Corporate Governance Comparative Guide

1 Legal and enforcement framework

1.1 Which legislative and regulatory provisions and codes of practice primarily govern corporate governance in your jurisdiction?

Depending on the sector, Nigeria has both legislative and regulatory provisions and codes of practices governing corporate governance. The Companies and Allied Matters Act, 2020 (CAMA) governs all that is related to a company from formation to winding up, its provision regulate how a company is set up, the duties and responsibilities of the company's stakeholders, and regulatory returns for oversight purposes. The provisions of CAMA borders on the duties and responsibilities of a director, the duties of the shareholders, company meetings and resolutions, corporate returns and filings.

Apart from CAMA, the Investment and Securities Act 2025 allows the Securities and Exchange Commission to govern public companies and capital market operators on corporate governance. The Central Bank of Nigeria (CBN) through its Code of Corporate Governance 2023, regulate banks and other financial institution.

Other regulators include the Federal Reporting Council of Nigeria (FRCN), which is responsible for issuing and enforcing codes of corporate governance for all companies in Nigeria, the National Insurance Commission (NAICOM) which is responsible for governing insurance companies, the National Pension Commission (PenCom) which governs pension fund administrators and the Nigerian Communication Commission (NCC) which governs communication companies.

There are various codes of corporate governance practices in Nigeria, the principal one being the Nigeria Code of Corporate Governance 2018 issued by the FRCN, the CBN code of corporate governance 2023, the NAICOM code of corporate governance 2021, the NCC code of corporate governance 2024 and the PenCom code of corporate governance 2021.

1.2 Is the corporate governance framework in your jurisdiction primarily based on hard (mandatory) law and regulation or soft (eg, 'comply or explain') codes of governance?

Mostly, the corporate governance framework in Nigeria is based on hard law and regulation. For instance, CAMA imposes sanction such fines on the directors and the company itself, and even delisting from the register of companies, on companies whether private or public which fails to comply with the filing of any of their corporate returns.

Also, the CBN in its oversight duties enforces the provision of its codes of corporate governance and maintain strict compliance. In the banking sector, a violation of any of the governance practices may result in heavy fines, sanctions, and even revocation of banking license.

The above is applicable across the various sectors; strict compliance is expected, and violations are met with heavy sanctions.

However, the Nigeria Code of Corporate Governance (NCCG) 2018 is a soft law and adopts the "apply and explain" philosophy. This allows companies to apply the code to their various activities as the companies deemed it best and explain how those specific applications achieved the outcomes intended by the code. In this way, the code of corporate governance practices recommended by the code can be scaled to suit the type, size, and growth phase of each company.

1.3 Which bodies are responsible for drafting and enforcing the rules and codes that make up the corporate governance framework? What powers do they have?

The Federal Reporting Council of Nigeria (FRCN) is the body responsible for the issuance of the Nigeria Code of Corporate Governance 2018, the FRCN is empowered by the Federal Reporting Council Act, 2011 to develop and issue codes of corporate governance and financial reporting for public companies, public interest companies and private companies in regulated sector. The powers of the FRCN includes issuance of codes, monitoring compliance and imposing sanctions such as suspension of auditors and in extreme cases, board member.

Also, the Corporate Affair Commission (CAC) established under the Companies and Allied Matters Act, 2020 is the primary regulator for all companies in Nigeria. The provisions of the CAC governs the appointment and removal of the members of the board, the participatory rights of shareholder, filing of corporate returns and disclosure of beneficial ownership. The powers of the CAC include company registration, sanctioning of company and members of the board upon violation and deregistering of companies.

For sectoral codes of governance, regulators such as the Central Bank of Nigeria, Securities and Exchange Commission, Nigeria Communication Commission, National Insurance Commission, and National Pension Commission oversee, draft, issue, and enforce corporate governance practices. These regulators have powers to issue operating licenses, to approve, veto, and dissolve the board of directors, revoke operating licenses, and impose fines.

2 Scope of application

2.1 Which entities are captured by the rules and codes that make up the principal elements of the corporate governance framework in your jurisdiction?

The Companies and Allied Matters Act, 2020 applies to all companies in Nigeria. The Nigeria Code of Corporate Governance 2018 applies to all public companies, public interest entities, and private companies in a regulated sector. The Securities and Exchange Commission's code of corporate governance 2021 was issued to complement the NCCG 2018 and it governs public companies and capital market operators. Likewise, the Central Bank of Nigeria's Code of Corporate Governance 2023 was issued to complement the NCCG 2018 for all financial institutions.

Other entities include the Nigeria Communication Commission Code of Corporate Governance 2024, which regulates the communication industry, the National Insurance Commission Code of Corporate Governance 2021 for insurance companies, and the National Pension Commission Code of Corporate Governance 2021, which governs the pension fund administrators.

2.2 What exemptions, if any, from the principal elements of the corporate governance framework are available in your jurisdiction?

