Directors, the Company Secretary and Corporate Governance
What the exam tests
This domain covers board composition and powers, directors' statutory and fiduciary duties, the secretary's qualifications and functions, and the governance codes that apply to Nigerian companies.
Core rules
- The board manages the company. Directors owe duties of good faith in the company's interest, care and skill, acting within powers, avoiding conflicts and not making secret profits.
- Public companies need at least three directors; private companies at least two, with provision for a single director in a small company. Directors' particulars and consent to act are filed with the CAC.
- Disqualification follows undischarged bankruptcy, conviction for fraud or dishonesty, and court orders. Removal is by ordinary resolution on special notice; removal does not defeat contractual compensation claims.
- A public company must have a secretary who is a member of ICSAN, ICAN, ANAN or the NBA, or otherwise qualified by prescribed experience. The secretary handles statutory filings, registers, minutes, board papers and compliance, and can incur personal liability for default.
- Governance: the Nigerian Code of Corporate Governance 2018 operates on an apply-and-explain basis; the SEC code governs public companies and the CBN code governs banks. Expect board balance, independent directors, committees, risk oversight and whistleblowing.
- A statutory audit committee with shareholder and director representatives applies to public companies.
Worked example
A director's private company bids for a supply contract. The director must disclose the interest at a board meeting, abstain from voting and be excluded from the quorum for that item; the disclosure and abstention are minuted. If the board approves without disclosure, the contract is voidable at the company's instance and the director must account for profit.
Traps
Believing directors can only be removed for cause; confusing the board's management power with shareholder reserve powers; assuming a private company must appoint a qualified secretary; treating governance codes as optional court-enforceable law.