Journal of Law, Policy and Globalization www.iiste.org ISSN 2224-3240 (Paper) ISSN 2224-3259 (Online) Vol.77, 2018 22 Division of Powers Between Corporate Organs in Public Companies: A Comparative Perspective Dr. Felix C. Amadi LLB, LLM, BL, PhD (Nigeria), ACIArb (Nigeria), Lecturer, Faculty of Law, Rivers State University, Port Harcourt, Nigeria; Solicitor and Advocate of the Supreme Court of Nigeria Gogo G. Otuturu LL.B, LL.M, B.L, ACIArb (Nigeria), PhD Candidate (Rivers State University); Lecturer, Faculty of Law, Niger Delta University, Wilberforce Island, Bayelsa State, Nigeria Abstract An incorporated company has neither body nor mind of its own. It can only exercise such powers as it possesses through the directors and other organs empowered by the articles to act on its behalf. This paper examines the division of powers between corporate organs in public companies in three jurisdictions, namely, Nigeria, the United States of America and Germany. It states that the German model has marked differences from the Nigerian and American models. It concludes that German corporation law shows more concern for workers as the principle of codetermination demonstrates. However, the management board which is the organ responsible for formulating corporate policy and transacting corporate business is responsible only to a supervisory board rather than to account directly to the shareholders for its conduct as in Nigeria and the United States. It suggests more participation of shareholders and workers in corporate governance in Nigeria. Keywords: directors, corporate organs, corporate powers, shareholders, supervisors I. Introduction An incorporated company has been aptly described as a mere “abstraction.” 1 If so, the legal personality enjoyed by an incorporated company is a legal fiction. This is because an incorporated company has neither body nor mind of its own. It can only exercise such powers as it possesses through the instrumentality of human beings who constitute the organs, officers and agents of the company. 2 In the case of a private company, the shareholders and the directors are usually the same persons. 3 However, in a public company, the directors may have few shares in the company or they may not have any shares in the company, so that management of the company is divorced from its ownership. 4 It is to be noted, at this juncture, that the public company in English law is the equivalent of the publicly owned corporation in American law and the AG (Aktiengesellschaft) in German law. 5 The separation of ownership from management of a company has brought into sharp focus the fundamental divergence between the interests of the shareholders and the interests of the board of directors. In the shareholder’s case, these interests include his desire to receive dividends and to have some power of decision over the activities of the company. These interests necessarily conflict with those of the board of directors, which encompass retaining a sufficient part of the annual profits for expansion, investment and other business purposes. Moreover, most boards of directors do not welcome shareholder participation in corporate management. 6 This paper examines the division of powers between corporate organs in public companies. Three models of corporate management are examined. The first is the English/Nigerian model which derives mainly from the common law. The second is the American model which deviates slightly from the English model. The third is the German model which has marked differences from the English and American models. The paper states that German corporation law shows greater concern for workers as the principle of codetermination demonstrates. However, the management board which is the organ responsible for formulating corporate policy and transacting corporate business is responsible only to a supervisory board rather than to account directly to the shareholders for its conduct as in Nigeria, England and the United States. It suggests more participation of shareholders and workers in corporate governance in Nigeria. 1 Lenard’s Carrying Co. Ltd. v. Asiatic Petroleum Co. Ltd (1915) A.C. 705 at 713 [Lord Haldane] 2 Ayodele James v. Mid-Motors (Nig) Co. Ltd (1975) 11-12 SC 31 3 AR Agom, “Shareholders Activism in Corporate Governance” (2000) 4(1) Modern Practice Journal of Finance and Investment Law 252, 255 4 GG Otuturu, “Legal Framework for the Management of Modern Companies” (2010) 1(2) Business Law Review 50, 51 5 LCB Gower, “Some Contrasts between British and American Corporation Law” (1956) 69 Harvard Law Review 1369, 1376; Ernest C. Steefel and Bernhard von Falkenhausen, “The New German Stock Corporation Law” (1967) 52 Cornell Law Quarterly 518. 6 D. Berger, “Shareholder Rights under German Stock Corporation Act of 1965” (1970) 38 Fordham Law Review 687, 688.