The Nigerian Exchange Limited, a leading listing and trading platform in Africa, recently partnered with the Nigerian Bar Association and the Institute of Directors to launch the Corporate Governance Triangle. Its Managing Director, Temi Popoola, in this interview with MARY NNAH, highlights the value of sound corporate governance in achieving high capital markets as NGX, a responsible organization, leverages collaborations to advance standards and corporate governance practices in Nigeria
Tell us about the reason for your recent partnership?
Nigerian Exchange Limited (NGX), in collaboration with the Business Law Section of the Nigerian Bar Association (NBA-SBL) and the Institute of Directors, IoD, have launched the Corporate Governance Triangle (CGT) in March 2022 to collectively pursue their shared vision and mission to develop and promote the best corporate governance in Nigeria among members of the business law community and other business stakeholders working in concert with relevant regulators.
The CGT was created to leverage the unique positions of partner institutions to better communicate learnings, guidance and best practices in corporate governance through meetings, interventions and publications with parties. stakeholders to address contemporary issues related to the practice of corporate governance in Nigeria.
As key corporate stakeholders, NGX, NBA-SBL and IOD are in a unique position to influence their members, share best practices and develop frameworks that will improve corporate governance in Nigeria.
The Triangle aims to leverage the combined strength of NGX as Nigeria’s premier capital-raising platform and facilitate a thriving secondary market for securities trading, NBA-SBL, which is striving to elevate the level of business law practice in Nigeria by engendering the professional development of Nigerian commercial lawyers, and IoD Nigeria represents and promotes directors to various stakeholders and develops best practices in corporate governance aimed at improving the economy for business development.
How does good corporate governance provide the transparency and trust necessary for the proper functioning of the financial system?
Trust is the fundamental value that keeps the global financial system functioning. The availability of high-quality financial information on companies is essential to the investment decision-making process. Asset managers, investors and other key stakeholders rely on this information to make informed investment decisions in complying with fiduciary duties to their clients.
On the other hand, these investors rely on the information communicated by the companies. A lack of public confidence in the quality and timeliness of financial information provided to market participants could have a cascading effect that could lead to a global crisis, as evidenced by the subprime mortgage crisis of 2009.
Effective corporate governance principles are essential to building trust in the financial market. These core principles drive our aspiration to play a leading role in promoting corporate governance within Nigerian Exchange Limited. As a stock exchange, we recognize our truly unique role as an organization that can foster long-term, sustainable capital growth by positively influencing our key stakeholders to adopt sustainable business practices, including best practices in corporate governance.
What are the main objectives of the corporate governance triangle and what role do they play in advancing the capital market?
Through CGT, NGX, NBA-SBL and IOD will work closely together to collectively foster good corporate governance in Nigeria among members of the business law community and other business stakeholders. working with relevant regulators. This will be achieved by pushing the boundaries of existing initiatives aimed at strengthening corporate integrity, such as the Corporate Governance Rating System (CGRS) for listed companies to cover unlisted entities.
Each party has a key role to play in ensuring the achievement of the CGT’s objectives. The partnership will involve extensive consultation between them, sharing of information to collaborate with respect to the Triangle, organize reciprocal capacity development programs for relevant staff and members of all Parties. In addition, the parties will collaborate to identify relevant global and regional corporate governance developments and topics for inclusion in the curriculum of X-Academy, IoD Nigeria and NBA- professional development program(s). SBL and agree credit hours for participation in the relevant program(s).
As NGX seeks to attract more companies to list on the exchange, how does the launch of the Corporate Governance Triangle reinforce this momentum?
NGX has remained committed to the highest standards of governance, in recognition of its essential role in the financial markets ecosystem. Our participation in CGT allows NGX to realize the benefits of improved trust and corporate governance, promoting corporate governance across our ecosystem helps increase investor confidence in our platform and, therefore, provides businesses with increased access to a vast pool of national, regional, and international investors. Furthermore, good corporate governance ultimately leads to greater transparency and confidence in the Nigerian capital market and puts the Nigerian capital market on a solid footing as the leading capital market in the region.
How will CGT drive the innovation and digital transformation you are leading with the capital market?
Advances in corporate governance are increasingly being leveraged to enable organizations to manage recent trends in managing data and information as business assets while minimizing risk and cost and taking advantage of technological advances. The digital transformation of the capital market will require the development and expansion of the frontiers of corporate governance, particularly with regard to new and emerging sectors of the capital market such as fintech, digital currencies, the use artificial intelligence and machine learning, among others. NGX will support CGT in its efforts to promote policies aimed at maximizing and improving the capital market’s response to these technological advances while respecting best practices in corporate governance.
How does NGX ensure that stock market activities comply with all applicable market laws and regulations?
Over the years, NGX has played a leading role in promoting various corporate governance initiatives in the Nigerian market. One of the key approaches has been to embed corporate governance principles into NGX’s listing and post-listing requirements.
Our listing and post-listing requirements, including disclosure standards, incorporate various corporate governance principles and best practices. Therefore, for a company to be listed on NGX’s Premium, Main and Growth Boards, the company must have demonstrated a strong commitment to high standards of disclosure and corporate governance.
Our Premium Board of Directors takes the level of corporate governance to higher standards due to the strict corporate governance and listing standards required of board-listed companies. The Premium Board showcases companies that are industry leaders in their sectors and adhere to international best practices in corporate governance.
Our role in monitoring compliance with these requirements is enhanced by the fact that local and international investors often look to NGX to provide a quality brand to its listed companies.
The Corporate Governance Rating System (“CGRS”) established for listed companies by NGX Regulation helps foster compliance with required corporate governance laws and guidance. The CGRA was launched in 2014 through the joint initiative of NGX and the Convention on Business Integrity (“CBI”) with the main objective of providing a comprehensive and reliable diagnosis of corporate governance practices and of Nigerian business integrity. The CGRS rates companies listed on NGX based on indicators such as corporate integrity, corporate compliance, understanding of their directors’ fiduciary responsibilities, and corporate reputation. The rating system covers topics such as business ethics and anti-corruption, internal and external audit, oversight, shareholder and stakeholder rights, board structure and responsibilities , as well as transparency and disclosure.
NGX leveraged CGRS to create the NGX CG Index, a capitalization-weighted, float-adjusted index that tracks the performance of all CGRS-rated companies listed on NGX. Along with other NGX indices, the NGX CG Index allows investors to track market movements and properly manage their investment portfolios.
CGRS ratings allow our listed companies to differentiate themselves by displaying good corporate governance practices and enabling investors to make informed investment decisions. These ratings are part of the criteria for listing on the NGX Premium Board and are a key eligibility requirement for admission to the NGX CG Index.
NGX offers dedicated training and capacity building in corporate governance through X-Academy, our specialist learning center, which offers a wide range of corporate governance courses to market participants financiers, investors and the general public.
Our corporate governance training programs and workshops are often aimed at helping participants understand their respective roles in implementing corporate governance best practices for an organization, thereby promoting the adoption of corporate governance best practices. corporate governance in Nigeria.