Corporate Governance 2021

May 3, 2021


Primary sources of law, regulation and practice 

1 What are the primary sources of law, regulation and practice relating to corporate governance? Is it mandatory for listed  companies to comply with listing rules or do they apply on a  ‘comply or explain’ basis? 

The main sources of law relating to corporate governance are the: • Companies and Allied Matters Act 2020 (CAMA); 

  • Investment and Securities Act; 
  • Financial Reporting Council of Nigeria Act (FRCA); • Banks and Other Financial Institutions Act; 
  • Central Bank of Nigeria Code of Corporate Governance for Banks  and Discount Houses in Nigeria (the CBN Code); 
  • Insurance Act; 
  • National Insurance Commission Act (the NAICOM Act); • Nigerian Code of Corporate Governance issued by the Financial  Reporting Council of Nigeria; 
  • CBN Code of Corporate Governance for Microfinance Banks  in Nigeria; 
  • CBN Code of Corporate Governance for Development Finance  Institutions in Nigeria; 
  • CBN Code of Corporate Governance for Finance Companies  in Nigeria; 
  • NAICOM Code of Corporate Governance for the Insurance Industry  in Nigeria; 
  • Code of Corporate Governance for Licensed Pension Operators; • Rule Book of the Nigerian Stock Exchange; 
  • Securities and Exchange Commission Code of Corporate  Governance in Nigeria (the SEC Code); 
  • SEC Rules and Regulations; 
  • SEC Code of Conduct for Shareholders’ Associations (SCCSA); • Nigerian Communications Commission Code of Corporate  Governance for telecommunication companies; and 
  • Nigerian Stock Exchange Guidance on Companies’ Virtual Board,  Committee and Management Meetings (NSE Guidance). 

The Rule Book of the Nigerian Stock Exchange requires mandatory  compliance with listing rules. 

Responsible entities 

2 What are the primary government agencies or other entities  responsible for making such rules and enforcing them? Are  there any well-known shareholder or business groups, or  proxy advisory firms, whose views are often


The primary government entities responsible for making these rules are: • the Corporate Affairs Commission (CAC), created under CAMA,  which oversees the registration of companies and compliance by  corporate bodies with the provisions of CAMA; 

  • the Securities and Exchange Commission (SEC), created under the  Investment and Securities Act, which regulates the capital market; • the Central Bank of Nigeria, which regulates banks and other finan cial institutions in Nigeria; 
  • the National Insurance Commission, established under the NAICOM  Act, which ensures compliance by insurance companies with the  provisions of the NAICOM Act and the Insurance Act; 
  • the National Pension Commission established under the Pension  Reform Act, which regulates pension fund administrators and  pension fund custodians; 
  • the Nigerian Communications Commission, established under the  Nigerian Communications Act (NCA), which regulates the commu nications industry in Nigeria and ensures compliance with the NCA; 
  • The Financial Reporting Council of Nigeria (FRCN), created under  the Financial Reporting Council of Nigeria Act, is empowered to  enforce and approve compliance with accounting, auditing, corpo rate governance and financial reporting standards in Nigeria and is  charged with ensuring good corporate governance practices in the  public and private sector; and 
  • the Directorate of Corporate Governance, which was created under  the Financial Reporting Council of Nigeria Act, is responsible for  issuing a code of corporate governance and guidelines and devel oping a mechanism for periodic assessments of the code and  guidelines. 

There are several shareholder activist groups in Nigeria and these  groups are more active in participating in annual general meetings,  influencing decision-making at these meetings and protecting share holders’ rights. 

Regulatory authorities, such as the SEC and the FRCN, adopt  a consultative process in making regulations to obtain the views of  various stakeholders, including shareholder groups. The SCCSA is  one of the means through which the SEC seeks to ensure the highest  standard of conduct among association members and the companies  with which they interact as shareholders and to ensure that association  members make positive contributions in the affairs of public companies.  The SCCSA prescribes that shareholders’ associations be registered  with the CAC for their views to be considered by the SEC during consul tations on corporate governance issues.  



Shareholder powers 

3 What powers do shareholders have to appoint or remove  directors or require the board to pursue a particular course  of action? What shareholder vote is required to elect or  remove directors? 

Shareholders in a general meeting have the power to appoint or remove  directors by a resolution passed by a simple majority of votes cast  in person or by proxy. Though the board of directors of a company is  empowered to appoint new directors to fill casual vacancies created  by death, resignation, retirement or removal, these appointments  are, however, subject to ratification by the shareholders in a general  meeting. Generally, unless the articles of association provide otherwise,  the directors, when acting within the powers conferred upon them by  the Companies and Allied Matters Act 2020 (CAMA) or the articles, are  not bound to obey the directions or instructions of the shareholders in  general meetings provided that the directors act in good faith and with  due diligence. This notwithstanding, the shareholders may make recom mendations to the board regarding actions to be taken by it and may ratify  or confirm any action taken. The Securities and Exchange Commission  Code of Corporate Governance in Nigeria (the SEC Code) provides that  the board is to ensure that all shareholders are given equal treatment  and minority shareholders are adequately protected from the abusive  actions of controlling shareholders. In addition, there should be adequate  shareholder representation on the board proportionate to the size of  shareholding. 

A shareholder can bring a court action to restrain the directors from  entering into an illegal or ultra vires transaction or perpetuating a fraud.  Members holding 5 per cent of the total voting rights in the company could  circulate a resolution to be voted upon at a general meeting, indicating a  course of action that should be adopted by the directors of the company. 

Under CAMA, a company may remove a director before the expiry of  his or her tenure of office, notwithstanding anything in its articles or in  any agreement between the company and the director. However, CAMA  requires that a special notice be given to those entitled to attend and  vote, as well as the director sought to be removed, to move and pass this  resolution. The company shall also give its members notice of this resolu 

tion a minimum of 21 days before the meeting where the removal of the  director is to be considered. 

Shareholder decisions 

4 What decisions must be reserved to the shareholders? What matters are required to be subject to a non-binding  shareholder vote? 

The shareholders in a general meeting are empowered to: • appoint and remove directors of the company; 

  • determine directors’ remuneration; 
  • appoint auditors and approve their remuneration; 
  • alter the company’s share capital; 
  • alter the memorandum and articles of association of the company; • approve the conversion of the company from a private to a public  company and vice versa, and from a limited company to an unlimited  company and vice versa; 
  • change the company’s name; and 
  • declare a dividend on the recommendation of the board. 

CAMA provides that, subject to the provisions of the articles of associa tion of a company, there are certain powers of the board that cannot  be restricted by the shareholders in a general meeting. These include  

powers over the day-to-day running of the company and the powers of  the directors to institute actions on behalf of the company. Where the  board fails to institute or defend an action on behalf of the company  when it ought to do so because the board is itself in the wrong or there  is a deadlock on the board, then the shareholders may apply to a court  to bring the action on behalf of the company. 

Where the articles of association of a company expressly vest

the  board with certain powers, it is not bound to obey the instructions of the  shareholders, especially when it acts in good faith and with diligence.  In these situations, the shareholders may only amend the articles of  association of the company such that those powers are now made exer 

cisable by the shareholders in a general meeting and not by the board  of directors. 

Disproportionate voting rights 

5 To what extent are disproportionate voting rights or limits on  the exercise of voting rights allowed? 

CAMA expressly prohibits disproportionate voting rights and the limi tation of voting rights. The basic rule is ‘one share, one vote’ and no  company may, by its articles or otherwise, authorise the issue of shares  that carry more than one vote in respect of each share or that do not  carry any rights to vote. There are, however, a few exceptions. Preference  shareholders, if the articles of the company so provide, can have more  

than one vote per share upon consideration of any resolution: • where a dividend on the preference share remains unpaid after the  due date of the dividend; 

  • that seeks to vary the rights attached to the preference shares; • to appoint or remove an auditor; and 
  • for winding up the company. 

