IBLC RETREAT 14 TH – 18 TH MAY 2008 SOUTH AFRICA EMERGING CORPORATE GOVERNANCE REGIMES IN NIGERIA...

IBLC RETREAT IBLC RETREAT

1414THTH – 18 – 18THTH MAY 2008 MAY 2008

SOUTH AFRICASOUTH AFRICA

EMERGING CORPORATE GOVERNANCE EMERGING CORPORATE GOVERNANCE REGIMES IN NIGERIAREGIMES IN NIGERIA

Ayuli Jemide,Ayuli Jemide,

Lead PartnerLead Partner

ESSENCE OF PAPERESSENCE OF PAPER

• To highlight interesting and encouraging To highlight interesting and encouraging Corporate Governance trends in Nigeria Corporate Governance trends in Nigeria

• Several of these trends are novel for Nigeria Several of these trends are novel for Nigeria and are changing the Corporate Landscape.and are changing the Corporate Landscape.

CLASS ACTIONSCLASS ACTIONS

CADBURY PLC: CADBURY PLC:

• SHAREHOLDERS sue company, directors, accountants and stockbrokers for losses suffered due to account overstatements and negligence.

FIRST BANK PLC: FIRST BANK PLC: SHARE SUBSCRIBERS sue for damages after their monies

where held over and returned because the Public Offer was oversubscribed. (Need a brief on Law & Facts????)

BRITISH AMERICAN TOBACCOBRITISH AMERICAN TOBACCO: : STATE GOVERNMENTS sue British American Tobacco claiming

compensation for health bills incurred by the States due to Tobacco induced ailments.

2005 BANK CONSOLIDATION POLICY2005 BANK CONSOLIDATION POLICY

-- Paid Up Share Capital Before 2005 =???Paid Up Share Capital Before 2005 =???

- - Paid Up Share Capital Max Post 2005 =???Paid Up Share Capital Max Post 2005 =???

Results:Results:

a) Diversifies Ownership Structurea) Diversifies Ownership Structure

b) Greater ability to meet financial commitmentsb) Greater ability to meet financial commitments

c) More Long term funds availablec) More Long term funds available

d) Higher accountability regimesd) Higher accountability regimes

e) ???------banks now reduced to 25e) ???------banks now reduced to 25

NEW CENTRAL BANK REGULATIONSNEW CENTRAL BANK REGULATIONS

• Government cannot hold (directly or Government cannot hold (directly or indirectly) more than 10% of any Bankindirectly) more than 10% of any Bank

• At least 2 Independent directors must be on At least 2 Independent directors must be on the Boardthe Board

• Above 10% Equity in any Bank needs CBN Above 10% Equity in any Bank needs CBN prior approval prior approval

• Board Chairman cannot be Managing DirectorBoard Chairman cannot be Managing Director

• No 2 members of an extended family shall be No 2 members of an extended family shall be Chairman and CEO or Executive Director at Chairman and CEO or Executive Director at same time.same time.

Securities & Exchange Comm. InterventionsSecurities & Exchange Comm. Interventions

• Sanctioning Powers are used: E.g Cadbury; Excess Cash for oversubscribed Public Offers

• Rigorous registration for Capital Market Operators

• Introduced Professional Indemnity Insurance

• Introduced half yearly report format for PLC’S

• Insist on Internationational Financial Reporting Standards (IFRS) for PLC’S

• Post Transaction Inspections

• Increase Share Capital for Stockbrokers

SCUML – SPECIAL CONTROL UNIT SCUML – SPECIAL CONTROL UNIT AGAINST MONEY LAUNDERINGAGAINST MONEY LAUNDERING

• Who is in the Suspicious Transaction Trap?Who is in the Suspicious Transaction Trap?

• ????????????

NEW FACE OF BANKINGNEW FACE OF BANKING

• Reporting Requirements to EFCCReporting Requirements to EFCC

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Know Your Customer StandardsKnow Your Customer Standards

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COMPANIES ACTCOMPANIES ACT

• Directors Culpability under the Act ???Directors Culpability under the Act ???

PENSION REFORMSPENSION REFORMS

Pensions Act of 200--?? now enforces the Pensions Act of 200--?? now enforces the following:following:

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How does this affect corporate governance?How does this affect corporate governance?

THANK YOU FOR LISTENINGTHANK YOU FOR LISTENING