According to sections 11(c) and 51(c) of the Federal Reporting Council of Nigeria Act, the FRCN has the powers to enforce corporate governance frameworks for both the private and the public sector. The Nigerian Code of Corporate Governance, therefore, applies to both the public and private sectors of the economy. The Code adopts a "apply and explain" philosophy, which allows companies of varying size and scale to adopt and apply the code in the most suitable manner that suits the scale and circumstance of the business.

In this way, various companies are allowed the flexibility to demonstrate how the specific activities they have undertaken achieve the corporate governance principles in the NCCG.

Also, regulators in regulated sectors such as banking, finance, insurance, telecommunication, mandates the adherence of the company operating in that sector o the corporate governance frameworks,. In fact, the corporate governance frameworks in these sectors require that companies operating in the sector file an annual return on compliance with the corporate governance frameworks.

While the above applies generally, it is imperative that the enforcement of the corporate governance framework on companies in non-regulated is not as strict as it is in the regulated sector particularly due to the apply and explain philosophy of the governance frameworks.

2.3 What are the principal issues covered by the codes of governance in your jurisdiction?

The Nigerian Code of Corporate Governance 2018, in addition to other regulated sector codes of corporate governance, seeks to institutionalise corporate governance best practices in Nigerian companies. Such principle issues recommended as best practices include:

1. The board of directors and the officers of the board; under this section the NCCG 2018 recommends how a company's board is to be properly constituted, the duties and responsibilities of its officers.
2. Assurance; under this section, the Code recommends that companies should have a sound framework for managing risk and ensuring an effective internal control, an effective audit function, an effective whistle blowing framework and an external auditor
3. Relationship with shareholders; the NCCG recommends that the company should establish a system of regular dialogue with the shareholders through meetings and ensure equitable treatment of the shareholders
4. Business conduct with ethics; the Code recommends that companies should establish the professional and ethical standards the protection of the company's reputation and also establish policies and mechanism to monitor insider trading and other corrupt practices.
5. Sustainability; the Code recommends that company pay attention to sustainability issues so as to ensure long term business performance,
6. Transparency; the Code recommends that companies should maintain good communication channel with stakeholders and ensure full and comprehensive disclosure of all material matters to investors and stakeholders.

3 Ownership and control

3.1 What are the typical ownership structures in your jurisdiction?

In Nigeria, the Companies and Allied Matter Act 2020 provides for the various ownership structures that a business entity can be

1. Company: According to Section 18(1) of the Act, a company may be formed by two or or more persons for any lawful purpose by subscribing their names to a memorandum of association and complying with the requirement of the Act in respect of registration. The Act provided for types of company and each type can either be private or public. A company can be a company having the liability of its members limited to the amount unpaid on the shares held by them or a company may be a company having the liability of it member limited to the amount such member undertakes to contribute to the asset of the company or a company may not have any limit on the liability of its members. Thus, a company can either be a company limited by liability, a company limited by guarantee or an unlimited company.
2. Partnership: A partnerships is a business entity wherein two or more persons carry on business together with the intent to make profit. Under the Act, a partnership can be a limited liability partnership or a limited partnership. A limited liability partnership is a body corporate with a distinct legal personality separate from the partners. It combines the flexibility of partnership with the benefits of a limited liability company. A limited Partnership, on the other hand, is not a body corporate and must have at last one general partner, whose liability is unlimited.
3. Business Names: A business name can also be referred to as a sole proprietorship. Under the Act, any person carrying on business in a name other than their true name is expected to register a business name. The liability of the business owner is personal.
4. Incorporated Trustees: This form of business entity is a non-profit organisation uh a religious, academic, social club and associations. It is a body corporate with a distinct personality. It is managed by the board of trustees.

3.2 How are companies typically controlled in your jurisdiction, both structurally and in practice?

Under the CAMA, a company control mechanism is typically divided into two namely the Board of Director and the shareholders. The board of directors is the management of the company and runs the day to day business activities of the company. It should be noted that not all directors participate in the management as there are various types of directors. However, the executive directors are the types of directors whose primary function is to manage the company. The other type of directors such as the non-executive directors, independent non-executive directors do not partake in the day to day business activities but are instrumental in determining the company trajectory, management strategy and supervision of the executive directors.

The Shareholders are the members or owners of the company. They control the companies through their power to appoint and remove directors, approve director's remuneration and other decisions, and declare and pay dividends. These powers are enforced through the general meeting, which must be held annually. The board of directors are agents of the company acting on behalf of the shareholders.

4 The board: structure and appointment

4.1 How is the board typically structured in your jurisdiction?

Board of directors in Nigerian companies adopts a unitary system that comprises of executive, non-executive and independent non-executive directors. The Nigeria Code of Corporate Governance recommends that the boards of director should have a majority of non-executive and independent non-executive directors so that the boards can properly administer its supervisory and oversight duties.

