Code of Corporate Governance in Nigeria


What is corporate governance?

This is the system by which companies are directed and controlled. The code of corporate governance can also be referred to as the principle of corporate governance. This article discusses the code of corporate governance in Nigeria. Read on below:

The goal of the code of corporate governance in Nigeria is to make those in charge of Nigerian companies more accountable, responsible and sensitive to the interest of shareholders and other Nigerian citizens. The main laws that guide corporate governance in Nigeria are:

The Companies and Allied Matters Act: This law establishes the Corporate Affairs Commission is the body responsible for the formation, supervision and winding up of companies in Nigeria

Insurance Act

Financial Reporting Council of Nigeria Act

Code of Corporate Governance in Nigeria

The major parties involved in corporate governance in Nigeria are:

  • The board of directors
  • Management and shareholders
  • Creditors
  • Customers
  • Government agencies
  • The Companies and Allied Matters Act Cap is a major law regulating corporate governance in Nigeria. It provides the procedure for appointing directors to a company, removing directors, mandatory involvement of shareholders in the decision-making process, and provision for auditors and audit committees.
  • The Securities and Exchange Commission (SEC) is responsible for regulating and enacting roles and rules for public governance in the public sector.
  • Other regulators, such as the Central Bank make rules for corporate governance in various sectors of the economy

Below are the codes that regulate corporate governance in Nigeria:

  • Code of corporate governance for public companies, 2011: This applies to all public and privately quoted companies in the Nigerian capital market.
  • Code of corporate governance for banks and discount houses in Nigeria
  • Guidelines for whistleblowing in the Nigerian banking industry
  • Code of corporate governance for other financial institutions In Nigeria: This applies to the likes of microfinance banks, Finance companies and bureau de change.
  • Securities and Exchange Commission rules
  • Listing rules of the Nigerian Stock Exchange
  • Code of business ethics and principles for the insurance industry: This is for companies who offer insurance services
  • Financial Reporting Council (FRC) code of corporate governance

It is expected that companies and corporations adhere to the codes of governance as it reflects in the company’s economic strength and also helps to provide assurance to its shareholders. The most recent code of corporate governance was released on the 15th of January, 2019. The implementation of these codes is based on the principle of Apply and Explain. Hence, companies are expected to put these principles to use as it applies to their companies’ specific organizational context.

Key principles of the corporate governance of 2018

  • Section 2 of the code emphasizes the empowerment of the companies to determine the size and composition of its board. Companies are expected to consider the range and complexity of its operations, the quorum needed at meetings, and diversity. The code also recommends a mix of executive directors, non-executive directors, and independent non-executive directors. Although the code does not specify the number of independent non-executive directors required on boards, it, however, recommends that the majority of the non-executive directors on the board be independent non-executive directors. With this code, companies are able to independently decide on the size and composition of their boards which in turn gives them significant control over their cost of governance.


  • Section 3 of the Code states that the chairman of the board is responsible for providing overall leadership to the company and accounts for the effectiveness of board operations. The code recommends that the chairman of the board should not be involved in the day-to-day operations of the company. There should be clear separation of roles between the Non-Executive Directors and the Executive Directors. These roles and responsibilities should be formally stated in appointment letters.


  • Section 8 of the code emphasizes the roles a company secretary plays in supporting the effectiveness of the board. The secretary is expected to provide independent guidance and support. The secretary should be properly empowered to approve the appointment, evaluation or removal of members. This also implies that the company secretary should not be a member of the board to ensure independence and unbiased guidance to the board. The Code also recommends the establishment of independent committees to be responsible for the nomination and governance, remuneration, risk management and audit of the company. This is not a strict rule as board members can combine these responsibilities if the size and needs of the company would be a constraint.


  • Section 11 of the code introduces additional responsibilities for the audit committee of the company. The audit committee is expected to ensure the development of a comprehensive internal control framework for the company. They are also expected to obtain annual assurance and report, in order to promote reliability of the company and safeguard its assets.


  • The code also recommends an annual evaluation of the board to assess its performance. Board committees and individual directors are to be evaluated based on the execution of their roles and responsibilities in the company. The evaluation should be done annually and should also check if the code was properly implemented by the board. These evaluations are to be externally facilitated by an independent consultant at least once every three years. The summary report of this evaluation is to be included in the company’s annual report and investors’ portal. The board should ensure that the company is in compliance with the laws of the Federal Republic of Nigeria. The company should hire external auditors who would report to any regulatory agency in the case of an offense.


  • About whistleblowing, the Code mandates the board of directors to establish an effective whistleblowing framework. This framework should encourage stakeholders who wish to report any illegal or unethical behavior. There must also be no retaliation or consequence against the whistleblower for making such reports. The whistleblower framework must be reviewed periodically.

Corporate governance is an important factor in the sustainability of any company. The practices recommended in the code will help companies to access their activities and adjust if any gaps are observed in their operations.




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