Who Calls the Shots? An Intro to Corporate Governance Within Nigerian Startups.

Who Calls the Shots? An Intro to Corporate Governance Within Nigerian Startups.

By Abosede Hassan · 28 February 2026

In the early stages of a startup, governance is rarely top of mind. Founders are typically focused on building a viable product, acquiring customers, attracting talent, and raising capital. Decisions are made quickly, often informally, and the company’s internal structure may appear secondary to growth.

However, as the business evolves, a critical question inevitably arises:

Who truly has the authority to make decisions within the company?

Corporate governance provides the framework for answering that question. For Nigerian startups, governance is not merely a matter of best practice, it is grounded in law, particularly under the Companies and Allied Matters Act 2020 (CAMA), and has significant implications for control, accountability, and long-term sustainability.

Understanding Corporate Governance in the Startup Context

Corporate governance broadly refers to the systems, rules, and institutional structures through which companies are directed and controlled. It determines:

• how decisions are made and by whom;

• the balance of authority between founders, directors, and shareholders;

• the mechanisms for accountability and oversight; and

• how disputes and competing interests are managed.

For startups, governance becomes important when the company begins to scale, external investors become involved, or the founding team expands beyond its initial structure. In such circumstances, informal decision-making can quickly give way to disputes, or regulatory exposure.

CAMA 2020: The Legal Framework for Startup Governance

The Companies and Allied Matters Act 2020 remains the principal legislation governing corporate entities in Nigeria. Notably, CAMA introduced reforms aimed at improving the ease of doing business, particularly for small companies and emerging enterprises.

Once incorporated, a startup becomes a distinct legal entity separate from its founders. This means the company, rather than the individuals behind it, owns property, enters into contracts, incurs liabilities, and is subject to statutory obligations.

Accordingly, governance is not optional. Every company registered under CAMA must operate through recognised corporate structures and comply with formal decision-making processes.

Ownership Versus Control: The Founder’s Common Misconception

One of the most frequent governance challenges faced by startups is the assumption that founders will always retain control simply by virtue of being the original creators of the business.

Under Nigerian company law, control is based on legal rights. The Shareholders are the owners of the company and their powers include:

• voting on key corporate decisions;

• appointing or removing directors; and

• approving structural changes such as share issuances or mergers.

However, shareholders do not manage the company’s daily affairs. That responsibility lies with the board of directors. The board of directors thereafter, appoints the Chief Executive Officer (CEO) who oversees the day-to-day activities of the Company.

As startups raise capital and issue equity to investors, founders may experience dilution of their shareholding and, consequently, their influence. Founders may find themselves in a minority position within the very company they established, if safeguards are not put in place.

Directors and the Board.

CAMA provides that companies act through their directors, who are responsible for directing the company’s business and exercising its corporate powers.

Directors owe statutory duties, including duties to:

• act in good faith and in the best interests of the company;

• exercise reasonable care, skill, and diligence; and

• avoid conflicts of interest.

In many early-stage startups, founders serve as both shareholders and directors. Over time, governance structures often evolve to include independent directors or investor-appointed board members.

This shift can materially alter the balance of decision-making authority and underscores the importance of properly defining board composition, reserved matters, and delegation of powers from the outset.

Investor Influence and Minority Shareholder Protections

As venture capital and private equity investment in Nigeria continues to grow, investor expectations around governance have become more pronounced.

Investors commonly require:

• board representation;

• veto rights over significant corporate actions;

• enhanced reporting obligations; and

• protections against dilution or oppressive conduct.

CAMA also provides statutory protections for minority shareholders, particularly where majority actions are unfairly prejudicial or oppressive.

Accordingly, startups must recognise that fundraising is not purely a financial transaction, but a governance element. The entry of new shareholders often reshapes control dynamics and decision-making processes.

Key Governance Instruments for Nigerian Startups

To avoid uncertainty regarding authority and control, startups should adopt appropriate governance documentation early in their lifecycle. These include:

1. Shareholders’ Agreement

This is a critical document that defines the relationship between founders and investors, addressing:

• voting thresholds;

• transfer restrictions;

• exit rights;

• founder obligations; and

• dispute resolution mechanisms.

2. Tailored Articles of Association

CAMA permits companies to customise internal governance rules through their Articles of Association. Properly drafted Articles can clarify decision-making authority and protect founder interests.

3. Board Structures and Delegated Authority

Startups should clearly outline in the company’s governance framework:

• matters requiring board approval;

• management authority of the CEO; and

• internal controls for corporate actions.

4. Statutory Compliance and Corporate Records

CAMA imposes obligations relating to filings, registers, and corporate records. Maintaining proper documentation is essential not only for compliance but also for investor confidence and ensuring the enforceability of decisions.

Governance as a Strategic Asset, Not a Formality

Many startup disputes arise not from market failure, but from poor corporate governance manifesting in unclear equity arrangements, founder disagreements, investor control tensions, or undocumented corporate records.

Strong governance mitigates these risks and enhances a company’s credibility, particularly in regulated sectors or cross-border investment contexts.

For startups seeking sustainable growth, governance should be viewed as an enabler rather than a constraint.

Conclusion: Who then Calls the Shots?

In Nigerian startups, decision-making authority is determined by the interplay of:

• Shareholder rights, often held by investors and founders.

• Board powers; and

• Agreements between the founders, Memorandum & Articles of Association and any governance documents adopted under CAMA

Startups that establish robust governance frameworks early are better positioned to attract investment, and avoid internal disputes.

Ultimately, the question is not simply who calls the shots today, but who will call them when the company grows, capital enters, and the stakes become significantly higher.

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This article is for general informational purposes only and does not constitute legal advice. For guidance specific to your circumstances, speak with a legal professional.

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