Nigeria: ‘Anomalies': The Illogics Of Section 283(c) And 20(1)(d) Companies And Allied Matters Act 2020 Directors' Removal/Disqualification Overkill

Introduction

For over thirty years, Nigeria's companies' legislation, the Companies and Allied Matters Act¹(CAMA 2004) did not attract any major legislative attention, despite changes in the business landscape during the period.  Whilst England'sCompanies Act 1985 (CA) which it was modelled after was succeeded by the CA 2006, Nigeria did not prioritise amending or repealing CAMA 2004.  Unsurprisingly, the lethargic situation attracted the criticisms of many commentators - that CAMA 2004 was outdated and no longer 'fit for purpose' in Nigeria's corporate and commercial environment - especially given her "ease of doing business" improvement cum reform ambitions.²

Happily, in August 2020, the new Companies and Allied Matters Act 2020³(CAMA or CAMA 2020) which repealed CAMA 2004, was signed into law by President Buhari. CAMA 2020's many innovative provisions has also attracted commentary and commendation.⁴

Disquiet: CAMA 2020's New Provisions on Removal Based Disqualification of Directors

Regarding disqualification of directors, and as our analysis shows subsequently, CAMA mostly reproduced or updated erstwhile provisions of CAMA 1990/2004. However, one new provision, section 283(c) - that handicaps a suspended or removed director (for whatever cause under section 288) – is disquieting, based on its extreme unfairness.⁵ Section 283(c) with its rigour heightened by section 20(1)(d) CAMA has collectively made the fact of director removal a strict liability event. Thus, it is irrelevant whether there was any mea culpa or removal was improperly orchestrated, rather than on valid grounds in the interests of the business. 

The disquiet is more poignant because section 20(1)(d) CAMA is harsher than its predecessor, section 20(1)(c) CAMA 1990/2004, which: (a) imposed incapacity to join in forming a company pursuant to judicial/quasi-judicial outcomes; and (b) for a limited timeframe (not more than 10 years); rather than indefinitely on just the fact of a previous removal as director.⁶  It appears this new section 283(c) and 20(1)(d) regime was an unintended outcome due to legislative error, given the apparent absurdity of the provisions.

Accordingly, we argue that the instant collegial provisions are prima facie unreasonable, and excessive, vis a vis the targeted mischief of egregious director conduct. In more or less sentencing affected directors to 'economic gulag', they approximate to a form of 'expropriation' without paying due regard to some relevant circumstances; and thereby may also be, arguably unconstitutional.

This article comprehensively considers the resultant implications from different perspectives, predicting likely future judicial treatment ahead of potential caselaw on these CAMA provisions, whilst making suggestions to cure the obvious anomalies. We preface the discourse with the status and duties of the Board under CAMA and use subheadings for an easier discourse.

'Responsibilities': The Key Role and Status of the Board and Individual Directors

It is trite that the Board constitutes the 'heart' of the company, directly responsible for over-sighting its management, as the latter implements the business strategy set by the Board. Section 269(1) CAMA's primary definition of 'directors' is that "A Director of a company registered under this Act is a person duly appointed by the company to direct and manage the business of the company."⁷ It has been stated that: "directors are generally not servants of the company but its alter ego".⁸ Glimpses of the Board's powers can be seen, for example, from the provisions of section 87 CAMA.⁹ There is also an abundance of settled Nigerian and foreign case law on these points.¹⁰

Unsurprisingly, since the Board is made up of directors, sections 305 and 306 CAMA stipulate the duties of directors and prescriptions for managing directors' conflicts of interest.¹¹ Indeed, section 305(9) stipulates that "Any duty imposed on a director under this section is enforceable against a director by the company". Also, because of the authority exercised by directors on its behalf, and the fiduciary position of directors to the company, CAMA sanctions unauthorised individuals purporting to be directors; or even the company itself, where it permits such misrepresentation.¹² Furthermore, acts of directors are deemed valid, irrespective of any defects that may be subsequently discovered in their appointment: section 286 CAMA.

