LEARNING OUTCOMES:

1. Identify the legal framework and codes of corporate governance in Nigeria.
2. Discuss various theories and international best practices of Corporate Governance – the Agency theory, economics theory (stockholder and stakeholder theories).
3. Discuss the legal status and impact of Corporate Social Responsibility in Corporate Governance.
4. Identify ethical issues arising in corporate governance – officers of companies.

CONTENT:

1. Meaning and relevance of corporate governance and overview of different segments of corporate governance to be discussed in detail in corporate governance (2) – (5) lessons.
2. Legal framework and codes of Corporate Governance.
3. Theories and best practice of Corporate Governance.
4. Corporate Social Responsibility and its impact on Corporate Governance.

 Corporate governance deals with how corporate entities are administered and governed.

Aside from international codes CAMA already provides for how companies ought to be run, the obligations for the different officers and penalties/ punishments that will be meted out.

Corporate governance is the system by which business corporations are directed and controlled – OECD definition.

This definition is consistent with the one presented by Cadbury [1992]

Issues that made it arise

• Enron: the auditors later found out that the companies assets were inflated, they were adding estimated future profits to their present profits, this led to the oxley act in America placing more obligations on companies.
• WorldCom
• International Financial Crisis in the American economy and other parts of the world
• Bernie Madoff
• Crisis in the Nigerian Banking sector

All this issues led to increased interest in corporate governance 

OECD 2015 principles – note that Nigeria is not a member of the OECD, the principles are not binding they’re just meant to assist their members and other countries that want to monitor their corporate governance in compliance with international best practice. The principles are: -

• Ensuring the basis for an effective corporate governance framework
• The rights and equitable treatment of shareholders and key ownership functions
• Disclosure and transparency
• The responsibilities of the board

Management team – they are the ones majorly involved in the day-to-day running of the business 

S 37 SEC.

Theories of corporate governance 

• Agency/shareholder/stockholder theory – this theory says that the directors are merely agents and that business is to make profit
• Stakeholder theory – says beyond making profits ,what’s the impact of the company in its immediate environment, is it impacting the host community. Its also called the triple bottom line

NATIONAL REGIME

Code of corporate governance 2011 – issued by SEC for public companies.

• Issued by SEC
• Repealed the 2003 code on Best Practice Code of corporate governance
• Its implementation is voluntary. Art 34.13 requires companies to present in their annual reports how they applied the code and extent of compliance.
• See ISA ss60-65

Art 1 of the CCG 2011 – gives the scope of application of the code.

Composition – art 4

EKO hotel v FRCN 2014

Chairman – article 5.1

Non-executive directors are not entitled to sitting allowances or directors’ fees paid to non-executive directors – art 5.3(e)

S 63 CAMA talks about division of powers between general meeting and board of directors – so the board of directors and general meeting manages the company.

Sector- specific codes

Code of corporate governance for banks and discount