The Possibility of Imposing Enforceable Legal Duty on the Board with Respect to the Interests of Non-Shareholding Stakeholder Groups

Abstract

As one of the well organised institutions of the modern society, big companies have the capacity to contribute immensely to a better, ethical and saner society. They can, as well, contribute towards the advancement and development of the society especially through their corporate policies. This they can do by being broad-minded and integrative of the interests, welfare and wellbeing of not only their shareholders but those of other non-shareholding stakeholders. Whether a company may be concerned about its social and ethical responsibilities depends on a number of issues including the corporate law or legislation in place in the jurisdiction concerned. Currently in Nigeria, companies are not duty-bound to be stakeholder or pluralist-oriented. This article sets out to see whether the companies can be mandated to discharge wider responsibilities by the instrument of the law, that is, by the imposition of statutory or legal duty on them to do so. The article does this by employing doctrinal research method. The work finds out that most companies in Nigeria are pre-occupied with shareholder wealth maximisation. In order for there to be a significant shift away from this shareholder primacy approach, there ought to be a combination of the imposition of certain legal duties on the board to do so, as well as the institutionalisation of stakeholder-oriented corporate governance and through active sensitisation and re-orientation of the board – which is widely viewed as the ‘corporate conscience - on the need to do so.