NIGERIA Law and Practice Contributed by: Yeye Nwidaa, Mariam Olayinka Akinyemi, Toluwalase Oliver-Jude and Adedoyin Odekilekun, Jackson, Etti & Edu
Failure to file annual returns for a continuous period of ten years may result in the company being struck off the register, effectively leading to its dissolution. These filings are available at the CAC and can be inspected for a fee. Please note that the list above is not exhaustive. The CAC has various supervisory powers over entities, including the authority to: • regulate and monitor the registration and operation of companies, business names and incorporated trustees; • inspect company records; and • investigate suspected breaches of CAMA, impose penalties for non-compliance and, where necessary, strike off defaulting entities from the register. Through these supervisory functions, the CAC plays a critical role in promoting good corporate governance and legal compliance among regis - tered entities. 7. Audit, Risk and Internal Controls 7.1 Appointment of External Auditors In line with CAMA, every company – except a small company as defined under Section 394 (3) of CAMA or a company that has not carried out business since its incorporation – is mandated to appoint an external auditor to audit its financial statements. One of the key requirements governing the rela - tionship between the company and the auditor is independence. An auditor is not expected to serve a company for more than ten consecutive years and must observe a seven-year cooling-off period before potential reappointment. To further preserve independence, there should be a rota -
tion of the audit engagement partner every five years. Also, it is expected that a cooling off peri - od is observed before the company can employ any member of the audit team. Companies are expected to establish policies on the appointment and independence of auditors, and on the scope of non-audit work an external auditor can undertake. 7.2 Requirements for Directors Concerning Management Risk and Internal Controls The NCCG places the responsibility for risk management and internal controls squarely on the board of directors. The board is required to ensure the establishment of a robust and com - prehensive risk management framework that identifies, assesses and mitigates risks. This framework must be effectively integrated into the company’s day-to-day operations and clear - ly communicated across all levels of the organi - sation in simple and practical terms. In addition, the board must ensure that sound internal con - trol mechanisms, policies and procedures are in place, and that they are regularly reviewed and updated to address evolving risks. Oversight of these functions is typically exercised through the board’s audit and risk management committee, which is also responsible for ensuring that the internal audit charter clearly outlines the roles, duties and responsibilities of the internal audit function. It must ensure that the individual or firm performing the internal audit function – whether internal staff or an outsourced firm – is properly qualified and operates in full compli - ance with the charter and applicable profes - sional standards. These measures are essential to safeguard shareholders’ interests and ensure the company’s long-term sustainability.
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