Several other provisions especially on personal liability are to incentivise directors' paying due attention to their responsibilities, and to contribute their respective quota towards ensuring the company's consistent optimal regulatory compliance status, or its general good corporate behaviour.¹³ This is moreso that the company itself is a legal abstraction, and therefore can only act through individuals.¹⁴ Even Nigerian tax legislation avows a similar policy.¹⁵ Another specific example is the section 2 prohibition of unlicensed banking business by the Banks and Other Financial Institutions Act 2020¹⁶ (BOFIA), breach of which could expose directors to personal liability.¹⁷ Indeed, section 48 BOFIA in a departure from the established rule on presumption of innocence, deems directors (amongst others), to be guilty of any offence under BOFIA that their company commits, shifting the burden of proof (of their non-involvement, etc) on the directors.¹⁸

On its own part, the Nigerian Code of Corporate Governance 2018 (NCCG),¹⁹ also emphasise the role of the Board;²⁰ and it is trite that in applicable cases, corporate governance failures could expose the subject company and/or directors to removal and other sanctions, ²¹ including by sector regulators.²² Meanwhile, section 41 Financial Reporting Council of Nigeria Act²³ (FRCN Act) mandates that directors of public interest entities (PIEs)²⁴ be registered with the FRCN, which also oversights the NCCG.

It is immaterial what the impact or subject matter of breach is, for example the Federal Competition and Consumer Protection Council (FCCPC) or the National Information Technology Development Agency (NITDA) can impose fines for antitrust behaviour/consumer protection infractions or data privacy breaches respectively.²⁵ 

And it is incontestable that pre and postCAMA 2020, there were/are other avenues for director disqualification/removal in Nigeria, especially vide the instrumentality of sector regulators in the exercise of their statutory powers.²⁶ CAMA's other provisions on disqualification pursuant to judicial intervention, automatic factual consequence, or status cum circumstances²⁷ are also relevant, albeit not our primary focus herein.

Possibly to reinforce these objectives (of incentivising 'good corporate behaviour'), the more stringent director removal and disqualification provisions of CAMA 2020 came to play. However, our view is that the new CAMA provisions are an overkill, symbolic of using a sledgehammer to kill an ant.

The Provisions: CAMA 2020 'Disqualification' of Directors

Section 20 (Capacity of individual to form company) provides in 20(1)(d) that: "Subject to subsection (2), an individual shall not join in the formation of a company under this Act if he is ... disqualified under sections 281 [(sic, 280)] and 283 of this Act from being a director of a company."²⁸ This was in pari materia with, albeit an enlargement of, section 20(1)(d) CAMA 1990/2004 respectively.²⁹ Section 41(1)(c) reinforces section 20(1)(d) requirement by empowering the Corporate Affairs Commission (CAC) to refuse registration of the proposed company, where "any of the subscribers to the memorandum is incompetent or disqualified in accordance with section 20 of this Act".³⁰

Footnotes

1. Cap. C20, Laws of the Federation of Nigeria (LFN) 2004. Originally enacted as the Companies and Allied Matters Decree No. 1 of 1990 (CAMD) by General Babangida's military administration, it was codified into the 1990 LFN as Cap. 59 (CAMA 1990), before further codification into LFN 2004 as Cap. C20.

2. See for example, Folashade Alli, 'Nigeria: The Companies and Allied Matters Act (Repeal and Re-enactment Bill) 2018: A Catalyst for Business in Nigeria', IFLR, 11.12.2018: https://www.iflr.com/article/b1lmx8zp9fnm5y/ nigeria-the-companies-and-allied-matters-act-repeal-and-reenactment-bill-2018-a-catalyst-for-business-in-nigeria (accessed 04.03.2022). According to Ms. Alli (at para 1): "The Companies and Allied Matters Act (CAMA) remains at the core of the regulation of business formations through which local and foreign direct investments (FDI) flow into the Nigerian economy. Despite its importance, CAMA has proven inadequate, as it is only a re-enactment of the 1968 Companies Act with further insignificant amendments in 1990 and 2004. These amendments did not reflect the ever dynamic and innovative global business environment CAMA sought to regulate, justifying the need for a complete overhaul of the Act in the face of Nigeria's current commercial realities."

3. Companies and Allied Matters Act No. 3 of 2020. Unless otherwise indicated, any simple reference to 'CAMA' in this article means CAMA 2020.

