ayuli jemide, lead partner1 iblc retreat 14 th – 18 th may 2008 south africa emerging corporate...

AYULI JEMIDE, LEAD PARTNER 1

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


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.

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

- Minimum Paid Up Share Capital Before 2005 Minimum Paid Up Share Capital Before 2005

= 2 billion Naira.= 2 billion Naira.

- Minimum paid Up Share Capital Post 2005 Minimum paid Up Share Capital Post 2005

= 25 billion Naira.= 25 billion Naira.

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 available for lendingc) More Long term funds available for lending

d) Higher accountability regimesd) Higher accountability regimes

e) 89 banks now reduced to 25e) 89 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: E.g Cadbury; subscribed Public Offers

• Rigorous registration for Capital Market Operators

• Introduced Professional Indemnity Insurance

• Introduced half yearly report format for PLC’S

• Insist on International 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?

• All Financial InstitutionsAll Financial Institutions

• Designated Non-Financial Institutions (DNFI’s) which Designated Non-Financial Institutions (DNFI’s) which include:include:

• Legal PractitionersLegal Practitioners

• Chartered AccountantsChartered Accountants

• Audit FirmsAudit Firms

• Tax ConsultantsTax Consultants


NEW FACE OF BANKINGNEW FACE OF BANKING

• Reporting Requirements to EFCCReporting Requirements to EFCC

• - every transaction by an Individual involving - every transaction by an Individual involving in excess of 1 million Naira.in excess of 1 million Naira.

• - every transaction involving a corporate body - every transaction involving a corporate body involving in excess of 5 million Naira.involving in excess of 5 million Naira.

• - reports must be filed within 7 days.- reports must be filed within 7 days.


NEW FACE OF BANKINGNEW FACE OF BANKING

Know Your Customer StandardsKnow Your Customer Standards

- required to keep records of every - required to keep records of every customers’ identity and transactions for customers’ identity and transactions for at least 5 years.at least 5 years.

- Banks are required to obtain - Banks are required to obtain identification evidence of customers identification evidence of customers before entering into a banker-customer before entering into a banker-customer relationship with them.relationship with them.


DIRECTORS CULPABILITYDIRECTORS CULPABILITY

• Directors are personally liable to lenders for Directors are personally liable to lenders for misappropriation of borrowed funds. S.290 misappropriation of borrowed funds. S.290 CAMACAMA

• Any Indemnity or exemption from liability Any Indemnity or exemption from liability given by a company to a director or auditor is given by a company to a director or auditor is void. S. 67 CAMAvoid. S. 67 CAMA


THANK YOU FOR LISTENINGTHANK YOU FOR LISTENING

ayuli jemide, lead partner1 iblc retreat 14 th – 18 th may 2008 south africa emerging corporate...

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