Corporate Governance 2025 Comparisons

The Companies and Allied Matters Act (CAMA) 2020 is the primary legislation that governs the formation, registration, operation and regulation of businesses and corporate entities in Nigeria, and provides for the following principal forms of corporate/business organisations.

• Private company limited by shares (LTD): this structure is one of the most widely adopted forms of company registration in Nigeria, primarily because of its operational efficiency and uncomplicated nature. An LTD is a commercial entity established to conduct business for profit, and is a corporate entity separate from its owner(s) with perpetual succession, a common seal and the capacity to sue and be sued in its own name. The minimum share capital for private companies is NGN100,000, with the exception of companies with foreign participation, for which it is NGN100 million, and regulated entities with specific capital requirements. One of the key introductions of CAMA is the allowance of a single shareholder for private companies and a maximum is 50 members, excluding bona fide employees of the company.
• Public company limited by shares: a public company is a distinct legal entity that exists independently from its shareholders and owners and is capable of perpetual existence. Similar to a private company, a public company affords its shareholders limited liability, meaning that, in the event of the company's insolvency, the shareholders' losses are restricted to the amounts they initially invested, and they cannot be held personally liable for any debts incurred by the company. The minimum share capital for public companies is NGN2 million, with the exception of companies with foreign participation, for which it is NGN100 million, and regulated entities with specific capital requirements.
• Company limited by guarantee: an LTD/GTE company is one in which the liability of its members is restricted by the agreement of the amount that each member pledges to contribute to the assets of the company in the event that it is wound up. It is typically used to promote commerce, art, science, religion, sports, culture, education, research, charity or another similar object, and the company's income and property are to be applied solely to the promotion of its objects, with no portion paid to the company's members except as permitted by CAMA.
• Unlimited company: the defining feature of an unlimited company is that its members have unlimited liability so that, in the event of winding-up, members may be required to contribute without limit towards the company’s debts and obligations. An unlimited company may be either private or public.
• Incorporated trustee: these are non-profit organisations formed by a group of persons united by a common interest in areas such as religion, sports, education or scientific development. These entities are not permitted to engage in business activities nor make profits for distribution.
• Limited liability partnership: an LLP is a business structure that combines the benefits of a partnership with that of a limited liability company. It must be formed by a minimum of two partners, for the purpose of carrying on a lawful business. In addition, there must be at least two designated partners, who must be individuals, with at least one resident in Nigeria. The designated partners are responsible for ensuring the LLP’s compliance with applicable laws, and for the filing of the necessary documents, returns and statements.
• Limited partnership: this business structure consists of no more than 20 partners, including at least one general partner who has unlimited liability for the debts and obligations of the partnership, and at least one limited partner, whose liability is restricted to the amount contributed to the partnership. The general partners are responsible for the day-to-day management of the business, while limited partners typically do not take part in management.
• Business name: a business name is the simplest and most flexible form of business registration in Nigeria and is ideal for small-scale businesses and individual entrepreneurs. Under CAMA, a business name is not recognised as a separate legal entity, which means that the business and the owner are considered the same under the law, and the owner(s) bears personal liability for all business debts and obligations.

The principal sources of corporate governance for companies in Nigeria are CAMA and the Nigerian Code of Corporate Governance 2018 (NCCG). The Code of Corporate Governance for Public Companies in Nigeria 2011, issued by the Securities and Exchange Commission (SEC), is applicable only to public companies. It is also important to note that there are industry-specific corporate governance codes issued by regulatory bodies such as the Central Bank of Nigeria (CBN), the National Insurance Commission (NAICOM) and the Pension Commission (PENCOM), which provide tailored governance frameworks for organisations within their respective sectors.

Companies with publicly traded shares are subject to the following requirements, among others.

• Board composition: the board of a publicly traded company should consist of no fewer than five members, with at least one independent non-executive director.
• Interlocking directorship: to preserve the objectivity and independence of the board, it is recommended that no more than two members of the same family should serve concurrently on the board of a public company. In addition, cross-membership on the boards of two or more companies should be discouraged.
• Separation of power: the positions of the chair of the board and chief executive officer in a publicly traded company must be separate and held by different individuals.
• Board committees: A public company is required to have audit, nomination, governance, remuneration and risk management committees.
• Board evaluation: to ensure continued effectiveness and accountability, the board of a public company is required to conduct an annual evaluation of its overall performance, as well as that of its committees, the chair and each individual director.

