Corporate Governance 2019

May 6, 2019


Primary sources of law, regulation and practice 

1 What are the primary sources of law, regulation and practice  relating to corporate governance? Is it mandatory for listed  companies to comply with listing rules or do they apply on a  ‘comply or explain’ basis? 

The main sources of law relating to corporate governance are as follows: • the Companies and Allied Matters Act 1990 (CAMA); • the Investment and Securities Act 2007 (ISA); 

  • the Financial Reporting Council of Nigeria Act 2011 (FRCA); • the Banks and Other Financial Institutions Act 1991 (BOFIA); • the Central Bank of Nigeria Code of Corporate Governance for  Banks and Discount Houses in Nigeria (the CBN Code); 
  • the Insurance Act 2003; 
  • the National Insurance Commission Act 1997 (the NAICOM Act); • the Financial Reporting Council of Nigerian Code of Corporate  Governance 2018 (the FRCN Code); 
  • the Central Bank of Nigeria Code of Corporate Governance for  Microfinance Banks in Nigeria 2019 (the CBN Code for MFBs); • the Central Bank of Nigeria Code of Corporate Governance for  

Development Finance Institutions in Nigeria 2019 (the CBN Code  for DFIs); 

  • the Central Bank of Nigeria Code of Corporate Governance for  Finance Companies in Nigeria 2019 (the CBN Code for FCs); • the NAICOM Code of Corporate Governance for the Insurance  Industry in Nigeria (the NAICOM Code); 
  • the Code of Corporate Governance for Licensed Pension Operators  (the PENCOM Code); 
  • the Rule Book of the Nigerian Stock Exchange; 
  • the Securities and Exchange Commission Code of Corporate  Governance in Nigeria (the SEC Code); 
  • the Securities and Exchange Commission Rules and Regulations  (the SEC Rules); 
  • the SEC Code of Conduct for Shareholders’ Associations  (SCCSA); and 
  • the Nigerian Communications Commission Code of Corporate  Governance for telecommunication companies (the NCC Code). 

The Rule Book of the Nigerian Stock Exchange requires mandatory  compliance with listing rules. 

Responsible entities 

2 What are the primary government agencies or other entities responsible for making such rules and enforcing them? Are  there any well-known shareholder groups or proxy advisory  firms whose views are often considered? 

The primary government entities responsible for making such rules are: • the Corporate Affairs Commission (CAC), created under CAMA,  which oversees the registration of companies and compliance by  corporate bodies with the provisions of CAMA; 

  • the Securities and Exchange Commission (SEC), created under the  ISA, which regulates the capital market; 
  • the Central Bank of Nigeria (CBN), which regulates banks and other  financial institutions in Nigeria;  
  • the National Insurance Commission (NAICOM), established  under the NAICOM Act 1997, which ensures compliance by insur ance companies with the provisions of the NAICOM Act and the  Insurance Act; 
  • the National Pension Commission established under the Pension  Reform Act, which regulates Pension Fund Administrators and  Pension Fund Custodians;  
  • the Nigerian Communications Commission established under the  Nigerian Communications Act 2003 (NCA) which regulates the  communications industry in Nigeria and ensures compliance with  the NCA; and 
  • the Financial Reporting Council of Nigeria (FRCN), created under  the FRCA, which is empowered to enforce and approve compli ance with accounting, auditing, corporate governance and financial  reporting standards in Nigeria. The FRCN is charged with ensuring  good corporate governance practices in the public and private  sector. The Directorate of Corporate Governance, created under the  FRCA, has the responsibility to issue the code of corporate govern ance and guidelines and to develop a mechanism for periodic  assessment of the code and guidelines. 

There are several shareholder activist groups in Nigeria. These  include: Progressive Shareholders’ Association of Nigeria, Lagos Zone  Shareholders’ Association, Renaissance Shareholders’ Association,  Association for the Advancement of the Rights of Nigerian Shareholders,  the Independent Shareholders’ Association of Nigeria, Dynamic  Shareholders’ Association of Nigeria, Nigerian Shareholders’ Solidarity  Association, Proactive Shareholders Association of Nigeria and the  Pacesetter Shareholders’ Association of Nigeria. The various groups  are more active in participating in annual general meetings, influencing  decision-making at such meetings and protecting shareholders’ rights. 

It should be noted that the regulatory authorities such as the SEC  and the FRCN adopt a consultative process in making regulations in  order to obtain the views of various stakeholders, including shareholder  groups. The SCCSA is one of the means through which the SEC seeks to

ensure the highest standard of conduct among association members and  the companies with which they interact as shareholders and to ensure  that association members make positive contributions in the affairs of  public companies. The SCCSA prescribes that shareholders’ associa 

tions be registered with the CAC in order for their views to be considered  by the SEC during consultations on corporate governance issues. 


Shareholder powers 

3 What powers do shareholders have to appoint or remove directors or require the board to pursue a particular course of  action? What shareholder vote is required to elect or remove  directors? 

Shareholders in a general meeting have the power to appoint or remove  directors by a resolution passed by a simple majority of votes cast  in person or by proxy. Though the board of directors of a company is  empowered to appoint new directors to fill casual vacancies created  by death, resignation, retirement or removal, such appointments  are, however, subject to ratification by the shareholders in a general  meeting. Generally, unless the articles of association provide otherwise,  the directors, when acting within the powers conferred upon them by  CAMA or the articles, are not bound to obey the directions or instruc tions of the shareholders in general meetings provided the directors act  in good faith and with due diligence. This notwithstanding, the share 

holders may make recommendations to the board regarding actions  to be taken by the board and may ratify or confirm any action taken  by the board. The SEC Code provides that the board is to ensure that  all shareholders are given equal treatment and minority shareholders  are adequately protected from the abusive actions of controlling share 

holders. Also, there should be adequate shareholder representation on  the board proportionate to the size of shareholding 

A shareholder can bring a court action to restrain the directors  from entering into an illegal or ultra vires transaction, or perpetuating  a fraud. Members holding 5 per cent of the total voting rights in the  company could circulate a resolution to be voted upon at a general  meeting, indicating a course of action that should be adopted by the  directors of the company. 

Under CAMA, a company may remove a director before the expiry of  his or her tenure of office, notwithstanding anything in its articles or in  any agreement between the company and the director. However, CAMA  requires that a special notice be given to those entitled to attend and  vote as well as the director sought to be removed in order to move and  pass such resolution. The company shall also give its members notice  of such resolution, a minimum of 21 days before the meeting where the  removal of the director is to be considered. 

Shareholder decisions 

4 What decisions must be reserved to the shareholders? What matters are required to be subject to a non-binding  shareholder vote? 

The shareholders in a general meeting are empowered to appoint and  remove directors of the company, determine directors’ remuneration,  appoint auditors and approve their remuneration, alter the company’s  share capital, alter the memorandum and articles of association of the  company, approve the conversion of the company from a private to a  public company and vice versa, and from a limited company to an unlim 

ited company and vice versa, change the company’s name, declare a  dividend on the recommendation of the board. 

