COMPANY MANAGEMENT IN NIGERIA

COMPANY MANAGEMENT IN NIGERIA

With so many problems plaguing the corporate sector of so many economies today, administration and day-to-day management of companies have become crucial. The problem of poor or ineffective corporate governance has also highlighted the fundamental issues that this industry faces in most economies, necessitating a review of the numerous corporate institutions in charge of management. These managements are the Registrars, Auditors, Secretaries, and Company Directors. We would examine the operations of these managements and how their work affects the general reputation and managerial effectiveness of a business.

DIRECTORS

Directors are the first group of individuals to be taken into account when managing a company. According to section 244 of Nigeria's Companies and Allied Matters Act (CAMA), Cap C20 LFN 2004, "directors" are individuals who have been duly appointed by the company to oversee and manage the company's operations.

In the case of Bernard Ojeifo Longe v. First Bank of Nigeria (2010) 5 NSCR 1, the Nigerian Supreme Court additionally revised the definition of what a director is as stated in section 244. In addition, according to Section 567 of the CAMA, a director is someone who has a directorship under whatever name, as well as anyone who gives directions or orders to the company's directors on a regular basis.

Directors have a key position in any company and how successfully they do their duties reflects on the health of the businesses they oversee and indicates whether those businesses are moving in the correct direction. There are various types of directors who oversee a company's operations in one manner or another. They consist of:

Shadow director – this refers to any person on whose instructions and directions the directors of a company are accustomed to act. This we see by the provision of section 245 of CAMA. Managing director – this director is appointed by the other directors from among themselves. He or she usually oversees the day to day running of the company. Executive director – this is a director who has a contract of employment with the company. Life director – this type of director is one who is not subject to the rule of rotation that applies to other types of directors.

APPOINTMENT OF DIRECTORS

According to CAMA's Section 246 (1), there must be at least two directors. If there are less than two directors, the company must appoint additional directors within a month. The manner of appointment for directors will rely on the categories listed below, namely:

First directors – section 247 of CAMA makes provision for the appointment of first directors, which is to be done in writing by the subscribers of the Memorandum of Association or the directors be named in the Article of Association. Subsequent directors – these types are appointed at Annual General Meetings (AGM), as seen under section 248 of CAMA. They could also be appointed where there is a casual vacancy (i.e. death, disqualification, resignation or retirement of a director). Other directors may fill the vacancy to be approved by the general meeting as stated under 249 of CAMA.

REMOVAL OF DIRECTORS

In order to remove a director, one must first check the company's articles of association or any other agreement to see if the removal process is specified there. If the Articles or another agreement do not contain such a clause, the process will be carried out in line with section 262 of the CAMA. Section 262 (1) states that a company may by ordinary resolution remove a director before the expiration of his period of office notwithstanding anything in its Articles or in any agreement between it and him. The Supreme Court also buttressed this in the case of Francis Adesegun Katto v. Central Bank of Nigeria (1999) 7 NWLR (Pt 607) 390 and Mobil Oil Nig. Ltd v. Abraham Akinfosile (1969) NMLR 217.

THE COMPANY SECRETARY

The Company Secretary is the next group of individuals in a company's management. According to CAMA's Section 293, each corporation must have a Secretary. The cases of Okeowo & Ors v. Migiliore & Ors (1979) 12 NSSC 210 and Panorama Dev. Ltd v. Fidelis Furnishing Fabrics Ltd. (1971) WLR 440 p443 are instructive in this regard. No company can correctly and efficiently exist and function without having a Secretary; this is because they hold a key place in the overall workings of the company. Section 295 provides for the qualification for being appointed as Secretary thus:

Private company – the Secretary must be someone who appears to the directors to have the requisite knowledge and experience to discharge the functions of a Secretary of a company. Public company – here the Secretary must belong to any of the following; chartered secretary and administrator, legal practitioner, chartered accountant or any person who has held office as secretary of a public company for at least 3 years.

The appointment and removal of a Company Secretary is provided for under section 296 of CAMA. The Act provides that a Secretary shall be appointed by the directors and they may also remove him. In carrying out the task of removing a Company Secretary, the Act further provides for the various steps to be followed for his removal; this is seen under section 296 (2) of CAMA.

COMPANY REGISTRAR

This is a further significant component of a company's management team, thus it is essential that company secretaries and other lawyers with expertise in corporate management become familiar with the whole operation of company registrars. Because of how the Company Secretary's responsibilities flow into those of the Company Registrar, this is the case.

The Company Registrar is charged with maintaining the register of shareholders or members as well as carrying out auxiliary duties like verifying shareholder signatures, carrying out transfers and transmissions, organising and conducting general meetings, issuing share certificates, compiling returns for public offerings, paying withholding tax, etc.

A common practice in today’s corporate law is to find that a company may opt to keep its own register (statutory books) at its registered office or employ the services of a registrar to keep its register at a place approved by it. The registrar may either be a general or ‘in house registrar’ i.e. a department within such a company; as is common with banks.

AUDITORS

Without these groups of people known as auditors who aid in the management of such organisations, corporate entities cannot be deemed to be healthy and performing well. According to CAMA's Section 357, each business must elect an auditor or auditors at each annual general meeting to review the company's financial statements and serve in that capacity from the end of the current annual general meeting until the end of the following one.

Section 358 (1) of CAMA further states who qualifies to be designated as an auditor. It states that only individuals who satisfy the professional requirements of the Institute of Chartered Accountants of Nigeria Act can be appointed as company auditors. While it also stated that certain categories of persons are excluded from appointment as Auditors and they are:

An officer or servant of the company; A person who is a partner or in the employment of an officer or servant of the company in the employment of the company; A body corporate; A person or firm who or which offers to the company professional advice in a consultancy capacity in respect of secretarial, taxation or financial management.

In appointing auditors for a company, we see that there are two sets of auditors and their modes of appointment vary. They are the first auditors and subsequent auditors. Section 357 (5) of CAMA provides that first auditors may be appointed by the directors at any time before the company is entitled to commence business and auditors so appointed shall hold office until the conclusion of the next Annual General Meeting. CAMA further stated under section 357(5) (b) that in the event that the directors fail to exercise their powers under this section; the company may in a general meeting convened for that purpose appoint the first auditors and thereupon the said powers of the directors shall cease. The subsequent auditors are appointed in certain situations which include when there is a vacancy or casual vacancy.

REMOVAL OF AUDITORS

Regardless of any agreements between the company and the auditor, as stated under section 362 (1) of the CAMA, the auditors of a company may be removed by an ordinary resolution prior to the end of their term. However, an auditor removed contrary to the agreement is entitled to damages and compensation for his removal. Section 362 (2) of CAMA goes on to stipulate that notice of removal of an auditor shall be filed at the Corporate Affairs Commission within 14 days of the resolution.

NB: This article is not a legal advice, and under no circumstance should you take it as such. All information provided are for general purpose only. For information, please contact chamanlawfirm@gmail.com

WRITTEN BY CHAMAN LAW FIRM TEAM

EMAIL: chamanlawfirm@gmail.com

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