Tuesday, 10 March 2020

WHAT YOU MUST KNOW ABOUT A DIRECTOR OF A COMPANY IN NIGERIA

According to section 244 of the Companies and Allied matters Act of 1990, directors are persons duly appointed by the company to direct and manage the affairs of the company.
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Consequently, directors will include executive, non-executive director and alternate director. Since directors hold a very important position in the operation of companies, the law requires them to possess some vital qualifications and these include the followings:

1. He must be of sane mind: A director must not be an insane person. He must possess a sound mind in order to perform the sacred and important
duties of directors.


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2. He must not hold a criminal record in respect of company operation. A director must not have been convicted of any crime by high court in respect of promotion, formation, management and winding up of company.

3. He must not be bankrupt person. A director must not have been declared a bankrupt or insolvent person. In practice however, this is not so in Nigeria as the law of bankruptcy is not fully operative in Nigeria.


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4. He must be an adult. A director must have attained a legal age of adulthood. In Nigeria, the legal age of adulthood is 18 years.

POWER OF DIRECTORS
The powers of directors in relation to company shall include the following:

1. Power to bind the company: All acts of director done in the course of the company business shall bind the company except it can be proved that
they are ultra vires (not provided by or contrary to) the provision of the memorandum and articles of association of that company.


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2. Power to direct the operation of the company: The directors are in charge of the operation of the company. They make day to day decision for
and on behalf of the company.

DUTIES OF DIRECTORS

Due to the immense power that is vested in directors, the relevant laws assign some duties to them, which they must perform. Failure to perform
these duties will attract some social and legal sanctions

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Basically, the duties of director are in three folds
1. The duty of care and skill.
2. The fiduciary duty
3. Duty to act within the confer of the power of directors

DUTY OF CARE AND SKILL:  Every director shall exercise the power of his office in accordance with the degree of care, diligence, and skill which a
reasonably prudent director would exercise in comparable circumstances.
Failure of director to act in accordance with this duty shall be a ground for an action of negligence against such director. It is important to point that this duty of care and skill is required from both executive and non executive director
Each director shall be also be liable for action of the board in which he participated and absence from the board’s deliberation shall not relieve
such director of such responsibility.

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FIDUCIARY DUTY A company director stands in a fiduciary relationship towards the company. consequently, he must act with utmost good faith towards the company in all transactions.
A company director is therefore expected to

I. Disclose all his interest in respect of any transaction with the company.
II. Not to fetter his discretion to vote a particular way
III. Not to make any secret profit or achieve other unnecessary benefit in the course of the management of the company or in the utilization of
company’s property. He must immediately disclose and account for all secret profit.
IV. Not to accept bribe, gift or commission either in cash or kind from any person or a share in the profit  of that person in respect of any transaction with the company

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DUTY TO ACT WITHIN THE CONFER OF THE POWER OF DIRECTORS: a director shall act within the confer of the power vested by the memorandum and articles of association of the company. A director shall be personally liable for any act done for and on behalf of the company which is outside the
provision of the memorandum and articles of association.

It is therefore important that director should receive training and relevant information about his responsibility immediately he is appointed into the position of a director especially in relation to public
companies.

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A prudent director should regularly consult his solicitor as to his duties and responsibilities especially when in doubt on decision or step the board is about to take


Olatayo Beckley Esq

Areas of Specialization of Beckley Nominees Since 1993
Commercial/Business Law
Company Law and Secretarial Practice
Real Estate Law
Corporate Governance
Tax Management
Criminal Law
Alternative Dispute Resolution
Oil and Gas Law
Banking Law
General Litigation

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