Apart from the NCCG, other codes of corporate governance in regulated sectors also align in prescribing that the composition of the board should be such that the board majorly comprises of non-executive directors and independent non-executive directors.

The several codes further recommend that the number of directors should be odd to prevent deadlock situations.

4.2 Are board committees recommended or mandated? If so, which areas should/must they cover?

It is mandatory for every company to have a board of directors according to the Companies and Allied Matters Act. The legal minimum for every company other than a small company is 2 directors under CAMA. In regulated sectors such as banking, insurance, and finance, the respective codes of corporate governance mandate that the companies must have a minimum of five (5) directors.

For these regulated sector, the codes mandates that the board must have majority as non-executive directors in order to balance out the powers and authority of the executive directors.

The director must have requisite knowledge, skills, and diligence to perform their roles and responsibilities.

The respective codes of corporate governance separate the role of the chairman of the board from that of the managing director or chief executive officer. The codes further mandates that the chairman of the board must always be a non-executive director. This is to preserve the independence of the board and protect it from executive influence.

4.3 Are there any requirements or recommendations to appoint independent board members? If so, how is 'independence' defined?

There are requirements to appoint independent board members, particularly in regulated sectors of the economy. For instance, Securities and Exchange Commission Code of Corporate Governance mandates that finance companies must have at least on independent director. According to the SEC, independent board members must not be a partner or an executive of the company's statutory audit firm, internal audit firm, legal or other consulting firm that have a material association with the company or has not been partner or executive in any of the consulting firms for 3 years prior.

Similarly, the NCCG 2018 recommends that independent board members should not hold more that 0.01% of the company so as not to have a value that might affect his independence. The independent board member must not be a representative of any shareholder or closely related to any of the members, officers, creditors, and stakeholders of the company. The board member must not have had any significant business relationship with the company at least 3 years prior. The code further recommends that the director must not have served at the directorate level of the company's regulator at least 3 years prior, must not consult for the company in any other capacity except as director, must not receive remuneration from the company other than directors fees and allowances and has not served on the board of the company for more than 9 years since he was first appointed.

The NCCG recommends that the board should recertify the independence of the independent board members on annual basis. Also, statutorily and under CAMA, public companies are required to have at least 3 independent board members.

4.4 Do any diversity requirements or recommendations apply with regard to board composition?

The Nigerian Codes of Corporate governance encourage diversity, particularly in reference to board structure and composition. Principle 2 of the NCCG 2018, provides that "the effective discharge of the responsibilities of the board and its committees is assured by an appropriate balance of skills and diversity (including experience and gender) without compromising competence, independence and integrity.

4.5 How are board members selected and appointed? What selection criteria (if any) apply in this regard?

The shareholders of a company may appoint or re-elect a director at the general meeting of the company. According to CAMA, the following persons are disqualified from being a director,

1. a person under the age of 18 years,
2. a person of unsound mind,
3. a person who have been suspended or removed as director of the company
4. a person disqualified as a result of share disqualification (where applicable), being bankrupt, becoming insolvent or been found to be fraudulent, becomes of unsound mind . and resigns from his office as director, and
5. a corporation other than its representatives.

The company is to ensure that the appointed directors have the required skills, experience, and expertise to properly steer the affairs of the companies. Per the various codes of corporate governance applicable to Nigerian companies, it is the duty of the Nomination and Governance Committee to nominate possible candidates to the shareholders for election and appointment at the general meeting.

4.6 How are board members removed?

According to Section 288 of the Companies and Allied Matters Act, a director of a company can be removed by ordinary resolution before the expiration of his term of office. To this end, the company must issue a special notice to member of the company and the board of directors inclusive of the director intended to be removed notifying them of the company's intention to remove the affected director.

The affected director must be given an opportunity to make representations in respect of the special notice, and such representation must be made available to all the members of the company ahead of the meeting to remove the director. Further, the director must also be allowed to speak at the meeting in his own defence.

The members of the company are then required to vote on the removal. A majority of the votes passes the resolution for removal.

A director will also be subject to removal if he fails within any of the categories required for disqualification of a director. In this regard, no meeting of the members will be required.

4.7 Do any tenure restrictions or recommendations apply to individual directors?

Section 284 of Companies and Allied Matters Act mandates that all the directors of a company must retire at the first annual general meeting and at every subsequent annual general meeting, 0ne-third of the total number of directors must retire.

In the case of the Nigerian Code of Corporate Governance 2018, it is recommended the tenure of the MD/CEO and the executive directors should be determined by the board after considering their performance, business continuity and succession planning. Independent board members should not exceed three (3) terms of 3 years each while non-executive directors should serve for a reasonable period and offer themselves up for re-election.

The various sector-specific codes also mandate for the maximum tenure requirement for directors. For instance, the CBN Code of Corporate Governance 2023 provides that the tenure of the executive directors and the managing director shall be in accordance with the terms of engagement with the company but shall be subjected to a maximum period of twelve years. In the case of non-executive directors, they are subject to a maximum period of twelve years comprising of four year each while independent board members are subject to a maximum of two terms of four years each.

