Investors laud suspension of FRCN corporate governance code

Urge government to streamline operations

Federal Government’s decision to suspend the Financial Reporting Council of Nigeria (FRCN’s) National Code of Corporate Governance, has been applauded by capital market investors.

Government’s decision to suspend the Code might not be unconnected with the widespread criticisms against it, which investors believe is anti-investment.

Consequently, investors urged the government to streamline the operations of the Council by ensuring that the aspect of corporate governance is taken away from its purview, while focusing on its core business of financial reporting.

Some shareholders, in an interview with The Guardian, argued that the Securities and Exchange Commission (SEC), the apex regulator of the market already has corporate governance, which is applicable to all public companies and compliance with its provisions is mandatory.

For instance, the President, Independence Shareholders Association of Nigeria, Sir Sunny Nwosu, expressed the need for government to review the operations area.

“We are very happy that the government turned out to be a listening one. The aspiration of this government is to play a good role and attract business into the country. No country that is in recession tries to use policies and code to drive business away from the country.

“This is an institution that does not have a board. They have been advised to consider collective decisions when rules are introduced to the operators. They are Financial Reporting Council; they have no business with corporate governance. They should face everything concerning financials.

“Government must ensure that they focus on financial practitioners’ assessment which is their core business. Government should look into their operations and ensure that they control only financial practitioners, while the aspect of corporate governance is taken away from their purview. We are not getting anything in terms of returns on our investment. They should control the financial aspect and let the market regulators handle the corporate governance.”

The President, Renaissance Association of Nigeria, Olufemi Timothy, said: “In the first instance government was right. What is FRCN’s concern in corporate governance code for businesses in Nigeria? Government action will check FRCN’s excesses on the market. Stakeholders will be comfortable now.”

Also reacting on the issue, the President of Constance Shareholders Association Mallam Shehu Mikail, said: “What I can say is that investors are watching and waiting for the 2017 budget. This will determine the next line of action because government itself does not create a platform for a good corporate governance to thrive and this has impacted negatively on the market. It is high time government sought the opinion of all stakeholders.”

Investors had recently faulted the new, National Code of Corporate Governance, prescribed by the FRCN, saying it is inimical to further investments, while also being high-handed.

After due considerations of the new regulation, which became effective on October 17th, the investors insisted that the FRCN did not incorporate the inputs made to it in a position paper and the three public hearings before the Code was enacted.