FRCN unveils reporting guide on compliance with Nigerian code of corporate governance

The Financial Reporting Council of  Nigeria  (FRCN) has unveiled the guide to companies on how to report their compliance with Nigerian code of corporate governance.

Specifically, paragraph 1(2) of the Regulation on the Adoption and Compliance with the Code states that reporting entities are to report on their application of the Code in their annual reports.

In a press statement available on FRCN website, the council noted that the completion and submission of the reporting template described above will be deemed to satisfy the requirement for reporting on the application of the  Code,  as well as the requirements indicated in the Code.

It stated that  Paragraph  D  of the  Introduction section of Nigerian  Code of Corporate  Governance  2018, on  Monitoring the Implementation provides that, “The implementation of this Code will be monitored by the FRC through the sectoral regulators and registered exchanges who are empowered to impose appropriate sanctions based on the specific deviation noted and the company in question.

“In consonance with the relevant regulatory agencies of the Federal Government of  Nigeria,  the  Council  will  subsequently  issue corporate  governance guidelines  to  assist  implementation  as  may be  required  to  respond  to prudential considerations in different sectors of the economy.”

In furtherance of this,  the Council said it has been engaging with all  Sector  Regulators,  for the purpose of developing Sectoral  Guidelines of  Corporate  Governance on specific requirements relevant to each sector which are not covered under  NCCG 2018.

It said all existing sectoral codes of Corporate  Governance are to be withdrawn,  and  Sectoral  Guidelines of Corporate Governance will be issued to address sector-specific matters or requirements on  Corporate  Governance.

“To this end,  NCCG  2018  as the National Code, would be the only Code of Corporate Governance in Nigeria. At the current time, the Council’s expectation is that the Sectoral Guidelines would be released once the engagement with  Sectoral  Regulators is completed,” it stated.

According to the FRCN,   Reporting Template  all  public companies (whether a listed company or not; all private companies that are holding  companies  of  public  companies  or  other  regulated entities;  all concessioned or privatised companies; and all regulated private companies being private companies that file returns to any regulatory authority other than the  Federal  Inland  Revenue  Service  (FIRS)  and  the  Corporate  Affairs Commission (CAC),   shall report on the application of the Code in their annual reports for financial years ending after January 1, 2020, in the form and manner prescribed by the FRC.”

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The  FRC set  up a Web  Portal  Committee (WPC)  comprised  of stakeholders, which  contributed  to  the  development  of  an  online  portal  for  electronic submissions of reports on compliance with the

NCCG 2018.   Members of the WPC also worked with the FRC and others to develop a reporting template to simplify and harmonize  Code compliance reporting by reporting entities.  Reporting entities according to the agency, are expected to access, complete, and submit the reporting template online.

The online portal is still at the stage of development and a link to the portal will be made available in a subsequent communication it stated.

” Until  the  web  portal  is  completely  developed,  companies  are expected  to download  the  reporting  template  from  the  FRC’s website, complete it and submit a copy of the completed  report  to:

(1)  their sector regulators;  (2)  the  FRC  at;  and,  for listed companies,  the stock exchanges on which they are listed.

“Additionally, a completed copy of the reporting template should be hosted on the investors’  portal on the company’s website for a minimum of five (5) years, alongside the company’s communication policy,  annual reports,  and other relevant information as indicated in Section 27.4 of the Code, ” the FRCN statement read in part.

The Financial  Reporting  Council of  Nigeria also conveys regulatory forbearance to accommodate the inevitable global effects of the COVID-19 pandemic and delayed issuance of the reporting template.

However, reporting entities are required to include in the Governance Report included in their annual reports,  an abridged version or summary of the following matters included in the Code.

(a) Section 12.6 – processes used in relation to all Board appointments;

(b) Section 15.2 – summary of the report of the annual corporate governance evaluation and the extent of the application of the Code, as well as the name of the consultants, where independent experts have been engaged;

(c)  Section  16.8  –  remuneration policy,  as  well  as  the  remuneration  of  all directors;

(d)Section 16.13 – sitting allowances, Directors’ fees and reimbursable travel and hotel expenses, as well as any other allowances and benefits made to NEDs; (e)Section 17.7 – the risk management framework; (f)  Section  18.2  –  where  the  Board has  decided  not to establish  an  internal audit function, whether internally or outsourced, and sufficient reasons for not doing  so,  and explanation  as  to  how  the  Board  has  obtained  adequate assurance on the effectiveness of the internal processes and systems such as risk management and internal control; (g) Section 28.1 – clear information on the Company’s governance structures, policies  and practices  as  well  as  environmental  and  social  risks  and opportunities; (h) Section 28.2 – a summary of the matters indicated in paragraphs (a) – (n), which should cover information relating to Composition  of  the  Board  and  Board  Committees,  including  names  of chairmen and members of each Committee; – Description of the roles of the Board Committees, number of meetings held and attendance of individual directors; – Gender diversity on the Board and employment; – Board appointment, induction and training process; – Summary of Board, Committees, individual Directors’ and overall governance evaluation; – Changes on the board and directors standing for re-election.

It will also contain the tenure  showing cumulative  years of  service of  each  Director, the external auditor,  and  external  consultant engaged  to  perform  the  governance evaluation; – Code of Business

Conduct and Ethics for directors, management and other employees;  Human Resource policies and internal management structure; – Sustainability Policies and Programmes; – Policy and cases of clawback; – Fines and penalties (i) Section 28.3 – the nature of any related party relationships and transactions; (j) Section 28.4 – any material matter even though not specifically required by the  Code to be disclosed, if in the opinion of the  Board such matter is capable of affecting the present or anticipated financial condition of the Company or its status as a going concern.


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