4. For some LeLaw contributions to CAMA 2020 related discourse, see Afolabi Elebiju and Ejiro Eferakeya, 'What's in a Name?: Issues in Conflict of Corporate Names in Nigeria', LeLaw Thought Leadership Reflections, June 2021: https://lelawlegal. com/add111pdfs/AEEjiro_-_Corporate_Name_Conflict_Article_Rev.pdf; Afolabi Elebiju, 'Synchronisations: Size Categorisations under Nigerian Companies and Tax Legislation', LeLaw Thought Leadership Reflections, August 2021:  https://lelawlegal.com/add111pdfs/AE_-_Synchronisations_ Companies _Size_3.pdf;  and 'Relationships and Scrutinisations: The Companies and Allied Matters Act 2020 and Transfer Pricing in Nigeria', LeLaw Thought Leadership, April 2021: https://lelawlegal.com/add111pdfs/ Relationships_and_Scrutinisations_Afolabi_corrected.pdf (all accessed 21.12.2021). Other notable commentaries include Udoma & Belo-Osagie's 12 part CAMA 2020 series. See for example, 'The Companies And Allied Matters Act 2020: What You Need To Know - Part 12 – Directors Under The CAMA 2020': https://www.mondaq.com/nigeria/shareholders/1024130/the-companies-and-allied-matters-act-2020-what-you-need-to-know--part-12-directors-under-the-cama-2020 (accessed 03.03.2022).

5. On their own director removal provisions are necessary because of the counterweight they provide to directors' powers. An authoritative commentator has stated that: "The effect of this provision [section 262(1) CAMA 2004] is that even a person appointed a director a director for life or as a permanent director by the articles or by agreement may nevertheless be removed by the general meeting, subject of course to his right to compensation, if any. This provision has been described as a key provision of modern company law is that it is designed to check the balance of power which is normally with the directors who manage the company by enabling 'shareholders to assert themselves against the directors, if need be and make it clear that the ultimate control is in the hands of the proprietors of the company if they are not the directors.' " See Hon. Dr. Olakunle Orojo, 'Company Law and Practice in Nigeria', (5^th ed., LexisNexis), p. 254.

6. The general logic of section 20(1) CAMA is understandable: anyone disqualified from being a director of an existing company should be precluded from being a prospective director of a new company. The CAC will have notice of such removal vide, the filing of CAC Form7A (Notice of Vacation of Office/Removal/Resignation of Directors) at the CAC. See subsequent discussion herein under 'Managing the Removal/Disqualification Challenge: Is Side Stepping Possible?'

7. Section 269 (244 1990/2004 CAMA) is captioned 'Meaning of directors" Note that the primary definition is supplemented by other CAMA provisions such as section 868 (560 CAMA 1990/567 CAMA 2004) stipulation that " 'director' includes any person occupying the position of director by whatever name called; and includes any person in accordance with whose directions or instructions the directors of the company are accustomed to act"; and section 270 (245 CAMA 1990/2004) which regards shadow directors as directors. From an evolutionary standpoint, see the views of a learned commentator: "In section 395 of the Companies Act, 1968, a functional approach was adopted in the definition of the word 'director'. That provision defined a director as any person occupying the position of director by whatever name called. This definition appears unsatisfactory and absurd. The intention of adopting this kind of distinction was perhaps to ensure that a person does not escape liability by pleading that he was not duly appointed. However, it appears absurd to elevate a person to the position of director first before attaching any liability to him." See E.M. Asomugha, 'Company Law in Nigeria Under the Companies and Allied Matters Act', (Toma Micro, 1994), p.163. Another author stated: "S.650 [CAMA 1990] describes a director as 'including any person occupying the position of a director by whatever name called'. This description under s.650 is based purely on function: a person is a director if he does whatever a director normally does." See M.O. Sofowora, 'Modern Nigerian Company Law', (Ipha, 1992), p.179.   

8. Fabian Ajogwu, 'Corporate Governance in Nigeria: Law & Practice' (CCLD, 2007), p.83 (Chapter 7, Duties of Directors and Their Legal Position). Continuing further, he stated: "However, the Managing Director who is saddled with day to day management of the affairs of the company is a servant of the company. [See Yalaju-Amaye v. Associated Registered Engineering Contractors Ltd. [1978 1LRN 146; [1978] All NLR 124; {1978} 11 NSCC 220.] It must be noted that such a director wears two hats – one is statutory ... and the other is the hat of an employee, albeit as the Chief Responsibility Officer of the company." Executive directors also wear dual hats like the MD.

