Company Management in Nigeria
Introduction
With numerous challenges confronting the corporate sectors of various economies today, the administration and day-to-day management of companies have taken Centre stage in ensuring sustainability, growth, and regulatory compliance. The prevalence of poor or ineffective corporate governance has exposed fundamental weaknesses within many institutions, necessitating a renewed focus on the statutory roles of corporate officers.
In Nigeria, the key officers charged with company management include Company Directors, Company Secretaries, Registrars, and Auditors. This article examines the statutory duties, legal implications, and governance impact of these entities in the corporate ecosystem.
Directors
Directors are the foremost category of persons recognized by law as responsible for managing a company. According to Section 244 of the Companies and Allied Matters Act (CAMA), Cap C20, LFN 2004, directors are persons duly appointed by a company to direct and manage its business affairs.
The Nigerian Supreme Court in Bernard Ojeifo Longe v. First Bank of Nigeria (2010) 5 NSCR 1 expanded on this definition, aligning with Section 567 of CAMA, which also recognizes any person regularly issuing instructions or directives to directors as a de facto director—commonly referred to as a shadow director.
The role of directors is central to corporate health and governance. Their effectiveness can either steer the company toward sustainable growth or lead it into corporate disrepair.
Types of Directors
Several types of directors are recognized under Nigerian law, each with distinct roles:
Shadow Director: A person on whose instructions the formally appointed directors customarily act (Section 245, CAMA).
Managing Director: Appointed from among the board members, tasked with overseeing the daily operations of the company.
Executive Director: A director with a contract of employment, actively involved in the company’s day-to-day affairs.
Life Director: A director who is exempt from the rotation requirement applicable to other directors.
Appointment of Directors
Section 246(1) of CAMA mandates that every company must have at least two directors. Where this minimum is not met, the company must appoint additional directors within one month.
Categories of Appointment:
First Directors: Appointed in writing by subscribers of the Memorandum of Association or named in the Articles of Association (Section 247).
Subsequent Directors: Appointed during Annual General Meetings (AGMs), or to fill casual vacancies resulting from resignation, disqualification, or death, subject to ratification at the next AGM (Sections 248–249).
Removal of Directors
To remove a director, the company’s Articles of Association or any applicable agreement should first be reviewed. Where no such provision exists, Section 262(1) of CAMA applies, allowing the company to remove a director by ordinary resolution passed at a general meeting.
In 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 courts upheld the statutory power of companies to remove directors regardless of any agreement, although such directors may be entitled to compensation for wrongful removal.
The Company Secretary
The Company Secretary is a vital part of corporate administration. Section 293 of CAMA mandates that every company must appoint a Secretary. The importance of this office is emphasized in the cases of Okeowo & Ors v. Migliore & Ors (1979) 12 NSSC 210 and Panorama Dev. Ltd v. Fidelis Furnishing Fabrics Ltd. (1971) WLR 440 p443, which stress that no company can operate efficiently without one.
Qualifications (Section 295):
For Private Companies: The Secretary must be someone with sufficient knowledge and experience in company secretarial duties.
For Public Companies: The Secretary must be a:
Chartered Secretary and Administrator;
Legal Practitioner;
Chartered Accountant;
Or a person who has served as a secretary of a public company for at least three years.
Appointment and Removal of the Company Secretary
Section 296 of CAMA empowers the board of directors to appoint and remove the company secretary. The removal process must follow the procedure outlined in Section 296(2), including passing a board resolution and giving notice to the Corporate Affairs Commission (CAC).
Company Registrar
The Company Registrar is another integral arm of corporate management, often working in conjunction with the company secretary.
Registrars are responsible for maintaining the register of shareholders or members. Their duties also include:
Verifying shareholder signatures;
Processing share transfers and transmissions;
Organizing general meetings;
Issuing share certificates;
Handling public offerings and investor communication;
Ensuring compliance with tax deductions like withholding tax (WHT).
Registrars may either be in-house (internal departments in companies like banks) or outsourced to professional registrar firms.
Auditors
Corporate accountability is incomplete without auditors. Section 357 of CAMA mandates that every company must appoint an auditor at each AGM to audit the financial statements.
Qualifications (Section 358):
To qualify as an auditor, the individual must:
Be a member of the Institute of Chartered Accountants of Nigeria (ICAN) or a recognized professional body.
Ineligible Persons Include:
Company officers or employees;
Partners or employees of company officers;
Corporate bodies;
Consultants rendering secretarial, financial, or taxation services.
Appointment of Auditors
Auditors are categorized as:
First Auditors: Appointed by the directors before the company begins business (Section 357(5)). If directors fail, shareholders can appoint during a general meeting.
Subsequent Auditors: Appointed at the AGM and serve from the conclusion of one AGM to the next.
Removal of Auditors
Auditors can be removed before the end of their tenure by an ordinary resolution as provided in Section 362(1) of CAMA. The company must notify the CAC within 14 days of such removal (Section 362(2)). Where removed in breach of contract, the auditor is entitled to compensation.
Conclusion
Company management in Nigeria is rooted in strict statutory responsibilities, ethical conduct, and corporate governance best practices. From the directors who set the strategic tone, to the secretaries who ensure regulatory compliance, and the auditors who safeguard financial transparency, each management component must operate in synergy.
Legal knowledge, operational diligence, and proactive risk management are indispensable for any Nigerian company aspiring to sustainability and growth.
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