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SEC clears NAHCO of alleged corporate gov breaches

By Peter Egwuatu

The Securities and Exchange Commission( SEC) in its response following the petition addressed to President Muhammadu Buhari alleging amongst others, an alleged violation of the corporate governance code by NAHCO Plc, a copy of which it received on July 21, 2016 disclosed that it carried a thorough examination of the corporate governance and capital market related issues cited in the letter and did not find NAHCO, its board and management wanting.

SEC stated: “In order to forestall a situation where one individual wields enormous powers, Section 5.1(b) of the SEC Code of Corporate Governance for Public Companies prohibits one individual from occupying the positions of Chairman and Chief Executive Officer, NAHCO complied with this provision.

“In an attempt to empower the boards of public companies to exercise appropriate oversight on management, Section 4.3 of the SEC Code of Corporate Governance requires that non-executive directors should be in the majority, NAHCO complied with this provision.

“For the purposes of efficiency and effectiveness, the Code requires that boards public companies should operate through committees, NAHCO complied with this requirement.

“In 2011, NAHCO entered into a Management Service Agreement with Rosehill Group. It was alleged that due to Mal. Suleiman Yahyah’s interest in Rosehill Group, the process was not transparent. However, documents show that the matter was presented by the management to the relevant board committee; the full board also considered the matter and finally an extra-ordinary general meeting of shareholders was convened to approve the agreement.

This process largely complies with good corporate governance practice especially where the interested directors were excused from the meetings when the decision was taken. This is in addition to the fact that detailed disclosure of the management service agreement as well as the value paid by NAHCO to Rosehill Group is made in the Annual Financial Statements (AFS) of the company every year. (Please refer to AFS of 21012, 2013, 2014 and 2015).”

“We are yet to identify any rule breaches with respect to the disposal of Sabena Airlines and British Airways shares by the concerned parties. The petitioner expected that the company should have part of the N5 billion bond proceeds on the Cargo Warehouse Modernisation Project when there was a shortage of funds.

“Since the Warehouse Modernisation Project was not cited in the offer documents as one of the purposes of the offer, the company had no power to divert the funds as expected by the petitioner. This is in line with Rule 305 (6) of the SEC Rules which prohibits the utilisation of the issue proceeds on projects not contained in the offer documents.”

 


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