Corporate Governance-Directors And secretary

Question 1

What does Corporate Governance deal with?

Answer 1

The mechanism involved in the administration and control of a company.

Indices of good Corporate Governance include fairness, transparency, and accountability.

Question 2

What is the Agency Theory in Corporate Governance?

Answer 2

The theory that shareholders are the principals and directors are the agents of the company, where principals provide funds and agents manage the company.

This theory highlights the relationship between shareholders and directors.

Question 3

What does the Stakeholders Theory suggest?

Answer 3

The company must satisfy various stakeholders, including employees, suppliers, and communities, not just the agents.

It emphasizes creating wealth for all stakeholders.

Question 4

What is the nature of the Code of Corporate Governance 2011 in Nigeria?

Answer 4

Persuasive in nature and not compulsory, promoting transparency, accountability, and fairness.

It includes provisions for shareholders’ rights and corporate social responsibility.

Question 5

What does the Code of Corporate Governance for Banks and Discount Houses provide?

Answer 5

It applies to banks and finance houses, includes whistleblowing provisions, and outlines the composition of the Board of Directors.

Issued by the Central Bank of Nigeria.

Question 6

Who are Directors in a company?

Answer 6

Persons duly appointed to direct and manage the affairs of the company.

They are the policy-making and executive organ of the company.

Question 7

What is the role of Executive Directors?

Answer 7

They are responsible for daily activities and administration of the company, holding both director and employee status.

They typically have a Service Contract with the company.

Question 8

What distinguishes Non-Executive Directors?

Answer 8

They are not employees and do not partake in daily operations, attending board meetings without receiving salaries.

They are reimbursed for out-of-pocket expenses.

Question 9

What is the definition of a Managing Director?

Answer 9

The Executive Director who is the Chief Executive Officer, responsible for all activities of the company.

Combines duties of both executive and non-executive directors.

Question 10

What is an Alternate Director?

Answer 10

A director appointed to take the place of another director in their absence.

Their appointment must be approved by the General Meeting of the company.

Question 11

What is a Shadow Director?

Answer 11

A director not formally appointed, but whose instructions the company follows.

They are deemed removed when their instructions are no longer followed.

Question 12

What is a Nominee Director?

Answer 12

A representative appointed by a company that acts as a director in another company.

This appointment must be for a fixed period.

Question 13

What is a Life Director?

Answer 13

A director appointed for life, exempt from retirement by rotation.

Can be removed if the proper procedure is followed.

Question 14

What defines Casual Directors?

Answer 14

Directors appointed to fill vacancies due to death, resignation, or removal, subject to approval at the next Annual General Meeting.

They serve the unexpired term of the original director.

Question 15

What is the minimum number of directors required for a company?

Answer 15

2 directors.

Maximum number is defined in the company’s articles.

Question 16

What are the disqualifications for becoming a director in Nigeria?

Answer 16

Infants, lunatics, undischarged bankrupts, and fraudulent promoters banned for 10 years.

Disqualification is based on criteria set in the CAMA.

Question 17

What is required for the appointment of first directors?

Answer 17

They are appointed at incorporation, either stated in writing by subscribers or named in the Articles.

This is outlined in S. 272 CAMA.

Question 18

Who can appoint subsequent directors?

Answer 18

Members in a General Meeting, Board of Directors, or personal representatives in certain situations.

Public companies can use unanimous resolutions.

Question 19

What is the age requirement to be appointed as a director?

Answer 19

Must be above 18 years.

Public companies have additional requirements for directors over 70 years.

Question 20

What are the key duties of directors?

Answer 20

• Duty to act in good faith
• Duty of care and skill
• Duty to disclose personal interest
• Duty to avoid conflict of interest
• Duty not to make secret profit
• Duty to keep account books
• Duty to exercise accountability

These duties ensure responsible governance.

Question 21

What remedies are available for breaches of directors’ duties?

Answer 21

• Injunctions
• Damages
• Compensation
• Rescission
• Account for profit
• Summary dismissal

These remedies vary based on the severity of the breach.

Question 22

What happens if a quorum is not formed at a directors’ meeting?

Answer 22

The general meeting may act in place of the board.

This provision is outlined in S. 291 CAMA.

Question 23

What is the notice requirement for directors’ meetings?

Answer 23

Notices must be given 14 days before the meeting, except to disqualified directors.

Failure to give notice invalidates the meeting.

Question 24

What is the exception regarding remuneration for directors?

Answer 24

Directors can be paid out-of-pocket expenses and remuneration can be fixed at the General Meeting.

Managing and Executive Directors are typically remunerated.

Question 25

What grounds can lead to the vacation of a director's office?

Answer 25

* Prohibition on grounds of fraud * Bankruptcy * Insanity * Resignation * Expiration of fixed tenure ## Footnote These grounds are specified in CAMA.

Question 26

What is the requirement for the retirement and rotation of directors?

Answer 26

Directors must retire after a specified period as outlined in the CAMA. ## Footnote This ensures regular renewal of the board.

Question 27

What is the provision for fixing the remuneration of Managing Directors and Executive Directors?

Answer 27

S. 294(3) CAMA ## Footnote This provision outlines how the company can determine the remuneration of its directors.

Question 28

List the grounds on which a Director can cease to occupy their position.

Answer 28

* Prohibition on grounds of fraud * Bankruptcy * Insanity * Resignation * Expiration of fixed tenure by regulatory authority ## Footnote These grounds are specified in the relevant legal framework.