9. Per section 87(3): "Except as otherwise provided in the company's articles, the business of the company shall be managed by the board of directors who may exercise all such powers of the company as are not by this Act or the articles required to be exercised by the members in general meeting." Section 87(4) stipulates that: "Unless the articles otherwise provide, the board of directors, when acting within the powers conferred upon them by this Act or the articles, is not bound to obey the directions or instructions of the members in general meeting provided that the directors acted in good faith and with due diligence." Emphases supplied. Cf. in pari materia provisions of section 63(3) and (4) CAMA 1990/2004. According to Ukeje, CJ, 'Nigerian Judicial Lexicon', (Ecowatch, 2006), p. 87: "'A director is simply a person appointed as one of a Board, with power to bind the company when acting as a Board, but having otherwise no power to bind them.' : Iwuchukwu v. Nwizu & Anor. [1994] 7 NWLR (Pt. 357), 379 at 396 citing Mellish LJ in Re Marseilles Extension Railway, 7 Ch.161"

10. See for example, Olufosoye v. Fakorede [1993] 1 NWLR (Pt. 272) 747; Marine Management Association Inc & Anor v. National Maritime Authority (2012) LPELR - 20618 (SC). See also relevant chapters of authoritative Nigerian company law texts cited in this article for detailed discussions.

11. Section 305(1)-(8) CAMA (279(1)-(8) 2004 CAMA) provides as follows: "(1) A director of a company stands in a fiduciary relationship towards the company and shall observe utmost good faith towards the company in any transaction with it or on its behalf. (2) A director owes fiduciary relationship with the company where - (a) a director is acting as agent of a particular shareholder; or (b) though, he is not an agent of any shareholder, such a shareholder or other person is dealing with the company's securities. (3) A director shall act at all times in what he believes to be the best interests of the company as a whole so as to preserve its assets, further its business, and promote the purposes for which it was formed, and in such manner as a faithful, diligent, careful and ordinarily skilful director would act in the circumstances and, in doing so, shall have regard to the impact of the company's operations on the environment in the community where it carries on business operations. (4) The matters to which a director of a company is to have regard in the performance of his functions include the interests of the company's employees in general, as well as the interests of its members. (5) A director shall exercise his powers for the purpose for which he is specified and shall not do so for a collateral purpose, and the power, if exercised for the right purpose, does not constitute a breach of duty, if it, incidentally, affects a member adversely. (6) A director shall not fetter his discretion to vote in a particular way. (7) Where a director is allowed to delegate his powers under any provision of this Act, such a director shall not delegate the power in such a way and manner as may amount to an abdication of duty. (8) No provision, whether contained in the articles, resolutions of a company, or any contract, shall relieve any director from the duty to act in accordance with this section or relieve him from any liability incurred as a result of any breach of the duties conferred upon him under this section." Emphases supplied.

12. See section 269(3) and (4) CAMA: "Where a person not duly appointed acts or holds himself out as a director, he commits an offence and is liable on conviction to imprisonment for a term of two years or a fine as the Court deems fit for each day he so acts or holds out himself as a director or both and shall be restrained by the company."  "If it is the company that holds him out as a director, it is liable to a fine in such amount as the Commission shall specify in its regulations for each day it holds him out, and he and the company may be restrained by any member from so acting until he is duly appointed." This is against the background of section 269(1) CAMA provision that: "A Director of a company registered under this Act is a person duly appointed by the company to direct and manage the business of the company." See predecessor provisions in section 244(1), (3) and (4) CAMA 1990/2004. For a detailed discussion of directors' status and responsibilities under the English regime, see Part II (The Office of Director) in Simon Mortimore, QC (ed.), 'Company Directors, Duties, Liabilities and Remedies' (2^nd ed., OUP, 2013), pp. 53-218.

13. See for example, sections 315 and 316 CAMA. Section 315 allows a limited company if so authorised by its articles, to by special resolution, alter its memorandum so as to render the liability of its directors or managers unlimited; whilst section 316 provides for personal liability of directors where loans, contract advances or other assets received for specific purposes by the company are misappropriated, albeit notwithstanding the liability of the company itself. By section 334(2), "Where, in proceedings brought under this section [personal and representative action], the Court finds the directors or any of them liable for any wrongdoing, the erring director is personally liable in damages to the aggrieved member." Section 433(1) provides that "All directors who knowingly pay, or are party to the payment of dividend out of capital or in contravention of this Part, are personally liable jointly and severally to refund to the company any amount so paid." Section 729(3) imposes personal liability for misuse of company's seal or other purported acts regarding the company's stationery, etc. in the circumstances therein stated, unless the company pays or discharges the resulting liability. Per section 862(1), persons (including directors) who wilfully make false statements in any statutory corporate returns or submission commits an offence and risks imprisonment for a term of two years upon conviction. Section 862(3) provides that "Nothing in this section shall affect the provisions of any enactment imposing penalties in respect of perjury in force in Nigeria.

