Regulators in the capital, money market as well as counterparts in other sectors of the economy, have stressed on the need for companies to ensure maximum compliance of the Nigerian code of corporate governance.
In a Stakeholders session organized by Deloitte—an indigenous accounting and auditing firm—in Nigeria’s commercial hub, Lagos, the Central bank; Securities and Exchange Commission, the Financial Reporting Council as well as market operators brainstormed on the benefit of a strict implementation of the code in the different sectors of the economy as this would help in driving transparency and sustainability in the Nigerian business environment.
“In terms of monitoring compliance, it is not a responsibility that the FRC will carry solely; it must be a shared responsibility between the FRC and the different regulators. Also, I think stakeholders have a role to play”, Daniel Asapokhai, Executive Secretary/CEO of FRCN
The new Corporate Governance Code 2018 would serve as the apex regulatory code in the country, according to the Financial Reporting Council of Nigeria (FRCN)— an agency under the supervision of the federal Minister of Industry, Trade and Investment.
Consequently, the existing code of governance under the laws establishing regulatory bodies like the Central Bank of Nigeria (CBN), Securities and Exchange Commission (SEC), among others, would serve as guidelines of operations for public and private businesses.
“If the code is diligently and faithfully implemented by corporate Nigerians over the coming months or years, the results would be economic transformation, resilience and widespread prosperity for our country and all its people including all those outside our country that chose to invest in Nigeria and its institution”, Asapokhai added.
In 2018, the regulatory agency drafted a new code that consolidates the code for private and public companies while the code for Not-for-profit companies remain suspended
The code consists of seven parts and twenty- eight principles together with practices recommended by the code for the implementation of each principle.
Drafted by the FRC, the code seeks to address issues relating to the composition of the board of companies, relationship with shareholders, sustainability, and assurance among others
“If there is an industry in which corporate governance is most important is the banking industry because by its nature, it is where you need the utmost trust of the people ie the depositors”, Kofo Alada, the Director, Consumer Protection Department and representative of the Central Bank.
“The Central bank considers the code of governance pertinent not just in ensuring that monies of depositors are safe but also that the banks make money out of it”, Alada noted.
For SEC, the Head of Corporate Governance, Sallau Maryam said the code will go a long way in ensuring Long term support of companies.” For the company to sustain for a very long time there has to be a good directing and controlling of such companies which the SEC is more concerned about”.
Sallau explained that the national code will call for more transparent, accurate and timely disclosure of the way things are done in companies.
The new code, according to FRC, seeks to institutionalise corporate governance best practices in Nigerian companies to promote public awareness of essential corporate values and ethical practices that will enhance the integrity of business environment rebuild public trust and confidence in the Nigerian economy, thus facilitating increased trade and investment
It also recommends an effective whistleblowing framework for reporting any illegal or unethical behaviour that will help in protecting minority shareholders rights, attracting and retaining foreign investments, as well as enhancing ease of doing business. The new code of corporate governance applies to all companies under the FRC Act
“What this code entails for us is sustainability listed companies especially given the fact that we are the voice of the investors”, Tinuade Awe, Executive Director, Regulation at the Nigerian Stock Exchange said.
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Until recently, there has been no codified, generally applicable corporate governance regime in Nigeria. However, the void that the absence of a generally applicable national code created was to a certain degree mitigated by a few sectors specific corporate governance codes issued by regulators to address the governance challenges in their sectors.
Subsequently, in order to consolidate the corporate governance requirements of various sectors and establish a codified corporate governance regime applicable across the board, the Financial Reporting Council of Nigeria (“FRCN”) released the National Code of Corporate Governance 2016 (the “NCCG”).
Sadly, whatever governance relief that the emergence of the NCCG brought was short-lived, as it was suspended due to controversies relating to its legality and impact on the ease of doing the business drive of the Federal Government of Nigeria (“FGN”).
