The Composition of Directors: CAMA 2020 & Corporate Governance Codes
Justice Joust Editorial
Legal Content Team
Download The Corporate Brief
- CAMA 2020 statutory minimums for directors
- CBN 2023 Guidelines for financial institutions
- NCCG 2018 (FRC Code) and SEC Code 2011
- Comparative analysis of board size and independent director requirements
Mastering Director Composition
The composition of directors is regulated by both the Companies and Allied Matters Act (CAMA) 2020 and various sector-specific or general Codes of Corporate Governance in Nigeria.
Rule of Conflict
Where there is a conflict between the provisions of the SEC Code (or similar codes) and another code concerning a company covered by both, the code that makes the stricter provision shall apply.
I. CAMA 2020 (Statutory Requirements)
CAMA 2020 sets the statutory minimums for director composition:
Minimum Number (S. 271)
Every company, not being a small company, shall have at least two directors. Small companies are permitted to have a single director.
Independent Directors (S. 275)
Public companies shall have at least three independent directors (S. 275(1)). Note: BFA S.14 now mandates one-third of directors as independent.
Audit Committee (S. 404)
Public companies must establish an Audit Committee of 5 members: 3 shareholders and 2 NEDs. Must be financially literate.
Vacancy (S. 271(2))
If numbers fall below two, must appoint new directors within one month or cease carrying on business.
II. CBN's 2023 Corporate Governance Guidelines
CMNIBs Limits
Min: 7 | Max: 15
(Commercial, Merchant, Non-Interest Banks)
PSBs Limits
Min: 7 | Max: 13
(Payment Service Banks)
- Minimum 2-3 INEDs depending on authorization.
- Diversity: Must NOT be only one gender.
- Tech Skills: 2 NEDs must have FinTech/ICT/Cyber skills.
- FHC Rules: Max 30% cross-directorship with subsidiaries.
III. NCCG 2018 (FRC Code)
- P2
Principle 2: Balanced skills and diversity (experience, gender) without compromising competence.
- 2.3
Mix: Majority must be Non-Executive Directors (NEDs). Desirable that most NEDs are independent.
- 2.7
Separation: Chairman and MD/CEO positions MUST be separate. Chairman should be a NED.
- 7.2
INED Definition: Max 0.01% shareholding of paid-up capital.
IV. SEC Code 2011 & Financial Cos Code 2019
SEC Code (Public)
- • Minimum Board Size: 5
- • Mix: Majority NEDs, at least 1 INED
- • INED Shareholding: Max 0.1%
- • Family: Max 2 members on board
Financial Cos 2019
- • Board Size: 5 (Min) to 9 (Max)
- • Mix: Over 50% must be NEDs
- • INED: At least 1 (no company relationship)
- • Banking Exp: At least 2 members
Comparative Summary Table
| Code/Legislation | Min Size | Max Size | Director Mix | Independent (INED) |
|---|---|---|---|---|
| CAMA 2020 | 2 (Non-Small) | None specified | Not specified | 3 or 1/3 (Public) |
| CBN 2023 (Banks) | 7 | 15 | Majority NEDs | 2-3 INEDs |
| NCCG 2018 | Relative to scale | None specified | Majority NEDs | Max 0.01% shares |
| SEC Code 2011 | 5 | None specified | Majority NEDs | Min 1 / Max 0.1% shares |
| Fin-Cos 2019 | 5 | 9 | >50% NEDs | Minimum 1 INED |
Subscribe to the The Weekly NLS Cheat Sheet
Master Civil, Corporate, Criminal, Property, and Ethics. Get our best weekly blog explainers in your inbox, then hit the Justice Joust app to practice what you've learned.
Ready to test your knowledge?
Don't just read about it. Join thousands of Nigerian law students answering past questions and battling on the leaderboards.
Subscribe & Unlock Past Questions