APPRAISING THE FUNCTIONALITY OF DIRECTORSHIP IN CORPORATE MANAGEMENT IN A DEVELOPING ECONOMY: THE CASE OF NIGERIA

Abstract

The trite rule underlying the operations of companies is that a company, upon incorporation, has its own legalidentity, distinct from that of its shareholders and other stakeholders. Thus corporate purists hold the view that ifa company, for instance, is proceeded against for its indebtedness, only the assets of the company can besequestrated to satisfy the debt of the company pursuant to a judgment. The implication is that if accompany isinsolvent, its debts may well go unsatisfied and creditors will take pot luck in the recovery of its loan. The creditorscannot go beyond this to attach the assets of the individual shareholders. This is predicated on the concept ofseparate legal personality which cloaks corporate veil over the company. The paper is aimed at appraising thefunctionality of directorship in corporate management. The paper identified the challenges of inappropriatepersons being appointed directors, the undefined and steady remuneration schedule of directors, themalfunctioning of multiple directorship, and the presumption of due appointment of a director as the causes ofthe malfunctioning of directors in the management of companies in Nigeria. It is therefore recommended thatrelevant provisions of the CAMA dealing with those challenges as discussed above be amended. For instance,clear qualifications of persons to be appointed company directors touching on educational qualification, moralityand experience should be stipulated by the CAMA to create a propensity for good corporate management. Theartificial nature of a company demands that the personalities of the directors as alter ego of the company shouldbe propitious to successful operations of a company.