PRIVATE SECTOR CODE -2016

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FINANCIAL REPORTING
COUNCIL (FRC) OF
NIGERIA
NATIONAL CODE OF
CORPORATE
GOVERNANCE 2016
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CONTENTS
PREFACE
FOREWORD
PAGE
PART A: PRELIMINARY MATTERS
1. Introduction 4
PART B: APPLICATION OF THE CODE
2. Application of the Code 6
PART C: BOARD OF DIRECTORS
3. Main Purpose of the Board 7
4. Responsibilities of the Board 7
5. Board Structure and Composition 8
6. Officers of the Board 9
7. Meetings of the Board 17
8. Board Committees 18
9. Appointment to the Board 25
10. Induction and Continuing Education 26
11. Terms and Conditions of Service 26
12. Access to Independent Advice 27
13. Access to Information 27
14. Tenure and Re-election of Directors 27
15. Performance Evaluation 28
PART D: RISK MANAGEMENT AND AUDIT
16. Risk Management 30
17. Internal Audit Function 30
18. Whistle-blowing 33
19. External Auditors 35

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PART E: RELATIONSHIP WITH SHAREHOLDERS
20. Interaction with Shareholders 38
21. Constructive Use of the Annual General Meeting 38
22. Protection of Shareholder Rights 39
23. Venue of Meeting 39
24. Notice of Meeting 39
25. Resolutions 40
26. Role of Shareholders’ Associations 40
27. Institutional Investors 40
PART F: MINORITY SHAREHOLDER PROTECTION
28. Minority Interest Expropriation 42
29. Insider Trading 42
30. Related Party Transactions 42
31. Conflict of Interests 42
PART G: RELATIONSHIP WITH OTHER STAKEHOLDERS
32. Sustainability Issues 44
PART H: TRANSPARENCY
33. Disclosures 46
34. Corporate Governance Evaluation 51
35. Company Investors’ Portal 51
PART I: CODE OF BUSINESS CONDUCT AND ETHICS
36. Code of Business Conduct and Ethics 52
37. Globally Responsible Business Conduct 53
PART J: ENFORCEMENT
38. Sanctions 56
PART K: MISCELLANEOUS
39. Commencement 57
40. Transitional Arrangements 57
41. Definitions 57

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Part A: Preliminary Matters
1. Introduction
This Code is to be referred to as the National Code of Corporate
Governance for the Private Sector in Nigeria 2016. It is the outcome of a
directive given to the Steering Committee on the National Code of
Corporate Governance on 17th January, 2013 by the Honourable Minister
of Trade and Investment. This Committee was chaired by Mr. Victor
Odiase and its focal remit was to harmonize and unify all the existing
sectoral corporate governance codes in Nigeria. The sectoral corporate
governance codes identifiable at the commencement of the Steering
Committee’s work were the Code of Corporate Governance for Banks in
Nigeria Post-Consolidation 2006, Code of Corporate Governance for
Licensed Pensions Operators 2008, Code of Corporate Governance for
Insurance Industry in Nigeria 2009, SEC Code of Corporate Governance in
Nigeria 2011 and CBN Code of Corporate Governance for Banks and
Discount Houses 2014. The need for harmonization and unification was
informed by the fact that there were not too many nations, and in fact none
was observed during the Steering Committee’s very extensive corporate
governance literature reviews, that have adopted this sectoral multiplicity of
governance codes. These Codes later became very confusing in view of
their conflicting provisions on apparently same subject matters.
1.1 Terms of Reference
The Terms of Reference given to the Steering Committee by the
Honourable Minister on 17th January 2013, include the development of a
National Code of Corporate Governance that will enable the Financial
Reporting Council of Nigeria, among other things, to:
(a) Promote the highest standards of corporate governance;
(b) Promote public awareness about corporate governance
principles and practices;
(c) Act as the national coordinating body responsible for all
matters pertaining to corporate governance in both private and
public sectors of the Nigerian economy;
(d) Encourage sound systems of internal control and information
systems control to safeguard stakeholders’ investment and
assets of public interest entities;
(e) Promote sound financial reporting and accountability based
on true and fair financial statements duly audited by
competent independent Auditors; and
(f) Ensure that audit committees of public interest entities keep
under review the scope of audit and its cost effectiveness, the
independence and objectivity of the auditors.

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1.2. The Committee received comments in the form of criticism of its Terms
of Reference as being too skewed towards accountability. This is
however justifiable since there appears to be general agreement that
very weak corporate governance has been significantly responsible for
recent global corporate failures, including those witnessed in Nigeria.
The emphasis therefore is inevitably shifted towards transparency and
accountability. This Governance Code therefore aims at promoting
accountability, adequate disclosure, transparency, integrity and most
importantly, minority shareholder and stakeholder protection.
1.3. The Steering Committee wishes to acknowledge the good work already
done by its predecessors: the pioneering Peterside Corporate
Governance Committee (2003) and the Mahmoud Corporate
Governance Review Committee (2011). The Committee also wishes to
acknowledge the significant contributions made by the various sectoral
codes which the Steering Committee was mandated to harmonize and
unify.
1.4. The strategic objectives of the committee were dictated not only by its
remit, but also by the perceived challenges to good corporate
governance practices in the Nigerian environment. Governance research
identifies ownership structure and national culture as defining factors in
the corporate governance system of any country because these
determine broadly the nature of the agency problems. The Nigerian
corporate governance system is predicated on wide dispersal having
adopted the Anglo-Saxon corporate governance unitary board structure
in which the dominant conflicts are between the shareholders and
managers.
1.5. The Nigeria investment environment is however replete with ownership
concentration, in which the dominant conflicts are usually between the
controlling shareholders and minorities, thus creating a mismatch
between the country’s ownership structure and its governance system.
This largely explains why the more germane and dominant conflicts of
ownership concentration between controlling shareholders and
minorities appear largely ignored. This perhaps also explains why
minority voice and protection, adequate disclosure, accountability,
transparency and financial reporting integrity remain significant
contending issues in the country.
1.6. Some of the provisions of this Code are therefore directed towards
further strengthening of all the superseded corporate governance Codes.
This is to usher in a unified corporate governance code with governance
safeguards that are more country-specific, contextual and
environmentally congruent, while at the same time conforming to
international best practices.

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Part B: Application of the Code
2. Application of the Code
2.1 The National Code of Corporate Governance for the private sector in
Nigeria 2016 shall be applicable to the following:
(a) All public companies (whether listed or not);
(b) All private companies that are holding companies or
subsidiaries of public companies; and
(c) Regulated private companies as defined in section 40.1.14 of
this Code.
2.2 This code provides the minimum standard for corporate
governance in Nigeria.
2.3 Compliance with the provisions of this code is mandatory.

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Part C: Board of Directors
3. Main Purpose of the Board
The main purpose of the board is to provide entrepreneurial,
strategic and ethical leadership to a company, ensure that
management is acting in the best interest of owners and other
stakeholders through the board’s advisory and monitoring roles, and
in the process enhance and sustain the prosperity of the company
over time.
4. Responsibilities of the Board
4.1 Every company shall be headed by a board that shall govern, direct
and be in effective control of its affairs. Every board shall have a
Charter setting out its responsibilities.
4.2 The board being central in corporate governance shall serve as the
link between the stakeholders and the company. The board’s
paramount responsibility is the positive performance of the company
in creating value for all its stakeholders.
4.3 The board shall exercise leadership, enterprise, integrity and
judgment in directing the company so as to achieve continuing
survival and prosperity of the company.
4.4 The board shall ensure the establishment and implementation of a
succession plan, appointment, training and remuneration for both the
board and senior management of the company.
4.5 The board is accountable to the shareholders and shall exercise the
important role of identifying other stakeholders relevant to the
business of the company and incorporate their expectations in its
decisions.
4.6 The board shall set the company's values and standards (including
ethical standards), and ensure that obligations to shareholders and
other stakeholders are understood and met.
4.7 The appointment and removal of the head of the internal audit shall
be the responsibility of the board on the recommendations of the
statutory or Board Audit Committee (or both where they co-exist).
4.8 The board is responsible for the establishment of the company’s risk
management framework as well as oversight over its
implementation.
4.9 The board shall be responsible for Information Technology
governance.

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4.10 The Board shall be responsible for the company’s internal control
system, financial control and reporting.
4.11 The above mentioned responsibilities are not intended to be
exhaustive, but shall be considered as examples of same.
5. Board Structure and Composition
5.1 The board shall be of a sufficient size relative to the scale and
complexity of the company’s operations and be composed in such a
way as to ensure best practices and diversity of experience and
gender without compromising competence, independence, integrity
and availability of members to attend and participate effectively at
meetings.
5.2 The board shall include an appropriate combination of executive and
non-executive directors (and, in particular, independent non-
executive directors) such that no individual or group of individuals
can dominate the board’s decision-making.
5.3 No person, having retired from the board or executive management
of a company, shall continue to exercise any surreptitious influence
or dominance over any of these two governance structures. Such
continued dominance or influence may vitiate the validity of the
disengagement cool-off period as provided for by this Code.
5.4 Membership of the board shall not be less than eight (8).
5.5 The number of executive directors on the board shall not be more
than one-third of the board.
5.6 The number of non-executive directors on the board shall not be less
than two-thirds of the board and the number of independent non-
executive directors shall not be less than half of the number of non-
executive directors.
5.7 Without prejudice to section 5.4, 5.5 and 5.6 above, regulated private
companies that are not holding companies or subsidiaries of public
companies shall have a board membership of not less than five (5)
out of which three (3) shall be non-executive directors (of which a
majority shall be independent non-executive directors).
5.8 The independent non-executive directors may appoint one of the
independent non-executive directors as the lead independent non-
executive director to provide a sounding board for the chairman and
to serve as an intermediary for the other directors when necessary.
The lead independent non-executive director shall be available to
shareholders if they have concerns which contact through the normal
channels of chairman, chief executive or other executive directors
has failed to resolve or for which such contact is inappropriate.

