UNIT 9

APPOINTMENT OF DIRECTORS

Directors are pivotal to the management and control of a company. Their appointment is a crucial aspect of corporate governance, ensuring the company is run efficiently and in compliance with the law. The appointment of directors in Nigeria is governed by the Companies and Allied Matters Act (CAMA) 2020. To qualify for the director, the person must be at least 18 years old, must not be an undischarged bankrupt and must not have been convicted of fraud or dishonesty within the last five years. See section 257 of CAMA 2020 which provides specific qualifications for directors and the case of Barclays Bank Ltd v. TOS Benson (1961) 1 All NLR 512 which underscores the importance of following proper procedures in the appointment of directors. The mode of appointment includes the following;

1. By subscribers to the memorandum and articles of association: this is where the initial directors of a company are usually named in the Articles of Association. These directors are appointed by the subscribers to the Memorandum of Association at the time of incorporation.
2. By shareholders in general meeting: this is where subsequent directors are typically appointed by the shareholders at the Annual General Meeting (AGM). This is provided for under Section 271 of CAMA 2020.
3. By the board of directors: this is where the board may appoint directors to fill casual vacancies or as additional directors, subject to ratification at the next AGM as stipulated under Section 274 of CAMA 2020.
4. By third parties: this is where in some instances, the Articles of Association may grant third parties, such as creditors, the right to appoint directors.

DUTIES OF DIRECTORS

Directors have a fiduciary duty to act in the best interests of the company. See the case of Olufosoye v. Fakorede (1993) 1 NWLR (Pt.272) 747 which highlights the duty of care and diligence expected from directors and teh case of Yalaju-Amaye v. A.R.E.C. Ltd (1990) 4 NWLR (Pt. 145) 422 which deals with the fiduciary duties of directors, emphasizing the need to act in the company’s best interests. Their duties are codified in CAMA 2020 and also derived from common law principles. The fiduciary duties includes the following;

1. Duty to act in good faith: this is where the directors must act in good faith in what they believe to be the best interests of the company (See section 305 of CAMA 2020).
2. Duty of care and skill: this is where the directors are required to exercise a reasonable degree of care, skill, and diligence (See section 282 of CAMA 2020).
3. Duty to avoid conflicts of interest: this is where the directors must avoid situations where their personal interests conflict with those of the company (See section 306 of CAMA 2020).
4. Duty to act within powers: this is where the directors must act within the powers granted to them by the company’s constitution and the law (See section 283 of CAMA 2020).

REMOVAL OF DIRECTORS

Directors can be removed before the expiration of their term by the company. See the case of Longe v. First Bank of Nigeria Plc (2006) 3 NWLR (Pt. 967) 228 which establishes the need for adherence to due process in the removal of directors and the case of Oloriode v. Oyebi (1984) 1 SCNLR 390 which emphasizes the importance of following the statutory procedure for the removal of directors. The procedure for removal is outlined in CAMA 2020 and they include the following;

1. Ordinary resolution: This is where a director can be removed by an ordinary resolution passed at a general meeting, provided special notice has been given (See section 288 of CAMA 2020).
2. Special notice: This is where the company must give special notice of the resolution to remove a director to all members and the director concerned.
3. Right to make representations: This is where the director can propose to be removed has the right to make written representations and to be heard at the meeting.

COMPANY SECRETARIES

A company secretary plays a vital role in ensuring the smooth administration of a company, particularly with regard to compliance with statutory and regulatory requirements. A company secretary must possess the requisite qualifications and experience as stipulated under section 330 of CAMA 2020 and for public companies, the secretary must be a member of a recognized professional body or a legal practitioner. The board of directors appoints the company secretary, subject to the terms and conditions set out in the company’s Articles of Association (See section 332 of CAMA 2020). See the case of Okeowo v. Migliore (1979) 11 SC 138 which highlights the responsibilities of the company secretary in maintaining statutory records. The duties of company secretaries include the following;

1. Compliance: to ensure the company complies with statutory and regulatory requirements.
2. Board meetings: to organize and attend board meetings, ensuring proper documentation of minutes.
3. Records: to maintain the company’s statutory books and records.
4. Liaison: to act as a liaison between the board and shareholders.

REMOVAL OF COMPANY SECRETARIES

The removal of a company secretary must be conducted in accordance with the provisions of CAMA 2020 and the company’s Articles of Association. See the case of Akintola v. Solano (1986) 2 NWLR (Pt. 24) 598 which underscores the importance of following due process in the removal of company secretaries. The procedure for removal includes the following;

1. Board resolution: this is where the company secretary can be removed by a resolution of the board of directors.
2. Notice: this is where proper notice must be given to the company secretary of the intention to remove them.
3. Right to be heard: this is where the company secretary should be given an opportunity to be heard before removal.

CONCLUSION

These notes provide a comprehensive overview of the appointment, duties, and removal of directors and company secretaries in Nigeria, including relevant sections from CAMA 2020 and illustrative case law.