LEADERSHIP, CORPORATE GOVERNANCE BOARD …

....Committed to the development of Corporate Governance

THE NIGERIAN OBSERVATORY ON COPORATE GOVERNANCE 2019

LEADERSHIP,CORPORATE GOVERNANCEBOARD EFFECTIVENESS IN NIGERIA

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2 Nigerian Observatory On Corporate Governance 2019

Leadership, Corporate Governance & Board Effectiveness in Nigeria

The success or failure of any organization rests on its leadership. In the 21st century, corporate governance is becoming a matter of enormous public attention and concern. This is directly linked to the rampant demise of large corporations and institutions all over the world. Corporate governance failures and scandals of organizations such as Enron, WorldCom, Tyco, Adelphia, Arthur Anderson, Lehman Brothers, Freddy Mac and Funny Mae in the USA; Marconi and Northern Rock (in UK); Parmalat (in Italy); Yukos (in Russia); Cadbury (in Nigeria) have kept governance issues on the front burner of academics, economists, boards, and policymakers.1

1 Editorial Committee: Professor Chris Ogbechie, Director SCGN; Professor Fabian Ajogwu, SAN, Director SCGN; Mrs Chioma Mordi, COO, SCGN and Mr. Uzodinma Okeke.

Overview

3Nigerian Observatory On Corporate Governance 2019


Introduction

Leadership is the ability to anticipate, envision, maintain flexibility and empower others to create the needed organizational and long-term changes.2 In a corporate entity, strategic leadership practice rests at the top, in particular, with the Chief Executive Officer, the board of directors and senior management officers.3

Some scholars argue that leadership is the ability of any person to influence, motivate, and enable others to contribute toward the effectiveness and success of the organisation of which they are members. However, others perceive leadership as board actions that have served to move organisations forward so they can successfully meet these challenges: mobilize action to further the mission; help the organisation adapt to changing circumstances; respond to the crisis; identify opportunities for change and growth; and/or create future leaders.4 Another scholar asserts that leadership is the creation of a vision about a defined future state, which seeks to enmesh all members of an organization in its net. He stated further that, a leader is one who designs and implement by way of instructing the subordinates, enthusiastically, motivating, encouraging and guiding them towards the achievement of the enterprise’s goals and objectives.5

On the other hand, corporate governance is the system by which organizations are directed and controlled.6 Also, it has been defined as a set of processes, customs, policies, laws and institutions affecting the way in which a corporation is directed, administered or controlled. Corporate governance also includes the relationship among the many players involved (the shareholders and stakeholders) and the goals for which the corporation is governed. The principal players are the shareholders, management, the board of directors, the accountants and auditors. Other stakeholders include employees, suppliers, customers,

2 D. Minja “The Role of Corporate Governance and Strategic Leadership Practices in Mitigating Risks in Stock Brokerage Firms in Nairobi” retrieved from https://www.ajol.info/index.php/jolte/article/view/148046 accessed on 27th November 2019

3 Ibid

4 J. Olabisi and O. Olufemi, op. cit

5 K. Atoyebi, F. Adekunjo, K. Kadiri, M. Ogundeji, A.Falana, (2012) “The Impact of Corporate Governance and Leadership on Entrepreneurship Development in Nigeria” retrieved from: http://www.iosrjournals.org/iosr-jhss/papers/Vol6-issue2/G0624668.pdf?id=5920 accessed on 3rd December 2019

6 Murithi, P. (2009). Corporate Governance Practices. Newsline March ed. The professional Journal of KAS-NEB.Nairobi.



lenders, regulators and the community at large. There is a direct and clear link between the actions of the board of directors and the success of the organizations measured in terms of such factors like profitability, reputation and share price. Nonetheless, only good and effective leadership can bring success for any organization.7

This paper therefore examines corporate governance and leadership in Nigeria under the following subsections: Corporate Governance in Nigeria; Challenges of Corporate Governance in Nigeria; Board Leadership and Corporate Governance, Board Structure and Effectiveness, Board Operations.