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5.9 The positions of the Chairman of the board and the Managing
Director/Chief Executive Officer (MD/CEO) of the company shall
be separate such that one person shall not combine the two positions
in any company.
5.10 The board shall discourage cross-memberships on the boards of two
or more companies (unless within a group) and disallow it where this
will lead to a conflict of interest situation among competing
companies.
5.11 Directors may hold concurrent directorships. However, concurrent
service on too many boards may interfere with an individual’s ability
to discharge his responsibilities. The board and the shareholders
shall therefore give careful consideration to other obligations and
commitments of prospective directors in assessing their suitability
for appointment to the board. To achieve this:
5.11.1 A prospective director shall disclose his/her memberships of
other boards;
5.11.2 The directorial status of every director shall be indicated
against the name of the director in the annual report of the
company, corporate publications and investors’ portal;
5.11.3 The board shall consider the other directorships held by
such a prospective director and determine whether the
prospective director can contribute effectively to the
performance of the board and the discharge of its
responsibilities before recommending such a person for
appointment;
5.11.4 Serving directors shall notify the board of prospective
appointments on other boards.
5.12 Not more than two members of the same or extended family
shall sit on the board of the same company at the same time.
5.13 Companies shall establish a policy concerning diversity and
disclose the policy or a summary of that policy. The policy
shall include requirements for the board to establish
measurable objectives for achieving gender diversity for the
board to assess annually both the objectives and progress in
achieving them.
6. Officers of the Board
6.1 Chairman
6.1.1 The chairman’s primary responsibility is to ensure effective
operation of the board such that the board works as a group

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towards achieving the company’s strategic objectives. The
chairman shall not be involved in the day-to-day operations of
the company. This shall be the primary responsibility of the
chief executive officer and the management team.
6.1.2 The positions of the chairman of the board and chief
executive officer shall be separate and held by different
individuals.
6.1.3 The chairman of the board shall be a non-executive director.
6.1.4 The MD/CEO shall not go on to be the chairman of the
same company. If in very exceptional circumstances the
board decides that a former MD/CEO shall become
chairman, the cool off period shall be 7 years and the board
shall consult both majority and minority shareholders in
advance and also inform the regulator of the appointment,
setting out its reasons for such appointment. This shall also
be stated in the next annual report.
6.1.5 The chairman may be re-elected at the first meeting of the
board of directors after the annual general meeting of the
company in which he was re-elected as a director.
6.1.6 The chairman´s functions shall include the following:
(a) Providing overall leadership and direction for the board
and the Company;
(b) Getting the board to agree an annual board plan;
(c) Setting the agenda for board meetings;
(d) Ensuring that the board and its committees are composed
of the relevant skills, competencies and desired
experience;
(e) Ensuring that board meetings are properly conducted and
the board is effective and functions in a cohesive manner;
(f) Ensuring that all directors focus on their key
responsibilities and play constructive role in the affairs of
the company;
(g) Ensuring that induction programmes are conducted for
new directors and a continuing education programme is
in place for all directors;
(h) Ensuring effective communication and relations with the
company’s institutional shareholders and strategic
stakeholders;

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(i) Taking a lead role in the assessment, improvement and
development of the board;
(j) Presiding over general meetings of shareholders; and
(k) Confirming to shareholders whether board expectations
have been met, particularly for the reporting period.
6.1.7 The chairman is responsible for ensuring that the directors
receive accurate, timely and clear information. Management
has an obligation to provide such information but directors
shall seek clarification or amplification where necessary.
6.1.8 The chairman shall hold meetings with the non-executive
directors without the executives present. Led by an
independent non-executive director, the non-executive
directors shall meet without the chairman present at least
annually.
6.1.9 The Chairman shall not sit on any board committee.
6.2 Lead Independent Non-Executive Director
6.2.1 The independent non-executive directors may appoint one among
themselves as the lead independent non-executive director to
provide a sounding board for the chairman and to serve as an
intermediary for the other directors when necessary.
6.2.2 The lead independent non-executive director shall be
available to shareholders if they have concerns which contact
through the normal channels of chairman, chief executive or
other executive directors has failed to resolve or for which
such contact is inappropriate.
6.2.3 The lead independent non-executive director shall preside at
the exclusive meetings of non-executive directors and
separate meetings of independent non-executive directors.
6.3 Managing Director/Chief Executive Officer
6.3.1 The managing director (MD) or chief executive officer (CEO)
shall be the head of the Management and is answerable to the
board.
6.3.2 The MD/CEO shall be knowledgeable in relevant areas of the
company’s activities. He shall demonstrate industry,
credibility and integrity and have the confidence of the board
and management.
6.3.3 The MD/CEO shall not be the only executive director on the
board of directors of the company.

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6.3.4 The MD/CEO and the senior management shall establish a
culture of integrity, compliance, conformance and
performance which shall be imbibed by personnel at all levels
of the company.
6.3.5 The functions and responsibilities of the MD/CEO shall
include the following:
(a) Day-to-day running of the company;
(b) Guiding the development and growth of the company;
(c) Acting as the company's leading representative in its
dealings with its stakeholders.
6.3.6 The authority of the MD/CEO and the relationship between
the office and the board shall be clearly and adequately
described in a letter of appointment.
6.3.7 The board may delegate such of its powers to the MD/CEO as
it may deem appropriate to ensure smooth operation of the
company.
6.3.8 The remuneration of the MD/CEO shall be determined by the
remuneration committee and may include a component that is
long-term performance related, stock options and bonuses, the
details of which must be disclosed in the company’s annual
reports.
6.4 Company Secretary
6.4.1 Without prejudice to the provisions of the Companies and
Allied Matters Act, Cap. C20, Laws of the Federation of
Nigeria 2004, the company secretary shall be a person with
relevant qualification and competence necessary to
effectively discharge the duties of his office. He shall be
appointed through a rigorous selection process similar to that
of new directors.
6.4.2 The company secretary has the primary duty of assisting the
board and management in implementing this Code and
developing good corporate governance practices and culture.
6.4.3. The Company Secretary has both functional and
administrative responsibilities. The functional responsibility
is to the Board to which he reports directly through the
Chairman, while the administrative responsibility is to the
company and the MD/CEO to whom he reports as the Head
of Executive Management.

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6.4.4 In addition to his statutory functions, the company secretary
shall carry out the following duties and responsibilities:
(a) Provide the board and directors individually, with
detailed guidance as to how their responsibilities
shall be properly discharged in the best interest of the
company;
(b) Coordinate the orientation and training of new
directors;
(c) Assist the chairman and MD/CEO in coordinating
activities regarding the annual board plan and with
the administration of other strategic issues at the
board level;
(d) Compilation of board papers and ensuring that the
board’s discussions and decisions are clearly and
properly recorded and communicated to the relevant
persons;
(e) Notify board members of matters that warrant their
attention;
(f) Provide a central source of guidance and advice to the board
and the company, on matters of ethics, conflict of interest and
good corporate governance.
6.4.5 Under the direction of the chairman, the company secretary’s
responsibilities include ensuring good information flows
within the board and its committees and between senior
management and non-executive directors.
6.4.6 The company secretary shall be properly empowered by the
board to discharge his duties and responsibilities.
6.4.7 The appointment and termination of the appointment of the
company secretary shall be a matter for the board.
6.5 Executive Directors
6.5.1 Executive directors shall be persons knowledgeable in
relevant areas of the company’s activities in addition to
possessing such other qualifications as may be needed for
their specific assignments or responsibilities.
6.5.2 Executive directors shall be involved in the day-to-day
operations and management of the company. In particular,

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they shall be responsible for their departments and shall be
answerable to the board through the MD/CEO.
6.5.3 Executive directors shall not be involved in the determination
of their remuneration.
6.5.4 The levels of remuneration of executive directors shall be
such that will attract, retain and motivate directors of the
quality required to run the company successfully.
6.5.5 Executive directors’ remuneration shall be structured to link
rewards to corporate and individual performances.
6.5.6 The remuneration of executive directors shall be determined
by remuneration committee and must be disclosed in the
company’s annual reports.
6.5.7 The details of the remuneration of executive directors shall be
disclosed in the company’s annual reports.
6.5.8 Executive directors shall not receive any sitting allowances or
director’s fees.
6.5.9 An executive director may be appointed non-executive
directors of other companies, provided such appointments are
not detrimental to his immediate responsibilities as an
executive director and are in accordance with board-approved
policy.
6.5.10 Where the board permits an executive director to serve as a
non-executive director in another entity (other than in a group
structure), there shall be a disclosure in the annual report as to
the value of his remuneration for such appointment and the
policy of the company as to its retention or otherwise.
6.5.11 Executive director shall not take on more than one non-
executive directorship in a listed company nor the
chairmanship of such a company unless the company is a
subsidiary or associate of the company of which he is an
executive director.
6.5.12 Under no circumstances shall executive directors sit on the
nomination and governance committee, remuneration
committee or audit committee (whether statutory or board
audit committee).
6.6 Non-Executive Directors
6.6.1 Non-executive directors shall be appointed on the basis of
their experience, specialist knowledge and personal qualities
and are expected to bring these qualities to bear on issues of
strategy, performance and resources.

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6.6.2 Non-executive directors shall constructively challenge and
contribute to the development of the strategy of the company
and satisfy themselves that the financial information provided
by the company is accurate and that the company has in place
a robust and adequate internal controls and risk management
systems.
6.6.3 Non-executive directors shall be responsible for the
performance evaluation of the MD/CEO.
6.6.4 Non-executive directors, led by an independent non-executive
director, shall be responsible for performance evaluation of
the chairman, taking into account the views of executive
directors.
6.6.5 Non-executive directors shall have unfettered access to
6.6.6 Non-executive directors shall have unfettered access to the
Company Secretary and the Internal Auditor, while access to
other senior management (other than executive directors)
shall be through the MD/CEO.
6.6.7 Non-executive directors shall declare any conflicts of interest
on appointment. In the event that they become aware of any
potential or actual conflicts of interests after appointment to
the board, they shall disclose these to the board.
6.6.8 Non-executive directors shall be entitled to be paid sitting
allowances, directors’ fees and reimbursable travel and hotel
expenses. These payments, in addition to any other benefits
made to non-executive directors shall be disclosed in the
company’s annual report.
6.6.9 Non-executive directors shall be provided with appropriate
facilities and administrative support for the effective
discharge of their duties. Adequate and comprehensive
information on all board matters shall be provided to them in
a timely manner.
6.7 Independent Non-Executive Directors
6.7.1 The main purpose of independent non-executive directors is
to bring a desired degree of objectivity that sustains investors’
trust and confidence by representing a strong independent
voice on the board.
6.7.2 An independent non-executive director shall be independent
in character and judgment and accordingly shall be free from

