Cama 2020: A Look at Nigeria’s New Corporate Governance Regime


The idea of Corporate governance is central to the health of every successful corporation – whether big or small. This is primarily because it defines how a corporate body conducts itself in light of our fast-paced and increasingly competitive world. A good corporate governance system must marry the core principles of fairness, accountability, responsibility and transparency. These principles do not only invite investors and relevant stakeholders, but also prove beneficial to the corporation and impact the economy.

Following the notorious Enron scandal[1] which revealed the malpractices of companies and the inadequacies of global corporate laws, countries have consistently enacted strong policies that regulate the governance of corporations. Nigeria recently repealed her 30-year old Companies and Allied Matters Act 1990[2], and replaced it with a forward-looking and enhanced regulation: The Companies and Allied Matters Act, 2020 (CAMA 2020).

This article examines Corporate Governance in light of the recent CAMA 2020, as well as its innovations towards the attainment of an enhanced corporate governance.


Two terms come to mind in the definition of corporate governance, to wit: Corporate and Governance. According to the Corporate Finance Institute, a corporate entity is created by individuals or shareholders with the purpose of operating for profit.[3] On the other hand, Governance in this context, ‘encompasses the system by which an organization is controlled and operates and the mechanisms by which it, and its people, are held to account. Ethics, risk management, compliance and administration are all elements of governance.’[4]

Corporate governance, therefore, is the set of rules and mechanisms through which a corporation is guided. To adopt the definition of the Governance Institute of Australia, they are ‘the framework of rules, relationships, systems and processes within and by which authority is exercised and controlled in corporations. It encompasses the mechanisms by which companies, and those in control, are held to account.[5] Put differently, corporate governance emphasizes the rights and responsibilities of a firm’s management, its board, stockholders and various stakeholders. How well companies are run affects their performance, market confidence and private sector investment.[6] It is the system of rules and practices by which a firm is controlled, without which the integrity of a company and financial market is questioned.

It is important to note that Corporate Governance has a special role to play in any vibrant financial market. As highlighted by the 2017 Cytonn Corporate Governance Ranking (CGR) Report, there is a strong correlation between Corporate Governance and returns on stocks of the listed entities.[7] In Nigeria, particularly in 2018, the private sector alone accounted for 90% of our GDP.[8] This underlines why countries aim to establish strong corporate governance regimes.

On the flip side, the impact of bad corporate governance is detrimental to a company’s reputation as well as the financial market of an economy – The Enron scandal is a good example.

Hence, global best practices have evolved in determining good corporate governance. These practices have seen countries develop guidelines. In Nigeria, these guidelines are both general and industry-specific, with CAMA 2020 being the extant principal regulation. Other examples include the CBN guidelines and the Securities and Exchange Commission Code of Corporate Governance.


Prior to its repeal, CAMA 1990 regulated corporate affairs in the country. It established the Corporate Affairs Commission (CAC), providing for the incorporation of companies, registration of business names and the incorporation of Trustees of certain communities, bodies and associations.  But it soon proved handicapped and created a fertile ground for certain corporate malpractices, due primarily to the imminent transformation of the Nigerian Corporate landscape.

The clamour by stakeholders for a refined piece legislation led to the enactment of CAMA 2020 which has been adjudged a welcome development and in fact, timely. Not only did it repeal the previous 30-year-old Act which was tailored in accordance with the British laws and grown stale, it also recognized the current corporate realities and advancements and accordingly made enhanced provisions in line with best practices. This new legislation has earned Nigeria global recognition as one of the 20 places with ease in doing business, among others like Saudi Arabia, Kuwait, China and India.


CAMA 2020 has brought with it a lot of changes that optimize corporate governance in Nigeria. These enhanced changes which shall be considered in subsequent paragraphs span from directorships, corporate finance to secretaries, audit and lots more.

  1. Directors: To enhance corporate governance principles in publicly owned companies, the Act provides for the minimum threshold of at least three Independent Directors for public companies and at least one director for small companies.[9] Although a right move, the Act in respect to the qualifications of Independent Directors conflicts with the Principle 7 of the Code of Corporate Governance 2018 (CCG) published by the Financial Reporting Council of Nigeria (FRCN). The conflict may otherwise disqualify competent directors from holding the seat of Independent Director.[10] It is hoped that this conflict is resolved immediately to avoid disqualification of otherwise qualified candidates from holding the seat of Independent Director.

Also, all companies must keep a register of directors’ residential addresses, failure of which would attract a fine as the CAC may specify.[11]

Meanwhile, directors with conflicting interests in any transaction must notify as a matter of statutory duty his interest in writing to other directors.[12]