Sustainability and Environmental, Social and Governance (ESG) Reporting

There is increasing regulatory focus on sustainability and ESG reporting in Nigeria. The Financial Reporting Council of Nigeria (FRC) has continued to promote the adoption of sustainability disclosures in alignment with the IFRS Sustainability Disclosure Standards. In March 2024, the FRC released a Sustainability Reporting Roadmap, segmented into four distinct phases, as outlined below.

Phase 1 – early adopters

Entities that participated in this phase reported their sustainability-related information for the financial period that ended on or before 31 December 2023.

Phase 2 – voluntary adoption (2024–2027)

This phase covers accounting periods from 1 January 2024 to 31 December 2027. During this period, entities are expected to build internal capacity in preparation for mandatory adoption. Voluntary adopters are also required to undergo the Readiness Test Assessment before publishing any sustainability report.

Phase 3 – mandatory adoption

Public interest entities are expected to mandatorily adopt the IFRS Sustainability Disclosure Standards by 2028, while small and medium enterprises (SMEs) are expected to comply mandatorily by 2030.

Phase 4 – government and government organisations

Adoption will be considered following the finalisation of public sector sustainability standards by the International Public Sector Accounting Standards Board (IPSASB). A review will determine an appropriate commencement date for government entities.

Digital Governance and Cybersecurity Oversight

Boards are expected to play a more active role in overseeing digital transformation and managing cyber-risks. This includes establishing clear governance frameworks around data protection and IT resilience.

Materiality Assessment

Conducting a materiality assessment is a fundamental step in ESG reporting, as it enables companies to pinpoint the ESG issues that are most relevant to their operations, stakeholders and long-term value creation. This process helps organisations focus their reporting on areas that have the greatest impact on business performance and stakeholder expectations.

Standardised Reporting Framework

Companies are expected to adopt a globally recognised ESG reporting framework to ensure transparency and comparability in their disclosures. Nigeria has adopted the ISSB Standards, supported by the FRC’s Sustainability Disclosure Roadmap, which offers a streamlined and consistent foundation for ESG reporting.

Governance Structure

Strong governance is the backbone of effective ESG reporting, requiring clearly defined structures that demonstrate active oversight by the board and senior management. Companies must disclose how ESG risks and opportunities are governed, including the roles and responsibilities assigned to leadership, the extent of board involvement in ESG oversight, and the accountability of management.

Data Collection

A key challenge for companies is the collection and management of accurate and verifiable ESG data. It is critical for companies to put clear processes in place for collecting and managing data, and ensuring that the data is reliable and consistent helps to build the trust of stakeholders and meets the expectations of regulators.

Areas of Focus

Corporate governance plays a critical role in today’s corporate landscape, particularly in the formulation of succession policies within companies. Regulators now closely oversee the decision-making processes related to role transitions (see Section 11.2 of the NCCG).

A hot topic when it comes to corporate governance is the management of corporate finances. This constitutes a significant aspect of corporate governance, with public companies obliged to regularly disclose financial statements to uphold financial accountability.

Another emerging area of focus is the integration of ESG principles into corporate governance practices. This reflects a growing commitment among companies to address ESG concerns.

The principal bodies and functions involved in the governance and management of a company are as follows.

• The board of directors is the governing body of a company, and is responsible for making key strategic decisions such as appointing and overseeing management, formulating corporate strategy, and monitoring risk, among others. The board operates independently of management and is expected to act in the best interests of the company and its stakeholders, ensuring accountability, transparency and long-term sustainability.
• The executive management is responsible for the day-to-day operation of the company and for implementation of the company’s strategy. Members are accountable to the board of directors and are expected to act in the best interest of the company and its stakeholders.
• Board committees support the board in achieving its goals and objectives by providing focused oversight and making informed recommendations to the board on relevant matters.
• The company secretary plays a key role in providing administrative and governance support to the board. The company secretary is responsible for offering advice and guidance on matters relating to company law, regulatory requirements, internal policies and corporate governance best practices. In addition, the company secretary ensures that the company remains compliant with all relevant laws and regulations, facilitates effective communication between the board and management, and manages essential duties such as organising board meetings, preparing minutes and maintaining statutory records.
• Regulators and government agencies oversee corporate activities, ensuring compliance and enforcing the implementation of laws, regulations and guidelines.

