NAVIGATING CORPORATE GOVERNANCE: BEST PRACTICES FOR NIGERIAN BUSINESSES

Navigating corporate governance is a crucial aspect of running a successful business in Nigeria. Corporate governance is the system by which companies are administered, directed, and controlled to ensure their long-term success. In Nigeria, corporate governance plays a crucial role in ensuring transparency, accountability, and ethical behavior within organizations.

According to the Nigerian Code of Corporate Governance (NCCG) 2018, companies in Nigeria are required to have at least two directors and a board to ensure transparency and prevent any single person from being granted autonomy in decision-making. However, under the Companies and Allied Matters Act (CAMA) 2020, Nigerian limited companies are allowed to have a single director subject to certain conditions. The company must be a private company, and its annual turnover and net assets value must not exceed NGN120 million and NGN60 million, respectively. However, foreign-owned companies cannot be single director companies. This provision is a welcome development that will ease the administrative burden and cost of running small and medium-sized enterprises (SMEs) in Nigeria. Entrepreneurs who set up businesses can serve as the sole director, which will help them make quick decisions and respond to market changes promptly. Shareholders have the right to receive notice of meetings and participate in the company’s decisions by vote. Public companies must disclose financial and non-financial information to the public, including annual financial statements, audit reports, and corporate governance reports in a clear, concise, and understandable manner.

To ensure compliance with corporate governance best practices, companies in Nigeria should consider the following:
1. Establish a strong board of directors: A strong board of directors is essential for effective corporate governance. The board should be composed of individuals with diverse backgrounds and expertise who can provide guidance and oversight to the company.
2. Develop a code of conduct: A code of conduct outlines the ethical standards and values that guide the behavior of employees and management. It is essential to establish a code of conduct that reflects the company’s values and culture.
3. Implement effective risk management practices: Risk management is an essential component of corporate governance. Companies should identify and assess risks and develop strategies to mitigate them.
4. Ensure transparency and disclosure: Transparency and disclosure are critical for building trust with stakeholders. Companies should provide clear and concise information about their financial performance, governance practices, and other relevant information.
5. Engage with stakeholders: Engaging with stakeholders is essential for building trust and ensuring that the company’s interests are aligned with those of its stakeholders. Companies should engage with stakeholders regularly and seek their input on important decisions.

By following these best practices, Nigerian businesses can navigate corporate governance successfully and build a foundation for long-term success.