By Blessing Anaro & Olushola Bello
Local investors, under the auspices of Independent Shareholders Association of Nigeria (ISAN) said over-regulation from various regulators, particularly the Financial Reporting Council of Nigeria (FRCN) was doing more harm than good to the investments. It said the FRCN code was at conflict with the Compani es and Allied Matters Act (CAMA).
The national coordinator of ISAN, Mr Sunny Nwosu, who made this known to the media yesterday in Lagos, said that the association recently reviewed the national code of corporate governance for the private sector released by the Financial Reporting Council of Nigeria (FRCN) and found it not favourable to the companies.
“ISAN categorical position on the code mostly stemmed from perceived negative implications of over regulation of the nation’s corporate world, particularly the financial industry and the noticeable contradictions and conflict with the subsisting Companies and Allied Matters Act (CAMA), as amended,” he said.
He noted the concern by Independent Shareholders Association of Nigeria (ISAN) on the suffocating effect of the code on entrepreneurial aspiration and initiatives of Nigerians and persons seeking to establish business in the country, saying this was based on the provision of the code that companies shall not have less than five directors.
According to ISAN, this provision is seen as unnecessary expansionary and costly for micro, small and medium scale enterprises (MSMEs).
Nwosu also said that there were identified provision of the code which directly conflicts with existing laws governing certain sectors, which FRCN has included in the code all in a bid to elevate itself to another super regulator over and above existing sectorial regulators for some companies.
He urged that FRCN should provide leadership in the nation’s corporate world by constituting its board in line with its new corporate governance code.
Other grey arrears queried by ISAN include the provision in the code which allows executive directors of the companies to be appointed board members of another companies.
While the group argued that contrary to the views espoused by government through the FRCN, the appointment of substantive executive directors into board of other companies breached the whole essence of international accepted corporate governance and best practice.
Also, the group condemned the prescribed 10 years cool off period before former CEOs assume the position of chairman in the same company, saying this would amount to serious setback in utilisation of limited experts, managerial proficiencies and scarce human capital resources.
The association called for urgent attention to the areas of conflict and counter-productive clauses