By Peter Egwuatu
FOLLOWING the global financial meltdown and its negative impact on the Nigerian economy, shareholders have canvassed for the enforcement of corporate governance.
The National Co- ordinator, Independent Shareholders Association of Nigeria (ISAN), Sir Sunny Nwosu said it has become pertinent for the principle of good corporate governance to be enforced by the regulatory authorities on companies in order to protect investors and other stakeholders against future loss of their investments.
According to him â€œ For the corporate governance to be enforced in Nigeria in line with global practice, the federal government need to ensure that the enforcement of corporate governance must be backed by appropriate legislative law so that if the provisions are violated then appropriate disciplinary action could be taken against such organisation.â€
At the moment, what obtains in the country, is the moral suasion, in which investors and other stakeholders have been kicking against.
GivenÂ the fact that the corporate governance is not enforced in Nigeria most companies are taking advantage of it by not coming out with full disclosure of their financials and other activities that should be made public. For instance, the Securities and Exchange Commission (SEC), apex capital market regulator has issued a code of good corporate governance for the quoted companies to apply but nopenalty whatsoever was incorporated against operators that err.
So many of the quoted entities are not following the rules and regulations probably as the regulators do not have the legal backing to enforce it on them.
The importance of corporate governance cannot be over emphasized, just as the International Finance Corporation (IFC) has reemphasized that performance and sustainability of companiesâ€™ existence strongly rest on the application of good corporate governance.
In a media workshop organized by IFC, in conjunction with ThompsonReuters Foundation(U.K) last week in Lagos, Isimkah Ibuakah, Legal Adviser, Nigerian Corporate Governance Banking Program (NCGBP) said companies should adhere to the principle of good corporate governance by not allowing a single person to hold too much power.
According to her; â€œ There should be separation of functions. among directors. A managing director need not be a chairman, and finance officer at the same time. The managing director of a company need not control the entire affairs of the company because if he does and eventually dies that could mean the end of the organisation because succession plan may not have been in placeâ€.
Mr. Olusegun Olukoya, MD/CEO, Nextzon Business Services Limited, told the participants that corporate governance was important to ensure that shareholders get value for their investment.
He noted that the media has a role to play in ensuring that the investors get to know what obtains in where they nvest their money. According to him, â€œ If companies imbibe the principles of good corporate governance investors would be ready to put in their money and go to sleep while allowing the managers of such organizations to manage the business and in return declare better profitability.â€