By PRISCA SAM-DURU

Dr Fabian Ajogwu’s Corporate Governance & Group Dynamics is a 420 page work that examines the existing models of corporate governance in Nigeria with the aim of determining whether they are capable of dealing with the complexities of group structures especially in the banking and financial services sector.

The book with a forward by former President of the Society for Corporate Governance Nigeria, Dr Christopher Kolade, deals with issues ranging from theories and standard models of corporate governance, roles of professionals in corporate governance, international financial reporting standards,  the relationship between risk management and corporate governance.

In discussing the modern corporate governance questions and premise after a review of existing corporate governance works, the author, a Senior Advocate of Nigeria (SAN) and a fellow of Society for Corporate Governance Nigeria, carefully examines different theories of corporate governance, comprising the agency theory, economic theory, transaction costs, motivators’ theory and stewardship theory, in the context of today’s company administration.

On investigating the subject of corporate governance, the author poses crucial questions,  such as What is the corporate governance impact, where a significant shareholder in a group wears several hats. For instance, shareholder, creditor, supplier, manager and franchisor in relation to the company or companies?; Are existing models of corporate governance in Nigeria adequate to cope with the complexities of group structures especially in the banking and financial services sector, etc.

While capturing the concept of corporate control and separation of ownership in addition to management within groups, the author also, discusses the control factor between parent and subsidiaries in relation to their impact on governance.

In chapter 5 of the book, the author examines board responsibility and its effectiveness in governance. He critically xrays also, board accountability in companies operating within groups with the aim of enhancing corporate governance through board committees.

Dr Ajogwu goes further to analyse private equity and shareholder control mechanisms, while looking at corporate governance against the background of debt and equity. In leu of this, he focuses on the role of institutional investors with the benefit of lessons from the banking and financial services sector in Nigeria. These are the main trust of chapter 6.

Chapter 9 of the book gives adequate attention to issues relating to corporate accountability and the acceptance of the International Financial Reporting Standards (IFRS), the elements and advantages of IFRS, challenges of its adoption in Nigeria and the actual adoption.

The book concludes with the finding “that corporate governance within groups is better observed when the respective boards of the parent as well as the subsidiaries are accountable to their respective shareholders and stakeholders, and take responsibility for the direction of the specific enterprise that they are by law responsible for.

The learned Senior Advocate couldn’t have ended the book on a better note than making prescriptions on the rules that should govern parent subsidiary relationships in different countries as well as in the same country, appointment and removal of directors and management and how to manage conflicts of interest, by outlining the rights and duties of parent and subsidiary companies in groups.