CAMA provides that, subject to the provisions of the articles of  association of a company, there are certain powers of the board that  

cannot be restricted by the shareholders in a general meeting. These  include powers over the day-to-day running of the company and the  powers of the directors to institute actions on behalf of the company.  Where the board fails to institute or defend an action on behalf of the  company when it ought to do so because the board is itself in the wrong  or there is a deadlock on the board, then the shareholders may apply to  court to bring the action on behalf of the company. 

Where the articles of association of a company expressly vest the  board with certain powers, it is not bound to obey the instructions of the  shareholders, especially when it acts in good faith and with diligence.  In such situations, the shareholders may only amend the articles of  association of the company such that those powers are now made exer 

cisable by the shareholders in a general meeting and not by the board  of directors. 

Disproportionate voting rights 

5 To what extent are disproportionate voting rights or limits on  the exercise of voting rights allowed? 

CAMA expressly prohibits disproportionate voting rights and the limi tation of voting rights. The basic rule is ‘one share, one vote’ and no  company may by its articles or otherwise authorise the issue of shares  that carry more than one vote in respect of each share or that do not  carry any rights to vote. There are, however, a few exceptions. Preference  shareholders, if the articles of the company so provide, can have more  

than one vote per share upon consideration of any resolution: • where a dividend on the preference share remains unpaid after the  due date of the dividend;  

  • that seeks to vary the rights attached to the preference shares;  • to appoint or remove an auditor; and  
  • for winding up the company.  

Also, any special resolution of a company increasing the number of any  class may validly resolve that any existing class of preference shares  carry the right to such votes, in addition to the one vote per share neces sary to preserve the existing ratio that the votes exercisable by the  holders of such preference shares bear to the total votes exercisable at  the meeting. The right of members to vote upon their share may also be  limited by the company’s articles until all calls or other sums payable to  the company by them in respect of the shares have been paid. 

Shareholders’ meetings and voting 

6 Are there any special requirements for shareholders to participate in general meetings of shareholders or to vote?  Can shareholders act by written consent without a meeting?  Are virtual meetings of shareholders permitted? 

All shareholders are entitled to attend and vote at the company’s  general meeting. It should be noted, however, that until the name of a  person having shares in a company has been entered as a member in  the register of members, which companies are statutorily required to  maintain, such person will not be deemed a member of the company  and may therefore not attend meetings of the company or be allowed to  vote at such meetings. 

The articles of a company may also provide that members who  have not made payments on all calls on their shares shall not be enti tled to attend meetings. 

Shareholders of a private company can act by way of written resolu tion. CAMA provides that a resolution of the shareholders of a company  would be effective only if it is passed at a general meeting. However,  the shareholders of a private company may act by a written resolution  signed by all the shareholders entitled to attend and vote at the general  meeting of the company where the resolution would have been passed. 

CAMA does not provide for virtual meetings. By the provisions of  CAMA, all statutory and annual general meetings shall be held in Nigeria  and the notice calling for such meetings should contain the place for  the meetings. An extraordinary general meeting has no such restric 

tions and therefore can be a virtual meeting. In practice, a company may  provide for the holding of virtual meetings in its articles of association.  

Shareholders and the board 

7 Are shareholders able to require meetings of shareholders to be convened, resolutions and director nominations to be put  to a shareholder vote against the wishes of the board, or the  board to circulate statements by dissident shareholders? 

The duty to call general meetings of shareholders is one held by the  board of directors. However, a shareholder or shareholders repre senting at least one-tenth of the shareholding (or voting rights in a  company not having share capital) of the company may requisition a  general meeting at any time. Where the board refuses to convene the  requisitioned meeting within 21 days, the requisitionists are authorised  to convene the meeting (within three months of the requisition) after  issuing the required notices and any reasonable expenses incurred in  relation to the meeting shall be repaid by the company. 

The nomination of a person to the board of directors can be put to  a vote at a general meeting, provided that prior notice (not less than  three or more than 21 days prior to the meeting) outlining his or her  intention to propose such person for election has been given, signed by  a shareholder qualified to attend and vote at the meeting and accompa 

nied by a notice in writing signed by the nominated person of his or her  willingness to act.  

Controlling shareholders’ duties 

8 Do controlling shareholders owe duties to the company or to non-controlling shareholders? If so, can an enforcement  action be brought against controlling shareholders for breach  of these duties? 

There are no statutory provisions that expressly provide that controlling  shareholders owe legal duties to the company or minority shareholders.  However, the CBN Code, the CBN Codes for MFBs, DFIs and FCs, the  FRCN Code, the SEC Code and the NAICOM Code each provide that it is  the responsibility of the board to ensure that minority shareholders are  protected from the overbearing influence of controlling shareholders  of a company and to ensure the fair treatment of all shareholders.  Further, if a controlling shareholder infringes on the rights of a minority  shareholder, or commits a fraud on either the company or the minority  shareholder, which the directors fail to redress (owing to the wrongdoer  being in control of the company or otherwise), the non-controlling share holder may apply to court for injunctive relief. 

A shareholder may also bring an application to the court for relief  on the grounds that the actions of the company are being conducted in  an unfairly prejudicial and oppressive or discriminatory manner. 

Further, a shareholder may bring a derivative action on behalf  of the company where the wrongdoers are in effective control of the  company, the directors refuse to act, the application is brought in good  faith, and it is in the best interest of the company. Evidence that the  majority shareholders have approved any such wrongdoing will not in  itself prevent a shareholder from seeking relief from the courts. 

A shareholder who possesses, either directly or through a nominee,  shares in a public company that entitles the shareholder to exercise 10  per cent of the unrestricted voting rights at any general meeting must  notify the company of his or her interest. The duty also arises where the  shareholding falls below 10 per cent. 

Shareholder responsibility 

9 Can shareholders ever be held responsible for the acts or  omissions of the company? 

Shareholders are generally not liable for the acts or omissions or debts  of the company as the liability of shareholders is limited to the amounts  paid or yet to be paid on their shares. In the case of an unlimited company,  the liability of members for the debts of the company is unlimited. The  company is a separate legal personality from its members. However, the  courts may ‘lift the corporate veil’ where a company is a mere sham or  is being used as a tool to perpetrate illegality. A shareholder may also  be liable where, to his or her knowledge the company operates with less  than two directors. 


Anti-takeover devices 

10 Are anti-takeover devices permitted? 

There are generally no rules prohibiting anti-takeover devices. The  directors have a duty to act in the best interests of the company in all  situations. Major shareholders of a company may enter into a lock-in  arrangement. 

The ISA mandates directors of a target company to send circulars  to members of the target company expressing their opinion one way or  the other on a takeover bid. A dissenting director can also circulate his  or her opinion to the shareholders. 

Issuance of new shares 

11 May the board be permitted to issue new shares without  shareholder approval? Do shareholders have pre-emptive  rights to acquire newly issued shares? 

