The Federal Government recently took another giant step towards re-enforcing the culture of corporate governance and fiscal responsibility in private and public sectors of the economy with the hosting of a one-day public hearing on unified National Code of Corporate governance to regulate the operations of public and private entities in the country.
The session was held at the Lagos Sheraton Hotel, Ikeja. The Chairman of the Financial Reporting Council (FRC), Hajia Maryam Ladi Ibrahim, said it had become important for Nigeria to join the fray for adoption of the code because majority of companies with substantial financial difficulties across the globe suffered from to weak corporate governance structures.
She said that its adoption by Nigeria has become more compelling given the outcry by the citizens against financial recklessness and system abuses by government officials and other individuals in position of leadership. She regretted that weak governance structures in most facets of the nation’s corporate and business lives has given rise to a situation where certain individuals in leadership positions have become more powerful and even richer than the nation or the institutions they represent.
According to her, effective corporate governance requires a proactive, focused state of mind on the part of everyone charged with the responsibility as well as other stakeholders who must be committed to business success through maintenance of highest standards of responsibility and ethics.
She, however, explained that in order to achieve this objective, there was need for a unified statutory document that would serve as a reference material for directing and controlling companies in the country to minimize corporate failures. “It is in the light of that that the Federal Government inaugurated a steering committee on January 17, 2013, led by the private sector to propose a National Code of Corporate Governance to guide the reporting activities of private, public and not for profit organizations in Nigeria,” she said.
The FRC Chairman listed some of the objective of the Financial Reporting Council of Nigeria Act N0 6 of 2011 to include, developing principles for corporate governance, promoting highest standards of corporate governance and encouraging sound systems of internal controls and information systems controls to safeguard stakeholders’ information and assets of public interest among others.
Before the public hearing, the FRC said it had received about 45 comments on the code from professional bodies and other entities.
Mr Victor Odiase, Chairman of the Steering Committee on National Code of Corporate Governance said his committee adopted a qualitative research approach in carrying out its assignment. “The committee gathered enormous data through semi-structured and unstructured in-depth interviews, personal observations, focus groups and the memoranda submitted to it,” he said. He identified some of the key governance challenges in Nigeria as inadequate public and institutional awareness of the real purpose of corporate governance, lack of understanding of the main purpose of a corporate board, preference of significantly concentrated equity ownership, insider-dominated Boards controlling shareholders and non-independent or affiliated corporate bodies.
Mr Odiase said that attracting investment requires protecting investors and no country has a divine right to foreign direct investment. “In our country today, neither the quality of law nor its enforcement can be said to be very adequate. We do not as a nation have an enforceable concept of the fiduciary duties that are controlling shareholders, directors and managers owe to investors – particularly the minorities…Investor whether equity or loan will not invest in a country or company regarded as unstable, corrupt or utterly lacking in basic protections for investments and rights. Let us give the Code a chance,” he said.
By Michael Otogo
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