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 shown 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 the 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 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
June 23, 2013