The Financial Reporting Council of Nigeria (FRCN) has concluded arrangement to roll out a national code of corporate governance that will focus on unifying the various existing regulatory codes come first quarter of 2015.
Speaking at the 11th yearly Corporate Financial Reporting Summit and Dinner, held in Lagos, the Executive Secretary/Chief Executive Officer, FRCN, Jim Obazee explained that the code, if properly implemented will boost the standard of business operations in Nigeria, and equally attract the needed foreign direct investment into the country.
He noted that the various industry codes of corporate governance issued by different regulators for companies under their purview were subject to conflict, which, according to him, has contributed to reduced compliance by entities and ineffective enforcement of the codes by regulatory authorities.
“The existing codes of corporate governance are only persuasive in nature and to a large extent accounted for the impediments to sound and good corporate governance in Nigeria. Undoubtedly, high profile of corporate governance scandal in the recent past have made multiple stakeholders including corporate leaders , shareholders’ associations and the government to activate a corporate governance agenda for reform to address the identified lapses in the running of corporations and institutions.”
Obazee, while examining the theme of the 2014 summit: ‘National Code of Corporate Governance: A New Regulatory Benchmark for Nigeria’, maintained that Nigeria requires a systematic approach to corporate governance issues, which would enable it stimulate sound financial systems and internal control to safeguard stakeholders ‘investment and public interest assets.
He added that increased government regulations would also ensure stability of financial system in order to mitigate corporate failures as witnessed in the past.
According to him, the various regulatory agencies that have persuasive code were represented in the committee that drafted the code to ensure that the board is propelled by the 23 board members of the regulatory bodies.
He explained that for listed companies to maintain sound corporate governance principles, the board of these companies must be independent of controlling shareholders.
He added, “The controlling shareholders should not be allowed to control the board. The board should be independent to serve the interest of all shareholders. This would make them to be free from influence of this group of shareholders in their decision making.
“In Nigeria, corporate boards are not free, what you see is controlling shareholders working in collaboration with the executive directors , doing things that are not in the best interest of minority shareholders.”
Odiase described the nation’s capital market as ‘minority market’, noting that “the big boys with heavy equity buy and sell their shares outside the country; they only come to the nation’s bourse to register the shares.”