Other codes of corporate governance have similar provisions with regards to the tenure of office of the board members.

4.8 What best practice is recommended when composing the board and appointing board members?

The best practices for the composition and appointment of board members as recommended by the Nigerian Code of Corporate Governance 2018 is as follows;

1. The board should be o a size sufficient to carry on it roles and responsibilities of effectively overseeing, monitoring, directing, and controlling the company's business. The size of the board must be proportionate to the scale and complexity of its operations
2. The board must consider a balance of knowledge, skill, experience and diversity in determining it composition and size
3. The board must regularly refresh itself by injecting new members so as to promote innovation, better decision-making and effective governance
4. The position of the chairman of the board and the chief executive officer should be separate and that no person can combine the two positions
5. The chairman of the board may not serve in any committee and the chief executive officer should not serve as chairman of any board committee.
6. Members of the board may hold concurrent directorship with multiple companies but it should be such that the other directorships does not interfere with the responsibilities of the director.

5 The board: role and responsibilities

5.1 What are the primary roles and responsibilities of the board?

Both the Companies and Allied Matter Act 2020 and the Nigerian Code of Corporate Governance 2018 provide for the roles and responsibilities of the board. They are as follows:

1. The board oversees and control the company and therefore must exercise due leadership, enterprise and integrity.
2. The board must ensure that all the directors act in the best interest of the company always.
3. The board must ensure that its actions are in accordance with the applicable laws.
4. The board has the duty of drawing the business strategies of the company and their implementations.
5. The board establishes and maintain a succession plan for the company, appointment process, board evaluation, training and development mechanisms, and remuneration structure for the management and the board of the company.
6. The board is accountable in its relationship with stakeholders and shareholders.
7. The board is responsible for the creation of ethical standards and code of conduct for the company.
8. Also, it has the duty to maintain a proper internal audit department and a committee for the monitoring of the audit function.
9. The board oversees the effectiveness of the internal control mechanism.
10. The board ensure the integrity of he company disclosures provided to shareholders and stakeholders.
11. The board also ensures that systems are in place to manage the environmental and social risks of the business impact.

5.2 How does the board exercise those roles and responsibilities?

There are various ways that the board exercises its roles and responsibilities. One of such is that the board regularly convenes through board meetings to discuss, and make decisions regarding the affairs of the company. This also allows the board to oversee properly and supervise the senior management of the company. According to the NCCG 2018, the Code recommends that the boards of directors meet at least once every quarter so as to properly perform it duties.

Also, the Code recommended the Board should be of sufficient size to undertake effectively and fulfil its business. The board considers the balance of knowledge, skills, experience, diversity and independence in determining its board composition. The board should also consider the appropriate mix of executive, non-executive and independent non-executive directors such that the board has a majority of non-executive directors.

Further, the board is to ensure that it has committees, especially large and/or public companies so as to properly oversee and control the business of the company. The committees are to meet regularly and report the outcomes of their meetings to the board for further deliberation and action, where applicable.

The Board also oversees the audit and internal control systems of the company.

5.3 What specific role does the board play in relation to: (a) Strategic planning? (b) Risk management? (c) Major and related-party transactions? and (d) Conflicts of interest?

(a) Strategic planning?

One of the board's primary duties is strategic planning. This is essentially the board's plan towards achieving the company's business aim, sustainability, and growth. It is the board's duty to oversee the planning, approval, and execution of the company's goals of the management's plan.

The board also monitors the management's performance and ensures accountability. In addition, the board evaluates the various outcomes of the company's strategy and compare against the risk appetite of the company.

(b) Risk management?

Another essential role of the board is to manage the company's risk. The board establishes and approve a risk management framework and a committee to monitor and assess the implementation of the framework. The board oversees audit, risk, and internal control function of the company and continually evaluate their effectiveness.

(c) Major and related-party transactions?

An essential ethical value of the board is transparency. Board members are, particularly in regulated sectors and public companies, mandated to make full and fair disclosure so as tom ensure that business transactions are transparent, fair and in the interest of the company. This is a recommended practice for all companies and board members by the code of corporate governance.

(d) Conflicts of interest?

As in major and related party transactions, the board ensure that board member disclose cases of conflict of interest and ensure that such disclosure are effectively managed. Where applicable, cases of conflict of interest are also disclosed to the members of the company and respective stakeholders.

5.4 Are the roles of individual board members restricted? Is this common in practice?

In Nigeria, it is important to note that the action of the board is collective and not unilateral. No member of the board can make a decision to bind the board unless the board has made an earlier resolution for such. It is also important to note that while the executive directors are involved in the day-to-day business decisions of the company, they do so on behalf of the board and are answerable to the boards at all times. Also, the Chairman of the board is responsible to provide overall leadership of the board.

