By Peter OBIORA InvestAdvocate
Lagos (INVESTADVOCATE)-The Nigerian Stock Exchange (NSE) on Monday announced that its newly introduced Corporate Governance Rating System (CGRS) is mandatory for quoted companies; as it endorsed and recognised eight (8) pilot companies.
Oscar Onyema, chief executive officer (CEO) of the Exchange affirmed at the launch that the CGRS is designed to rate companies listed on Nigerian bourse based on their corporate governance and anti-corruption culture, thereby improving the overall perception of and trust in Nigeria’s capital markets and business practices.
“With this Corporate Governance Rating System, it is anticipated that there would be an improvement in the overall perception of capital markets and business practices. It is expected that companies will enjoy tangible business advantages from risk-oriented and/or ethically sensitive business partners and investors. In addition, competitors would be challenged to establish the same level of good governance by setting standards of excellence. Companies would not only set themselves apart from their peers, but also contribute to improving the climate for doing business in Nigeria,” he said.
On his part, Soji Apampa, executive director (ED) of Convention on Business Integrity (CBi), partners to the initiative at the launch shared the design & pilot phase of the CGRS which was done between May 2013 and September 2014.
According to him, the three (3) step approach envisioned for the CGRS after the pilot phase is firstly, only companies which score at least 70 percent in the Corporate Compliance Assessment Score; equivalent to 35 percent of a total 50 percent possible of the overall CGRS score are eligible to conduct a fiduciary awareness training for directors. ‘’This has to be verified by the consultant before conducting the Corporate Integrity Assessment,’’ he said.
Secondly, only when at least 50 percent of the directors of a company passed the test, that the company becomes eligible to conduct the Corporate Integrity Assessment.
The third is that only companies with an accumulated score of at least 70 percent will be listed on the Corporate Integrity Index at the Nigerian bourse.
“The rating system is based on a holistic multi-stakeholder approach that uses a diverse information collection and verification approach, which relies not only on self-assessments of companies but also on experiences of stakeholders and experts. It is envisioned to be more transparent on rating procedures and rating governance than other Corporate Governance indices,’’ Apampa said.
He disclosed that the HUMBOLDT-VIADRINA School of Governance (Berlin/Germany) was appointed as the International Observer to review and support the process of establishing Nigeria’s Corporate Governance.
However, the NSE announced 64 names on the list of CGRS certified directors.
The eight pilot companies endorsed and recognised by the NSE and CBi include lenders Access bank Plc, Diamond Bank Plc, First Bank of Nigeria, United Bank for Africa Plc, Zenith Bank Plc, insurer Mansard Insurance Plc, aviation servicing company, Nigerian Aviation Handling Company (Nahco Aviance) and Oil marketing firm Oando Plc.
