Principles of Corporate Management

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c!ccINTRODUCTION
1.1-c BACKGROUND OF STUDY
This work is an examination of company law. Company law is foreign to the

customary and indigenous system of law in Nigeria and its history is part of the
history of the received English law which has become incorporated into the Nigerian
legal system1.
It is no gain say that the major ambition of any country is national economic
sustainability and advancement which various corporate businesses form a major part
of and as stated by Gamaliel O. Onosode;
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Thus, the incorporation of the various English laws on company law has formed a
distinctive development by regulating companies in Nigeria through the recognition,
application and strict adherence of those laws via the agency saddled with the
responsibility The Corporate Affairs commission (CAC).
The Companies and Allied Matters Act of 1990 (CAMA) is the federal statute in
Nigeria. The statute is a codification of common law, general regulations and customs
of company law practitioners and businessmen alike which addresses most of the
mischief of corporate life and practices that the nation was subjected to. The
provisions of CAMA prompted textual authorities to revise and update their works in
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order to accommodate the changes the Act brought along so that already seasoned
practitioners on the traditional company law become more enlightened. L.C.B Gower,
said £
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examination of the extents to which they are applied and adhered to in practice.
1.2- STATEMENT OF PROBLEM
Considering that the corporate environment is one filled with stippled practices, ³*

' + it then becomes crucial to examine µthe principles of corporate
management¶ as a topic. Some people establish Corporations to carry on illicit
activities with the intention of hiding behind the veil of incorporation; this work seeks
to examine the reasons for this behaviour by the business owners. The significance of
the provisions of subsection 3 to section 39 (effect of Ult ra Vires acts) of CAMA, and
the effect of pre-incorporation (especially where the proceeds of the contract go to the
start-up capital of the company) contracts on a proposed company.
1.3- SCOPE OF STUDY
This research work is intended to bring a clear straightforward and up-to-date

introduction to all aspects of business management, ranging from the rules that guide
the formation of business organisations to the establishment of various organs within
the organisation being the directors, members and the officers of the organisation.
The major principles of company law would be explained with sufficient details to
reveal their operation in practice so that the structure of the subject matter remains in
plain view. Certain emphasis would be laid on the constitution of the company which
guides the every activity of the officers that ensures that they don¶t deviate from
objectives as laid down, and where they do, the penalty that would be accorded as
stipulated by the statute that regulates the activities of such company. The provisions
of CAMA on subjects like the rule, the formation of a company,
membership of a company , adequacies of internal organs in managing the affairs of
the company lawfully, and the finance sourcing of the company, would be analysed,
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pointing out the problems that such provisions pose and suggestions on possible
solutions. 1
1.4- METHODOLOGY
The method to be used for this research is analytical and expository based on
secondary data and information gathered from text books, dictionaries, articles,
journals, the internet, newspapers, and lecture notes as well as deductions from the
researcher.
1.5- OBJECTIVE OF STUDY
The assumption of general knowledge on English law and its codification into our
indigenous law, and detailed examination of different textual authorities on the subject
has helped develop to a great extent company law in Nigeria and also minimise the
problems faced by the honest man who does not know what he is doing in modern
business.
Although this is a research project, I hope it can also serve as a useful, compact and
advanced statement of law for other students seeking to be more knowledgeable in
this aspect of law. My primary aim in this work is to state the current position of the
law leading from the development of such laws through the history and purpose with
as much precision as can be achieved on the fundamental principles of corporate
management by the examination of authorities on the subject matter, and the
provisions of the Companies and Allied Matters Act 1990 and other statutes that guide
business operations in Nigeria and other jurisdictions.
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The different solutions proffered to the problems still existent in our current legal
system on corporate practices would be examined as certain areas still give concern to
the common man for instance, the issue of finance wherein money acquired for a
specified purpose is diverted to another area entirely different from that stated.
1.6- SIGNIFICANCE OF THE STUDY
Seeks to be an academic contribution to the further development of application of the

principles that guide corporate management in Nigeria wherein proposition would be
made for a review of the penalties met out to defaulting companies under CAMA
having in mind that the current penalties/ fines are laughable. This work however is a
step to a close analysis of those areas of law that affect the immediate running of a
company enumerating the purposes, significance, as well as the flexibility of those
laws on corporate governance.
1.7- LIMITATIONS OF STUDY:
Sources of materials for this research work are scarce and the immediate availability
of those available is limited therefore restricting the researcher to the use of those that
are at her disposal but this would not affect the quality of the content of this study as it
poses a challenge to delve deeper and optimise the use of available materials. The
time frame is also short.
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Corporations or companies are organizations created pursuant to statute that allows

people to associate together for a common purpose under a common name. The statute
gives the corporation certain privileges, including the right to buy and sell property,
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enter into contracts, sue and be sued, and borrow and lend money. 2 One of the
significant features of corporation is that the rights and responsibilities of a
corporation are independent and distinct from the people who own or invest in them.
Most corporations provide a way for the running of a business and the sharing of the
profits and losses. This research is concerned with how a company; the legal entity
which owns the business (and not the business in itself) is managed or governed.
The aim of this chapter is to bring to the fore, the various opinions, write ups and
discussions on the topic; principles of corporate management. This paper seeks to
examine corporate management as a theme, the history, and definition of corporate
management, the manner in which a corporation comes into existence, as well as the
duties and responsibilities of the people behind a company.
Corporate management or governance is receiving greater attention in both developed
and developing countries as a result of the increasing recognition that a the manner in
which a company is managed affects both its economic performance as well as its
ability to grow through long -term access to low-cost investment capital. Recent cases
of corporate failure in large companies have focused the minds of investors, boards,
companies, regulators and indeed governments on the threat posed to the integrity of
financial markets3.
The legal principles of corporate management are the laws, rules, concepts, theories
that companies are run by. The Encarta dictionary defines corporation as ³

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corporations initially served only limited purposes, the Industrial Revolution spurred
their development. The corporation became the ideal way to run a large enterprise,
combining centralized control and direction with moderate investments by a
potentially unlimited number of people. The corporation today remains the most
common form of business organization because, theoretically, a corporation can exist
forever and because a corporation, not its owners or investors, is liable for its
contracts. But these benefits do not come free. A corporation must follow many

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formalities, is subject to publicity, and is governed by regulations. It is through these
formalities, and regulations that companies are managed; this is the theme of this
work.
The principles of corporate management (also known as corporate governance) is all

about the laws, rules, concepts that company management is based on, such that are
far encompassing and in order to adequately discuss the subject, various texts would
be delved into to x-ray the following:
1.c The nature of a company and its separate personality;
1.c Types of corporations; and
2.c The administrative and statutory bodies for corporate management.
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In the 19th century, state corporation laws enhanced the rights of corporate boards to
govern without unanimous consent of shareholders in exchange for statutory benefits
like appraisal rights, to make corporate governance more efficient. Since that time,
and because most large publicly traded corporations in the US are incorporated under
corporate administration friendly Delaware law, and because the US's wealth has been
increasingly securitized into various corporate entities and institutions, the rights of
individual owners and shareholders have become increasingly derivative and
dissipated. The concerns of shareholders over administration pay and stock losses
periodically has led to more frequent calls for corporate governance reforms
In the twentieth century in the immediate aftermath of the Wall Street Crash of 1929
legal scholars such as Adolf Augustus Berle, Edwin Dodd, and Gardiner C. Means
pondered on the changing role of Modern Corporation in society. Berle and Means¶
monograph4 continues to have profound influence on the conception of corporate
governance in scholarly debates today. From the Chicago school of economics,

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Ronald Coase¶s ³Nature of the firm´ (1937) introduced the notion of transaction costs
into the understanding of why firms are founded and how they continue to behave
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American expansion after World War II through the emergence of multinational

corporations saw the establishment of the managerial class. Accordingly, some
Harvard Business School professors published influential monographs studying their
prominence, according to Professor Jay Lorsch and MacIver, ³many large
corporations have dominant control over business affairs without sufficient
accountability or monitoring by their board of directo rs.´
Recent occurrences in the international corporate environment have refocused the

