The Nigerian Code of Corporate Governance 2018: An Ethical Approach to the Nigerian Corporate Governance System?
Olayimika Phillips, Partner, Olaniwun Ajayi LP, Nigeria
Similoluwa Somuyiwa, Associate, Olaniwun Ajayi LP, Nigeria
Oretayo Olajide, Company Secretary/Director, Legal Services, Emerging Markets Telecommunications Services Limited, Nigeria
The utility of good corporate governance practices cannot be overemphasised in any organisation, as sound processes evincing the principles of transparency, fairness and accountability have become imperative for national and global economies. Indeed, the benefits of adopting strong corporate governance ethics in a developing economy remain alluring today.
In ensuring sound corporate governance practices in Nigeria, the Financial Reporting Council of Nigeria (FRCN) released the Draft Nigerian Code of Corporate Governance 2018 (the Draft Code), which seeks to, inter alia, institutionalise the highest standards of corporate governance best practices in Nigerian companies, and promote public awareness of essential corporate values and ethical practices that will enhance the integrity of the Nigerian corporate landscape.
Perhaps the most impactful innovation of the Draft Code is its philosophy which takes the “Apply and Explain” approach of implementation. In precis, this approach requires companies to take responsibility for demonstrating how the specific activities they have undertaken best achieve the intended outcomes of corporate governance specifications in the Draft Code as opposed to the mandatory compliance approach adopted by the Nigerian Code of Corporate Governance 2016. This paper therefore examines the Draft Code’s philosophy and how it attempts to alter the corporate governance regime in Nigeria.
The Nigerian corporate governance system, as we know it, focuses primarily on legal processes and structures to ensure compliance, whilst the ethical basis is seen to be absent. The difficulty with legal structures and its compliance mechanisms is that most corporate practices that have enraged the public are entirely legal. This paper seeks to explore the role of the Draft Code in shifting the focus from a structural perspective to an ethical perspective, and the viability of the Draft Code in sustaining the ethical values of transparency, fairness and accountability.
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