Who is a Director When Registering a Company with CAC?

When registering a company in Nigeria with the Corporate Affairs Commission (CAC), one of the key roles that must be filled is that of a director. The director is a critical part of the company?s structure and has several responsibilities that can significantly impact the direction and success of the business. But who exactly is a director, and what does their role entail?

Who Can Be a Director?

A director is an individual appointed to manage the affairs and operations of a company. According to the Companies and Allied Matters Act (CAMA) in Nigeria, a person can be a director if they meet certain eligibility criteria. These criteria are quite straightforward and allow for flexibility in the appointment of directors.

Age Requirement: A director must be at least 18 years old. However, exceptions exist for younger individuals if the company?s constitution allows it, but this is less common.

Mental Soundness: The person must be of sound mind, meaning they are capable of making decisions and understanding the implications of their actions.

Financial Responsibility: A director should not be an undischarged bankrupt, unless they have received court approval to act as a director.

Criminal Record: A person convicted of offenses related to fraud or dishonesty is disqualified from acting as a director for a specific period, typically five years.

It's important to note that a director does not need to reside in Nigeria. Foreign nationals can serve as directors of a Nigerian company, provided they meet the legal requirements.

Types of Directors

In a company, there are different types of directors, each with distinct roles and responsibilities. Understanding these types can help you select the right individuals to guide your company.

Executive Directors: These are directors who are involved in the day-to-day management of the company. They typically hold specific managerial roles, such as CEO or CFO, and make decisions regarding the company's operations.

Non-Executive Directors: These directors do not engage in the daily management of the company. Instead, they provide strategic guidance and oversight, ensuring that the executive team stays on course and makes sound decisions.

Independent Directors: These are non-executive directors who have no material relationship with the company, its executives, or its shareholders. They offer unbiased and independent advice.

Alternate Directors: In situations where a director is unavailable, an alternate director may be appointed to act in their place temporarily.

Responsibilities of a Director

A director plays a crucial role in the growth and governance of a company. Below are some of the key responsibilities:

Strategic Decision-Making: Directors are responsible for steering the company?s strategic direction. They set goals, approve business plans, and oversee the overall progress of the company.

Fiduciary Duty: Directors must act in the best interest of the company and its shareholders. This means exercising their power responsibly and avoiding conflicts of interest.

Compliance: Directors ensure that the company complies with all legal and regulatory requirements, including filing annual returns with CAC and maintaining proper financial records.

Risk Management: Directors assess potential risks to the company and develop strategies to mitigate them.

Number of Directors Required by CAC

When registering a private limited liability company (LTD) in Nigeria, at least one director is required. However, it is common to have multiple directors, especially for larger companies. For a public limited company (PLC), a minimum of two directors is required by law.

Appointing and Removing Directors

Directors can be appointed either at the point of incorporation or later during the life of the company. Shareholders usually have the power to appoint and remove directors. However, this process must be conducted in line with the company?s articles of association and the provisions of CAMA.

Conclusion

A director is a vital component of a company's success. Their role extends beyond simply holding a title?they are responsible for guiding the company?s vision, ensuring compliance with the law, and safeguarding the interests of shareholders. When registering your company with the CAC, selecting qualified and responsible individuals as directors can lay a strong foundation for future growth and stability.

For personalized assistance in registering your company with the CAC or appointing directors, feel free to contact us for expert guidance.