THE level of a company’s compliance to the tenets of corporate governance will determine the attractiveness of such a company to international investors.
The Chief Executive Officer of the Nigerian Stock Exchange (NSE), Oscar Onyema, noted that the corporate governance of a company could increase or decrease the level of Foreign Direct Investment (FDI) and Foreign Portfolio Investment (FPI) into a country through its well-run companies as international investors are averse to companies with low levels of corporate governance practices and reputational risk.
At a certification ceremony for 35 companies and 437 directors that made it over the 70 per cent threshold for the Corporate Governance Rating System (CGRS) process, organised by NSE and The Convention on Business Integrity (CBi), Oscar stated that it was well established that companies with good corporate governance generally receive higher market valuations than those that are regarded as poorly governed.
“We all know that sound corporate governance practices in a nation will lead to higher performance in its economy, provide more sources for capital investment and increase the creditability of shareholders,” he said.
He, therefore, noted that in line with the NSE’s commitment of making listed companies attractive and creating value for investors, we have created and today launched the NSE Corporate Governance (CG) Index which tracks the performance of all CGRS qualified companies on the NSE.
Speaking at the event, Soji Apampa, Co-Founder and Chief Executive Officer, CBi stated that it was a triumph for collective action in the fight against corruption and unethical practices.
“Today’s celebration is not a destination but a continuous process that should be consistently maintained and further improved upon. I encourage other listed companies still on this evolutionary process to keep at it and conclude the process during this new review period which is now open,” he said.
The companies were awarded the CGRS certification while the directors were awarded certificates for success in the Fiduciary Awareness Certification Test (FACT), which was a key component of the CGRS.
At the event, the NSE launched its Corporate Governance Index of the NSE, which would track the performance of the 35 CGRS rated companies using their market capitalization, free float and corporate governance rating scores.
The Index will be reviewed on a bi-annual basis at which point other companies that have become CGRS rated in the interim may be added to the Index or companies that have had their ratings suspended or withdrawn may be removed.
The CGRS was launched on November 3, 2014 after a successful pilot phase involving a number of companies listed on the NSE some of which are now listed on the Premium Board. The CGRS was designed to rate companies that are listed on the NSE based on their corporate governance and anti-corruption culture.
The process comprises three segments: an independently verified, self-assessment by the company; a certification of director awareness of their fiduciary duties; and, a corporate integrity assessment where feedback on actual company behaviour is sought from internal and external stakeholders.
Combinations of the three segments with attendant weighted scores are collated and companies with a score of 70 per cent and above accorded the CGRS certification celebrating the degree to which they have evolved the quality of their corporate governance.
and then