14. For a discussion, see Yewande Obayomi,'Some Thoughts on Corporate Criminal Responsibility in Nigeria', LeLaw Thought Leadership, September 2017: https://lelawlegal.com/add111pdfs/Corporate_Criminal_ Responsibility.pdf (accessed 03.03.2022). Since the company has legal personality by virtue of sections 42 CAMA (Effect of registration), and by section 43(1) it generally, "for the furtherance of its business or objects, have all the powers of a natural person of full capacity", it is clear that directors' liability does not relieve the company itself of its rights and obligations. Cf. predecessor provisions of sections 37 and 38(1) 1990/2004 CAMA. See for example, sections 304 (criminal prosecution) and 305 (offences by companies and market participants) ISA – these provisions could impact directors, depending on the applicable factual context. See also generally, Godwin Luke Umoru, 'Corporate Citizenship in Law: Nigerian and Other Comparative Perspectives', (Malthouse, 2017). For some comparative discussion under the CA 2006, see Part III (The General Duties of Directors) in Simon Mortimore, QC (ed.) (supra), pp. 221–416. See also, Adewale Olawoyin, SAN 'Directors' Personal Liability In Nigerian Corporate Law', (2016) 7 GRBPL No. 4, pp.30-48; Prof. Konyinsola Ajayi, SAN, 'The Bank Director: Duties and Imperative of Corporate Governance', (2015) 6 GRBPL No.2, pp. 1-21; and Aluju and Onele, 'An Appraisal of the Duties of Directors of a Public Company in Nigeria', 8 (2017) 8 GRBPL No. 1, pp.52-65.

15. Some provisions of Nigerian tax legislation hold directors and officers personally liable for certain breaches by the company. See for example, sections 94 Companies Income Tax Act, Cap. C21, LFN 2004 (which sanctions "any person other than a company"; sections 41-43 Federal Inland Revenue Service (Establishment) Act, Cap. F36, LFN 2004 (FIRSEA) provides for fines and/or terms of imprisonment persons who commits and are convicted of the specified offences. Section 49(2)(a) FIRSEA on its own part stipulates inter alia that where  a body corporate commits an offence under the Act, then "every director, manager, secretary or other similar officer of the body corporate, commits an offence and shall be liable to be proceeded against and punished for the offence in like manner as if he had had himself committed the offence; unless he proves that the act or omission constituting the offence took place without his knowledge, consent or connivance."  Emphasis supplied; sections 96 Personal Income Tax Act, Cap. P8, LFN 2004 (PITA) (which is in pari materia with section 94 CITA), etc.

16. Act No. 5 of 2020.

17. Section 2(2) and (3) BOFIA provides: "(2) Any person who carries on banking business in Nigeria without a valid licence under this Act, commits an offence and is liable on conviction to – (a) imprisonment for a term of not less than five years; (b) a fine of not less than N50, 000,000; (c) two times the cumulative deposits or other amount collected; or (d) both imprisonment and fine. (3) For the purpose of subsection (2), "any person" includes: a body corporate, its promoters, directors, managers, or officers that are in any way connected with superintending, directing or managing the affairs of the company." Emphasis supplied. See also, the in pari materia provisions of section 58(5) BOFIA.

18. Cf. with section 49(2)(a) FIRSEA referred to subsequently in this article. See also section 49 BOFIA: "Any person, being a director, manager or officer of a bank, who fails to - (a) take all reasonable steps to secure compliance by the bank with the requirements of this Act; or (b) take all reasonable steps to secure the correctness of any statement submitted under the provisions of this Act, commits an offence and is liable on conviction to – (i) a fine of not less than N2, 000,000 or imprisonment for a term of not less than 3 years or to both such fine and imprisonment and, in addition, the Governor may suspend or remove from office or blacklist any such officer, manager or director." Emphases supplied. Cf. also, section 27 Nigerian Council of Registered Insurance Brokers Act, Cap. N148, 2004 LFN.

