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Life Chairman of the Board of Directors or Managing Director? Give it a second thought!

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 The decision in U.O.O. NIG PLC V. OKAFOR & ORS (2020) LPELR - 49570 (SC) has handed down another perspective to the way we see corporate governance. Just about a day before, a colleague had hinted on why not have a life managing director of a company, it protects the those with high stakes in the company and prevents future mishaps that could arise in corporate governance. 

Well, that was what happened in the case, the Articles of Association made provisions for it, giving a life position to the Managing Director of the company. Unfortunately, that choice of having it in the Articles of Association of the Company could not save the position. As held by the Supreme Court, only 'Director for Life' is allowed, who can still be removed from office. The Supreme Court concluded in the following words:

"It needs be stated that any clause in the Memorandum and Articles of Association which purported to make a person a Managing Director for Life or Board Chairman for Life contrary to the express provisions of the law, is an illegal contract and therefore unenforceable. Such clause is ab initio illegal and does not require a formal amendment to deprive it of the force of law. The court does not enforce an illegal contract and one cannot place something upon nothing or rely on an illegality"

It needs be stated therefore that the position of the law is quite clear. Do you have such provisions in your Articles of Association? What's the way out? 

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