7 J. Olabisi and O. Olufemi, op. cit



The main purpose of corporate governance is to build and strengthen accountability, credibility, transparency, integrity, and trust in an organization. These are equally relevant whether businesses are privately, publicly or state-owned. It has been widely acknowledged by experts that good corporate governance helps most developing countries and emerging markets to attract domestic and foreign direct investments, build their markets competitiveness, restore investors’ confidence, promote economic growth and boost national development.8

There are a number of corporate governance provisions in the Companies and Allied Matters Act, 1990, the Bank and other Financial Institutions Act, 1991 (as amended) the Investment and Securities Act, 1999 (as amended) the Securities and Exchange Commission Act, 1988 (as amended). These laws which place the responsibility for regulating corporate governance on the CAC, SEC and CBN reflect some of the OECD principles of corporate governance following the growing concerns on issues of corporate governance and realizing the need to align with the International Best practices, the Securities and Exchange Commission (SEC) in collaboration with the Corporate Affairs Commission (CAC) inaugurated a seventeen member committee to identify weaknesses in the current corporate governance practice in Nigeria and fashion out necessary changes that will improve our corporate governance practices. The final report of the committee was eventually approved by the Boards of the SEC and CAC and released as the code of best practices on corporate governance in Nigeria for public quoted companies in 2003.9

In 2005, the Society for Corporate Governance Nigeria was set up to ensure the development of good corporate governance amongst corporations in Nigeria. Furthermore, in March 2006, the Central Bank of Nigeria (CBN) issued corporate governance guidelines for banks operating in Nigeria. In January 2013, the Federal Ministry of Trade and Investment set up a committee to produce

8 B. Oni, (2007) Corporate Governance: A Leadership Challenge in Nigeria; .5th Adetunji Ogunkanmi Lecture

9 C. Ogbechie and I. Adeleye (2013) Corporate Governance Practices and Leadership in Nigeria. Retrieved from: https://www.researchgate.net/publication/296332659_Corporate_Governance_Praatices_and_Leadership_in_NigNige/link/56d48d4d08aed6a7b275c6bb/download. Accessed on 29th November 2019

Corporate Governance in Nigeria

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a Nigerian code of corporate governance that will harmonise all the various codes and be in line with global best practices.10

Finally, in 2018, the Financial Reporting Council of Nigeria unveiled a Nigerian code of Corporate Governance which aims to harmonise all the various codes as well as a blanket applicability across all companies in Nigeria. At the heart of these corporate governance reforms and enhancements is a common interest in ensuring good corporate governance and effectiveness of boards of directors in Nigeria. Several authors have commented on the importance of good corporate governance in both the public and private sectors of Nigeria.11 However, in the last decade, several events in the country have indicated that there are entrenched challenges to good corporate governance in Nigeria.

Some of these include the case of Lever Brothers Plc., under the leadership of Late Chief Rufus Giwa and Cadbury Nigeria Plc., under the leadership of Mr. Bunmi Oni. While, the allegations of abuse of corporate governance principles leveled against the management of Lever Brothers in the Late 1990s were well publicized, the outcome of the investigations and sanctions, if any, were not made public. On the other hand, following the investigation in the case of Cadbury Nigeria Plc., the Securities and Exchange Commission (SEC) was reported to have decided among other measures that the company should pay fines for several breaches of corporate governance codes established against it.12 Recently, in a press statement, on the 31st of May 2019, the Securities and Exchange Commission released the report of their investigation into the operations of Oando Plc, spanning a period of two years. The findings “revealed serious infractions such as false disclosures, market abuses, misstatements in financial statements, internal control failures, and corporate governance lapses stemming from poor board oversight, irregular approval of directors’ remuneration, unjustified disbursements to directors and management of the company, related party transactions not conducted at arm’s length, amongst others”.13

10 C. Ogbechie and I. Adeleye, Op.cit

11 ibid

12 ibid

13 https://sec.gov.ng/press-release-on-investigation-of-oando-plc/ accessed on 29th November 2019



Despite the efforts of SEC towards acting on its findings on Oando Plc, the company has successfully obtained a Court injunction barring the commission from further actions.

