No CrossRef data available.
Article contents
Infusion of ICT into Nigeria's Corporate Democracy: A Proposal for a New Reform Initiative
Published online by Cambridge University Press: 16 February 2023
Abstract
This article examines the infusion of information communication technology (ICT) into Nigeria's new company legislation to promote corporate democracy. While the initiative is laudable, especially in the age of the COVID-19 pandemic, the article argues that the reform is of limited value, as only private companies are empowered to deploy ICT in the conduct of general meetings. By excluding public companies, the article argues, inter alia, that the reform overlooks the role that ICT could play in addressing the assumed passivity of latent, large groups, which typify the shareholders of public companies. In making a case for inclusive reform, the article examines the reforms already undertaken by some countries in the common law jurisdictions, whose templates on the subject may inform the changes Nigeria needs to effect in her law.
Keywords
- Type
- Research Article
- Information
- Copyright
- Copyright © The Author(s), 2023. Published by Cambridge University Press on behalf of SOAS University of London
Footnotes
*
LLB (Hons) (Lagos State University), LLM (University of Lagos), D Jur (Osgoode Hall Law School, York University, Canada). Professor of law and dean, Faculty of Law, University of Lagos, Akoka. The author thanks the anonymous reviewers for their comments and the in-house editors for their observations in the course of working on the final version of this article; however, the usual caveat applies. This article is dedicated to the author's daughter, Bolajoko Bolodeoku.
References
1 See Berle, A and Means, G The Modern Corporation and Private Property (reprint 1982, Hein)Google Scholar; EasterBrook, F and Fischel, D “Voting in corporate law” (1983) 27 Journal of Law and Economics 395Google Scholar; and Manne, H “Some theoretical aspects of share voting: Essay in honour of Adolf A Berle” (1964) 64 Columbia Law Review 1427CrossRefGoogle Scholar. See generally, the discussion of the issue of shareholder passivity in Bolodeoku, I “Corporate governance in the new information and communication age: An interrogation of the rational apathy theory” (2007) 7 Journal of Corporate Law Studies 109CrossRefGoogle Scholar.
2 See Olson, M The Logic of Collective Action (2nd ed, 1991, Harvard University Press)Google Scholar.
3 See DA Zetzsche “Corporate governance in cyberspace: A blue print for virtual shareholder meetings” (2005), available at: <https://papers.ssrn.com/sol3/papers.cfm?abstract_id=747347> (last accessed 20 October 2022).
4 See Canada Business Corporations Act 1985, RS c C-44, part XII, sec 132; Delaware General Corporation Law, title 8, sec 211(a); Corporations Act 2001, sec 249S (Australia); Companies Act 2006, chap 46, sec 301 (UK); The Companies (Model Articles) Regulations 2008 (No 3229), reg 37 (UK); Companies Amendment Act 2011, sec 41(1) (South Africa); and Companies Act 2013, sec 108 (India).
5 See Bolodeoku, I “Going virtual: Using some common law world initiatives to update the Nigerian law on corporate democracy” (2007) 36 Common Law World Review 106CrossRefGoogle Scholar.
6 Note that the emphasis in this article is on the integration of ICT into the conduct of general meetings of shareholders, rather than those of directors or reform to aid filing returns with the Corporate Affairs Commission, as required by CAMA 2020.
7 See Bolodeoku “Corporate governance”, above at note at 1.
8 See Berle and Means The Modern Corporation, above at note 1 at 66.
9 Id at 277.
10 Ibid.
11 Id at 353–54. See also P Ireland, I Grigg-Spall and D Kelly “The conceptual foundations of modern company law” (1987) 14 Journal of Law and Society 149 at 154–59, drawing largely on the transformation of shares into “fictitious capital”, which shifted shareholders’ interests to return on investment, rather than monitoring.
12 See Olson The Logic of Collective, above at note 2 at 50–51, arguing that large, latent groups have no incentive to obtain collective good. For criticism of this approach, however, see Bolodeoku “Corporate governance”, above at note 1. Note, however, that some have argued against the traditional rendering of shareholder passivity. See Black, B “Shareholder passivity re-examined” (1990) 89 Michigan Law Review 520CrossRefGoogle Scholar, arguing (at 525) that “[s]hareholder passivity, in sum, may be both legally and historically contingent. It may reflect less the inexorable logic of collective action than a combination of legal obstacles to shareholder action, shareholder conflicts of interest, managers’ agenda control”.
13 See Olson, id at 48.
14 Ibid.
15 Id at 14 and 16.
16 Id at 53.
17 See Hendry, J et al. “Owners or traders: Conceptualisations of institutional investors and their relationship with corporate managers” (2006) 59 Human Relations 1101CrossRefGoogle Scholar; they share part of their findings (at 1103) as being that “both fund managers and company managers conceptualize institutional investors primarily as financial traders who happen, as a result of their trading, to control key resources, but whose interests are effectively divorced from those of long-term share owners”. See also Black, B and Coffee, J Jr “Hail Britannia? Institutional investors’ behaviour under limited regulation” (1998) 92 Michigan Law Review 1994Google Scholar.
18 See Bolodeoku “Corporate governance”, above at note 1.
19 Ibid.
20 Id at 131–36. See generally The Rule Book of the Nigerian Stock Exchange (2015, Nigerian Stock Exchange), chap 17 on disclosure of information to shareholders, and rule 18 on the use of an issuer portal to disclose information required by the Rule Book.
