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Published online by Cambridge University Press: 14 September 2011
In furtherance of its role to entrench good corporate governance practice in Nigeria, the Securities and Exchange Commission of Nigeria published a draft revised Code of Corporate Governance. It is intended that this revised code will replace the country's current corporate governance code which came into force in 2003. This article sets out a thorough examination of the draft code with a view to appraising whether the final version of the code will be well-suited to meet its desired goals. Consequently, some of its provisions have been critically reviewed while others have been acclaimed. Furthermore, the article draws attention to the increased responsibility of the Securities and Exchange Commission in establishing good corporate governance practice and makes extensive suggestions in this regard.
1 The Draft Code is available at: <http://www.sec.gov.ng/uploads/notices/20091008215709Review of Code Corporate Governance (Amended) – EKA.doc> (last accessed 22 December 2009). The Draft Code was also widely published in national newspapers. See advertisements in (29 September 2009) This Day (Lagos, Nigeria) at i and (30 September 2009) The Guardian (Lagos, Nigeria) at 47.
2 Sec 24 of the Companies and Allied Matters Act, cap C20, Laws of the Federation of Nigeria 2004, defines a public company as any company other than a private company and its memorandum must state that it is a public company.
3 See the address by the governor of Central Bank of Nigeria, Mallam Sanusi Lamido Sanusi, on developments in the banking system in Nigeria on 14 August 2009, available at: <http://www.cenbank.org/out/speeches/2009/Govadd-14-8-09.pdf> (last accessed 24 December 2009).
4 Above at note 2.
5 Sec 16 of the Draft Code.
6 CAMA, sec 280(1).
7 Id, sec 280(2).
8 Orojo, JOCompany Law and Practice in Nigeria (5th ed, 2008, LexisNexis)Google Scholar at 268. See also Boston Deep Sea Fishing Co v Ansell (1888) 39 ChD 339 CA and Regal (Hastings) Ltd v Gulliver (1967) 2 AC 134.
9 CAMA, sec 217(1).
10 See Smyth v Darley (1849) 2 HL Cas 789; Onwuka v Taymani (1965) LLR 62; and Young v Ladies Imperial Club (1920) 2 KB 523.
11 Sec 30.3 of the Draft Code.
12 Id, sec 30.4.
13 See id, secs 14.10, 29.2(e), 31.1, 34.4, 34.6, 34.7 and 34.15.
14 The typographical errors are profuse, running into several pages. They have, therefore, not been included in this article. A copy of the list of typographical errors can, if required, be obtained on request from natofo@yahoo.com.
15 See E Wymeersch “Enforcement of corporate governance codes” (2005) 46/2005 ECGI Working Paper Series in Law 1 at 4, identifying four enforcement approaches.
16 See sec 404.
17 Sec 1.3(a) and (b) of the Draft Code. Specifically, sec 1.3(b) provides that shareholders should “encourage” compliance with the Draft Code by their companies. See also sec 34.7 and 34.14 of the Draft Code.
18 Id, sec 1.3(d) and (e).
19 Investments and Securities Act 2007, sec 31(3).
20 For example, executive directors (sec 5.3), non-executive directors (sec 5.4), independent directors (sec 5.5), family directorship (sec 7), interlocking directorship (sec 7) and alternate directors (sec 37).
21 In fact, the expressions “non-executive director” and “alternate director” were surprisingly not used in the CAMA at all. It is sec 244(2) of the CAMA that refers to an executive director, and that is in passing.
22 Sec 37 of the Draft Code.
23 Id, sec 5.5(a) and (b).
24 Id, secs 4.3 and 34.4(a).
25 Id, secs 4.3 and 5.5(c).
26 A smaller company is defined in the UK Combined Code as a company that is below the FTSE 350 throughout the year immediately prior to the reporting year.