Decision-making in companies takes place at various levels within the organisation, with each level having clearly defined roles and responsibilities. These decisions are made in accordance with relevant laws, as well as the company’s internal policies and procedures, ensuring accountability, consistency and alignment with organisational goals.

• As the owners of the company, shareholders have authority over certain matters that are exclusively within their purview. These typically include decisions such as an increase of share capital, a change of the company’s name, making the liability of directors unlimited, sale of the company’s major asset, voluntary winding-up of the company, declaration of dividend, etc. In addition, a company’s Articles of Association may reserve other specific matters for shareholder approval, ensuring that key decisions reflect the interests of the ownership.
• The board of directors is responsible for making key strategic decisions that shape the direction of the company. These include matters such as capital investments, budget approvals, review and approval of financial statements, corporate governance oversight, long-term planning, risk management and the establishment of internal control systems. The scope of the board's authority may vary between organisations and is typically defined in the company’s Board Charter, Delegation of Authority Policy, other internal governance documents, and applicable laws and regulations.
• The authority of board committees is defined by their respective Terms of Reference and delegated by the board.
• The authority of the executive management is subject to the authority delegated by the board of directors.
• Regulators and government agencies exert external influence on the management and governance of companies by enforcing the implementation of relevant laws and regulations, as well as issuing guidelines, circulars and directives to ensure compliance and promote best practices.

Company decisions are typically made through the passing of resolutions, which occur either at board meetings (by directors) or at general meetings (by shareholders). These resolutions are voted on in accordance with the provisions of CAMA and the company’s Articles of Association. In situations where a formal meeting cannot be convened, or where the matter is urgent, a written resolution signed by all directors or members may be passed as a substitute for a physical meeting.

Decisions by regulators and government agencies are made internally based on their statutory powers and are subsequently published publicly – typically in the form of circulars, guidelines or directives – to inform and guide companies on compliance and governance expectations.

Regulatory governance frameworks in Nigeria provide for a unitary board structure, which typically consists of a mix of executive directors, non-executive directors and independent non-executive directors with the appropriate mix of knowledge, skills and expertise to effectively undertake the operations of the company.

The roles and responsibilities of board members are typically outlined in the company’s Board Charter, Articles of Association and governance policy. A general overview of these roles and responsibilities is provided below.

• The board chair is a non-executive director who provides leadership to the board and has the responsibility of ensuring board cohesiveness and effectiveness, with the objective of supporting management in achieving corporate success. A key principle of Nigerian corporate governance is the separation of power: the chair of the board and the MD/CEO cannot be the same person. In addition, the chair of the board should not be a chair or member of any board committee.
• The MD/CEO is an executive director who oversees the day-to-day running of the company, including the implementation and achievement of the company’s strategic objectives.
• Executive directors are senior management members involved in day-to-day operations, such as the chief financial officer (CFO), chief operating officer (COO), head of legal/company secretary, etc. They support the MD/CEO in achieving the company’s goals.
• Non-executive directors oversee, constructively challenge and hold management accountable with respect to the implementation of strategy.
• Independent non-executive directors are non-executive directors with no ties to the company other than their board membership, ensuring an additional layer of objectivity.

To function effectively, a board requires the right mix of skills, experience and diversity. The composition of the board is influenced by external factors, such as the governance framework relevant to the sector in which the company operates, and by internal factors, including provisions in key company documents like the Shareholders Agreement, Articles of Association, Board Charter and governance policy. External factors typically include specific regulatory requirements, such as:

• board size;
• specific mix of executive, non-executive and independent non-executive directors;
• provisions for the prohibition of interlocking directorships; and
• the necessary board skills and expertise to oversee the business effectively.

Internal factors, on the other hand, are shaped by the company’s own governance documents, which may set additional criteria for board composition based on the company’s goals and structure.

The NCCG recommends that the board be of an adequate size relative to the scale and complexity of the company’s operations. It emphasises the importance of considering factors such as the balance of knowledge, skills, experience, diversity and independence to ensure the board can objectively and effectively fulfil its governance duties and responsibilities.

The Code also advocates for the appropriate mix of executive, non-executive and independent non-executive directors, with the requirement that the majority of the board should be non-executive directors, to ensure a proper balance of oversight and management. The Code also highlights the need for a sufficient number of members who are qualified to serve on the board’s various committees and who can form a quorum at board meetings.