The significant levels of corruption, corporate misdemeanors and insider abuses of corporate privileges in Nigeria are indications of weak corporate governance environment. The mechanisms for ensuring good corporate governance exists in Nigeria but the major challenge lies in the weakened, inefficient and inadequate regulatory agencies responsible for ensuring enforcement and monitoring compliance.14 It is also quite unfortunate, that in Nigeria, the struggle to survive at all costs is making most businesses in Nigeria to close their eyes to governance, ethical, social and environmental issues.

Furthermore, shareholder vigilance in Nigeria is rather weak and external pressure on corporate management is also weak. Therefore, boards are required to be major drivers of good corporate governance in Nigeria. The general roles played by boards, including those in Nigeria, can be classified into three broad categories.15

First, directors are expected to monitor senior executives, select and dismiss them, evaluate their performance and design their compensation package. Second, directors should be part of defining, selecting and implementing corporate strategy. Third, directors should perform ceremonial functions that enhance the company’s legitimacy.16

In Nigeria, like most developing countries, good corporate and public governance are critical to economic development and growth. It is, therefore, important to understand the role of boards, hence corporate leadership, in ensuring good governance practices. The corporate governance scandals in Nigeria’s financial services industry added more pep to the discussion on board leadership and effectiveness, and good corporate governance.

14 E.N.M. Okike (2007) Corporate Governance in Nigeria: The Status quo, Corporate Governance, (15) 2: 173-193 and K. Amaeshi, B. C. Adi, C. Ogbechie, and O. O. Amao (2006) Corporate Social Responsibility in Nigeria: Indigenous practices or Western influences? Journal of Corporate Citizenship, 24: 83-99


16 J. Pearce, and S. Zahra (1992) Board Composition from a Strategic Contingency Perspective, Journal of Management Studies, 29(4), 411–438 and P. Stiles and B. Taylor (2001) Boards at Work - How Directors View Their Roles and Responsibility. Oxford: Oxford University Press.

At the heart of these corporate governance reforms and enhancements is a common interest in ensuring

good corporate governance and effectiveness of boards of directors in Nigeria.



A number of financial failures, frauds and questionable business practices had adversely affected investors’ confidence and customers’ trust in the industry.17

Scholars, corporates, governments and regulatory agencies are in unison as to the crucial and vital role that corporate boards (leadership) play in the implementation, execution and sustenance of corporate governance practices in the company. It is no gainsaying, that Boards are the most reliable line of defense for good corporate governance. It is, therefore, important to understand how boards function and how best to make them effective and add value to the firm.18

Many companies in Nigeria, particularly quoted companies, are responding to pressure from regulators for higher standards of corporate governance. Boards now appoint truly independent directors; have board committees such as audit, risk management, nomination (governance) and remuneration. They also invest in director training and development, particularly their leadership capabilities, and embark on annual board/director evaluation. However, there are many challenges to the effectiveness of corporate governance in Nigeria. They range from corrupt practices, ownership structure, slow and inefficient judicial process to lack of enforcement mechanisms by regulatory bodies.





A principal challenge for corporate governance is to create system that holds decision makers accountable while according proper respect to their authority over the corporation. Also, Managerial challenges are a challenge for the board to effectively monitor management even if the power pattern held is a reality. The challenge comes from the fact that such contracts are necessarily “incomplete” and it is not possible for the board to fully instruct management on the desired course of action under every possible business situation19 Furthermore, Corporations do not operate in isolated environments or in vacuums, they are subject to State imposed rules and regulations as well as events and forces around them. As a result, corporate governance is affected by overall public governance. Hence, where economic and political governance at the country level is weak, the impact of that weakness almost invariably trickles down onto corporations operating within the country.

