By Michael Eboh & Providence Obuh

An economic analyst, Mr. Fabian Ajogwu, has called for reforms in the various codes of corporate governance in Nigeria, so as to address the problems of conflicts of interests posed by the relationship among owners, shareholders, managers and other key stakeholders in an organisation.

Speaking at 4th International Conference of the Institute of chartered Secretaries and Administrators of Nigeria, ICSAN, Lagos Chapter, Ajogwu, a Senior Advocate of Nigeria and Senior Partner, Kenna and Associate, emphasised the need for an effective corporate governance structure that ensures a clear separation of ownership from management, especially in companies operation within group structures.

According to him, assumptions on the regulator’s timely intervention to ensure corporate governance compliance need to be dealt with proactively by means of effective leadership and enabling regulatory framework.

He lamented the present practice in a number of companies with group structure, whereby officers of the various subsidiaries report to the Chief Executive of the parent company, bypassing their various Boards, noting that this represents a clear erosion of checks and balances in the whole structure.

Ajogwu explained that there are critical aspects of governance that needed to be proactively addressed which include ; Disclosure & Transparency — adopting International Financial reporting Standards (IFRS), the rights of shareholders including minority interests, duties, responsibilities and liability of directors, separation of powers between the general meeting and the board, and post-merger best practices, especially in companies operating in groups.

He said, “The practice in some Nigerian banks has been that the management of the subsidiaries report directly to the CEO of their parent, and in so doing, side track their respective boards, rendering them ineffective in governance.

“The effect is that accountability to the board is reduced and the checks and balances which an effective board would have brought to bear on the company are eroded.

“In the affected companies, the functional line of reporting within the group, and the activities of the parent and subsidiary appeared somewhat to impair the application of best practices of corporate governance within the subsidiary; thus putting the enterprise at risk.”

Also speaking, Chairman, ICSAN, Lagos Chapter, Mrs Jaquiline Yemi Odiadi said despite reluctance to embrace the principle of corporate governance, its growing influence and relevance can not be ignored.