Abstract

This paper appraises the provisions of Companies and Allied Matters Act (CAMA), 2020 on the minimum number of directors and the requirement for three independent directors in a registered public company. It is trite that a registered company requires natural persons who should be entrusted with the management of its affairs. This is so because a registered company is an artificial person; its management has to be entrusted to human agents. CAMA makes it mandatory that every registered company that is not small shall have minimum of two directors. Any registered company, not being a small company, whose number of directors falls below two (statutory requirement) shall within one month, appoint new director and shall not carry on business after the expiration of the one month unless the directors are appointed. It is an offence for any director or member of a company to know that the company carries on business, sixty days after the number of directors has fallen below two. Such director or member shall be liable for all liabilities and debts incurred by the company during that period when the company so carried on business. In another provision, CAMA makes it a requirement that every registered public company shall have at least three independent directors, though the Act is silent on the penalty for default in complying with the requirement. The paper, using doctrinal method, observes a conflict between the two provisions; to the extent that which of the provisions will determine the minimum number of directors in a registered public company. It is recommended that the provision on the minimum number of directors should be reviewed to limit it to registered private companies; while the provision on minimum of three independent directors should be reviewed to determine the minimum number of directors in a registered public company, and penalty for default in complying should be provided.