AYULI JEMIDE, LEAD PARTNER1 IBLC RETREAT 14 TH – 18 TH MAY 2008 SOUTH AFRICA EMERGING CORPORATE GOVERNANCE REGIMES IN NIGERIA

AYULI JEMIDE, LEAD PARTNER2 ESSENCE OF PAPER To highlight interesting and encouraging Corporate Governance trends in NigeriaTo highlight interesting and encouraging Corporate Governance trends in Nigeria Several of these trends are novel for Nigeria and are changing the Corporate Landscape.Several of these trends are novel for Nigeria and are changing the Corporate Landscape.

AYULI JEMIDE, LEAD PARTNER3 CLASS ACTIONS CADBURY PLC: SHAREHOLDERS sue company, directors, accountants and stockbrokers for losses suffered due to account overstatements and negligence. FIRST BANK PLC: FIRST BANK PLC: SHARE SUBSCRIBERS sue for damages after their monies where held over and returned because the Public Offer was oversubscribed. BRITISH AMERICAN TOBACCO : BRITISH AMERICAN TOBACCO : STATE GOVERNMENTS sue British American Tobacco claiming compensation for health bills incurred by the States due to Tobacco induced ailments.

AYULI JEMIDE, LEAD PARTNER BANK CONSOLIDATION POLICY -Minimum Paid Up Share Capital Before 2005 = 2 billion Naira. -Minimum paid Up Share Capital Post 2005 = 25 billion Naira. RESULTS: a) Diversifies Ownership Structure b) Greater ability to meet financial commitments c) More Long term funds available for lending d) Higher accountability regimes e) 89 banks now reduced to 25

AYULI JEMIDE, LEAD PARTNER5 NEW CENTRAL BANK REGULATIONS Government cannot hold (directly or indirectly) more than 10% of any BankGovernment cannot hold (directly or indirectly) more than 10% of any Bank At least 2 Independent directors must be on the BoardAt least 2 Independent directors must be on the Board Above 10% Equity in any Bank needs CBN prior approvalAbove 10% Equity in any Bank needs CBN prior approval Board Chairman cannot be Managing DirectorBoard Chairman cannot be Managing Director No 2 members of an extended family shall be Chairman and CEO or Executive Director at same time.No 2 members of an extended family shall be Chairman and CEO or Executive Director at same time.

AYULI JEMIDE, LEAD PARTNER6 Securities & Exchange Comm. Interventions Sanctioning Powers: E.g Cadbury; subscribed Public Offers Rigorous registration for Capital Market Operators Introduced Professional Indemnity Insurance Introduced half yearly report format for PLC’S Insist on International Financial Reporting Standards (IFRS) for PLC’S Post Transaction Inspections Increase Share Capital for Stockbrokers

AYULI JEMIDE, LEAD PARTNER7 SCUML – SPECIAL CONTROL UNIT AGAINST MONEY LAUNDERING Who is in the Suspicious Transaction Trap?Who is in the Suspicious Transaction Trap? All Financial InstitutionsAll Financial Institutions Designated Non-Financial Institutions (DNFI’s) which include:Designated Non-Financial Institutions (DNFI’s) which include: Legal PractitionersLegal Practitioners Chartered AccountantsChartered Accountants Audit FirmsAudit Firms Tax ConsultantsTax Consultants

AYULI JEMIDE, LEAD PARTNER8 NEW FACE OF BANKING Reporting Requirements to EFCCReporting Requirements to EFCC - every transaction by an Individual involving in excess of 1 million Naira.- every transaction by an Individual involving in excess of 1 million Naira. - every transaction involving a corporate body involving in excess of 5 million Naira.- every transaction involving a corporate body involving in excess of 5 million Naira. - reports must be filed within 7 days.- reports must be filed within 7 days.

AYULI JEMIDE, LEAD PARTNER9 NEW FACE OF BANKING Know Your Customer Standards - required to keep records of every customers’ identity and transactions for at least 5 years. - Banks are required to obtain identification evidence of customers before entering into a banker-customer relationship with them.

AYULI JEMIDE, LEAD PARTNER10 DIRECTORS CULPABILITY Directors are personally liable to lenders for misappropriation of borrowed funds. S.290 CAMADirectors are personally liable to lenders for misappropriation of borrowed funds. S.290 CAMA Any Indemnity or exemption from liability given by a company to a director or auditor is void. S. 67 CAMAAny Indemnity or exemption from liability given by a company to a director or auditor is void. S. 67 CAMA

AYULI JEMIDE, LEAD PARTNER11 THANK YOU FOR LISTENING