SEC Says 2018 National Governance Code Binding From Jan. 2021
The management of the Securities and Exchange Commission (SEC), on Tuesday, issued a Corporate Governance Guidelines and a template (revised Form 01) for reporting compliance with the Securities and SEC Corporate Governance Guideline, (SCGG) which becomes mandatory from January 1, 2021.
From that date, the commission advised public companies to comply with the Nigerian Code of Corporate Governance (NCCG) of 2018 issued by the Financial Reporting Council (FRC) of Nigeria, just as compliance with the SCGG/revised reporting template.
Recall that the NCCG effectively replaced the Code of Corporate Governance for public companies issued by the SEC, just as the council also issued a template for reporting compliance.
A statement by the SEC on Tuesday directed that “in order to foster good corporate governance, companies shall engage in increased disclosure beyond the statutory requirements in the CAMA”.
For example, some provisions of the document available on the SEC website www.sec.gov.ng, require that board membership companies shall not be less than five years, just as the commission moves to safeguard the independence of the Board. In this regards, the guideline requires that no more than two members of same family shall sit on the board of a public company at the same time.
The guidelines also stipulate that while making any board appointment, shareholders should be provided with information on any real or potential conflict of interest, including whether a proposed appointee is an interlocking director.
Also, the guideline requires that “the letters of appointment should cover the following: Synopsis of Director’s rights; Director evaluation programme used by the company, and Any other contractual responsibilities.”
On sustainability, the guideline requires companies to “recognise corruption as a major threat to business and to national development, and therefore as a sustainability issue for businesses in Nigeria. Companies, Boards and individual directors must commit themselves to transparent dealings and to the establishment of a culture of integrity and zero tolerance to corruption and corrupt practices.
In a bid to minimize risk in the operations of companies, the guidelines state that the annual risk-based internal audit plan shall: address the broad range of risks facing the company, linking this to a risk management framework; ii. identify audit priority areas and areas of the greatest threat to the company; indicate how assurance will be provided on the company’s risk management process; and indicate the resources and skills available or required to achieve the plan.