The first directors of a company are appointed at incorporation by the promoters of the company, while subsequent appointment is by ordinary resolution of shareholders at the general meeting. However, where there is a casual vacancy arising from the death, retirement, resignation or removal of a director, the board of directors may appoint a new director to fill the vacancy and present such appointment to the shareholders at the next general meeting for ratification.

The following persons are disqualified from being directors under the Nigerian law:

• a child (ie, a person under the age of 18 years);
• a person of unsound mind;
• a person suspended or removed;
• a person disqualified owing to insolvency, fraudulent activities, bankruptcy or unsound mind; and
• a corporation other than its representative appointed to the board for a given term.

Unless otherwise provided in the company’s Articles of Association, at the first annual general meeting (AGM) of the company all the directors are to retire from office, and one-third of the directors ‒ or, if their number is not three or a multiple of three, then the number nearest one-third – shall retire from office at the AGM in every subsequent year. The directors to retire in every year are those who have been longest in office since their last election; however, between persons who became directors on the same day, those to retire are determined by lot (unless they agree among themselves). Directors retiring by rotation can be reappointed by shareholders.

The process and criteria for the appointment and removal of directors would typically be contained in the Board Charter or policy on board appointment, with oversight delegated to the committee responsible for governance and nominations.

Unless provided in the Articles of Association or Board Charter, the removal of a director is a statutory process and thus the provisions of CAMA would be applicable as follows.

• The person(s) wishing to remove the director will issue a notice of the resolution to the company at least 28 days before the date of the meeting.
• Upon receiving the notice, the company secretary will:
1. send a copy to the director sought to be removed; and
2. issue notice of the meeting at least 21 days before the meeting date, along with any representations made by the director.
• At the meeting, the director sought to be removed will be allowed to present their case and read their representations to the members if they were received late or not received at all due to the company’s fault.
• Following the representation by the director, the company shall now pass an ordinary resolution to remove the director and authorise the secretary to file Form CAC 7A – Notice of vacation of office/removal of director within 14 days of removal with the Corporate Affairs Commission (CAC).
• Record the removal in the register of directors and the register of directors’ residential addresses and, if necessary, amend the register of directors’ shareholding.

CAMA and the NCCG have set rules to ensure the independence of directors. The Business Facilitation Act stipulates that one-third of the board composition should be independent non-executive directors. The NCCG provides that an independent non-executive director must not possess a shareholding in the company the value of which is material to them such as to impair their independence or in excess of 0.01% of the paid-up capital of the company. Although Section 275(1) of CAMA sets a threshold of not more than 30% equity holding in the company to determine the independence of an independent non-executive director of a public company, companies typically apply the provision of the NCCG in setting the criterion of independence for their independent non-executive directors.

Directors are expected to disclose any form of conflict of interest or potential conflict of interest in the company they serve as director, as recommended by the NCCG. Conflicts of interest include insider dealing, a personal interest in transactions with the company, and familiar relationships.

The duties of the directors of a company extend to the officers of the company and are statutorily outlined. These duties include:

• a duty to always act in what the director believes to be in the best interests of the company, in good faith, to preserve the company’s assets, further its business and promote the purposes of the company;
• a duty to further the company’s business and purposes in a faithful, diligent and careful manner – in doing so, the director must pay attention to what an ordinarily skilful director would do in those circumstances and must also have regard to the impact of the company’s operations on the environment;
• a duty to always take into consideration the interests of the company’s employees, as well as the interests of its members;
• the duty of a director to exercise powers as a director based on the specified obligations within their role and not to do so for a collateral purpose;
• a duty not to fetter discretion to vote in a particular way (the director is expected to use their voting power and discretion in the best interest of the company);
• where a director is allowed to delegate powers under any provision of CAMA, such director must not delegate the power in a way that may amount to an abdication of duty;
• a duty to ensure that the director’s interest does not conflict with any of the director’s duties to the company; and
• a duty not to make unnecessary secret profit while managing and utilising the properties of the company as a director ‒ if such profit is made, the director is expected to account for it.

The directors’ statutory duties under CAMA are designed to serve the best interests of the company. These duties are fiduciary in nature, meaning directors must act in good faith and prioritise the company’s interests above their own. They must avoid any actions that would violate this duty. Directors are also expected to exercise their powers for proper purposes and to do so with care, skill and diligence.

