By Emmanuel Otaru and Obinna Chima
Just like it did recently for commercial banks, the Central Bank of Nigeria (CBN) Thursday advised the Securities and Exchange Commission (SEC) to limit the tenure of directors in other quoted companies in the country.
CBN Deputy Governor, Financial Systems Stability, Dr. Kingsley Moghalu, made this call in Lagos, while making a speech at the annual roundtable on corporate governance, tagged: “Taking Responsibility for the new Code Corporate Governance,” organised by the Society for Corporate Governance Nigeria.
Part of the tenure limit that was introduced by the banking sector regulator last year, stipulates maximum 10-year limit for chief executive officers of commercial banks. The policy is part of the blueprint on reforming the banking industry.
Moghalu said: “We think that there should be a clear limit of tenure for directors in quoted companies, just like we did in banks. Risk management fails, where there is lack of corporate governance.”
Corporate governance is the major issue in Nigeria. It is one of those things that stand before our progress as a nation, in both the private and public sectors. “That is why the CBN made it a focal issue. Even within the CBN, we have tried to address our own corporate governance issues internally.”
Moghalu who charged the SEC to step up its regulatory also urged the apex capital market regulator to ensure that the code of corporate governance for quoted companies is enforced. He emphasised that part of the reforms carried out in the banking sector was to ensure compliance of banks to its code of corporate governance that was prepared in 2006.
According to him, there was need for the SEC to be more robust in its enforcement of compliance with its corporate governance code.
Moghalu added: “In a country where there is little respect for ethics, guides may not be enough. We know about all the exuberances and sharp practices in not just the banks but in a lot of the quoted companies.”
He pointed out that despite the responsibility of shareholders to ensure that companies comply with the code SEC must also monitor and enforce compliance.
“The CBN has taken a very proactive approach in this matter as regards the banks. We have said it is good for you to reflect if you have complied with the code of corporate governance but we are also baring our minds to our responsibility to enforce the code.”
The SEC code places responsibility of ensuring compliance on the board of directors, the shareholders.
“SEC should be the third layer in my view that should make sure that they have done what they are supposed to do. Of course, the market is also supposed to play its role by sanctioning those companies that have not complied,” the regulator added
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