A legal practitioner has called for the harmonisation of the various codes of corporate governance in the country to address the problem of conflicts of interest posed by the relationship among owners, shareholders, managers and other key stakeholders in a given organisation.
A Senior Partner in Kenna and Associates, Mr. Fabian Ajogwu (SAN), who made this call in Lagos at 4th International Conference of the Institute of Chartered Secretaries and Administrators of Nigeria, (ICSAN), Lagos Chapter, said there was need to have an effective corporate governance structure that would provide a clear separation of ownership from management, especially companies’ operation within group structures.
He stated that the current practice in a number of companies with group structure, whereby officers of the various subsidiaries report directly to the chief executive officer of the parent company, bypassing their various Boards was wrong, noting that this represented a clear erosion of checks and balances in the whole structure.
Ajogwu further pointed out that there were critical aspects of governance that needed to be proactively addressed in the country.
Some of the areas he listed to be looked into included; disclosure and transparency–adopting International Financial reporting Standards (IFRS)–the rights of shareholders including minority interests, duties, responsibilities and liability of directors, separation of powers between the general meeting and the board, and post-merger best practices, especially in companies operating in groups.
“The practice in some Nigerian banks has been that the management of the subsidiaries report directly to the CEO of their parent, and in so doing, side track their respective Boards, rendering them ineffective in governance,” he observed.
“The effect is that accountability to the Board is reduced and the checks and balances which an effective Board would have brought to bear on the company are eroded,” he added.
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