Subject to any limitations in the articles of a company, the power to issue  shares is vested in the company. The power is exercised by the general  meeting unless the articles specify otherwise, and the general meeting  may grant the authority to issue new shares to the board. 

The articles of a company should determine whether shareholders  have pre-emptive rights to acquire newly issued shares. Where the arti cles do not provide for such rights, none can be said to exist. The articles  of private companies usually provide for pre-emptive rights. 

Restrictions on the transfer of fully paid shares 

12 Are restrictions on the transfer of fully paid shares permitted  and, if so, what restrictions are commonly adopted? 

The transfer of shares of a private company is subject to restrictions as  specified in its articles of association. Restrictions commonly employed  include provisions on pre-emptive rights. The right of pre-emption gives  the other shareholders the first option to buy any shares a shareholder  wishes to sell or transfer. Another restriction employed are clauses in  a company’s articles giving the board of directors and, in some cases,  the shareholders a discretion to refuse to approve or register transfer of  shares to persons or entities of whom they do not approve. 

Public companies are expressly precluded from restricting the  transfer of fully paid shares. 

Compulsory repurchase rules 

13 Are compulsory share repurchases allowed? Can they be  made mandatory in certain circumstances? 

There are certain situations in which a company may repurchase its  shares. These are where the company does so in order to settle a debt

or claim against the company, to eliminate fractional shares, where the  company has entered into an agreement to purchase shares from an  officer or employee of the company or in order to satisfy the claims of  a dissenting shareholder, or in compliance with a court order in the  course of an arrangement or compromise. CAMA provides that an agree 

ment with a company providing for the acquisition by a company of its  shares is specifically enforceable against the company, to the extent that  the company can perform the agreement without breaching the provi sion of CAMA on repurchase of shares. Any public company seeking to  repurchase its own shares is also required to obtain the approval of the  SEC and comply with the SEC Rules. 

Where the shares are to be repurchased by the company, the  shares may only be repurchased out of profits that would have been  otherwise distributed as dividends or out of the proceeds from a fresh  issue of shares made specifically for the purpose of the purchase of  such shares. 

Further, redeemable shares shall not be purchased at a price  greater than the lowest price at which they are redeemable. 

Dissenters’ rights 

14 Do shareholders have appraisal rights? 

The ISA provides that where the approval of nine-tenths of the share holders has been obtained, the shares of the dissenting shareholders  (those who have not approved a scheme of merger, takeover or acquisi tion) may be acquired, with notice, at the value agreed by the consenting  shareholders except where the dissenting shareholders apply to court  to have those terms varied. Aggrieved shareholders may petition the  court to make an order compelling the company to buy them out at a  price to be determined by the court. 


Board structure 

15 Is the predominant board structure for listed companies best categorised as one-tier or two-tier? 

The board structure for listed companies can best be described as one  or single-tier, comprising both executive and non-executive directors. The SEC Code provides that the board should be of a size relative  to the size and complexity of the operations of the company. It further  recommends that the board of a public company should be made up of  at least five directors but sets no upper limit for the number of direc tors on a board. The SEC Code further recommends that the majority of  the board members should be non-executive directors and at least one  should be an independent director. 

Board’s legal responsibilities 

16 What are the board’s primary legal responsibilities? 

The board’s legal responsibilities include directing and managing the  affairs of the company, securing its assets, performing its duties in  the interest of the company and furthering the purposes for which the  company was formed. 

Board obligees 

17 Whom does the board represent and to whom does it owe legal duties? 

The board represents the company and owes its duties primarily to  the company. The board is to perform its duties in the interest of the  company and all its shareholders as a whole, and not in the interest of  a specific shareholder or a section of the shareholders. The board is  

also to take into consideration the interests of the employees in general,  in performing its duties. However, the interests of the company must  always come first, regardless of whether the actions of the board may  adversely affect a shareholder. 

Enforcement action against directors 

18 Can an enforcement action against directors be brought by, or  on behalf of, those to whom duties are owed? 

The directors owe their duty to the company. The company can bring an  action against a director to enforce any duty imposed by law or contract.  A shareholder may bring an action to prevent or redress a breach of  duty by the directors. 

A shareholder may also, with the leave of court, bring a derivative  action on behalf of the company where the wrongdoers are directors  who are in control and thus will not redress the wrong done to the  company. A shareholder may also apply for relief from the court on  the grounds that the affairs of the company are being conducted in an  unfairly prejudicial and oppressive manner. 

Care and prudence 

19 Do the board’s duties include a care or prudence element? 

The directors of a company owe a duty of care and skill to the company  and are to exercise such degree of care and skill that a reasonably  prudent director would exercise in comparable circumstances. A  director is required to exercise the powers and duties of his or her office  honestly, in good faith and in the best interests of the company. 

Board member duties 

20 To what extent do the duties of individual members of the  board differ? 

The same standard of care in relation to the duties of a director is  expected of all members of the board including executive and non executive directors. The relationship is a fiduciary one and directors  are trustees of the company’s assets, and are bound to exercise their  powers in the interest of the company. 

However, there may be additional contractual liabilities and bene fits for executive directors under the principles of ‘master and servant’  where there is a contract to that effect. 

Delegation of board responsibilities 

21 To what extent can the board delegate responsibilities to  management, a board committee or board members, or other  persons? 

The board is empowered, subject to any specific provisions in the arti cles to the contrary, to delegate any or all of its powers to a managing  director or to committees made up of members of the board. The  managing director or committee shall, in the exercise of such respon sibilities so delegated, conform to any directions or regulations of the  board. However, such delegation should not be done in such a way that  it amounts to an abdication of duty. 

The SEC Code provides that it is the responsibility of the board  to facilitate the effective discharge of its duties and responsibilities  through committees. While membership of these committees is exclu sively reserved for board members, senior managers are allowed to be  in attendance during their meetings to provide all necessary informa tion needed by the committee to make informed decisions on behalf of  the board. Even after delegating its powers, the overall responsibility of  directing and managing the affairs of the company still ultimately lies  with the board.

Non-executive and independent directors 

22 Is there a minimum number of ‘non-executive’ or  ‘independent’ directors required by law, regulation or listing  requirement? If so, what is the definition of ‘non-executive’  and ‘independent’ directors and how do their responsibilities  differ from executive directors? 

The SEC Code recommends that there be at least five members of the  board with a mix of both executive and non-executive directors. The CBN  Code and the SEC Code provide that the number of non-executive direc tors on the board should exceed the number of executive directors. The  CBN Code provides that for banks, at least two of the non-executive direc tors should be independent directors, and for discount houses at least  one of the non-executive directors should be an independent director.  