Furthermore, any special resolution of a company increasing the  number of any class may validly resolve that any existing class of pref erence shares carry the right to the votes in addition to the one vote per  share necessary to preserve the existing ratio that the votes exercis able by the holders of these preference shares bear to the total votes  exercisable at the meeting. The rights of members to vote upon their  shares may also be limited by the company’s articles until all calls or  other sums payable to the company by them in respect of the shares  have been paid. 

Shareholders’ meetings and voting 

6 Are there any special requirements for shareholders to  participate in general meetings of shareholders or to vote?  Can shareholders act by written consent without a meeting?  Are virtual meetings of shareholders permitted? 

All shareholders are entitled to attend and vote at the company’s  general meeting. However, until the name of a person with shares in  a company has been entered as a member in the register of members,  which companies are statutorily required to maintain, that person will  not be deemed a member of the company and, therefore, may not attend  meetings of the company or be allowed to vote at these meetings. 

The articles of a company may also provide that members who  have not made payments on all calls on their shares shall not be enti tled to attend meetings. 

Shareholders of a private company can act by way of written  resolution. CAMA provides that a resolution of the shareholders of a  company would be effective only if it is passed at a general meeting.  However, the shareholders of a private company may act by a written  resolution signed by all the shareholders entitled to attend and vote at  the general meeting of the company where the resolution would have  been passed. 

Generally, CAMA provides that (with the exception of small compa nies and companies having a single shareholder) all statutory and  annual general meetings shall be held in Nigeria. However, a private  company may hold its general meetings electronically, provided that  such meetings are conducted in accordance with its articles of asso ciation. Although CAMA makes no provisions for the conduct of virtual  meetings by public companies, the Nigerian Stock Exchange Guidance  recommends that the articles of association of a company or its Board,  Committee, and Management Charters or Terms of Reference should  provide or be altered to provide for and authorise virtual meetings. In  practice, a company may provide for the holding of virtual meetings in  its articles of association. 

Shareholders and the board 

7 Are shareholders able to require meetings of shareholders to  be convened, resolutions and director nominations to be put  to a shareholder vote against the wishes of the board, or the  board to circulate statements by dissident shareholders? 

The duty to call general meetings of shareholders is one held by the  board of directors. However, a shareholder or shareholders repre senting at least 10 per cent of the shareholding (or voting rights in  a company without share capital) of the company may requisition a  general meeting at any time. Where the board refuses to convene the  requisitioned meeting within 21 days, the requisitionists are authorised  to convene the meeting (within three months of the requisition) after  issuing the required notices, and any reasonable expenses incurred in  relation to the meeting shall be repaid by the company. 

The nomination of a person to the board of directors can be put to  a vote at a general meeting, provided that prior notice (not less than  three days or more than 21 days prior to the meeting) outlining his or  her intention to propose this person for election has been given, signed  by a shareholder qualified to attend and vote at the meeting and accom 

panied by a notice in writing signed by the nominated person of his or  her willingness to act. 

Controlling shareholders’ duties 

8 Do controlling shareholders owe duties to the company or  to non-controlling shareholders? If so, can an enforcement  action be brought against controlling shareholders for breach  of these duties? 

There are no statutory provisions that expressly provide that controlling  shareholders owe legal duties to the company or minority shareholders.  However, the following codes provide that it is the responsibility of the  board to ensure that minority shareholders are protected from the  overbearing influence of controlling shareholders of a company and to  ensure the fair treatment of all shareholders: 

  • the Central Bank of Nigeria Code of Corporate Governance for  Banks and Discount Houses in Nigeria (the CBN Code); • the CBN Code of Corporate Governance for Microfinance Banks  (MFBs) in Nigeria; 
  • the CBN Code of Corporate Governance for Development Finance  Institutions (DFIs) in Nigeria; 
  • the CBN Code of Corporate Governance for Finance Companies  (FCs) in Nigeria; 
  • the Nigerian Code of Corporate Governance (the NCCG); • the SEC Code; and 
  • the National Insurance Commission Code of Corporate Governance  for the Insurance Industry in Nigeria. 

Further, if a controlling shareholder infringes on the rights of a minority  shareholder, or commits a fraud on either the company or

the minority  

shareholder, which the directors fail to redress (owing to the wrong doer being in control of the company or otherwise), the non-controlling  shareholder may apply to a court for injunctive relief. 

A shareholder may also bring an application to the court for relief  on the grounds that the actions of the company are being conducted in  an unfairly prejudicial and oppressive or discriminatory manner. 

Further, a shareholder may bring a derivative action on behalf of  the company where the wrongdoers are effectively in control of the  company, the directors refuse to act, the application is brought in good  faith, and it is in the best interest of the company. Evidence that the  majority shareholders have approved any such wrongdoing will not in  itself prevent a shareholder from seeking relief from the courts. 

A shareholder who possesses significant control over a company,  whether a private company or a public company, must notify the  company of the particulars of such control, within seven days of  becoming such a person. The company shall not later than one month  from the receipt of such information, notify the CAC and disclose the  same in its annual return. 

Also, a shareholder who possesses, either directly or through  a nominee, shares in a public company that entitles the shareholder  to exercise 5 per cent of the unrestricted voting rights at any general  meeting is considered a substantial shareholder and must notify the  company of his or her interest within 14 days after that person becomes  aware that he is a substantial shareholder. The company shall within 14  days of receipt of the notice or of becoming aware that the person is a  substantial shareholder give notice in writing to the CAC. The duty also  arises where the person ceases to be a substantial shareholder (that is,  his or her shareholding falls below 5 per cent). 

A ‘person with significant control’ is defined as a person: 1 directly or indirectly holding at least 5 per cent of shares or interest  in a company; 

2 directly or indirectly holding at least 5 per cent of the voting rights  in a company; 

3 directly or indirectly holding the right to appoint or remove a  majority of the directors; 

4 who has the right to exercise, or who actually exercises, significant  influence or control over a company; or 

5 who has the right to exercise, or actually exercises, significant  influence or control over the activities of a trust or firm. 

Definition (5) also applies to legal persons that satisfy any of the condi tions (1) to (4). 

Shareholder responsibility 

9 Can shareholders ever be held responsible for the acts or  omissions of the company? 

Shareholders are generally not liable for the acts or omissions or debts  of the company as the liability of shareholders is limited to the amounts  yet to be paid on their shares. In the case of an unlimited company,  the liability of members for the debts of the company is unlimited. The  company is a separate legal personality from its members. However,  the courts may ‘lift the corporate veil’ where a company is a mere sham  or is being used as a tool to perpetuate illegality. A shareholder may  also be liable where, to his or her knowledge, the company operates  with less than two directors. 


10 What role do employees have in corporate governance? 

CAMA provides for the protection of employees who are required to  make disclosures into the affairs of his or her employer to an inspector  appointed to conduct an investigation into that company and makes

provision for compensating such employees in the event that they are  relieved of their employment without any just cause, other than the  disclosure made during the course of the investigation. 

The Central Bank of Nigeria Code and the SEC Code require every  public company to establish whistle-blowing procedures that encourage  staff to report unethical activity or breaches of corporate governance  to the bank and Central Bank of Nigeria, under the CBN Code, and the  company, under the SEC Code. In addition to the provisions of the CBN  Code on whistle-blowing, the CBN Codes for MFBs, DFIs and FCs require  that MFBs, DFIs and FCs submit returns to the CBN on compliance with  the whistle-blowing policy on a semi-annual basis no later than seven  days after the end of the relevant period. The Investment and Securities  Act also makes provision for employees of publicly quoted companies to  report suspected criminal activities or non-compliance with any legal obli gation within the company. The law provides that any such whistle-blower  shall be protected from detriment as a result of his or her actions. Where  he or she suffers any detriment, the Securities and Exchange Commission  may, on his or her complaint, order that the employee be reinstated or  compensated, or both. The CBN Guidelines for Whistle-Blowing in the  Nigerian Banking Industry 2014 provide similar protection for employees  of financial institutions. The Nigerian Code of Corporate Governance is in  tandem with the stipulations of the CBN Code and SEC Code. 

