Nigerian Church Leaders & Founders: FRC Code of Governance (What You Need To Know)

President Buhari receives northern Christian leaders at the state house

The Financial Reporting Council of Nigeria (FRC) has issued National Codes of Corporate Governance (the Code) for the private sector, public sector and not-for-profit organisations in Nigeria. The Code, which is effective from 17 October 2016, was issued by FRC following a Federal High Court ruling that FRC has the powers to issue the Codes.

The Codes are aimed at enhancing management credibility, preserving long-term investments, improving access to new capital and lowering cost of capital. The Codes will also help to drive increased transparency and accountability in financial reporting through enhanced disclosures in financial statements thereby supporting investment decisions and shareholders' value.
Highlights of the three components of the Codes are:

1. The Code of Corporate Governance for the Private Sector – Compliance with this Code is mandatory for:

• all public companies (whether listed or not)
• all private companies that are holding companies or subsidiaries of public companies
• private companies that file returns to any regulatory authority other than the Federal Inland Revenue Service and the Corporate Affairs Commission

Compliance is however not mandatory for companies with eight (8) or less employees, regardless of status of such companies.

2. The Code of Governance for Not-for-Profit Sector – Not-for-profits organizations are encouraged to comply with the provisions of the Code. Where they do not comply, they are required to justify the reason for non-compliance.

3. The Code of Governance for the Public Sector – This Code, though not mandatory at the moment, will be applicable to all public sector entities (government agencies, parastatals, ministries, departments, and state owned entities). 

According to FRC, the Code of Governance for the Public Sector will not be effective immediately, until an executive directive is secured from the Federal Government of Nigeria. This is because the enabling laws that set up most government establishments already carry some form of governance structures. Therefore, there may be need for an umbrella legislation which will seek to harmonize the different provisions of those laws and synchronize them with the Code.

The Corporate Governance Code (For Not-for-Profits) which was revised in October 2016 said that Founders/Leaders of Not for Profit Organisations should resign after spending “more than 20 years (in office) or is age 70 years and above” and hand over to successors who are not their family members. Please click Church matters for full details.