Thesis Abstract

Abstract
The position and duties of company directors under Nigerian company law are crucial aspects of corporate governance that play a significant role in the effective management and operation of companies in Nigeria. This research explores the legal framework governing the duties and responsibilities of company directors in Nigeria, focusing on the Companies and Allied Matters Act (CAMA) and other relevant regulations and guidelines. The study examines the fiduciary duties of directors, including the duty of loyalty, duty of care, and duty to act in the best interests of the company. It also analyzes the statutory duties imposed on directors by CAMA, such as the duty to act within their powers, promote the success of the company, exercise independent judgment, and avoid conflicts of interest. Furthermore, the research delves into the liability of directors for breaches of their duties under Nigerian company law, including civil and criminal liabilities. It discusses the legal remedies available to companies and shareholders for director misconduct, such as derivative actions, injunctions, and damages. The study also explores the role of regulatory bodies, such as the Corporate Affairs Commission (CAC) and the Securities and Exchange Commission (SEC), in enforcing compliance with directorial duties and holding directors accountable for their actions. Moreover, the research highlights the challenges and complexities faced by company directors in fulfilling their duties under Nigerian company law, including issues related to corporate governance practices, conflicts of interest, and regulatory compliance. It provides insights into best practices for directors to enhance corporate governance, mitigate risks, and promote transparency and accountability within companies. The study emphasizes the importance of director training, board diversity, and ethical leadership in fostering a culture of good corporate governance and sustainable business practices. In conclusion, this research underscores the critical role of company directors in ensuring the long-term success and sustainability of companies in Nigeria. By understanding and adhering to their legal obligations and ethical responsibilities, directors can contribute to the growth and stability of the Nigerian corporate sector, enhance investor confidence, and uphold the principles of good corporate governance. Effective regulation, enforcement mechanisms, and directorial practices are essential for promoting transparency, accountability, and integrity in corporate leadership, thereby fostering a conducive environment for business development and economic growth in Nigeria.

Thesis Overview

INTRODUCTION

The enormous and challenging responsibilities of managing incorporated companies are vested on directors by the Companies and Allied Matters Laws of the Federation, 2004.

Consequently I am attracted into researching about these human agents, trustees and organs of the company whose acts within the purview of the Law could be said to be the acts of the company. Though “ownership” normally are vested on shareholders (it is not the objective of this project to discuss extensively on shareholding) for they bear the ultimate risk in the event of any mishap to the company. It is an established fact that directors stand in a fiduciary relationship to the company and also owe duty of care and skill.

Generally directors owe certain obligations to the companies in the performance of their functions. It must be noted that the Act also provides for circumstances upon which a director could be removed. The responsibility of enforcing the duties of directors lies with the company, technically speaking therefore, it is the responsibility of the directors to enforce this duties. It is pertinent to note that the rule in Foss V Harbottle has been whittled down by certain exceptions, which are also statutorily provided. This project also highlights the liability of directors and when a shareholder could institute derivative action for and on behalf of the company.

Finally, I shall proffer suggestions on the ways of improving corporate management through directors and where necessary, suggest for the amendment of certain provisions in the Act which does not reflect contemporary corporate management in Nigeria and the need for our courts to live up to their constitutional responsibilities in the interpretation of statutes as it affects company directors.

CHAPTER ONE

MEANING, APPOINTMENT AND QUALIFICATIONS OF DIRECTORS

1.1   WHO IS A DIRECTOR?

A director is a person duly appointed by the company to direct and manage the business of the company.1 This definition goes a step further than the 1968 Act2 by adding due appointment as a condition precedent. Section 244 (2) provides a rebuttable presumption that all persons described by a company as directors, whether as executive or otherwise, have been duly appointed. This safeguards third parties dealing with the company. In Aberdeen Railway Co. V. Blaikie Bros3, Lord. Cransworth defined directors to be somebody to whom is delegated the duty of managing the general affairs of

1.   Sec 244(1) of the Companies and Allied Matters Act CAP C20 LFN 2004– the term “director” of a company would be defined “as a person appointed or elected according to Law, authorized to manage or direct the affairs of a company or Corporation” Sofowara, Mordern Nigerian Company Law”, second edition, 2006, p.425

2.   Formally Companies Decree No. 51 of 1968 at p

3.   (1859) 3 & 4 Macq 461 at p. 471

the company. Section 245 (1) of the Act4 defines a shadow director as “any person on whose instructions and directions the directors are accustomed to act”. A shadow director is also deemed to be a director. Although this definition is not explicit, it is deemed to take care of the practice where recognized groups or corporations nominate directors on another company’s board to represent and protect their interests. This is usual with some banking institutions, which lend huge amounts of money to companies. Another good example of shadow director is where a government nominates some directors to represent its interest in a company where the government has substantial or controlling shares, for instance, the Nkalagu Cement Company Ltd has in its board some directors nominated by the government of Enugu, Anambra, Imo and Abia States. These four state governments could be described as shadow directors in relation to the Nkalagu Cement Company Ltd, because their nominee ‘directors’ are

4. Decree No.1 of 1990 later designated as “Act”

accustomed to act on their instructions. It should be noted that the above mentioned situation is a deviation and an exception to the rule that directors must only be appointed by shareholders at a general meeting of the company as provided by Section 248 of the Company and Allied Matters Act, CAP C20 LFN 2004.

However, it is pertinent to mention that persons who give advice to directors in their professional capacities are not included in the concept of shadow directors.