In addition, the managing director and executive directors, as  employees of the company, are responsible for the implementation of  corporate governance policies. 

The PENCOM Whistle-Blowing Guidelines for Pensions (WBGP)  provides that the directors, management, employees and any other  persons that have dealings with a pension fund administrator or a  pension fund custodian shall have the responsibility to report breaches  to PENCOM and requires that all pension fund administrators and  custodians undertake not to victimise employees that comply with the  WBGP. Where victimisation nonetheless occurs, the WBGP provides that  PENCOM shall employ appropriate regulatory tools to offer redress to the  employee concerned. 


Anti-takeover devices 

11 Are anti-takeover devices permitted? 

There are generally no rules prohibiting anti-takeover devices. The direc tors have a duty to act in the best interests of the company in all situations.  Major shareholders of a company may enter into a lock-in arrangement. 

The Investment and Securities Act mandates directors of a target  company to send circulars to members of the target company expressing  their opinion one way or the other on a takeover bid. A dissenting director  can also circulate his or her opinion to the shareholders. 

Issuance of new shares 

12 May the board be permitted to issue new shares without  shareholder approval? Do shareholders have pre-emptive  rights to acquire newly issued shares? 

The power to issue shares is vested in the company. A private company  may delegate this power to the directors, subject to any condition or  direction that may be imposed in the articles or by the company in a  general meeting. 

CAMA provides for the pre-emptive rights of shareholders in a  company and makes it mandatory for a company to offer newly issued  shares to its existing shareholders first. In practice, the articles of a  company usually provide for pre-emptive rights. However, any such  provisions in the articles cannot vary the existing shareholders’ statutory  right of first refusal. 

Restrictions on the transfer of fully paid shares 

13 Are restrictions on the transfer of fully paid shares permitted  and, if so, what restrictions are commonly adopted? 

The transfer of shares of a private company is subject to restric tions as specified in its articles of association. Restrictions commonly  employed include provisions on pre-emptive rights. The right of pre emption gives the other shareholders the first option to buy any shares  a shareholder wishes to sell or transfer. Other restrictions employed  are clauses in a company’s articles giving the board of directors, and,  in some cases, the shareholders, the discretion to refuse to approve  or register a transfer of shares to persons or entities of whom they do  not approve. 

Public companies are expressly precluded from restricting the  transfer of fully paid shares. 

Compulsory repurchase rules 

14 Are compulsory share repurchases allowed? Can they be  made mandatory in certain circumstances? 

A company may only repurchase its shares including irredeemable  shares upon the fulfilment of certain conditions. These conditions are: • if this action is permitted by the company’s articles; • a special resolution is passed by the shareholders approving the  repurchase of the shares; 

  • the shares are fully paid up; 
  • notice of the proposed purchase by the company of its own shares  is published in two national newspapers within seven days of  passing the special resolution; 
  • a statutory declaration of solvency is filed with the CAC within 15  days after the newspaper publication; and 
  • the company would still retain some of its issued shares other than  redeemable shares or shares held as treasury shares. 

A company may only repurchase its shares from certain persons or  channels, including: 

  • existing shareholders or security holders on a proportionate basis; • from the existing shareholders in a manner permitted by a court  sanction in respect of a scheme of arrangement; 
  • from the open market; or 
  • by purchasing the securities issued to employees of the company  pursuant to a scheme of stock option or any other similar scheme. 

CAMA provides that an agreement with a company providing for the  acquisition by a company of its shares is specifically enforceable against  the company to the extent that the company can perform the agree ment without breaching the provisions of CAMA on the repurchasing  of shares. Any public company seeking to repurchase its own shares  is also required to obtain the approval of the Securities and Exchange  

Commission and comply with the SEC Rules and Regulations. Where the shares are to be repurchased by the company, payment  for the shares may only be made from the distributable profits of  the company. 

Dissenters’ rights 

15 Do shareholders have appraisal rights? 

CAMA and the Investment and Securities Act provide that where the  approval of 90 per cent of the shareholders has been obtained, the  shares of the dissenting shareholders (those who have not approved  a scheme of merger, takeover or acquisition) may be acquired, with  notice, at the value agreed by the consenting shareholders except  where the dissenting shareholders apply to a court to have those terms

varied. Aggrieved shareholders may petition the court to make an order  compelling the company to buy them out at a price to be determined by  the court. 


Board structure 

16 Is the predominant board structure for listed companies best  categorised as one-tier or two-tier? 

The board structure for listed companies can best be described as one tier, comprising both executive and non-executive directors. 

Board’s legal responsibilities 

17 What are the board’s primary legal responsibilities? 

The board’s legal responsibilities include directing and managing the  affairs of the company, securing its assets, performing its duties in  the interest of the company and furthering the purposes for which the  company was formed. 

Board obligees 

18 Whom does the board represent and to whom do directors  owe legal duties? 

The board represents the company and owes its duties primarily to  the company. The board is to perform its duties in the interest of the  company and all its shareholders as a whole, and not in the interest of  a specific shareholder or a section of the shareholders. The board is  also to take into consideration the interests of the employees in general  in performing its duties. However, the interests of the company must  always come first, regardless of whether the actions of the board may  adversely affect a shareholder. 

Enforcement action against directors 

19 Can an enforcement action against directors be brought by,  or on behalf of, those to whom duties are owed? Is there a  business judgement rule? 

The directors owe their duty to the company. The company can bring an  action against a director to enforce any duty imposed by law or contract.  A shareholder may bring an action to prevent or

redress a breach of  duty by the directors. 

A shareholder may also, with the leave of court, bring a derivative  action on behalf of the company where the wrongdoers are directors  who are in control and, thus, will not redress the wrong done to the  company. A shareholder may also apply for relief from the court on  the grounds that the affairs of the company are being conducted in an  unfairly prejudicial and oppressive manner. 

Care and prudence 

20 Do the duties of directors include a care or prudence  element? 

The directors of a company owe a duty of care and skill to the company  and are to exercise the degree of care and skill that a reasonably prudent  director would exercise in comparable circumstances. A director is  required to exercise the powers and duties of his or her office honestly,  in good faith and in the best interests of the company. 

Board member duties 

21 To what extent do the duties of individual members of the  board differ? 

The same standard of care in relation to the duties of a director is  expected of all members of the board, including executive and non executive directors. The relationship is a fiduciary one, and directors  are trustees of the company’s assets and are bound to exercise their  powers in the interest of the company. 

However, there may be additional contractual liabilities and bene fits for executive directors under the principles of ‘master and servant’  where there is a contract to that effect. 

Delegation of board responsibilities 

22 To what extent can the board delegate responsibilities to  management, a board committee or board members, or other  persons? 

The board is empowered, subject to any specific provisions in the arti cles to the contrary, to delegate any or all of its powers to a managing  director or to committees made up of members of the board. The  managing director or committee shall, in exercising the responsibili ties delegated to them, conform to any directions or regulations of the  board. However, this delegation should not be done in such a way that  it amounts to an abdication of duty. Even after delegating its powers,  the overall responsibility of directing and managing the affairs of the  company still ultimately lies with the board. 

Non-executive and independent directors 

23 Is there a minimum number of ‘non-executive’ or  ‘independent’ directors required by law, regulation or listing  requirement? If so, what is the definition of ‘non-executive’  and ‘independent’ directors and how do their responsibilities  differ from executive directors? 

Non-executive directors are those whose roles are strictly supervisory  and who do not participate in the day-to-day running of affairs of the  company but are, nevertheless, important members of any board in the  sense that they play a key role in the transparency, integrity and cred 

ibility of the board. An independent director, on the other hand, serves  the function of bringing an objective, unbiased perspective to the board  in carrying out its functions. 

