SEC restates need for corporate governance in business

Securities and Exchange Commission (SEC) has restated the need for business owners in the country to embrace corporate governance as a desirable option.

The Acting Director-General of SEC, Ms Mary Uduk, in a statement on Thursday, said that this would help grow their enterprises, improve shareholders’ funds and improve profitability on a sustainable basis.

Uduk said this at the maiden lecture and book presentation organised by Alliance Law Firm with the theme “Contemporary Corporate Governance Issues in Nigeria”.

Uduk, represented by a Director at the commission, Mr. Edward Okolo, noted that experiences globally demonstrated that enterprises that showed commitment to corporate governance principles perform better.

She said that those enterprises had also continued to enjoy investors and other stakeholders’ confidence in building their brands.

According to her, the level of compliance to corporate governance code in the country has remained low.

The SEC boss expressed dismay that access to critical indices by which companies’ compliance with the SEC Code could be measured had also remained difficult.

This, she said, was due to the fact that many companies were either unwilling to comply or lacked understanding of the importance of corporate governance to their entities’ survival and profitability.

“We observed that most issues covered in the SEC Code 2011 have remained difficult for some entities to observe in terms of fairness, independence, accountability and transparency requirements by their boards.

“The Code of corporate governance talks about how companies are run and managed.

“Looking at the scorecard, we have seen areas of weaknesses and strengths across companies and these areas are very germane to having strong corporate governance.

“For example, the boards are expected to have a deep understanding of the business and the environment to which the business is run.

“They are supposed to understand the blueprint, speak out, be innovative and have a little bit of financial experience so that they could be able to interpret financial statements.”

The director-general noted that all these made for a strong board and that if a company did not have that, it could id not have a strong board.

Uduk explained that this also remained linked to the issue of independent directors.

She said that if a company selected its independent directors based on transparency principles, it would have informed judgment that was transparent or the courage to make a difference would be there.

“We believe there should be more disclosure.

“We believe that issues of conflict of interest and related party transactions should go to the shareholders to validate decisions taken by the boards.

“This will help to strengthen shareholders’ rights in public companies,” the SEC director-general stressed.

Earlier in his remarks, Mr Dotun Sulaiman, the Chairman, Financial Reporting Council of Nigeria (FRCN), said that the council was embarking on some initiatives .

Such initiatives, he said, would improve corporate governance as it relates to financial reporting to make them more investor-friendly.