One of the challenges of corporate governance reform in Nigeria is the deeply entrenched positions arising from the distortions in our development model as a nation, and the unwillingness to change because of the tendency for leaders to feed off the organisation they preside over. Corporate leaders in Nigeria tend to use corporate assets as their personal assets, as was the case with the banks that were taken over by the Central Bank of Nigeria, and such actions are very unhealthy to governance.20

A second challenge is that socially-validated value system and societal expectations tend to drive practice and behaviour, rather than principles. Corporate leaders abuse their offices for personal gains as seen in many conflict of interest situations. Society expects corporate leaders to enrich themselves, help people from their ethnic groups and be powerful enough to dish out favours to people. Non-executive chairmen would like to operate as executive chairmen and this tend to lead to poor board – management relationship.21

19 M. P. Mwenda (2015) “The Challenges of the Implementation of Corporate Governance Strategy by the Oriental Commercial Bank Limited, Kenya” retrieved from: http://erepository.uonbi.ac.ke/bitstream/handle/11295/95300/MWONGERA%20PAUL%20MWENDA%20FINAL%20PROJECT.pdf?sequence=1 accessed on 4th December 2019

20 B. Oni, (2007) Corporate Governance: A Leadership Challenge in Nigeria; .5th Adetunji Ogunkanmi Lecture

21 B. Oni, Op. cit

Challenges of Corporate Governance in Nigeria

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A third challenge is the generally inadequate preparation for leadership, and the severe dearth of self-development effort once a person has attained a position perceived to be high. And yet leadership has nothing to do with position, and it is the responsibility of anyone who desires to attain leadership stature to submit him or herself to principles, and live by them. This is true in both the private and public sectors. In the public sector, Nigeria does not have a system by which leaders emerge through a process of deliberate hard and grinding preparation.22

Lastly, corporate governance demands a degree of openness that Nigeria may find challenging or intimidating, especially as leaders. Leaders are called to be accountable, and that often demands a considerable degree of self-denial and humility.23

22 ibid

23 ibid

• The deeply entrenched positions arising from the distortions in our development model as a nation, and the unwillingness to change because of the tendency for leaders to feed off the organisation they preside over.

• Socially-validated value system and societal expectations tend to drive practice and behaviour, rather than principles.

• Inadequate preparation for leadership, and the severe dearth of self-development efforts.

CHALLENGES OF CORPORATE GOVERNANCE IN NIGERIA SNAPSHOT

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Board Leadership & Corporate Governance

3The members of the board of directors make up the top leadership of any organization and it is their responsibility to make decisions that create value for the organization and also manage risk. They should therefore foster good corporate governance as a way of life in their organization rather than a code. The OECD defines six essential governance tasks the board, CEO and top management team must make as core of their leadership and management efforts as they “govern” the company.24

1. A redefinition of the mission of the company—and the role of the board of directors and the CEO to create durable value for shareholders and other stakeholders through sustained economic performance, sound risk management and high integrity. This requires that leaders must find a sound balance between risk-taking (innovation and creativity) and risk-management (financial and operational discipline) and must fuse this high performance with high integrity (commitment to law, ethics and values to reduce legal, ethical, reputational, public policy and country risk). The emphasis on short-term maximization of shareholder value should be reduced significantly.

2. A revamped internal leadership training process built on these integrated essentials of performance, risk and integrity—and on a culture in which all are honoured and exemplified.

3. A refocused CEO selection process, flowing from a revised leadership development process, which seeks a broader set of skills appropriate to a redefined mission.

4. A restatement of fundamental but operational financial and non-financial measurements for performance, risk and integrity that expresses the near, medium and long-term corporate goals—with primary focus on creation of sustainable value for shareholders and other stakeholders, such as employees and customers, essential to the company’s well-being.

24 OECD (2010), Restoring Trust in corporate Governance: The Six Essential Task of Boards of Directors and Business Leaders. Policy Brief



Directors in Nigeria must have the mind-set of being ‘servant leaders’ who are accountable to those who

own the organization, shareholders for private sector organizations and the general public for public sector

organizations.

5. A revision of compensation for the CEO and top management team, which is based on real performance based on both financial and non-financial metrics. Although top business leadership will receive substantial annual cash compensation, a significant proportion of compensation in a particular year will be variable cash and variable equity which will be paid out or held back over time as objectives are met, exceeded or missed.

6. A re-alignment of the board’s fundamental oversight function with the highest priority performance, risk and integrity issues—those operational objectives which are central to attainment of corporate mission and to compensation based on the impact of actions over both nearer and longer terms.

