Clara Nwachukwu
Publicly-quoted company shareholders have been urged to assert their right more in demanding better governance structure from the board and management to check corporate recklessness.
This advice follows the inquiry by Nigeria’s Securities and Exchange Commission (SEC) in 2019, which found Oando Plc management guilty of serious infractions, leading to the suspension of its Chief Executive Officer, Mr. Wale Tinubu, and his the company’s and his deputy Mr. Mofe Boyo, from the boards of public companies for five years.
SEC also instituted an interim management to appoint a new board of directors and management team for Oando.
The impasse, which began about four years ago over disputes among the major shareholders, is now being resolved following the SEC’s announcement on Monday of Oando Plc entering into settlement with it.
The President, Association of Stock Broking Houses of Nigeria (ASHON), Mr Patrick Ezeagu, told Sustainable Economy that now is the time for shareholders to assert their authority as the owners of the company and stand up to the board and management in guiding the decisions they take.
“Shareholders should be up and doing in their responsibility as the watchdog of the board and management. They should be more circumspect, especially the audit committees, and should dig deeper rather than just accept what they are told on the face value.”
In its statement, SEC said: “Pursuant to the powers conferred on the Securities and Exchange Commission (the Commission) by the Investments and Securities Act 2007, and the Rules and Regulations made pursuant thereto, the Commission on Thursday, July 15, 2021, entered into a Settlement with Oando Plc (the Company).
“The Commission in its letter to the Company dated May 31, 2019, gave certain directives and imposed sanctions on the Company, following investigations conducted pursuant to two petitions filed with the Commission in 2017.”
Describing the issue as a good development, especially for Oando shareholders, who had watched suffered huge losses as a result of the deep plunge in the share price, a Professor of Economic, at the Olabisi Onabanjo University, Ago-Iwoye, Ogun State, Sheriffdeen Tella, expressed the hope that the company would have learnt some lessons and institute better corporate governance.
Tella applauded the Commission for standing its ground through these years, saying: “Due to the nature of the sector, the capital market requires a strong regulator to retain public trust and confidence. SEC did not budge despite everything Oando did, and now I think the board and management is sufficiently remorseful and would take measures to correct the infractions spotted by the Commission.”
Terms of agreement
SEC, in its statement disclosed that the settlement was reached by both parties in consideration of the impact that a further prolonged period of litigation would have on the Company’s shareholders and the value of their investments.
Also, Oando puts in place remedial measures to enhance its corporate governance practices and strengthen its internal control environment.
However, the settlement reached with the Commission, was “without accepting or denying liability,” but was done “in the overriding interest of shareholders of the Company and the capital market,” SEC said.
Reiterating its commitment to ensuring the fairness, transparency and integrity of the capital market, and uphold its mandate to protect investors, the Commission said the parties, amongst others, agreed to immediately withdrawal of all legal actions filed by Oando Plc and all affected directors; and payment of an unspecified monetary sum.
More importantly, “an undertaking by the company to implement corporate governance improvements; and the submission by the Company of quarterly reports on its compliance with the terms of the Settlement Agreement; the Investments and Securities Act, 2007; the SEC Rules and Regulations; the National Code of Corporate Governance and the SEC Guidelines to the Code of Corporate Governance.”
Importance of corporate governance
Experts argue that poor corporate governance can lead to scandalous issues such as corruption, negligence, fraud and lack of accountability, in addition to stunted business growth, repetitive complaints, and high levels of waste also highlight lack of control and strategic alignment of a company whether public or private.
Good governance, they insist, “ultimately fosters sustainability, creates sustainable values and helps companies achieve their values. Companies also realize long-term benefits, including reducing risks, attracting new investors and shareholders, and increasing the company’s equity.”
Indeed, corporate sustainability is understood as the ability of companies to positively influence environmental, social and economic development through their governance practices and market presence. As such, “Sustainability should become an integral part of strategic management and corporate planning.”
Against this backdrop, shareholders actually have the power to decide matters that fundamentally influence the management of their company.
To this, the President, Ibadan Zone Shareholders Association of Nigeria, Mr. Eric Akinduro, defended that stakeholders have been doing their bit to keep the board and management on their toes in terms of being more accountable and transparent in their operations.
He said: “The settlement is a good decision because shareholders have been suffering all this while due to lack of information on what is happening in the company as a result of the court cases and lack of annual general meetings (AGMs) to question the board and management on the decisions they take. Whenever we find unsavoury issues, we take them up at the AGMs or write to them to raise the alarm on our observations.”
He however cautioned against “too much pressure” on the board and management in order not to distract them from their major role of taking informed decisions for the benefit of the company and its shareholders.
The trio of Tell, Ezeagu and Akinduro are optimistic that with the settlement between SEC and Oando, the company’s stock price, which had crashed from above N20 to less than N5/share will get a lift.
