Nigerian Code of Corporate Governance: FRCN sets timelines for reporting on compliance
…annuals reports to show directors remuneration; sitting allowances, reimbursable travel and hotel expenses, others
Financial Reporting Council of Nigeria (FRCN) has released the guidance for reporting on compliance with the Nigerian Code of Corporate Governance (NCCG) 2018.
The Financial Reporting Council of Nigeria said it has been engaging with all Sector Regulators, for the purpose of developing Sectoral Guidelines of Corporate Governance on specific requirements relevant to each sector which are not covered under NCCG 2018.
Reporting entities are required to report the adoption and compliance with the Code in their annual reports.
Companies that had 31 January as year-end have 30 July 2020 as NCCG 2018 compliance reporting timeline for 2020 and their compliance reporting timeline for 2021 is 30 April 2021. Companies that have 29 February 30 as year-end have July 2020 as NCCG 2018 compliance reporting timeline for 2020 and their compliance reporting timeline for 2021 is 30 May 2021.
Companies that have 31 March 30 as their year-end have July 2020 as reporting timeline for 2020 and 30 June 2021 reporting timeline for 2021. In the same vein, the companies that have 30 April as their year-end have 30 July 2020 reporting timeline for 2020 and 29 July 2021 as reporting timeline for 2021.
Those that have 31 May as their year-end have 30 August 2020 as reporting timeline for 2020 and 30 August 2021 as reporting timeline for 2021.
At the Nigerian Stock Exchange (NSE), all listed Companies have already been notified that further to the issuance of the regulation on the adoption and compliance with the Nigerian Code of Corporate Governance (NCCG) 2018, the FRCN said companies that have 30 June as their year-end have 29 September 2020 as their reporting timeline for 2020 and 29 September 2021 as their reporting timeline for 2021.
For the companies that have 31 July 29 as year-end, their reporting timeline for 2020 is October 2020 and 29 October 2021 is their reporting timeline for 2021. Companies that have 31 August 29 as year-end now have November 2020 as their reporting timeline for 2020 and 29 November 2021 as reporting timeline for 2021.
Companies with year-end of 30 September have 29 December 2020 as their reporting timeline for 2020 and 29 December 2021 reporting timeline for 2021. Likewise, those their year-end is October 29 have January 2021 as reporting timeline for 2020 and 29 January 2022 as reporting timeline for 2021.
Companies that their year ends on 30 November have 28 February 2021 as their reporting timeline for 2020 and 28 February 2022 as reporting timeline for 2021; while those their year ends on 31 December have 31 March 2021 as their reporting timeline for 2020 and 31 March 2022 as reporting timeline for 2021.
“This process is ultimately important because all existing sectoral codes of Corporate Governance are to be withdrawn, and Sectoral Guidelines of Corporate Governance issued to address sector specific matters or requirements on Corporate Governance. To this end, NCCG 2018 as the National Code, would be the only Code of Corporate Governance in Nigeria.
“At the current time, the Council’s expectation is that the Sectoral Guidelines would be released once the engagement with Sectoral Regulators is completed. Additional information in this regard will be provided subsequently”, FRCN stated.
Paragraph D of the Introduction section of Nigerian Code of Corporate Governance 2018 (NCCG 2018 or the Code) on Monitoring the Implementation of NCCG 2018 provides that, “The implementation of this Code will be monitored by the FRC through the sectoral regulators and registered exchanges who are empowered to impose appropriate sanctions based on the specific deviation noted and the company in question…In consonance with the relevant regulatory agencies of the Federal Government of Nigeria, the Council will subsequently issue corporate governance guidelines to assist implementation as may be required to respond to prudential considerations in different sectors of the economy.”
Paragraph 1(2) of the Regulation on the Adoption and Compliance with the Code, and issued pursuant to Section 73 of the Financial Reporting Council of Nigeria Act of 2011 provides that, all public companies (whether a listed company or not; all private companies that are holding companies of public companies or other regulated entities; all concessioned or privatised companies; and all regulated private companies being private companies that file returns to any regulatory authority other than the Federal Inland Revenue Service (FIRS) and the Corporate Affairs Commission (CAC), shall report on the application of the Code in their annual reports for financial years ending after January 1, 2020 in the form and manner prescribed by the FRC.
The FRC has set up a Web Portal Committee (WPC) comprised of stakeholders, which contributed to the development of an online portal for electronic submissions of reports on compliance with the NCCG 2018.
Members of the WPC also worked with the FRC and others to develop a reporting template to simplify and harmonize Code compliance reporting by reporting entities.
Reporting entities are expected to access, complete, and submit the reporting template online. The online portal is still at the stage of development and a link to the portal will be made available in a subsequent communication.
Among others requirements, the reporting entities are required to include in the Governance Report included in their annual reports, an abridged version or summary of the following matters included in the Code: processes used in relation to all Board appointments; summary of the report of the annual corporate governance evaluation and the extent of the application of the Code, as well as the name of the consultants, and where independent experts have been engaged.
They are also expected to include their remuneration policy, as well as the remuneration of all directors; sitting allowances, Directors’ fees and reimbursable travel and hotel expenses, as well as any other allowances and benefits made to non-executive directors (NEDs); the risk management framework; where the Board has decided not to establish an internal audit function, whether internally or outsourced, and sufficient reasons for not doing so, and explanation as to how the Board has obtained adequate assurance on the effectiveness of the internal processes and systems such as risk management and internal control; and clear information on the Company’s governance structures, policies and practices as well as environmental and social risks and opportunities.