It is usual to hear about top-level staff in a firm or company having official titles,the most common of them being the title of a “director”.

However, there is a lot to know about company directors considering the Legal framework surrounding the position, and this article aims to provide more insight into by dealing with the topics of:-

– Who a company director is under Nigerian law.

– The duties of a director under Nigerian law.

– The types of company directors under Nigerian law.

– Who is eligible to be a company director under Nigerian law.

– Whether or not company directors can hold their positions indefinitely.

Who is a company director under Nigerian law?

A company director is a corporate position (who may or may not be a founder or founding member of a company) appointed or chosen via ordinary employment, a resolution of a company’s management board, or by means of a company’s articles of association to either manage a company, oversee the running of the company, represent the interests of a member or majority shareholder of a company or provide a specialist service to a company by virtue of being a highly skilled & experienced member of a particular profession. 

What is the Regulatory Framework if any governing company directors in Nigeria?

The appointment, duties, removal, powers and daily professional conduct of company directors in Nigeria are regulated by the Companies and Allied Matters Act (CAMA) as well as the Nigerian Code of Corporate Governance(NCCG).

What are the duties of a company director under Nigerian law?

The general duties of a company director under Nigerian law are :-

– The duty to not make secret profits.

– The duty to avoid a conflict of interests.

– The duty not to delegate his powers in a manner that will constitute an abandonment of duty.

– The fiduciary duties imposed by equity on a director i.e. :-

a). a duty as a trustee of the company;

b). a duty as an agent of the company;

c). a duty of uberrima fidei(utmost good faith).

– The duty of care and skill.

– The duty to not fetter discretion.

– The duty to not misuse information gained by virtue of his office/position as a company director even after leaving office.

– The duty to disclose his interest or any secret profit by way of gifts, dividends or any pecuniary interest that could & would be seen to be conflicting with the interests of the company in which he is a director.

What are the types of company directors in Nigeria?

The types of company directors in Nigeria are :-

– Executive directors :- These are directors that constitute the day-to-day top-level management of a company e.g. the post of ‘Executive Director, Credit Risk Management’ or ‘Executive Director, Management Services’.

– Non-Executive directors :- These are usually individuals appointed to be members of a company’s board of directors to participate in board meetings and for the purpose of rendering to the company their sector-specific high level expertise  e.g. high-level Corporate lawyers with director experience. 

– Shadow directors – These are individuals according to whose instructions the directors and even the general staff of a company are used to acting . These persons are usually the actual owners of the company but might not be disclosed as such in a company’s MEMART (Memorandum & Articles of Association) , usually on the grounds of confidentiality.

– Nominee Directors :- These are usually symbolic/representative directors apponted by a member or actual director of a company to participate on their behalf on the basis of confidentiality or inability to act naturally as directors e.g. companies that are appointed as directors of other companies lack natural legal personality and as such need individual representatives to act as their natural alter egos under law.

 As a result, these individuals are appointed to represent and guard the interest of the appointing party.

– Independent Directors :- These are usually highly-experienced sector-specific professionals appointed in a strictly professional capacity to bring their professional skill sets to bear in the service of the company as directors independent of the control of either the party appointing them or the company itself . 

The appointment of such directors is also usually a compulsory compliance requirement in some sectors e.g. Banks and Public Limited Liability Companies (PLCs). 

What is the minimum required number of  directors for companies in Nigeria?

A small company under Nigerian Law is required to have at least 1 director while a private company other than a small company is required to have at least 2 directors. 

A Public Limited Liability Company (PLC) is required to have at least 3 independent directors who have not & whose relatives also have not within the preceding 2 years:-

– worked as employees of the company;

– made or received more than 20 Million Naira from the company;

– owned (or currently own) more than 30% of the Equity/Share Capital stock of a company that made or received more than 20 Million Naira;

– acted as a partner, director or officer of a partnership or company that made or received more than 20 Million Naira;

– been engaged directly or indirectly as an auditor of the company.

A company will be required to halt business operations if it goes below the required number of company directors required for its operation and cannot hire or appoint replacement or new directors.

What does Nigerian law say about life directors?

Under Nigerian law, a person can be appointed as a life director as long as he can be removed under Section.288 of the Companies and Allied Matters Act (CAMA). The appointment of an individual as a life director has to stated and provided for in the company’s Articles of Association.

