Shareholders across Nigeria have been urged to have meaningful engagement with companies and hold the management accountable for any incompetence as a means of checking abnormalities in the capital market.
They have also been charged to play an active role on corporate governance issues as it directly affects the growth of the economy.
The Director and Secretary to Securities and Exchange Commission (SEC), Edosa Aigbekaen, made the call Thursday, during the 3rd edition of SEC Journalists Academy held at Transcorp Hilton Abuja.
SEC had in the early 2000s realized that good corporate governance can help underpin market confidence and financial stability.
This, according to Aigbekaen who delivered a paper on “the Corporate Governance Framework in Nigeria,” has driven the commission to insist that shareholders should pay apt attention to monitoring how their companies are managed.
He argued that even though the corporate governance framework is built on the assumption that shareholders engage with companies and hold the management to account, for its performance, majority of them are passive and are often only focused on short-term profits.
“It is therefore necessary for more shareholders to take interest in sustainable reforms and longer term performance and to be more active on corporate governance issues.
“A lot more is expected of the majority of the small holders who are known to be very passive. They do not attend annual meetings and so, there is no real effort to take management to task regarding the management of their companies,” he added.
Explaining further, he said, the flow of funds to corporate entities can only be assured if there is proper definition of property rights of shareholders and the mechanisms for exercising such rights.
He therefore advised the Shareholders’ Association to be more responsive in ensuring accountability and effective management of their companies.
Aigbekaen also said shareholders must take interest in sustainable returns and longer term performance, aiming to be more active on corporate governance issues.
He further explained that the increasingly international nature of business and investment, coupled with regulatory responses to corporate scandals, are encouraging demands from companies and investors for consistency in corporate governance practices across jurisdictions.
Highlighting the importance of good corporate governance in Nigeria, he said it can help reduce the risk of financial crisis which can have devastating economic and social cost.
“Good corporate governance can also lead to better relationships with the stakeholders; produce better operational performance through better allocation of resources and better management, as well as, raise the value of the company and access to both local and external financing, which can lead to larger investment, higher growth and creation of more jobs.
“Good corporate governance therefore helps to underpin a market confidence and financial stability,” he added.
Also speaking on corporate governance, the Chief Executive of Institute of Capital Market Registrars (ICMR), Dr David Ogogo stated that it is intended to increase the accountability of the company to avoid massive disaster before they occur.
He therefore recommended that regulators should make sure all organisations are subject to Corporate Governance Audit (CGA) annually.
Ogogo, who spoke on “Development, Role of Stakeholders, the Media and Compliance Officers” also noted that the CGA should be drawn up for public companies, Federal and state Ministries, Departments and Agencies, as well as, parastatals.
If this is applied, Ogogo says “organisations will be successfully managed and the economy and the country will be better in all ramifications.”
The SEC Journalists’ Academy was instituted two years ago to isolate and recognise financial and ancillary journalists as an important stakeholder group whose role is vital to securing the good health and optimum performance of the markets.
Others include, deepening the knowledge and professional output of financial market and related journalists through qualitative training and aligning market reporting with the more urgent concerns and currents in local and global market among others.