The board of Oando Plc, last week informed the Nigerian Stock Exchange (NSE) that the indefinite suspension imposed by the nation’s capital market regulator- the Securities & Exchange Commission (SEC) is already taking its toll on the group.
Specifically, due to the suspension, Oando Plc, is unable to organize an annual general meeting where shareholders statutorily give approvals to audited accounts, vote to appoint and reappoint directors and external auditors.
According to information provided by the group in the Template for reporting compliance with the Nigerian Code of Corporate Governance 2018 administered by the Financial Reporting Council of Nigeria (FRC/CG/001) submitted to the NSE, the directors say they are yet to reappoint Ernst & Young (Chartered Accountants) as external auditor for the 2019 financial year.
In a footnote to the column for the name of its external auditors, Oando Plc recalled that the SEC suspended its 2018 Annual General Meeting, and “has till date, not lifted” it to allow for the holding of subsequent annual meetings.
Due to the suspension, Oando explained that “Ernst & Young was appointed as the Company’s to hold office for the 2018 financial year. However, they are yet to be reappointed because the company has not held its 2018 Annual General Meeting or any other subsequent general meeting (at which the External Auditor will be re-appointed).”
The company reported that Ernst & Young was first appointed external auditors on October 27, 2014; and in answer to how often the audit partners are rotated, it said “the company’s policy is that audit engagement partners should be rotated every five years to preserve independence.”
This means a reappointment was due at the AGM for the 2019 financials of the company.
Also, due to the suspension, Oando Plc said its board-approved directors’ remuneration policy, which provide details of directors’ fees, allowances and all other benefits paid to them during the could not be reviewed. The company is therefore “yet to publish its 2019 and 2020 financials due to the indefinite suspension of the 2018 Annual General Meeting by the SEC.”
The company is also unable to renew the appointments of its non-executive directors (including the chairman), and independent non-executive directors, who have “initial term of three years, renewable for a maximum of three terms (a total of nine years), subject to a retirement age of 70 years.”
According to details supplied in the template, chairman of the board, Oba Michael Adedotun Gbadebo, its chairman and non-executive director, was first appointed on April 10, 2006, meaning he has served a total of 14 years on the board, besides the fact that he celebrated his 75th birthday in September 2018. Also, those who ought to present themselves for reappointment at the AGM are unable to do so, even as new appointees cannot be on-boarded.
Also, the inability to hold an AGM for the third consecutive year also means the company is unable to approve the remuneration of the non-executive directors.
According to the template, corporate governance is a key driver of corporate accountability and business prosperity, just as “the Nigerian Code of Corporate Governance, 2018 (NCCG 2018) seeks to institutionalize corporate governance best practices in Nigerian companies. It is also aimed at increasing entities’ levels of transparency, trust, and integrity, and create an environment for sustainable business operations.
“The Code adopts a principle-based approach in specifying minimum standards of practice that companies should adopt. Where so required, companies are required to adopt the “Apply and Explain” approach in reporting on compliance with the Code. The ‘Apply and Explain’ approach assumes application of all principles and requires entities to explain how the principles are applied. This requires companies to demonstrate how the specific activities they have undertaken best achieve the outcomes intended by the corporate governance principles specified in the Code,” it added.
In recent months there have been two court judgments procured by shareholders against the indefinite suspension imposed on Oando Plc by the SEC, both of which have been quashed, suggesting that reported political solution being sought to the face-off may have collapsed. The hope for an out-of-court settlement was boosted by the appointment of a new SEC management, led by Lamido Yuguda, as director-general.
Recall that Oando Plc and its some board members, including the executive management team who were suspended and fines imposed on them for corporate governance breaches approached regular courts for protection, followed by the protracted legal battle.