The SEC Code provides for a minimum of one independent director. The SEC Code describes an independent director as a non-execu tive director who: 

  • is not a substantial shareholder of the company, that is, one whose  shareholding, directly or indirectly, does not exceed 0.1 per cent of  the company’s paid-up capital; 
  • is not a representative of a shareholder that has the ability to  control or significantly influence management; 
  • has not been employed by the company or the group of which it  currently forms part, or has not served in any executive capacity in  the company or the group for the preceding three financial years; 
  • is not a member of the immediate family of an individual who is, or  has been in any of the past three financial years, employed by the  company or the group in an executive capacity; 
  • is not a professional adviser to the company or group, other than in  the capacity of a director; 
  • is not a significant supplier to or customer of the company or group; • has no significant contractual relationship with the company or  group and is free from any business or other relationship that could  materially interfere with his or her capacity to act in an independent  manner; and  
  • is not a partner or an executive of the company’s audit firm, internal  audit firm, legal or other consulting firm that have material associa tion with the company and has not been a partner or an executive  of any such firm for three financial years preceding his or her  appointment. 

The PENCOM Code describes an independent director as one who has  no relationship with the company, its related companies or officers that  could interfere, or be reasonably perceived to interfere, with the exer cise of his or her independent business judgement. The NAICOM Code  provides that the board of insurance companies should have a minimum  of seven and a maximum of 15 members and that the maximum number  of executive directors should not exceed 40 per cent of the members of  the board. The PENCOM Code provides that the number of non-executive  members (excluding the chair) of the board shall equate to the number  of executive directors. The NAICOM Code and PENCOM Code each  provide for a minimum of one independent director. The CBN Codes for  MFBs, DFIs and FCs and the FRCN Code also provide that the number  of non-executive directors on the board should exceed the number of  executive directors. 

Non-executive directors are those whose roles are strictly supervi sory and who do not participate in the day-to-day running of affairs of the  company but are nevertheless important members of any board in the  sense that they play a key role in the transparency, integrity and cred ibility of the board. An independent director on the other hand serves the  function of bringing an objective, unbiased perspective to the board in  carrying out its functions. 

Board size and composition 

23 How is the size of the board determined? Are there minimum  and maximum numbers of seats on the board? Who is  authorised to make appointments to fill vacancies on the  board or newly created directorships? Are there criteria  that individual directors or the board as a whole must fulfil?  Are there any disclosure requirements relating to board  composition? 

Generally, persons of unsound mind, persons under the age of 18,  persons previously convicted of fraud or breach of duty in connection  with the promotion, formation or management of a company and insol vent persons are statutorily disqualified from being directors. There are  criteria that must be met to be a director in a company and any person  who is or proposes to be a director of a company must meet these  criteria. A company may by its articles require directors to hold a speci fied number of shares. Failure of a director of such a company to obtain  the share qualification within two months of his or her appointment will  result in the person vacating his or her office until he or she obtains the  shareholding qualification. The PENCOM Code provides that a director of  a pension fund administrator (PFA) must not be a director, an employee,  a principal officer or shareholder in a pension fund custodian (PFC) with  which the PFA conducts business. 

Managing directors and key management operating in certain  industries may be required by the regulations and guidelines governing  those industries to have specific qualifications. The SEC Code permits  public companies to have a governance or remuneration committee  whose function is to establish the criteria for board and board committee  membership and to periodically evaluate the skills, knowledge and expe 

rience required on the board. The CBN Code prescribes that members  of the board shall be qualified persons of proven integrity and be knowl edgeable in business and financial matters in accordance with the extant  CBN Assessment Criteria for Approved Persons’ Regime for Financial  Institutions. This is the same position in the CBN Codes for MFBs. DFIs  

and FCs. The NAICOM Code emphasises competence and integrity. There is no restriction on the nationality of directors. Non-Nigerian  citizens are permitted to be directors. Aside from the NCC Code, there  are no gender requirements in the composition of boards.  A person over 70 years of age or more who is or is to be appointed  as a director in a public company is required to disclose his or her age  to the members of the company in a general meeting and failure to do  so amounts to an offence under CAMA. Special notice of the resolution  approving or appointing such a director must be given by the company  to its members, disclosing the age of the director. An appointee to  the board of a public company is also expected to disclose his or her  membership of boards of other companies to enable the shareholders to  give full consideration to his or her other obligations and commitments  in determining his or her suitability as a board member. CAMA requires every company to have a minimum of two directors  at all times but does not provide for the maximum number of direc tors a company may have. CAMA provides, however, that the number  of directors shall be determined in writing by the subscribers of the  memorandum of association or a majority of them with the power of  the shareholders at a general meeting to increase or reduce the board.  The laws and regulations governing particular industries may also set  the minimum and maximum number of board seats. The CBN Code  prescribes a minimum and maximum board size of five and 20 direc tors respectively. The SEC Code prescribes a minimum of five directors  while directing that the board of a company be of a sufficient size rela tive to the scale and complexity of the operations of the company. The  NAICOM Code prescribes a minimum of seven and a maximum of 15  board members for insurance companies. The PENCOM Code prescribes  that the board of a company shall not exceed a size that will allow it to

employ simple and effective methods of work to enable each director to  feel a personal responsibility and commitment to the company and the  board is to take into cognisance the scope and nature of the operations  of the company. 

The NCC Code requires the composition of a board to include a  mix of skills, diversity, experience and gender. The number of directors  should reflect the scale, size, complexity and reach of the business of  the company and the skills and resource requirements of the company  have to be taken into consideration. A majority of the board should be  non-executive directors with at least one independent director holding  not more than 0.1 per cent of the shareholding directly or indirectly in  the company. One-third of the non-executive directors is also required  to retire yearly by rotation subject to reappointment and for larger  companies, non-executive directors should not remain on the board for  a continuous period in excess of 15 years. 

The CBN Code for MFBs requires that the boards of MFBs shall be  a minimum of five and maximum of seven for Unit MFBs; a minimum of  five and maximum of nine for State MFBs; and a minimum of seven and  maximum of 12 for National MFBs, respectively. The Code prescribes  that the MD or CEO shall be the only executive director of a Unit MFB.  The board of MFBs shall consist of a minimum of one independent non 

executive director (INED) for Unit MFBs and state MFBs and two for  National MFBs. However, a state MFB with a board size of more than  seven members shall be required to have a minimum of two INEDs. The  CBN Code for DFIs requires that the board of a DFI shall be a minimum  of seven and a maximum of 11 or in accordance with the law establishing  the institution. The CBN Code for FCs requires that the board of any FC  shall be limited to a minimum of five and a maximum of nine members. 

All the CBN Codes for MFBs. DFIs and FCs provide that not more  than two members of a family shall be on the board at the same time.  The expression ‘family’ includes director’s spouse, parents, children,  siblings, cousins, uncles, aunts, nephews, nieces and in-laws. All three  Codes also provide that the board must be constituted in such a way that  the numbers of non-executive directors exceeds the number of executive  directors. 

The FRCN Code does not provide for a minimum or maximum  number of directors. It merely recommends that the board should be  of a sufficient size to effectively undertake and fulfil its business; to  oversee, monitor, direct and control the company’s activities; and be  relative to the scale and complexity of its operations. 

