Nigeria Corporate Governance Code 2020: Ethics, Sustainability Crucial For Companies - Tosin Ajose

Thursday, December 02, 2019 / 9:10 AM / Ottoabasi Abasiekong for WebTV / Header Image Credit: WebTV

As the revised Nigerian Corporate Governance Code takes effect in 2020, Ethics and Sustainability will be critical areas for companies to give priority.

Lead Advisor for Deal HQ Solicitors, Tosin Ajose, noted this at the Roundtable 1.0, which discussed "Building Sustainable Enterprises Through Adaptive Corporate Governance Practices".

Giving an overview of the code and implications for businesses, Ajose stressed that Ethics and Sustainability would position companies to be effective and valuable to the economy of the nation.

On Ethics, she said it includes the values of a company, its culture as a business, and what matters to it as an organizational entity.

Sustainability, according to her, covers the interaction between the companies and their environment, stating that it was an important consideration for investors.

In the area of sustainability, the Deal HQ boss emphasized the fact that beyond making a profit, companies had a responsibility to factor in consideration for their communities and the environment.  She gave an example of a manufacturing and production company that should be concerned about the impact of its activities on the ozone layer.

"Investors are taking note of how companies value ethics, sustainability and people, which are critical components for ranking companies," She said.

The Deal HQ solicitor also added that the people-component was critical to good corporate governance and involved creating an enabling environment for learning and the development of the skills and capacities of employees alongside considerations of staff empowerment.

Looking at the board of directors' composition under the code and as it applies to businesses, she advised that tested experts and experienced professionals be employed to design and oversee the values of respective companies.

She said, "Boards should suit the need of the organization in question, where quality decisions are made, with a composition that is diverse".

Giving further perspective on the matter, she noted that Company Secretaries should play critical roles in driving corporate governance in Nigeria.

She called on boards of companies to entrench transparency, which was a key component of the corporate governance code, and encourage openness and scrutiny of their operations.

The provisions for whistle-blowing in companies, according to her, was a wonderful initiative that encouraged individuals to report infractions within companies.

She highlighted some of the key features of the 2020 Nigerian Corporate Governance Code, to include;

• More business-friendly rules compared to the suspended 2016 version.

• Sector regulators would determine infractions, not the Financial Reporting Council of Nigeria.

• Private firms that are not under a formal regulation will take the "Best of Judgement Approach" in determining  their penalties and fines.

• Provision for "Flexible adaptation," which means companies have the opportunity to apply as much as is practicable and explain the approach taken.

• Seven  parts which cover Boards, Assurance, Relationship with Shareholders, Business Conduct & Ethics, Sustainability, Transparency and Definitions.

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