The
Nigerian Securities and Exchange Commission’s Corporate Governance Code (otherwise
known as SEC Code) applies to the following corporate entities:
·
Public companies with securities listed on the
Stock Exchange;
·
All companies seeking to raise funds from the
capital market through securities issuance or listing;
·
All other public companies.
The SEC CODE spells out the composition and
structure of the Board of Directors and the Board Committees of a Public
company, the relationship with shareholders as well as other stakeholders. The
Code also places the responsibility of risk management and audit of concerned
companies on the Board of Directors. Companies regulated by the SEC CODE are
required to seek approvals from the Securities and Exchange Commission
regarding board appointments and public companies are also mandated to report
on the extent of their compliance with the SEC CODE in their Annual Reports.
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Highlights of the SEC CODE include:
(i) Membership of the Board should not be less than 5.
(ii) Majority of the Board should be non-executive
directors, at least one of whom should be an independent director.
(iii) The Chairman of the Board should be a non-executive
director.
(iv) The Board should be independent of Management to
enable it carry out its oversight function in an objective and effective manner.
(v) Not more than two members of the same family should
sit on the board.
(vi) Company secretary should be selected through a
rigorous selection process.
(vii) To effectively perform an oversight function and
monitor management’s performance, the Board should meet at least every quarter.
(viii)Every director should be required to attend at least
two-thirds of all Board meetings.
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