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such relationships or circumstances with the company, its
management, or substantial shareholders which may, or
appear to, impair his ability to make independent judgment.
6.7.3 An independent non-executive director is a non-executive
director who:
(a) Is not a substantial shareholder of the company (that is, one
whose shareholding, directly or indirectly, does not exceed
0.1% of the company’s paid up capital) or a nominee of a
substantial shareholder of the company or otherwise related to
such a substantial shareholder of the company;
(b) Is not a representative of a shareholder that has the ability to
control or significantly influence Management;
(c) Has not been an employee of the company or group within
the last five years;
(d) Is not an extended family member of any of the company’s
advisers, directors, senior employees, consultants, auditors,
creditors, suppliers, customers or substantial shareholder;
(e) Does not have, and has not had within the last five years, a
material business relationship with the company either
directly, or as a partner, shareholder, director or senior
employee of a body that has, or has had, such a relationship
with the company;
(f) Does not render any professional, consultancy, or other
advisory services to the company or the group, other than in a
capacity of a director;
(g) Does not receive, and has not received additional
remuneration from the company apart from a director’s fee
and allowances, and does not participate in the company’s
share option or a performance-related pay scheme, nor is a
member of the company’s pension scheme;
(h) Has not served on the board for more than nine years from the
date of his first election; and
(i) Does not hold cross-directorships or significant links with
other directors through involvement in other companies or
bodies.
6.7.4 The above mentioned criteria for establishing the independent
status of an independent non-executive director are not
intended to be exhaustive, but shall be considered as
examples of some of those relationships or circumstances

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which may impair, or appear to impair, an independent non-
executive director’s independent judgment.
6.7.5 In appointing independent non-executive directors,
companies may apply to any of the relevant regulators or the
Institute of Directors, Nigeria for a list of potential
independent non-executive directors from their respective
database.
6.7.6 There shall be an annual meeting of only the independent
non-executive directors of the company, at which no other
director or member of management of the company is
present.
6.7.7 An independent non-executive director shall declare annually
his continued independence. The board shall undertake an
annual evaluation of the independent status of each
independent non-executive director of the company.
6.7.8 The independent status of independent non-executive
directors of a company shall be clearly disclosed in the
company’s annual report, corporate governance report, and on
the website of the company.
6.7.9 The reclassification of an existing non-executive director into
an independent non-executive director on the same board is
not allowed.
6.7.10 Independent non-executive director(s) may request the
company to provide them with external professional advice
in the discharge of their responsibilities.
6.7.11 Where an independent non-executive director resigns from
the board before the expiration of his term, he shall disclose
to the appropriate regulator(s) the reasons for such
resignation not later than 30 days after the date of the
resignation.
7. Meetings of the Board
7.1 In order to effectively perform its oversight function and
monitor management’s performance, the board shall meet at
least once every quarter.
7.2 Every director shall be required to attend at least two-thirds of
all board meetings. Such attendance record shall be among
the criteria for the re-nomination of a director by the board
except where there are cogent reasons which the board must
notify the shareholders of at the annual general meeting.

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7.3 Where a majority of independent non-executive directors
dissent on an issue decided by the board, such decision can
only be valid where at least 75% of the full board (without
reference to quorum) vote in favour of such decision.
8. Board Committees
8.1 The board shall determine the extent to which its duties and
responsibilities shall be undertaken through committees. It shall
determine the number and composition of such committees, ensuring
that each comprises of directors with relevant skills and
competencies and that its members are able to devote sufficient time
to the committee’s work.
8.2 A Charter shall be established and approved for each committee of
the board. The board shall spell out there in the terms of reference
and composition of such committees.
8.3 The board shall delegate certain of its functions to well-structured
committees, but without abdicating its own responsibilities. The
membership of board committees shall be reviewed and
reconstituted at most every three years.
8.4 Every board shall establish nomination and governance committee,
remuneration committee, audit committee, and risk management
committee. No director shall serve on more than two of the
following committees: nomination and governance, remuneration,
and audit.
8.5 The boards of regulated private companies may merge any of the
committees mentioned in section 8.4, taking into consideration the
size, needs and other requirements of the company, subject to
adequate board oversight and regulatory concurrence.
8.6 Where one committee performs audit and risk management functions,
the officer overseeing risk in the company shall be in attendance at
the meeting of the committee when deliberating on risk matters only.
The officer shall not be present, except if invited, when the
committee is deliberating on audit matters.
8.7 The chairman of the board shall not sit on any board committee.
However, in the case of regulated private companies having a board
size of five (5), the Chairman may be a member of the nomination
and governance committee and remuneration committee but shall
not chair any of these two committees.
8.8 No one other than the Committee Chairman and members of the
committee is entitled to be present at a meeting of the nomination
and governance, audit or remuneration committee, but others may
attend only at the specific invitation of the committee. Such persons

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shall take their leave immediately after satisfying the purpose of
their invitation.
8.9 The company secretary, or any other officers in the office of the
company secretary, shall be the secretary of all board committees.
8.10 Minutes of meetings of board committees shall be prepared and sent to
members of such committees on a timely basis, and thereafter to
members of the board on a timely basis.
8.11 Minutes are a record of what transpired at a meeting. Minutes shall
therefore not be written for meetings not actually held.
8.12 Nomination and Governance Committee
8.12.1 The board shall establish a nomination and governance
committee which shall be composed of at least three
members, all of whom shall be non-executive directors, a
majority of whom shall be independent non-executive
directors.
8.12.2 The chairman of the nomination and governance committee
shall be appointed by the board and must be an independent
non-executive director.
8.12.3 The committee shall meet in the course of the year as it
deems appropriate. The agenda for the meetings of the
committee shall be developed by the chairman of the
committee in consultation with other members of the
committee.
8.12.4 The nomination and governance committee shall have the
duty to:
(a) Review the structure, size and composition of the
board at least annually and make recommendations on
any proposed changes to the board.
(b) Establish the criteria for board and board committee
membership, review prospective candidates’
qualifications and any potential conflict of interest,
assess the contribution of current directors against their
suitability for re-nomination, and make appropriate
recommendations to the board.
(c) Periodically determine the skills, knowledge and
experience required on the board and its committees.
(d) Identify individuals suitably qualified to become board
members and make recommendations to the board for
nomination and appointment as directors.

20
(e) Ensure the annual declaration of independence by
independent non-executive directors and undertake the
annual assessment of the independent status of such
independent non-executive directors.
(f) Ensure that the company has a succession policy and
plan in place for the chairman of the board, the chief
executive officer of the company, and all other
executive and non-executive directors and senior
management positions.
(g) Ensure that the board undertakes an annual
performance evaluation of itself, its committees, the
chairman and other individual directors.
8.12.5 A separate section of the annual report shall describe the
work of the nomination and governance committee, including
its processes in relation to board appointments.
8.13 Remuneration Committee
8.13.1 The board shall establish a remuneration committee which
shall be composed of at least three members, all of whom
shall be non-executive directors, a majority of whom shall be
independent non-executive directors.
8.13.2 The chairman of the remuneration committee shall be
appointed by the board and he must be an independent non-
executive director.
8.13.3 The remuneration committee shall meet in the course of the
year as it deems appropriate. The agenda for the meetings of
the remuneration committee shall be developed by the
chairman of the committee in consultation with other
members of the committee.
8.13.4 The duties of the remuneration committee shall include:
(a) Development of a formal, clear and transparent
procedure for the development of the company’s
remuneration policy.
(b) Recommendation to the board on the company’s
remuneration policy and structure for all executive
directors and senior management employees.
(c) Recommendation to the board on the remuneration of
non-executive directors.

21
(d) Recommendation to the board on compensation
payable to executive directors and senior management
employees for any loss of office or termination of
appointment to ensure that it is consistent with
contractual terms, fair and not excessive.
8.13.5 The remuneration committee may engage a remuneration
consultant at the expense of the company for the purpose of
carrying out its responsibilities. Where such a consultant is
engaged by the remuneration committee, the consultant must
be independent. The name of the consultant shall be disclosed
in the annual report of the company.
8.14 Audit Committee
8.14.1 Consistent with section 359(3) and (6) of Companies and
Allied Matters Act, Cap. C20, Laws of the Federation of
Nigeria 2004, every public company shall establish a
Statutory Audit Committee which shall perform the following
functions:
(a) Ascertain whether the accounting and reporting
policies of the company are in accordance with legal
requirements and agreed ethical practices;
(b) Review the scope and planning of audit requirements;
(c) Review the findings on management matters in
conjunction with the external auditor and departmental
responses thereon;
(d) Keep under review the effectiveness of the company's
system of accounting and internal control;
(e) Make recommendations to the board regarding the
appointment, removal and remuneration of the external
auditors of the company; and
(f) Authorise the internal auditor to carry out
investigations into any activities of the company which
may be of interest or concern to the committee.
8.14.2 Without prejudice to the provision of the Companies and Allied
Matters Act, CAP C20, Laws of the Federation of Nigeria 2004
every public company shall, in addition to a Statutory Audit
Committee, have a Board Audit Committee.
8.14.3 All members of an audit committee (whether statutory or
board) shall have financial literacy and shall be able to read
and interpret financial statements. At least one member of

22
the committee shall be an expert and have current
knowledge in accounting and financial management.
8.14.4 The Board Audit Committee shall be composed of at least
three members, all of whom shall be non-executive
directors, a majority of whom shall be independent non-
8.14.5 The chairman of the Board Audit Committee must be an
independent non-executive director. In the case of the
Statutory Audit Committee, its chairman shall be either an
independent non-executive director or an independent
shareholder.
8.14.6 The Board Audit Committee shall meet at least once every
quarter. The agenda for the meetings of the committee shall
be developed by the chairman of the committee in
consultation with other members of the committee.
8.14.7 The number, timing and duration of Board Audit
Committee meetings shall be appropriate to ensure that the
committee achieves its objectives.
8.14.8 At least once in a year, the Board Audit Committee shall
meet the head of internal audit and other members of the
internal audit function without the chief financial officer
and the external auditors being present.
8.14.9 The Board Audit Committee shall have the following
additional responsibilities:
(a) Exercise oversight over the integrity of the company’s
financial statements, compliance with legal and other
regulatory requirements, assessment of qualifications
and independence of external auditor, and performance
of the company’s internal audit function as well as that
of external auditors;
(b) Establish an internal audit function and ensure there
are other means of obtaining sufficient assurance of
regular review or appraisal of the system of internal
controls in the company;
(c) Ensure the development of a comprehensive internal
control framework for the company, obtain assurance
and report annually in the financial report, on the
operating effectiveness of the company’s internal
control framework;
(d) Oversee the process for the identification of significant
fraud risks across the company and ensure that