The Companies and Allied Matters Act 2020 (CAMA) and the various  codes that govern specific industries set out different requirements for  the numbers and types of directors of companies operating in those  sectors, and different definitions of ‘independent director’. 


CAMA makes it mandatory for public companies to have at least three  independent directors. It describes an ‘independent director’ as a director  (or whose relatives either separately or together with the director or  each other) during the two years preceding their proposed appointment: 

  • was not an employee of the company; 
  • did not: 
  • make payments to, or receive payments from, the company of  more than 20 million naira; or 
  • directly or indirectly own more than a 30 per cent of shares  or other ownership interest in any entity that the company  made payments to, or received payments from, of more than  20 million naira; or 
  • act as a partner, director or an officer of a partnership or a  company that made payments to, or received payments from,  of more than 20 million naira; 
    • did not own directly or indirectly more than 30 per cent of the  shares of any type or class in the company; and 
    • was not engaged, directly or indirectly, as an auditor for  the company. 
  • The SEC Code The Securities and Exchange Commission Code of Corporate  Governance in Nigeria (the SEC Code) recommends that there be at  least five members of a board, with a mix of both executive and non executive directors, that latter should outnumber the former, and there  should be a minimum of one independent director. The SEC Code describes an independent director as a non-execu tive director who: 
    • is not a substantial shareholder of the company (ie, their share holding, directly or indirectly, does not exceed 0.1 per cent of the  company’s paid-up capital); 
    • is not a representative of a shareholder that has the ability to  control or significantly influence management; 
    • has not been employed by the company or the group of which it  currently forms part, or has not served in any executive capacity in  the company or the group, for the preceding three financial years; 
    • is not a member of the immediate family of an individual who is, or  has been in any of the past three financial years, employed by the  company or the group in an executive capacity; 
    • is not a professional adviser to the company or group, other than in  the capacity of a director; 
    • is not a significant supplier to or customer of the company or group; • has no significant contractual relationship with the company or  group and is free from any business or other relationship that  could materially interfere with his or her capacity to act in an inde pendent manner; and 
    • is not a partner or an executive of the company’s audit firm, internal  audit firm, legal or another consulting firm that has a material  association with the company and has not been a partner or an  executive of any such firm for the three financial years preceding  his or her appointment. 

    The CBN Code 

    The Central Bank of Nigeria Code of Corporate Governance for Banks  and Discount Houses in Nigeria (the CBN Code) provides that the  number of non-executive directors on a bank’s board should exceed the  number of executive directors, and at least two of the non-executive  directors should be independent directors; and that for discount houses  at least one non-executive director should be an independent director. 

    The PENCOM Code 

    The Code of Corporate Governance for Licensed Pension Operators (the  PENCOM Code) provides that the number of non-executive members  (excluding the chair) of a board must equal the number of executive  directors, and at least one non-executive member should be an inde 

    pendent director. It defines an ‘independent director’ as one who has  no relationship with the company, its related companies or officers that  could interfere or be reasonably perceived to interfere with the exercise  of his or her independent business judgement. 

    The NAICOM Code 

    The National Insurance Commission Code of Corporate Governance for  the Insurance Industry in Nigeria (the NAICOM Code) provides that the  board of insurance companies should have a minimum of seven and a  maximum of 15 members, that the maximum number of executive direc 

    tors should not exceed 40 per cent of the board, and there should be at  least one independent director. 

    The NCC and NCCG Codes 

    The Nigerian Communications Commission Code of Corporate  Governance for telecommunication companies (the NCC Code) and the  Nigerian Code of Corporate Governance (the NCCG) also provide that  the number of non-executive directors should exceed the number of  executive directors; however, the NCC Code also requires at least one  non-executive director to be an independent director. 

    Board size and composition 

    24 How is the size of the board determined? Are there minimum  and maximum numbers of seats on the board? Who is  authorised to make appointments to fill vacancies on the  board or newly created directorships? Are there criteria  that individual directors or the board as a whole must fulfil?  Are there any disclosure requirements relating to board  composition? 

    Qualifying for a directorship 

    Generally, persons of unsound mind, under the age of 18, previously  convicted of fraud or breach of duty in connection with the promotion,  formation or management of a company, and insolvent persons are  statutorily disqualified from being directors. 

    There is no restriction on the nationality of directors. Non-Nigerian  citizens are permitted to be directors. Aside from the NCCG and the  NCC Codes, there are no gender requirements for the composition  of boards. 

    A person over 70 years of age, who is or is to be appointed as a  director in a public company, is required to disclose his or her age to  the members of the company in a general meeting. Failure to do so  amounts to an offence under the CAMA. Special notice of the resolution  approving or appointing such a director must be given by the company  to its members, disclosing the age of the director. 

    An appointee to the board of a public company is also expected  to disclose his or her membership of boards of other companies to  enable the shareholders to give full consideration to his or her other  obligations and commitments in determining his or her suitability to be  a board member. 

    However, additional criteria are contained in the various Codes that  govern specific industries, as can specific company’s by-laws and arti cles. For example, a company may, by its articles, require that directors  hold a specified number of shares. A director who fails to obtain their  share qualification within two months of appointment must vacate his or  her office until he or she obtains the shareholding qualification. 

    The PENCOM Code provides that a director of a pension fund  administrator must not be a director, an employee, a principal officer or  a shareholder in a pension fund custodian with which the pension fund  administrator conducts business. 

    The regulations and guidelines governing certain industries may  require managing directors and key management operating in these  areas to have specific qualifications. 

    The SEC Code permits public companies to form governance or  remuneration committees, the function of which is to establish the  criteria for board and board committee membership and to periodi cally evaluate the skills, knowledge and experience required to sit on  the board. 

    The CBN Code prescribes that members of the board shall be  qualified persons of proven integrity and be knowledgeable in business  and financial matters, in accordance with the extant CBN Assessment  Criteria for Approved Persons’ Regime for Financial Institutions. This  is the same position in the CBN Codes for microfinance Banks (MFBs),  development finance institutions (DFIs) and finance companies (FCs). 

    The NAICOM Code also emphasises competence and integrity.

    Composition of boards of directors 

    CAMA requires every company that is not a small company (which can  only have one director) to have a minimum of two directors at all times  but does not state a maximum number of directors. However, it does  provide that the number of directors shall be determined in writing  by the subscribers of the company’s memorandum of association, or  a majority of them with the power of the shareholders at a general  meeting to increase or reduce the board. 

    The laws and regulations governing particular industries also set a  minimum and a maximum number of board seats: 

    • The CBN Code prescribes a minimum and maximum board size of  five and 20 directors respectively. 
    • The SEC Code prescribes a minimum of five directors and directs  that the board of a company be of a sufficient size relative to the  scale and complexity of the operations of the company. 
    • The NAICOM Code prescribes a minimum of seven and a maximum  of 15 board members for insurance companies. 
    • The PENCOM Code prescribes that the board of a company shall  not exceed a size that will allow it to employ simple and effective  methods of work to enable each director to feel a personal respon sibility and commitment to the company, and the board must take  into account the scope and nature of the company’s operations. • The NCC Code requires: 
    • that the composition of a board includes a mix of skills, diver sity, experience and genders; 
    • that the number of directors should reflect the scale, size,  complexity and reach of the business of the company; 
    • that the skills and resource requirements of the company  have to be taken into consideration; 
      • a majority of the board to be non-executive directors; • at least one independent director must hold, directly or  indirectly, no more than 0.1 per cent of a shareholding in  the company; 
      • one-third of the non-executive directors retire each year by  rotation, subject to reappointment; and 
      • non-executive directors should not remain on the board of  larger companies for a continuous period in excess of 15 years. • The NCCG does not provide for a minimum or a maximum number  of directors, but recommends that a board be of sufficient size to  effectively undertake and fulfil its business (ie, overseeing, moni toring, directing and controlling the company’s activities) and be  relative to the scale and complexity of the company’s operations.  However, it does require a board to have at least one independent  director, who may hold, directly or indirectly, no more than 0.1 per  cent of a shareholding in the company. 

