ABSTRACT

Corporate organizations are engine of growth and development. They contribute to
economic and social development of individuals, society and the nation in general as they
produce goods and render services that improve the social and economic life of the
people. In carrying out their businesses, they provide investment opportunities to the
public and other social responsibility projects as well as contribute to national gross
domestic product. Based on the above factors the survival of corporate organizations is of
interest to both government and individuals hence the need for promoting good corporate
governance. Corporate collapses have however, occurred around the world including
Nigeria with devastating social and economic effects of loss of income, employment and
revenue due to corporate governance lapses. The Nigerian Companies and Allied Matters
Act like companies statutes in other countries of the world was found to be insufficient in
stemming the increasing rate of corporate collapses around the world including Nigeria
due to corporate governance abuses. The introduction of codes of corporate governance
in Nigeria and around the world was meant to complement companies’ statutes in order
to improve corporate governance. The Nigerian Securities and Exchange Commission
Code of Corporate Governance was meant to apply essentially to all public companies
that are listed on the stock exchanges in Nigeria. The Code has made far reaching
provisions in respect of composition, duties and disclosure requirements of directors with
the objective of ensuring that directors perform their duties and responsibilities in such a
way that corporations are protected from abuses that resulted to their failures. The issue
for consideration was whether the Companies and Allied Matters Act and the Securities
and Exchange Commission Code of Corporate Governance in Nigeria have provided
sufficient legal regime that would protect companies from directors’ abuses in
performing their duties and responsibilities. Consequently, the objective of the research
was to find out whether the Companies and Allied Matters Act together with the
Securities and Exchange Commission Code of Corporate Governance in Nigeria have
sufficiently addressed issues of corporate governance relating to composition, duties of
directors and disclosure requirements. The research adopted a doctrinal research
methodology which relied principally on existing statutes, subsidiary legislation and
literature on corporate governance and made analyses which resulted to formation of
opinions and findings. The study reveals that the category of persons prohibited from
being directors on the basis of past fraudulent conduct is narrow which will continue to
provide a leeway for some fraudulent persons to become company directors; It was also
found that the SEC Code has failed to provide sanctions for failure to comply with the
Code therefore making the Code to lack enforcement power thus making compliance to
be voluntary and haphazard which will not achieve the desired best practices in the
Nigerian business environment. It was further shown that the narrow scope and
ambiguous definition of the concept of ‘connected persons’ to directors cannot achieve
the objective of preventing conflict of interest transactions under the current corporate
governance regime. The research therefore recommended among other things, the
amendment of the Companies and Allied Matters Act to make the definition of fraudulent
persons to be elastic enough to cover other areas beyond company affair. Fraudulent
conduct should be made elastic enough to cover other areas like civil and public service;
the SEC Code should be made mandatory for compliance by public companies and clear
sanctions should be prescribed for failure to comply in order to enhance faster
application and entrenchment of good corporate governance in Nigeria. It was further
recommended that a clear definition of ‘connected persons’ to directors with an extended
scope be made to cover other persons such as father, mother, brothers and sisters, father
in-law and mother in-law who are more likely to promote the interest of directors in
material transaction with the company.

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