Overview
IntroductionCorporate governance, at its core, establishes how an organisation is directed and controlled, precisely defining the distribution of rights and responsibilities among participants of an organisation. In this part two of the ‘Mind the Board Series’, we will discuss the dynamics inside the boardroom, delving into the roles played by key actors in corporate governance. These include the Chairman, Chief Executive Officer (CEO)/Managing Director (MD), Executive Directors, Non-Executive Directors (NEDs), Independent Non-Executive Directors (INEDs) and the Company Secretary.
While each of these players have distinct roles and responsibilities – from the Chairman’s strategic leadership and board oversight to the CEO/MD’s operational execution and the objective judgment of NEDs and INEDs – their interactions (or lack thereof) are critical. The mandated separation of roles between the Chairman and CEO/MD, for instance, is designed to prevent unfettered decision-making and ensure appropriate checks are in place. The CEO is answerable to the board. The synergy among these individuals, fostered through clear delineation of duties, open communication, and a collective commitment to ethical conduct, directly influences a company’s success, reputation, and long-term sustainability. Key Players in Corporate Governancea.
The ChairmanThe Chairman’s role is pivotal to corporate governance, as they are responsible for the effective functioning of the board and setting the company’s tone. For public companies in Nigeria, the Chairman must be a non-executive director (NED), which means that the Chairman is not involved in the company’s day-to-day operations, allowing them to maintain a critical and unbiased assessment of the company. An individual cannot hold the offices of Chairman and Chief Executive Officer (CEO)/Managing Director (MD) simultaneously in a company. Before a former CEO/MD can become the Chairman of the company, they are required to observe a minimum cool-off period of three years.
The Chairman’s tenure is primarily determined by the company’s articles of association and the specific terms of their appointment, often outlined in their contract of employment.