      The CBN Code for MFBs requires the following of MFBs’ boards. • Unit MFB boards: 

      • must have a minimum of five and a maximum of  seven members; 
      • including at least one independent non-executive director  (INED); and 
      • the managing director or chief executive must be the only  executive director. 
      • State MFB boards: 
      • must have a minimum of five and a maximum of nine  members, including: 
      • at least one INED, if there are five or six members; or • at least two INEDs, if there are seven members. 
      • National MFB boards: 
      • must have a minimum of seven and a maximum of 12 members; • including at least two INEDs. 

      The CBN Code for DFIs requires that a board of a DFI: 

      • has a minimum of seven and a maximum of 11 members; or • be in accordance with the law establishing the institution; and • that the board of any FC be limited to a minimum of five and a  maximum of nine members. 

      The CBN Codes for MFBs, DFIs and FCs also provide that: • no more than two members of a family can be on the board at the  same time (‘family’ includes a director’s spouse, parents, children,  siblings, cousins, uncles, aunts, nephews, nieces and in-laws); and • a board must be constituted in such a way that the number of non executive directors exceeds the number of executive directors. 

      Filling vacancies 

      Vacancies on a board may be filled by the shareholders of a company  during a general meeting. 

      A board of directors is also empowered to appoint new directors  to fill casual vacancies created by death, resignation, retirement or  removal of a director. These appointments are, however, subject to rati fication by the shareholders at the next general meeting. 

      Board leadership 

      25 Is there any law, regulation, listing requirement or practice  that requires the separation of the functions of board chair  and CEO? If flexibility on board leadership is allowed, what  is generally recognised as best practice and what is the  

      common practice? 

      While the role of the chief executive is to see to the day-to-day running  and management of the company, the chair’s role is to provide overall  leadership, direction and supervision of the board. The separation of the  roles of board chair and CEO is considered best practice. 

      CAMA provides that the chair of a public company must not  act as the chief executive of such a company. A similar restriction  exists in NCCG. 

      The SEC Code recommends that the board of a company should  not be dominated by any one person, and the positions of chair and CEO  should be separate and held by different individuals. In addition, the  chair should be a non-executive director to ensure the effective opera 

      tion of the board. 

      The CBN Code (including the Codes for MFBs, DFIs and FCs) and  the NAICOM Code state that no single person shall hold or combine the  office of chair of the board and CEO or managing director. The CBN Code  further provides that no executive vice-chair shall be recognised in the  board structure. 

      The PENCOM Code, the NCCG and the NCC Code also require  the position of chair of the board and CEO to be occupied by separate  individuals. 

      Board committees 

      26 What board committees are mandatory? What board  committees are allowed? Are there mandatory requirements  for committee composition? 

      Audit committees 

      Every public company is required to set up an audit committee of five  members comprising of three members and two non-executive direc tors. Members of an audit committee are not entitled to remuneration  and are subject to re-election annually. The functions of an audit  committee include: 

      • ascertaining whether the accounting and reporting policies of the  company are in accordance with legal requirements and agreed  ethical practices; 
        • reviewing the scope and planning of audit requirements; • reviewing the findings on management matters in conjunction with  the external auditor and departmental responses thereon; • keeping under review the effectiveness of the company’s system of  accounting and control; 
        • making recommendations to the board regarding the appoint ment, removal and remuneration of the external auditors of the  company; and 
        • authorising the internal auditor to carry out investigations into any  activities of the company that may be of interest or concern to the  committee. 
      • The various corporate governance codes require that members of the  audit committee should be able to read and understand basic finan cial statements and be in a position to make valuable contributions to  the committee, and the SEC and CBN Codes provide that at least one  member of this committee should be financially literate. The SEC Code  further provides that, when necessary, external professional advice may  be sought by the committee. Risk management and governance or remuneration committees In addition to an audit committee, the SEC Code permits the board of  a public company is to establish a riskmanagement committee and a  governance or remuneration committee. The risk management committee assists in the overseeing of the  risk profile and the risk management framework to be determined by  the board. 

        The governance or remuneration committee periodically evalu ates the skills and experience required of the individual members of  the board and the board as a whole and makes recommendations on  the compensation structure for the executive directors of the company. 

        Committees under the CBN Codes 

        The CBN Code also directs banks and discount houses in Nigeria to  establish committees responsible for overseeing risk management and  auditing (it provides that these functions may be carried out by one  committee, particularly in small institutions), and a board governance  and nominations committee. 

        The Code proscribes the chair of a board from being a member  or chair of any committee, and provides that board committees must  be headed by non-executive directors; a board remuneration committee  must have at least two non-executive directors; and a board audit  committee must have at least three members, consist only of non-exec 

        utive directors, and be headed by an independent director. The CBN Codes for MFBs, DFIs and FCs maintain the same posi tions as the main CBN Code, but make no provisions for the composition  of remuneration committees and provide for an additional committee:  the board credit committee. The Codes for MFBs and FCs merely state  that this committee must be comprised of members knowledgeable in  credit analysis. 

        The Codes for MFBs and FCs require all board committees to have  their charters approved and reviewed every three years, or from time to  time as determined by the Central Bank of Nigeria (CBN). The CBN Code  and the CBN Code for DFIs merely state that each board committee  must have a charter that is approved by the CBN. 

        Finally, the Codes for MFBs and FCs provide that a board may  not replace members of the board audit committee and a company’s  external auditors at the same time. 

        Committees under the PENCOM Code 

        The PENCOM Code requires pension fund administrators and pension  fund custodians to constitute nominating committees, the duty of which  is to make recommendations to the board on all board appointments.  

        This committee must consist of three directors, including the chair of  the board and an independent director. 

        Committees under the NCCG 

        The NCCG recommends establishing the same committees provided by  the CBN Code, and also provides that when appointing members of the  board committees, there should be a balanced distribution of power so  that no individual has the ability to dominate decision-making and undue  reliance is not placed on any individual; that each committee should be  comprised of at least three members; and individual committee char 

        ters should indicate if they require INEDs. 

        It is common practice among quoted companies to have various  board committees assist the board in administering the affairs of these  companies and strengthening corporate governance. These commit tees, which may be known by different names in different companies,  include nomination committees, general-purpose committees,  remuneration or compensation committees, risk assessment commit tees, strategy committees, and corporate governance and finance  committees. 

        Board meetings 

        27 Is a minimum or set number of board meetings per year  required by law, regulation or listing requirement? 

        There are no statutory minimum requirements on the number of board  meetings per year. However, directors are required to meet no later  than six months after the incorporation of the company. The directors  may otherwise regulate their meetings. 

        The PENCOM, CBN, SEC and NCC Codes, the NCCG, and the CBN  Codes for MFBs, DFIs and FCs recommend that board meetings be held  at least quarterly in each financial year. The NAICOM Code provides that  the board should meet not less than four times a year. 

        Board practices 

        28 Is disclosure of board practices required by law, regulation or  listing requirement? 


        CAMA provides that, where a director presents him or herself for  re-election, a record of his or her attendance at meetings of the board  during the preceding year must be made available to members at the  general meeting where he or she is to be re-elected. Where a person  to be appointed or re-elected as a director is 70 years old or older, a  notice of his or her election or re-election must disclose their age to the  shareholders. 

        The CBN Codes 

        The CBN Code and the CBN Codes for MFBs, DFIs and FCs require the  board to disclose the total number of board meetings held in the finan cial year and attendance by each director in its annual report. 

