Amendment to the SEC’s rule 42 minimum disclosure requirements
The Securities and Exchange Commission, Nigeria (SEC) reviewed and approved new rules and amendments to its existing rules and regulations a little over a month ago precisely on the 23rd of December, 2019. One of the sundry amendments made was to Rule 42 of the SEC rules by the creation of a sub-rule (6). The new sub-rule 6 deals with Minimum Disclosure Requirements by Public Companies on their websites. It is not a sector-specific amendment but it applies to ALL Public companies. It wasn’t mandatory for Public companies to disclose in-depth corporate governance information on their websites. However, the narrative has changed with the advent of the new sub-rule 6.
The new sub-rule 6 mandates Public companies to, in addition to the corporate governance disclosures in their annual reports, disclose certain minimum corporate governance information on their websites. The corporate governance information that must now be disclosed on the website of Public companies are in respect of the following broad categories; the governance structure; the Board; the other governance process.
Each of the above mentioned broad areas have specific information requirements listed under them respectively as follows;
The governance structure: Board Committee Charters/Terms of Reference; Responsibilities of the Board and Board Committees; Duties of the Board and Board Committees; The roles of the Chairman and the Chief Executive Officer; Directors’ Nomination and Appointment Process; Induction and Continuous Training; Annual Board Plan, Evaluation Report of the Board, Board Committees and Individual Directors; Statement of compliance with the requirements of established Codes of Corporate Governance; Organogram of the Company.
The Board of the company: A tabular representation of the profile of directors containing the biography, experience, educational and professional qualifications, date of appointment, committee membership.
Other governance process: In keeping to the highest standard of governance, companies would be required to disclose detailed information as it relates to internal control policy, risk management policy, staff development programme (training) policy, insider trading policy, communications policy, whistleblowing policy, code of ethics for directors, sustainability issues, including gender analysis.
In practical terms, it would seem that most if not all the Public companies already have the information required under Category B (the profile of the Board) on their websites through the information may not necessarily be in the format specified under the new sub-rule 6.
It would appear that the information in categories A and C are the major areas that would require some degree of work on the websites of the Public companies. These details are usually not displayed on the websites of Companies. Some people may even be of the opinion that the information in Categories A and C especially C, will be too much information to be displayed on a company’s website. Whatever one’s opinion might be on the issue; the new sub-rule 6 has been made and should be complied with.
The new sub-rule 6 also places an obligation on Public companies to update this mandatory information on their websites whenever changes occur. It is worthy to mention that penalties stipulated by the SEC for non-compliance with its rules are usually quite stiff. Therefore, it would be best for all Public companies to update their websites to comply with this new sub-rule 6 if they are yet to do so.