The Financial Reporting Council of Nigeria (FRC) has reduced the ‘cooling off’ period for executives in regulatory entities, public and private companies from 10 years, to three years, when transiting from a board role to another.
The Executive Secretary/Chief Executive Officer, FRC, Mr. Daniel Asapokhai, disclosed this at the last session of its public hearing/ sensitisation on the ‘Nigerian Code of Corporate Governance,’ held in Lagos yesterday.
Asapokhai explained, “On tenure and cooling off periods for directors, giving the prescriptive nature of the 2016 code, there were provisions around tenure in office and cooling off periods that were required for certain board positions and from migrating from one to the other.
“We have dropped a lot of the hard coding on matters such as tenure. However, a maximum nine years tenure for independent directors on the board.
“For cooling off period for executives of regulatory agencies looking to join the board of previously supervised entities, the 2016 code specified the cooling off period of 10 years for executives and management staff of supervisory bodies before they can join board of previously supervised entities.
“The new code has reduced that cooling off period to three years. However, it increases to five years if the board role would also be an independent director role.”
Continuing, he said, “There is also the change in the cooling off period required before a transition from the role of managing director to board chairman, which has been reduced from 10 years to three years.”
According to the FRC boss, countries with institutions that are well regulated and have high level of transparency demonstrate better economic performance and greater financial stability and are better able to withstand shocks during periods of financial instability.
“There is need for a national code and the existence of a national code does not mean the sectorial codes are no longer relevant. But we just need a national framework where everything can co-exist,” he said.
He, however, pointed out that the window for suggestions is open to all stakeholders through comments and also by writing to the FRC, which is open till the end of this month.
The public hearing took place in all geo-political zones of the country and the Federal Capital Territory.
“It is our belief that this code will promote Ease of Doing Business, attract local and foreign investments and enhance the integrity of the Nigerian capital market, by entrenching a culture of disclosure, transparency and accountability.
“In addition, this code will raise public awareness of good corporate governance practices,” he said.
Asapokhai also revealed that the Nigerian Code of Corporate Governance adopted the ‘Apply and Explain,’ principle, which requires companies to apply the requirements of the Code and to explain how they did so.