world¶s attention to concerns for effective domestic corporate governance initiatives
that would ensure credibility on how companies conduct business in our postmodern
globalised world. The Enron and the WorldCom saga in the United States 5 the
Vivendi and the recent Parmalat scandals in Europe6 are the most recent of such
disturbing failures of credible business practice.
In Nigeria, corporate governance issues particularly accounting irregularities had been
raised in the case of Unilever, and recently in Cadbury Nigeria Plc. The investing
public and the Securities Exchange Commission reacted negatively to allegations of
financial misrepresentations on the part of the lever brothers, what followed was the
creation by SEC a committee on corporate governance which produced its report as
well as the first Code of Corporate Governance and Best practices in 2002,
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Management is the only activating element of any enterprise for getting things done
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The phrase µcorporate management¶ is barely defined in books; the definition is fluid
and not precise therefore the term µcorporate governance¶ which is more freely used
and only synonymous with µcorporate management¶.
Corporate governance is not a concept that could be subjected to a watertight
definition. The 1992 Cadbury Report saw it as ³systems by which companies are
directed and controlled. 7´
The concept of governance cannot be completed without acknowledging the
contribution of the most celebrated scholar of ancient India, Kuatilya. One of the
world¶s most complete manuscripts on the science of governance was penned by
Kautilya in third century, B.C. Kautilya¶s discussions on administration and
management are strikingly modern and scientific covering almost all facets of
governance. According to him, ³an ideal king is one for whom in the happiness and
well being of the subjects, lies the well being of the king, in the welfare of the
subjects, is the welfare of the king, what is desirable and beneficial to the subjects and
not his personal desires and ambitions, is desirable and beneficial for the king. He
further elaborates that a king has a fourfold duty as raksha or protection, Vridhi or
enhancement, palana or maintenance, yogakshema or safeguard. It is the duty of the
king to protect the wealth of the state and its subjects, to enhance the wealth, to
maintain it and safeguard it and the interests of the subjects. If we for a moment
assume the today¶s business CEO or corporate board as king and subjects as its
shareholders, its bring out the quintessence of Corporate governance as public good
should be ahead of private good and company¶s resources should not be used for
personal gains. The four duties in corporate parlance would imply protection of
shareholders wealth, enhancement of wealth by proper utilization of assets,
maintaining the wealth (without appropriating it otherwise) and safeguarding the
interests of all stakeholders. Therefore, the ultimate end of earning all round
reverence, from a corporate¶s perspectives, should be the improvement of
stakeholders¶ value8.
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A Corporation is an association of individuals, created by law or under authority of
law, having a continuous existence independent of the existence of its members, and
powers and liabilities distinct from those of its members, 9 while management is the act
or manner of managing, handling the direction or control10, it could also mean the
coordination of all the resources of an organization through the process of planning,
organizing, directing and controlling in order to attain organization objective.
Management in all business and human organization activity is the act of getting
people together to accomplish desired goals and objectives11. From the above split
definitions of µCorporate¶ and µmanagement¶ ³corporate management can be defined
as the way in which a company is co-ordinated through the process of planning,
organising, directing and control in order to attain its objectives´12c Corporate
management means the planning, organizing, directing, and controlling of the
enterprise's operation so that objectives can be achieved economically and efficiently
through others 13.
Corporate management is about how companies are directed and controlled. The term
corporate governance has come to mean two things: the processes by which
companies are controlled and directed; and a field in law and business, which studies
many issues arising from the separation of ownership and control14.
A holistic interpretation of the nature of corporate management was put forward by
Pat Barret15 in his definition:
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Corporate management is therefore used to monitor whether outcomes are in
accordance with plans, and to motivate the company to be more informed in order to
maintain or alter organisational activity. It is the mechanism by which individuals are
motivated to align their actual behaviours with the overall participants.
The Organisation for Economic Cooperation and Development (OECD) provides the
most authoritative functional definition of corporate governance: È,

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The concept implicates rules and regulations that ensure that a company is governed
in a transparent and accountable manner such that the enterprise survives and meets
the expectations of its shareholders, creditors and stakeholders of which society forms
a large part of.
Business author Gabrielle O¶Donovan 17 defines corporate governance as µan internal

system encompassing policies, processes and people, which serve the needs of
shareholders and other stakeholders, by directing and controlling management
activities with good business savvy, objectivity and integrity. Sound corporate
governance is reliant on external market place commitment and legislation, plus a
healthy board culture which safeguards policies and processes¶.
O¶Donovan goes to say that the manner in which the quality 18 of a company¶s
corporate governance is perceived is able to influence the price of its shares and also
the cost of raising capital.
Legislative policies have been the centre stage for discussion of corporate
management today in an effort to bring fraudulent activities to a bearable minimal and
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allow transparency. In this vein, management executives instead of maximising and
relying on their internal structure, do not recognise the causes of these activities and
battle the indicators instead.
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The companies with which this work is concerned are called µregistered companies¶
because they are brought into existence by registration of documents19 with a public
official 20 and afterwards issued a certificate of incorporation. Section 37 of CAMA
provides that from the date of incorporation mentioned in the certificate of
incorporation, everybody who subscribes the memorandum and all other person who
joins the company afterwards would become a body corporate by the name contained
in the memorandum. The most important legal characteristic of a registered company
is that it is µincorporated¶ and so has what is known as µlegal personality¶. In
345 " it was held that the legal personality of a corporate body can only be
established as a matter of law by the production of the certificate of incorporation in
evidence, but that where by the state of the pleading, the legal personality is not in
issue, there would be no need to prove the status.
Incorporation is a legal process by which an artificial entity (or µ
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capacity of an incorporated entity is limited by only two factors:
1. The fact that the entity is not human. For instance, a company cannot drive a
car or eat bread.22
2. Any limitation imposed by the process of incorporation. Following recent
reforms only charitable companies (companies limited by guarantee) suffer any
limitations on capacity by being incorporated as registered companies.
Corporate personality refers to the fact that, as far as the law is concerned, a company
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really exists. This means that a company can sue and be sued in its own name, hold its
own property and crucially be liable for its own debts. It is this concept that allows
limited liability for shareholders as the debts belong to the legal entity of the company
and not to the shareholders in that company.
Corporate legal personality arose from the activities of organizations, such as religious
orders and local authorities, which were granted rights by the government to hold
property, sue and be sued in their own right and not to have to rely on the rights of the
members behind the organization. Over time the concept began to be applied to
commercial ventures with a public interest element, such as rail building ventures and
colonial trading businesses. However, modern company law only began in the mid-
nineteenth century when a series of Companies Acts were passed which allowed
ordinary individuals to form registered companies with limited liability. The way in
which corporate personality and limited liability link together is best expressed by
examining the key cases.
It was fairly clear that the mid-nineteenth century Companies Acts intended the
virtues of corporate personality and limited liability to be conferred on medium to
large commercial ventures. To ensure this was the case there was a requirement that
there be at least seven members of the company. This was thought to exclude sole
traders and small partnerships from utilizing corporate personality.
However, as we will see in the case of - v - 8, 9: !;<,"", this
assumption proved to be mistaken.
The fact of the case: Mr. Salomon carried on a business as a leather merchant. In 1892
he formed the company Salomon & Co Ltd. Mr. Salomon, his wife and five of his
children held one share each in the company. The members of the family held the
shares for Mr Salomon because the Companies Acts required at that time that there be
seven shareholders. Mr. Salomon was also the managing director of the company. The
newly incorporated company purchased the sole trading leather business. The leather
business was valued by Mr. Salomon at £39,000. This was not an attempt at a fair
valuation; rather it represented Mr. Salomon¶s confidence in the continued success of
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the business. The price was paid in £10,000 worth of debentures 23 this means the debt
is secured over the company¶s assets and Mr. Salomon could, if he has not repaid his
debt, take the company¶s assets and sell them to get his money back), plus £20,000 in
£1 shares and £9,000 cash. Mr. Salomon also at this point paid off all the sole trading
business creditors in full. Mr Salomon thus held 20,001 shares in the company, with
his family holding the six remaining shares. He was also, because of the debenture, a
secured creditor.
However, things did not go well for the leather business and within a year Mr
Salomon had to sell his debenture to save the business. This did not have the desired
effect and the company was placed in insolvent liquidation (i.e. it had too little money
to pay its debts) and a liquidator was appointed (a court-appointed official who sells
off the remaining assets and distributes the proceeds to those who are owed money by
the company.
The liquidator alleged that the company was but a sham and a mere µalias¶ or agent for
Mr Salomon and that Mr Salomon was therefore personally liable for the debts of the
company. The Court of Appeal agreed, finding that the shareholders had to be a
association who intended to go into business and not just hold shares to comply
with the Companies Acts. The House of Lords disagreed and found that:
1c the fact that some of the shareholders were only holding shares as a
technicality was irrelevant; the registration procedure could be used by an
individual to carry on what was in effect a one-man business
2c A company formed in compliance with the regulations of the Companies Acts
is a separate person and not the agent or trustee of its controller. As a result,
the debts of the company were its own and not those of the members. The
members¶ liability was limited to the amount prescribed in the Companies Act
(i.e. the amount they invested).
Lord Mcnaghten stated thus: where a memorandum is duly signed and registered,
though there be only seven share taken, the subscribers are a body corporate ³capable
forthwith´, to use the words of the enactment, ³of exercising all the functions of an
incorporated company. µThose are strong words. The company attain maturity on its
birth there is no period of minority- no interval of incapacity«cannot understand how

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a body corporate this made capable by statute can lose individuality by issuing the
bulk of its capital to one person, whether he be a subscriber to the memorandum or
not. The company is at law a different person altogether from the subscribers to the
memorandum: and, although it may be that after incorporation the business is
precisely the same as it was before, and the same persons are managers, and the same
hands receive the profits, the company is not in law the agent of the subscribers or
trustee for them, nor are the subscribers as members liable, in any shape or form,
except and in the manner provided by the Act´ 24
The decision also confirmed that the use of debentures instead of shares can further
protect investors.
The concept of corporate personality therefore means that once a company is

registered, it becomes a separate person from the individuals who are its members. it
has the capacity to enjoy legal rights and it is subject to legal duties which do not
concede with that of its members.
It therefore follows from this that it is through incorporation that one can create a
corporation25. Although a company is a legal entity and has independent legal
personality all its operations and activities have to be carried on by its organs and
agents. This is the position in 0
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Another application of the principle of legal personality is in the right of a company

even a one man company to employ and pay for service of any its shareholders as a
servant in 3436<3 2&<,"
&Mr Lee incorporated a
company, Lee¶s Air Farming Ltd, in August 1954 in which he owned all the shares.
Mr Lee was also the sole µGoverning Director¶ for life. Thus, he was in essence a sole
trader who now operated through a corporation. Mr Lee was also employed as chief
pilot of the company. Mr Lee was killed in the crash of the company¶s plane leaving a
widow and four infant children. The company, as part of its statutory obligations, had
been paying an insurance policy to cover claims brought under the Workers¶

