Limitation statutes are often described as statutes of repose. Their purpose is not merely procedural; in appropriate circumstances, the expiration of the prescribed period extinguishes the right to enforce a cause of action through judicial proceedings. The recent decision of the Supreme Court in Keystone Bank Limited v. Ebuh (2026) 13 NWLR (Pt. 2058) 433 provides a useful examination of this principle in the context of a capital market transaction.
INTRODUCTION
Limitation statutes are often described as statutes of repose. Their purpose is not merely procedural; in appropriate circumstances, the expiration of the prescribed period extinguishes the right to enforce a cause of action through judicial proceedings.
The recent decision of the Supreme Court in Keystone Bank Limited v. Ebuh (2026) 13 NWLR (Pt. 2058) 433 provides a useful examination of this principle in the context of a capital market transaction. More importantly, the decision clarifies the distinction between a claim relating to shares and a claim for recovery of money paid for shares which were never allotted.
The case also presents an important procedural question: where a court or tribunal lacks jurisdiction because a claim is statute-barred, should the proceedings be struck out or dismissed?
The Supreme Court's answer has significant implications for investors, issuing companies, financial institutions and practitioners involved in capital market disputes.
THE FACTS
Dr. Vincent Ebuh applied for 30,000,000 shares in an Initial Public Offer conducted by Bank PHB, now Keystone Bank Limited. Although he paid for the shares, only 4,335,000 shares were allotted to him.
He subsequently claimed a refund of ₦436,305,000 representing the amount allegedly paid for the 25,665,000 shares which were not allotted to him.
The cause of action was found to have accrued on 19 April 2008. However, the action was not commenced until 7 November 2017—more than nine years later.
Keystone Bank challenged the action on the ground that it was statute-barred.
The dispute eventually reached the Supreme Court.
The Central Question: Six Years or Twelve Years?
The principal issue before the Supreme Court was the applicable limitation period.
Keystone Bank argued that the claim was founded on a simple contract and therefore subject to the six-year limitation period applicable under the Limitation Law of Lagos State.
The claimant, on the other hand, argued that the transaction was governed by provisions of the Companies and Allied Matters Act relating to shares, share certificates and dividends and therefore attracted a twelve-year limitation period.
The Supreme Court rejected the latter argument.
The Court Looked at the Real Nature of the Claim
One of the most important lessons from the decision is that the character of a claim for limitation purposes is determined by the relief sought and the facts pleaded.
Although the dispute arose from an IPO, the claimant's principal claim was for the refund of money allegedly paid for shares which were never allotted.
The Court therefore refused to allow the general description of the transaction as a "share transaction" to determine the limitation period. Instead, it examined the precise right being enforced.
The claim was not for dividends. It was not for an entitlement arising from existing shareholding. It was not for enforcement of rights attached to allotted shares.
It was fundamentally a claim for recovery of money paid where the anticipated consideration had not been received.
The Court accordingly classified it as a simple contract claim.
Section 385 of the Companies and Allied Matters Act (CAMA), 1990 Could Not Be Extended to Unallotted Shares
The Court of Appeal had relied on section 385 of the then applicable CAMA 1990, which prescribed a twelve-year period in relation to the recovery of dividends.
The Supreme Court held that this was an erroneous application of the provision.
The language of the section was clear: it dealt with dividends.
A claim for refund of subscription money for unallotted shares is a different cause of action.
The Court therefore declined to expand the statutory provision beyond its express terms.
This aspect of the decision reinforces a settled principle of statutory interpretation: where legislative language is clear and unambiguous, the court is not permitted to introduce into the statute what the legislature did not provide.
An Application for Shares Is Not the Same as an Allotment
The Court also reaffirmed an important principle concerning the formation of contracts for shares.
An application for shares constitutes an offer. Allotment constitutes acceptance and brings the contractual relationship into existence.
This distinction was critical to the Court's reasoning.
In respect of the 25,665,000 shares which were allegedly never allotted, there was no concluded contract for those shares. The claimant's right was therefore not a proprietary right arising from share ownership.
Rather, the claim arose from the alleged failure of consideration.