5.5 What are the legal duties of individual board members? To whom are these duties owed?

The duties of the board and it officers are collective and individual. The directors have fiduciary duties towards the company. This means the directors are to act in utmost good faith and in the best interest of the company. The directors must have a duty of care, skill, and diligence, which means the directors must be capable of performing their responsibility in accordance with best practices.

The directors owe their duties primarily to the company and the shareholders. The directors are also accountable to the stakeholders and regulators.

5.6 To what civil and criminal liabilities are individual board members primarily potentially subject?

Directors are civilly liable to the company for breach of their fiduciary duty. They are also liable for negligence for duty of care, skill, and diligence, and also for unauthorised decisions or actions that are beyond the powers of the directors.

Directors can be criminally liable for fraud related charges, insider trading, and other criminal activities in relation to the company. For instance, in 2010, the Economic and Financial Crimes Commission filed charges against seven (7) non-executive directors of the Intercontinental Bank for granting loans over N60 billion Naira to companies they allegedly had interests.

6 Shareholders

6.1 What rights do shareholders enjoy with regard to the company in which they have invested?

The Companies and Allied Matters Act 2020 covers the rights of shareholders to a company. These rights are also embedded in the articles of association of the company. The right of shareholders is as follows

1. Shareholder can transfer their share in whole or in part by instrument in writing in any usual form that the directors of the company may approve of. (Section 151(4) of CAMA).
2. The members of a company have the right to inspect the minute book containing the proceedings of a general meeting at no cost. Further, a member of a company is entitled to receiving a certified copy of the minute book with 7 days upon his request and with applicable cost. This right is only subject to reasonable restriction imposed by the members of the company at general meeting (Section 242 of CAMA).
3. The shareholders of a company have the right to declare and partake in the dividend of the company. Section 379 of CAMA provides that the shareholders may be paid dividends out of the distributable profits of the company.
4. Shareholder have the right to receive notice of, attend, speak and vote at the general meeting. Where the shareholder is unable to be present in person, the shareholder may appoint proxy to act on its behalf.
5. Shareholders have the right to appoint and remove directors, approve the remuneration for directors, and appoint auditors at the general meeting
6. The Shareholder also have the right to sue the directors of a company where the directors are in breach of the fiduciary duty to the company.
7. The shareholders has the right to partake in the assets of the company in the proportion of its shareholding during winding up and liquidation proceedings.

6.2 How do shareholders exercise these rights? Do they have a right to call shareholders' meetings and, if so, in what circumstances?

Shareholders exercise their rights through the general meeting. The shareholders may also exercise their rights through legal actions against the directors or through the minority protection procedure.

A shareholder who is entitled to vote at a general meeting can convene a general meeting of the company by requesting the court of competent jurisdiction. The meeting may be held in the manner that the court deems fit.

6.3 What influence can shareholders exert on the appointment and operations of the board?

Under the CAMA, the shareholders have the power to appoint and remove director. In addition, the shareholders determine how and what directors' remuneration will be. The shareholders' power to appoint, remunerate, and remove directors serves as a check on the power of the board.

The Shareholders in general meeting also review the director's performance, approve or disapprove re-election based on performance.

The shareholders hold the ultimate power of control over the directors as the owner of the company. Despite not being in day-to-day control of the company, they ultimately evaluate the performance of the directors and determine whether or not a director can continue to serve the company.

6.4 What are the legal duties/responsibilities and potential liabilities, if any, of shareholders?

The duties of the shareholder include

1. paying for shares allotted or transferred to the shareholder,
2. Section 95 of CAMA provides that shareholders of a public company have the obligation to disclose substantial interest. In this case, substantial interest is 10% of the company's voting right.
3. Attending and voting at general meeting.

The liabilities of the shareholders is provided for in section 92 and 93 of CAMA. CAMA provides that a shareholder is liable for the unpaid balance on the shares issued to him. The company can make a valid call for this unpaid balance before winding up. A shareholder's liability shall only cease when the company has received full payment in full for all moneys in respect of the shares allotted or transferred to him.

In the event of winding up, every past and present shareholder of the company shall be liable to contribute to the asset of a company an amount that is sufficient for the payments of debts and winding up proceedings. For companies limited by guarantee or shares, the liability of the shareholders are only limited to the amount unpaid on shares or guarantees in respect of which they are liable as a past or present member.

6.5 To what civil and criminal liabilities might individual shareholders be subject?

For civil liabilities, shareholders are liable for the unpaid balance on their shares. Also, under the doctrine of piercing the veil, shareholders may become personally liable for the liabilities of a company where the court has found that the shareholders have purposely used the company as a means to commit fraudulent activities.

For criminal liabilities, during winding up proceedings, the court may hold any member or officers of the company criminally liable where the court has for that the member or officer is complicit in the matter regarding defrauding investors or creditors.