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Compensation Act. The widow claimed she was entitled to compensation under the
Act as the widow of a µworker¶. The issue went first to the New Zealand Court of
Appeal who found that he was not a µworker¶ within the meaning of the Act and so no
compensation was payable. The case was appealed to the Privy Council which found
that:
1c the company and Mr Lee were distinct legal entities and therefore capable of
entering into legal relations with one another
2c as such they had entered into a contractual relationship for him to be employed
as the chief pilot of the company
3c He could in his role of Governing Director give himself orders as chief pilot. It
was therefore a master and servant relationship and as such he fitted the
definition of µworker¶ under the Act. The widow was therefore entitled to
compensation.
A company is liable as an ordinary individual for injurious acts of its agents including
acts of which its nature is a necessary ingredient like malicious prosecution, libel and
slander, liability of the company does not mean that the directors who manage its
affairs can be made liable for the wrongs committed.
The consistent application of this principle allows the company business to be

efficiently organised and justice done where otherwise it would have been denied. It is
perhaps for this reason that the extent of the principle of legal personality beyond the
class of human beings has been hailed as the most noteworthy features of the legal
imagination27
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It is generally assumed that the control and the power of managing a business enterprise
will lie where the ownership lies. This assumption arises from the legal position of
forms of organisation like sole-proprietorship and partnership. cIn these forms, the
owners control the functioning of the enterprise and are responsible for its management
because law makes no distinction between the entities and the owners of the firm. The
position is different in corporate incorporated organisation. Unlike sole proprietor and
partnership organisations, a company enjoys legal status which makes the entity distinct
from its members. The rationale being that members may come and members may go
but the company goes on undisturbed. Given the separate corporate entity of a company
and its continued and uninterrupted existence (perpetual existence), managerial
authority cannot lie where the ownership lies. Shareholders own the share capital (also
called the ownership capital) of a company and bear the risks of business but they do
not participate in the management of the company directly like the proprietors of a non-
corporate business. It is this peculiarity of the corporate form of organisation that
makes it necessary to make a separate and detailed study of the structure of company
management. c
Seeing as a company is an artificial person, it can only be managed through the

instrumentality of the persons that consist of it 28. They may be described as directors,
governors, governing body, or any other similar expression, section 567 of CAMA
defines µDirector¶ as including ³any person occupying the position of director by
whatever name called.´
The two primary organs of corporate management through which the company¶s
powers are executed are the Board of Directors and the Members in the general
meeting. The members control and regulate the affairs of the company in their
meeting through potentially restraining the behavior of the director in the management
of the company29. The position in England until the nineteenth century which was
that the Directors were subject to the absolute control of members in the general
meeting, resulted to the principle that the general meeting was the company whereas
the Directors were merely agents of the company subject to the complete control of
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the company in the general meeting; in * @ , 40
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between the Board and the Company in general meeting depended entirely on the
construction of the Articles of Association and where powers had been vested in the
Board, the general meeting could not interfere with their exercise. The Companies and
Allied Matters Act31 leaves to the discretion of the company¶s articles the allocations
of powers either generally or specifically to each of organs of the company in such a
way that it does not conflict with any provision of the Act. Though the functions of
the Board of directors vary from company to company depending on its size, and
structure, apart from the statutory power of allotment of shares32, the appointment of
the company secretary33, recommendation of auditors for confirmation by the
members at the meeting, other powers include the following:
1.c To define the business or businesses in which the company shall engage;
2.c To set the company¶s long term objectives and strategic plans and ensuring that
there is adequate machinery for planning;
3.c Organising the company to meet its objectives and delegating authority for
certain functions within the company;
4.c Setting guidelines for employment and personnel policies;
5.c To control the company¶s financial affairs including the approval of capital
projects and programmes and capital expenditures;
6.c To appoint senior managers, reviewing their remuneration as well as

overseeing the process of management development and training;
7.c Considering policy on corporate re-organisation and reconstruction especially

take-overs and mergers.
8.c To monitor and evaluate the performance of the company economically.


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These functions as empowered on the board by section 63 of CAMA are both
managerial and supervisory but in reality, the dichotomy between the two is not easily
identified. The managerial functions include the coordination of all resources of a
company through planning, organising, leading and controlling in order to achieve a
company¶s objectives34 while the supervisory functions include the responsibility of
ensuring that the company¶s objectives and strategic plans as well as the policies made
are achieved and carried out.
The actual management of the company is carried on by the elected representatives of

the owners in accordance with the policy supposedly approved by them. The board of
Directors is, then, the top administrative organ of the company. The Board may
sometimes appoint an executive committee. The directors are not always whole-time
officials of the company. Some of them maybe only part -time directors associated
with a number of companies in this capacity. In this situation, the directors may well
be expected to lay down policies and programme but they may not be able to secure
their implementation under their continuous supervision and guidance. The company
will, therefore, need another organ which can convey the decisions of the directors to
the rest of the staff. For this purpose, one or more whole-time directors or other top
officials may serve as the chief executive organ of management. The chief executives
serve as a link between the Board of Directors on one hand and the operating
Organisation on the other hand. Their work consists of interpreting the policies and
decisions for the benefit of the people responsible for the execution and in dealing
with the day-to-day problems of business operation. They also place the important
problems concerning of the executing of policies before the Board and acquaint them
with the experience of the operating organisation. The chief executives include
managing directors and manager. They receive instructions from the Board and
broadcast them to the senior delegates a substantial part of their authority to the board
of Directors, the Board passes on a part of its powers to the chief executive (be it an
individual or a team) and the chief executive further delegates some powers to the
department managers who direct the operations of the departments such delegation is
done in accordance with section 64 of the Act which states thus:

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However, the exercise of such delegated power is subject to any regulation or
restrictions that may be imposed on it by the board or articles. Some articles usually
contain provisions similar to those of Section 64(b) empowering the Directors to
appoint one or more of their number as Managing Director subject to such period and
on such terms as they think fit. The appointment of such a Managing Director
automatically determines if he ceases to be a Director of the company. Thus in
considering the provisions in Article 106 of Table A of the Companies Act, 1968, the
supreme court per Karibi-Whyte JSC35 held that where the tenure of a managing
Director is governed by article 106 of table A to the companies Act, 1968, the
managing director ceases to be so if he ceases to be a Director of the company.
It is noteworthy that where the articles empower the directors to appoint a managing
director, the company in the general meeting (except where such appointment owes to
some internal problems, though the Directors cannot make such appointment) cannot
lawfully by itself make such an appointment without first altering the articles. 36
Furthermore, where no payment is attached, the appointment of one or more of their
numbers is merely a delegation of the Board¶s powers and will not constitute a
contract between the appointed Director and the company, but where there¶s some sort
of remuneration, the reverse is the case37. It then follows that there was devolution of
the powers of the company between the directors and the shareholders (members) in
the general meeting with each having its sphere of authority.
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The primary players in a corporation are the shareholders, directors, and officers.
Shareholders are the investors in, and owners of, a corporation. They elect, and
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sometimes remove, the directors, and occasionally they must vote on specific
corporate transactions or operations. As noted earlier, the board of directors is the top
governing body. Directors establish corporate policy and hire officers, to whom they
usually delegate their obligations to administer and manage the corporation's affairs.
Officers run the day-to-day business affairs and carry out the policies the directors
establish.
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does not define who a shareholder is but section 79(3) provides that in the case of a
company having a share capital, each member shall be a shareholder of the company
and shall hold at least one share. In such a company, the term µmembers¶ and
µshareholders¶ may be synonymous, but this is not necessarily so 39. Shareholders'
financial interest in the corporation is determined by the percentage of the total
outstanding shares of stock that they own. Along with their financial stakes,
shareholders generally receive a number of rights, all designed to protect their
investments. Foremost among these rights is the power to vote. Shareholders vote to
elect and remove directors, to change or add to the bylaws, to ratify (i.e., approve after
the fact) directors' actions where the bylaws require shareholder approval, and to
accept or reject changes that are not part of the regular course of business, such as
mergers or dissolution. This power to vote, although limited, gives the shareholders
some role in running a corporation.
Shareholders typically exercise their VOTING RIGHTS 40 at annual general or special

meetings. The Act provides for an annual meeting, with requirements for some
advance notice, and any shareholder can apply for a court order 41 to hold an annual
meeting when one has not been held within a specified period of time 42. Although the
main purpose of the annual general meeting is to elect directors, the meeting may
address any relevant matter, even one that has not been mentioned specifically in the
advance notice. Shareholders elect directors each year at the annual meeting43. The
Act provides that directors be elected by a majority of the voting shares that are
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present at the meeting. This is part of the control that shareholders exercise over
directors to be able to dispense with unproductive ones in a system of automatic
retirement and is guaranteed by section the 259 of CAMA. Part of the problem,
however, rests on the question whether shareholders are able to effectively assess the
performance of a director so as to enable them to take decision whether to re-elect the
director or not. The CAMA is not of much help as it only provides that ³when a
director presents himself for re-election, his record of attendance at the meetings of
the board during the preceding year shall be made available to members of the general
meeting.´44 Frankly, attendance at a board meeting should not be the only yardstick;
perhaps there ought to be an independent mechanism for individual assessment of
each board member enough to assist the shareholders in making an informed decision
in that regard. The same number of shares needed to elect a director normally is
required to remove a director45, usually without proof of cause, such as Fraud or abuse
of authority46.
An extraordinary general meeting is any meeting other than an annual general

meeting. The bylaws (i.e. rules for actual running of the company as contained in the
Memorandum) govern the persons who may call an extraordinary general meeting;
typically, the directors, certain officers, or by a member on requisition (the holders of
a specified percentage)47 may do so. The only subjects that an extra-ordinary general
meeting may address are those that are urgent and cannot wait till the annual general
meeting.
The CAMA in section 232(1) requires that a quorum48 exist at any corporation
meeting. A quorum exists when a specified number of a corporation's outstanding
shares are represented. Section 232(2) determines what level of representation
constitutes a quorum which require one-third. Once a quorum exists, the Act requires
an affirmative vote of the majority of the shares present before a vote can bind a
corporation. Generally, once a quorum is present, it continues, and the withdrawal of a