Therefore, it is the responsibility of the board of directors to ensure that the firm it governs has a proper framework for internal controls and risk management systems, which will help check abuses and encourage decent behaviour. Board leadership is therefore very central to advancing corporate governance, and this is where we are disadvantaged in Nigeria. Nigeria as a nation has learned the wrong form of leadership from the autocratic military dictators that governed the nation for so long and the civilian counterparts have been influenced by the corrupt, discriminatory and narrow-minded approach to Leadership.

Directors in Nigeria must have the mind-set of being ‘servant leaders’ who are accountable to those who own the organization, shareholders for private sector organizations and the general public for public sector organizations.25 On the leadership front, directors’ actions must fulfill three fiduciary duties26:

The duty of care to make informed decisions: This means that the board decision-making process is such that robust and open discussions take place and decisions taken will advance corporate interests.


26 ibid



The duty of loyalty to act without conflict and always put the interest of the company before those of directors: Disciplined leadership will avoid conflict of interest situations, such as related party transactions, payment of commissions to directors and top management, awarding contracts to directors or their proxies, and hiring people based on merits and not on connections. Implementing a comprehensive code of conduct that emphasizes ethics from the top could bring some discipline to bear at the top.

The duty to act in good faith in accordance with corporate governance best practice: Effective leadership requires character, competence and commitment for efficiency in the allocation of resources, probity in systems and control, and responsibility for personal and corporate actions.



Board Structure & Effectiveness

4The starting point to good board leadership is ensuring that the right directors are appointed to the board and that efficient board processes are put in place. Board composition refers to the quality of directors on the board and the proportion of executive directors (including the chief executive officer) and non-executive directors on the board. Non-executive directors are outsiders who do not have any management responsibilities but may have some shares in the firm. Non-executive directors that do not have any material interest in or related to top management or to any substantial shareholder are known as independent directors. Ideally directors are appointed on the basis of their qualifications, expertise and experience so that they may in a position to effectively influence the board’s decision and ultimately add value to the firm.27

Independent directors are poised to be the conscience of the board as they are expected to challenge the board to play their roles most effectively. The selection process for non-executive and independent directors is critical to ensure the desired board independence that will lead to board effectiveness. The degree of independence of the non-executive directors in many companies, including publicly quoted ones, is doubtful as their

27 M. A. Fields and P. Y. Keys (2003) “The Emergence of Corporate Governance from Wall Street to Main Street: Outside Directors, Board Diversity, Earnings Management, and Managerial Incentives to Bear Risk.” Financial Review, 38(1), pp 1-24



appointments tends to be influenced by either the chairperson or the CEO or the dominant shareholders. The existence of a nomination committee and a well-defined process for appointing new directors could be a good starting point. Such appointments should not be influenced by the chairman, CEO or dominant shareholder and a good way of avoiding such influence is to establish the skills/competence gap to be filled on the board and then to identify potential directors who have to go through a formal selection process (interviews and discussions) managed by the nomination committee with possible assistance from a consultant.28

Diversity is also an aspect of board composition that could impact on the effectiveness of board leadership. Board diversity implies that the directors have different skills, knowledge and experience, and they are also from different age groups, social status and gender. Some researchers suggest that board diversity leads to a greater board knowledge base, creativity and innovation because of the diverse experience of members of the board.29 Nigerian boards are diverse in nature with the key professions represented being accountants, engineers, lawyers and economists with sound management experience in various industries. Directors are expected to have a working knowledge of financial matters, have a fair understanding of the industry their firm operates in and a good understanding of the business of their firm.30

The role of the chairman and his leadership style will have significant impact on the effectiveness of the board in performing its roles. Most publicly quoted companies in Nigeria have separated the role of chairman and CEO, in line with the requirements of the SEC code of corporate governance. Advocates of separation, claim that CEOs become more effective leaders when the two positions are separated because it allows them to concentrate on the firm’s operations while empowering the board to exercise its governance function.31 Kajola (2008) also argued that concentration of decision management and decision control in one individual hinders boards’ effectiveness in monitoring top management as the chairman who runs the board is also the CEO who is responsible for day-to-day running of the firm.32


29 E. Watson, Kumar, K. and Michaelsen, L. (1993) Cultural Diversity’s Impact on Interaction Process and Performance: Comparing Homogeneous and Diverse Task Groups, Academy of Management Journal, 36, 590–603


31 I. Wilson (2006), “Regulatory and Institutional Challenges of Corporate Governance in Nigeria Post Bank-ing Consolidation.” Economic Indicators Nigeria Economic Summit Group (NESG) April-June.

