Corp Governance: Listed Firms Violating Rules On Independent Directors-SEC

The Securities & Exchange Commission (SEC), on Thursday in Lagos expressed disappointment at the poor level of compliance with the corporate governance code in the country
Speaking during a panel discussion at the maiden lecture series, luncheon and book presentation organized by Alliance, a law firm Ms. Mary Uduk, Acting Director General of the commission, expressed disappointment at the rate listed companies continue to abuse provisions in the SEC Code 2011, relating to the role of independent directors in companies.
Represented by Edward Okolo, a Director at the commission, Ms. Uduk lamented the difficulty in accessing critical indices by which compliance with the SEC Code could be measured.
This, he said, is because many companies are either unwilling to comply or lack understanding of the importance of corporate governance to the survival and profitability of their entities.
According to him, “we observed that most of the issues covered in the SEC Code 2011 have remained difficult for some entities to observe in terms of fairness, independence, accountability and transparency requirements by their boards.
“The Code of corporate governance talks about how companies are run and managed. Looking at the scorecard as a follow up to the code, we have been able to see areas of weaknesses and strength across companies and these areas are very germane to having strong corporate governance.
“For example, the boards are expected to have a deep understanding of the business and the environment in which the business is run. They are supposed to understand the blueprint, they are supposed to speak out, they are supposed to be innovative and they are supposed to have a little bit of financial experience so they could be able to interpret financial statements”, the SEC boss added.
All these, the SEC continued, make for strong boards, while the absence means a weak board that is unable to exercise oversight on the management since experiences show that companies that have strong boards have better corporate governance systems.
He explained further that this also remains linked to the issue of independent directors, adding that if a company selects its them transparently, it would have informed judgment or decision making which would ultimately make a difference.
“We believe there should be more disclosure. We believe that on the issues of conflict of interest and related party transactions should go to the shareholders to validate decisions taken by the boards in order to strengthen shareholders’ rights in public companies”, the investment expert stressed.
The SEC reminded Nigerian companies to embrace corporate governance as a desirable option for growing their businesses, improving shareholders’ funds and profitability on a sustainable basis.
He said experiences globally have demonstrated that enterprises that remain committed to corporate governance principles perform better, even as such firms continue to enjoy investor and other stakeholders’ confidence while building their brands.
Speaking earlier, Chairman, Financial Reporting Council of Nigeria (FRCN), Dotun Sulaiman, spoke on sundry initiatives being undertaken by the Council to improve on the contents of existing corporate governance principles as they relate to financial reporting in order to make them more investor-friendly.

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