UNIT 6

OFFICERS OF THE COMPANY UNDER CORPORATE GOVERNANCE

Corporate governance in Nigeria is fundamentally influenced by the companies and allied matters act (CAMA) 2020 which provides a detailed framework for managing and directing the affairs of a company. Under this act officers of a company play a significant role in corporate governance by ensuring the smooth and lawful management of the company's operations. The term "officers of the company" refers to individuals who hold positions of responsibility in a company. These officers can be classified into directors, company secretary, and key management personnel. Their duties, responsibilities, and liabilities are outlined in CAMA 2020 along with various Nigerian judicial decisions that provide clarity on their roles.

DIRECTORS

Directors are individuals appointed by the shareholders to manage the affairs of the company. See section 269 of CAMA 2020 which defines a director as someone duly appointed by the company to direct and manage the business of the company. The board of directors holds the highest decision-making authority and is responsible for setting corporate policies and the case of Bamford v Bamford (1970) where it was emphasized that directors must act in good faith and in the best interest of the company. Directors can be executive or non-executive, depending on their roles and the extent of their involvement in the daily operations of the company. Directors are expected to perform their functions with care, skill, and diligence. They owe fiduciary duties to the company, meaning they must act in the best interest of the company and avoid conflicts of interest. The specific duties of directors are outlined in section 305 of CAMA 2020 which includes the following:

1. Duty of loyalty and good faith: Directors must act honestly and in the company's best interest. See the case of Akintunde v Ojikutu (1971) where the court held that directors should not engage in activities that conflict with the company's interests.
2. Duty to avoid conflict of interest: A director must not put himself in a position where his personal interests conflict with the company's interests. This includes not exploiting corporate opportunities for personal gain. See the case of Aberdeen Railway Co. v Blaikie Brothers (1854) though a foreign case has been influential in Nigerian jurisprudence as shown in the Nigerian case of Nwankwere v Adewunmi (1966).
3. Duty to exercise care and skill: Directors must exhibit the level of care and diligence expected from someone in their position. See the case of Re City Equitable Fire Insurance Co. Ltd (1925) where the court outlines that directors must exercise care based on the standard of skill reasonably expected of a person with their knowledge.

REMOVAL OF DIRECTORS

Directors can be removed from office by an ordinary resolution of the company. See section 288 of CAMA 2020 which provides the procedure for removing a director, which includes giving the director concerned a chance to defend themselves and the case of Longe v First Bank of Nigeria Plc (2010) where the supreme court of Nigeria emphasized that the removal of a director must comply strictly with the provisions of CAMA particularly the right of the director to be heard.

COMPANY SECRETARY

Every company, whether private or public, is required to appoint a company secretary as provided under section 330 of CAMA 2020. The company secretary plays a key role in ensuring the company complies with statutory and regulatory requirements. For public companies, the company secretary must meet certain qualifications, including being a member of the institute of chartered secretaries and administrators or a legal practitioner in Nigeria. The removal of a company secretary follows the procedures outlined by the company's articles of association or a board resolution. The duties of the company secretary includes the following:

1. Advising the board: The company secretary advises the board on governance matters and ensures compliance with corporate laws.
2. Maintaining statutory registers: The secretary must ensure that the company's statutory registers including the register of directors and members are properly maintained.
3. Organizing meetings: The company secretary is responsible for organizing and documenting board meetings and general meetings of the company. See the case of Kuye v ABU (1986) where the importance of properly organized meetings, as facilitated by the company secretary was highlighted.
4. Filing returns: The company secretary must ensure that the necessary returns such as annual returns, are filed with the corporate affairs commission (CAC). See sections 417 and 418 of CAMA 2020.

OTHER KEY MANAGEMENT PERSONNEL

Besides directors and the company secretary, companies may also have other key officers, often referred to as key management personnel, who play significant roles in corporate governance. These may include the chief executive officer (CEO), chief financial officer (CFO), and other senior managers responsible for the day-to-day management of the company. Though CAMA 2020 does not explicitly define key management personnel, the board of directors delegates various responsibilities to these officers, and they must act within the scope of their authority and while the duties of key management personnel are similar to those of directors, especially in relation to the duty of care, loyalty, and skill, they are expected to act in good faith and in the company's best interest.

LIABILITY OF OFFICERS

Officers of a company may be held liable for actions taken in breach of their duties. See section 280 of CAMA 2020 which provides that officers who act negligently or fraudulently can be personally liable for any losses incurred by the company and the case of Yalaju-Amaye v AREC Ltd (1990) where the court established that officers who engage in fraud or misrepresentation can be personally sued for their actions.

CONCLUSION

Officers of a company, particularly directors, the company secretary, and key management personnel, play pivotal roles in corporate governance in Nigeria. Their duties, as outlined in CAMA 2020, are crucial for ensuring the lawful and efficient operation of a company. Officers who fail in their responsibilities can be removed and held personally liable for breaches of their duties, as demonstrated in various Nigerian court cases.