Books

Corporate Governance & Group Dynamics

ISBN: 978-978-919-954-6

“The Author has been a great advocate of good corporate governance practice in Nigeria since it became a discipline of interest to practitioners in the country. He has taught it, preached it and written on it consistently, bringing his understanding and expertise on the subject to bear on his interactions with his audiences over the years. For me, this book offers additional confirmation of his scholarly commitment, which is evident in the scope and depth of discussions, the propositions as well as the analysis of the principles of corporate governance as they apply to groups. I must commend the Learned Senior Advocate for making this significant contribution to the jurisprudence of corporate governance.

I therefore have no hesitation in recommending this book as an authoritative text on the subject for the benefit of companies, boards, shareholders, regulators, directors, managers, stakeholders and indeed all who are interested in seeing that the our corporations become increasingly well governed”.

– Dr Christopher Kolade CON, Pro-Chancellor, Pan-Atlantic University;Formerly, Nigerian High Commissioner to the United Kingdom; Formerly, President, Society for Corporate Governance Nigeria

Preface

The notion of corporate governance can simply be put to effective governance of the corporation in the real sense of the words – ‘corporate’ and ‘governance’. It has been argued that shareholders have an incentive to invest resources in curbing both managerial and owner opportunism, however the recent experiences in the banking and financial services sector in Nigeria show that the significant shareholders that are most capable of curbing board and management excesses (for example the institutional shareholders and majority shareholders) have showed an apparent unwillingness to oppose the management and the boards of the companies.

This situation is more prevalent in companies operating within group structures (companies having parent – subsidiary relationships). With the five banks that emerged as having corporate governance challenges in July 2009 all operating group structures. The banking and financial services crisis in Nigeria has raised serious questions about the adequacy of corporate governance arrangements especially for companies operating within the group structure. In the group structure, the duty on the part of the board to be accountable to the shareholders, creditors, and other stakeholders become even more pronounced. Consideration of recent concrete examples in Nigeria reveals that not only must existing corporate governance arrangements be questioned in terms of their ability to cope with managerial problems raised by the complexities of the group structures. This issue, which is the theme of this book, has hardly ever been addressed.

This book examines the existing models of corporate governance in Nigeria to see if they are indeed adequate to cope with the complexities of group structures especially in the banking and financial service sector: it concludes with the finding that corporate governance within group is better observed when the respective boards of the parents as well as the subsidiaries are accountable to their respective shareholders and stakeholders, and take responsibility for the direction of the specific enterprise that they are by law responsible for. The book further recommends that it is this specific responsibility of each board that could ensure proper disclosures, integrity in financial reporting and a duty of accountability of management to the shareholders. It is a twelve-chapter book that deals with issues ranging from theories and standard Models of Corporate Governance to the Roles of Professionals in Corporate Governance, International Financial Reporting Standard and the Relationship between Risk Management and Corporate Governance.
All of these have brought depth and meaning to this book on corporate governance and group dynamics. The book lays no claim to perfection, and I therefore take full responsibility for any errors of omission and commission that may be found herein.

Dr Fabian Ajogwu, SAN Balgowan
June 23, 2013

Foreword

I am pleased to be asked to write the foreword to Dr. Fabian Ajogwu’s book, Corporate Governance & Group Dynamics.
It is generally agreed that the leadership provided by the board will always be a significant factor in the successful running of the enterprise. For many years, the discussion has focused mainly on the need for the corporate to be governed by an efficient Board, and the emphasis has been on adhering to the principles of corporate governance especially in relation to globally accepted best practice. However, it is becoming increasingly clear that some attention should be given to the more complex relationships that exist between companies operating within a group structure, for the simple reason that the actions of the parents often affect the subsidiary and vice versa. This book, turning the searchlight on this complex area of company administration, is indeed a welcome addition to the literature on corporate governance and enterprise development, especially because it raises questions about the suitability of existing models of corporate governance in Nigeria for dealing with the complexities of group structures, particularly in the banking and financial services sector.

The Author makes the point clearly that ‘corporate governance within groups is better observed when the respective boards of the parents as well as the subsidiaries are accountable to their respective shareholders and stakeholders, and take responsibility for the direction of the specific enterprise that they are by law responsible for’. He believes that it is precisely the lack of this accountability and responsibility that led to the corporate maladministration and failures of recent times. The Author goes further to recommend that ‘it is specific responsibility of each board that could ensure proper disclosures, integrity in financial reporting and a duty of accountability of management to the shareholders’. I cannot agree more.

Dr. Fabian Ajogwu, SAN has been a great advocate of good corporate governance practice in Nigeria since it became a discipline of interest to practitioners in the country. He has taught it, preached it and written on it consistently, bringing his understanding and expertise on the subject to bear on his interactions with his audiences over the years. For me, this book offers additional confirmation of his scholarly commitment, which is evident in the scope and depth of discussions, the propositions as well as the analysis of the principles of corporate governance as they apply to groups. I must commend the Learned Senior Advocate for making this significant contribution to the jurisprudence of corporate governance. I therefore have no hesitation in recommending this book as an authoritative text on the subject for the benefit of companies, boards, shareholders, regulators, directors, managers, stakeholders and indeed all who are interested in seeing that our corporations become increasingly well governed.

Dr Christopher Kolade, CON Pro-Chancellor, Pan-Atlantic University Formerly,
Nigerian High Commissioner to the United Kingdom Formerly,
President, Society for Corporate Governance Nigeria Lagos.
June 2013

Corporate Governance & Group Dynamics

ISBN: 978-978-919-954-6

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