Who is not eligible to be a company director/what are the grounds for the disqualification /removal of a company director in Nigeria?

The following persons are not eligible by law to be company directors in Nigeria :-

– Infants below 18.

– Persons of unsound mind.

– Persons disqualified by insolvency/bankruptcy.

– Persons convicted for fraud in relation to the formation, promotion, management or dissolution of a company.

– Persons originally qualified by lack of share ownership no longer owning those shares and requested by the board of directors or members of a company to vacate their positions.

– Companies can be appointed as directors of a company but cannot act naturally as directors under Nigerian law except via the appointment of Nominee directors.

– An individual cannot be a director in more than 5 Public Limited Liability Companies PLCs in Nigeria.

What is the position of Nigerian law on remuneration/payment of company directors?

Companies in Nigeria are not bound to pay directors except where expressly stated so and in such a case the payment will become receivable as a debt from the company and shall be out of its funds. 

Although directors are usually entitled to expenses incidental to their offices and in connection with the company’s business operations, company directors will be committing misfeasance where they take receipt of the company’s funds beyond what they are entitled to.

Also, loans , severance benefits or guarantees to company directors without the approval of a company’s members are prohibited under Nigerian law.

Is there a limitation on the period for which company directors can remain in office before compulsorily vacating their positions?

Yes. All directors are required at the first Annual General Meeting(AGM) of a company to retire and then 1/3rd of them in subsequent AGMs although retired directors are deemed reelected in the absence of newly appointed or elected replacements or by virtue of the company’s members resolution.

How are company directors appointed and removed in Nigeria?

Appointment

– The initial/pioneer directors of a company are to be appointed during its registration/incorporation.

– Company directors can be appointed by a simple employment letter.

– Company directors can also be appointed by a provision in its Articles of Association.

– In some business sectors, the approval of sector regulators will be required to appoint a director e.g. the appointment of company directors for a bank or finance company will require prior approval of proposed candidates for the positions by the Central Bank of Nigeria (CBN). 

– A company can also be appointed as a director of a company but can only operate as a director by means of a duly appointed human representative.

Removal 

– A company director can be suspended by the company’s board of directors or members before its next Annual General Meeting or Extraordinary General Meeting via an ordinary company resolution.

– A company director can also be removed via a special resolution given at its members meeting of which a 28-day special notice has been given.

– A company director can be removed in accordance with the terms of his appointment contract.

– The removal of a director is to be communicated to the Corporate Affairs Commission (CAC) by virtue of a Notice of Removal of a director.

It should be noted that removing a company director without recourse to due process will entitle the director to a right of action via courtroom action for legal reliefs that include but are not limited to damages.

Can company directors have personal or unlimited liability in their official capacities?

Yes , though this isn’t usually the case.

Personal and unlimited liability will only arise when:-

– When a company’s MEMART Memorandum Articles of Association describes the company as a registered unlimited liability company.

– Company directors are found to have paid dividends from the company’s Shareholder’s fund base.

– There is a case of company Tax evasion.

– Where there is a case/allegation of fraud by the company’s directors that can lead to a process known as “lifting the veil”(setting aside the Legal personality of a company to get hold of the individuals controlling the company).

– Where there is a case of misfeasance or the company directors acting ultra vires (beyond the scope of their given powers).

Conclusion :- Company director positions are a unique set of appointments that come with a unique set of compliance and Corporate Governance requirements and as such, require unique Director appointment contracts/ clauses in Company Articles of Association that require diligent professional insight and guidance. 

Aviation, or more specifically Air Transportation, has proven to be one of the most indispensable means of movement in the 21st century, with passengers and goods being able to literally traverse continents in just a couple of hours. 

Like most innovations, it is not without its flaws, one of the most problematic flaws being the issue of safety and the close second being the constant possibility of Air Transportation being used to move illegal cargoes in any form . It is for this reason that Air Transportation is heavily regulated in almost every country of the world, Nigeria not being an exception.

This article will thus be looking at the main topics of :-

– What Air Transport licenses (ATLs) and Airline Operations Permits (AOPs) mean for their holders.

– The Legal and Regulatory Framework governing these Aviation licenses.

– The requirements needed to procure these licenses.

– The post-licensing operation guidelines for holders of these licenses.

What is an Air Transport license and an Airline Operations Permit?

