Board Resolutions In Nigeria: When You Need One And How To Get It Right.

Board resolutions are a fundamental part of corporate governance. They provide a formal record of decisions taken by a company’s board and, importantly, evidence that the board has properly authorised a proposed corporate action.

In practice, resolutions are routinely required for matters such as opening or changing bank mandates, approving financing arrangements, entering into material contracts, acquiring or disposing of assets, appointing officers, approving corporate restructuring and authorising directors or officers to execute transaction documents.

Under the Companies and Allied Matters Act 2020 (“CAMA”), board decisions may generally be documented through a duly convened board meeting or, where the statutory and constitutional requirements are satisfied, by a written resolution.

1. Board Meeting Resolutions

The conventional approach is for directors to consider and approve a matter at a properly convened board meeting.

CAMA provides that, unless the company’s Articles of Association provide otherwise, the quorum for a board meeting is two directors where the company has not more than six directors. Where there are more than six directors, the statutory quorum is one-third of the number of directors, subject to the calculation prescribed by CAMA.

Notice is equally important. CAMA requires directors to receive notice of board meetings and, unless the Articles provide otherwise, provides for 14 days’ written notice to directors entitled to receive notice. Failure to give notice in accordance with the statutory requirement invalidates the meeting.

Accordingly, a board meeting resolution should not be viewed in isolation from the process through which it was passed. A technically well-drafted resolution may still be vulnerable if the meeting was not properly convened or the required quorum was absent.

The minutes should accurately record the proceedings and resolutions adopted. Properly maintained minutes can also have evidential significance; CAMA provides that minutes signed by the chairman of the relevant meeting or the succeeding meeting constitute prima facie evidence of the proceedings.

2. Written Board Resolutions

CAMA provides a particularly useful mechanism for companies seeking to approve matters without convening a physical or virtual board meeting.

Under section 289(8) of CAMA, a resolution in writing signed by all directors for the time being entitled to receive notice of a meeting of the directors is as valid and effectual as if it had been passed at a duly convened and held board meeting. This can provide a practical solution where directors are geographically dispersed, the matter is time-sensitive or the decision does not require extensive deliberation.

However, written resolutions should not be treated merely as an administrative shortcut. Before using one, the company should confirm that:

1. all directors entitled to notice have been included in the circulation;

1. the resolution is signed by the directors required under CAMA;
2. the Articles of Association do not impose additional requirements;
3. the proposed action falls within the board’s authority;
4. any director’s conflict of interest has been appropriately addressed; and
5. any separate shareholder, regulatory or third-party approval required by law or the company’s constitutional documents has been obtained or will be obtained.

3. Written Resolution or Board Meeting?

The appropriate method depends principally on the nature and circumstances of the decision.

For significant, complex or sensitive transactions, a board meeting may provide a more comprehensive governance record because the directors can demonstrate that the proposal was considered collectively before the decision was taken.

Conversely, where the decision is routine, clearly understood and does not warrant a meeting, a written resolution may offer a more efficient means of obtaining the necessary corporate authority.

4. What Should a Board Resolution Contain?

A well-drafted board resolution should be sufficiently precise to establish what has been approved and who is authorized to implement it.

Depending on the transaction, it should ordinarily identify:

1. the company’s full legal name;

1. the date of the meeting or written resolution;
2. the relevant background and transaction, where appropriate;
3. the specific decision being approved;
4. the person(s) authorised to act;
5. the scope of their authority;
6. authority to negotiate, execute and deliver ancillary documents, where required; and
7. any conditions or limitations attached to the approval.

For example, a resolution approving a financing transaction should ideally do more than state that “the proposed facility is approved.” It should identify the facility and relevant transaction documents with sufficient precision and authorise designated persons to execute the documents and undertake the necessary ancillary actions. This is particularly important because banks, investors, counterparties, regulators and other third parties frequently require evidence of board authority before proceeding with a transaction.

5. Common Pitfalls

Several recurring issues can undermine the effectiveness of board resolutions.

These include using an outdated precedent, failing to comply with notice requirements, proceeding without the required quorum, obtaining incomplete signatures on a written resolution, exceeding the board’s authority, and failing to identify additional shareholder or regulatory approvals. A board resolution should also be consistent with the company’s Articles of Association and any shareholders’ agreement. CAMA itself recognises the importance of the Articles in determining certain aspects of board procedure, including meeting requirements.

It is equally important to distinguish board approval from shareholder approval. A matter requiring approval of the company’s members cannot necessarily be validated simply because the board has passed a resolution. CAMA, for example, separately regulates ordinary and special resolutions of members and prescribes circumstances in which shareholder approval is required.

Conclusion

A board resolution is not merely a document to be produced when a bank, regulator or counterparty asks for one. It is an important corporate governance instrument and, when properly prepared, provides evidence that the company has acted through the appropriate decision-making process. For Nigerian companies, CAMA 2020 provides a clear statutory basis for both board meeting resolutions and written board resolutions. The choice between them should therefore be guided by the nature of the decision, the need for deliberation, the company’s Articles of Association and any applicable statutory or regulatory requirements.

The essential question is not simply whether a resolution has been signed, but whether the right decision was made by the right corporate organ, through the right procedure, with the requisite authority and documentation.

For material transactions, companies should undertake a corporate authority check before execution to ensure that all required board, shareholder, regulatory and contractual approvals have been properly obtained.

Team 618 Bees

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