Question 29

What does retirement in the context of directors refer to?

Answer 29

The period when Directors who have been appointed in a company can retire and leave office ## Footnote Retirement is governed by S. 285 CAMA.

Question 30

What is the mode of determining which directors are to retire at a stipulated period?

Answer 30

Rotation ## Footnote This is also outlined in S. 285 CAMA.

Question 31

At the first Annual General Meeting (AGM), what happens to all Directors?

Answer 31

All the Directors of the company shall retire ## Footnote This ensures turnover and refreshment of the board.

Question 32

How many directors retire at subsequent AGMs?

Answer 32

1/3 of the entire number of directors or the nearest whole number if not a multiple of three ## Footnote This ensures a systematic rotation of directors.

Question 33

Who is exempt from retirement by rotation?

Answer 33

Life directors ## Footnote Life directors are not counted in the calculation of retiring directors.

Question 34

What is the FIFO principle in the context of director retirement?

Answer 34

Those who have been longest in office shall retire first ## Footnote This ensures fairness in the rotation process.

Question 35

What happens when two or more directors are appointed on the same day regarding retirement?

Answer 35

Retirement shall be by casting lot unless they agree on who should retire ## Footnote This provides a fair method to determine which director will retire.

Question 36

What are the exceptions to retirement by rotation?

Answer 36

* Articles of Association can exempt the rule * Directors service contract can exempt some directors * Life Directors do not retire by rotation ## Footnote These exceptions allow for flexibility in governance.

Question 37

What conditions must be met for a retiring Director to be deemed re-elected?

Answer 37

* No one has been appointed to replace him * His re-election has not been put to vote and he lost * No resolution postponing the filling of the vacancy ## Footnote This ensures that the process respects the wishes of the shareholders.

Question 38

What is required for the nomination of Directors?

Answer 38

Nominations must be submitted to the registered office not less than 3 days and not more than 21 days to the proposed meeting ## Footnote This gives the company time to prepare for the meeting.

Question 39

What must accompany the nomination for a director?

Answer 39

A notice in writing signed by the person nominated of his willingness to be elected ## Footnote This ensures that the nominee is aware and consents to the nomination.

Question 40

Can a shadow Director be removed?

Answer 40

Yes, a shadow Director is presumed removed once their instructions are no longer followed ## Footnote This highlights the accountability of all directors, including shadow directors.

Question 41

What cannot stop a director from being removed by members?

Answer 41

Protective Clause in the Articles of Association or non-termination clause in the Service Contract ## Footnote This ensures that directors remain accountable to the shareholders.

Question 42

What is the first step in the procedure for removal of a director?

Answer 42

Special Notice for the removal of the Director must be sent at least 28 days before the meeting ## Footnote This ensures proper notice and opportunity for the director to prepare.

Question 43

What is the role of the Company Secretary in the removal process?

Answer 43

The Company Secretary is responsible for sending the Special Notice and Proposed Resolution to the Director to be removed ## Footnote This is part of ensuring transparency and due process.

Question 44

What happens if the Director intends to read a defamatory written representation at the meeting?

Answer 44

An aggrieved party can obtain a court order restraining the representation from being read ## Footnote This protects the integrity of the meeting.

Question 45

What is the effective date of removal if a secretary is removed following a suspension?

Answer 45

The effective date is determined by the company at the general meeting ## Footnote This allows for clarity and transparency in the removal process.

Question 46

What qualifications must a Company Secretary have?

Answer 46

* Requisite knowledge and experience * Member of the institute of Chartered Secretaries and Administration or a Legal Practitioner * Member of the institute of Chartered Accountancy of Nigeria or related bodies * Held office of secretary of a public company for at least three of the last five years * A body corporate or firm with qualified members ## Footnote These qualifications ensure that the Company Secretary is competent and capable.

Question 47

Who has the power to appoint a Company Secretary?

Answer 47

The Board of Directors ## Footnote This responsibility is essential for governance.

Question 48

What are the duties of a Company Secretary?

Answer 48

* Attends Board and Committee meetings * Renders returns and notifications to the Commission * Keeps statutory registers and books * Carries out administrative duties as directed * Serves as intermediary between the Board and Shareholders * Advises on compliance with the law * Renders secretarial services in meetings ## Footnote These duties are crucial for the effective operation of the company.

Question 49

Can a person serve as both a Director and Company Secretary?

Answer 49

Yes, but cannot sign a document in both capacities where required to sign separately ## Footnote This maintains the integrity of the roles.

Question 50

What is required for the resignation of a Company Secretary?

Answer 50

A notice of resignation in writing must be sent to the company ## Footnote This formalizes the resignation process.

Question 51

What must the Board do before removing a Company Secretary?

Answer 51

* Give notice of intention to remove * State the grounds for removal * Allow the secretary to make a defense or resign within 7 working days ## Footnote This process ensures fairness and due process.

Question 52

What happens if the grounds for intended removal of a secretary involve fraud or serious misconduct?

Answer 52

The Board may remove him immediately and report to the next General Meeting ## Footnote This allows for swift action in serious cases.

Question 53

What is the procedure if a vacancy exists in the office of a Company Secretary?

Answer 53

An Assistant Secretary, Deputy Secretary, or authorized officer may act as the Secretary ## Footnote This ensures continuity in the company's governance.