What director means
A director runs the company. Shareholders own it, directors manage it, and in most small Nigerian companies the same people wear both hats without noticing where one role ends and the other begins.
That matters, because the two carry very different obligations. Owning shares imposes almost no duties. Being a director imposes real ones, owed to the company itself rather than to the shareholder who put you there.
Under CAMA 2020 a single person can form and run a private company, so a company can have one director who is also its only shareholder.
How it is used
Directors are named at incorporation and recorded at the CAC, and any change has to be filed. That record is what banks, investors and counterparties check when they want to know who can bind the company.
Day to day, directors act through board decisions, recorded in board resolutions. A bank opening a corporate account, a landlord signing a lease with a company, or an investor putting money in will all want to see that the directors, as recorded at the CAC, actually authorised the transaction.
Key features
- Appointed by the members and recorded at the CAC
- Owes duties to the company, including good faith, care and avoiding conflicts of interest
- Acts collectively through the board, normally by resolution
- Can be removed by the members following the process in the articles and CAMA
- May be personally liable where duties are breached or the company trades wrongfully
How this works in Nigeria
CAMA 2020 tightened director accountability. It codified duties, addressed disqualification, and introduced provisions on the number of directorships a person may hold in public companies.
The most common practical failure in Nigerian small companies is the informal change. A director leaves, or a new one joins, and nobody files anything at the CAC. Months later the bank refuses a transaction because the resolution is signed by somebody who, on the public record, is not a director, or because a person who left is still shown as one.
Director vs shareholder
A shareholder owns part of the company and generally has no duty to it beyond paying for their shares. Their power is exercised by voting, mostly on big constitutional questions.
A director manages the company and owes it fiduciary duties. They can be personally liable for breaches, disqualified, and in serious cases pursued for the company's debts.
In a two founder Nigerian startup where both are directors and both hold shares, the distinction only becomes visible during a fallout. That is when it emerges that removing somebody as a director does not take away their shares, and buying their shares does not automatically remove them as a director. They are separate steps.
Limits and risks
Limited liability protects shareholders, not misbehaving directors. Where a director acts fraudulently, trades while insolvent in defined circumstances, or breaches their duties, personal liability can follow.
A director also cannot act alone where the articles require a board decision. Signing a significant contract without authority can leave the company disputing the deal and the director carrying the consequences.
Worth knowing
Resigning as a director means nothing until it is filed at the CAC. People have been pursued over decisions taken by companies they thought they had left years earlier.