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The newly launched code of corporate governance for quoted companies at the Nigerian Stock Exchange has been welcomed by investors.

While some market watchers say the various regulations by the Securities and Exchange Commission (SEC) to restore confidence in the market have not yielded the intended results, some investors who spoke to NEXT yesterday said the new code initiative, if well enforced, will further boost investors’ confidence that has been eroded in the system.

Albert Edun, an executive member of the Nigerian Shareholders Solidarity Association, said that with the reviewed code of corporate governance, “I believe that companies will now be run in a transparent manner.”

“We, the investors, can then get accurate and reliable information that will allow us make informed decision on investment,” Mr. Edun said.

David Amaechi, an investment analyst and a member of the Shareholders Association of Nigeria, said the new code will boost investors’ confidence in quoted companies, “because the code now mandates companies to state in their annual financial results a corporate governance report detailing how they are complying with the corporate governance.”

“SEC and the review committee should be acknowledged because of this initiative,” Mr. Amaechi said, adding that enforcement of the code should be priority for the Exchange Commission to further boost confidence in the market.

A review committee, established September 2008, headed by Balarabe Mahmoud, was set up to review and update the 2003 code of corporate governance for public companies in Nigeria.

International best practice

At the official launch of the new code on Monday, Udoma Udo Udoma, chairman of SEC, said the corporate governance code was reviewed in the international best practice.

“In Nigeria, it became particularity important because of some of the unethical practice that was revealed in the administration of some companies,” Mr. Udoma said.

“The new code is formulated to guide corporate companies in the conduct of their affairs. While the application of the new code is limited to public companies, other companies are encouraged to use the principles set out in the code to guide their own activities. While the code sets out best practices, it allows companies to determine which one best suits them.

“Take for instance the issue of committees; while the code prescribes and describes the sort of committee each company should have, it leaves to the board of such company the power to determine which one and how many they need for their particular business; because it is clear that one type does not suit all,” Mr. Udoma said.

Christopher Kolade, a former ambassador to the United Kingdom, said at the occasion that every company must bring up to its board a kind of competence that is required to run a successful business.

Mr. Kolade said companies’ boards must also communicate with various operators in their organisations.

“Communication is key to the success of the organisation. Communication, not just in giving accurate information in good times, but also in giving accurate information in times that are not so good because that is the way to be transparent,” Mr. Kolade said.