32 S.O., Kajola (2008) “Corporate Governance and Firm Performance: The Case of Nigerian Listed Firms. European Journal of Economics, Finance and Administrative Sciences, Vol.14, 16-28.



Finally, the clear lesson Enron, Parmalat, WorldCom, Barings Bank etc, taught the corporate world is that no company is too big (financially or otherwise) to fall. That is, irrespective of the financial standard or capability of an organisation, without an effective leadership and good corporate governance system will go bankrupt. Therefore, effective leadership and good corporate governance are essential ingredients to the success of every organisation.33

33 K. Atoyebi, F. Adekunjo, K. Kadiri, M. Ogundeji, A.Falana, (2012) “The Impact of Corporate Governance and Leadership on Entrepreneurship Development in Nigeria” retrieved from: http://www.iosrjournals.org/iosr-jhss/papers/Vol6-issue2/G0624668.pdf?id=5920 accessed on 3rd December 2019



Section 2



The Nigerian Stock Exchange at a glance

2.1.1 Recent Developments in the Nigerian Stock Exchange for the year 2018

This section attempts to summarize the recent developments of the Nigerian Stock Exchange in 2018.

In line with global markets, the Nigerian Stock Exchange experienced a decline in 2018. The Nigerian Stock Market depreciated by -17.8 percent or -6,812.69 points as the benchmark market Index, NSE ASI closed at 31.430.50 points on Monday December 31, 2018 from 38, 243.19 points recorded at its close on December 29, 2017.This trend, however, was counterbalanced by the Nigerian Stock Exchange’s delivery of key initiatives for the development of the Nigerian capital market.

Notably there has been an increase in issuance of alternative instruments, with a focus on transforming the Exchange and reforming the Exchange and reforming the market to be more efficient. In line with this, the NSE deployed innovation and leadership at all levels, to be agile, offering smart products and services like deepening the technology partnership with NASDAQ, in order to continue leveraging NASDAQ’s SMARTS Market Surveillance technology to monitor market manipulation.

Furthermore, the Debt Management Office (DMO) listing the pioneer N10.69 billion Federal Government of Nigeria (FGN) Sovereign Green Bond, a N100 billion FGN Ijarah Sukuk bond and the commencement of a monthly retail savings bond programme in March 2017, asserted the public’s aspiration of the NSE as the platform for both the public and private sector to raise and to access capital, encouraging financial inclusion.

The different instruments have had mixed results. Whilst the Sukuk and Green bond received a healthy investor reaction (another sukuk issue that was completed recently towards the end of 2018), interest in the retail savings bond has been weak, with under 10 billion raised so far.34

34 Retrieved from: https://www.vanguardngr.com/2019/01/stock-market-in-2018-investors-loss-peak-at-n1-9-trn-year-to-date/ accessed on 25th October 2019



Meanwhile, the NSE listed the pioneer N10.69 billion FGN Sovereign green bonds and N100 billion Ijara Sukuk on its platform. Sukuk are bonds structured to generate returns to ethical investors without infringing on the Islamic law which forbids interest payments.35

2.1.2 New Listing in NSE For 2018-2019

The primary market segment of the stocks space was relatively healthy throughout 2018 till 2019 as we saw the listing of four new companies on the Exchange (Notore Chemical Industries Plc, SAHCO Plc, MTN Nigeria, and Airtel Africa Plc) and an addition of N1.36 Trillion36 to the market capitalization of the Nigerian Capital market.