  1. Dual position of Chairman and Chief Executive Officer in a public company: To ensure the protection of shareholders’ interest, the Act prohibits the MD/CEO from serving as the Chairman of the same Company and further reiterates the global practice which restricts the chairman from the day-to-day running of the company. Instead, the Act under section 443 makes provision for the appointment of a company’s administrator, who is charged with the responsibility of managing the affairs, business and property of the company. He/she may remove or appoint a director whether or not a vacancy exists. Company officers of companies must require the consent of the administrator prior to exercising any management authority. An administrator, however, may be subject to checks upon the application of a creditor for an examination of his administrative conduct.
  2. Limitations in relation to Directors: Prior to CAMA 2020, the director of a company could serve on the boards of several public entities. This gave the directors so much autonomy and diminished shareholders’ confidence. With CAMA 2020, persons are restricted to serve as directors on five boards of public entities.[13]
  3. Protection of Minority Shareholders: Due to the increasing abuse of domination of majority shareholders over minority shareholders, the new CAMA mandates shareholders to bring derivative actions[14] against a company and its affiliations. It also empowers the Court to make orders such as directing that any amount payable by a defendant in the action, is paid to the applicant, and requires the company to pay reasonable legal fees incurred by the applicant.[15] This provision aims at not just protecting minority shareholders’ rights, but promotes transparency.
  4. Disclosure of Beneficial Ownership For Private Companies – The Act places a duty on trust shareholders who hold in shares for another person to disclose the identity of the beneficial owner of the shares. However, it failed the CAMA to prescribe a penalty for a Trustee’s failure to disclose the nature of his interest in the shares.

More so, as opposed to the previous Act which only made the disclosure of substantial shareholding applicable to public companies, the new Act places a duty on private companies to disclose and share particulars of their substantial shareholders (persons with significant control)[16] with the Commission within a month. This disclosure makes corporate entities transparent enough to attract foreign investors, as well as, discourage illegal investment activities.

  1. Company Secretary: Prior to CAMA 2020, all companies whatsoever, whether big or small were required to appoint a company secretary. This is no longer the case with small companies as section 330 0f CAMA 2020 now exempts them from mandatorily appointing secretaries. The position however remains the same for all other classes of companies. As a new rule, the appointment of a secretary must be followed by a letter by such person consenting to act in that capacity, and which must be lodged at the Commission.
  2. Shareholders’ Pre-Emptive Rights: In order to protect against the dilution of shares of existing shareholders, the new Act grants pre-emptive rights to shareholders. By this, companies that wish to issue shares through private or public placement, must first offer to sell the shares to existing shareholders in proportion to their existing holdings. Hence, shareholders are given preferential treatment over non-members of the company, and this protect shareholders against third party agreements like acquisitions.

Furthermore, although varied by a company’s articles of association, a private company is mandated to seek the consent of all its members before making any sale that exceeds 50% of the total value of the company’s assets.

  1. Audit: As a general practice, companies are required to appoint an auditor or auditors to audit their financial records for the preceding fiscal year at their annual general meeting. However, with the enhanced CAMA 2020, small companies and businesses that have ceased operations since incorporation (excluding insurance companies and banks) are exempted from this requirement. Also, debtors of a company to the amount of N500, 000, shareholders or shareholders’ spouse of a company whose employee is an officer of the company, a person who is or whose partner is an employee of a debenture holder of the company, and an employee of a consultant to the company who has been engaged for more than one year in the maintenance of any of the company’s financial records, or preparation of any of its financial statements, are disqualified from being appointed as auditors of the company.[17]

Meanwhile, public companies must now publish their audited financial records on their websites.

  1. Netting: A principle which helps in assessing and reducing financial obligation for struggling corporations was not known to the repealed CAMA. Its introduction therefore as one of the financial contract provisions in the new Act is very commendable.[18] Netting agreements can now be concluded and enforced against an insolvent party under the provisions of the CAMA 2020.


The enactment of CAMA 2020 is a commendable effort by the regulators to meet the expectations of a fast-changing corporate world. The enhanced provisions of the Act compete with international best practices. However, as with other local legislations, there is yet the Nigeria disease of poor enforcement mechanisms. Nonetheless, it is hoped that the Commission, alongside other relevant regulatory agencies, will proactively implement and carry out their oversight functions on corporate entities.


  1. Corporate Finance Institute. 2022. Enron Scandal. [online] Available at: <> [Accessed 25 May 2022].
  2. The principal legislation which regulated the operations of companies prior to its repeal.
  3. Corporate Finance Institute. 2022. Corporation. [online] Available at: <> [Accessed 25 April 2022].
  4. Governance Institute of Australia. 2022. What is Governance? [online] Available at <> [Accessed 26 April 2022].
  5. Ibid
  6. OECD. 2022. Corporate governance and corporate finance. [online] Available at: <> [ Accessed 27 April 2022]
  7. Cytonn. 2022. Steps to enhancing Corporate Governance. [Online] Available at: <> [Accessed 28 April 2022]
  8. Dada, A., 2018. Private sector accounts for over 90% of Nigeria’s GDP – Osinbajo. PM News, [online] Available at: <> [Accessed 27 April 2022].
  9. Section 275
  10. Obayomi, W., 2022. The sea is history – the Companies and Allied Matters, 2020 aspires to optimize corporate regulation in Nigeria. KPMG Nigeria.
  11. Section 320
  12. Secion 303
  13. Section 307(2)
  14. Section 343 – 346
  15. Section 347
  16. Section 120 (2) of CAMA, 2020. These are persons that hold at least 5% of the voting rights, shares or interest in a company or limited liability partnership; have the power to appoint or remove a majority of the board or partners of a limited liability partnership; or exercise significant influence over a company or limited liability partnership.
  17. Section 403
  18. Section 718

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