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faction of voters does not prevent the others from acting 49. Shareholders need not
attend meetings in order to vote; they may authorize a person, called a proxy, to vote
their shares. Proxy appointment often is solicited by parties who are interested in
gaining control of the board of directors or in passing a particular proposal; their
request is called a proxy solicitation. Proxy appointment must be in writing ³...under
the hand of the appointer or of his attorney duly authorised in writing or, if the
appointer is a corporation, either under seal or under the hand of an officer or attorney
duly authorised.´ 50 It usually may last no longer than a year, and it can be revoked .
In addition to voting rights, shareholders also have a right to inspect a corporat ion's
books and records 51. A corporation almost always views the invocation of this right as
hostile. Shareholders may only inspect records if they do so for a "proper purpose";
that is, is a purpose that is reasonably relevant to the shareholder's financial interest,
such as determining the worth of his or her holdings. Shareholders can be required to
own a specified amount of shares or to have held the shares for a specified period of
time before inspection is allowed. Shareholders generally may review all relevant
records that are needed, in order to gather information in which they have a legitimate
interest. Shareholders also may examine a corporation's record of shareholders,
including names and addresses and classes of shares.
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then appropriate to discuss who a director really is. CAMA is the starting point which
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While section 567 refers: £
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... a person appointed or elected according to law, authorised to manage and direct the
affairs of a corporation or company.´ What is now virtually settled judicially is not at
all about what we call them or what name they bear, the main factor is that they are
managing the business outfit in order to get a benefit 53. Even though there is no
educational or industry experience imposed by the CAMA for directors, there are
certain persons who are disqualified from being directors under section 257 and these
include ³infants (persons under 18 years of age); 54 a lunatic or person of unsound
mind; a corporation other than its representatives; an insolvent person; and a person
convicted of an offence involving mismanagement.´ It should have been important for
the CAMA to impose some educational or industry experience to ensure that only
those with the appropriate understanding of the particular business in respect of which
they involved are appointed directors. On the other hand, it may be argued that
educational credential does not guarantee industry experience and that it may be
difficult to agree on the minimum level of education required. Be that as it may, it is
important that a more than average familiarity with the line of business of the
company is essential for directorship appointment. The reason for appointing directors
of a company is to provide the company with persons who can act for it.
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A director may be in different capacities such as Shadow Directors, Alternate

Directors, Nominee Directors, Executive Directors, Non-Executive Directors and such
other nomenclature to depict the extent and scope of his powers at any given time. In
practice,
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is an employee of the company whose
status has been raised to that of a director but who continues essentially as such
employee, for instance, a sales director. His status is usually limited by the articles,
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but he may eventually be elevated to full directorial status 55.
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is appointed by a director to act in his place in his absence. The power of a director to
make such an appointment and the details of the relations between them must be
provided for in the Articles of Association of that company with matters of payment
clearly stated out. While the powers of µspecial¶ and µexecutive¶ directors are limited
by the articles in a manner that section 567 does not recognise him as such, an
µalternate¶ director falls under the definition.
A company usually appoint a certain number of Directors to manage the business, to

make contracts for the company and to take care of the property of the company56.
Section 246 of the Companies and Allied Matters Act 1990 stipulates that the
minimum number of directors a company can have is two. Any company whose
number falls below this two must within one month, appoint one or more new
directors. Where a company fails to comply with this provision, within the time limit,
it cannot thereafter carry on business unless and until it has not less than two
directors57, and where business is carried on after the number of directors has fallen
below the minimum number, all director or member of the company who is aware
would be liable personally for all the debts and liabilities incurred by the company
during the period business was carried on58.
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The position of the law has seemingly developed on the status of Directors in a
company to the effect that they are not employees of the company 59, though this must
not be taken as saying that such director cannot be an employee of the company since
it is possible to act in both capacities at the same time60. As directors, they are officers
of the company, and are primarily liable for making the company liable vicariously if
they are negligent in the discharge of duties of their office. Courts have adopted the
rule that directors of a company must act bona fide in what they consider is in the
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interests of the company, and not for any collateral purpose 61. Directors' fiduciary
duties fall under three broad categories: the duty of care, the duty of loyalty, and
duties imposed by statute. Generally, a fiduciary duty is the duty to act for the benefit
of another²here, the corporation²while subordinating personal interests. A fiduciary
occupies a position of trust for another and owes the other a high degree of fidelity
and loyalty. A director owes the corporation the duty to manage the entity's business
with due care. CAMA typically define using due care as acting in c2c
3 4cusing the care that an ordinarily prudent person would use in a similar position
and situation, and acting in a manner that the director reasonably thinks is in the
corporation's best interests.
The fundamental legal concept of duty is used judicially as an instrument to define,

delimit and determine the extent of relationship legally within the corporate structure.
Duty as a concept is of the medieval age derived from the Latin word µdebitum¶ which
is regarded as prescriptive formulation of conduct recognized by the judiciary and
which should be observed by all in a legal relationship. There is a correlation between
rights and duties within the jurisprudential concept presupposing that where one has a
duty, right resides in the other person 62. Bowen L.J. in * D
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and the company from the duty point of view had this to say:
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As a company is incorporated to pursue the objects stated in its memorandum it is

clear that the directors must act in pursuit of those objects. Courts seldom second-
guess directors, but they usually find personal liability for corporate losses where
there is self-dealing or Negligence63.
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Self-dealing transactions raise questions about directors' duty of loyalty. A self-
dealing transaction occurs when a director is on both sides of the same transaction,
representing both the corporation and another person or entity who is involved in the
transaction. Self-dealing may endanger a corporation because the corporation may be
treated unfairly. If a transaction is questioned, the director bears the burden of proving
that it was in fact satisfactory. Self-dealing usually occurs in one of four types of
situations: transactions between a director and the corporation; transactions between
corporations where the same director serves on both corporations' boards; by a
director who takes advantage of an opportunity for business that arguably may belong
to the corporation; and by a director who competes with the corporation64. The
usurping of a corporate opportunity poses the most significant challenge to a director's
duty of loyalty. A director cannot exploit the position of director by taking for himself
or herself a business opportunity that rightly belongs to the corp oration by virtue of
the provisions of Section 284 of the Companies and Allied Matters Act, 1990.
Directors who are charged with violating their duty of care usually are protected by
what courts call the Business Judgment Rule. Essentially, the rule states that even if
the directors' decisions turn out badly for the corporation, the directors themselves will
not be personally liable for losses if those decisions were based on reasonable
information and if the directors acted rationally65
CONCLUSION:
The various organs or levels of administration of a company have been identified and
discussed within the purview of their relationship with one another, as well as their
position within the scheme of things in the governance of companies in Nigeria.
Deducing from this writing, it is clear that the bastion of power of a company resides
in the Directors who hold the line of power sharing formula and are thus enjoined with
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certain responsibilities; in terms of the duties they owe to the corporate existence of
such business outfits.
However, given the rather fluid nature of corporate governance in Nigeria, the duties
are discharged haphazardly and the powers are exercised without due regard to the
binding duties imposed on them. Practical examples could be drawn from the Cadbury
crisis, or even more recently, the crisis that broke out in the banking industry in the
country.
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Companies are constrained by the law in what they can do. For example laws regulate
the way in which companies deal with other people, giving rights to creditors and
customers, and also provide some protection for employees and for society at large.
Companies are also subject to various regulations and codes of practice from external
bodies, such as the national listing authority (e.g. in the UK, the UK Listing authority
issues rules for listed companies whose shares are traded on the main London Stock
Exchange) and in Nigeria for instance the Security Exchange Commission in Nigeria.
For instance in the UK, Company Law provides some framework for corporate
governance, but arguably not enough that is why the law is reinforced for listed
companies66, and also in Nigeria, the framework is provided for through the
instrumentality of CAMA.
The UK Listing Rules give support to a code of principles and best practice for
corporate governance: the combined code. Although pressure is brought to bear on
companies to persuade them to apply the best practice measures that are
recommended, the combined code is voluntary.67
In practice however, although corporate governance is voluntary rather than

compulsory, the risk of disrupting relations with shareholders is usually enough to
persuade companies to comply with guidelines and code of practice. The aim of this
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chapter is to critically inquire the statutory and administrative standards for companies
which also refer to external and internal standards that guide Nigerian companies,
with the examination of issues like:
1c The extent to which corporate governance practices should be forced on

companies by legislation; and
2c How much corporate management should be a matter for companies to decide

for themselves, perhaps within a published framework of best practice
guidelines.
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Within Nigeria¶s domesticccorporate setting, the effect of the unwholesome

international corporate governancecclimate caused a renewed emphasis on effective
corporate governance standards. The launch of Code of Best Practices on Corporate
Governance in Nigeria (CorporatecGovernance Code)68 lays credence to this
emphasis. There are also other ways standards are met; these ways are as discussed
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External standards of corporate governance in Nigeria, as in any other country lie

