ABSTRACT

Undoubtedly, the corporation has become one of the most powerful forces in twentieth century economies. It is both a method of property tenure and a means of organizing economic life. The corporation’s separation of ownership into component parts, control and beneficial ownership has brought into sharp focus the fundamental divergence between shareholder and management interests. With sole proprietorships, the owners are usually the same people who manage and operate the business. But in large companies, corporate officers manage the business on behalf of the owners. This separation of ownership and control creates a potential conflict of interests. In particular, managers may care about their salaries, fringe benefits, or the size of their offices and support staff; or perhaps even the overall size of the business they are running, more than they care about the shareholders’ profits. This agency problem caused by the separation of ownership and control has long been a great concern globally. This is particularly so in the wake of mass corporate scandals witnessed in the past couple of years. Just like any other country, Nigeria has faced the same problem. In Nigeria, the Companies and Allied Matters Act, Cap. C20, LFN, 2004, was enacted as the principal statute regulating the formation and management of companies. The central tenets of the Act have been accountability, efficiency and objectivity on the part of management. However, cracks are visible in many areas of the Act with gross attendant consequences for directors. It is found out that the exercise of the powers as conferred by the Act on the directors to direct and manage the business of the company is vulnerable to abuse. This is particularly the case when directors are partially permitted to deal in contracts with their own companies. There is therefore the need for amendment of the Act. This study examines the relevant provisions of the Companies and Allied Matters Act, 2004 as well as the two Codes of Corporate Governance for public companies in Nigeria using doctrinal method. The objective is to ensure that there is corporate accountability.

CHAPTER ONE GENERAL INTRODUCTION 1.1 BACKGROUND TO THE STUDY
A company once incorporated is a legal person; distinct and separate from the members that established it1and is also endowed with all the powers of a natural person of full capacity for the furtherance of its authorised business or objects specifically set out in its Memorandum of Association.2 The Company being an artificial person – in contra-distinction to a natural human being, therefore, can only function or operate through the instrumentality of its human organs, officers and agents.3 This view was observed and more vividly stated by Viscount Heldane L.C. in Lennands Carrying Co. v. Asiatic Petroleum Co. Ltd4 A corporation is an abstraction. It has no mind of its own any more than it has a body of its own; its active and directing will must consequently be sought in the person of somebody who for some purposes may be called an agent, but who is really the directing mind and will of the corporation, the very ego and centre of the personality of the corporation.

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