Consequently, the Court treated the claim as one for recovery of money had and received and classified it as a simple contract claim.
A Sealed Share Certificate Does Not Create a Sealed Contract
Another argument rejected by the Supreme Court was that the existence of a share certificate issued under seal converted the entire transaction into a contract under seal.
The Court disagreed.
A contract under seal must itself be executed, sealed and delivered. The mere existence of a share certificate bearing a seal does not transform an earlier share application or payment into an instrument under seal. This distinction is commercially significant.
Practitioners should therefore avoid assuming that because a particular document issued in connection with a transaction is executed under seal, every obligation arising from the underlying transaction automatically enjoys the limitation period applicable to sealed instruments.
The nature of the particular obligation and the instrument creating it remain critical.
The Claim Was Statute-Barred
Having classified the claim as a simple contract claim, the Supreme Court applied the six-year limitation period.
The cause of action accrued on 19 April 2008.
The action was commenced on 7 November 2017.
More than nine years had elapsed.
The claim was therefore statute-barred.
The consequence was not merely that the claimant had delayed in bringing the proceedings. The limitation statute had extinguished the right to enforce the claim judicially.
The Tribunal therefore lacked jurisdiction to entertain the action.
Striking Out or Dismissal?
The second significant issue concerned the proper order to make once want of jurisdiction was established.
The general rule is familiar: where a court lacks jurisdiction, the appropriate order is ordinarily to strike out the proceedings. An order of striking out generally leaves the claimant at liberty to recommence the action where the defect is capable of being cured.
Dismissal, by contrast, ordinarily brings the litigation to a final end.
However, the Supreme Court recognized that a statute-barred claim occupies a different position.
Where the limitation period has expired, the claim is dead. There is no longer a viable right of action which can properly be revived by simply recommencing proceedings.
The Court therefore held that, in the circumstances of the case, dismissal was appropriate.
The distinction is important: although lack of jurisdiction ordinarily leads to striking out, the Court will consider the substantive legal effect of the defect. Where limitation has extinguished the right of action, striking out the proceedings merely to leave the claimant to pursue a dead claim would serve no useful purpose.
Implications for Legal Practitioners
The decision carries several practical lessons.
- First, limitation must be considered at the earliest stage of every commercial dispute. A potentially meritorious claim can become legally unenforceable simply because proceedings were commenced outside the prescribed period.
- Second, practitioners must identify the true cause of action rather than relying on the general subject matter of the transaction. The fact that a dispute arises from an IPO or involves shares does not necessarily mean that provisions applicable to dividends, share ownership or sealed instruments will govern the limitation period.
- Third, the distinction between an application for shares and an allotment remains important. The legal consequences of a failed subscription may be fundamentally different from disputes concerning shares that have actually been allotted.
- Fourth, parties cannot ordinarily evade limitation by introducing allegations of fraud at the appellate stage. The Supreme Court noted that fraud must be specifically pleaded and strictly proved.
- Finally, the decision underscores the importance of correctly identifying jurisdictional issues. Limitation is not simply a procedural technicality. Where a claim is statute-barred, the court is deprived of jurisdiction to entertain it.
Conclusion
Keystone Bank Ltd v. Ebuh is an important decision at the intersection of company law, capital market transactions, contract and limitation law.
Its central lesson is straightforward: the legal character of a claim determines the applicable limitation period, not merely the commercial context in which the dispute arose.
A claim for money paid for unallotted shares is not transformed into a claim for dividends merely because the underlying transaction involved shares. Nor does the issuance of a sealed share certificate automatically convert the underlying subscription transaction into a contract under seal.
For investors and financial institutions alike, the decision is a reminder that limitation periods can be decisive. For legal practitioners, it reinforces the need to identify the precise cause of action, the date on which it accrued and the statutory period within which proceedings must be commenced.
Ultimately, the judgment demonstrates a fundamental proposition of Nigerian civil procedure: a right which has become statute-barred cannot ordinarily be resurrected through procedural maneuvering.
In commercial litigation, therefore, the question is not only whether a client has a good claim.
It is also whether the law still permits that claim to be brought.
This article is general commentary, not legal advice. Speak to our team about how it applies to your circumstances.
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