How do you appoint new directors as a start-up company?
In our earlier post, we dealt with the removal of company directors and the steps stipulated by law to ensure a valid removal.
It’s equally important to explore the provisions of the law on how a start-up company may bring in new directorship into the company other than the founding directors.
Let us delve in quickly.
Before You Appoint New Directors As A Start-up Company
There are a few things you should note before going ahead to appoint new directors. They are summarised below.
For the purpose of clarity, the first directors of the company at the time of incorporation are usually appointed by the subscribers to the memorandum of association of the company or a majority of them. This is usually provided in the statement of proposed directors to be delivered to CAC.
However, you may want to appoint more directors as time goes on.
To do this, you have to follow prescribed CAMA guidelines on appointment.
CAMA Guidelines To Follow To Appoint New Directors As A Start-up Company
This is referred to as appointment of subsequent directors.
Importantly, S 273 of CAMA confers the power to appoint new or subsequent directors on the Members In General Meeting (MIGM).
Thus, appointment of subsequent or new directors in your start-up company lies with your members and this must be done in a members’ general meeting.
Additionally, there are instances where a company may lose its members and even directors. In this case, the personal representatives of the members entitled to attend and vote at GM may do so in accordance with CAMA and where they are also absent, the creditors may do so.
It’s noteworthy that appointment is by ordinary resolution accompanied by special notice.
Also, before a director is validly appointed, there has to be a nomination by a fellow director.
Upon appointment, you are required to file Form CAC 7 (Change in Particulars of Directors) within 14 days alongside a copy of the resolution appointing the directors.
One important detail about directorship you are to note is that other than the aforementioned prescribed guidelines, a company may choose to provide for an alternative appointment procedure.
In other words, a company may confer authority on any person if choice to determine appointment of directors.
This could be a director, a secretary, or any other person as approved by the company. The usual is to provide this alternative appointment framework in the articles or memorandum of the company.
References
1 https://www.google.com/url?sa=t&source=web&rct=j&url=https://www.tekedia.com/the-legal-framework-governing-company-directors-in-nigeria/&ved=2ahUKEwifiqPN6JL-AhVOhf0HHagmD8w4ChAWegQIBxAB&usg=AOvVaw14IkKGlec4xqbk9MXtzk1s accessed on April 5 2023
2 https://www.google.com/url?sa=t&source=web&rct=j&url=https://businessday.ng/amp/columnist/article/director-appointment-and-board-refreshment/&ved=2ahUKEwifmLu86JL-AhX0iP0HHaYaBfEQFnoECCgQAQ&usg=AOvVaw3OtMEnNdaOgtfP1HqJLh1r accessed on April 5 2023
3 https://www.google.com/url?sa=t&source=web&rct=j&url=https://www.cac.gov.ng/wp-content/uploads/2020/12/CAMA-NOTE-BOOK-FULL-VERSION.pdf&ved=2ahUKEwirptyo65L-AhXp87sIHYq0D6kQFnoECA4QAQ&usg=AOvVaw0L5-xU0JkloHlV2AjRBPCF accessed on April 5 2023
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