23
adequate prevention, detection and reporting
mechanisms are in place;
(e) At least on a quarterly basis, obtain and review a report
by the internal auditor describing the strength and
quality of internal controls including any issues or
recommendations for improvement, raised by the most
recent internal control review of the company;
(f) Discuss the annual audited financial statements with
management and external auditors;
(g) Discuss policies and strategies with respect to risk
assessment and management;
(h) Meet separately and periodically with management,
internal auditors and external auditors;
(i) Review and ensure that adequate whistle-blowing
procedures are in place and that a summary of issues
reported are highlighted to the chairman of the
committee;
(j) Review, with the external auditor, any audit scope
limitations or problems encountered and
management’s responses to same;
(k) Review the independence of the external auditors and
ensure that where approved non-audit services are
provided by the external auditors, there is no conflict
of interest;
(l) Preserve auditor independence, by setting clear hiring
policies for employees or former employees of
independent auditors;
(m) Consider any related party transactions that may arise
within the company or group;
(n) Invoke its authority to investigate any matter within its
Charter for which purpose the company must make
available the resources to the internal auditors with
which to carry out this function, including access to
external advice where necessary; and
(o) Report regularly to the board.
8.14.10 Every private company to which this code applies shall have
a Board Audit Committee.
8.14.11 Persons serving on any Audit Committee, whether Statutory
Audit Committee or Board Audit Committee, shall have

24
coextensive responsibilities and must have such relevant
experience, competence and knowledge that would enable
them serve on either or both of the two committees.
8.14.12 The Statutory Audit Committee Report, the opinion expressed
and the recommendations made therein to shareholders must
be predicated on and evidenced by the work done by the
Committee, verifiable where necessary, by regulatory action.
8.14.13 The Board Audit Committee Report, the various opinions
expressed and the recommendations made to the board must
be predicated on and evidenced by the work done by the
Committee, verifiable where necessary, by regulatory action.
8.15 Risk Management Committee
8.15.1 The board shall establish a risk management committee
which shall be composed of a majority of non-executive
directors. At least one of the non-executive directors shall be
an independent non-executive director.
8.15.2 The chairman of the risk management committee shall be
appointed by the board and he must be an independent non-
executive director.
8.15.3 The committee shall meet in the course of the year as it
deems appropriate. However, it shall meet at least once every
quarter in a financial year. The agenda for the meetings of the
committee shall be developed by the chairman of the
committee in consultation with other members of the
committee.
8.15.4 The risk management committee shall have the duty to:
(a) Assist the board in its oversight of the risk profile, risk
management framework and the risk strategy as may
be determined by the board.
(b) Review the adequacy and effectiveness of risk
management and controls in the company.
(c) Exercise oversight over management process for the
identification of significant risks across the company
and the adequacy of prevention, detection and
reporting mechanisms.
(d) Undertake the review of the company’s compliance
level with applicable laws and regulatory requirements
which may impact the company’s risk profile.

25
(e) Undertake periodic review of changes in the economic
and business environment, including emerging trends
and other factors relevant to the company’s risk profile
and make recommendations to the board as
appropriate.
(f) Review and recommend for approval of the board risk
management procedures and controls for new products
and services.
(g) Ensure that Information Technology assets are
managed effectively.
(h) Review the company’s Information Technology
governance framework at least annually
8.15.5 A member of senior management of the company shall be
charged with the responsibility of performing the risk
function and shall be entitled to attend the meetings of the
risk management committee.
9. Appointment to the Board
9.1 The board shall develop a written, clearly defined, formal and
transparent procedure for appointment to the board of directors.
9.2 The board shall specify and document the criteria for appointing
directors. Such criteria shall embrace the strengths and weaknesses
of the existing board, required skills, and experience as well as
current age range and gender diversity.
9.3 Appointments shall be a matter for the board as a whole and there
shall be a formal selection process which will reinforce the
independence of non-executive directors and make it evident that
they have been appointed on merit and not through any form of
patronage. In the case of specialised businesses, possession of
requisite technical skill shall be taken into account.
9.4 The nomination committee shall recommend names of prospective
candidates for consideration for directorship positions. The board
shall appoint directors subject to ratification by the relevant industry
regulator(s), where this is applicable.
9.5 Shareholders shall be provided with biographical information of
proposed directors including:
(a) Name, age, qualification, nationality and country of
primary residence. If not resident in Nigeria, the
ownership interest represented;

26
(b) Whether the appointment is executive, non-executive or
independent and any proposed specific area of
responsibility;
(c) Work experience and occupation in the preceding ten
years;
(d) Current directorships and appointments in the preceding
five years;
(e) Shareholding in the company and its subsidiaries; and
(f) Any real or potential conflict of interest, including
whether he is an interlocking director.
9.6 The Corporate Governance Section of the company’s annual report
shall state the processes used in relation to all board appointments.
10. Induction and Continuing Education
10.1 The board shall establish a formal induction programme for new
directors of the company to familiarize the new directors with the
company’s operations, strategic plan, senior management and its
business environment, and to induct them in their fiduciary duties
and responsibilities.
10.2 It is mandatory for all directors to participate in periodic, relevant,
professional continuing education programmes in order to update
their knowledge and skills and keep them informed of new
developments in the company’s business and operating environment.
The objective of the training is to assist the directors discharge fully
and effectively their duties to the company. The training shall be at
the company’s expense.
10.3 The company shall disclose in its annual report the courses attended
by each director on a named basis.
11. Terms and Conditions of Service
11.1 The terms and conditions of a director’s employment or service on
the board shall be in writing and issued to the director in the form of
a contract.
11.2 The letters of appointment shall cover the following issues:
(a) Duration or term of appointment;
(b) Remuneration package and method of remuneration;

27
(c) Explanation of the duties of care, skill, diligence and loyalty
and other responsibilities of the director;
(d) Requirement to disclose any material interests in the company
and other entities related to the company;
(e) Requirement to disclose periodically, material interests in
contracts in which the company is interested or involved;
(f) Specific requirements, such as board meeting attendance;
(g) Synopsis of directors’ rights;
(h) Formal orientation programme or training for the director to
attend;
(i) Copy of Board Charter, Code of Business Conduct and Ethics
and the director’s responsibility to observe same;
(j) Directors’ evaluation programme used by the company; and
(k) Any other contractual responsibilities.
12. Access to Independent Advice
The board shall ensure that directors, especially non-executive
directors, have access to independent professional advice at the
company’s expense where they consider it necessary to discharge
their responsibilities as directors.
13. Access to Information
The board shall be supplied in a timely manner with all relevant
information in a form and of a quality appropriate to enable it to
discharge its duties. This is without prejudice to the right of the
Board to have access to all documents and information relating to
the management of the company at all times.
14. Tenure and Re-election of Directors
14.1 Subject to satisfactory performance and the provisions of Companies
and Allied Matters Act, Cap. C20, Laws of the Federation of Nigeria
2004, directors shall offer themselves for re-election at regular
intervals of at least once every three years. In order to guide the
decision of shareholders, names and sufficient biographical details of
directors nominated for re-election shall be accompanied by
performance evaluation results and any other relevant information.
14.2 Non-executive directors shall serve for a defined period on the
board. Consequently, it is necessary to reinforce the board by
continually injecting new energy, fresh ideas and perspectives. The

28
board shall ensure the periodic appointment of new directors to
replace existing non-executive directors.
14.3 The tenure of the Managing Director/Chief Executive Officer shall
not exceed two terms of five years each.
14.4 The tenure of executive directors other than the Managing
Director/Chief Executive Officer shall not exceed three terms of four
years each.
14.5 Where an executive director is subsequently appointed as the
Managing Director/Chief Executive Officer of the company, his
tenure of office in that new capacity starts from the date he assumed
the position of Managing Director/Chief Executive Officer and he is
entitled to two terms of five years each PROVIDED that no person
shall serve as an executive director of a company for a combined
period of more than 15 years in total.
14.6 The tenure of non-executive directors shall not exceed three terms of
four years each.
15. Performance Evaluation
15.1 The board shall establish a system to undertake a formal and
rigorous annual evaluation of its own performance, that of its
committees, the chairman and individual directors.
15.2 The evaluation system shall include the criteria and key performance
indicators and targets for the board, its committees, the chairman and
each individual committee member.
15.3 The result of the board performance evaluation shall be
communicated and discussed by the board as a whole, while those of
individual directors shall be communicated and discussed with them
individually by the chairman.
15.4 Where the performance of a director is considered to be
unsatisfactory, the director concerned shall undergo further training.
Where such is not feasible or practicable, the director may be
removed or requested to retire in accordance with established
procedures.
15.5 The board may engage the services of external consultants to
facilitate the performance evaluation of the board, its committees,
and individual directors at least, once every three years. The name of
the consultant must be disclosed in the annual report.
15.6 The cumulative result of the performance evaluation of the board
and individual directors shall be used as a guide in deciding
eligibility for nomination for re-election.

29
15.7 The result of the performance evaluation of each director shall be
disclosed in the annual report on a named basis.

30
16. Part D – Risk Management and Audit
16. Risk Management
16.1. The Board is responsible for the oversight of enterprise-wide risk
management. It shall accordingly form its own opinion on the
effectiveness of the process. Management is accountable to the
Board for implementing and monitoring the process of risk
management and integrating it into the day-to-day activities of the
company.
16.2. The Board shall:
(a) Oversee the establishment of a management framework that defines
the company’s risk policy, risk appetite and risk limits. The
framework shall be formally approved by the Board. The company’s
risk management policies shall be communicated in simple and clear
language to all employees to ensure the integration of risk awareness
at all levels of the company.
(b) Ensure that the risk management framework is integrated into the
day-to-day operations of the business and provide guidelines and
standards for management of key risks.
(c) Undertake at least annually, a thorough risk assessment covering all
aspects of the company’s business. The results of the risk assessment
shall be used to update the risk management framework of the
company.
(d) Obtain and review periodically relevant reports to ensure the
ongoing effectiveness of the company’s risk management
framework.
(e) Ensure that the company’s risk management policies and practices
are disclosed in the annual report.
16.3. Going Concern
The directors shall report in the annual and half-yearly financial
statements the going concern status of the business, with supporting
assumptions or qualifications as necessary.
17. Internal Audit Function
17.1 All companies shall have an effective risk–based internal audit
function. Where the board decides not to establish such a function,
sufficient reasons must be disclosed in the company’s annual report
with an explanation as to how assurance of effective internal

