Corporate Social Responsibility (CSR) is premised on the idea that corporations should exercise a broader level of accountability (legal and social) towards stakeholder groups, other than shareholders. This transcends mere corporate philanthropic gestures and encompasses economic, ethical, and legal expectations of corporations in terms of the impact of their activities on host communities and society at large. A problem emanating from the regulatory framework of the CSR of oil companies in Nigeria is that the Companies and Allied Matters Act (CAMA) 2020, which is the primary companies’ legislation in Nigeria, lacks an enforceable duty mandating companies to discharge social responsibility in favour of their host communities. The implication of this is that the CAMA 2020 does not offer support for CSR and as such companies are not adequately encouraged to engage in social endeavours and community development. At most, only Oil Companies are bound to execute CSR initiatives under the Petroleum Industry Act 2021.
It is against this background that this article seeks to interrogate CSR under the Companies and Allied Matters Act and underscore its effectiveness and benefits to the host communities.
CSR and the Companies and Allied Matters Act 2020 (CAMA 2020)
The main corporate law statute in Nigeria is the Companies and Allied Matters Act (CAMA) 2020. The definition of CSR under CAMA may have had a significant impact on the type of CSR practices obtainable in the Nigeria corporate sector. While CSR may occasionally include elements of corporate philanthropy, charity, or making donations from business profits, it is clearly not all about altruism. It may be essential to emphasize that the issue of corporate giving and charitable giving has subsequently been resolved under the CAMA, 2020. A business is typically only allowed to engage in philanthropy and charity if doing so will ultimately benefit the company and advance the success of all of its shareholders. Otherwise, corporate law prohibits corporate gifting since it is interpreted as an unauthorized use of funds that would otherwise be accessible as profits for shareholders.
Also, all corporations are said to have all the rights and powers of a natural person with full capacity, including the right to make donations, under section 43 of the CAMA 2020. So, it follows logically that any business that has been established will be permitted to participate in corporate gifting provided that its memorandum and articles of association do not contain any prohibitions to the contrary. Moreover, Section 43(2) of CAMA 2020 solely forbids corporate donations to political parties, associations, or for any other political reasons. Again, this can only imply that such corporate contributions will be intra vires, lawful, and legitimate if they are not directed toward any political objectives or purposes and if they are not otherwise banned by the company’s constitution (memorandum and articles of association).
Although it will be legal for business managers to provide gifts from company cash, doing so at random and solely for charitable purposes will amount to an unnecessary depletion of capital that would have otherwise been accessible to shareholders as profits.
Once more, CAMA 2020 does not seem to offer enough ideological backing that is favourable to good CSR efforts in Nigeria. Being a classic shareholder-first style of corporate governance, CAMA gives relatively little consideration to company responsibilities towards stakeholder groups like employees, creditors, local communities, and suppliers. The combined implications of section 305(3) and (5) of the provisions of CAMA 2020 further support the claim that CSR has supported very little in Nigeria, particularly in terms of employee rights. Corporate decision-makers appear to be obligated under sub-section 4 to take into account, and balance employee-related issues and interests. While these employees may feel that their interests are being considered in the promotion of the company’s success, sub-section 9 makes it abundantly clear that they should not attempt to enforce this right because they will fail since only the company (that is, the shareholders as a whole) can sue if this right is violated or perceived to have been violated by corporate managers. This codifies section 341 of the CAMA 2020 and the well-known common law rule established in the case of Foss v. Harbottle.