Director's Service Agreement (Nigeria)

A Director's Service Agreement in Nigeria records the obligations, timelines and payment owed between the client and the service provider.

The Companies and Allied Matters Act 2020 (CAMA 2020) governs the appointment, duties, and removal of directors. Section 271 of CAMA 2020 requires directors to be natural persons of full legal capacity. Section 279 of CAMA 2020 imposes statutory duties on directors including the duty to act in good faith in the best interests of the company, the duty to avoid conflicts of interest, the duty to declare interests in transactions, and the duty to exercise reasonable care, skill, and diligence. A Director's Service Agreement typically incorporates these statutory duties by reference and adds further contractual obligations.

The Labour Act (Cap L1, LFN 2004) applies to the employment aspects of the director's engagement — including provisions on notice periods, annual leave, and terminal benefits. The National Industrial Court of Nigeria (NICN), which has exclusive jurisdiction over employment disputes under Section 254C of the Constitution of the Federal Republic of Nigeria 1999 (Third Alteration), has jurisdiction over disputes arising from a Director's Service Agreement in its employment law dimension. However, disputes concerning the director's duties to the company as a director — as distinct from their employment rights — fall within the jurisdiction of the Federal High Court under CAMA 2020.

A Director's Service Agreement should be distinguished from a Non-Executive Director's Letter of Appointment — which is not an employment contract but a service engagement for governance purposes — and from a Senior Management Service Agreement, which covers senior employees who are not directors.

The legal framework governing the Director's Service Agreement (Nigeria) in Nigeria draws on several key statutes and regulatory bodies. Under Nigerian law, the Companies and Allied Matters Act 2020 (CAMA) regulates corporate entities through the Corporate Affairs Commission (CAC). The Labour Act (Cap L1 LFN 2004) and the National Industrial Court of Nigeria (NICN) govern employment disputes. The Nigeria Data Protection Regulation (NDPR) 2019 and the Nigeria Data Protection Commission (NDPC) protect personal data. The Federal Inland Revenue Service (FIRS) administers tax obligations under the Companies Income Tax Act. The Federal High Court and state High Courts have jurisdiction over civil matters. Parties executing a Director's Service Agreement (Nigeria) in Nigeria should confirm the document reflects current law, including any amendments enacted since the original drafting date. The Companies and Allied Matters Act (CAMA) 2020 sets the foundational requirements.

A Director's Service Agreement in Nigeria is required whenever a company appoints an individual as an executive director who will also serve as an employee in a senior management capacity.

A Director's Service Agreement is needed when a company incorporated under CAMA 2020 appoints a Managing Director (MD) or Chief Executive Officer (CEO), who is both a director of the company and the head of its executive management team, responsible for day-to-day operations.

A Director's Service Agreement is required when a company appoints functional executive directors — such as a Finance Director (CFO), Technical Director, or Operations Director — who hold both a board seat and a senior management role within the company.

A Director's Service Agreement is needed when a private equity investor or venture capital fund acquires a significant shareholding in a Nigerian company and requires that its nominee director be appointed on terms that include remuneration, information rights, and protections consistent with the investor's governance requirements.

A Director's Service Agreement is required when a company listed on the Nigerian Exchange Group (NGX) needs to comply with the NGX Corporate Governance Guidelines and the Securities and Exchange Commission (SEC) Code of Corporate Governance for Public Companies 2011, which require disclosure of executive directors' remuneration and service terms.

A Director's Service Agreement is needed in family-owned businesses that are formalising their governance structure by appointing professional management directors from outside the family, requiring clear written terms for remuneration, authority, and removal.

Parties in Nigeria should prepare a Director's Service Agreement (Nigeria) proactively rather than waiting for a dispute to arise. Courts interpret agreements based on the written terms rather than oral representations. Under Nigerian law, the Companies and Allied Matters Act 2020 (CAMA) regulates corporate entities through the Corporate Affairs Commission (CAC). The Labour Act (Cap L1 LFN 2004) and the National Industrial Court of Nigeria (NICN) govern employment disputes. The Nigeria Data Protection Regulation (NDPR) 2019 and the Nigeria Data Protection Commission (NDPC) protect personal data. The Federal Inland Revenue Service (FIRS) administers tax obligations under the Companies Income Tax Act. The Federal High Court and state High Courts have jurisdiction over civil matters. Where the transaction involves regulated activities, prior approval from the relevant authority may be required before execution.

A valid Director's Service Agreement in Nigeria must contain the following essential elements.

Appointment and Term: The date of appointment as executive director, the term of office (fixed or rolling), and the condition that the appointment is subject to the director's continued election by shareholders under the company's Articles of Association and CAMA 2020, Section 256.

Role and Duties: A clear description of the director's executive role, reporting line, and management responsibilities. The agreement should incorporate the director's statutory duties under CAMA 2020, Sections 279 to 281 — including the duty to act in the company's best interests, the duty of care and skill, and the duty to avoid conflicts of interest.

Remuneration: Base salary in Nigerian Naira (NGN), payment frequency (monthly), and details of any performance bonuses, profit-sharing arrangements, housing allowance, car allowance, medical insurance, and pension contributions under the Contributory Pension Scheme established by the Pension Reform Act 2014, administered by the National Pension Commission (PenCom).

Expense Policy: The company's policy on reimbursement of reasonable business expenses incurred by the director in the performance of duties, including travel, accommodation, and entertainment.

Confidentiality and IP: Obligations on the director not to disclose the company's confidential information (including trade secrets, financial data, and strategic plans) during or after the term of service, and to assign any intellectual property created in the course of the director's duties to the company.

Non-Compete and Non-Solicitation: Post-termination restrictions on the director from competing with the company, approaching the company's customers or employees, or using confidential information — drafted to be enforceable under Nigerian common law with a defined scope, duration (typically 1 to 2 years), and geographic area.

Termination: Notice periods for termination by either party; grounds for summary termination (dismissal without notice) for serious breach, gross misconduct, or insolvency of the director; provisions for payment in lieu of notice; and treatment of accrued benefits on termination consistent with the Labour Act.

Governing Law: Nigerian law, with disputes subject to the jurisdiction of the National Industrial Court of Nigeria (NICN) for employment matters and the Federal High Court for corporate law matters under CAMA 2020.

Additional compliance elements for a Director's Service Agreement (Nigeria) used in Nigeria include: Under Nigerian law, the Companies and Allied Matters Act 2020 (CAMA) regulates corporate entities through the Corporate Affairs Commission (CAC). The Labour Act (Cap L1 LFN 2004) and the National Industrial Court of Nigeria (NICN) govern employment disputes. The Nigeria Data Protection Regulation (NDPR) 2019 and the Nigeria Data Protection Commission (NDPC) protect personal data. The Federal Inland Revenue Service (FIRS) administers tax obligations under the Companies Income Tax Act. The Federal High Court and state High Courts have jurisdiction over civil matters. Forms-legal.com provides this template as a starting point for Nigeria-compliant documentation.