Directors are required to consider the interests of the company’s employees as well as its members (shareholders) when performing their duties. However, where directors act in good faith and in pursuit of the company’s objectives and interests in the course of fulfilling their duties to the company, they will not be held liable for any adverse effects their actions may have on a member or employee.

Therefore, while directors are encouraged to take the interests of employees and members into account, it is clear that the ultimate priority remains the best interest of the company itself. Directors are primarily obliged to act in a manner that promotes the success and sustainability of the company as a separate legal entity, even if such actions may, in some instances, negatively impact certain stakeholders.

As a general rule, a company ‒ rather than its shareholders ‒ can bring a claim against one of its directors for breach of duty, given that the duty is owed by the directors to the company itself. The options available to the company include order of injunction, compensation for damages, and revocation of contract. However, there are instances that entitle a shareholder to enforce a breach of director’s duties, including:

• entering into illegal or ultra vires transactions;
• purporting to do by ordinary resolution any act that is required by CAMA or the company’s articles/charter to be done by special resolution;
• any act or omission affecting the shareholder’s individual rights as a member of the company;
• committing fraud on either the company or its minority shareholders;
• where a company meeting cannot be called in time to be of practical use in redressing a wrong done to the company or to its minority shareholders; and
• where the directors are likely to derive a profit or benefit ‒ or have profited ‒ from their negligence or from their breach of duty.        

Other bases for claims or enforcement against directors or officers for breaches of corporate governance requirements in Nigeria are as follows.

• Statutory regulations – Nigerian companies are subject to various statutory regulations and regulatory bodies, such as the SEC and the CAC. Directors and officers must comply with these regulations; failure to do so can result in enforcement actions.
• Common law – directors can be held liable under common law principles for actions such as negligence, breach of duty of care, or breach of trust.
• Shareholder actions – shareholders in Nigerian companies have the right to bring actions against directors for breaches of duty or other misconduct through derivative actions or direct claims.
• Criminal offences – directors and officers can also face criminal liability for offences such as fraud, insider trading, or other financial crimes under Nigerian criminal law.
• Tort law – directors can be sued under tort law for actions such as defamation, negligence or misrepresentation.
• Regulatory enforcement – regulatory bodies such as the Nigerian Stock Exchange (NGX) or the FRC have powers to enforce compliance with corporate governance standards, and can take enforcement actions against directors and officers for non-compliance.

The liability of a director is generally limited. A director will not be held personally liable for actions taken in the ordinary course of business, provided such actions are carried out in good faith and in the best interest of the company. However, directors may be personally liable in certain circumstances, particularly where their conduct involves wrongdoing. In such cases, the law lifts the veil of protection usually afforded to directors, holding them personally accountable for their misconduct.

The remuneration of non-executive directors is determined by the company at its general meetings. Typically, the board proposes the remuneration package to shareholders based on the recommendation of the committee responsible for nomination, governance and remuneration. In making such recommendations, factors such as industry standards, the expected time commitment and the company’s financial capacity are considered. The components of non-executive directors' remuneration generally include directors’ fees and sitting allowances, which are required to be disclosed in the company’s annual report. Notably, non-executive directors are prohibited from receiving performance-based compensation.

The remuneration components of executive directors who are also employees of the company are typically outlined in their letters of employment. Such remuneration usually includes benefits such as an annual salary, healthcare, car allowance, housing allowance, travel allowance, telephone allowance and other performance-based compensation. These benefits are subject to board approval and must be disclosed to shareholders. Executive directors, unlike non-executive directors, are not entitled to receive sitting allowances or directors’ fees.

Failure to comply with the approval process would render the activities of the board void.

Under the NCCG, a company’s remuneration policy as well as the remunerations of all directors are required to be disclosed in the company’s annual report. Companies are also advised to implement a claw-back policy to recover excess or undeserved rewards (eg, bonuses, incentives, share of profits, stock options, or any performance-based reward) from directors and senior employees.

A shareholder’s relationship with the company in which they hold shares is a contractual one. The relationship between the shareholders and the company is guided by the Shareholders Agreement, Memorandum And Articles Of Association to the same extent as if they were covenants on the part of the company, and each member must observe the provisions.

The shares held by the members give a right of participation in the company. A shareholder does not have a proprietary interest in the underlying assets of a company; however, they are entitled to a share of the distributed profits of the company in proportion to their respective shareholdings and, on a winding-up, to the surplus assets of the company after the company’s creditors have been repaid in full.

