Company Directors in Nigeria - Resignation, Retirement and Removal

In Nigeria, every company must have a minimum of two directors and there is no residence requirement. As such, a director of a Nigerian company need not reside in Nigeria. However, some problems seem to arise when the shareholders of a company no longer require the services of a director. They seem to be faced with a problem as to how to legally and effectively remove a director of a company. Below is a short answer to assist you in making that decision. Under Nigerian law, a director of a company may cease to hold office in different ways, such as:

1. By resignation

A director of a company may resign his appointment as a director by tendering his letter of resignation to the board of directors. The board of directors may then pass a resolution accepting his resignation and directing the company secretary to notify the Corporate Affairs Commission (“CAC”) accordingly. The letter of resignation and the board resolution will then be filed at the CAC alongside a completed form CAC 7A (Particulars of Directors and of any Changes Therein).

1. By retirement
   • Unless the articles of association of the company provides otherwise, at the first annual general meeting of the company, all the directors are required to retire from office and at the annual general meeting in every subsequent year, one-third of the directors for the time being, or in the event that their number is not a multiple of three, then the number nearest one-third shall retire from office.

• The directors to retire in every year shall be those who have been longest in office since their last election, but as between persons who became directors on the same day, those to retire are to be determined by lot, unless they otherwise agree among themselves.

• Upon the retirement of the director, a board resolution stating the fact of the retirement and a completed form CAC 7A will be filed with the CAC.

1. By removal by the company (Shareholders’ resolution)

Where a shareholder proposes that a director of a company be removed, the company may do so by a simple resolution, notwithstanding anything in its articles or in any agreement between the company and the director sought to be removed. However, it is important to note the following requirements of law:

• The person(s) wishing to remove the director must issue a notice of the resolution to the company at least 28 days (special notice) before the date of the meeting of which the removal of the director is intended to be discussed.

• Upon receipt of the notice, the company secretary will:

• send a copy of the notice to the director concerned, who may wish to make representations;

• issue notice of the meeting at least 21 days before the date of the meeting. The notice will be accompanied by any representations made by the director and state the fact of the representations having been made.

• At the meeting, the company must give audience to the director and read to the members his representations (if they were received too late or were not sent to the members owing to the company’s default). An ordinary resolution may then be passed removing the director. (An ordinary resolution is passed by simple majority of votes cast at a general meeting).

Upon the removal of the director, the law requires the company to notify the CAC of the removal by filing form CAC 7 (Notice of his removal must be filed within 14 days of the removal or it will attract a late filing fee of N5000.

Furthermore, the company is also required to reflect the removal on the register of directors. Where the strict provisions of the law are not adhered to and a director feels he has been wrongly removed, he may sue for –

1. declaration for wrongful removal;
2. an injunction restraining the company from the continued removal and barring him from entering its premises; and
3. damages for breach of contract;

Please note that a company is required at all times to have a minimum of two directors.  When a director is removed, a casual vacancy is created and the board of directors may appoint another director to replace the removed director.