The Executive Secretary of the Financial
Reporting Council of Nigeria (FRC), Mr. Jim Obazee has said National
Code of Corporate Governance (NCCG) has the capacity to build confidence
that can assist the Nigerian economy’s normal recuperative mechanism to
engage.
He said this in his welcome address on
the occasion of the 13th annual financial reporting summit and dinner
that took place in Lagos yesterday. The theme for the summit was: “National Code of Corporate Governance and New Audit Report: A Paradigm Shift.” Obazee said the Council had been accused
from different quarters that the issuance of the National Code of
Corporate Governance (NCCG) was the cause of, or capable of, creating a
recession, impeding the ease of doing business and/or decreasing foreign
direct investments.
According to him, in other cases, the FRC
had also been informed that the NCCG was in conflict with the FRC Act,
2011 and/or the Companies and Allied Matters Act, CAP C20, LFN 2004;
among others.But Obazee responded to some of the accusations, saying the NCCG was not the cause of recession.
In addition, he stressed that the NCCG
cannot impede the ease of doing business, saying “Ease of doing
business”, in a jurisdiction, is based on some “indicator sets.”These indicator sets, according to the World Bank Group, are in the
areas of: Starting a Business, Dealing with Construction Permits,
Getting Electricity, Registering Property, Getting Credit, Protecting
Minority Investors, Paying taxes, Trading across Borders, Enforcing
Contracts and Resolving Insolvency.
The FRC boss added: “Capital, globally,
has only two known loyalties: safety and adequate returns. Capital does
not owe any loyalty to any governance environment that does not
guarantee these two loyalties. This is because; capital does not focus
on the “product” but on the “experience”. If we do not arrange our
jurisdictional issues by importance, they will automatically arrange
themselves by priority. Again, it seems that it is the signals that are
talking not the issuance of NCCG.”
He also insisted that the NCCG will not scare foreign direct investment, rather it enhances it.
According to Obazee, “The Nigerian
economy would no doubt benefit extensively from the NCCG through its
demand for enhanced transparency and accountability in financial
reporting (resulting from better disclosures in financial statements)
and mandatory corporate codes that speaks to how covenants are taken
seriously in Nigeria.
“Corporate governance failures have now
been proved to be at the very heart of the global financial crisis. This
is because the supposed risk management systems in most corporate
entities did not work since corporate boards did not live up to their
responsibilities and the “gatekeepers” (financial analysts, rating
agencies, prudential regulators, etc) did not draw the investing public
and other relevant stakeholders’ attention to systemic risks.”
He also argued that the NCCG is not in conflict with the FRC Act, 2011 as well as with the provisions of the Companies and Allied Matters Act, CAP C 20, LFN, 2004.
“The contention that the NCCG is
inconsistent with extant legislation is misconceived and ill-informed.
The nature of corporate governance codes is that they complement
corporate law by filling gaps existing in corporate law and practice.
Most jurisdictions adopt the format of a Code instead of an Act of the
Legislature because of the relative ease of amendment where necessary to
deal with dynamism of the corporate world. Corporate governance is
dynamic,” he said.
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