The Companies and Allied Matters Act, 2020 (“CAMA 2020”) has changed the previous provisions in the repealed CAMA on the composition of the statutory audit committee for public companies. In the repealed CAMA, the composition of the audit committee of public companies was six (6) members with an equal number of shareholders and directors.
However, in CAMA 2020, the audit committee of a public company should have 5 (five) members i.e., 3 (three) shareholders and 2 (two) non-executive directors with at least one member being a member of a professional accounting body in Nigeria established by an Act of the National Assembly.
This provision is in line with the principles of the Nigerian Code of Corporate Governance 2018 which provides that at least one member of the audit committee should be “…a financial expert…have current knowledge in accounting and financial management and be able to interpret financial statements”.
What does this mean for public companies?
Public companies should review the composition of their audit committees to ensure conformity with the provisions of CAMA 2020 with respect to the number and qualification of the committee members.