Introduction

Businesses around the world are leveraging AI to enhance their operations. This is based on the belief that AI promotes effective decision-making, enhances productivity, and improves employees’ capacity, among other benefits. On the other hand, the board of directors is at the heart of decision-making in any corporate entity. The board embodies the corporation’s mind and is indispensable in the effective administration of the company. This underscores the need for competent, experienced and skilled individuals on the board. Given that the selection of those to be appointed to the board is crucial, and to the extent that AI promotes effective decision-making, it could be a useful tool in the appointment of a company’s directors.

Considering the above, this paper examines the role of AI in enhancing corporate governance, particularly in determining suitable candidates for the company’s board and its various committees of the board. It highlights the role of the board and the importance of optimal board composition within the context of corporate governance legal framework. It also discusses the prospects of AI in the contemporary world. In this regard, it highlights how AI could assist in selecting appropriate individuals to the board, and reviewing individuals recommended for appointment to the board. It also identifies potential challenges that may arise from the adoption of AI for effective board governance and proffer recommendations to mitigate these challenges.

The Board’s Role and Importance in driving Corporate Sustainability

The board is the highest governing body in the company, responsible for providing strategic leadership and guidance towards achieving the organisational goals. The Nigerian Code of Corporate Governance (NCCG) 2018 highlights the critical role of the board in providing leadership, enterprise, integrity, and judgment in its oversight and control of the company to ensure its continued survival and prosperity. Thus, the board is largely responsible for the company’s success or failure, underscoring the need to have competent and qualified persons on the board who possess the requisite skills, knowledge, experience and expertise to effectively lead the organisation in achieving its set goals.

Board Composition/ Structure and Qualification

The Board is expected to have the appropriate mix of knowledge, skills and experience, including the business, commercial, and industry experience needed to govern the company. To effectively discharge its duty, the NCCG 2018 recommends that the board should be of such size for effective direction and control of the company’s activities. Whilst the NCCG is silent on the prescribed number of board members, the Companies and Allied Matters Act (CAMA) 2020 mandates that companies have at least two board members. The Central Bank of Nigeria’s (CBN) circular on Corporate Governance Guidelines for Banks of Other Financial Institutions 2023 also prescribes that commercial, merchant, and non-interest banks should have a minimum of seven and a maximum of fifteen board members.

Generally, board members are required to contribute a high level of judgment and critical thinking during discussions to ensure that the board makes informed decisions essential to the organisation’s. This independence requirement especially relevant for non-executive directors and independent non-executive directors, who are expected to be independent of management and bring their unbiased perspectives to board discussions. This further highlights the importance of appointing suitable individuals  to the board.

Furthermore, both CAMA and the NCCG empower directors to act through committees constituted amongst themselves in the performance of their duties. Accordingly, the board may delegate some of its duties and responsibilities to well-structured and efficient committees. Considering the importance of the board in the growth and survival of a company, as well as the necessity of having individuals with the right mix of skills, experience, and expertise on the board and board committees, it is important to ensure that the appropriate tools are deployed in making the decision regarding appointments.