Vacancies on the board may be filled by the shareholders of a  company in a general meeting. The board of directors of a company is  also empowered to appoint new directors to fill casual vacancies created  by death, resignation, retirement or removal of a director. Such appoint 

ments are, however, subject to ratification by the shareholders at the  next general meeting. 

Board leadership 

24 Is there any law, regulation, listing requirement or practice  that requires the separation of the functions of board chair  and CEO? If flexibility on board leadership is allowed, what  is generally recognised as best practice and what is the  

common practice? 

The SEC Code recommends that the board of a company should not  be dominated by any one person and the positions of chair and CEO  should be separate and be held by different individuals. Also, the chair  of the board should be a non-executive director in order to ensure the  effective operation of the board. While the role of the CEO is to see to  the day-to-day running and management of the company, the chair’s  role is to provide overall leadership, direction and supervision of the  board. The separation of the roles of board chair and CEO is considered  best practice. 

The CBN Code and the NAICOM Code make it mandatory that no  one person shall hold or combine the office of chair of the board and  that of CEO or managing director. The CBN Code further provides that  no executive vice chair shall be recognised in the board structure. The  PENCOM Code, , the FRCN Code and the NCC Code also require the  position of the chair of the board and the CEO to be occupied by two  separate individuals. All the CBN Codes for MFBs. DFIs and FCs maintain  the same position as the CBN Code. 

Board committees 

25 What board committees are mandatory? What board committees are allowed? Are there mandatory requirements  for committee composition? 

Every public company is required to set up an audit committee consisting  of an equal number of directors and shareholders’ representatives up  to a maximum of six members. Members of an audit committee are not  entitled to remuneration and are subject to re-election annually. The  functions of the audit committee include: 

  • ascertaining whether the accounting and reporting policies of the  company are in accordance with legal requirements and agreed  ethical practices; 
  • reviewing the scope and planning of audit requirements; • reviewing the findings on management matters in conjunction with  the external auditor and departmental responses thereon; • keeping under review the effectiveness of the company’s system of  accounting and control; 
  • making recommendations to the board with regard to the appoint ment, removal and remuneration of the external auditors of the  company; and 
  • authorising the internal auditor to carry out investigations into any  activities of the company that may be of interest or concern to the  committee. 

The various corporate governance codes require that members of the  audit committee should be able to read and understand basic financial  statements, and be in a position to make valuable contributions to the  committee. The SEC and CBN Codes provide that at least one member  of the committee should be financially literate. The SEC Code further  provides that, when necessary, external professional advice may be  sought by the committee. 

The board of a public company is permitted by the SEC Code to  establish a risk management committee and a governance or remunera tion committee in addition to its audit committee. The risk management  committee is to serve the function of assisting in the overseeing of the  risk profile and the risk management framework to be determined by  the board, while the governance or remuneration committee serves the  function of periodically evaluating the skills and experience required  by the individual members of the board and the board as a whole and  making recommendations on the compensation structure for the execu 

tive directors of the company. 

Banks and discount houses in Nigeria are directed by the CBN Code  to establish a committee responsible for the overseeing of risk manage ment and audit functions and a board governance and nominations  committee. The CBN Code further provides that the risk management  and audit functions may be carried out by one committee, particularly  in small institutions. The CBN Code proscribes the chair of the board  from being a member or chair of any committee and provides that board  committees must be headed by non-executive directors. The board  remuneration committee must have at least two non-executive direc 

tors, while the board audit committee must have at least three members  consisting only of non-executive directors and be headed by an inde pendent director. 

The CBN Codes for MFBs, DFIs and FCs maintain the same posi tion as stated in the CBN Code. However, these codes provide for an  additional committee called the board credit committee. With respect  to a board credit committee, the Codes for MFBs and FCs merely state  that the committee shall comprise members knowledgeable in credit  analysis. The Codes for MFBs and FCs requires that all board committee  have a charter to be approved and reviewed every three years or as may  be determined by the CBN from time to time. The CBN Code and the  CBN Code for DFIs merely state that all board committees shall each  have a charter to be approved by the CBN. The CBN Codes for MFBs,  DFIs and FCs make no provision for the composition of the remunera 

tion committee. Last, the Codes for MFBs and FCs provide that the board  shall not replace members of the board audit committee and external  auditors at the same time. 

The PENCOM Code requires PFAs and PFCs to constitute a nomi nating committee (NC) whose duty is to make recommendations to the  board on all board appointments. The NC shall consist of three directors  including the chair of the board and an independent director. 

The FRCN Code recommends the establishment of the same  committees provided for under the CBN Code. The FRCN Code further  provides that each committee should comprise at least three members  and individual board committee charters will indicate where INEDs  are required. 

It is common practice among quoted companies to have various  board committees assist the boards in administering the affairs of such  companies and strengthen corporate governance. These committees,  which may be known by different names in different companies, include  nomination, general purpose, remuneration or compensation, risk  assessment, strategy, corporate governance, finance, etc. 

Board meetings 

26 Is a minimum or set number of board meetings per year required by law, regulation or listing requirement? 

There are no statutory minimum requirements on the number of board  meetings per year. However, directors are required to meet no later than  six months after the incorporation of the company. The directors may  otherwise regulate their meetings. 

The PENCOM, FRCN, CBN, SEC, NCC Codes and the CBN Codes for  MFBs, DFIs and FCs recommend that board meetings be held at least  quarterly in each financial year. The CBN Codes for MFBs, DFIs and  FCs, however, add that the minutes of meetings of the board or board  committees shall be properly written in English language, adopted by  the board or board committee and signed off by the chair and secretary,  pasted in the minutes book and domiciled at the head office of such  entities. The Codes also made provision for the constitution of the meet ings. The board or board committee meetings shall be deemed to be  duly constituted where two-thirds of members are present, provided  that a majority of directors at the meeting are non-executive directors.  The NAICOM Code provides that the board shall meet not less than four  times in a year.  

Board practices 

27 Is disclosure of board practices required by law, regulation or  listing requirement? 

CAMA provides that, where a director presents him or herself for  re-election, a record of his or her attendance at meetings of the board  during the preceding year shall be made available to members at the  general meeting where he or she is to be re-elected. Where a person to  be appointed or re-elected as a director is 70 years old or older, notice  of his or her election or re-election shall disclose the age of the person  to the shareholders. 

The CBN Code and the CBN Codes for MFBs, DFIs and FCs require  the board to disclose the total number of board meetings held in the  financial year and attendance by each director in its annual report.  The CBN Code also provides that members of the board be appraised  by an independent consultant annually on all aspects of the board’s  structure, composition, responsibilities, processes and relationships  and the report of the independent consultant must be presented to the  shareholders in the general meeting and to the CBN. The CBN Codes  for MFBs and FCs further provide that a copy of the annual board  appraisal conducted by the independent consultant shall be forwarded  to the CBN not later than 31 March of the following year.  