COMPANY/ISSUER DATE LISTED

Notore Chemical Industries Plc 02 August 2018

SAHCO Plc 23 April 2019

MTN Nigeria 16 May 2019

Airtel Africa Plc 09 July 2019

35 ibid

36 Retrieved from African Markets accessed on 3rd December 2019



2.1.3 DELISTED COMPANIES FROM 2016- 2019

This table below shows various companies delisted from the NSE from 2016-2019

S/N COMPANIES DATE DELISTED REASONS

1. IPWA PLC May 18, 2016 Regulatory: NSE

2. G. CAPPA PLC May 18, 2016 Regulatory: NSE3. WEST AFRICAN GLASS INDUSTRIES PLC May 18, 2016 Regulatory: NSE4. INVESTMENT & ALLIED INDUSTRIES PLC May 18, 2016 Regulatory: NSE5. ALUMACO PLC May 18, 2016 Regulatory: NSE6. JOS INTERNATIONAL BREWERIES PLC May 18, 2016 Regulatory: NSE7. ADSWITCH PLC May 18, 2016 Regulatory: NSE8. ROKANNA PLC May 18, 2016 Regulatory: NSE9. VONO PRODUCTS NIGERIA PLC May 23, 2016 Merged with Vitafoam Plc10. LENNARDS (NIGERIA) PLC December 1, 2016 Regulatory: NSE11. P.S MANDRIDES & COMPANY PLC December 1, 2016 Regulatory: NSE12. PREMIER BREWERIES PLC December 1, 2016 Regulatory: NSE13. COSTAIN (W.A) PLC December 1, 2016 Regulatory: NSE

14. NAVITUS ENERGY PLC December 1, 2016 Regulatory: NSE15. NIGERIAN ROPES PLC December 1, 2016 Regulatory: NSE16. BECO PETROLEUM PRODUCTS PLC May 2, 2017 Regulatory: NSE17. MTECH COMMUNICATIONS PLC May 2, 2017 Regulatory: NSE18. MTI PLC May 2, 2017 Regulatory: NSE19. UTC PLC May 2, 2017 Regulatory: NSE20. ASHAKACEM PLC July 4, 2017 Voluntary21 SEVEN-UP BOTTLING COMPANY March 5, 2018 Voluntary(Shareholders

Approval)22. AFRICAN PAINTS (NIGERIA) PLC April 6, 2018 Regulatory: NSE23. AFRIK PHARMACEUTICALS PLC April 6, 2018 Regulatory: NSE24. PAINTS AND COATINGS MANUFACTURERS

NIG.PLC

August 17, 2018 Voluntary

25 GREAT NIGERIA INSURANCE PLC January 25, 2019 Voluntary26 DIAMOND BANK PLC April 1, 2019 Merged with Access Bank Plc27 NEWREST ASL NIGERIA PLC May 13, 2019 Voluntary28 FIRST ALUMINIUM NIGERIA PLC July 31, 2019 Voluntary29 SKYE BANK PLC August 21, 2019 Regulatory: NSE30 FORTIS MICROFINANCE BANK PLC August 21, 2019 Regulatory: NSE



2.1.4 CHANGE OF NAME IN 2017-2018

The Nigerian Stock Exchange was notified by the below company of their intention to change the name of the companies:

• In 2017 Omoluabi Savings & Loans Plc was changed to Omoluabi Mortagage Bank Plc

• In 2017 Airline Services & Logistics Plc was changed to Newrest ASL Nigeria Plc • In 2017 Beta Glass Company Plc was changed to Beta Glass Plc • In 2017 Mobil Oil Nigeria Plc was changed to 11 Plc • In 2018 Unity Kapital Assurance Plc was changed to Veritas Kapital Assurance Plc • In 2018 Sim Capital Alliance Value Fund was changed to ValuAlliance Value Fund • In 2018 Custodian and Allied Insurance Plc was changed to Custodian Investment