19. For a discussion, see Afolabi Elebiju and Gabriel Omoniyi, 'Nigeria: Corporate Governance Comparative Guide', Mondaq, 09.02.2022: https://www.mondaq.com/nigeria/corporatecommercial-law/1131674/corporate-governance-comparative-guide; and Afolabi Elebiju and Gabriel Fatokunbo, 'Overviews: NAICOM's Corporate Governance Guidelines For Insurance And Reinsurance Companies 2021 (CGGIRC)', LeLaw Thought Leadership, April 2021: https://lelawlegal.com/add111pdfs/OVERVIEWS_-_NAICOM%E2%80%99S_CORPORATE_ GOVERNANCE.pdf   (both accessed 04.03.2022). In the latter article, the authors commented (at p.1): "The CGGIRC 2021 replaced the Code of Good Corporate Governance for the Insurance Industry in Nigeria 2009 (CGCGII) vide Guideline 1.0(v) CGGIRC 2021. Prior to the issuance of CGGIRC 2021, the Financial Reporting Council of Nigeria (FRCN) pursuant to sections 11(c) and 51(c) FRCN Act 2011 essentially harmonised all sectoral codes into the Nigerian Code of Corporate Governance 2018 (NCCG). April 2021 Therefore, the NCCG 2018 displaced prior sectoral codes: (a) Code of Corporate Governance for the Telecommunication Industry 2016, issued by the Nigerian Communications Commission (NCC); (b) Code of Corporate Governance for Banks and Discount Houses in Nigeria 2014 issued by the Central Bank of Nigeria (CBN); (c) Code of Corporate Governance for Public Companies in Nigeria 2011 issued by the Securities and Exchange Commission (SEC); (d) Code of Good Corporate Governance for Insurance Industry in Nigeria 2009 issued by the National Insurance Commission (NAICOM); and (e) Code of Corporate Governance for Licensed Pension Fund Operators 2008 issued by the National Pension Commission (PenCom)"

20. See Part A NCCG (Board of Directors and Officers of the Board), covering Principles 1-16. The NCCG is available at: https://nambnigeria.org/Nig_Code_of_Corp._Governance_2018.pdf  (accessed 06.03.2022).

21. See sections 64 (Sanctions for noncompliance) and 65 (Sanctions on public interest entities) FRCN Act and section 33(1)(e) FRCN Act that "fines and penalties imposed by the Council" also comprise part of the FRCN's Fund. Para 28.2(n) NCCG requires that subject company's CG Report should include "a list of all the fines and penalties (including date, amount, and subject matter) imposed on the Company by regulators at the

end of the reporting period." See for example, section 59(5) BOFIA: "Failure to comply with the guidelines or other directives of the Bank or refusal to supply returns in the prescribed form may be a ground for the revocation of a licence granted under this Act." Emphasis supplied. In its Introduction, Para D (Monitoring the Implementation of the Code), the NCCG state in part: "The implementation of this Code will be monitored by the FRC through the sectoral regulators and registered exchanges who are empowered to impose appropriate sanctions based on the specific deviation noted and the company in question. Additionally, the FRC may conduct reviews on the implementation of the Code where deviations from the Code recur. Other monitoring mechanisms adopted by the FRC will be based on its review of the level of implementation of the Code." Note that the NCCG is mandatory for public interest entities (PIEs) as defined therein, albeit small unregulated companies can view the provisions as best practice guides for their own governance. See also SEC, 'Suspension and Penalties: Companies Facing Enforcement Action' (As at March 2015, April 2016 and March 2011 respectively): https://sec.gov.ng/suspensions-and-penalties/ (accessed 08.03.2022); Victor Ejechi, 'SEC: We'll Continue to Monitor and Sanction Erring Capital Market Operators', The Cable, 01.11. 2021: https://www.thecable.ng/sec-well-continue-to-monitor-and-sanction-erring-capital-market-operators  (accessed 08.03.2022). SEC's powers is pursuant to the Investment and Securities Act, Cap. I24 LFN 2004 (as amended) (ISA). TheISA vests the Securities and Exchange Commission (SEC) with enforcement powers to impose several sanctions on erring capital market operators.

22. Sanctions could come in various forms, not just removal. For an example of a non-director removal sectoral sanction, see section 80 BOFIA: "A bank, specialised bank or other financial institution that is in default of payment of the levy imposed under this Act or any part thereof shall be prohibited from paying dividends or other like distribution to its shareholders, and from paying any bonuses however to its directors or employees, while such payment default continues."

