Cross-Cutting Issues In Corporate Governance

NIGERIAN LEGAL FRAMEWORK

In 2003, at about the time of the ‘birth’ of the America’s Sarbanes-Oxley Act, the Nigeria’s Securities and Exchange Commission (the “SEC”), against the backdrop of widespread erosion of public confidence in corporate entities, issued the “Nigerian Code of Corporate Governance Practices” for public companies. The Central Bank of Nigeria (the “CBN”) immediately followed suit by issuing in the same year, a “Code of Corporate Governance for Banks and other Financial Institutions in Nigeria”. These codes have since been reviewed a number of times.

Major reforms introduced by these early codes range from board composition to separation of the office of the CEO from the board chairman; conflict of interests; directors’ dealings; creative accounting policies; fixed term of office for CEOs and board members; risk management & disclosure standards; whistle-blowing policies; quality of membership of the audit committee and the establishment and composition of other critical committees of the board.

It is instructive to note, however, that a broad corporate governance framework existed to some extent in Nigeria before the above two early codes. Essentially, ‘codes of conduct’ for directors of companies were entrenched in the Companies and Allied Matters Act (“CAMA”), 1990. The legislation touches on matters of remuneration & payments, disclosure of directors’ interests in the company’s contracts and shareholding structure, the duties that directors owe to their companies as legal entities, fiduciary relationship etc. See sections 267 – 292 of the CAMA (now found in Cap. C20, Laws of the Federation of Nigeria 2004).

Apart from the general codes for public companies and banking institutions mentioned above, there are today a couple of sector-specific CGCs in operation in Nigeria. There is also a “National Code of Corporate Governance” (still inchoate), which the Financial Reporting Council of Nigeria (the “FRCN”), issued in draft in 2015 to have an all-sector coverage; to govern the private, public, and not-for-profit organizations.

At any rate, the CGCs that are operational in Nigeria at the moment include:

1. Codes of Corporate Governance for Banks and Discount Houses in Nigeria and Guidelines for Whistle Blowing in the Nigerian Banking Industry, 2014 – issued by the CBN
2. Code of Corporate Governance for Public Companies, 2014 – issued by the SEC
3. Code of Corporate Governance for Shareholders Associations, 2014 – issued by the SEC
4. Code of Corporate Governance for Insurance Companies, 2009 issued by the National Insurance Commission
5. Code of Corporate Governance for Licensed Pension Operators, 2008 – issued by the National Pension Commission
6. Code of Ethics and Business Practices for Licensed Pension Operators, 2008 – issued by the National Pension Commission
7. Whistle Blowing Guidelines for Pensions, 2008 – issued by the National Pension Commission