The Securities and Exchange Commission (SEC) has 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 effective on January 01, 2021.
Some provisions of the document which can be found at the SEC website www.sec.gov.ng, indicates 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 or not a proposed appointee is an interlocking director. “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 dictates that 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. “Companies shall recognize corruption as a major threat to business and to national development and therefore as a sustainability issue for businesses in Nigeria.” The guideline read.
To minimize 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;
- 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. The FRC had also issued a template for reporting compliance with the NCCG 2018.
SEC has advised Public Companies, by the circular, to comply with the requirements of the NCCG 2018 and also notes that compliance with the SCGG and the revised reporting template is mandatory.