Strong indications emerged last Friday that the Securities and Exchange Commission (SEC) may dump the recommendation by the National Technical Committee on the review of the Code of Corporate Governance, that tenure of Chief Executives Officers of quoted companies be limited to 12 years.

The committee, which was headed by Mr. Balarabe Mahmoud (SAN),  was set up in September 2008 and  mandated by the  SEC Chairman, Senator Udoma Udo Udoma, to  among others, review the existing Code of Best Practices on Corporate Governance in Nigeria, that of the 2003 Code as well as to examine and recommend ways of effecting greater compliance with the 2003 Code by public companies.

The Committee's report was submitted last April and  THISDAY had exclusively reported recently that  one of the recommendations was  that the tenure of directors  of quoted companies should be limited.The proposal,  stipulates that  directors of quoted companies must retire at age 70 or after serving for a maximum of 12 years - that is, three terms of four years on the board.

However, THISDAY checks revealed that the commission may not adopt that recommendation  and is rather  considering the introduction of a policy that will deal with  each company based on its size and sector where it is listed on the NSE.

The Director-General of the SEC, Ms. Arunma Oteh, who said the commission was in support of the policy of the Central Bank of Nigeria (CBN) restricting tenure of bank MDs to 10 years,  however, explained that the Commission  has not stipulated any tenure for MDs of quoted companies.

“What SEC believes is that as part of strong corporate governance, there  should be  independence on the board. The board should have people with  high integrity,  people that have the pedigree to occupy those positions. There should  be traditional mechanism that will ensure that the board of company is not  dependent on any individual,” she said.

The SEC boss added that in ensuring corporate governance, the strategy that would be adopted must consider the size of the company and the sector  it operates, stressing that  she does not believe in “ one size suits all.” 

While receiving the report of the last year, Udoma  had said that  review of the code was part of the reform programme  by the Commission, towards enhancing efficiency and transparency in the capital market activities.  Udoma said: “SEC realised that a strong and virile capital market built on solid-market structures will only be achievable when public companies operate under the highest standards of corporate governance. Such corporate entities are more likely to provide reliable information to the market to enable investors take well informed investment decisions. Equally important is the need to protect investors of these companies by ensuring good corporate governance.”

Some market operators said that SEC may be contemplating dumping the  recommended tenure policy  due to uproar it has generated among stakeholders especially with apprehensions that the policy may discourage owners of companies from getting them listed on the NSE.

(Source:ThisDay)