Remuneration of directors in Nigeria
As defined by the Companies and Allied Matters Act (CAMA), directors are persons that are duly appointed by the company to direct and manage the business of the company. The CAMA also made provisions on the remunerations of company directors.
Ordinarily, a company is not bound to pay remuneration to a director but where a company chooses to pay remuneration such remuneration will be taken from the companies’ fund.
Accordingly, remunerations for directors are determined by the company at its General Meeting and it is calculated on a daily basis.
A director however, is to be paid any travelling expenses, hotel bill and any other bill he might incur in the course of performing his duty as a director for the company.
Where the remuneration of a company director has been fixed by an Article, it can be altered by a special resolution.
Where a director’s remuneration is based on the Article of Association, it shall be a debt to the company, they can sue the company on the basis of debt or prove it during liquidation
A director is strictly prohibited from receiving more money than what he is entitled.
A managing director of a company on the other hand is entitled to remuneration and it can be by way of salary, commission, participation in profits , partly in one way or another but as determined by the Board of directors.
A director’s remuneration must not be tax free and a company is prohibited from granting loans to a director unless on exception cases such as;
- Where part of the company’s objective is lending money or giving guarantees in connection with loans and even as such it must be approved first at a General Meeting of the company.
- Where such a loan is for the expenditure incurred by the director for the purpose of the company or to enable him perform his duty in the company.
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