6.6 Are there rules governing the issuance of further securities in a company? Do rights of pre-emption exist and, if so, how do they operate? Can they be circumvented? If so, how and to what extent?

The Companies and Allied Matters Act 2020 allows companies to issues shares to either the public, private individuals or it members depending on whether the company is a public or private company. Also, pre-emptive rights exist under the CAMA. However, every company has the right to determine how it deals with its shares and pre-emptive right. In practice, the company provides for methods of approaching issuance of shares and pre-emptive rights, through the article of association and/or shareholder's agreement.

Regardless of the above, the right of every shareholder to the opportunity to protect its interest in the company is sacrosanct. Therefore, any company undertaking a capital raise allows existing shareholders to purchase additional shares prior to being sold to new investors. The shareholder's right of pre-emption is a tool of corporate governance that preserves fairness and empowers the shareholders.

The procedure for pre-emptive rights is that a company raising capital gives notices of such issuance to its shareholders with details of how much shares they are entitled to, the price of the shares and the duration of time before the offer lapses. Any shareholder who did not take up the offer before it lapses or outrightly declined waives the right of pre-emption.

The only lawful way to circumvent pre-emptive right is if the members of a company passes a resolution to waive the right of pre-emption or in the case where the member of a company are bound through contractual agreement that allows them to waive the right.

Any waiver of pre-emptive right must always comply with the provision of CAMA and the company's article of association or the shareholders agreement, where applicable.

6.7 Are there any rules on the public disclosure of levels of shareholding and/or stake building?

Under the Companies and Allied Matters Act 2020, shareholders with holdings equal to 5% and more are required to disclose the same to the company. In the case of public companies, shareholders with significant shareholding must disclose to the Company within 14 days of becoming aware, and the company in turn must disclose the same to the Corporate Affairs Commission and the Security and Exchange Commission. Failure to make this disclosure attracts considerable sanctions from both the CAC and SEC.

7 Shareholder activism

7.1 What role do institutional investors and other activist shareholders play in shaping corporate governance in your jurisdiction?

Institutional investors and activist shareholders play a pivotal role in shaping corporate governance in Nigeria through monitoring management, advocating for better governance practices, influencing board composition, and advocating for ESG (this may be particularly seen in energy related and finance related industries). One key thing to highlight is applying the necessary tactics where required, such as knowing when to deploy dialogue, soliciting other shareholders' support, stakeholder collaboration, or knowing when to go public, and escalate to the appropriate authorities. The role of institutional investors (such as asset managers, pension funds, insurance companies) in shaping corporate governance may also be stipulated by their governing regulations, which may require them to provide certain strategic governance oversight. For instance, SEC Nigeria regulated entities are required to embed ESG considerations into their decision making processes (which may include investment decisions). For start ups, institutional investors such as VCs usually have board representation which gives them direct access to the board and opportunity to shape governance. Simplicita, the VC acts like a watch dog guiding start ups to establish robust financial systems for accountability and growth.

It is important to note that under Nigerian law, there are provisions on minority protection, which is a form of shareholder activism that allows minority shareholders to take proactive steps to exercise their rights, participate in corporate governance, and influence decisions to secure their interests.

7.2 Is there any legislation or code of practice which applies to institutional shareholders? If so, what issues does it primarily address and how is it policed/enforced?

Yes. There are provisions that apply to institutional shareholders under the Nigerian Code of Corporate Governance 2018 (NCCG). While the Companies and Allied Matters Act (CAMA) 2020 does not provide clearly for institutional shareholders, there are certain provisions that make room for the activities of an institutional shareholder. For instance, the provision of single shareholders for private companies does not restrict single corporate shareholders (see section 18(2) of CAMA). Additionally, the recognition of Persons with Significant Control (PSC), requirement for the disclosure of PSC and the creation of a regulation for PSCs also makes room for institutional shareholders.

With respect to the NCCG, principle 22.3 provides that the board should encourage institutional investors to positively influence the standard of corporate governance and monitor conformance with the provisions of the NCCG and raise concerns as appropriate. Principle 23.1 further recommends that there should be no preferential treatment given to institutional shareholders.

It is important to note that the CBN Code of Corporate Governance for Banks and Financial Holding Companies (FHC) lends weight to this NCCG principle 22.3 by providing that boards of the concerned companies should ensure that institutional investors carry out the responsibilities detailed in principle 22.3 of NCCG. (See principles 19.1.1 and 20(1)(a) of the CBN Code).

7.3 How do activist shareholders typically seek to exert influence on corporations in your jurisdiction?

Activist shareholders seek to exert influence through different ways. Commonly utilised is the use of voting power in person or by proxy, enabling the Shareholders to express their voices on issues within the purview of the shareholder decision. Shareholders' influence can also be exerted through board seats; an available option for shareholders that hold a certain ownership threshold in the company as stipulated in the shareholders agreement or in the company's articles as the case may be.

