NIGERIA Law and Practice Contributed by: Yeye Nwidaa, Mariam Olayinka Akinyemi, Toluwalase Oliver-Jude and Adedoyin Odekilekun, Jackson, Etti & Edu
4.11 Disclosure of Payments to Directors/Officers
directors, holding them personally accountable for their misconduct. 4.10 Approvals and Restrictions Concerning Payments to Directors/ Officers The remuneration of non-executive directors is determined by the company at its general meet - ings. Typically, the board proposes the remu - neration package to shareholders based on the recommendation of the committee responsible for nomination, governance and remuneration. In making such recommendations, factors such as industry standards, the expected time com - mitment and the company’s financial capacity are considered. The components of non-exec - utive directors’ remuneration generally include directors’ fees and sitting allowances, which are required to be disclosed in the company’s annu - al report. Notably, non-executive directors are prohibited from receiving performance-based compensation. The remuneration components of executive directors who are also employees of the compa - ny are typically outlined in their letters of employ - ment. Such remuneration usually includes ben - efits such as an annual salary, healthcare, car allowance, housing allowance, travel allowance, telephone allowance and other performance- based compensation. These benefits are sub - ject to board approval and must be disclosed to shareholders. Executive directors, unlike non- executive directors, are not entitled to receive sitting allowances or directors’ fees. Failure to comply with the approval process would render the activities of the board void.
Under the NCCG, a company’s remuneration policy as well as the remunerations of all direc - tors are required to be disclosed in the compa - ny’s annual report. Companies are also advised to implement a claw-back policy to recover excess or undeserved rewards (eg, bonuses, incentives, share of profits, stock options, or any performance-based reward) from directors and senior employees. 5. Shareholders 5.1 Relationship Between Companies and Shareholders A shareholder’s relationship with the company in which they hold shares is a contractual one. The relationship between the shareholders and the company is guided by the Shareholders Agree - ment, Memorandum And Articles Of Association to the same extent as if they were covenants on the part of the company, and each member must observe the provisions. The shares held by the members give a right of participation in the company. A shareholder does not have a proprietary interest in the under - lying assets of a company; however, they are entitled to a share of the distributed profits of the company in proportion to their respective shareholdings and, on a winding-up, to the sur - plus assets of the company after the company’s creditors have been repaid in full. Shareholders are not liable for the acts of the company, except in very limited circumstances when the corporate veil can be pierced, where a company’s limited liability status is set aside, and a shareholder is liable for the company’s acts.
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