outside the internal machineries for the management and control of corporations.
Many of these standards are statutory, while some are directives of regulatory
agencies that have institutional supervision in particular sectors, and others are
industry-induced standards, which may be voluntary, but have wide appeal within the
various sectors. These standards would be discussed in turn.
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cThe Code of Corporate Governance is based on The Report of the Committee on Corporate Governance of
Public Companies in Nigeria, April 2003 (hereafter, Report of the Committee on Corporate Governance of
Public Companies in Nigeria). Details of the Code will be elaborated on later in this paper. President Olusegun
Obasanjo of Nigeria launched the Code on 4 Nov. 2003. See ³Obasanjo Launches New Code of Corporate
Governance´ The Guardian 05 Nov. 2003 available at www.guardiannewsngr.com/news/article10
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One important factor in statutory standards of corporate governance is that they are
enforceable and subject to judicial review. Many a times, in countries like Nigeria, the
problem has always been that the existence of these standards does not necessarily
guarantee that they would be enforced. The most important statutory standards that
this paper emphasizes are as contained in the Companies and Allied Matters Act
(CAMA),69 which governs all companies. The Central Bank of Nigeria Act 70 (CBN
Act); the Investment and Securities Act71 (ISA); the Banks and Other Financial
Institutions Act (BOFIA) 72; the Insurance Act (IA)73 and the National Insurance
Commission Act 74 govern the Nigerian financial system comprising of bank and non -
bank financial institutions. External standards that are not based on legislation but on
voluntary initiatives, the principal one of which is the Code of Best Practices on
Corporate Governance in Nigeria earlier mentioned would also be examined.
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The external standards of corporate governance established by CAMA are found in
provisions that relate to the management of the company; the reporting requirements 75
and the oversight functions of the audit process.

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: As noted earlier under the organs of the corporate management
structure, is the annual general meeting where the financial statements of the
company76 are laid before members for their information. The ability of members to
understand the financial statement is a critical factor in determining how transparent
and accountable a company is. It doesn¶t make much sense that the documents are in a
state that ordinary shareholders are not able to understand, as those in control i.e.
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directors, may capitalize on that to cover up their irregularities; hence the audit
process. It is, however, very important that an oversight function of the financial
statements through the audit process is credible and independent such that its report
can be relied on as a further testimonial of the health of the company. The
independence of the auditors is therefore critical as it reflects their integrity. In
Nigeria, such independence seeks guarantee in the capacity, manner of appointment
and removal of auditors. Section 358 of the CAMA lists the qualifications of auditors.
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The Nigerian Government promulgated BOFIA as a result of the banks¶ collapse in
the late 1980s and early 1990s and imposed certain standards to govern employees
and officers of banks. The first type of standard deals with capacity for banks¶
directorships which is provided for in Section 19(2) of BOFIA, The second type of
standard concerns declarations of interests. Section 18(1) thereof prohibits a manager
or any other officer of a bank from having any direct or indirect personal interest in
any advance, loan, or credit facility, without declaring such interest, as well as the
nature of such interest to the bank. The consequence for contravening this provision is
a fine or term of imprisonment on conviction 77. The third type of standard is to be
found in a code of conduct to be signed by directors and employees if so made
available.78 Fourthly, there is a general duty imposed by section 46 of the BOFIA on
directors and managers of banks to take all reasonable steps to ensure compliance with
the BOFIA failing which they are liable to be prosecuted. The ultimate sanction
contained in the BOFIA is found in section 12(1) that allows the Central Bank of
Nigeria (CBN) to revoke a banking license. This power has been used by CBN, as has
been witnessed over the years, to bring down banks where due to overt breaches of the
corporate governance principles, rules regulations and directives of regulatory
authorities, the bank is no longer a going concern. The conclusiveness of this power as
well as criminal prosecution has largely sanitized the banking sector.
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There are certain standards also established by the Failed Banks Act because it
criminalizes certain conduct related to the grant of loans by virtue of the provisions of
Section 19(1) of the Act 79 .
Many of the offences prosecuted before the Failed Bank Tribunal show remarkable
evidence of corporate governance abuse. In @
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accused person who was the founder of the failed Republic Bank Ltd was arraigned
and convicted on a 17-count charge. The charges included that he failed to disclose his
interest as soon as possible to the Board of Republic Bank Ltd while being a director
thereof in respect of loans/advances granted to five of his companies contrary to
section 18 (3) of the BOFIA. He was also found guilty of breaching the provisions of
section 46 of the BOFIA, which imposes a general duty to ensure compliance with the
Act.
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The ISA establishes the Securities and Exchange Commission of Nigeria (SEC)81. The
SEC is endowed with many functions among which is to ³protect the integrity of the
securities market against abuses arising from the practice of insider trading´. Section
88 and 89 of the ISA prohibit insider trading in companies. Section 88 provides that
an insider ³shall not buy sell or otherwise deal with securities of the company which
are offered to the public for sale or subscription if he has information which he knows
is a-price sensitive information in relation to those securities.´ This prohibition also
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applies to individuals who obtain information from an insider. There are civil 82 or
criminal83 liabilities for breach of these provisions.
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The Insurance Act sets standards in the insurance Industry in Nigeria through the
regulatory oversight of the National Insurance Commission, which in turn is
constituted by the National Insurance Commission Act of 1977, which ensures the
effective supervision, regulation and control of insurance business in the country. The
Insurance
Commission Act charges the Commission to establish ethical standards for the
conduct of insurance business in Nigeria.
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Some regulatory agencies in Nigeria in furtherance of their enabling powers prescribe

standards to guide the conduct of business in their area of jurisdiction.
A good example of such a regulator is the Central Bank of Nigeria (CBN) established
by the CBN Act. The CBN is the apex regulatory bank in Nigeria and has been very
insistent on standards particularly regarding persons who are appointed chairmen,
members of the board of directors and top management of banks. It does not p ermit
the practice of Board Chairmen serving simultaneously as chairmen/member of board
committees in Nigerian banks84. CBN does not permit multiple directorships. Its
directive is that no person should hold directorships in more than two banks 85. The
CBN regularly takes action to enforce these directives. Only also in 2004, ordered the
resignation of the Chairman of the United Bank of Africa (UBA) Mr. Hakeem Bello-
Osagie; the Vice Chairman of the bank, Alhaji Abba Kyari and an Executive Director,
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Mario Bashir to leave the bank. 86 And more recently, The Nigeria Economic Summit
Group (NESG) endorsed the regulatory actions of the Central Bank of Nigeria
(CBN)87. Lastly, the CBN does not permit public officers to become directors of
banks and other financial institutions in Nigeria. 88
The Nigerian Stock Exchange is yet another body that exercises some control through
its rules that govern the companies that are allowed to trade their stocks and shares.
The exchange was established in 1960 as the Lagos Stock Exchange. At present it has
264 securities listed on The Exchange the total market value of 264 securities listed on
the Exchange increased by 41.12 per cent from N7.03 trillion to stand at N9.92 trillion
by year-end 2010. 89 There are two markets for the ordinary shares of the Exchange;
the First-Tier Market and the Second Tier-Market. The listing90 and post listing
requirements for both tiers are rigorous to ensure that the companies maintain
financial discipline. The post -listing requirements include the submission of interim
accounts (quarterly and half yearly for First Tier Companies and semi-annual for
SSM) and final accounts for both tiers and approval before p ublication to the general
public.
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Voluntary standards of corporate management that lie outside the internal workings of
corporate regulation have become popular internationally. These standards are mainly
industry-based rather than legislation-based and they are usually presented in the form
of codes. There is, however, no doubt that the codes are inspired by statutory
standards as well a desire to improve corporate governance in the light of
developments all over the world. Voluntary external standards of corporate
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governance in Nigeria are quite a recent trend and are exemplified in the Code of Best
Practices on Corporate Governance in Nigeria91.
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The Code of Corporate Governance in is the result of the work of the Committee on
Corporate Governance of Public Companies in Nigeria, which finalized its report in
April
2003. The Committee, which was made up of 17 members was inaugurated at the
instance of the Nigerian Securities and Exchange Commission (SEC) and the
Corporate Affairs Commission on 15 June 2000, ³realizing the need to align with the
International Best practices´ In the course of its work, the Committee found that ³the
system of corporate governance in Nigeria is still in its development stage,´ and it
addresses three broad areas of corporate governance: the board of directors92, the
shareholders93 and the audit committee94.
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Internal standards of corporate management refer to codes of conduct adopted by
companies extra-statutorily to enable them achieve their goals. As noted when the
BOFIA was considered, we noted that it requires banks to keep a code of conduct to
which directors and employees would pledge. Other than codes of conduct that are
part of employment contracts, it seems apparent that there are no others in existence.
This appears to be the case with companies in other sectors as well. These internal
standards usually build on good governance and ethical behaviours within the
corporation. 95
One other significant feature of internal standards in Nigerian companies is their
emphasis on corporate community investments through the adoption of corporate
social responsibility (CSR) policies and initiatives, or their involvement in so me
corporate community investments without any formal policy in that regard. This helps
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the companies in their cultivation of a good corporate image and has become a feature
generally believed to represent good corporate governance and to generate the
goodwill necessary for survival and the growth of companies. Even though no specific
legislation demands this type of responsibility, broad support can be found in
directors¶ duties as provided for in the CAMA. Thus, if directors in their bid to µact at
all times in what they believe is in the best interests of the company«¶ 96 decide to
spend the company¶s resources on initiatives that would enhance the reputation of
companies, they could be in order. Apart from directors¶ exercise of discretion in
carrying on their duties, it has become globally fashionable for corporations to adopt
social responsibility measures through corporate community investments 97.
In conclusion, the need for standard settings as recognised by companies is to

1.c Set desired standards of management,
2.c Build on the ethics of good behaviour amongst the employees, and
3.c To sometimes give back to the society.
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A company¶s constitution is divided between the Memorandum of Association

(external aspects) and the Articles of Association (internal aspects, including the
balance of power between the board of directors and the general meeting).
The purpose of the memorandum and articles of association is to define what the
company is and how its business and affairs are to be conducted. The original
memorandum must be presented to the CAC to obtain registration of a new company.
It is usually signed by two persons [the subscribers to the memorandum] who agree to
become first members. Whenever the memorandum is altered in accordance with
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The Memorandum is now simply a statement of the subscribers¶ intention to form,
and become members of, a company.98 The information previously contained in the
memorandum is in application documents for registration sent to the Registrar of
Companies including:
(a) Company¶s proposed name;
(b) Situation of the registered office;
(c) Whether the members¶ liability is limited by shares or by guarantee;
(d) Whether the company is private or public: 99
For companies with a share capital, there must be a statement of capital and initial
Shareholdings. 100
Under the Companies and Allied matters Act 1990, references to a company¶s
constitution include:
(a) The company¶s articles, and
(b) Any resolutions and agreements to which this chapter applies.

