A Comparative Analysis of Directors' Duties of Care and Skill and Fiduciary Duties of Loyalty and Good Faith Under Companies' Acts of Nigeria and the United Kingdom

Abstract

Having been in force for nearly thirty years now, the Nigerian Companies and Allied Matters Act 1990 (CAMA) is certainly overdue for review. However, the many calls for its review have not particularly singled out the director’s duties. Yet, a cursory look at the statement of duties under the CAMA leaves much to be desired. The United Kingdom reviewed its company law and now operates the Companies Act of 2006 (CA). One of the most admirable aspects of this new law is the codification of the duties of directors, which were hitherto uncodified and based in case law. For the fact that Nigeria is a common law jurisdiction which usually models its laws after English law, it will most likely be the case that any review of the CAMA would have the CA as a foremost reference point. On this note, this research considers, comparatively, whether and to what extent the CA can be a model for the CAMA in the area of the director’s duties of care and skill and fiduciary duties of loyalty and good faith. A doctrinal method of research is employed using the tool of comparison. The research tries to show that the CAMA is far from being a model company law in the area of the duties and therefore, requires urgent review. Although the law improved on the common law at the time of its enactment many years ago, particularly with respect to the standard of care required of the director, it is still not up to standards for today’s business society and its statement of the director’s duties does not adequately reflect the common law principles it was meant to codify. Comparatively, the CA is found to be clearer on several points indicated and reflects the modern practice on the standard of care required of directors. The work recommends that the CAMA be amended substantially using the CA as a model. This would not only reflect developments from case law and practice, help to further clarify and simplify this important aspect of corporate governance for corporate stakeholders, but may also revive corporate litigation which is currently almost non-existent in that area.

Keywords: fiduciary duties, directors, corporate governance, company law, comparative law, UK, Nigeria