        The CBN Code also provides that members of the board be  appraised by an independent consultant annually on all aspects of the  board’s structure, composition, responsibilities, processes and relation ships, and the report of the independent consultant must be presented  to the shareholders in the general meeting and to the CBN. 

        The CBN Codes for MFBs and FCs further provide that a copy of the  annual board appraisal conducted by the independent consultant must  be forwarded to the CBN no later than 31 March of the following year. 

        The SEC Code 

        The SEC Code provides that the board of a public company must include  a corporate governance report in its annual reports, to be circulated to  members and the regulatory authorities.

        The report may contain information on the composition and  responsibilities of board committees and records of attendance at board  and shareholders’ meetings by directors during the period covered by  the annual report; however, the SEC Code provides that the company’s  annual report ought to make sufficient disclosures on its accounting  and risk management issues, indicating the board’s responsibility for  the process of risk management and its opinion on the effectiveness of  the process. 

        Public companies must also disclose the details of any director’s  interests in contracts with the company, its subsidiaries or holding  companies, and should also disclose any service contracts and any  other significant contracts with controlling shareholders.

        A company’s directors are required to disclose: 

        • their shareholdings in the company; 
        • loans made by the company to the director; 
        • the director’s interests in any contract involving the company; and • any conflicts of interest in relation to the company. 

        The SEC Code also requires directors to disclose any directorships in  other companies, so that the members of the company can take a direc tor’s other responsibilities into consideration when assessing his or her  suitability as a director. 

        The NCCG has similar provisions to the SEC Code. 

        Board and director evaluations 

        29 Is there any law, regulation, listing requirement or practice  that requires evaluation of the board, its committees or  individual directors? How regularly are such evaluations  conducted and by whom? What do companies disclose in  relation to such evaluations? 

        The NCC Code 

        Under the NCC Code, the board is required to establish a system for  periodic evaluation of its own performance and that of its committees,  chair, chairs of its committees, and individual directors. This should be  done at least annually. 

        A statement of evaluation must be included in a company’s annual  returns, stating whether an evaluation had been conducted during the  period under the review. The evaluation must be an objective and inde pendent process. 

        The appraisal of the chief executive is done by the board, or a  committee of the board made up of non-executive directors. 

        The SEC Code 

        The SEC Code requires a board to establish a system to annually  undertake a rigorous evaluation of its own performance and that of its  committees, chair and individual directors. The board may engage the  services of external consultants to facilitate the evaluation. 

        The chair oversees the evaluation of the CEO’s performance, while  the CEO oversees the executive directors’ evaluations. The results of the  evaluations must be communicated to and discussed by the board as a  whole, while the chair must communicate and discuss the evaluation of  the independent directors with them. The results are used as a guide  for re-election. 

        The SEC Code recommends providing training for any director  whose performance is found to be unsatisfactory or their removal from  office if this is not feasible. 

        The PENCOM Code 

        The PENCOM Code has similar provisions to the SEC and NCC Codes,  but also requires that copies of the evaluations are submitted to the  Pension Commission and are included in the company’s annual corpo rate governance report. 

        Under the PENCOM Code, the evaluation should answer ques tions such as: 

        • how well the board performed against any performance objectives  that have been set; 
        • what the board’s contribution to the testing and development of the  strategy has been; 
        • whether the composition of the board and its committees is appro priate with the right mix of knowledge and skills to maximise  performance in the light of future strategy; 
        • if the board responded to any problems or crises that have emerged  and whether these could have been foreseen; 
        • how well the board communicates with the management team,  company employees and others; 
        • how effectively the board uses mechanisms such as the annual  general meeting; 
        • whether the board as a whole is up to date with the latest develop ments in the regulatory environment and the market; 
        • whether sufficient board and committee meetings of appropriate  length are held to enable proper consideration of issues; and • whether board procedures are conducive to effective performance  and flexible enough to deal with all eventualities. 

        The CBN Codes 

        The CBN Code requires an annual formal assessment of the effective ness of the board as a whole, and the contributions of each individual  director (including the chair) to the effectiveness of the board. 

        The nomination committee recommends an evaluation procedure  and proposes objective performance criteria, which are then approved  by the board. The issues evaluated should include: 

        • individual directors’: 
        • attendance at meetings; 
        • contributions to discussions at board meetings and board  committee meetings; 
        • business referrals or other support they provide to the  institution; 
        • their public standing; and 
        • the effects of their standing on the institution’s business; and • the institution’s: 
        • compliance status; 
        • overall performance; 
        • regularity of board meetings; and 
        • the overall contribution of the board to the institution’s  performance. 

        The CBN Codes for MFBs and FCs provide that an independent  consultant must annually appraise board members on all aspects of  the board’s structure, composition, responsibilities, processes and rela tionships. This report must be presented to shareholders in a general  meeting and also forwarded to the CBN no later than 31 March of the  following year. 

        The NCCG 

        The NCCG provides that a board must establish a system to undertake  a formal and rigorous evaluation of its own performance and that of its  committees, chair and individual directors, facilitated by an independent  external consultant, at least once every three years. 



        Remuneration of directors 

        30 How is remuneration of directors determined? Is there any  law, regulation, listing requirement or practice that affects  the remuneration of directors, the length of directors’  service contracts, loans to directors or other transactions or  compensatory arrangements between the company and any  director? 

        Remuneration of directors 

        The Companies and Allied Matters Act 2020 (CAMA) provides that the  remuneration of directors should be determined by the company in a  general meeting. 

        The Securities and Exchange Commission Code of Corporate  Governance in Nigeria (the SEC Code) provides that the remunera tion of executive directors should be set by a remuneration committee  consisting wholly of non-executive directors. It also provides that the  remuneration for non-executive directors should be fixed by the board  and approved by the members in a general meeting and that, where  share options are granted as part of the remuneration for directors, the  board should ensure that they are not priced at a discount except with  the approval of the Securities and Exchange Commission. 

        The Central Bank of Nigeria Code of Corporate Governance for  Banks and Discount Houses in Nigeria (the CBN Code) also requires  the remuneration of directors to be fixed by a committee composed  of non-executive directors, and the remuneration for non-executive  directors should be strictly limited to directors’ fees, sitting allowances  for board and board committee meetings and reimbursable travel and  hotel expenses. Executive directors do not receive sitting allowances  and directors’ fees. 

        The CBN Code further provides that stock options offered as  part of executive remuneration shall be tied to performance subject  to the approval of shareholders in general meeting, may only be exer cisable after one year of the expiry of the director’s tenure and may  only be priced at a discount on the authorisation of relevant regula tory agencies. 

        The CBN Code of Corporate Governance for Microfinance  Banks (MFBs) in Nigeria, the CBN Code of Corporate Governance for  Development Finance Institutions (DFIs) in Nigeria, the CBN Code of  Corporate Governance for Finance Companies (FCs) in Nigeria, and the  Financial Reporting Council of Nigeria Code of Corporate Governance  maintain the same position with the CBN Code in these respects. 

        The remuneration of each director should be proportionate to his  or her skill and experience and should be sufficient to attract, motivate  and retain skilled and qualified persons. The remuneration of directors  is to be disclosed in the yearly financial statements of the company. 

        Tenures of directors 

        The CBN’s guidelines for the appointment of independent directors  restricts the term of office of independent directors to a single term of  four years and a maximum of eight years for two consecutive terms.  The tenures of other non-executive directors are limited to a maximum  of three terms of four years each. The CBN Code allows a chief execu 

        tive of a bank to hold a tenure of 10 years, which may be broken down  into periods not exceeding five years at a time. 

        CAMA discourages directors’ service contracts beyond a five-year  term and provides that a service contract for a term beyond five years  is executed must be approved by a resolution of the company before  being executed. 

        The SEC Code, while subjecting the tenure of directors to the  provisions of CAMA, recommends that all directors be submitted for  re-election at regular intervals of at least once every three years. It  

        also provides that non-executive directors of public companies should  serve for reasonable periods on the board, but emphasises the neces sity to continually reinforce the board by injecting new energy, fresh  ideas and perspective and that the board should ensure the peri odic appointment of new directors to replace existing non-executive  directors. 