31
processes and systems such as risk management, internal control and
the like will be obtained.
17.2 The purpose, authority and responsibility of the internal auditing
activity shall be clearly and formally defined in an internal audit
charter approved by the board. This shall be consistent with the
definition of internal auditing by the Institute of Internal Auditors.
17.3 The Internal Audit Unit shall be headed by a professional with
relevant qualification who has registered with the regulator. The unit
shall be adequately resourced and have appropriate budget to enable
it effectively discharge its responsibilities.
17.4 The Head of Internal Audit Unit shall report directly to both the
Board Audit Committee and the Statutory Audit Committee (where
both co-exist) while having a line of communication with the
MD/CEO. The Head of Internal Audit Unit shall have unrestricted
access to the chairmen of both the Board Audit Committee and
Statutory Audit Committee (where both co-exist), and the Chairman
of the Board.
17.5 The Head of Internal Audit Unit shall report at least once every
quarter, at audit committee meetings, on the adequacy and
effectiveness of management, governance, risk and control
environment, deficiencies observed and management mitigation
plans.
17.6 The internal audit function shall assist the directors and management
to maintain effective controls through periodic evaluation to
determine the effectiveness and efficiency of the company’s internal
control systems and make recommendations for enhancement or
improvement.
17.7 The evaluation of controls by the internal audit function shall
encompass the following:
(a) The information systems environment;
(b) The reliability and integrity of financial and
operational information;
(c) The effectiveness and efficiency of operations;
(d) Safeguarding of assets; and
(e) Compliance with laws and regulations.
17.8 The internal audit function shall establish a risk-based internal audit
process that provides a consistent basis for the provision of internal
audit services and highlights the key steps and activities to be

32
performed from the planning stage through to the reporting phase of
the audit.
17.9 The internal audit function shall develop an annual risk-based
internal audit plan in line with the risk-based internal audit process
and shall be approved by the audit committee.
17.10 The annual risk-based internal audit plan shall:
(a) Address the broad range of risks facing the company
linking this to risk management framework;
(b) Identify audit priority areas and areas of greatest threat
to the company;
(c) Indicate how assurance will be provided on the
company’s risk management process; and
(d) Indicate the resources and skills available or required
to achieve the plan.
17.11 The internal audit plan shall be based on the result of the
assessment of the risks faced by the company in line with the risk
management framework and shall be approved by the board. The
plan shall identify audit priority areas and determine the frequency
of audits as well as the required resources and skills. The risk
assessment process shall be of a continuous nature so as to identify
emerging, as well as residual or existing risks and shall be
conducted at least annually, but more often in companies with
complex operations.
17.12 Internal audit shall provide independent assurance on the
robustness and effectiveness of the company’s risk management
process.
17.13 The internal audit function shall liaise with other internal and
external providers of assurances in order to ensure proper coverage
and to minimise duplication of effort.
17.14 There shall be an external assessment of the effectiveness of the
internal audit function at least once every three years by a qualified
independent reviewer, as defined by the Institute of Internal
Auditors, or by an external review team.
17.15 The head of the internal audit function shall be a member of senior
management and can only be removed by the board on the
recommendation of the Statutory Audit Committee (and board
audit committee, in the case of companies with two audit
committees). A publicly interest Entity shall not outsource its
internal audit functions.

33
18. Whistle-blowing
18.1 The objective of whistle-blowing is to encourage stakeholders to
bring unethical conduct and illegal violations to the attention of an
internal and/or external authority so that action can be taken to verify
the ethical violation, apply appropriate sanctions and avoid a re-
occurrence. This will minimize a company's exposure to the damage
that can occur when internal mechanisms are abused or
circumvented. It will also demonstrate to stakeholders the criticality
of adherence to codes of ethics and conduct.
18.2 A whistle-blower is any person(s) including the employees,
management, directors, customers, service providers, creditors and
other stakeholder(s) of a company who report any form of unethical
behaviour, dishonesty or violation of any law or regulation(s) to the
appropriate internal authority or external regulators.
18.3 Companies shall have a whistle-blowing policy which shall be
known to employees, stakeholders such as contractors, customers,
service providers, creditors, shareholders, job applicants and the
general public. It is the responsibility of the board to implement such
a policy and to establish a whistle-blowing mechanism for reporting
any illegal or unethical behaviour, with or without the knowledge or
involvement of the company’s external auditors.
18.4 The whistle-blowing mechanism shall be accorded priority and the
board shall also reaffirm continually its support for and commitment
to the company’s whistle-blower protection mechanism.
18.5 The whistle-blowing mechanism shall include a dedicated telephone
“hot-line”, e-mail address and other electronic communication
methods that could be used, even anonymously, to report illegal or
unethical practices.
18.6 The Head of the internal audit function shall review reported cases
and bring them to the notice of the Statutory Audit Committee (and
Board Audit Committee, in the case of companies with two audit
committees).
18.7 The Head of the internal audit function shall provide the audit
committee(s) with a summary of reported cases, cases investigated,
the process of investigation and the results of the investigations.
18.8 A whistle-blower shall disclose any information connected with the
activities of companies which indicate any of the following:
(a) That an offence is about to be, is being or has been
committed;
(b) That a person has failed to comply with any laws, internal
policies and procedures, etc; or

34
(c) That someone has concealed any matter falling within (a) or
(b) above.
18.9 A disclosure is deemed to have been made in accordance with this
section if the whistle-blower makes the disclosure to the appropriate
internal authority of the company or external regulator provided that
such disclosure, even if made anonymously, is:
(a) In respect of matters which he believes to be true;
(b) Reasonable;
(c) Made in good faith; and
(d) Can be investigated.
18.10 Companies shall treat all disclosures resulting from whistle-blowing
in a confidential manner. The identity of the whistle-blower, if
disclosed - though it need not be disclosed - shall be kept
confidential.
18.11 No company to which this Code applies shall subject a
whistleblower to any detriment whatsoever on the grounds that he
has made a disclosure in accordance with the provisions of this
Code.
18.12 Where a whistle-blower has been subjected to any detriment in
contravention of the above provision, he may present a complaint to
the regulators. This is without prejudice to the right of the whistle-
blower to take other appropriate legal actions.
18.13 An employee who has suffered any detriment by reason of
disclosure made pursuant to the provisions of this Code shall be
entitled to compensation and/or reinstatement provided that in the
case of compensation, the employee's entitlement shall be computed
as if he had attained the maximum age of retirement or had
completed the maximum period of service, in accordance with his
condition of service. For other stakeholders, the whistle-blower shall
be adequately compensated.
18.14 Any company which contravenes the provision of this section of the
Code shall be sanctioned appropriately.
18.15 For the purpose of this Code, the word “detriment” includes
dismissal, termination, demotion, retirement, redundancy, undue

35
influence, duress, withholding of benefits and/or entitlements and
any other act that has a negative impact on the whistle-blower.
19. External Auditors
19.1 The Statutory and Board audit committees, either independently or
jointly (where they co-exist) shall have the primary responsibility for
making a recommendation to the board on the appointment,
reappointment and removal of external auditors.
19.2 The appointment of the first external auditor of a company, as well
as subsequent appointments, shall be as stipulated by the Companies
and Allied Matters Act, Cap. C20, Laws of the Federation of Nigeria
2004.
19.2.1 Listed and Significant Public Interest Entities shall engage Joint
External Auditors for their statutory audit. These entities are those
whose market capitalisation is not less than =N=1 billion and/or
whose annual turnover is not less than =N=10 billion.
19.2.2 Where the existing or first statutory auditor is an international firm,
the second auditor who must be appointed by show of hands (in an
Annual General Meeting) rather than by poll, shall be a national
firm.
19.2.3 Without prejudice to the provisions of sub-sections 19.2.1 and 19.2.2
above, where an entity has a market capitalisation of not less than
300 Billion Naira and/or an annual turnover of not less than 50
Billion Naira, if the existing or first statutory auditor is an
international firm, the second auditor, who must be appointed by
show of hands (in an Annual General Meeting) rather than by a poll,
shall be a national firm, or vice versa.
19.3 External audit firms shall be retained for no longer than ten years
continuously. External audit firms disengaged after continuous
service to a company for ten years may be considered for
reappointment seven years after their disengagement. Where an
auditor’s aggregate or cumulative tenure has already exceeded ten
years at the date of commencement of this Code, such auditor shall
cease to hold office as an auditor of the company at the end of the
financial year that this Code comes into force.
19.4 An external auditor shall provide to the company only such other
services as are approved by the board of directors on the
recommendation of the audit committee, but which shall not include

36
any of the following services (whether such services are rendered
directly or indirectly to the company or its holding company or
subsidiary company), namely:
(a) Accounting and book keeping services;
(b) Internal audit services;
(c) Design and implementation of any financial information
system;
(d) Actuarial services;
(e) Investment advisory services;
(f) Investment banking services;
(g) Rendering of outsourced financial services;
(h) Management services;
(i) Taxation services;
(j) Performance evaluation of the board and its committees; and
(k) Any other kind of services as may be proscribed by the
regulators:
Provided that an auditor or audit firm who or which has been
performing any non-audit services on or before the commencement
of this Code shall comply with the provisions of this section before
the end of the first financial year after the date of the
commencement.
19.5 Companies shall require external audit firms to rotate the audit
partners assigned to undertake the external audit of the company
every five years.
19.6 In order to ensure independence:
a) No retired partner of an audit firm shall be appointed as a director
of any company that had been, or still being audited or
investigated by the firm from which the partner retired, until five
years after the disengagement of the firm from such audit or
investigation and/or the disengagement of the partner from the firm.
b) No partner or employee (Audit Manager and above) of an audit
firm shall be employed by the company which the audit firm has
audited until after a period of not less than three years after the
person ceased to be in that position in that audit firm.