In addition, the SEC Code provides that the board of a public  company is to include a corporate governance report in its annual  reports, to be circulated to members and the regulatory authorities.  The corporate governance report may contain information on the  composition and responsibilities of board committees, and records of  attendance at board and shareholders’ meetings by directors during  the period covered by the annual report. The SEC Code goes further  to provide that the company’s annual report ought to make sufficient  disclosures on its accounting and risk management issues, indicating  the board’s responsibility for the process of risk management as well  as its opinion on the effectiveness of the process. 

Public companies are also to disclose the details of any director’s  interests in contracts with the company, its subsidiaries or holding  companies and should also disclose any service contracts and any  other significant contracts with controlling shareholders. Directors are  required by the SEC Code to disclose any other directorship positions  in other companies so that the members of the company can take into  consideration a director’s other responsibilities in assessing his or her  suitability as a director in the company. 

The directors are required to disclose their shareholdings in the  company. Directors are also required to disclose loans made by the  company to directors, their interest in contracts involving the company  and any conflicts of interest in relation to the company. 

Remuneration of directors 

28 How is remuneration of directors determined? Is there any  law, regulation, listing requirement or practice that affects  the remuneration of directors, the length of directors’  service contracts, loans to directors or other transactions or  compensatory arrangements between the company and any  director? 

CAMA provides that the remuneration of directors should be deter mined by the company in a general meeting, while the SEC Code  provides that the remuneration of executive directors should be set  by a remuneration committee consisting wholly of non-executive  directors. The SEC Code also provides that the remuneration for  non-executive directors should be fixed by the board and approved  by the members in a general meeting and that, where share options  are granted as part of remuneration for directors, the board should  ensure that they are not priced at a discount except with the approval  of the SEC. The CBN Code also requires the remuneration of directors  to be fixed by a committee composed of non-executive directors and  the remuneration for non-executive directors should be strictly limited  to directors’ fees, sitting allowances for board and board committee  meetings and reimbursable travel and hotel expenses. Executive direc tors do not receive sitting allowances and directors’ fees. The CBN  Code further provides that stock options offered as part of executive  remuneration shall be tied to performance subject to the approval of  shareholders in general meeting, may only be exercisable after one  year of the expiry of the director’s tenure and may only be priced at a  discount on the authorisation of relevant regulatory agencies. The CBN

Codes for MFBs, DFIs and FCs maintain the same position with the CBN  Code in these respects. 

The remuneration of each director should be proportionate to his or  her skill and experience and should be sufficient to attract, motivate and  retain skilled and qualified persons. The remuneration of directors is to  be disclosed in the yearly financial statements of the company. 

The CBN Guidelines for the appointment of independent directors  restricts the term of office of independent directors to a single term of  four years and a maximum of eight years of two consecutive terms. In  relation to other non-executive directors, their tenure is limited to a  maximum of three terms of four years each. With respect to the tenure  of the chief executive officer of a bank, the CBN Code allows for a tenure  of 10 years, which may be broken down into periods not exceeding five  years at a time. 

CAMA discourages directors’ service contracts beyond a five-year  term and provides that, before a service contract for a term beyond five  years is executed, it must be approved by a resolution of the company.  The SEC Code, while subjecting the tenure for directors to the provisions  of CAMA, recommends that all directors should be submitted for re-elec 

tion at regular intervals of at least once every three years. The SEC Code  also provides that non-executive directors of public companies should  serve for reasonable periods on the board but emphasises the necessity  to continually reinforce the board by injecting new energy, fresh ideas  and perspective and that the board should ensure the periodic appoint 

ment of new directors to replace existing non-executive directors. Companies are prohibited from making loans to directors and  are also not allowed to guarantee such loans. There are, however, two  exceptions provided in CAMA: the company can grant a loan to a director  where such loan will enhance the performance of his or her duties in  the company; and the company can also grant a loan to a director where  money lending is one of its ordinary businesses and the lending is done  in the ordinary course of business. 

In addition, substantial property transactions between a company  and its directors are prohibited unless approval is granted by the  company by way of an ordinary resolution at a general meeting. If a  director is in any way, whether directly or indirectly, interested in a  contract or proposed contract with the company, he or she is required to  declare the nature of his or her interest at a meeting of the board. Banks  are also required to disclose details of insider-related credits in their  financial statements. Such insider-related credits include transactions  involving directors, shareholders, employees and their related interests. 

CAMA makes it unlawful for a company to make payment to a  director as compensation for loss of office or as consideration for or in  connection with his or her retirement from office unless particulars of  the proposed payment and amount have been disclosed to the members  of the company and approved. Under CAMA, members’ approval is also  required for compensatory payments to be made where, in connection  with the transfer of the whole or part of the undertaking or property of a  company, it is proposed to make any payment to a director as compensa tion for loss of office or as consideration for or in connection with his or  her retirement from office. 

Remuneration of senior management 

29 How is the remuneration of the most senior management  determined? Is there any law, regulation, listing requirement  or practice that affects the remuneration of senior  managers, loans to senior managers or other transactions  or compensatory arrangements between the company and  senior managers? 

The remuneration of the managing director is determined by the  board. In addition to the response stated in the penultimate paragraph  of question 28, banks are required by the CBN to disclose details of  

insider-related credits including the aggregate amount of insider related loans, advances and leases outstanding with non-performing  components further analysed by security, maturity, performance, provi sion, interest-in-suspense and name of borrowers in their financial  statements. 

D&O liability insurance 

30 Is directors’ and officers’ liability insurance permitted or  common practice? Can the company pay the premiums? 

Directors’ and officers’ liability insurance is permitted. It is not common  practice for companies to take out such insurance, though some compa nies, in keeping with international best practices, take out liability  insurance for their directors and officers. 

Indemnification of directors and officers 

31 Are there any constraints on the company indemnifying  directors and officers in respect of liabilities incurred in their  professional capacity? If not, are such indemnities common? 

Companies are permitted to indemnify their directors and officers for  liabilities incurred in their capacities as directors and officers of the  company except in cases of negligence, fraud or breach of trust in rela tion to the company. 

Exculpation of directors and officers 

32 To what extent may companies or shareholders preclude or  limit the liability of directors and officers? 

A company may ratify the act of an officer or director even where such  an act or conduct is irregular. The company may also, by its articles  (or by the director’s contracts of service), limit the liability of a director  except in cases of negligence, fraud or breach of trust of which a director  or officer may be guilty in relation to the company. 

Further, a company may also provide that the liability of a director  be unlimited, regardless of the fact that the company itself is a limited  liability company, provided that the director is given notice before he or  she takes up the appointment that his or her liability shall be unlimited.  The company may also, by special resolution, amend its memorandum  so as to render the liability of its directors or managers unlimited. 