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Companies must register articles of association101 contained in a single document
divided into consecutively numbered paragraphs. 102

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Articles can be amended by special resolution but, in a new development, certain
provisions can be entrenched and can only be amended or repealed subject to more
stringent conditions. Amendments must not:
Conflict with the CAMA e.g. directors removable only by special resolution.
Be illegal.
Deprive members of statutory protection (variation of class rights).103
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The constitution binds the company and its members as if there were covenants on the
part of the company and each member to observe those provisions 104:
The constitution is enforceable by:
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The company exists only for the authorized objects or business specified in its
memorandum of association. Any business or act done or power exercised by the
company outside its objects or which is not reasonably incidental to the attainment of
the express object of the company is beyond the powers of the company, and
therefore, null and void 105. This simply is the doctrine as applied to
company law. This doctrine is one of the English common law principles received into
Nigeria as part of our company law. It was only applicable to statutory corporations 106
but was finally extended to registered companies in the leading case of <
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under the Companies Act 1862 which with the object to make and sell or lend on hire,
railway-carriages and wagons, and all kinds of railway plant, fittings machinery, and
rolling-stock: to carry on the business of mechanical engineers and general
contractors; to purchase and sell as merchants, timber, coal, metals, or other material;
and to buy and sell any such material on commission or as an agent.

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The directors entered into a contract to finance the construction of a railway in
Belgium. The contract had been ratified by all the members, but later the company
repudiated the contract. The question was whether the company was bound by the
contract. The House Of Lords (England) held that the contract was ultra vires, that the
financing of a railway corporation in Belgium cannot be brought within any of the
objects, empowering the company ³to do all such other things as are necessarily
contingent, incidental or conducive to all or any of such objects´ the court declared
that the contract was void ab initio, and not even the unanimous consent of all the
members of the company in general meeting could validate or ratify an ultra vires
contract.
Lord Cairns L.C. explained the rationale for the application of the ultra vires rule to
companies to protect investors and creditors. The rule enables the shareholders to
know the uses to which their money may be put and also enables other persons
dealing with the company to know the authorized ventures of the company. In
addition, the rule helps to control the powers of the directors in relation to the internal
management of the company.
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At common law, the effect of ultra vires was to render a contract by or with a
company void ab initio. The rule was a µdouble edged-sword¶. If a person lent his
money to the company on an ultra vires business, he could not recover. Indeed in an
action to recover the money, the company could plead ultra vires and avoid the
obligations of the contract. The reverse was also true. In @E 1 3 &
3%:a company authorized by its memorandum to carry on business of customers,
gown makers and other activities ( decided to undertake the business of
making veneered panels, and for this purpose it erected a factory. The company later
went into compulsory liquidation. A number of proofs of debt were lodged. The
liquidator refused to pay and was sued. It was held that the activities of the company,
which gave birth to the debt, were ultra vires and that no judgment founded on ultra
vires contract could be sustained. In

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medical doctor who benefited from a contract with the plaintiff company pleaded ultra
vires and avoided performance of his bond under the contract.
The introduction of the provision into our companies legislation has brought a major
change in this area of law.
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However, mindful of the adverse consequences of the rigid adherence to the ultra vires
rule, the House of Lords (England) in < .F 4F@
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that ultra vires rule ought to be reasonably understood and applied so that whatever
may fairly be regarded as incidental to or consequential upon the specified objects of
as company would be treated as intra vires111. Moreover, the protection that the
doctrine provided for investors and businessmen soon became frustrated and lost. The
doctrine then could be described as µan ill-wind that blew nobody any good¶ 112.
Because of the harsh operation of the rule, leaving the situation to chance was no
longer the option for businessmen and legal drafts men, they instead resorted to the
inflation of object clause in a manner to specify not only the objects which will
normally be implied, but also those that would not normally pertain to the business of
the company. This is the practice notwithstanding the form of memorandum
contemplated by Companies Act of 1968. The goal of the practice according to Dr.
Olakunle Orojo, is to ensure that all future acts of the company are intra vires which
aim runs contrary to the main purpose of the rule i.e. to assure investors as to specific
business in which they are investing. 113
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There are two major company law reforms on + namely, the unrestricted
capacity formula as adopted by Canada and Australia, and New Zealand and the
restricted capacity formula adopted by the United Kingdom, Ghana, and Nigeria. The

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effect of the unrestricted capacity formula is to abolish the ultra vires rule. The
Australian Companies and Securities (Miscellaneous Amendments) Act 1983 confers
on a new company ³the right, powers and privileges of a natural person´ Under the
Canadian Business Corporation Act 1975 ³a corporation has the capacity and the
rights, powers and privileges of a natural person´. The Act also provides that the
corporation can carry out any lawful business or exercise any lawful power unless
specifically restricted by the articles of incorporation. 115 However, the Nigerian
Legislation does not adopt this direct approach to abolish the ultra vires rule. It is clear
that the rule has been retained but reformed in favour of security of transactions with
third parties. The Nigerian approach compares more with that of the Ghana and
Caribbean Community Company Law, and to some extent, that of the United
Kingdom. This goes in line with the recommendation of the Nigerian Law Reform
Commission that provision be made similar to those of the Ghana Draft Companies
Code Bill and the Caribbean Company Law Bill with necessary modifications116.
The doctrine was developed at the common law to ensure that the company keeps to
the limit of its authorised business or object(s) listed in the memorandum in the
interest of both the investors and its creditors. The Companies and Allied Matters Act,
1990 also recognises the importance of ensuring that the company is prohibited from
carrying on any business not authorised in its memorandum. In addition, a company
shall not exceed the powers conferred upon it by its memorandum or the CAMA. It is
provided further in S.39 (2) that a breach of the provision of S.39 (1) may be asserted
in any proceedings under sections 300-313 of CAMA or under section 39(4).
In conclusion, the forgoing practice, i.e. the inflation with the aim of extending the
scope of business of a company to cover every conceivable act, is now unnecessary in
that there is now a statutory validation of ultra vires acts of the companies by S.39(3)
of the CAMA. CAMA also seems to disfavour the inflation of object clause in that it
now requires the precise statement of the nature of the business(es) the company is
authorised to carry on, or the nature is not established to carry on. 117
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Also, the memorandum of a company may contain restrictions on the powers of the
company to carry on its authorised business or object Section27 (1)(d) e.g. the
borrowing powers of a company can be limited to a specified sum. Such restrictions
can only be relied on for the purposes of proceedings and by the persons specified in
subsection (1). Section 40(2) provides a bar to reliance on such a restriction. Thus,
where a party either expressly or by implication agreed to the doing of an act that
constituted the alleged breach of restriction, he is estopped from relying on the breach
to found his action 118.
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µChecks and balance¶ is something that can be used or referred to in order to test the
accuracy, truth, or safety of something else.
Because most economic activity is conducted by companies, company law has a large
potential impact on peoples¶ lives. People are naturally concerned by the power that
companies have to affect their lives and wish to be assured that corporate power is
legitimate and is properly controlled, just as they wish to see proper controls on the
power of other institutions, such as national and local government, trade unions and
educational institutions. People naturally look to the law to provide the framework for
legitimation and control of power. For some people, the power of a company will be
legitimate only if it is exercised in the interest of all those whom it affects. They want
the law to require companies to give due consideration to all relevant interests. Other
people believe that corporate power is legitimated by the contribution that companies
make to the economy and that the market provides adequate control of economic
activity so that legal controls are either superfluous or produce damaging distortions
of the market.
This part of the chapter focuses on the suggestion that corporate governance is
becoming structured much more like public government in certain ways. This shift
may well be helpful for enhancing credibility and confidence in capital markets, but it
also raises important questions. Will reforms enacted in the post- bank recapitalisation
era limit managers' discretion to innovate, take risks, and respond quickly to changing
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economic circumstances? How far should society/ statutes go in imposing on
corporations the kinds of procedures found commonly in democratic governments?
Corporations and their managers too exert significant power affecting people's lives in
important ways. 119Their power over employees is quite noticeable. But business
decisions also have major ramifications for investors, for customers, for those who
inhabit the communities where corporations do business, and for the economy overall
in cities and regions around the world.
Even though corporations are unlike government in that they are voluntary
associations, and also unlike government in that they have competitors, we still can
and should ask whether corporate power is legitimate. Just as with governmental
power, corporate power²more precisely, corporate managerial power²can be
abused. 120It can be used to satiate the self-interested thirst of greedy CEOs at the
expense of shareholders. It can be used to exploit workers, treating them inhumanely
and failing to provide safe working conditions or suitable wages. It can be used to
make profits at the expense of environmental quality, even putting innocent lives at
risk from accidents or toxic pollution.
The existence of power wielded by corporations means that the question of legitimacy
can be applied to the private sector. And in our post- banking industry crisis, post-
Nigerian Cadbury case, post-Enron, post-WorldCom, post-Tyco, post-Parmalat
environment, it is precisely this kind of question that has been raised increasingly in
board rooms, stock exchanges, the Securities and Exchange Commission, the media,
and even in schools. How can integrity and trust i.e. legitimacy be maintained in the
corporate world?
What is called

