Boards of corporations are now to decide how long their chief executive officers (CEO) would stay on the job, instead of the compulsory retirement date earlier fixed by the regulatory authorities, so declared the Financial Reporting Council (FRC) in Port Harcourt, Friday afternoon.

The new guidelines were unveiled by the team led by the executive secretary of FRC/chief executive officer, Daniel Asapokhai, when the council began nationwide draft presentation consultations that began in Owerri, Imo State and moved to Port Harcourt, onward to other zones in Nigeria.
The CEO said the previous guidelines unveiled in 2016 had caused nationwide uproar, forcing the federal government to suspend the codes and appointed a new board to work out what would be acceptable to Nigerians. The new codes are being sampled around Nigeria. The executive secretary said the new policy is a set of principles, not rules that would guide boards of corporations.
The other major difference is that the new code to be approved would start immediately but it would take up to 2020 for companies to report how far they had implemented the principles.

There are no punitive measures for non-compliance but Asapokhai said the market would punish companies that failed to operate by the new codes because such companies would not be regarded as standard firms and would hardly pass due diligence tests. They would, therefore, miss many incentives such as loans and investment opportunities.

The nationwide draft presentation followed the successful release of ‘Exposure Draft’ of Nigerian Code of Corporate Governance, NCCG 2018’. The four-week public hearing on the new Code, in all six geopolitical zones of Nigeria, including the Federal Capital Territory, kicked off in Owerri on Wednesday, June 28, 2018.

Speaking at the event in Port Harcourt, Asapokhai stated: “The public hearings will take place in seven key locations in all the geopolitical zones and Abuja. It is our belief that this Code will promote ease of doing business, attract local and foreign investments and enhance the integrity of the Nigerian capital market, by entrenching a culture of disclosure, transparency and accountability. In addition, this Code will raise public awareness of good corporate governance practices.”

Asapokhai revealed that the Nigerian Code of Corporate Governance has adopted the ‘Apply and Explain’ principle, which requires companies to apply the requirements of the Code and to explain how they did so. In his words: “The decision to adopt the ‘Apply and Explain’ approach was made after careful considerations of several factors including the Nigerian legal system, Nigerian culture and history, government policies, state of the Nigerian economy, global economic and political climate, and levels of capital inflow of investment coming into the country.”

According to the FRC CEO, the Nigerian Code of Corporate Governance 2018 shall apply to all public companies; whether listed or not, all private companies that are holding companies of public companies and other regulated entities, concessioned and privatised companies, and regulated private companies.

The Code was developed based on a comprehensive review of the suspended 2016 Code of Corporate Governance by a 15-man technical committee, and extensive consultative and collaborative engagement with a wide range of stakeholders and other regulators.

The Public Hearing was attended by Nigeria Chamber of Commerce Industry Mines and Culture, Austin Avuru, Chief Executive Officer, Seplat Petroleum Development Company Plc, the media, and a host of other dignitaries. The event witnessed comments and reactions from stakeholders, public entities to whom the code will apply, the media, and public, all of which will be taken into consideration in finalising the Code.

The FRC is a federal government agency established by the Financial Reporting Council of Nigeria Act No. 6, 2011, under the supervision of the Federal Ministry of Industry, Trade and Investment. The FRC is responsible for, among other things, developing and publishing accounting and financial reporting standards to be observed in the preparation of financial statements of public entities in Nigeria and monitor compliance with reporting requirements specified in the adopted Code of Corporate Governance for related matters. (BusinessDay)

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