Most Nigerian Companies see Corporate Governance as an expensive, cumbersome, slow and retrogressive process but in truth, it is the only proven way for a company to grow and thrive.
Here’s why.
Organisations in Nigeria are already encumbered by various delimiting factors, which are generic to the country but the continued absence of Corporate Governance values has further eroded the gains that could have accrued.
The ability to create sustainable wealth through the building of enterprises and companies, individuals, shareholders, directors and boards must attain a level of Corporate Governance that dovetails attentively with the Companies and Allied Matters Act [CAMA] repealed and re-enacted by the Nigerian Senate on May 15, 2018majorly to ease the burden on small companies.
Whether it would be the impetus needed to fire the country forward is another matter entirely. But whatever the size or scope of the business, Corporate Governance still applies.
The economic climate in Nigeria has not had enoughstimuli to build strong institutions over time – companies that have been and continue to exist and meaningfully contribute to the country’s development because there continues to be a lack of proper adherence to CAMA (not Karma).
The issue of Corporate Governance is a wide-ranging one that can be the enabler of a greater Nigeria in a world now more defined by openness and collaboration, governments and companies have to be driven by much more than just avarice and profit.
As an entity [Nigeria], even though operating a democratic form of governance does not totally align or have an abiding culture of transparency and accountability – the two important factors that drive Corporate Governance.
Havard Business Review believes, “Corporate Governance 2.0 asks the functional question: What goals are the activists, governance rating agencies, boards, and everyday shareholders all trying to achieve?
The answer is clear: insulation from frivolous litigation, but meaningful exposure to liability in the event of a dereliction of duty in the boardroom.”
The subject of liability is a responsibility enabler. This makes Corporate Governance so important and of urgent need for Nigeria’s economic reforms but it will only bear fruit [for all the people] when the proper laws of Corporate Governance oversee the rules of all business engagement.
As long as companies and enterprises run foul of their law of formation and association, the more these corporations flout the laws and get away with it, the more the economy will be run aground.”
Many companies in Nigeria do not have the proper alliance between the board of directors and the shareholders – with both parties not knowing how they are beholden to each other. One or two ‘strong’ directors run many companies, with the rest of the board and shareholders as mere spectators.
Section 299 and 300 of CAMA explains in totality the rights of the shareholder. As a Corporate and Commercial transactions law firm, we try to sensitize organisations on this and how it affects their firms.
Corporate Governance is not CSR
All said and done, Corporate Governance must not be confused with Corporate Social Responsibility [CSR], which is the continuing commitment by business entities to behave ethically and contribute to economic development while improving the quality oflife of the work force and their families as well as of the local community and society atlarge.
Being socially responsible means not only fulfilling legal expectations but alsogoing beyond compliance and investing “more” into human capital, the environment andthe relations with stakeholders.
The Nigerian constitution, and by alliance CAMA, must be tasked to do more! Nigeria, as an entity has been a powder keg of ability and potential – now the building blocks – the corporations, ministries, parastatals, must all be in correct alliance with the law to enablethat potential to be transformed into quantifiable results.
“It [Corporate Governance] goes beyond philanthropy and compliance, and addresses how companies manage their economic, social, philanthropic and environmental impacts, as well as their relationships in all key spheres of influence: the workplace, the marketplace, the supply chain, the community and the public policy realm,” says Michael W. Peregrine, in a publication on Havard Law website.
It is all about impact on the country and her people. To properly deliver the dividends of democracy amid the prevalence of a free market economy, Corporate Governance must move beyond lip service to exploits of decisive actions.
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