23. Act No. 6 of 2011. By section 41(6), contravention is an offence attracting a fine of up to N0.5 million and/ or imprisonment of up to 6 months. The registration has a 2 year validity and must be renewed: section 42 FRCN Act.

24. For a discussion of PIEs, see Afolabi Elebiju, et al, 'Definitions And Developments: Corporate Governance Implications of Judicial Interpretation of "Public Interest Entities" in Eko Hotels Limited v. FRCN FHC/L/CS/ 1430/2012', LeLaw Thought Leadership Insights, July 2019: https://lelawlegal.com/add111pdfs/PIE-ARTICLE.pdf (accessed 08.03.2022).

25. See for example, stringent provisions of sections 36, 69, 74, and 154 Federal Competition and Consumer Protection Act No. 1 of 2019 (FCCPA); section 18 NITDA Act, Cap. N156, LFN 2004, and Reg. 2.10 Nigeria Data Protection Regulation 2019 (NDPR). Both the FCCPA and NITDA Act deems directors as committing any offence that their related company commits, unless proven to the contrary. Section 24(g) Pension Reform Act 2014 (PRA) empowers the National Pension Commission (PenCom) to "impose administrative or civil sanctions or fines on erring employers or Pension Fund Administrators or Pension Fund Custodians"

26. For example sectoral regulators such as the: Central Bank of Nigeria (CBN),  Securities and Exchange Commission (SEC), National Insurance Commission (NAICOM), PenCom, etc pursuant to their relevant enabling PIA example? Sometimes disqualification is loosely used interchangeably with removal, especially as removal will be the incidence of any currently serving director being disqualified – such director can no longer continue in office and removal would be inescapable. Since the enabling law often require prior approval of sectoral regulator for appointment of individuals as directors of regulated entities (see for example, section 47(1) BOFIA), regulatory removal is not as objectionable, once there is compliance with due process.   

27. By section 280 CAMA (previously section 254 CAMA 1990/2004), disqualification by order of the FHC include all the instances under sections 668-670 (section 506 CAMA 1990/2004) for a period not exceeding 10 years. Automatic disqualification include disqualification by reason of: insolvency; not meeting any prescribed share qualifications in the Articles; being of unsound mind; minors (under 18 years). See sections 277, 279 and 283.

28. Emphasis supplied.

29. Whilst CAMA referred to persons disqualified under sections 280 and 283 (as an aside, we believe that section 20(1)(d) CAMA not only incorrectly referred to section 281 (it should have referred to section 280), but such reference is actually superfluous, since section 288 removal (imported by section 283(c)), affects a section 281 director (life director but who is removable). Cf. CAMA 1990/2004 which referred to persons disqualified under section 254 (Restraint of Fraudulent Persons). Whilst section 280 CAMA is largely a rehash of section 254 CAMA 1990/2004 and the latter's 254(1) is more or less in pari materia with 280(1); section 280(2) is a new provision that stipulates: "The period of disqualification referred to in subsection (1) shall commence after the sentence for the offence has been served or on the date the fine for the offence is paid." Emphasis supplied. Closer review has shown that section 20(1)(d) CAMA 1990/2004 can also be read to include section 283 CAMA 2020 equivalent, because section 257(1)(c) CAMA 1990/2004 also disqualifies from being director "a person disqualified under sections 253, 254 and 258 of this Act" (relating to insolvents, fraudulent persons and persons that must vacate office of director under the enumerated circumstances of section 284).

30. The provision is in pari materia with section 36(1)(c) CAMA 1990/2004. Notably, section 40 CAMA 2020 provides for the statement of compliance (a statement by the applicant or his agent) to be delivered to the CAC "that the requirements of this Act as to registration have been complied with", which the CAC "may accept ...as sufficient evidence of compliance". Cf. with equivalent section 35(3) CAMA 1990/2004's statutory declaration of compliance in the prescribed form by a legal practitioner which the CAC may also accept as sufficient evidence of compliance. These essentially represents attestations amongst others that no disqualified person is joining in promoting companies. For added effect, section 41(3) CAMA 2020 (in pari materia with 36(3) CAMA 1990/2004) provides that the CAC "may, in order to satisfy itself as provided in subsection (1)(c), by instrument in writing, require a person subscribing to the memorandum to make and lodge with the Commission, a statutory declaration to the effect that he is not disqualified under section 20 of this Act from joining in forming a company."

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