A COMPARATIVE ANALYSIS OF DIRECTORS’ DUTIES OF CARE AND SKILL AND FIDUCIARY DUTIES OF LOYALTY AND GOOD FAITH UNDER THE COMPANIES’ ACTS OF NIGERIA AND THE UNITED KINDGOM

A COMPARATIVE ANALYSIS OF DIRECTORS’ DUTIES OF CARE AND SKILL AND FIDUCIARY DUTIES OF LOYALTY AND GOOD FAITH UNDER THE COMPANIES’ ACTS OF NIGERIA AND THE UNITED KINDGOM

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ABSTRACT

Having been in existence for about twenty five years now, the Companies and Allied Matters Act 1990 ―CAMA‖ is long overdue for review. The many calls for the review of the law have not particularly singled out the director‘s duties of care and skill and fiduciary duties of loyalty and good faith. Yet, a cursory look at the statement of duties under the CAMA leaves much to be desired. The United Kingdom relatively recently 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 today would have the CA as a foremost reference point. On this note, this research considered, comparatively, whether and to what extent the CA can be a model for the CAMA in the area of directors‘ general duties of care and skill and fiduciary duties of loyalty and good faith. A doctrinal method of research was employed using the tool of comparison. The research tried to show that the CAMA, after over 20 years, is far from being a model company law for Nigeria today in the area of the director‘s duties of care and skill and fiduciary duties of loyalty and good faith and therefore, requires review in line with the UK Companies Act 2006. The research found that the CAMA, although improved on the common law at the time of its enactment with respect to the standard of care required of the director, is far from being up to standards of today‘s business society. Furthermore, the fiduciary duties under the CAMA were found to be riddled with grammatical errors and in some cases, did not adequately reflect the common law principles they were meant to codify. The principles on conflicts of duties also gave the director very little information. Comparatively, the CA was found to be clearer on the points indicated and also reflected the modern practice on the standard of care required of directors. The work recommended that, on the duties of care and skill and fiduciary duties of loyalty and good faith, the CAMA should 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.

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