Another method is public campaigns by shareholders/Investors. In previous years, shareholders would publicise the letters written to the Companies in the newspapers or media houses, however, the wave of social media has witnessed shareholder/investor activism on social media platforms such as X (formerly Twitter) by start up investors/shareholders leveraging the 'court of public opinion' as a means of applying pressure on the company to do needful. The public campaign method also entails media amplification of the campaign by tech-focused news outlets and has sometimes raised the awareness of regulators.

Additionally, shareholders also exert influence through their Shareholder associations and regulatory involvement. Shareholders association involves shareholders who pool their influence to engage management. Principle 22.4 of the NCCG recommends transparency in a Company's dealings with its shareholders' association.

Shareholders can also exert influence through judicial reliefs and exit threat/actual divestment. Where actual divestment is done by a major shareholder, it may signal governance concerns. Regarding judicial relief, Shareholders may initiate minority protection actions or derivative actions before a competent court.

7.4 Which areas of governance are shareholders currently focused on?

Some key areas of governance that shareholders are involved in are regulatory compliance, organisational strategy, board composition, stakeholder communication and management, risk management, and financial reporting and management performance.

7.5 Have there been any high-profile instances of shareholder activism in recent years?

Yes. In the year 2021, the minority shareholder of Oando plc led by Venus Construction alongside 13 other shareholders filed an application before the court on 25 March 2021 praying the court to order a buy out of their shares by Oando following the losses recorded by the Company leading to its inability to pay dividends. This action was part of a longer saga that had been fuelled by in earlier years, shareholders had accused management of poor governance, related-party transactions, and mismanagement.

In 2015, Ikeja Hotels Plc, one of Nigeria's leading tourism and hospitality investment companies, experienced significant shareholder activism, which led to the removal of its then Chairman following disputes over governance and financial issues. More recently, the SEC Nigeria intervened after a prolonged conflict, concluding a forensic audit and issuing directives in July 2025 to reform the company's corporate governance, including restructuring shareholder loans, establishing a new board with independent directors, and requiring a shareholder agreement. In this case, the shareholder activism was aided by regulatory oversight, which triggered the forensic audit on the Company.

7.6 Is shareholder activism increasing or decreasing in your jurisdiction? If so, how and why?

Shareholder activism is increasing in Nigeria. Some of the indices that indicate an increase is the increase in the number of registered shareholder associations with the Securities and Exchange Commission (SEC). We have also seen more regulatory support with the introduction of the NCCG 2018 by the Financial Reporting Council of Nigeria (FRCN) and other codes of corporate governance for specific industries which have also recognised NCCG 2018. Additionally, we continue to witness a rise in shareholder awareness through social media and growing participation corporate governance.

8 Other stakeholders

8.1 What role do stakeholders such as employees, pensioners, creditors, customers, and suppliers play in shaping corporate governance in your jurisdiction? What influence can they exert on a company?

Stakeholders influencing governance through different methods:

1. Employees are usually the first point of call in identifying regulatory breaches, unethical practices and regulatory shortfalls. Employees are required to report such identified practices once identified. Principle 19 of the NCCG 2018 requires companies to establish whistle-blowing mechanisms enabling employees to report unethical activity safely and confidentially. This principle is re-echoed by section 5 of the CBN CCG for Banks. Employees can also seek legal accountability by filing law suits bordering on labour related breaches by the employer.
2. Pensioners influence corporate governance indirectly through the Pension Fund Administrators (PFA). Section 68 of the Pension Reform Act places a fiduciary duty on the PFA to act in the best interest of Pensioners. Pensioners can also influence strong governance by collective advocacy through their pensioners association, through whistle blowing and reporting.
3. Creditors exert influence on the governance of a company as a result of their financial leverage. They rely on creditor rights in contract and statutes. For instance, creditors can initiate creditor's voluntary winding up (Sections 471 to 478 of CAMA). Additionally, contracts may place covenants or condition precedents on the borrowing company. For instance, where a company is required to provide regular financial statements and audited accounts to the creditor.
4. Customers and Suppliers: One key area that customers influence governance is through enforcing consumer protection rights and market pressure achieved by public complaints, class actions or petition to regulators. Suppliers influence governance largely through contract, third party risk management and regulatory provisions.

9 Executive performance and compensation

9.1 How is executive compensation regulated in your jurisdiction?

The primary legislation regulating executive compensation in Nigeria is CAMA 2020 which provides that an executive is not entitled to seating allowance at board meetings but is entitled to salaries and performance-based bonuses. Additionally, in Nigeria, director's remuneration is usually contractual especially for the executive directors. The contract includes the job description and key performance indicators, salaries and additional incentives, duration (where applicable) and other important terms. For the other board members, the contract sets the expectation between the company and the board member, the duties and obligations of parties, and other terms as parties may agree.

CAMA 2020 provides that the shareholders of a company may decide the remuneration of its directors at the general meeting of the company.

