Nigeria: Review Of Nigerian Code Of Coroporate Governance 2018


On the 15th of January 2019, the Vice President of the Federal Republic of Nigeria and the Honourable Minister of Industry, Trade and Investment unveiled the Nigerian Code of Corporate Governance 2018 (The Code) issued by the Financial Reporting Council of Nigeria (FRC). The Code was drafted pursuant to Sections 11(c) and 51(c) of the Financial Reporting Council of Nigeria Act which confer upon the Financial Reporting Council, the powers to ensure good corporate governance practices in the public and private sectors of the Nigerian economy through issuance of the Code.


The Code was formulated to propel good corporate governance, corporate accountability and business prosperity. Furthermore, the Code seeks to institutionalise corporate governance best practices by promoting public awareness of essential corporate values and ethical practices that will enhance the integrity of the business environment in companies. Furthermore, the aim of the code remains to rebuild public trust and confidence in the Nigerian economy resulting in increased trade and investment. Presumably, the mindset behind the establishment of the Code is that Companies with effective boards, competent management and shareholder and stakeholder engagements are better positioned to enhance corporate governance, achieve their business goals and contribute meaningfully to the society.


The Code is to be applied in all companies and industries across Nigeria regardless of their sizes and complexities.


The implementation and monitoring of the Code will be the responsibility of the FRC of Nigeria through sectoral regulators and registered exchanges. The FRC is not restricted to only monitoring and implementation of the Code, the Council may also conduct reviews on the Code where deviations from the Code persist.


In fulfilment of the objectives and aims listed above, the Code is broken down into seven (7) parts and twenty – eight (28) principles which serve as a guide for Directors, Management, Shareholders and Stakeholders on how to effectively and efficiently run the operations of any company.

Below is a breakdown of the Code:

Part A - Board of Directors and Officers of the Company (Section 1-16)

Part A is broken down into:

  • Role of the Board
  • Board Structure and Composition
  • Chairman
  • Managing Director/Chief Executive Officer
  • Executive Directors
  • Non-Executive Directors
  • Independent Non-Executive Directors
  • Company Secretary
  • Access to Independent Advice
  • Meetings of the Board
  • Board Committees
  • Appointment to the Board
  • Induction and Continuing Education
  • Board Evaluation
  • Corporate Governance Evaluation
  • Remuneration Governance

This section deals with the roles, structure, composition of the Directors and Company Secretary. It also spells out the establishment and functions of committees and meetings, steps for access to independent advice, induction and continuing education, board evaluation, corporate governance evaluation and remuneration governance.

Furthermore, the principles summarised under part A include the establishment of an effective Board responsible for providing entrepreneurial and strategic leadership while promoting an ethical culture and responsible corporate citizenship. The Code propels these principles by clearly defining the roles and framework of the officers of the Company to promote good corporate governance.

Part B – Assurance (Sections 17-20)

Part B is broken down into:

  • Risk Management
  • Internal Audit Function
  • Whistle-blowing
  • External Auditors

This section deals with formulation of policies and frameworks that promote management of risk at the same time ensuring effective internal control systems to achieve the objectives of the Company. It can be deduced that the principle behind these policies and frameworks is to ensure assurance of the Company's compliance with the doctrine of transparency and accountability amongst others while promoting good corporate governance.

Part C – Relationship with Shareholders (Sections 21 - 23)

Part C is broken down into:

  • General Meetings
  • Shareholder Engagement
  • Protection of Shareholder Rights

This section entails policies that propel Companies relationship with Shareholders to promote and ensure that Shareholders needs and interests are balanced against the objectives of the Company.

Part D – Business Conduct and Ethics (Sections 24-25)

Part D is broken down into:

  • Business Conduct and Ethics
  • Ethical Culture

The principle behind this section is to establish policies that enhance professional business ethical standards, monitor insider trading and manage conflict of interest. This section also contains guidelines that emphasize the need for protection and enhancement of the Company's reputation while promoting good business conduct and investor confidence all the while mitigating the adverse effects of these abuses on the Company.

Part E: Sustainability (Section 26)

Part E deals solely on:

  • Sustainability

The principle behind this section is to ensure that Companies have policies that carter specifically to sustainability issues including environmental, social, occupational and health and safety compliance to ensure successful long term business performance and ensure Companies contribute to the economic development by acting as a responsible citizen.

Part F: Transparency (Section 27 - 28)

Part F is broken down into:

  • Stakeholder Communication
  • Transparency

This section aims to promote policies that further communication and interaction with Stakeholders by advocating for Stakeholder engagement and disclosure which promotes good corporate governance practice.

Part G: Definitions

This section details the definitions and interpretation of the terminologies used in the Code for better understanding of the policies contained therein.


A precursory look into the Code shows an extensive and commendable effort by the Nigerian Government to enhance and cultivate policies and practices that promote good corporate governance. This effort shows a forward- thinking plan to ensure that Nigeria corporate world can compete their counterparts based on international best practice in the world. For example, the provisions on sustainability, disclosure and transparency are in line with international best practices.

While congratulating the FRC for their innovation and proactiveness, there are still areas of potential uncertainty, ambiguity and conflict. One overlap seems to be the lack of sanctions for failure to implement the Code properly and effectively. The existence of clear sanctions and implementation of same in instances of failure to adhere to same will propel strict compliance with the Code which is essential for the success of business. Another overlap in the Code seems to be the lack of review time frame and process to ensure that the Code remains in line with current and best practices of doing business in Nigeria.


The Code was put in place by the FRC to promote and enforce a system of effectively and efficiently operating a business in Nigeria through the enhancing good corporate governance policies. Diligent compliance with the Code will build investor confidence which will ultimately strengthen the Nigerian economy.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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