Plc • In 2018 Equity Assurance Plc was changed to Sunu Assurance Nigeria Plc

TOP 20 MOST CAPITALISED EQUITIES AS AT DECEMBER 29, 2018

S/N EQUITY NAME SECTOR MARKET CAPITALIZATION

% OF THE TOTAL MARKET CAPITALIZATION

ESTABLISHMENT

1 Dangote Cement Plc

Building 3,232,584,254,728.50 29.83%

November 4, 1992

2 Nestle Nigeria Plc Food and Beverages

1,177,094,534,220.0010.86%

September 25, 1961

3 Guaranty Trust Bank

Banking 1,013,904,124,266.809.36%

July 20, 1990

4 Zenith Bank Plc Banking 723,689,181,767.30

6.68%

November 16, 1946

5 Nigerian Breweries Plc

Breweries 683,735,125,360.506.31%

May 30, 1990

6 Stanbic IBTC Holdings Plc

Banking 491,034,513,712.75

4.53%

December 1971

7 Seplat Petroleum Dev. Co Plc

Oil & Gas 376,604,519,040.00 3.48%

February 26, 1959



S/N EQUITY NAME SECTOR MARKET CAPITALIZATION

% OF THE TOTAL MARKET CAPITALIZATION

ESTABLISHMENT

8 FBN Holdings Plc Banking 285,367,577,696.40

2.63%

April 11, 1923

9 United Bank of Africa Plc

Banking 263,335,544,533.60 2.43%

August 25, 1969

10 International Breweries Plc

Breweries 262,173,789,048.002.42%

April 29, 1950

11 Ecobank Transnational Incorporated

Banking 256,893,717,010.00

2.37%

February 2, 1989

12 Cement Company of Northern Nigeria Plc

Building 254,983,918,740.40

2.35%

February 8, 1989

13 Unilever Nigeria Plc

Conglomerates 212,565,200,429.001.96%

October 7, 1986

14 Access Bank Plc Banking 196,710,207,090.80

1.82%

June 25, 1959

15 Dangote Sugar Refinery Plc

Food and Beverages

183,000,000,000.001.69%

June 2009

16 Union Bank of Nigeria Plc

Banking 163,076,215,612.801.51%

December 11, 1964

17 Guinness Nigeria Plc

Breweries 157,707,562,968.001.46%

January 1, 1969

18 Lafarge Africa Plc Building 107,984,181,588.001.00%

December 4, 1948

19 Notore Chemical Industries

Oil & Gas 100,754,137,500.000.93%

June 1, 1956

20 Flour Mills of Nigeria Plc

Food and Beverages

94,718,768,875.500.87%

March 8, 2007

TOTAL 10,237,917,074,188.40 100%



SECTORAL ANALYSIS OF THE TOP 20 MOST CAPITALIZED COMPANIES

S/N SECTOR NO OF COMPANIES PERCENTAGE

1 BUILDING 3 15%

2 BANKING 8 40%

3 BREWERIES 3 15%

4 FOOD & BEVERAGES 3 15%

5 CONGLOMERATE 1 5%

6 OIL & GAS 2 10%

TOTAL 20 100%

Building

Banking

Breweries

Food & Beverages

Conglomerate

Oil & Gas

0 1 2 3 4 5 6 7 8

40

510 15 Building

Banking

Breweries

Food & Beverages

Conglomerate

Oil & Gas

15

15

100%

Capitalization by No of Companies Capitalization by Percentage



Nigerian companies have been forced to embrace global best practices in terms of corporate governance and this will make them more appealing to foreign investors and also enhance their internationalization efforts. Corporate governance is not just about playing “watchdog” over management, it is more about enhancing corporate strategic choices, acknowledging and responding to the interests and concerns of stakeholders, developing and bolstering managerial competencies and skills and ultimately protecting and maximizing shareholder wealth; it is about leadership. As scholars have observed, different types of leaders are needed at different stages of the development of a company. Therefore, Companies functioning within a dynamic business environment such as Nigeria experience three stages of change; a problem-solving stage, an implementation-of-solution stage, and a stable stage and it is the responsibility of the Board of Directors to first recognise in what stage of change is the company in and identify the right leadership to steer the company through the change.

Therefore, it is recommended that, there is a need for more awareness on the importance of good leadership and corporate governance to embrace corporate governance being a system that encourages efficient use of available scarce resources in order to achieve organizational objectives

Commitment to integrity, honesty, fairness and transparency should be for leaders who want to create value and succeed in running organizations that are highly rated in corporate governance.

Boards must take responsibility for the integrity of their organizations and directors must see their organization’s integrity as an extension of their own integrity. There should be a high commitment of company leadership to having policies, regulations and rules that are well stated and strictly adhered to by all employees.37


Conclusion & Recommendation



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LEADERSHIP, CORPORATE GOVERNANCE BOARD …

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