It is no longer news that Ecobank Transnational Incorporated (ETI) has sacked or removed its Chief Executive Officer, Ivorian, Thierry Tanoh. The bank released a statement on the 12th of March stating that: “Ecobank Transnational Incorporated today announces the departure of Group CEO Mr. Thierry Tanoh with effect from 12 March 2014. Effective the same date he will no longer be a director of ETI”.
Reasons for his removal were not immediately stated but some media in support of Tanoh have said it was because of his drive to expose and correct abuses of corporate governance that pre-dated his tenure, which attracted powerful enemies, within the hierarchy, nervous of what he might uncover. Whether that is true or not is no of immediate concern to us. Rather, I am looking at the possible legal issues that can arise from this episode and that is the main subject of this discourse.
Tanoh was the CEO of Ecobank Transnational, the holding company of the Nigerian subsidiary Ecobank (Nigeria). So I will not be very assertive to immediately say which ‘forum law’ applies. Except one takes a forensic look of the bank’s constituting documents. Rather I would assume that the bank and its holding company were subject to Nigerian law on corporate governance. Also, since the facts are still sketchy, it would be safer for me to make some factual assumptions as well as those reported by international media.
So, what likely legal issues could arise from the removal of Mr. Tanoh as head of ETI? The answer to that would be determined by a myriad of factors or legal technicalities.
Firstly, Nigerian corporate law recognises different types of directors – CEO being one of them. A person who is a CEO in a company occupies a dual capacity. He is an employee of the company and he is also a directing mind (alter ego) in the company. So he may be removed as an employee of the company (bank) and still remain a director.
Also, if he is removed as director, he can still technically remain as an employee of the company, albeit in a position that does not require directorship. Definitely not as CEO.
His relationship with the bank as CEO is governed primarily by his terms of employment (appointment) as Chief Executive. While his relationship with the bank as director is governed primarily by the Articles of Association of the bank and where the latter is silent, by company law. So, Mr. Tanoh removal as Chief Executive must comply with his terms of employment as CEO for it to be legal. If otherwise, his removal would be illegal. The bank statement says shows clearly that he has also been removed as director of the bank. To determine the legality of that, one must look at the Articles of Association of the bank to ascertain whether the laid down procedure was followed.
He was removed by a 12 member board, presumably in a board of directors meeting. Under Nigerian law, a company director can only be removed by the members of the company in a general meeting, unless the Articles of Association of the company states otherwise.
Media reports have it that Mr. Tanoh did not attend the meeting wherein he was removed. The meeting was held in Yaoundé, Cameroon. Under Nigerian law, a board of directors meeting can be held anywhere as long as notice, thereof was given. This is unlike an Annual General Meeting which must be held in Nigeria. The fact that he did not attend is not a breach of law strictu sensu so long as he was given notice of the meeting. It is now settled law in Nigeria that, a director must be given notice of the meeting wherein he is sought to be removed. This was the gamut of the decision of the Supreme Court in Longe v. First Bank of Nigeria (2010) 2-3 MJSC 128; or (2010) 5 NSCR 1. Also Section 262 of the Companies and Allied Matters Act (CAMA)
So as long as he was given notice of that board of directors meeting, he cannot complain of foul play in that respect. The notice implies that he was given the opportunity to defend himself. However, if he was not given notice of the meeting, then all the decisions reached in that meeting are a nullity. So let the facts speak!
One last issue that could arise is that of jurisdiction. If the matter were to be brought to court in Nigeria, which court would have jurisdiction over the matter? It seems pretty straightforward to say it is the Federal High Court (pursuant to section 251(1)(e) of the Constitution). But it can be argued that since the removal also involves relationship between employer and employee, the National Industrial Court can also assume jurisdiction (pursuant to Section 254 of the Constitution(as amended) ).
No doubt, the removal of Mr. Tanoh as CEO of ETI has raised some technical legal issues, under Nigerian corporate law at least. Issues that would be interesting if tested in court. However, intervention of relevant regulatory agencies to resolve the boardroom issues at the bank may be a more ‘amicable’ and long-term path to embrace by parties concerned. I am aware that Nigeria’s Securities and Exchange Commission has been investigating some issues of corporate governance at the bank.