Unifying Nigeria's Sectoral Corporate Governance Regimes Through A National Code Of Corporate Governance For The Private Sector

“regulated private companies” that are not holding companies or subsidiaries of public companies shall be constituted of five (5) or more directors with three (3) of such directors being non-executive directors (of which a majority shall be independent non-executive directors)[15].

As laudable as this new development may appear, it clearly runs contrary to the provision of Section 246(1) of the Companies and Allied Matters Act (“CAMA”) (Cap. C20, Laws of the Federation of Nigeria 2004)[16], which states that a minimum of two (2) directors at a time, shall constitute the Board of any private company.

Other notable provisions in the Code include:

1. restriction of:

   1. Board membership of family members (including extended family) to not more than two (2) family members[17];

   2. Managing Directors/Chief Executive Officers (“MD/CEO”) of companies assuming office as Chairmen of the same companies where they acted as MD/CEO. Subject to “very exceptional circumstances” a former MD/CEO may assume a Chairman position after a “cool off period” of seven (7) years after holding the position of MD/CEO[18]; and

   3. the Board Chairman from sitting on any Board Committee[19], (except in the case of regulated private companies having a Board size of five (5), where the Chairman may then be a member of the Nomination and Governance Committee and Remuneration Committee, but shall not chair any of the two (2) committees[20]); and

2. the introduction of powers of the Board to appoint and remove the Head of Internal Audit (upon recommendation of the Statutory or Board Audit Committee)[21].

These are clear departures from what was hitherto permissible for the Board.

Also, the tenure of office of the MD/CEO shall no longer exceed two (2) terms of five (5) years each[22]; while that of other Executive Directors and Non-Executive Directors shall be maximum of three (3) terms of four (4) years each[23].

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[15] Section 5.7 of the Code
[16] The primary legislation governing company affairs in Nigeria
[17] Section 5.12 of the Code
[18] Section 6.1.4 of the Code
[19] Section 6.1.9 of the Code
[20] Section 8.7 of the Code
[21] Section 4.7 of the Code
[22] Section 14.3 of the Code
[23] Sections 14.4 & 14.6 of the Code