33 What role do employees have in corporate governance? 

The CBN and SEC Codes require every public company to establish  whistle-blowing procedures that encourage staff to report unethical  activity or breaches of corporate governance to, in the case of the CBN  Code, the bank and CBN and under the SEC Code, the company. In addi 

tion to the provisions of the CBN Code on whistle-blowing, the CBN  Codes for MFBs, DFIs and FCs require that MFBs, DFIs and FCs submit  returns to the CBN on compliance with the whistle-blowing policy on a  semi-annual basis to the director and other financial institutions’ super 

vision department no later than seven days after the end of the relevant  period. The ISA also makes provision for employees of publicly quoted  companies to report suspected criminal activities or non-compliance  with any legal obligation within the company. The law provides that any  such whistle-blower shall be protected from detriment as a result of his  or her actions. Where he or she suffers any detriment, the SEC may, on  his or her complaint, order that the employee be reinstated or compen sated, or both. The CBN Guidelines for Whistle Blowing in the Nigerian  Banking Industry 2014 provide similar protection for employees of  financial institutions. The FRCN Code is in tandem with the stipulations  of the CBN Code and SEC Code.

In addition, the managing director and executive directors, as  employees of the company, are responsible for the implementation of  corporate governance policies. 

The PENCOM Whistle Blowing Guidelines for Pensions (WBGP)  provides that the directors, management, employees and any other  persons that have dealings with a PFA or PFC shall have the respon sibility to report breaches to PENCOM and requires that all PFAs and  PFCs undertake not to victimise employees that comply with the WBGP.  Where victimisation nonetheless occurs, the WBGP provides that  PENCOM shall employ appropriate regulatory tools to offer redress to  the employee concerned. 

Board and director evaluations 

34 Is there any law, regulation, listing requirement or practice  that requires evaluation of the board, its committees or  individual directors? How regularly are such evaluations  conducted and by whom? What do companies disclose in  relation to such evaluations? 

Under the NCC Code, the board is required to establish a system for  periodic evaluation of its own performance, that of its committees, chair,  chairmen of its committees and individual directors. This should be done  at least annually, and a statement of evaluation is required in the compa 

ny’s annual returns to state whether evaluation had been conducted  during the period under the review. The evaluation is to be an objective  and independent process. The CEO appraisal is to be done by the board  or such committee of the board made up of non-executive directors. 

The SEC Code also requires a board to establish a system to  undertake an annual and rigorous evaluation of its own performance,  its committees, chair and individual directors. The chair is to oversee  the evaluation of the performance of the CEO while the CEO is to do the  same for the executive directors. The result of the evaluation is to be  communicated and discussed by the board as a whole while that of the  independent directors is to be communicated and discussed by the chair  with them. The board may engage the services of external consultants  to facilitate the evaluation. The cumulative result of the performance  evaluation of the board and independent directors is to be used as a  guide for re-election. The SEC Code further recommends training for  any director whose performance is unsatisfactory or where not feasible,  removal from office. 

The PENCOM Code has similar provisions to the SEC Code and  NCC Code and requires that the outcome of the evaluation shall be  prepared in two copies, one of which must be submitted to the Pension  Commission along with the company’s annual report on corporate  governance. 

The CBN Code requires an annual formal assessment of the  effectiveness of the board as a whole and the contribution by each indi vidual director (including the chair) to the effectiveness of the board.  The Nomination Committee is to recommend the evaluation procedure  and propose objective performance criteria, which should be approved  by the board. The issues to be evaluated should include attendance at  meetings, contributions to discussions at board meetings and board  committee meetings, business referrals or support of the institution,  public standing of the director and the beneficial effect of this on the  business of the institution. The performance indicators should include  the compliance status of the institution, the overall performance of the  institution, regularity of board meetings and the overall contribution of  the board to the performance of the institution. 

The CBN Codes for MFBs and FCs provide that members of the  board be appraised by an independent consultant annually on all aspects  of the board’s structure, composition, responsibilities, processes and  relationships and the report of the independent consultant must be  presented to the shareholders in the general meeting and to the CBN.  

The CBN Codes for MFBs and FCs further provide that a copy of the  annual board appraisal conducted by the Independent consultant shall  be forwarded to the CBN not later than 31 March of the following year. 

The FRCN Code provides that the board should establish a system  to undertake a formal and rigorous annual evaluation of its own perfor mance, that of its committees, the chair and individual directors. This  process should be facilitated by an independent external consultant at  least once every three years. 

Under the PENCOM Code, the evaluation should answer ques tions such as: 

  • how well the board performed against any performance objectives  that have been set; 
  • what the board’s contribution to the testing and development of  strategy has been; 
  • whether the composition of the board and its committees is appro priate with the right mix of knowledge and skills to maximise  performance in the light of future strategy; 
  • if the board responded to any problems or crises that have emerged  and whether these could have been foreseen; 
  • how well the board communicates with the management team,  company employees and others; 
  • how effectively the board uses mechanisms such as the annual  general meeting; 
  • whether the board as a whole is up to date with the latest develop ments in the regulatory environment and the market; 
  • whether sufficient board and committee meetings of appropriate  length are held to enable proper consideration of issues; and • whether board procedures are conducive to effective performance  and flexible enough to deal with all eventualities, etc. 


Corporate charter and by-laws 

35 Are the corporate charter and by-laws of companies publicly  available? If so, where? 

The memorandum and articles of association and other statutory  filings of companies are available to the public at the Corporate Affairs  Commission. Copies can be obtained upon application and subject to the  payment of prescribed fees. 

Company information 

36 What information must companies publicly disclose? How  often must disclosure be made? 

The annual reports and accounts consisting of the directors’ report, audi tor’s report and financial statements are to be filed with the Corporate  Affairs Commission after every annual general meeting of a company.  These documents can be accessed by the general public upon payment  of the requisite fee. Other information filed with the Corporate Affairs  Commission, which is available to the public, includes any changes  in the composition of the board of directors, return of allotment of  shares, change of registered address, charges on the company’s assets,  appointment of receivers, appointment of liquidators, etc. Outside the  statutory requirements, companies are encouraged to also include  corporate governance reports laying out the company’s governance  structure, policies and practices in their annual reports. 

Quoted companies are required to make certain disclosures to the  Nigerian Stock Exchange and the SEC from time to time. Such disclo sures include: 

  • information on acquisitions of other companies or businesses; • preliminary results for any year, half-year, quarter and compara tive figures in respect of the profits before and after taxation, evenif this calls for qualification that such figures are provisional or  subject to audit; 
    • information on any proposed changes in the capital structure of the  company or redemption of securities; 
    • financial statements; and 
    • interim reports such as first-quarter, half-year and nine month accounts. 

    In addition, the annual reports shall disclose, among other things, the  directors’ direct and indirect holdings in the issued shares, substantial  shareholdings representing 5 per cent or more of issued shares and a  five-year financial summary. The CBN and SEC Codes also require the  board to disclose its risk management policy in its annual report. 



    37 Do shareholders have an advisory or other vote regarding remuneration of directors and senior management? How  frequently may they vote? 

    Shareholders have a direct say in directors’ remuneration. CAMA  provides that directors’ remuneration be determined by the share holders in a general meeting. Such votes take place at the annual  general meeting of a company. However, the board fixes the remunera tion of executive directors. The SEC and CBN Codes stipulate that only  the non-executive directors should be involved in decisions regarding  the remuneration of executive directors. 

