Daily Law Tips (Tip 615) by Onyekachi Umah, Esq., LL.M, ACIArb(UK)
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CAN A COMPANY DIRECTOR BE APPOINTED OR REMOVED ORALLY?
Companies and Allied Matters Act 1990 is the federal law that governs formation, management and dissolution of companies in Nigeria, through a federal agency; the Corporate Affairs Commission (CAC). Once a company is registered it becomes a corporate being (legal being/juristic being) different from its owners (shareholders), directors, workers and agents). A company has some powers, rights and duties of a human being, including human rights. Among the rights that a company cannot have, is the right to vote or be voted for in elections.
In regulating companies, the law mandates and specifies the procedures and process for appointment, resignation and removal of directors of a company in Nigeria. As will be shown later, every appointment or removal of a director must be written and filed at the CAC.
A director of a company is a person appointed by a company to direct and manage the business and affairs of the company. Directors of a company are the eyes, mouths, hands and legs of the company through which the company operates. Every company must have at least two directors at all times. Where the number of directors falls below 2, then the company must appoint another director within 1 month and shall not continue business unless such appointment is made.
The first directors of a company (directors at the time of incorporation) must be appointed by the shareholders, their number and names must be put into writing. Subsequent appointments of new directors, re-elections or rejection of old directors must be at a general meeting of shareholders of the company through resolutions. The decisions of companies come in the form of resolutions passed at a general meeting of shareholders. In private companies, a written resolution signed by all shareholders that are eligible to attend and vote in a general meeting will be valid, as if the resolution was made in a general meeting.
Resolutions must be written and submitted so that their notices are circulated to shareholders ahead of a general meeting. Furthermore, printed copies of resolutions and agreements of a company must be sent and filed at the CAC within 15 days after the passing or making of the resolution or agreement. Hence, there is no room for oral appointment or removal of a director of a company in Nigeria. Every appointment, removal and decisions of a company must be documented and filed at the CAC.
It is an offence to fail to document and file resolutions at the CAC. It is an offence punishable with fine of Fifty Naira (N50) according to the federal law. However, the CAC presently charges a penalty of Five Thousand Naira (N5, 000.00).
My authorities are:
1. Sections 234, 235, 237(1), 244(1), 246(1), 246(2) and 262 of the Companies and Allied Matters Act, 1990.
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