37
19.7 Audit quality depends on a number of factors including, but not
limited to, the quality of the individuals who conduct an audit. The
external auditor must therefore ensure:
(a) That the lead engagement partner and the audit team have the
necessary knowledge and relevant skills to meet the
company’s audit requirements.
(b) That the audit team provides quality audit services to the
satisfaction of the Board Audit Committee or Statutory Audit
Committee or both.
(c) That the primary members of the audit team demonstrate the
knowledge, skills and experience necessary to address the
company’s area of greatest financial reporting risk.
(d) That the audit team carries out a comprehensive and sound
risk assessment, including especially an assessment of fraud
risk.
(e) That the audit team is able to demonstrate, a good
understanding of the company’s business and industry and
also the impact of the economic environment on the company.
(f) That the lead engagement partner and the audit team are
satisfied with the quality of other engagement teams that
perform other portions of the audit in various domestic and
foreign locations.
(g) That the lead engagement partner and the engagement team
are independent of the company and approach their work with
a high level of objectivity and professional scepticism.
19.8 Where the regulator is satisfied that an external auditor of a company
has abused his office or acted in a fraudulent manner or colluded in
any fraud in the company, it may by regulatory order direct the
company to approach its members to consider and resolve whether
on the basis of any facts revealed, the company in general meeting
shall change its auditors. The decision on this matter at the general
meeting shall be by show of hands only. The proceeding for the
change of auditor shall be without prejudice to any sanctions that the
regulator might impose on such erring auditor.
19.9 There shall be no direct reciprocal change of the same firms of
auditors taking the form of two audit firms succeeding each other as
opposites in audits from which they have just mandatorily retired.
19.10 Where the Board Audit Committee or the Statutory Audit Committee
has made a recommendation for the appointment, re-appointment or

38
removal of an external auditor, such recommendation can only be
overridden by a 75% vote of the board’s full membership and the
fact of override should be disclosed in the annual report.
19.11 Where External Auditors discover or acquire information during an
audit that leads them to believe that the company or anyone
associated with it has committed an indictable offence under the
Companies and Allied Matters Act, Cap C20 Laws of the Federation
on Nigeria 2004, any other Statute, or regulation(s), they must report
this to the Regulator, whether or not such matter is or will be
included in the Management Letter.
Part E: Relationship with Shareholders
20. Interaction with Shareholders
20.1 The board shall establish a system of constant dialogue with
shareholders, majority and minority, based on mutual understanding
of the objectives of the company. The board as a whole has
responsibility of ensuring that this dialogue with shareholders takes
place.
20.2 The chairman or lead independent non-executive director (where
appointed) shall ensure that the views of shareholders are
communicated to the board as a whole. The chairman shall discuss
governance and strategy with majority and minority shareholders.
20.3 Non-executive directors may attend meetings with majority and
minority shareholders if requested.
20.4 The lead independent non-executive director (where appointed) may
attend meetings with a range of shareholders to listen to their views
in order to help develop a balanced understanding of the issues and
concerns of all shareholders.
20.5 The board shall state in the annual report the steps it has taken to
ensure that the members of the board, and in particular the
independent non-executive directors, develop an understanding of
the views of all shareholders about the company
21. Constructive Use of the Annual General Meeting
21.1 The board shall use the annual general meeting to communicate with
investors and to encourage their participation.
21.2 The general meetings of the company shall be the primary, but not
the only, avenue for meeting and interaction between shareholders
(majority and minority), board and management.

39
21.3 The board shall ensure that all shareholders are treated fairly and are
given equal and simultaneous access to information about the
company.
21.4 General meetings shall be conducted in an open manner allowing for
free discussions on all issues on the agenda. Sufficient time shall be
allocated to shareholders, particularly minorities, to participate fully
and contribute effectively at the meetings.
21.5 The chairmen of all board committees and of the Statutory Audit
Committee shall be present at general meetings of the company to
respond to shareholders’ queries and questions.
22. Protection of Shareholder Rights
22.1 The board shall ensure that shareholders’ statutory and general rights
are protected at all times. In particular, the board shall ensure that
shareholders at annual general meetings preserve their effective
powers to appoint and remove directors of the company.
22.2 The board shall ensure that all shareholders are treated fairly and
equally. No shareholder, however large his shareholding or whether
institutional or otherwise, shall be given preferential treatment or
superior access to information or other materials.
22.3 It is the responsibility of the board to ensure that minority
shareholders are treated fairly at all times and are adequately
protected from abusive actions by controlling shareholders.
22.4 The board shall ensure that the company promptly renders to
shareholders documentary evidence of ownership interest in the
company and related instruments. Where these are rendered
electronically, the board shall ensure that they are rendered to
shareholders promptly and in a secure manner.
23. Venue of Meeting
The venue of a general meeting shall be accessible to shareholders.
The board shall ensure that shareholders are not disenfranchised on
account of the choice of venue.
24. Notice of Meeting
Notices of general meetings shall be at least 21 days from the date
on which the meeting will be held. Companies shall allow at least
seven days for service of notice if sent out by post from the day the
letter containing the same is posted. The notices shall include copies
of such documents, including annual reports and audited financial
statements and other information as will enable members prepare
adequately for the meeting.

40
25. Resolutions
25.1 The board shall ensure that unrelated issues for consideration are not
lumped together at general meetings. Statutory business shall be
clearly and separately set out. Separate resolutions shall be proposed
and voted on for each major issue.
25.2 The board shall ensure that decisions reached at general meetings are
properly and fully implemented as governance directives.
26. Role of Shareholders’ Associations
26.1 The board of every public company shall ensure that dealings of the
company with shareholder associations are always transparent.
26.2 The board shall ensure that in any interaction or dialogue with
shareholders, invitations are also sent on a random or purposive
selection basis to minority shareholders in their individual capacities
to act as a sounding board for the personal views of the minority
shareholders of the company. This is without prejudice to the role of
shareholders’ associations.
27. Institutional Investors
27.1 Shareholders shall play an active role in good corporate governance.
In particular, institutional shareholders and other shareholders shall
seek to influence positively the standard of corporate governance in
the companies in which they invest. They shall demand compliance
with the provisions of this Code and report to the regulator whenever
they observe non-compliance with this Code.
27.2 Institutional investors shall:
(a) Publicly disclose their policy on how they discharge their
stewardship responsibilities;
(b) Have a robust policy on managing conflicts of interest in
relation to stewardship which shall be publicly disclosed;
(c) Monitor their investee companies;
(d) Establish clear guidelines on when and how they will escalate
their stewardship activities;
(e) Be willing to act collectively with other investors where
appropriate;

41
(f) Have a clear policy on voting and disclosure of voting
activity; and
(g) Report periodically on their stewardship and voting activities.

42
Part F: Minority Shareholder Protection
28. Minority Interest Expropriation
28.1 In order to protect minority shareholders and other external
stakeholders, insiders are precluded from engaging in transfers of
assets and profits out of companies for their personal benefits or for
the benefit of those who control the companies.
28.2 A shareholder or group of shareholders, holding in aggregate not less
than one per cent of the share capital or shares of a company, shall
be entitled to submit items for inclusion in the agenda of the annual
general meeting of the company.
28.3 Controlling shareholders have a fiduciary responsibility to minority
shareholders and shall call a general meeting to discuss major or
extraordinary transactions that could have a material impact on the
business of the company, including acquisitions or divestitures,
capital restructuring, change of business model, venture partnerships
or similar activities.
29. Insider Trading
Insider trading undermines investor confidence in the fairness and
integrity of the securities market. Insiders are, therefore, precluded
from buying and selling any security in breach of their fiduciary duty
and other relationship of trust and confidence while in possession of
material, privileged, non-public, and price-sensitive information
about the security.
30. Related Party Transactions
The company shall disclose all transactions between related parties,
whether natural persons or body corporate, including whether such
transactions have been executed at arm’s length and on normal
market terms.
31. Conflict of Interests
The board shall have a distinct policy on conflict of interest
situations. Such a policy shall be guided by the following principles:
(a) Directors shall promptly disclose any real or potential conflict of
interest that they may have by virtue of their membership of the
board.
(b) A director shall not be present during the time any matter on which
he has an interest is being discussed or decided.

43
(c) If a director is not certain whether he is in a conflict of interest
situation, the director concerned shall discuss the matter with the
chairman of the board, the company secretary or the chairman of the
nomination and governance committee for advice and guidance.
(d) If any question arises before the board as to the existence of a real or
perceived conflict, the board shall by a simple majority determine if
a conflict exists. The director or directors potentially in the conflict
of interest situation shall not be present during any discussion and
voting on the issue.
(e) Directors who are aware of a real, potential or perceived conflict of
interest on the part of a fellow director, have a responsibility to raise
the issue promptly for clarification, either with the director
concerned, the chairman of the board or the chairman of the
nomination and governance committee.
(f) Disclosure by a director of a real, potential or perceived conflict of
interest or a decision by the board as to whether a conflict of interest
exists shall be recorded in the minutes of the meeting.
(g) No member of executive management (director level and above)
leaving the services of a relevant regulatory institution, for any
reason, shall be appointed as a director or top management staff of
an institution that has been directly supervised or regulated by the
said regulatory institution until after three years of the
disengagement of such executive management staff from that
regulatory institution.

44
Part G: Relationship with Other Stakeholders
32. Sustainability Issues
32.1 Companies shall pay adequate attention to the interests of their
stakeholders such as employees, creditors, consumers, suppliers,
trade unions, host community, government, the general public and
future generations.
32.2 Companies shall recognise corruption as a major threat to business
and to national development and therefore as a sustainability issue
for businesses in Nigeria. Companies, boards and individual
directors must commit themselves to transparent dealings and to the
establishment of a culture of integrity and zero tolerance of
corruption and corrupt practices.
32.3 The board shall report annually on the nature and extent of its social,
ethical, safety, health and environmental policies and practices.
Issues shall be categorized into the following levels of reporting:
(a) Disclosures of the company’s business principles and codes
of practice and efforts towards implementation of same;
(b) Description of workplace accidents, fatalities and
occupational and safety incidents against objectives and
targets and a suitable explanation where appropriate;
(c) Disclosure of the company’s policies, plans and strategy for
addressing and managing the impact of HIV/AIDS, malaria
and other serious diseases on the company’s employees and
their families;
(d) Adoption, in the company’s operations, of options with the
most benefit or least damage to the environment, particularly
for companies operating in disadvantaged regions or in
regions with delicate ecology, in order to minimize
environmental impact of the company’s operations;
(e) Disclosure of the nature and extent of employment equity and
gender policies and practices, especially as they relate to the
executive level opportunities;
(f) Disclosure of the number and diversity of staff, training
initiatives, employee development and the associated
financial investment;
(g) Disclosure of the conditions and opportunities created for
physically-challenged persons or disadvantaged individuals;
(h) Disclosure of the nature and extent of the company’s social
investment policy; and

45
(i) Disclosure of the company’s policies on corruption and
related issues and the extent of compliance with the policies
and the company’s Code of Business Conduct and Ethics.

