INJUNCTION RESTRAINS FRCN FROM HEARING ON NEW CORPORATE GOVERNANCE CODE

Justice O.E Abang of the Federal High Court, Ikoyi, on Thursday 14th May, 2015 stopped further processes relating to the draft corporate governance code released by the Financial Reporting Council of Nigeria (FRCN) on April 15, 2015 with a 30-day window for stakeholders to comment on the 133-page document, ahead of a planned public hearing on May 19, 2015.

The presiding judge, at the hearing of the ex parte application for injunction brought by Timothy Adesiyan  and nine others against the Minister of Trade and Investment and three others , granted the applicants’ ex parte application and ordered that the defendants should maintain status quo and suspend further deliberations, considerations, proceedings, processes and all actions relating to the draft National Code of Corporate Governance (NCCG) 2015, pending the hearing of the motion on notice for injunction.

The judge heard the arguments of the plaintiffs’ counsel, Kemi Pinheiro (SAN) in favour of the ex parte application and thereafter gave a well-considered bench ruling wherein he granted the applicants’ ex parte application. Subsequently, the suit was adjourned to May 20, 2015, for hearing of the plaintiffs’ motion on notice for injunction.

BusinessDay had exclusively reported last week about the fears being expressed by business leaders and investors that the policy document could wield excessive powers over Nigeria’s already challenged private sector, following the deadline for public comments which expired yesterday. According to comments received exclusively by BusinessDay on conditions of anonymity, the NCCG, according to them, may swing the country from one extreme of weak corporate governance to another extreme of excessive regulation.

The NCCG is the government’s comprehensive response to the weak corporate governance environment in Africa’s largest economy, identified as a main cause of the 2008/2009 banking sector crisis. The document promises to harmonise existing codes in the banking, pension, insurance and other sectors into a unified code of rules for board compositions, audit processes, and shareholder protection, among others, which will be regulated by the Financial Reporting Council of Nigeria (FRC).However, business leaders say the convergence of the codes into a one-size-fits-all would miss out on industry specific details or contradict existing industry policies.

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