Regulators of certain sectors also regulate executive compensation. For instance, where the remuneration of directors comprises share options, the CBN Code of Corporate Governance for Banks and Discount Houses 2014 (the CBN Code) and the Securities and Exchange Commission (SEC) Code of Corporate Governance for Public Companies in Nigeria (the SEC Code) prohibit the company from issuing the shares to the directors at a discount, except with the authorisation of the relevant regulatory authorities. Please note that such options must be subject to the approval of the shareholders.

9.2 How is executive compensation determined? Do shareholders play a role in this regard?

According to CAMA 2020, the shareholders at the general meeting of a company approves or disapproves the remuneration of directors (inclusive of executive directors). Section 293(1) places the responsibility of determining the compensation of directors on the shareholders at a general meeting. Section 294(1) however places the remuneration of the managing director on the board.

It is however, important to note that before the executive compensation is recommended by the board for the determination of shareholders, the board would usually place into consideration the following factors: budgetary allocations, market comparison, the industry, and the qualifications of the intended director.

9.3 Do any disclosure requirements apply in relation to executive compensation?

The director's remuneration shareholder companies.

9.4 Have any measures to address the gender pay gap been introduced in your jurisdiction?

Governance encourage mandate.

9.5 How is executive performance monitored and managed?

Some is a report on meetings managed is oversee supervise whole, NCCG.

9.6 What best practices should be considered with regard to executive performance and compensation?

Should policy, bonuses, determined, Additionally, executive remuneration should be directly linked to measurable performance outcomes, and the performance metrics should include financial indicators and non-financila indicators such as ESG, compliance, culture and risk management.

10 Disclosure and transparency

10.1 What primary reporting obligations relating to corporate governance apply in your jurisdiction?

• to file annual
• to report both quarterly

10.2 What role does the board play in this regard?

Company, the audit committee, as internal control policies ensures these includes.

10.3 What role do accountants and auditors play in this regard?

Company; the disclosure framework.

10.4 What best practice should be considered in relation to reporting and disclosure?

Accurate, communication.

11 Audit and auditors

11.1 What rules relate to the appointment, tenure and removal of auditors?

No answer submitted for this question.

11.2 Are there any rules or recommendations that limit the scope of services as regards the provision of non-audit services by an auditor?

The Financial Reporting Council of Nigeria (FRCN) in accordance with Section 8(2), 30 and 53(2) of the Financial Reporting Council Act No. 6 2011 (FRC Act), issued strict rules (FRCN rules) limiting the provision of non-audit services to provided by an auditor stating that provision of non-audit services by an auditor and/or its related entity to its audit client could pose potential threats to the audit firm's independence and objectivity. The rules go further to impose disclosure obligations on audit client to disclose the details of such non-audit services and the applicable fees paid thereon in the notes to its financial statements. Where no non-audit service has been provided in the year, that fact shall also be disclosed.

In the same vein, principle 20 of the NCCG 2018 provides for the independence of external auditor and recommends that an external auditor may provide to the Company only such other services as are approved by the Board on the recommendation of the committee responsible for audit and such as does not create a self-review threat. This recommendation is in line with the provisions of international auditing standards.

11.3 Are there any rules or recommendations which cap the remuneration of an auditor as regards payment for the provision of non-audit services?

The FRCN rules provide that the audit client shall disclose the details of such non-audit services and the applicable fees paid in the notes to its financial statements where an audit firm and/or its related entity offers non–audit service(s) to an audit client. Additionally, where no non-audit service has been provided in the year, that fact shall also be disclosed.

12 Trends and predictions

12.1 How would you describe the current corporate governance landscape and prevailing trends in your jurisdiction?

the corporate governance landscape is and Regulators are increasingly focused on how governance works in practice, not merely whether structures exist. In other words, corporate is shifting from tick boxes to actual compliance, especially for regulated industries. For industries that are not regulated, some compliance gaps still exist.

Regarding current, transparent, and, environment the board of is the environmental and, and there is now heightened requirement for board oversight.

12.2 Are any new developments anticipated in the next 12 months, including any proposed legislative reforms?

In October 2025, Nigeria was taken off the FATF grey list after two (2) years of being on the list. As a result, continued reforms are expected to maintain Nigeria's status with FATF. In light of this, new regulatory developments are anticipated to from key regulators such as the CBN and SEC Nigeria. Some of the regulatory development expected are an intensification of board accountability for financial crime risk, increased culture and ethics in setting the tone from the top, and increased regulatory engagements with the board and not just management.

13 Tips and traps

13.1 What are your top tips for effective corporate governance in your jurisdiction and what potential sticking points would you highlight?

One key sticking point to note is weak board independence, especially for dominant founders and CEO in unregulated industries; hence, the need for board independence is crucial and should be ensured in substance beyond labels. In light of independence, the role of Independent directors cannot be underplayed. Additionally, audit, risk, and governance committees of boards should be properly empowered.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.