NIGERIA Law and Practice Contributed by: Yeye Nwidaa, Mariam Olayinka Akinyemi, Toluwalase Oliver-Jude and Adedoyin Odekilekun, Jackson, Etti & Edu
remains the best interest of the company itself. Directors are primarily obliged to act in a manner that promotes the success and sustainability of the company as a separate legal entity, even if such actions may, in some instances, negatively impact certain stakeholders. 4.8 Consequences and Enforcement of Breach of Directors’ Duties As a general rule, a company ‒ rather than its shareholders ‒ can bring a claim against one of its directors for breach of duty, given that the duty is owed by the directors to the company itself. The options available to the company include order of injunction, compensation for damages, and revocation of contract. However, there are instances that entitle a shareholder to enforce a breach of director’s duties, including: • entering into illegal or ultra vires transactions; • purporting to do by ordinary resolution any act that is required by CAMA or the com - pany’s articles/charter to be done by special resolution; • any act or omission affecting the share - holder’s individual rights as a member of the company; • committing fraud on either the company or its minority shareholders; • where a company meeting cannot be called in time to be of practical use in redressing a wrong done to the company or to its minority shareholders; and • where the directors are likely to derive a profit or benefit ‒ or have profited ‒ from their negli - gence or from their breach of duty. 4.9 Other Bases for Claims/Enforcement Against Directors/Officers Other bases for claims or enforcement against directors or officers for breaches of corporate
governance requirements in Nigeria are as fol - lows. • Statutory regulations – Nigerian companies are subject to various statutory regulations and regulatory bodies, such as the SEC and the CAC. Directors and officers must comply with these regulations; failure to do so can result in enforcement actions. • Common law – directors can be held liable under common law principles for actions such as negligence, breach of duty of care, or breach of trust. • Shareholder actions – shareholders in Nige - rian companies have the right to bring actions against directors for breaches of duty or other misconduct through derivative actions or direct claims. • Criminal offences – directors and officers can also face criminal liability for offences such as fraud, insider trading, or other financial crimes under Nigerian criminal law. • Tort law – directors can be sued under tort law for actions such as defamation, negli - gence or misrepresentation. • Regulatory enforcement – regulatory bodies such as the Nigerian Stock Exchange (NGX) or the FRC have powers to enforce compli - ance with corporate governance standards, and can take enforcement actions against directors and officers for non-compliance. The liability of a director is generally limited. A director will not be held personally liable for actions taken in the ordinary course of business, provided such actions are carried out in good faith and in the best interest of the company. However, directors may be personally liable in certain circumstances, particularly where their conduct involves wrongdoing. In such cases, the law lifts the veil of protection usually afforded to
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