When a company is incorporated, it becomes a legal entity that can both initiate and respond to lawsuits. Although it holds the status of a legal person, its operations are managed by individuals. For a company to thrive, the directors and shareholders must work together effectively, each fulfilling their specific roles to ensure smooth operations. These individuals, particularly the directors, must be trustworthy and possess the necessary legal, mental, and technical qualifications to oversee the company’s affairs. A pertinent question arises: Can a minor be appointed as a director or a shareholder of a company? To address this question, it’s crucial to examine the qualifications required for each position. This article aims to provide a detailed exploration of these issues, offering valuable insights into the topic.
Can a minor be a director of a company?
A minor is defined as a person under the age of full legal capacity. In Nigeria, the age of full legal capacity is 18 years and older. Every company is required to appoint at least two directors, except in the case of small companies. These directors must be at least 18 years old. This requirement is reasonable, as the role of a director demands both expertise and maturity to make informed decisions regarding the management of the company. It’s important to note that there are no specific qualifications outlined for a director under the Companies and Allied Matters Act (CAMA) 2020. However, the qualifications for a company director can be inferred from the sections of the law that detail disqualifications, one of which is that minors are not eligible to serve as directors.
A director of a company has a fiduciary relationship with that company. As the representative of the company, a director is required to act in its best interests, particularly in preserving its assets. To fulfill this responsibility, a director must exercise care, diligence, and skill while performing their duties. If they fail to do so, they can be held liable for breach of duty and negligence. Consequently, a minor cannot serve as a director of a company because they lack the necessary expertise and legal capacity for such a role. This position involves significant responsibilities that cannot be entrusted to a minor or someone lacking experience.
Can a minor be a shareholder of a company?
A shareholder is a member of a company who owns at least one share. This applies to companies that have share capital. To become a shareholder, a person must have the necessary legal capacity, which includes the following:
- The person must not be of unsound mind[6]
- Such a person must not be an undischarged bankrupt[7]
- A corporate body in liquidation cannot be a member of a company[8]
Regarding minors, a minor can be a shareholder in a company; however, they do not count when determining the legal minimum number of members required for the company. It is essential to understand that before a company can be formed, certain legal requirements must be met, one of which is that the minimum number of members must be at least two. While one person may incorporate or form a private company, they still must adhere to the requirements for forming private companies. If there are only two members and one of them is a minor, the company will be considered to have only one member. This means that, for companies with share capital, only individuals aged 18 and above are counted as members or shareholders when assessing the legal minimum number of members. In the eyes of the law, minors lack the legal capacity to qualify as members of a company. However, if a company has two or more adult members (individuals who are 18 years or older) and includes a minor, the legal minimum requirement will still be satisfied, allowing the minor to retain their position as a shareholder.
Conclusion
A minor cannot serve as a director of a company, but can be a shareholder if the legal minimum number of members for the company has been met. Since a minor has not yet reached full maturity, it’s important to mitigate any risks to both the minor and the company. Therefore, it is advisable to assign the management and control of shares owned by a minor to a legal guardian or trustee until the minor reaches the age of 18.
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[1] Section 29 (4) (a) 1999 Constitution of the Federal Republic of Nigeria
[2] Section 283 (1)(a) CAMA 2020
[3] Section 283 (1)(a)-(e) CAMA 2020
[4] Section 308 (1) (2) CAMA 2020
[5] Section 105 (3) CAMA 2020
[6] Section 106 (1) (a) CAMA 2020
[7] Section 106 (1)(b) CAMA 2020
[8] Section 106 (3) CAMA 2020
[9] Section 106 (2) CAMA 2020
[10] Section 18 and 20 (1) (a) CAMA 2020