Shareholders are not liable for the acts of the company, except in very limited circumstances when the corporate veil can be pierced, where a company’s limited liability status is set aside, and a shareholder is liable for the company’s acts.

Information regarding a company's shareholders and their shareholding records can be obtained through the company’s profile on the CAC portal.

Shareholders are generally not involved in the day-to-day operations of the company. This responsibility lies with the board of directors, as provided by law and outlined in the company’s Articles of Association. However, certain matters are reserved for shareholder approval, including:

• the appointment and removal of directors;
• the determination of directors’ remuneration;
• the appointment of auditors and approval of their remuneration;
• alteration of the company’s share capital;
• alteration of the Memorandum and Articles of Association of the company;
• approval of the conversion of the company from a private to a public company and vice versa, and from a limited company to an unlimited company and vice versa;
• change of the company’s name;
• making the liability of directors unlimited;
• the appointment of a person over 70 years of age as a director in a public company;
• the sale or transfer of the company’s major asset;
• the winding-up of the company;
• an application to strike off the company’s name from CAC’s register; and
• declaration of dividends.

Shareholders make decisions by way of resolutions passed during general meetings. However, CAMA allows private companies to pass written resolutions without holding a meeting, provided the written resolution is signed by all shareholders.

CAMA requires shareholders to hold two types of meetings: the statutory meeting and the AGM. A statutory meeting must be held within six months of the company's incorporation and is mandatory only for public companies. The AGM, on the other hand, is required to be held annually by all companies, unless exempted by law.

Every company, except a small company or a company with a single shareholder, is required to hold an AGM each year, and no more than 15 months shall elapse between the date of one AGM and the next. The CAC has the power to grant an extension for holding the AGM, but such extension cannot exceed three months. Notice for the AGM must be sent to the shareholders at least 21 days prior to the meeting. However, a shorter notice may be sent if all shareholders entitled to attend and vote at the meeting consent to it.

CAMA provides that all statutory and annual general meetings must be held in Nigeria; however, these meetings may be held electronically if they are conducted in accordance with the company's Articles of Association.

Two types of business can be transacted during an AGM: ordinary business and special business. Ordinary business includes the declaration of dividends, presentation of the financial statements, reports of the directors and auditors, the election of directors in the place of those retiring, fixing of the remuneration of the auditors, and the removal and election of auditors and directors, while special business is any business other than ordinary business.

At any general meeting, a resolution put to the vote is decided by a show of hands, unless a poll is demanded by the chair or at least three members present in person or by proxy or a member or members representing at least one tenth of the total voting rights of all the members having the right to vote at the meeting.

As a general rule, only a company can bring a claim against any form of breach committed against it by its directors. However, shareholders may bring a claim on behalf of the company against the company and the directors under the following instances:

• entering into any transaction that is illegal or ultra vires;
• fraud against either the company or the minority shareholders where the directors fail to take appropriate action to redress the wrong done;

• where a company meeting cannot be called in time to be of practical use in redressing a wrong done to the company or to minority shareholders;
• purporting to do by ordinary resolution any act that by its articles or this act is required to be done by special resolution;
• any act or omission affecting the applicant’s individual rights as a member;
• where the directors are likely to derive a profit or benefit – or have profited or benefitted – from their negligence or their breach of duty; and
• any act or omission where the interest of justice so demands.

Shareholders may bring an action in court through a member’s direct action, personal or representative action, or derivative action.

In publicly traded companies, shareholders are required to disclose their shareholding interests when they acquire a significant percentage of the company’s shares. Under Nigerian law, particularly in accordance with the Investments and Securities Act and relevant SEC regulations, any person who acquires 5% or more of a company's voting shares must notify the company and the SEC within a prescribed period, typically within ten business days.

Shareholders are also obliged to disclose any substantial changes in their shareholding, such as further acquisitions or disposals that alter their percentage of ownership. The company, in turn, must notify the relevant securities exchange and update its records. This disclosure framework promotes transparency, prevents insider trading and ensures that investors and regulators are kept informed about significant changes in the ownership structure of listed companies.

The Persons of Significant Control Regulation is applicable to all companies, and requires a person with significant control (PSC) in a company to disclose to the company the particulars of such control within seven days of acquiring such significant control. Companies must, in turn, notify the CAC within one month of receipt of the information, disclose the information in their annual returns to the CAC, and update their registers of members with the appropriate details. Significant control arises where a natural person owns or controls at least 5% of the company’s shareholding.

