Examination of the Legal Framework for Sustainability and Corporate Objectives in Nigeria

Abstract

Corporate Governance has been widely recognised as the way and manner through which a company is directed and controlled. The acts of directing and controlling the company are the core responsibilities of the Board; saddled with the responsibility of ensuring the company delivers its promises to the investors, that is the shareholders. Therefore, traditionally, companies focus on satisfying the interest of the shareholders. The reason is not far-fetched; the shareholders are the capital providers of the company hence companies have the responsibility of ensuring the shareholders receive returns on their investments. Considering the global trend however, it is doubtful whether focusing on the interest of the shareholders solely can deliver companies’ long term sustainability. The experience with COVID-19 pandemic clearly shows that companies cannot afford to ignore the interest of other constituencies that contribute to their stability. Therefore, it becomes imperative for companies to identify key stakeholders, to consider their interest in the companies’ corporate objectives and adopt corporate sustainability practices. This paper therefore examines the principle of corporate sustainability with particular reference to stakeholders’ engagement. It finds that the Nigerian Company Law is rooted in the shareholders’ theory of corporate governance therefore favours the interest of shareholders. It also finds that focusing on shareholders’ satisfaction may not deliver sustainability of companies in Nigeria.