is akin to procedural legitimacy. Corporate
governance refers to, among other things, the assignment of separate powers to
management, shareholders, and boards of directors, the procedures for selecting and
removing members of boards of directors, and so forth. While
is
parallel to substantive legitimacy. Regulation imposed by government says that even
properly constituted corporations with fully functioning boards of directors (a test of
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procedural legitimacy) cannot take actions that will pollute the environment, treat their
workers badly, or take money from investors. Regulation places constraints on
corporate managers in a way conceptually parallel to the constraints that constitutions
place on legislatures; a typical method of checking the excesses of these set of people.
Corporate management has become more procedurally constrained, using institutional

features not too dissimilar to those procedural devices imposed on government. The
following four institutional features will be considered: - separation of powers,
transparency, codes of ethics, and elections.
7
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.corporations have long had their own checks and balances,
with boards of directors responsible both for hiring the CEOs who actually run
companies and then overseeing their work, and with shareholders retaining the
theoretical ability to challenge the slate of directors. While boards in theory provide a
check on managerial power, they have functioned for many years quite deferentially
to the CEO. Indeed, a common cause of corporate scandals and skyrocketing
executive compensation has been said to be weaknesses in boards' oversight.121
Remarkably, unlike the kind of strict separation of powers observed in government,
boards of directors have never been entirely independent of corporate management.
Indeed, corporate managers (in particular, CEOs) have sat and voted themselves on
boards; in some cases the CEO has also served as the chair of the board or on the
nominating committee that selects new board members. Furthermore, even so-called
independent board members i.e., those not employed by the company, would still
sometimes conduct extensive business with the company.
Such conflicts of interest no doubt can cloud board members' judgment and reduce
their incentives to look carefully at how management is running a company with the
interests of the shareholders in mind. The thrust of recent changes to the rules of
corporate governance has been to make boards more independent than they have been,

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strengthening them by moving them a bit closer to the kind of strict separation of
powers exhibited in national and state government. 122
For example, the independence of the auditors is critical as is their integrity. In

Nigeria, such independence seeks guarantee in the capacity, manner of appointment
and removal of auditors. Section 358 of CAMA lists the qualifications of auditors: the
person must be ³a chartered accountant recognized to practise in Nigeria; not an
officer or servant of the company; partner or in the employment of an officer or
servant of the company; a person or firm who offers to the company professional
advice in a consultancy capacity in respect of secretarial, taxation or financial
management; and a body corporate.´

.cA key feature of procedural legitimacy for government has been
openness. Laws need to be made in the open, and information about most government
functions must be made available to the public under laws for instance in Nigeria, the
official gazettes published by the national and state houses of assembly. In the
business context, publicly traded companies have been, subject to a variety of
disclosure requirements that similarly aim to create transparency.123
Under Section 359, the CAMA requires that the audit report of a public company
should be submitted to an audit committee.
The objectives and functions of audit committees are to:
(a) Ascertain whether the accounting and reporting policies of the company are in
accordance with legal requirements and agreed ethical practices;
(b) Review the scope and planning of the audit requirements;
(c) Review the findings on management matters in conjunction with the external
auditor and departmental responses thereon;

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(d) Keep under review the effectiveness of the company¶s system accounting and
internal control;
(e) Make recommendations to the Board in regard to the appointment removal and
remuneration of company¶s external auditors; and
(f) Authorize the internal auditor to carry out investigations into activities of the
company, which may be of interest or concern to the committee. 124
All these objectives to strengthen of the auditing industry with the aim to ma ke
investors better aware of the true financial conditions of companies.

c)c
.ccould also be referred to as the internal standards set by companies
to regulate the employees¶ behaviours. As already discussed

.cElections are a major feature of procedural legitimacy for governments,
and we are seeing some movement in the field of corporate governance that may
eventually make corporate management more electorally accountable to shareholders.
Formally speaking, shareholders do vote on members of the board of directors, but
they typically only vote on one slate of candidates those nominated by the existing
board. 125
Rarely are board elections real contests
In conclusion, the dangers of corporate power; the greater they loom, the more
ambition should be designed to counteract ambition in the corporate world. But we
must also consider the benefits that come from giving business managers the
discretion they need to innovate and respond quickly to changing economic
circumstances, and consider what will be lost if we make corporate governance too
constraining. I suspect that few proponents of current corporate governance reforms
would advocate making corporations fully as rule-bound and democratically open as
(a democratic) government is.

cSection 359(6). CAMAc
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Introduction: ³A business with an income at its heels furnishes always oil for its own
wheels´126. This statement is as true today as it was in 1782. No business can grow
without capital (money), which can be very much likened to a lubricant or fuel
without which a mechanical object, such as a motor vehicle or an airplane, cannot
function. At every stage in the development of a business enterprise, capital is needed,
be it for start-up, for expansion or for its daily operations.
The focus of this chapter is going to be the various means of finance available to
corporations before the start-up of a company, also for the company during its daily
functioning. Besides the means, the legitimacy of the application of the funds got
would also be look into. The aim being to highlight the fact that unlike the Nigerian
Government officials who can get away with misappropriation of public fund, little or
no means is available to those who run companies that are regulated by the Act since
transparency and accountability are core requirements
Once a new company has ascertained its funding requirements and has a realistic
business plan and budget in place, it can then start reviewing the various sources of
finance which might be available to it.
Informal sources of finance are largely those which do not require written and
formalised agreements before such funding is acquired. These informal means include
personal savings, family and friends, or even credit from suppliers. Besides these
informal means, start-up capital could also be got through bank loans and sometimes
through venture capital
&and it is important to note that the
availability of these funds most of the time will be determined by the status of the
individual(s), the perceived marketability of his dominant concept/ product,
governmental policies and political climate conduce to investment. Finance sources
would be examined under these headings:
@
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1.c Members¶ Capital: this is the private capital available for promoters 127 to pull
together as the initial capital of the company. This may be in cash, kind,
expertise, or a combination of these. Depending on the kind of company and its
main objective, the prescribed minimum of two persons set by the law and
ordinarily not more than fifty128 in the case of a private company may act in
one respect as a disadvantage to the amount of capital members can pull
together before incorporation. But where the promoters are rich and the
prospects are profit bright, the few members with the requisite personal
resources may form a compact administration to raise the necessary capital.
2.c Borrowing: borrowing before incorporation may be seen in two ways: borrowing
from outside source(s) i.e. non-promoters; and borrowing specific amounts from
promoters. In both circumstances, borrowing is hedged by various legal
constraints.129
Borrowing from outside source(s) are most likely capital market funds130, bank
loans. Banks are short tenor funding institutions, typically providing capital for a
maximum period of 12 months. Entrepreneurs who seek such short term funds to
finance projects with long gestation periods could therefore be placed in
precarious situations when loans are recalled before maturity or completion of
project. In such situation, both the company and the bank are adversely affected.
One of the causes of distress in the financial market in the early 1990s was the
use of short-term funds to finance long-term projects such as housing estate
development. As funds were tied up for a long period, they would not be
available when needed by depositors131. Meanwhile, capital market funds are by
contrast structured for long periods and therefore, best suited for the financing of
projects with long gestation particularly real assets such as factories, roads and
bridges or procurement of machineries and equipments. Also, money market
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funds are usually sourced for trade financing and to meet working capital or
short-term needs of entrepreneurs as well as households.132 Note that it is a
misconception that bank financing represents a perfect substitute for capital
market financing, this probably arose from the practice of rolling-over short term
facilities such as bank overdraft to finance medium to long term needs of
business enterprises133
In private companies, all borrowing is hinged on the reputation, ability to repay
and personal guarantee and existing assets of the promoter(s). He is made to
personally enter into a guarantee to repay.
3.c Government Policies: government economic and political policies may constitute
veritable sources of finance both for incorporated and unincorporated companies.
Many times in developing countries, Government Policies constitute the main
reason for the formation of certain companies, e.g., under the Peoples Bank
regime, jobless artisan and market women were made to form co-operatives in
order to attract interest free loans to promote self-employment in Nigeria. The
bank was said to have disbursed over N400million as loans and advances to over
650,000 people. 134
The means of finance are not limited to the ones highlighted above.
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It was mentioned earlier that the duties of a promoter would be examined in this essay.
Who is a promoter?
The word µpromoter¶ has always been difficult to define. It may be said that much of
the difficulty stems from the fact that the function of a promoter does not begin and
end with the formation of a company and it is difficult to bring the various activities in
which he is involved into a single definition. The term "promoter" is one broadly used