An Air Transport license basically entitles its holder to engage in the commercial business of transporting persons, personal belongings, baggage, goods or cargo via the means of an aircraft while an Airline Operations Permit gives its holder to engage in Airline Operations which basically involve the aspects of making planes fly on the day of operation and involves the aspects of :-

– Flight operations (dispatch, flight planning, flight watch, operational control, ground-to-air communications, integration with the crew, schedule & maintenance planning).

– Ground operations( optimal risk allocation, training, reward systems, determination of operational manpower requirements, checking, baggage handling, loading the plane with cargo, bags , fuel , catering, embarking & disembarking the aircraft)

– Maintenance operations.

What is the Regulatory Framework governing the granting and operation of an ATL and AOP?

Airline Operations Permits and Air Transportation licenses along with the companies that seek or secure these licenses are governed by the Nigerian Civil Aviation Act through and the Nigerian Civil Aviation Regulations  through the Nigerian Civil Aviation Authority (NCAA) along with the Federal Airports Authority of Nigeria(FAAN). 

What are the requirements for the grant of an Airline Operations Permit?

The requirements for this permit are :-

-An  application for this type of license is to be made in writing to the Director-General of the NCAA & signed by a duly authorized representative (preferably a lawyer) of the applicant and should be submitted on or before a date not less than 6 months to the expected date of AOP utilization.

This application must contain:-

• 1.The name and address of the applicant.
• The type of services to be provided.
• The number and types of aircraft to be utilized.
• The proposed operational base of the applicant.

– 4 copies of the applicant company’s certificate of incorporation and MEMART (Memorandum & Articles of Association) as well as the Statutory forms showing the directors of the company and their particulars. At least 1 member of the board of directors must be an Aviation professional & the majority shareholding of such a company shall be held by Nigerians.

– A statement of the company’s share capital.

-4 copies of the Tax Clearance Certificates of the company and its directors (with original copies for sighting).

– 4 copies of the detailed business plan of the company indicating its vision, mission, market analysis and strategy, company’s ownership structure, personnel plan, fleet acquisition plan, financial plan including sources of finance, balance sheet, break-even analysis, pro forma income projections (profit and loss statements), cash flow analysis, proposed fares for passengers or cargo and other standard business plan requirements showing detailed road map of how the applicant’s strategy to provide efficient services in respect of safety, regularity, reliability and profitability of operations.

– A publication of a notice of the AOP application in 2 national daily newspapers. This publication should contain information in the application submitted to the NCAA.

– Evidence of the applicant’s financial solvency/ability to undertake the business. Applicants are expected to prove that they are solvent to run operations for a period of 3 months from the start of operations without resorting to any income from their operations.

– Duly completed application forms to be obtained from the NCAA.

– Duly completed Personal History Statement (PHS) forms & 2 passport photographs in respect of each of the shareholders of the company having more than 5% equity shareholding.

– Receipt of payment of a 500 Thousand Naira non-refundable processing fee payable to the NCAA.

– Evidence of adequate insurance cover for passengers, cargo and 3rd party liability.

– Publication in the official Government gazette by the NCAA in the process of carrying out the technical evaluation of the application. The cost implication of this publication will be borne by the applicant. 

– A security clearance via the NCAA forwarding the applicant’s duly completed PHS forms and other relevant documents to the ministry responsible for aviation to seek security clearance from the presidency.

– The applicant will be required to liaise with the airport service providers or the FAAN regarding the approval of its home or operational base.

The following should be noted :

– Upon the receipt of an AOP grant, an annual utilization fee of 100 Thousand shall be paid to the NCAA.

– On receipt of an AOP application, the Director-General of the NCAA may request for additional information from the applicant as may be deemed necessary.

– The outcome of the technical evaluation of the application accompanied by an appropriate recommendation will be forwarded to the Air Transport Licensing Committee (ATLC) for consideration & approval to issue the AOP or otherwise as soon as the security clearance or consent is received from the ministry.

– The Director-General shall refuse to grant a permit if the applicant is not cleared by the State Security Service.

– An AOP grant not utilized at the expiration of its validity period shall not be renewed.

– AOP holders are also required to return to the NCAA monthly statistical returns on aircraft movements as well as cargo & passenger up-lift.

What are the requirements for the grant of an Air Transport Licence (ATL)?

