Introduction
Annual General Meetings (AGMs) are essential to corporate governance, acting as the main platform for shareholders to interact with a company's board of directors and management. AGMs serve as a forum for evaluating company performance, facilitating critical decisions including the selection of directors and auditors, and promoting accountability through the examination of financial disclosures. [Mohd Shazwan Mohd Ariffin, Wan Nordin Wan-Hussin and Siti Seri Delima Abdul Malak, 'Annual General Meeting Minutes Value Creation: Moving Forward' (2020) 17(1) JAS 78].
In accordance with Nigerian corporate law, AGMs play a crucial role in fostering transparency, encouraging stakeholder engagement, and ensuring the democratic operation of corporate entities. [Franklin Chinagorom Ogbu and Vincent Ehimhanre Odafen, 'The Role of Internal Governance Mechanisms in Ensuring Corporate Accountability in Nigeria' (2024) SSRN 49]
The presentation of audited financial statements is a fundamental aspect of AGM. The AGM offers a thorough analysis of the company's financial status, encompassing its income, expenses, assets, liabilities, and overall performance for the fiscal year.[ Akaninyene Akpan Arthur, Jephtar Uviefovwe Ohwoekevwo and Iniobong Asuquo, 'Influence of Chief Executive Officers' Managerial Attributes on Tax Avoidance of Selected Production Firms in Nigeria' (2024) 1(2) MASS 272] The audit process, carried out by independent experts, enhances the credibility of these statements and provides assurance to shareholders regarding the accuracy and compliance of the financial disclosures with statutory requirements. The significance of financial statements in AGMs extends beyond mere information; it is essential for ensuring shareholder oversight and fostering trust. The legal implications regarding their presentation, especially the necessity of shareholder approval, continue to be a subject of investigation under the Companies and Allied Matters Act 2020.[ Meshach Nnama Umenweke and Onyeka Christiana Aduma, 'One Person Company under the Companies and Allied Matters Act 2020: A Step in Which Direction?' (2024) 5 ACRLR]
Legal Framework under CAMA 2020
The primary legislation regulating company activities in Nigeria is the Companies and Allied Matters Act, 2020 (CAMA 2020). It presents major changes meant to improve responsibility, openness, and corporate control. Among the important issues it tackles are the way financial statements are prepared and presented at AGMs and the corresponding responsibilities of directors and owners in this process.
Directors under Section 377(1)[ Section 377(1) of CAMA 2020] are required to compile and present to members of the AGM the company's financial statements for the pertinent financial year together with the audit report and their own report. This clause emphasises the directors' responsibility to give shareholders correct and timely financial reports. Further underlining this responsibility, Section 386(4)[ Section 386(4) of CAMA 2020] requires the board of directors to review the balance sheet and profit and loss account before they are approved and signed on their behalf by two directors authorised to do so. This internal approval system guarantees that the board has common responsibility for the completeness and accuracy of financial data.
Section 405(1)(a)[ Section 405(1)(a) of CAMA 2020] also adds a certification requirement wherein the Chief Executive Officer (CEO) and Chief Financial Officer (CFO) must formally confirm the correctness and dependability of the financial statements. This clause conforms with the world's best standards and encourages personal executive responsibility.
From the standpoint of the shareholders, Section 388(1)[ Section 388(1) of CAMA 2020] and (2)[ Section 388(2) of CAMA 2020] demand that the auditor's report and the financial statements be presented before them at the AGM. The Act does not specifically mandate, nevertheless, shareholder approval of these materials. This omission has spurred discussion on the degree of shareholder participation in financial disclosure approval.
At AGMs, Section 238[ Section 238(1) of CAMA 2020
] finally separates "ordinary business" and "special business." Financial statement presentation falls under the routine business classification, meaning it is a regular procedural need, and no official decision is required. This categorisation also implies - a point of vital relevance for continuous legal debates - that shareholder approval is not necessary for the adoption of financial accounts under CAMA 2020.
To view the full article click here
Originally published by Legal Business, 24 July 2025
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.