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to describe the person who brings the corporation into existence. It is a business term,
not cparticularly a legal term.135 Furthermore, the expression µpromoter¶ would cover a
wide range of persons involved in these activities in relation to a company.
Accordingly, µpromoter¶ would generally include a person who gives instructions for
the preparation of the company¶s incorporation documents or negotiates acquisition of
property for the company, or negotiates underwriting contract for the company, or
obtains directors for the company, or issues prospectus or agrees to place shares for
the company, or obtains permission for an expatriate participation in the company. c
A corporate "promoter" is one who is a "self-constituted organizer who finds an

enterprise or venture and helps to attract investors, form a corporation and launch it in
business, all with a view to earning promotional profits." 136 Another court has
described a corporate "promoter" to be "one who alone or with others forms a
corporation and procures for it the rights, instrumentalities and capital to enable it to
conduct its business."137ccThe Delaware courts have described a "promoter" as:
*
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138
Promoter status attaches regardless of the term used by parties involved. Thus, even
though a person may sign a contract as "treasurer" before the corporation is formed, a
court may treat that person as a promoter for purposes of analyzing his/her liability on
the contract. 139Whether or not a person is a promoter is a question of fact, but a
person acting in his professional capacity for persons engaged in procuring the
formation of a company e.g. a lawyer doesn¶t become a promoter simply by doing the
5
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legal work necessary to form a corporation,140 and although a promoter is usually a
natural person, entities such as corporations can be a promoter141.
In its traditional sense, the concept of a "promoter" has become outdated. At one time,
a corporation could not begin doing busines s until it had received subscriptions for a
certain amount of its capital stock. 142One can infer that a significant period of time
would often elapse between the date the articles were filed and the date the
corporation started doing business. Most "promoter cases" involve legal disputes
arising during this lengthy period.
Today, a corporation usually starts doing business almost immediately after its articles
are filed, and a promoter is usually already serving as a director and/or officer by the
time he/she takes the action which is the basis for the legal dispute. Today, a
"promoter case" is much more likely to be an action against a director or officer,
rather than against the person known only as the ³promoter´.
,%%c0'
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Section 62 of CAMA 1990 has captured and legislated the essence of the common law
duties and liabilities of the promoter in response not only to the propensity of
promoters to breach them at the expense of the company, investors and third parties
generally, but also owing to the need to create some certainty in this area of our
company law. -
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A promoter has a fiduciary relationship to the corporation and to its subsequent

shareholders.143 A promoter owes a duty of utmost good faith to the company in any
transaction with it or on its behalf and shall compensate the company for any loss
suffered by reason of his failure to do so144. <*, , 60 Wash 286,
111 P 173 (1908). Most courts have held that promoters owe the same duty to the
corporation as trustees owe to the beneficiaries of a trust 145
,%,c0'
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Promoters must never take any secret profits from the promotion of the company
unless they make adequate disclosure to an independent board of directors or to
directors or to all the present and intended shareholders. This duty includes the
promoter's obligation to disclose any compensation, profits or advantages derived
146
from the corporation or from persons dealing with the corporation. Although the
onus lies on the promoter to prove full disclosure, however, where a company had
state by its memorandum and articles, and notice that its directors were also the

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vendors or agents of a vendor syndicate and also the fact that the directors did not
constitutes an independent board, it cannot be said that there has been
misrepresentation made to or any material facts concealed from, any persons were
members of the company, those persons being the Directors themselves. 147
,%-c7

c) .c

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Where a promoter has made secret profits, the company has several remedies
available to it.
1. First, the company may seek to rescind the contract made with the promoter
(subsection 3 of section 62) as held in >- $ , +:c
and also in D< @< ,.
2. The company may also seek to recover the secret profit made by the promoters.
3. The promoters may also be held liable for damages for breach of fiduciary duty. 149
4. Thus, the company, XYZ may be advised that as Mr. A and / or Mr. B being a
promoter(s) having made a secret profit of _XXX_ without disclosing it to the
company, it is entitled to rescind the contract, or alternatively to recover the secret
profit, or may allow him to keep the profit and affirm the contract. The company may
be advised that it can I) rescind the contract or ii) affirm the contract and either
recover the secret profit from the promoter or allow him to keep it. The corporation
may recover damages at law for the fraud or negligent misrepresentation or in a proper
case may rescind the transaction and recover what it has parted with.
There are however limitations. The Limitation Laws of the various states do not apply
to any proceedings brought by the company to enforce any of its rights under Section
62(4). Though the court may relieve a promoter in whole or in part and on such terms
as it thinks fit from liability hereunder if in all the circumstances, including lapse of
time, the court thinks it equitable to do so. The reference to equity here suggests that
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the courts will apply the principles affecting equitable relief to relieve a promoter in
certain circumstances, for example in cases of genuine mistake made by a promoter.
Mistake is a ground for relief both in law and equity. Another relief in equity that
could be considered is in situations of accidents. Cases of accidents arise where for
example documents required to establish a claim have been lost or destroyed 150 .
,+&c
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Before a company commences business, it has to enter into several contracts and incur
several initial expenses. Contracts which are entered into by promoters with parties to
acquire some property or right for and on behalf of a company yet to be formed are
called as µpre-incorporation contracts¶ or µpreliminary contracts¶.
The legal status of a pre-incorporation contract is not easy to define. Going by the
definition of the contract, there has to be at least two parties/persons who enter into
contract with each other. So, the general principle goes that no contract is there if one
of the parties to the contract is not in existence at the time of entering into the contract.
Hence, the company can¶t enter into a contract before it comes into existence, and it
comes into existence only after its registration (incorporation) It may be argued that,
the pre-incorporation contract is entered into by the promoters on behalf of the
company. But here also, is a tangle. The promoters, while entering into the contract,
act as agents of the company. But when the principal, i.e. the company is itself not in
existence, how can it appoint an agent to act for it? So, the promoters, themselves and
not the company, become personally liable for all contracts entered into by them even
though they claim to be acting for the prospective company.
At common law such contracts were totally void. This was because until a company
was incorporated it has no capacity to contract. A company could not ratify the
contract after its incorporation. Thus, in ½ c c1:22&A30"),
, $ , it was held that the pre-incorporation contract was not binding on the
company after its formation, and that the promoters or persons acting on behalf of the
company before the formation were personally liable. Further, no ratification could
release them from such liability. However, a person carrying on the affairs of an
5
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existing company under a new name which has not yet been registered will not be
personally liable
A nonexistent corporation has no liability on contracts made by a promoter prior to its

incorporation this is because the corporation doesn¶t exist.
c
c

Principles of Corporate Management

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Principles of Corporate Management

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c

1.1-c BACKGROUND OF STUDY

This work is an examination of company law. Company law is foreign to the

1.2- STATEMENT OF PROBLEM

1.3- SCOPE OF STUDY

This research work is intended to bring a clear straightforward and up-to-date

1.5- OBJECTIVE OF STUDY

1.6- SIGNIFICANCE OF THE STUDY

Seeks to be an academic contribution to the further development of application of the

1.7- LIMITATIONS OF STUDY:

%&c # ' 

Corporations or companies are organizations created pursuant to statute that allows

The principles of corporate management (also known as corporate governance) is all

1.c The nature of a company and its separate personality;

1.c Types of corporations; and

2.c The administrative and statutory bodies for corporate management.

American expansion after World War II through the emergence of multinational

Recent occurrences in the international corporate environment have refocused the

    

Business author Gabrielle O¶Donovan 17 defines corporate governance as µan internal

The concept of corporate personality therefore means that once a company is

Another application of the principle of legal personality is in the right of a company

The consistent application of this principle allows the company business to be

Seeing as a company is an artificial person, it can only be managed through the

4.c Setting guidelines for employment and personnel policies;

6.c To appoint senior managers, reviewing their remuneration as well as

7.c Considering policy on corporate re-organisation and reconstruction especially

8.c To monitor and evaluate the performance of the company economically.

The actual management of the company is carried on by the elected representatives of

Shareholders typically exercise their VOTING RIGHTS 40 at annual general or special

An extraordinary general meeting is any meeting other than an annual general

cHaving discussed the place of directors in the managerial scheme in a company, it is

In 5   4   )&> 3@$"!"& +! a director was described as ³

A director may be in different capacities such as Shadow Directors, Alternate

A company usually appoint a certain number of Directors to manage the business, to

The fundamental legal concept of duty is used judicially as an instrument to define,

£  B 

As a company is incorporated to pursue the objects stated in its memorandum it is

cccccccccccccccccccccccccccccccccccccccc cccccccccccccccccccccccccccccccccccccccc cccccccccccccccccccccccccccccccccccccccc cccccccccccccccccccccccccccccccccccccccc cccccccccccc

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In practice however, although corporate governance is voluntary rather than

1c The extent to which corporate governance practices should be forced on

2c How much corporate management should be a matter for companies to decide

+&(.c 05##7 #$c 0c7 ! 6c7 0 07c3! c

Within Nigeria¶s domesticccorporate setting, the effect of the unwholesome

External standards of corporate governance in Nigeria, as in any other country lie

&c c7 c  

Some regulatory agencies in Nigeria in furtherance of their enabling powers prescribe

+&,.c#  c7 0 07c

In conclusion, the need for standard settings as recognised by companies is to

+%. c!7##!c!3c c!5 6c

A company¶s constitution is divided between the Memorandum of Association

The constitution is enforceable by:

pc Company against member±A

++.cc c$# 7c ##.c

++&.c   cc 

 %Recommended a liberal construction of the objects clause with the declaration

Corporate management has become more procedurally constrained, using institutional

For example, the independence of the auditors is critical as is their integrity. In

The objectives and functions of audit committees are to:

(b) Review the scope and planning of the audit requirements;

Rarely are board elections real contests

%&c # '

In 5 4 )&> 3@$"!"& +! a director was described as ³

£ B

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%Recommended a liberal construction of the objects clause with the declaration

Rarely are board elections real contests

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