    Shareholder-nominated directors 

    38 Do shareholders have the ability to nominate directors and have them included in shareholder meeting materials that are  prepared and distributed at the company’s expense? 

    Shareholders can nominate a director to be appointed to the board at  the general meeting. The law states that a motion for nomination will be  treated as a motion for his or her appointment. 

    A member may leave at the registered address of a company a  signed notice in writing of his or her intention to propose a person for  election to the office of a director in place of a retiring director at a  general meeting. The notice must be given not less than three days or  more than 21 days before the date appointed for the meeting and must  be accompanied by a notice in writing signed by that person of his or her  willingness to be elected. 

    One or more members representing not less than one-twentieth of  the total voting rights of members entitled to vote at a general meeting  or 100 or more members holding shares on which there has been paid  up an average sum per member of at least 500 naira, may requisition the  company to circulate notice of a resolution they intend to be moved at a  general meeting. The proposed resolution can propose the appointment  of a new director. The company has a duty to give notice of the resolu tion to members entitled to receive notice of the next annual general  meeting where the resolution is intended to be moved. The notice of the  resolution shall be given in the same manner and so far as practicable,  at the same time as notice of the meeting and where not practicable,  soon thereafter. The company is, however, not bound to give notice of  any requisition unless a duly signed copy is deposited at the registered  address of the company and a sum deposited or tendered, which is  reasonably sufficient to meet the company’s expenses in giving effect  to it. The company may also decide to bear the expenses of circulating  notice of the proposed resolution. 

    Shareholder engagement 

    39 Do companies engage with shareholders? If so, who typically  participates in the company’s engagement efforts and when  does engagement typically occur? 

    The process of engaging with the shareholders is typically led by the  directors and senior management of the company. Generally, companies  engage with their shareholders through the holding of general meetings.  It is usual for directors, senior management, external counsel, auditors  and other specialists or consultants engaged in relation to matters to  be discussed or decided during a general meeting of the company to be  involved in such engagements. Some quoted companies also organise  pre-AGM forums or dinners for directors, management, investors, major  customers, etc to interact. 

    The SEC Code provides that the general meetings of the company  should be the primary avenue for meeting and interaction between the  shareholders, management and board of a company. It further requires  that general meetings should be conducted in an open manner allowing  for free discussions on all issues on the agenda such that sufficient time  is allocated to shareholders to participate fully and contribute effectively  at the meetings. 

    The NAICOM Code provides that directors should always communi cate information that is understandable and accessible to shareholders  in a timely manner and on a regular basis and encourage shareholders  to participate in annual general meetings. Under the CBN Code, banks  are encouraged to communicate with their shareholders via their  website. Information to be provided through this means shall include  major developments in the bank, risk management practices, executive  compensation, local and offshore branch expansion, establishment of  investment in subsidiaries and associates, board and top management  appointments and sustainability initiatives and practices. 

    The CBN Codes for MFBs, DFIs and FCs are in tandem with the posi tion under the CBN Code. These codes, however, add that the operators  are encouraged to communicate with shareholders via the website, news letters, annual general meetings and extraordinary general meetings. 

    The FRCN Code provides that the board should develop a policy that  ensures appropriate engagement with shareholders. The policy should  be posted on the company website. 

     The NCC Code provides that there should be a dialogue and  engagement between the board and the shareholders to align appre ciation and attain the mutual understanding of corporate objectives of  telecoms companies. 

    Sustainability disclosure 

    40 Are companies required to provide disclosure with respect to corporate social responsibility matters? 

    While some of the codes encourage corporate social responsibility, they  do not all have specific disclosure requirements. The SEC Code requires  companies to pay attention to the interests of its employees, host  community, consumers and the general public. It further requires that  companies demonstrate sensitivity to local social and cultural diversity  issues. The SEC Code mandates that the board report annually on the  nature and extent of its social, ethical, safety, health and environmental  policies and practices including application of options with the most  benefit or least damage to the environment, opportunities created for  physically challenged persons or disadvantaged individuals, the nature  and extent of the company’s social investment policy and the company’s  policies on corruption and related issues. The CBN Code requires that  banks demonstrate a good sense of corporate social responsibility to  their customers, employees, host communities and the general public  and encourages banks to make robust disclosures beyond the statutory  requirements of CAMA and BOFIA. 

    CEO pay ratio disclosure 

    41 Are companies required to disclose the ‘pay ratio’ between  

    the CEO’s annual total compensation and the annual total  

    compensation of other workers? 

    There is no direct requirement to disclose pay ratio between CEOs and  

    other employees of companies. However, various codes of corporate  

    governance require that companies disclose their remuneration policies. 

    Gender pay gap disclosure 

    42 Are companies required to disclose ‘gender pay gap’  information? If so, how is the gender pay gap measured? 

    The various corporate governance codes or regulations have no  requirement for disclosure of information on gender pay gap. The SEC  Code requires that companies report annually on the nature and extent  of employment equity and gender policies and practices, especially as  they relate to executive level opportunities. 


    Recent developments 

    43 Identify any new developments in corporate governance over  the past year. Identify any significant trends in the issues that  have been the focus of shareholder interest or activism over  the past year. 

    In a circular dated 26 October 2018 the Central Bank of Nigeria issued  the Codes of Corporate Governance with respect to the following six  financial institutions: 

    • microfinance banks; 
    • development finance banks; 
    • primary mortgage banks; 
    • mortgage refinance companies; 
    • finance companies; and 
    • bureaux de change. 

    These Codes aim to define minimum acceptable corporate govern ance standards, enhance good governance practices, engender public  confidence to attract investments and promote high ethical standards,  efficiency and transparency in the sub-sectors. Although the effective  date of each Code is 1 December 2018, full implementation of the Codes  came into effect from 1 April 2019. 

    The Financial Reporting Council of Nigeria also issued the Nigerian  Code of Corporate Governance 2018. The Nigerian Code of Corporate  Governance 2018 seeks to institutionalise corporate governance best  practice in Nigerian companies. The Code sets to promote public aware 

    ness of key corporate values and ethical practices that will enhance  the integrity of the business environment and is aimed at companies  of varying sizes and complexities across different industries. The Code  adopts a principle-based approach in specifying minimum standards  of practice that companies should adopt. This is welcomed as MSMEs  will be more amenable to adopting the principles of the Code and  enhance their businesses. Companies are required to adopt the ‘comply  and explain’ approach in reporting on compliance with this Code and  therefore entities would have to demonstrate how activities they have  undertaken best achieve the Code’s principles. The implementation of  this Code will be monitored by the FRCN through the sectoral regulators  and registered exchanges that are empowered to impose appropriate  sanctions. 

    A proposed Companies and Allied Matters (Repeal and  Re-enactment) Bill (CAMA Bill) has been passed by both houses of  the National Assembly. It is currently awaiting presidential assent to  

    Tamuno Atekebo 

    Otome Okolo 

    Omolayo Latunji

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