46
Part H: Transparency
33. Disclosures
33.1 Companies shall strive to achieve international best practices and
therefore engage in full disclosure of all the matters set out in this
Code.
33.2 The chief executive officer (or equivalent) and chief financial officer
(or equivalent) shall jointly state in writing to the board that the
company’s financial statements present a true and fair view, in all
material respects, of the company’s financial condition and
operational results and are in accordance with relevant accounting
standards.
33.3 The board of a company shall ensure that the company’s annual
report contains the following information on the company’s capital
structure:
(a) Details of issuance of its share capital during the year;
(b) Borrowings and maturity dates;
(c) Details and reasons for share buy-backs during the year, if
any;
(d) Details of directors’ and substantial shareholders’ interests in
the company and subsidiaries or associated companies; and
(e) All acquisitions and disposals (specifying dates, quantities
and values) of each director's, insider’s and substantial
shareholder’s holdings in the company and its subsidiaries
and associated companies.
33.4 The board of every company shall ensure that the company’s annual
report includes a corporate governance report that conveys to
stakeholders clear information on the strength of the company’s
governance structures, policies and practices. The report shall
include the following:
(a) Composition of the board of directors stating the names of the
chairman, the managing director/chief executive officer, the
executive and non-executive directors as well as independent
non-executive directors;
(b) The measurable objectives for achieving gender diversity set
by the board in accordance with its diversity policy, the
progress towards achieving them and the proportion of
women employees in the whole organisation, including
women in senior executive positions and women on the
board.

47
(c) The directorial classification of each director set out against
his name wherever his name appears in the report. This
information shall also be on the company’s website and other
publications of the company.
(d) The matters reserved for the board and those delegated to
Management;
(e) Board appointment process including induction and training
of board members;
(f) Evaluation process and summary of evaluation results for the
board as a whole, its committees and each individual director;
(g) Directors standing for re-election and their educational and
previous board performance evaluation details to enable
shareholders to make informed decisions about their
continued suitability for re-election;
(h) Composition of board committees including names of
chairmen and members of each committee and their
directorial classification;
(i) Description of the roles and responsibilities of the board
committees and how the committees have discharged those
responsibilities;
(j) Aggregate tenure of the Governance Consultant (years and
months) at the end of the reporting period.
(k) The number of meetings of the board and its committees held
during the year and the attendance of individual directors at
those meetings;
(l) Aggregate tenure of each director (years and months) at the
end of the reporting period;
(m) Aggregate tenure of the external auditor (years and months) at
the end of the reporting period;
(n) Statement of the availability or otherwise of the Code of
Business Conduct and Ethics for directors, management and
all employees;
(o) Human resource policies, internal management structure,
relations with employees, employee share-ownership schemes
and other workplace development initiatives;
(p) Company’s sustainability policies and programmes covering
social issues such as corruption, community service,
including environmental protection, HIV/AIDS and matters
of general corporate social responsibility;

48
(q) A detailed list of all the fines and penalties (including date,
amount, and subject matters) paid to regulators in the
financial year for infractions of this Code or other regulations.
33.5 In addition to the foregoing, the board shall ensure that the
company’s annual report make sufficient disclosure on accounting
and risk management issues. In particular, the following matters
shall be disclosed:
(a) A statement of the director’s responsibilities in connection
with the preparation of the financial statements.
(b) Details of accounting policies utilised and reasons for
changes in accounting policies.
(c) Where the accounting policies applied are not in conformance
with standard practices, the external auditor shall express an
opinion on whether they agreed with the departure and the
reasons for such departure.
(d) A statement by the directors that the business is a going
concern, with supporting assumptions or qualifications where
necessary.
(e) Executive directors’ remuneration, share options,
compensation for loss of office, and terminal benefits.
(f) Non-executive directors’ fees and allowances and share
options, if any.
(g) The board’s evaluation of the risk management processes of
the company and their effectiveness.
33.6 The Chairman’s statement in the annual report shall provide a
balanced and readable summary of the company’s performance for
the period under review and future prospects, and shall expressly
state whether the board’s expectations (financial and non-financial)
for the reporting period have been met.
33.7 The annual report shall contain a statement by the board with regards
to the company’s degree of compliance with the provisions of this
Code. In particular it shall provide:
(a) Assurances that effective internal audit function exists in the
company and that risk management control and compliance
system are operating efficiently and effectively in all respects;
(b) The board’s explanation of the basis for the rejection of the
audit committee’s recommendation on the appointment,
reappointment or removal of an external auditor and

49
subsequent override of the recommendation by 75% vote of
board’s full membership;
(c) Statement on the sustainability initiatives of the company;
(d) The nature of any related party relationships and transactions
as well as relevant information about their purpose and
financial magnitudes necessary to understand whether the
transactions have been at arm’s length and that the company
has not suffered any loss or disadvantage from such
transactions.
33.8 Every company shall disclose details of any director’s interest in
contracts either directly or indirectly with the company or its
subsidiaries and holding companies. The details shall include the
name of the director, his directorial classification, the nature and
details of the contract and the director’s interest therein: provided
that the disclosures required do not include the director’s service
contract.
33.9 Every company shall disclose the details of any service contracts and
other contracts with controlling shareholder(s), their group networks
and associates. The details shall include the names of the parties, the
nature of the contract, and monetary values involved.
33.10 Disclosures on related party transactions relating to directors’
current accounts or loans shall include the following:
(a) The amount of the transactions;
(b) The amount of outstanding balances at the beginning and at
the end of the financial year including the terms and
conditions of the loans and details of any guarantees given
and received;
(c) The amounts of principal and interest which have fallen due
and have not been paid with the overdue period stated, and
the amount of provisions for doubtful debts related to the
amount of the outstanding balances;
(d) The aggregate expense recognised during the period in
respect of bad or doubtful debts due from related parties, and
the proportion of it attributable to directors; and
(e) A statement as to whether the transactions were conducted at
arm’s length.
33.11 The disclosures required to be made for related party transactions
shall be made separately for each of the following:
(a) The parent company;

50
(b) Entities with joint control or significant influence over the
entity;
(c) Subsidiaries;
(d) Associates;
(e) Joint ventures in which the entity is a partner;
(f) Key management personnel of the entity or its parent; and
(g) Other related parties.
33.12 The board shall use its best judgment to disclose any matter even
though not specifically required by this Code to be disclosed if in the
opinion of the board such matter is capable of affecting the financial
condition of the company or its status as a going concern. The onus
of proof of such possible negative effect is on the board.
33.13 In evaluating and reporting on the extent of compliance with this
Code, the board may engage independent governance experts. Where
such is done, the name of the expert shall be disclosed. A summary
of the report and conclusions of the expert shall be included in the
company’s annual report.
33.14 Concerned members of the board of directors, particularly
independent non-executive directors, shall ensure that the following
disclosures are promptly made to the regulator:
(a) Any unreported cases of insider trading or related party
transactions.
(b) Director’s dissent on any matter before the board being
inappropriately or unjustifiably overridden by the board
majority, and not properly minuted.
(c) Any evidence of the impairment of the external auditor’s
independence and objectivity, or failure to approach his work
with an acceptable degree of professional scepticism.
(d) Deliberate withholding of information from directors.
(e) Any egregious violation of this Code, laws of the land and
extant regulations, and flagrant disregard for accounting
standards.
(f) Any evidence of the impairment of the independence of the
board or any of its committees.

51
(g) Condoning of high-level unethical behaviour and conduct in
the company.
33.15 For the avoidance of doubt, the regulator is entitled to demand for
further documents or reports from the company to enable it validate
the disclosures made herein.
34. Corporate Governance Evaluation
34.1 Every company shall carry out annual corporate governance
evaluation which shall be facilitated by an independent external
consultant who must be registered by the regulator for this purpose.
34.2 The corporate governance evaluation shall not be undertaken by the
company’s external auditor or a firm related to the external auditor.
34.3 The report of this evaluation shall be presented at the company’s
annual general meeting and a copy of the report sent to the regulator
and made accessible on the investors’ portal of the company.
35. Company Investors’ Portal
35.1 Companies shall adopt and implement a communications policy that
enables the Board and Management to communicate, interact with
and disseminate information regarding the operations and
management of the company to shareholders, stakeholders and the
general public.
35.2 The board shall ensure that company reports and other
communications to shareholders and other stakeholders are in plain
language, readable and understandable and consistent with previous
reports.
35.3 Communication with shareholders, stakeholders and the general
public shall be governed by the principle of timely, accurate and
continuous disclosure of information and activities of the company
so as to give a balanced and fair view the company, including its
non-financial matters.
35.4 Companies shall ensure that shareholders have equal access to the
company’s information. The board shall establish web sites and
investors’ portals where the communication policy as well as the
company’s annual reports for a minimum of five immediately
preceding years and other relevant information about the company
shall be published and made accessible in downloadable format to
the public.

52
Part I: Code of Business Conduct and Ethics
36. Code of Business Conduct and Ethics
36.1 Every company shall have a Code of Business Conduct and Ethics
which shall be regarded as part of the corporate governance practices
of the company.
36.2 The Code shall contain at least the following:
(a) In accordance with legal requirements and agreed ethical
standards, directors and senior management of the company
will act honestly, in good faith and in the best interests of the
whole company;
(b) Directors owe a fiduciary duty to the company as a whole,
and have a duty of care, skill, diligence and loyalty in
fulfilling the functions of their offices and exercising the
powers attached to those offices;
(c) Directors shall undertake diligent analysis of all proposals
placed before the board and act with the level of skill
expected from directors;
(d) Directors shall not make improper or prejudicial use of
information acquired as directors and not disclose non-public
information except where disclosure is authorised or legally
mandated;
(e) Directors shall not take advantage of their position as
directors for personal gain or compete with the company;
(f) Directors shall not engage in conduct likely to discredit the
company, and shall encourage fair dealing by all employees
with the company’s customers, suppliers, competitors and
other employees;
(g) Directors shall encourage the reporting of unlawful or
unethical behaviours and actively promote ethical behaviours
and the protection for those who report violations in good
faith;
(m) Directors shall have an obligation, at all times, to comply
with the principles of this Code.
36.3 The Code of Business Conduct and Ethics shall:
(a) Commit the company, its board and management to the
highest standards of professional and ethical behaviour,
business conduct and sustainable business practices;