The requirements for an ATL grant are :-

– An application to be made in writing to the Director-General of the NCAA & signed by a duly authorized representative of the applicant (preferably a lawyer). 

This application must be submitted on or before a date not less than 6 months to the expected date of utilization of the ATL.

An ATL application must contain :-

a). The name and address of the applicant.

b). The type of air services to be provided.

c). The proposed operational base of the applicant.

d). Details of proposed routes to be operated where applicable.

e). The number and types of aircraft to be utilized.

f). Times and frequency of the services.

– 4 copies of the certificate of incorporation of the applicant company and its MEMART (Memorandum & Articles of Association).

– Statutory Corporate forms showing particulars of the applicant company’s directors. At least 1 member of the board of directors must be an Aviation professional in line with the Aviation Act. Also, the majority shareholding of the applicant company shall be held by Nigerians.

– 4 copies of the Tax Clearance Certificates of the company and its directors (originals should also be presented for sighting).

– 4 copies of the applicant company’s business plan.

– A publication of a notice of the ATL application in 2 national daily papers which should contain information on the application submitted to the NCAA.

– Evidence of the applicant’s financial solvency/ability to undertake the business. Applicants are expected to prove that they are financially solvent to run operations for a period of 3 months from the start of operations without resorting to any income from their operations.

– Duly completed application forms from the NCAA.

– Duly completed PHS forms and 2 passport photographs in respect of each of the shareholders of the company having more than 5% equity shareholding. 

– Proof of payment of a non-refundable processing fee of 1 Million Naira to the NCAA.

– A publication in an official Government gazette with the costs to be borne by the applicant.

The following should also be noted regarding ATL applications :-

– No person shall operate an aircraft in Nigeria without a security clearance issued by the government upon the forwarding by the NCAA of PHS forms and other relevant documents to the ministry in charge of security clearances. 

– The applicant will be required to liaise with the Airport Service providers or the FAAN regarding approval of its home or operational base. 

– Upon the receipt of an ATL application, the Director-General of the NCAA may request for additional information from the applicant as deemed necessary.

– Upon the grant of an ATL, an annual utilization fee of 200 Thousand Naira shall be paid to the authority.

– The outcome of the technical evaluation of tht application followed by an appropriate recommendation will be forwarded to the ATLC for consideration and approval to issue a Licence subject to a received security clearance from the Ministry.

– The Director-General of the NCAA shall refuse to grant an ATL if the applicant is yet to be cleared by the State Security Service.

– Every Commercial Air Transportation service provider must provide adequate insurance covers for passengers, cargo and 3rd parties.

– The financial health of an Air Transport Company or Airline Operations company shall be monitored closely by the NCAA. 

– Tariffs to be charged for the carriage of passengers and baggage shall be filed with the authority and the public duly notified before their introduction in respect of scheduled services. The Directorate of Air Transport Regulation, NCAA should be contacted further on this.

– ATL holders are also required to forward to the NCAA:-

1. Monthly statistical returns on aircraft movements and passengers uplift.

2. Details of flight schedules and changes thereof regarding frequencies & new destinations.

– An applicant wishing to operate regional and International scheduled services should obtain and seek further professional advice on the guidelines and requirements for designation as approved by the Honourable Minister . 

– ATL grants that are not utilized at their expiration shall not be renewed.

What is the validity period of an AOP and ATL?

AOP grants are valid for 3 years while ATL grants are valid for 5; years.

What are the minimum share capital requirements for an AOP and ATL?

AOP grants require a minimum share capital of 500 Million Naira while for ATLs the minimum share capital requirements are :-

– Domestic operations – 500 Million Naira.

– Regional operations -1 Billion Naira.

– International operations – 2 Billion Naira.

What is the basic insurance cover requirement for both AOP and ATL holders?

The insurance policy required of both AOP and ATL holders must at minimum be able to pay a compensation of $100,000.00 (a Hundred Thousand US Dollars) per passenger in case of death or injury.

Conclusion :- It can be seen from the above write-up that seeking entry into the Aviation sector requires dependable professional guidance and representation at the pre-licensing, licensing and operations phase of operations. Further consultation with a lawyer is very necessary if you are seeking advice on how to register an aircraft in Nigeria or secure operational base approval from the FAAN, two other topics that are very important pre-operation requirements for intending Aviation Service providers but which are not the core focus topics of this article.