27 This provision is re-enacted in sec B.1.2 of the UK Corporate Governance Code effective 29 June 2010 (UK 2010 Code). See also sec 303A.01 of the New York Stock Exchange Listed Company Manual (NYSE Manual) containing its corporate governance rules. But contrast sec 2.18.1 and sec 2.18.2 of the King III Report, the corporate governance code of South Africa effective 1 March 2010 (King III Report), which provides that the majority of board members should be non-executive directors and that majority of the non-executive directors should be independent.
28 See: sec A.4.1 of the UK Combined Code; sec B.2.1 of the UK 2010 Code; sec 303A.04(a) of the NYSE Manual; and sec 2.23.7 of the King III Report.
29 See: sec B.2.1 of the UK Combined Code; sec D.2.1 of the UK 2010 Code; sec 303A.05(a) of the NYSE Manual; and sec 2.23.7 of the King III Report.
30 See: sec C.3.1 of the UK Combined Code; sec C.3.1 of the UK 2010 Code; sec 301(3)(A) of the Sarbanes-Oxley Act; sec 303A.07(b) of the NYSE Manual; and sec 3.2.1 of the King III Report.
31 Compare with sec 14 of the Draft Code.
32 CAMA, sec 359(4).
33 See note 30 above.
34 See: sec C.3.2 of the UK Combined Code; sec C.3.2 of the UK 2010 Code; sec 303A.07(c)(i) of the NYSE Manual; and sec 3.4.10 of the King III Report.
35 Sec 9.2 of the Draft Code.
36 See id, sec 11.2(a), (b), (c), (d), (g), (h), (i) and (j).
37 See id, sec 11.2(e) and (f).
38 Code of Corporate Governance of Banks in Nigeria Post-Consolidation 2006 (Bank Code).
39 Code of Corporate Governance for Licensed Pension Operators 2008 (Pension Code).
40 Code of Corporate Governance for Insurance Industry in Nigeria 2009 (Insurance Code).
41 See: sec 1.7 of the Bank Code; sec 5.5.1 of the Pension Code; and sec 11 of the Insurance Code.
42 See sec 7(b) of the 2003 Code.
43 See sec 5.3.5 of the Bank Code.
44 See sec 4.1.6 of the Pension Code.
45 See sec 5.04(i) of the Insurance Code.
46 CAMA, secs 246(1), 247 and 249(3).
47 Sec 1.1 of the Draft Code.
48 See, for example: sec A.2.2 of the UK Combined Code; sec A.3.1 of the UK 2010 Code; and sec 2.16.2 of King III Report.
49 See note 30 above.
50 See note 29 above.
51 See note 28 above.
52 Sec 4.2 of the Draft Code.
53 CAMA, sec 264. See also: Re Greymouth – Point Elizabeth Railway and Coal Company Limited (1904) 1 Ch 32; Martins v Ogungbadero (1967) NCLR 393; and Pricklik v Marsh and Others (1961) WNLR 59.
54 CAMA, sec 296.
55 Sec 15.1 of the Draft Code.
56 See “The bad” above.
57 On the inherent danger of whistle-blowing, see Cooper, CExtraordinary Circumstances: The Journey of a Corporate Whistleblower (2008, John Wiley & Sons)Google Scholar at 242–79. See generally Rapp, GC “Beyond protection: Invigorating incentives for Sarbanes-Oxley corporate and securities fraud whistleblowers” (2007) 87 Boston Law ReviewGoogle Scholar 91; Ramirez, MK “Blowing the whistle on whistleblower protection: A tale of reform versus power” (2007) 76 University of Cincinnati Law ReviewGoogle Scholar 183; and Moberly, RE “Sarbanes-Oxley's structural model to encourage corporate whistleblowers” (2006) Brigham Young University Law ReviewGoogle Scholar 1107.
58 Rather curiously, there is no part F in the Draft Code. Either it was inadvertently omitted or part G should have been part F. If the latter is the case, then parts H – J would need to be renamed accordingly.
59 See sec 36.2(1), (3) and (4) of the Draft Code.
60 Investments and Securities Act 2007, sec 13.
61 It is arguable whether this award still commands the level of respect it enjoyed in the past.
