The Financial Reporting Council of Nigeria issued the Nigerian Code of Corporate Governance (NCCG) in 2018, which replaces all existing sectorial Codes of Corporate Governance in Nigeria. The Securities and Exchange Commission subsequently developed the SEC Corporate Governance Guidelines (SCGG). Public companies are required to comply with the provisions of the NCCG and the SCGG.
The Nigerian Code of Corporate Governance (NCCG) 2018 is applicable to all sectors of the economy. However, given the peculiarity of the Capital Market, the SEC hereby issues additional recommended practices, largely obtained from the 2011 SEC Code of Corporate Governance for Public Companies in Nigeria, as Guideline. It is believed that these guidelines would add to the standards of transparency, accountability and good corporate governance of companies, without unduly inhibiting enterprise and innovation.
These Guidelines are structured along the Principles of the Nigerian Code of Corporate Governance 2018.
Public companies are to mandatorily comply with the requirements of the Nigerian Code of Corporate Governance 2018 and the SEC Corporate Governance Guidelines.
The Guidelines are as follows;
Guideline 1 – BOARD STRUCTURE AND COMPOSITION
Membership of the Board shall not be less than five (5).
2.1. 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.
2.2. To safeguard the objectivity and independence of the Board, cross membership on the boards of two or more companies should be discouraged. However, where it will lead to a conflict of interest situation as in cross-membership(s) on boards of competing companies, then it shall be disallowed.
Board papers should be made available to every member of the Board at least one week prior to the date of the Board or committee meeting.
4.1. Every public company shall have a minimum of one Independent Director on its Board.
4.2. An Independent Director:
The Nomination and Governance Committee shall perform the following:
Guideline 6 – AUDIT COMMITTEE
Whenever necessary, the Committee may obtain external professional advice.
The CEO/MD, Executive Directors and the Head of the internal audit unit must be in attendance at the meetings of the Risk Management Committee.
8.1. In appointing a person to the Board, Shareholders should be provided with any real or potential conflict of interest, including whether a proposed appointee is an interlocking director.
8.2. The letters of appointment should cover the following:
The Chairman shall oversee the annual evaluation of the performance of the Chief Executive Officer. The CEO/MD shall similarly perform an annual evaluation for the Executive Directors based on agreed criteria or performance indicators.
10.1. The Remuneration policy should define a process, if necessary with the assistance of external advisers, for determining Executive and Non-Executive Directors’ compensation.
10.2. The Board shall approve the remuneration of each Executive Director including the CEO individually taking into consideration direct relevance of skill and experience to the company at that time.
10.3 Where share options are:
The annual risk-based internal audit plan shall:
Directors, Management and other employees have an obligation to comply with the principles of the Code of Business Conduct and Ethics at all times, including to:
13.1. Companies shall recognise corruption as a major threat to business and to national development and therefore as a sustainability issue for businesses in Nigeria.
13.2. 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.
PENALTY FOR NON COMPLIANCE WITH THE NIGERIAN CODE OF CORPORATE GOVERNANCE (NCCG) AND SEC CORPORATE GOVERNANCE GUIDELINES.
Any Company/Entity that violates the provisions of Nigerian Code of Corporate Governance and the SEC Corporate Governance Guidelines shall be liable to a fine of N500,000.00 in the first instance and a further sum of N5, 000.00 for every day the violation persists and or any other sanction as the Commission may deem fit in the circumstance.