CORPORATE LAW PRACTICE WEEK 10 CORPORATE GOVERNANCE (1) (FRAMEWORK AND PRACTICES)
CORPORATE GOVERNANCE 1.
TOPIC: LEGAL FRAMEWORK, CONCEPTS AND INTERNATIONAL BEST PRACTICES IN CORPORATE GOVERNANCE.
:: MEANING AND RELEVANCE OF CORPORATE GOVERNANCE: mechanism of internal and external control of the actions of organs of a company to promote integrity, transparency, ethical behaviour, etc.… for the ultimate benefit of the stakeholders. Caters for interplay of interests of various company stakeholders.
:: LEGAL FRAMEWORK AND CODES OF CORPORATE GOVERNANCE IN NIGERIA. Evolved based on a series of CG theories.
- Code of Corporate Governance for Public Companies: by SEC in 2003 now 2011 version. Certain issues like composition and responsibilities of the board (in a way to ensure diversity, experience, diligence and independence), Chairman (who should be a non-ED and shall not be CEO), Multiple Directorship should be disclosed to prevent reduced conflict/divided dedication, Not more than 2 members of the same family should sit on the board of public companies at the same time-Article 7.1, Board should meet at least 3 times a year and carry shareholders along, empathy, disclosures, whistle blowing on unethical behaviours and illegalities
- Code of Corporate Governance for Banks and Discount Houses 2014 (initially 2006 then 2013). Strict adherence to laws. Similar to discussion above especially directors and whistleblowing, MD/CEO be separate. Non-ED serve 12 years maximum at 3 per term, MD/CEO serve 10 years maximum at 5 per term, remuneration should not be excessive. See whole of Article 2, 3, 4 and 5 of the Code.
- Code of Corporate Governance for Non Profit Organisations 2013?
- Code of Corporate Governance for Insurance Industry in Nigeria by NAICOM 2009.
- Code of corporate governance for pension operators 2008 by National Pension Commission (PenCom).
- Code of Corporate governance for Telecommunication Operators 2014 by NCC.
: In the international Level, we have:
– Code of the Organisation for Economic Co-operation Development (OECD) September 2014. Which principles are, ensuring the basis for an effective CG Framework (transparency and efficiency), Rights of Stakeholders and equitable treatment of them, integrity and due diligence.
:: THEORIES AND INTERNATIONAL BEST PRACTICES OF CORPORATE GOVERNANCE. (CURRICULUM NOTES AGENCY THEORY, ECONOMICS THEORY THEN IN BRACKET (STOCKHOLDER AND STAKEHOLDER THEORIES).
– The Stockholder/Shareholder Theory: maximisation of profits/returns of investment for the shareholders should be the main aim.
– The Stakeholder Theory: that ethical considerations mandates interests of entities which (in one way or the other) impact on the success of the company should be catered for to ensure long term growth and interest of the company.
– The Agency Theory (confirm whether it is the same with Shareholder theory): that the officers of the co are its agents who carry out its wishes.
:: CSR AND ITS IMPACT OF CORPORATE GOVERNANCE.
:: ETHICAL ISSUES IN CORPORATE GOVERNANCE.
 Applicable to all public companies and Companies whose securities are listed on any recognised securities exchange in Nigeria and those seeking to raise funds from the capital market.