In Nigeria, companies are subject to various annual and periodic financial reporting obligations to ensure regulatory compliance and promote transparency. These requirements apply generally to all companies, with additional sector-specific obligations imposed by various regulatory bodies, depending on the nature of the company’s operations.

The key financial reporting obligations are as follows.

• Under CAMA, all companies are required to prepare and file their annual financial statements with the CAC, within 42 days after the annual general meeting.
• Publicly quoted companies are required to file annual financial statements, quarterly reports and corporate governance reports with the NGX.
• Public companies (both quoted and unquoted) are required to submit their annual financial statements, quarterly reports and corporate governance reports to the SEC.
• Public interest entities are required to file their annual financial statements and corporate governance reports with the FRC.
• Insurance companies are mandated to file their annual financial statements with the National Insurance Commission (NAICOM).
• Banks and other financial institutions are required to file their annual financial statements and quarterly reports with the CBN.
• Banks, insurance companies and deposit, provident or benefit societies are required to file a Statement of Affairs (Fourteenth Schedule) with the CAC on the first Monday of February and the first Tuesday of August each year.

Companies are required to disclose the extent of their compliance with the NCCG on an annual basis, outlining the nature of the company’s compliance and, where applicable, explaining any areas of non-compliance. The report must be filed on the FRC’s portal on or before March 31st each year and, for publicly listed companies, must also be filed with the NGX on or before March 31st annually. In addition, public companies are required to submit an annual corporate governance report in compliance with the SEC Corporate Governance Guidelines on or before January 31st.

The CAC is the regulatory body responsible for incorporating companies in Nigeria. Companies are required to make various filings with the CAC, as needed, including:

• annual returns;
• notice of appointment/change of director;
• notice of share increase;
• notice of appointment/change of company secretary;
• notice of appointment/change of external auditors;
• notice of transfer of shares;
• allotment of shares;
• alteration of Memorandum;
• Statement of Affairs (Fourteenth Schedule);
• notice of change of registered address;
• notice of change of persons with significant control; and
• notice of resolution to wind up.

The filings must be made within specific timeframes, and failure to comply can result in penalties, which may be a one-off payment or daily penalties, depending on the nature of the filing. Failure to file annual returns for a continuous period of ten years may result in the company being struck off the register, effectively leading to its dissolution. These filings are available at the CAC and can be inspected for a fee. Please note that the list above is not exhaustive.

The CAC has various supervisory powers over entities, including the authority to:

• regulate and monitor the registration and operation of companies, business names and incorporated trustees;
• inspect company records; and
• investigate suspected breaches of CAMA, impose penalties for non-compliance and, where necessary, strike off defaulting entities from the register.

Through these supervisory functions, the CAC plays a critical role in promoting good corporate governance and legal compliance among registered entities.

In line with CAMA, every company – except a small company as defined under Section 394(3) of CAMA or a company that has not carried out business since its incorporation – is mandated to appoint an external auditor to audit its financial statements.

One of the key requirements governing the relationship between the company and the auditor is independence. An auditor is not expected to serve a company for more than ten consecutive years and must observe a seven-year cooling-off period before potential reappointment. To further preserve independence, there should be a rotation of the audit engagement partner every five years. Also, it is expected that a cooling off period is observed before the company can employ any member of the audit team.

Companies are expected to establish policies on the appointment and independence of auditors, and on the scope of non-audit work an external auditor can undertake.

The NCCG places the responsibility for risk management and internal controls squarely on the board of directors. The board is required to ensure the establishment of a robust and comprehensive risk management framework that identifies, assesses and mitigates risks. This framework must be effectively integrated into the company’s day-to-day operations and clearly communicated across all levels of the organisation in simple and practical terms. In addition, the board must ensure that sound internal control mechanisms, policies and procedures are in place, and that they are regularly reviewed and updated to address evolving risks.

Oversight of these functions is typically exercised through the board’s audit and risk management committee, which is also responsible for ensuring that the internal audit charter clearly outlines the roles, duties and responsibilities of the internal audit function. It must ensure that the individual or firm performing the internal audit function – whether internal staff or an outsourced firm – is properly qualified and operates in full compliance with the charter and applicable professional standards. These measures are essential to safeguard shareholders’ interests and ensure the company’s long-term sustainability.