FRC unveils mandatory code of corporate governance

The Financial Reporting Council of Nigeria has finally released the National Code of Corporate Governance to the general public.
This was after long wait for effective rules to guide operations and create conducive environment for businesses in the country.
These codes, according to the FRC, are expected to bring changes in the structure of organisations and businesses as the Federal Government remains committed to its promise of sanitising the nation’s business environment to attract more foreign investments into the country.
The codes are National Code of Corporate Governance for the Private Sector, Code of Corporate Governance for the Not- For-Profit Entities and Code of Corporate Governance for the Public Sector.
The NCCG for Private and Not-For-Profit Entities take effect from Monday, October 17, 2016, while that of the Public Sector will require approval from the Presidency to be applicable.
The FRC noted that the NCCG for the Private Sector is mandatory while that for Not- For-Profit entities is “comply or justify non-compliance.”
“The NCCG for the Public Sector will not be applicable immediately until an executive directive is secured from the Federal Government of Nigeria. This is due to the fact that the enabling laws that set up most government establishments already carry some form of governance structure that will require an umbrella legislation to unify the different provisions of those laws to synchronise with this code,” the FRC added.
It said the codes were in accordance with Section 50 of the Financial Reporting Council Act, 2011.
“In accordance with Section 50 of the Financial Reporting Council Act, 2011, which among other things requires the Directorate of Corporate Governance to develop the principles and practices of Corporate Governance applicable in Nigeria, the Council hereby releases the national Code of Corporate Governance effective October 17, 2016.”
These codes are a product of long but consistent deliberations and contributions by various stakeholders covered by these codes through series of public hearings conducted by the Council, the last of which was in June this year.
It should be noted that the delay in the release of these codes were largely due to a law suit instituted at the Federal High Court, Lagos against the Council by Chief Timothy Adesiyan and 9 others represented by Kemi Pinheiro, SAN of Kemi Pinheiro & Co.
But the court ruled that the plaintiffs lacked the locus standi to institute the suit, thus bringing to an end the argument as to whether the FRC has the power or not to develop codes for corporate governance for the nation.