By Dipo Olowookere
Acting Director General of Securities and Exchange Commission (SEC), Ms Mary Uduk, has lamented the low level of compliance with corporate governance code in Nigeria.
Speaking at a function in Lagos on Thursday, the SEC boss said some companies listed on the Nigerian Stock Exchange (NSE) lacked understanding of the SEC Code 2011, which talked about code of corporate governance for public companies in the country.
According to SEC Code 2011, the rules were not intended to be rigid, but to “be viewed and understood as a guide to facilitate sound corporate practices and behaviour.”
The code stipulated that the Board is accountable and responsible for the performance and affairs of the company and should define its strategic goals and ensure that its human and financial resources are effectively deployed towards attaining those goals.
Also, the board was mandated to ensure that the company was properly managed, overseeing the effective performance of the management in order to protect and enhance shareholder value and to meet the company’s obligations to its employees and other stakeholders.
But Ms Uduk said some boards were not performing these and other roles expected of them by the corporate governance code.
“We observed that most of the issues covered in the SEC Code 2011 have remained difficult for some entities to observe in terms of fairness, independence, accountability and transparency requirements by their boards.
“The Code of corporate governance talks about how companies are run and managed.
“Looking at the scorecard as a follow up to the code, we have been able to see areas of weaknesses and strength across companies and these areas are very germane to having strong corporate governance.
“For example, the Boards are expected to have a deep understanding of the business and the environment to which the business is run.
“They are supposed to understand the blueprint, they are supposed to speak out, they are supposed to be innovative and they are supposed to have a little bit of financial experience so they could be able to interpret financial statements,” Ms Uduk said at the Alliance Law Firm’s Maiden Lecture Series, Luncheon and Book Presentation.
At the lecture themed ‘Contemporary Corporate Governance Issues in Nigeria,’ the SEC DG, who was represented by a Director at the agency, Mr Edward Okolo, pointed out that access to critical indices by which companies’ compliance with the SEC Code could be measured remained difficult.
She stressed that experiences globally have demonstrated that enterprises with commitment to corporate governance principles perform better and have continued to enjoy investors and other stakeholders’ confidence in building their brands.
Ms Uduk urged publicly listed companies to do more to strengthen their boards so as to have better corporate governance system.
Business Post reports that the SEC Code 2011 stipulates that The CEO/MD should be knowledgeable in relevant areas of the company’s activities. He should demonstrate industry, credibility and integrity and should have the confidence of the Board and management.
Also, executive directors should be involved in the day-to-day operations and management of the company. In particular, they should be responsible for the departments they head and should be answerable to the Board through the CEO/MD.
Furthermore, non-executive directors are expected to be key members of the Board. They should bring independent judgment as well as necessary scrutiny to the proposals and actions of the management and executive directors especially on issues of strategy, performance evaluation and key appointments.
For independent directors, they should have no significant contractual relationship with the company or group and must be free from any business or other relationship which could materially interfere with their capacity to act in an independent manner and “every public company should have a minimum of one independent director on its Board.”