21 Note that private companies may have recourse to written resolutions, but such resolutions require the concurrence of all members. See CAMA 2020, sec 259.
22 See id, sec 254.
23 See Black “Shareholder passivity”, above at note 12.
24 This relates to institutional investors’ behaviour, and their disposition and methodology in engaging corporate managers.
25 See Delaware General Corporation Law, sec 211(a).
26 Id, sec 211(a)(2).
27 See generally, CBCA, sec 132.
28 The CBCA Regulations 2001, SOR 2001-512, sec 45(1) is very instructive. The communication facilities referred to in sec 141(3) of the act must: enable votes to be gathered in a manner that permits their subsequent verification; and permit the tallied votes to be presented to the corporation without it being possible for the corporation to identify how each shareholder or group of shareholders voted. For the purpose of sec 141(4) of the act on voting while participating electronically, sec 45(2) of the regulations provides, in effect, provisions similar to those of subsec (1) on the quality of the communication facility.
29 CBCA, sec 141(3).
30 Id, sec 141(3)(4).
31 Id, sec 141(4).
32 See Corporations Act 2001, sec 249S (Australia).
33 See Companies Act 2006, sec 301 (UK).
34 Note that part 13, chap 4 relates to public companies.
35 See The Companies (Model Articles) Regulations 2008, reg 37(4). Note that the UK Model Articles are for private companies, limited by shares. Note further that the equivalent model articles for public companies also contain provisions on attendance and participation at general meetings similar to those in the UK Model Articles. See regulation 29 of the articles for public companies.
36 See Companies Amendment Act 2011, sec 41(1).
37 Id, sec 41(2).
38 See Companies Act (Act No 18 of 2013), sec 108.
39 This directive was implemented in Germany by inserting a new para 118(1)(2) into the German Stock Corporation Act (Aktiengesetz). For a discussion of this development, see C Kersting “Electronic participation in general meetings and the right to ask questions: Implementing the Shareholders’ Right Directive (2007/36/EG)” (2010) Neue Zeitschrift für Gesellschaftsrecht 130, available at: <https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1590213> (last accessed 20 October 2022).
40 See above at note 28.
41 See Companies Regulations 2021, Model Articles for Private Companies Limited by Shares, 20th sched.
42 Regulation 45 provides: “(1) For the purpose of subsection 143(1) of the Act, when a vote is to be taken at a meeting of shareholders, the voting may be carried out by means of a telephonic, electronic or other communication facility, if the facility - (a) enables the votes to be gathered in a manner that permits their subsequent verification; and (b) permits the tallied votes to be presented to the corporation without it being possible for the corporation to identify how each shareholder or group of shareholders voted.”
43 The Rule Book, above at note 20, chap 19.
44 See CAMA 2020, sec 259.
45 See B Ahunwa “Corporate governance in Nigeria” (2002) 37 Journal of Business Ethics 269 at 274. Moreover, the usual concern where ownership is both concentrated and dispersed is the exploitation of the minority. Thus, reform that induces minority participation especially by electronic means is desirable.
46 See Olson The Logic of Collective, above at note 2 at 55. See also Black “Shareholder passivity”, above at note 12.
47 See Bolodeoku “Corporate governance”, above at note 1.
48 See Eisenberg, M “Access to the corporate proxy machinery” (1970) 83 Harvard Law Review 1489CrossRefGoogle Scholar. See also I Bolodeoku “A critique of the theories underpinning proxy solicitation by the board of directors” (2001) Journal of Business Law 377. Note also that, although CAMA 2020, sec 260 obliges a company to circulate a resolution of qualified members to other members (at the company's expense), the conditions attached to it may be exploited by management against the members seeking the company to circulate their resolutions to other members.
49 See Principles of Corporate Governance (2015, G20/OECD) at 22, noting that the corporate governance framework should facilitate the use of electronic voting in absentia, including electronic distribution of materials and reliable vote validation systems.
50 2020 Subscriber / Network Data Report (NCC) (NCC Report), available at: <https://www.ncc.gov.ng/accessible/documents/1021-2020-year-end-subscriber-network-data-report/file> (last accessed 11 January 2023). See also NCC Strategic Management Plan 2020–2024 – ASPIRE 2024 (NCC), available at: <https://www.ncc.gov.ng/docman-main/industry-statistics/policies-reports/886-ncc-2020-2024-strategic-management-plan-aspire-2024/file> (last accessed 20 October 2022).
51 NCC Report, id at 3.
52 Ibid.
53 Ibid.
54 Id at 4.
55 Ibid.
56 Ibid.
57 Ibid.
58 Ibid.
59 Id at 13
60 Id at 34.
61 Two operators had already emerged as winners in the 3.5 GHz spectrum auction for the deployment of the 5G network: A Adepetun, BC Onochie and N Onyedika-Ugoeze “Nigeria issues 5G licences to two operators” (14 December 2021) The Guardian, available at: <https://guardian.ng/news/nigeria-issues-5g-licences-to-two-operators/> (last accessed 20 October 2022).
62 See NCC Report, above at note 50 at 21.
63 Id at 29.
64 Id at 30–31.
65 “Internet penetration in Africa: 2020 – Q1 – March” (Internet World Stats), available at: <https://www.internetworldstats.com/stats1.htm> (last accessed 20 October 2022).
66 Ibid.