The Securities and Exchange Commission, SEC, has issued a Corporate Governance Guidelines (SCGG) and a template (revised Form 01) for reporting compliance with the Securities which becomes effective from January 2021
Par of the Guidelines indicate that Membership of the Board shall not be less than five (5) and to safeguard the independence of the Board, not more than two members of the same family shall sit on the Board of a public company at the same time
The guidelines also stipulate that in appointing a person to the Board, Shareholders should be provided with information on any real or potential conflict of interest, including whether a proposed appointee is an interlocking director, adding “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 stated “Companies shall 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 order to foster good corporate governance, companies shall engage in increased disclosure beyond the statutory requirements in the CAMA”.
In a bid to minimise risk in the operations of companies, the guidelines states 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 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.
Recall that the Nigerian Code of Corporate Governance (NCCG) of 2018 issued by the Financial Reporting Council (FRC) of Nigeria effectively replaced the Code of Corporate Governance for public companies issued by the Securities and Exchange Commission (SEC). The FRC had also issued a template for reporting compliance with the NCCG 2018
According to the SEC, “Public Companies are by this circular advised to comply with the requirements of the NCCG 2018 and also note that compliance with the SCGG/revised reporting template is mandatory”