53
(b) Be designed with due consideration of the interests of
management and employees;
(c) Receive its implementation commitment from the managing
director/chief executive officer and executive management;
(d) Be sufficiently detailed as to give clear guidance to users; and
(e) Be formally communicated to all persons to whom it applies.
36.4 The board shall be responsible for formulating and reviewing the
Code of Business Conduct and Ethics. All directors, management
and other employees of the company shall be required to abide by
the code. The board shall set a clear tone at the top and monitor
adherence to ensure that breaches are effectively sanctioned.
36.5. Globally Responsible Business Conduct
36.5.1. Responsible Business Conduct has become everyone’s business involving
not only local and domestic companies, but also multinationals and their
host operating environments. It is therefore a key priority on global
economic agenda on which appropriate emphasis shall be laid for meeting
not only the expectations of owners, but also the needs of all relevant
stakeholders and the suitability of the local operating environment for
businesses to thrive and prosper.
36.5.2. This Code recognizes that international investment is of global importance
having contributed largely to the development of world economy, hence the
critical need for principles and standards for responsible business conduct
in a global context, consistent with applicable laws and international
standards.
36.5.3. These provisions on responsible business conduct are in line with the
shared values of many governments whose aim is to promote positive
contributions by all enterprises, both domestic and foreign, to the
economic, social and environmental well-being of their own economies and
the rest of the world.
36.5.4. Enterprises operating within a global context shall therefore take into
account the established processes in the countries in which they operate and
international best practices, while considering the views of all relevant
stakeholders. Enterprises shall particularly in this regard:

54
a) Contribute to economic, environmental and social progress with a
view to achieving sustainable development.
b) Respect the internationally recognized human rights of those
affected by their activities.
c) Encourage local capacity building through close co-operation with
the local community, including business interests, as well as
developing the enterprise’s activities in domestic and foreign
markets, consistent with the need for sound commercial practice.
d) Encourage human capital development, in particular by creating
employment opportunities and facilitating training opportunities for
employees.
e) Refrain from seeking or accepting exemptions not contemplated in
the statutory or regulatory framework related to human rights,
environmental, health, safety, labour, taxation, financial incentives,
or other issues.
f) Support and uphold good corporate governance principles and
develop and apply good corporate governance practices throughout
enterprise groups.
g) Develop and apply effective self-regulatory practices and
management systems that foster a relationship of confidence and
mutual trust between enterprises and the societies in which they
operate.
h) Promote awareness of and compliance by workers employed by
multinational enterprises with respect to company policies through
appropriate dissemination of these policies, including through
training programmes.
i) Refrain from discriminatory or disciplinary action against workers
who make genuine and conscientious reports to management or, as
appropriate, to the competent public authorities, on practices that
contravene the law or the enterprise’s policies.
j) Carry out risk-based due diligence, for example by incorporating it
into their enterprise risk management systems, to identify, prevent
and mitigate actual and potential adverse impacts as described in
paragraphs (k) and (l), and account for how these impacts are

55
addressed. The nature and extent of due diligence depend on the
circumstances of a particular situation.
k) Avoid causing or contributing to adverse impacts on matters covered
by this Code, through their own activities, and address such impacts
when and where they occur.
l) Seek to prevent or mitigate an adverse impact where they have not
contributed to that impact, when the impact is nevertheless directly
linked to their operations, products or services by a business
relationship. This is not intended to shift responsibility from the
entity causing an adverse impact to the enterprise with which it has a
business relationship.
m) In addition to addressing any adverse impacts, encourage, where
practicable, business partners, including suppliers and sub-
contractors, to apply principles of responsible business conduct
compatible with this Code.
n) Engage with relevant stakeholders in order to provide meaningful
opportunities for their views to be taken into account in relation to
planning and decision-making for projects or other activities that
may significantly impact local communities.
o) Abstain from any improper involvement in local political activities.
p) Engage in or support, where appropriate, private or multi-
stakeholder initiatives and social dialogue on responsible supply chain
management while ensuring that these initiatives take due account of
their social and economic effects in the local environment and of
existing internationally recognized standards.
36.5.5. This Code stresses that even though the primary responsibility for
improving the legal and institutional regulatory framework lies with
relevant governments, there is nevertheless a profound case for
enterprises to implement good corporate governance practices in their
operating environments.

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Part J: Enforcement
37. Sanctions
37.1 Compliance with the provisions of this Code is mandatory.
Accordingly, violations of the provisions of this Code will occasion
both personal sanctions against the persons directly involved in the
violation, and sanctions against the companies or firms involved in
such violation.
37.2 The enforcement of the code shall be the responsibility of the FRC
and sectoral regulator, where applicable.
37.3 Without prejudice to section 37.2 of this code, a sectoral regulator
shall in its guideline provide for sanction for violation of this code in
respect of the sector its regulates.
37.4 Where sanctions have been imposed pursuant to section 37.1 above,
the person or the firm is precluded from making any reimbursements
to the person or firm so sanctioned.

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Part K: Miscellaneous
38. Commencement
38.1. This Code is effective from 17th
October 2016, and every company
to which it applies is expected to comply with it in respect of the
financial year ending after that date.
38.2. From the date of commencement of this Code, it supersedes any
corporate governance code in force in Nigeria before that date.
38.3. Without prejudice to the provision of section 38.2 of this code, a
sectoral regulator may issue sectoral supplementary guideline on
sector specific matters relating to corporate governance.
38.4 In recognition of the need for companies in the Alternative
Securities Market to comply with corporate governance, the capital
market regulator may make provisions in its sectoral supplementary
governance guideline specific to such companies.
38.5 Where there is a conflict between the provisions of this code and any
sectoral supplementary governance guideline, the provisions of the
code shall to the extent of those inconsistencies prevail.
39. Transitional Arrangements
An entity shall apply this Code in its annual annual reports for the
periods beginning on or after 17th
October 2016. Earlier application
is permitted. If an entity applies this Code in its annual annual
reports for a period before17th
October 2016, it shall disclose that
fact.
40. Definitions
40.1 In this Code, unless the context otherwise requires:
40.1.1 “Chief executive officer” means an officer who is
responsible for the execution of policy and the day to day
administration of the affairs of an entity.
40.1.2 “Chief financial officer” means a person appointed as the
chief financial officer of a company;
40.1.3 “Company” means a company incorporated under the
Companies and Allied Matters Act, Cap. C20, Laws of the
Federation of Nigeria 2004 or any previous legislation it
replaced;

58
40.1.4 “Director” means a director appointed to the board of a
company;
40.1.5 “Executive management” means the chief executive officer
and other persons having authority and responsibility for
planning, directing and controlling the activities of the
company, whether or not they are members of the board of
directors of the company;
40.1.6 “Extended family member” means those persons who may
be reasonably expected to influence, or be influenced by,
that person in his dealing with a company.
40.1.7 “Independent Governance Expert” is a person who is very
knowledgeable and skilled in corporate governance;
40.1.8 “Independent Shareholder” means a shareholder who:
(a) is not a substantial shareholder of the company (that
is, one whose shareholding, directly or indirectly, does
not exceed 0.1% of the company’s paid-up capital) or
a nominee of a substantial shareholder of the
company or otherwise related to such a substantial
shareholder of the company;
(b) is not a representative of a shareholder that has the
ability to control or significantly influence
Management;
(c) has not been an employee of the company or group
within the last five years;
(d) is not an extended family member of any of the
company’s advisers, directors, senior employees,
consultants, auditors, creditors, suppliers, customers or
substantial shareholder;
(e) does not have, and has not had within the last five
years, a material business relationship with the
company either directly, or as a partner, shareholder,
director or senior employee of a body that has, or has
had, such a relationship with the company;
(f) does not render any professional, consultancy, or other
advisory services to the company or the group;
(g) does not receive, and has not received, any
remuneration from the company and does not take
part in the company’s share option or performance-
related pay scheme, nor is a member of the company’s
pension scheme;

59
(h) is not a member of the board and has not served on the
board of the company within the last nine years;
(i) does not have significant links with other directors
of the company through involvement in other
companies or bodies.
40.1.9 “Insider” means the following:
(a) any person who is connected with the company
in one or more of the following capacities:
(i) a director of the company or a related company;
(ii) an officer of the company or a related company;
(iii) an employer of the company or a related
company;
(iv) an employee of the company, involved in a
professional or business relationship to the
company;
(v) any shareholder of the company who owns 5
per cent or more of any class of securities or
any person who is or can be deemed to have any
relationship with the company or member;
(vi) members of the Statutory Audit Committee of a
company; and
(b) any of the persons listed in paragraph (a), who
by virtue of having been connected with any
such person or connected with the company in
any other way, possesses unpublished price
sensitive information in relation to the securities
of the company, and any reference to
unpublished price sensitive information in
relation to any securities of a company is a
reference to information which:
(i) relates to specific matters relating or of concern
(directly or indirectly) to that company, that is,
is not of a general nature relating or of concern
to that company; and
(ii) is not generally known to those persons who are
accustomed to or would be likely to deal in
those securities but which would, if it were

60
generally known to them be likely materially to
affect the price of those securities;
40.1.10 “International firm” means audit firm that has at least a
non-Nigerian partner in the firm whether incidental or
otherwise;
40.1.11 “listed company” means a company which has any of its
securities listed on any recognised stock exchange;
40.1.12 “Listed and Significant Public Interest Entities” means
entities whose market capitalisation is not less than =N=1
billion and/or whose annual turnover is not less than
=N=10 billion.
40.1.13 “national firm” means audit firm that has no non-Nigerian in
the partnership in the firm whether incidental or
otherwise.
40.1.14 “regulated private companies” means those private
companies that file returns to any regulatory authority
other than the Federal Inland Revenue Service and the
Corporate Affairs Commission, except such companies with
not more than eight (8) employees;
40.1.15 “regulator” or “regulatory authority” means the Financial
Reporting Council of Nigeria and other sectoral regulators
as may be appropriate;
40.1.16 “related company” means anybody corporate which is that
company’s holding company, subsidiary or fellow
subsidiary;
40.1.17 “related party” means a person or entity that is related to
any company subject to this Code;
40.1.18 “substantial shareholder” means a shareholder whose
shareholding, directly or indirectly, exceeds 0.1% of the
company’s paid up capital;
40.1.19 “whistle-blower” means any person(s) including the
employee, management, directors, customers, service
providers, creditors and other stakeholder(s) of an
organisation who reports any form of unethical behaviour
or dishonesty to the appropriate internal authority or
external regulators.

61
40.2 In this Code:
40.2.1 Words importing the masculine gender include females;
and
40.2.2 Words in the singular include the plural and words in the
plural include the singular.
40.3 In construing any fraction resulting from any provisions of
this Code:
40.3.1 Where the fraction results from the use of the expression
“less than”, the figure shall be rounded-up; that is to say,
the fraction shall be rounded off as one.
40.3.2 Where the fraction results from the use of the expression
“more than”, the figure shall be rounded-down; that is to
say, the fraction shall be disregarded

PRIVATE SECTOR CODE -2016

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