Companies deploy new corporate governance code

Following the controversy that initially trailed the newly introduced National Code of Corporate Governance (NCCG) by the Financial Reporting Council of Nigeria (FRC), Business Times findings revealed that companies and organizations have started complying with it.

Corporate governance can be described as a way of running an organization which guarantees that its owners or stockholders receive a fair return on their investment, while the expectations of other stakeholders are also met.

It addresses the need for organizational stewards or managers to act in the best interest of the firm’s core stakeholders, particularly minority shareholders or investors, by ensuring that only actions that facilitate delivery of optimum returns and other favourable outcomes are taken at all times.

Local affiliates of multinationals have been complying with the long- awaited rules which are aimed at guiding business operations in the country. They include Guinesss Nigeria, Nestle, Glaxo Smith Kline, and Flour Mills, among many others, according to our findings. Our checks also note that some local firms are also adopting the new corporate governance.

According to the FRC, the Code of Corporate Governance for the private sector is mandatory, while the code of governance for not-for-profit entities is at the level of “Comply or Justify non-compliance.”

The NCCG for private and not-for-profit entities took effect in October, while that of the public sector will require approval from the presidency to be applicable. 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.

FRC’s Media/Communications Consultant, Mr. Mack Ogbamosa, said in a statement that the development and introduction of the NCCG was in line with Section 50 of the FRC Act, 2011, which among other things requires the Directorate of Corporate Governance of the Council to develop the principles and practices applicable in Nigeria. Business Times investigations noted the controversy among some financial stakeholders in the country following the introduction of the NCCG, coupled with non-understanding of its importance to the economy, as well as the tendency of corruption in both the private and public sectors.