If you missed our last post on the duties of a director of a Nigerian company, you can check it out here.
Let’s delve into these duties of a Nigerian director.
The first duties we’ll look at are provided in Part IX of CAMA.
They are the duties to observe and perform the provisions of the Articles of Association of the company (Section 41), and the duty to disclose your age (Section 252).
In Nigeria, it is mandatory for directors to observe and perform the provisions of the company’s Memorandum & Articles of Association including all rights and powers conferred by it. This is a strict duty and the Memorandum & Articles of Association is a contract between the company and the directors.
Did you know that your Articles of Association can be amended to contain bespoke provisions on matters affecting the running of the company or the rights and interests of shareholders and directors?
Typical items in the articles of association include the issuing, allotment and transfer of shares, matters reserved strictly for the approval of shareholders, delegated authorities to directors, and even rules for dealing with decision deadlock on the Board.
Because of this duty, shareholders can bring a legal claim against the directors, for a breach.
Note: Directors should take the time, to give careful consideration, to the provisions of the articles of association from the registration of the company (or at any given time), and decide what rights, powers, and duties of should be included or omitted (as clearly as possible).
Section 252 only applies to listed companies, and it requires a director of a listed company to disclose the fact that he/she is aged 70 or above, to the shareholders at a general meeting considering the appointment of the director. This duty carries a criminal offence penalty with a fine if disregarded.
Note: Even though this section places responsibility on the director to disclose his/her age at the general meeting, it is usual (and best) practice for the Company Secretary to request this information from a nominated director, before the appointment. Shareholders will require this sort of information in deciding whether to elect a director and they should have this included in the biography of the director with the notice of the general meeting.
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