        Company loans to directors 

        Companies are prohibited from making loans to directors and are also  not allowed to guarantee such loans. However, CAMA provides two  exceptions: loans to enhance the performance of the director’s duties  in the company, and where money lending is one of the company’s  ordinary businesses and the lending is done in the ordinary course  of business. 

        In addition, substantial property transactions between a company  and its directors are prohibited, unless approval is granted by the  company by way of an ordinary resolution at a general meeting. 

        If a director is in any way, whether directly or indirectly, inter ested in a contract or proposed contract with the company, he or she  is required to declare the nature of his or her interest at a meeting of  the board. 

        Banks are also required to disclose details of insider-related  credits in their financial statements. These insider-related credits  include transactions involving directors, shareholders and employees  and their related interests. 

        Consideration payments 

        CAMA makes it unlawful for a company to make payment to a director  as compensation for loss of office or as consideration for, or in connec tion with, his or her retirement from office unless particulars of the  proposed payment and amount have been disclosed to the members of  the company and approved. 

        Under CAMA, members’ approval is also required for compensa tory payments to be made where, in connection with the transfer of  the whole or part of the undertaking or property of a company, it is  proposed to make any payment to a director as compensation for loss  of office or as consideration for, or in connection with, his or her retire ment from office. 

        Remuneration of senior management 

        31 How is the remuneration of the most senior management  determined? Is there any law, regulation, listing requirement  or practice that affects the remuneration of senior  managers, loans to senior managers or other transactions  or compensatory arrangements between the company and  senior managers? 

        The remuneration of the managing director is determined by the board. Companies are prohibited from making loans to directors and are  also not allowed to guarantee such loans. However, CAMA provides  two exceptions: loans to enhance the performance of the director’s  duties in the company, and where money lending is one of the compa ny’s ordinary businesses and the lending is done in the ordinary course  of business. 

        The Central Bank of Nigeria requires banks to disclose details  of insider-related credits, including the aggregate amount of insider related loans, advances and leases outstanding with non-performing  components further analysed, examining the security, maturity, perfor mance, provision, interest-in-suspense and names of borrowers in  their financial statements. 


        32 Do shareholders have an advisory or other vote regarding  remuneration of directors and senior management? How  frequently may they vote? 

        Shareholders have a direct say in directors’ remuneration. CAMA  provides that directors’ remuneration should be determined by the  shareholders in a general meeting. Such votes take place at the annual  general meeting of a company. However, the board fixes the remunera 

        tion of executive directors. The Financial Reporting Council of Nigeria  and the SEC and CBN Codes stipulate that only the non-executive direc tors should be involved in decisions regarding the remuneration of  executive directors. 


        D&O liability insurance 

        33 Is directors’ and officers’ liability insurance permitted or  common practice? Can the company pay the premiums? 

        Directors’ and officers’ liability insurance is permitted. It is not common  practice for companies to take out this insurance, though some compa nies, in keeping with international best practices, take out liability  insurance for their directors and officers. 

        Indemnification of directors and officers 

        34 Are there any constraints on the company indemnifying  directors and officers in respect of liabilities incurred in their  professional capacity? If not, are such indemnities common? 

        Companies are permitted to indemnify their directors and officers for  liabilities incurred in their capacities as directors and officers of the  company, except in cases of negligence, fraud or breach of trust in rela tion to the company. 

        Advancement of expenses to directors and officers 35 To what extent may companies advance expenses to directors  and officers in connection with litigation or other proceedings  against them or in which they will be a witness? 

        There are no specific provisions or statutory or regulatory restrictions  on advancing expenses to directors or officers of a company in connec tion with litigation or similar proceedings where they are witnesses. The  Companies and Allied Matters Act 2020 permits companies to pay direc tors all expenses incurred in connection with the business of a company.  Therefore, arrangements for the payment of these expenses may be  made contractually or be part of the policy of a company. 

        Exculpation of directors and officers 

        36 To what extent may companies or shareholders preclude or  limit the liability of directors and officers? 

        A company may ratify the act of an officer or director even where such  an act or conduct is irregular. The company may also, by its articles  (or by the director’s contracts of service), limit the liability of a director  except in cases of negligence, fraud or breach of trust of which a director  or officer may be guilty in relation to the company. 

        Further, a company may also provide that the liability of a director  must be unlimited, regardless of the fact that the company itself is a  limited liability company, provided that the director is given notice before  he or she takes up the appointment that his or her liability shall be  unlimited. The company may also, by special resolution, amend its memo 

        randum so as to render the liability of its directors or managers unlimited. 


        Corporate charter and by-laws 

        37 Are the corporate charter and by-laws of companies publicly  available? If so, where? 

        The memorandum and articles of association and other statutory  filings of companies are available to the public at the Corporate Affairs  Commission. Copies can be obtained upon application and are subject to  the payment of prescribed fees. 

        Company information 

        38 What information must companies publicly disclose? How  often must disclosure be made? 

        Annual reports and accounts consisting of the directors’ report, audi tor’s report and financial statements must be filed with the Corporate  Affairs Commission after every annual general meeting of a company.  These documents can be accessed by the general public upon payment  of the requisite fee. 

        Other information filed with the Corporate Affairs Commission,  which is available to the public, includes any changes in the composi tion of the board of directors, return of allotment of shares, change of  registered address, charges on the company’s assets, the appointment  of receivers or liquidators, etc. Outside the statutory requirements,  companies are encouraged to also include corporate governance  reports laying out the company’s governance structure, policies and  practices in their annual reports. 

        Quoted companies are required to make certain disclosures to the  Nigerian Stock Exchange and the Securities and Exchange Commission  from time to time. These disclosures include: 

        • information on acquisitions of other companies or businesses; • preliminary results for any year, half-year or quarter and compara tive figures in respect of the profits before and after taxation, even  if this calls for the qualification that these figures are provisional  or subject to auditing; 
        • information on any proposed changes in the capital structure of the  company or redemption of securities; 
        • financial statements; and 
        • interim reports, such as first quarter, half-year and nine month accounts. 

        In addition, the annual reports must disclose, among other things, the  directors’ direct and indirect holdings in the issued shares, substan tial shareholdings representing 5 per cent or more of issued shares  and a five-year financial summary. The Central Bank of Nigeria Code of  Corporate Governance for Banks and Discount Houses in Nigeria and the  Securities and Exchange Commission Code of Corporate Governance in  Nigeria also require a board to disclose its risk management policy in  its

        annual report, and the Nigerian Code of Corporate Governance also  prescribes including a statement on a company’s environmental, social  and governance activities in its corporate governance report. 

        HOT TOPICS 

        Shareholder-nominated directors 

        39 Do shareholders have the ability to nominate directors and  have them included in shareholder meeting materials that  are prepared and distributed at the company’s expense? 

        Shareholders can nominate a director to be appointed to the board at  the general meeting. The law states that a motion for nomination will be  treated as a motion for his or her appointment. 

        A member may leave a signed notice in writing of his or her  intention to propose a person for election to the office of a director in  the place of a retiring director at a general meeting at the registered  address of a company. The notice must be given no less than three days  and no more than 21 days before the date appointed for the meeting and  must be accompanied by a notice in writing signed by that person of his  or her willingness to be elected. 

        One or more members representing no less than 5 per cent of the  total voting rights of members entitled to vote at a general meeting, or  100 or more members holding shares on which there has been paid up  an average sum per member of at least 500 naira, may requisition the  company to circulate notice of a resolution they intend to be moved at a  general meeting. The proposed resolution can suggest the appointment  of a new director. 

        The company has a duty to give notice of the resolution to members  entitled to receive notice of the next annual general meeting when the  resolution is intended to be moved. The notice of the resolution shall be  given in the same manner and, so far as practicable, at the same time  as the notice of the meeting; where not practicable, notice shall be given  soon thereafter. The company is, however, not bound to give notice of  any requisition unless a duly signed copy is deposited at the registered  address of the company, and a sum is deposited or tendered that is  reasonably sufficient to meet the company’s expenses in giving effect  to it. The company may also decide to bear the expenses of circulating  notice of the proposed resolution. 

        Shareholder engagement 

        40 Do companies engage with shareholders? If so, who typically  participates in the company’s engagement efforts and when  does engagement typically occur? 

        The process of engaging with the shareholders is typically led by the  directors and senior management of the company. Generally, compa nies engage with their shareholders by holding general meetings. It is  usual for directors, senior management, external counsel, auditors and  other specialists or consultants engaged in relation to matters to be  discussed or decided during a general meeting of the company to be  involved in these engagements. Some quoted companies also organise  pre-annual general meeting forums or dinners for directors, manage 

        ment, investors and major customers, etc, to interact. 

        The Securities and Exchange Commission Code of Corporate  Governance in Nigeria (the SEC Code) provides that the general meet ings of a company should be the primary avenue for meeting and  interaction between the shareholders, management and board of a  company. It further requires that general meetings should be conducted  in an open manner allowing for free discussions on all issues on the  agenda such that sufficient time is allocated to shareholders to partici pate fully and contribute effectively at the meetings. 

        The NAICOM Code of Corporate Governance for the Insurance  Industry in Nigeria provides that directors should always communicate  information that is understandable and accessible to shareholders in a  timely manner and on a regular basis and encourage shareholders to  participate in annual general meetings. 

        Under the Central Bank of Nigeria Code of Corporate Governance  for Banks and Discount Houses in Nigeria (the CBN Code), banks are  encouraged to communicate with their shareholders via their websites.  Information to be provided through this means shall include major  developments in the bank, risk management practices, executive  compensation, local and offshore branch expansions, the establishment  of investment in subsidiaries and associates, board and top manage ment appointments, and sustainability initiatives and practices. 

        The CBN Code of Corporate Governance for Microfinance Banks  in Nigeria, the CBN Code of Corporate Governance for Development  

        Finance Institutions in Nigeria, the CBN Code of Corporate Governance  for Finance Companies in Nigeria maintain the same position as the CBN  Code. However, they add that the operators are encouraged to commu nicate with shareholders via the website, newsletters, annual general  meetings and extraordinary general meetings. 

        The Nigerian Code of Corporate Governance provides that the  board should develop a policy that ensures appropriate engagement  with shareholders. The policy should be posted on the company website. 

        The Nigerian Communications Commission Code of Corporate  Governance for telecommunication companies provides that there  should be dialogue and engagement between the board and share holders to align appreciation and attain a mutual understanding of the  corporate objectives of telecoms companies. 

        Sustainability disclosure 

        41 Are companies required to provide disclosure with respect to  corporate social responsibility matters? 

        While some of the codes encourage corporate social responsibility, they  do not all have specific disclosure requirements. 

        The SEC Code requires companies to pay attention to the interests  of their employees, host community, consumers and the general public.  It further requires that companies demonstrate sensitivity to local social  and cultural diversity issues, and mandates that the board report annu 

        ally on the nature and extent of its social, ethical, safety, health and  environmental policies and practices, including the application of options  with the most benefit or least damage to the environment, opportunities  created for physically challenged persons or disadvantaged individuals,  the nature and extent of the company’s social investment policy, and the  company’s policies on corruption and related issues. 

        The CBN Code requires that banks demonstrate a good sense  of corporate social responsibility to their customers, employees, host  communities and the general public, and

        encourages banks to make  robust disclosures beyond the statutory requirements of the Companies  and Allied Matters Act 2020 and the Banks and Other Financial  Institutions Act. 

        The Nigerian Code of Corporate Governance requires highlights  of sustainability policies and programmes covering social issues, such  as corruption, community service (including environmental protec tion, serious diseases and matters of general environmental), social  and governance initiatives, to be included in the corporate governance  report in the company’s annual report. 

        CEO pay ratio disclosure 

        42 Are companies required to disclose the ‘pay ratio’ between  the CEO’s annual total compensation and the annual total  compensation of other workers? 

        There is no direct requirement to disclose the pay ratio between  CEOs and other employees of companies. However, various codes of  corporate governance require that companies disclose their remunera tion policies. 

        Gender pay gap disclosure 

        43 Are companies required to disclose ‘gender pay gap’  information? If so, how is the gender pay gap measured? 

        The various corporate governance codes or regulations have no require ment for disclosure of information on the gender pay gap. The SEC Code  requires that companies report annually on the nature and extent of  employment equity and gender policies and practices, especially as they  relate to executive-level opportunities.


        Recent developments 

        44 Identify any new developments in corporate governance over  

        the past year. Identify any significant trends in the issues that  

        have been the focus of shareholder interest or activism over  

        the past year. 

        On 7 August 2020, President Muhammadu Buhari assented to the  Companies and Allied Matters Act 2020 (CAMA 2020), which repealed  and replaced the Companies and Allied Matters Act 1990. CAMA 2020  seeks to provide for global best practice in doing business and enhancing  transparency and shareholder engagement by, among other things,  permitting the incorporation of a private company by one person, accept 

        ance of electronic filings, virtual meetings, requiring the disclosure of  the beneficiary of shares held in trust in the memorandum of association  and providing mechanisms for identifying persons interested in shares. 

        The Financial Reporting Council of Nigeria issued Audit Regulations  2020 which came into force on 25 January 2021. The Regulations are  aimed at providing a regulatory framework for auditors in Nigeria and  ensure that the activities of auditors, audit committee members and other  assurance service providers are regulated with a view to sustaining best  ethical practices capable of promoting quality audit services. The regula 

        tions are to be applied in conjunction with applicable laws, codes, rules,  standards, guidelines and requirements in relation to audit in Nigeria. 


        45 What emergency legislation, relief programmes and other  initiatives specific to your practice area has your state  implemented to address the pandemic? Have any existing  government programmes, laws or regulations been amended  to address these concerns? What best practices are advisable  for clients? 

        The Nigerian Stock Exchange (NSE) identified the legal and regulatory  uncertainties that Nigerian businesses may face regarding convening  virtual meetings, particularly in the wake of current economic and social  constraints precipitated by the covid-19 pandemic, which underscore the  need for companies to adopt a more practical style of holding meetings.  As a result of this, the Nigerian Stock Exchange issued the Guidance on  Companies’ Virtual Board, Committee and Management Meetings (NSE  Guidance). 

        The NSE Guidance advises listed companies to put in place precau tionary measures to ensure the safety of all stakeholders during their  annual general meetings and addresses virtual participation for the  following meeting scenarios: 

        • board, committee and management meetings and briefings that  require online presentations; 
        • board, committee or management meetings with some members  physically present at the meeting venue, and others participating  virtually; and 
        • board, committee or management meetings where all members are  participating virtually. 

        To accommodate the emerging issues arising from the pandemic, the  NSE undertook the following measures: 

        • on 23 March 2020, it granted listed companies a 60-day grace period  for submitting their audited financial statements for the year ending  31 December 2019, extending the deadline to 29 May 2020; 
        • in its circular dated 17 April 2021, it further extended the due date  for the submission of audited financial statements for listed compa nies with 31 March year-end by 60 days, from 29 June 2020 to 28  August 2020; 

        Tamuno Atekebo  

        Otome Okolo  

        Miriam Anozie  

        Feyikemi Fatunmbi 

16D Akin Olugbade Street, Victoria Island Lagos
Block C Terrace 3, CT3, Lobito Crescent, Stallion Estate, Wuse II, Abuja
77B Woji Road, GRA Phase II, Port Harcourt



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