ICSAN Sector Governance flashcards

32 cards. Read the term and the definition here. The deck at the top of this page is optional.

Nigerian Code of Corporate Governance 2018

Principle-based national code issued by the Financial Reporting Council of Nigeria, effective 1 January 2019, requiring public and regulated companies to apply its principles and explain how each was applied.

Apply and explain

Compliance model in which a company must apply every principle of the code and explain in its annual report how it did so; deviation is not a substitute for application.

Comply or explain

Model popularised by the UK Cadbury Report 1992: a company either follows the code or states clearly in its report which provisions it departed from, and why.

King IV governance outcomes

South Africa's King IV (2016) sets 17 principles around four outcomes - ethical culture, good performance, effective control and legitimacy - and is applied on an apply-and-explain basis by all organisations.

Independent non-executive director

Board member with no material relationship with the company, its management, shareholders or advisers, free of conflicts and able to exercise objective judgement on strategy, performance and accountability.

Board charter

Written document setting out a board's role, powers, composition, meeting procedures and the matters reserved to it, separating board oversight from management's day-to-day responsibilities.

Schedule of matters reserved

List agreed by the board of decisions only the board can take, such as strategy, budgets, large capital spending, senior appointments and dividends, with all other matters delegated to management.

NGX free float requirement

Nigerian Exchange rule requiring a minimum proportion of a listed company's shares to be held by the public, commonly 20 per cent for the largest companies and 25 per cent for others, ensuring liquidity.

Fit and proper test

Regulatory assessment of an appointee's honesty, competence, financial soundness and independence, used by the Central Bank of Nigeria and other regulators before approving directors and senior officers of regulated firms.

BOFIA 2020

Banks and Other Financial Institutions Act 2020, which repealed BOFIA 1991 and gives the Central Bank of Nigeria powers over licensing, shareholder approval, director fit-and-proper screening and bank resolution.

Fiscal Responsibility Act 2007

Nigerian law that creates the Fiscal Responsibility Commission, requires a medium-term expenditure framework and fiscal strategy paper before each budget, and mandates quarterly reports on budget implementation.

Treasury Single Account

Government policy requiring all federal revenues and expenditures to pass through one consolidated account at the Central Bank, reducing idle balances and improving cash visibility and control.

Public Procurement Act 2007

Nigerian law establishing the Bureau of Public Procurement and prescribing open competitive bidding, procurement planning, due process certification and a ban on splitting contracts to avoid approval thresholds.

Three lines model

Institute of Internal Auditors model in which operating management owns and manages risk, risk and compliance functions monitor it, and internal audit gives independent assurance, all overseen by the governing body.

COSO internal control framework

Framework with five components - control environment, risk assessment, control activities, information and communication, and monitoring - supported by seventeen principles for designing and evaluating internal control.

Risk appetite statement

Board-approved description of how much and what type of risk the organisation will accept in pursuing its strategy, from which tolerances and limits for each risk category are set.

Incorporated trustees

Registration route under CAMA 2020 that makes a non-profit association a body corporate in Nigeria, able to hold property and sue through trustees appointed under its constitution.

Cooperative principles

Seven identity principles from the 1995 ICA Statement, including voluntary and open membership, democratic member control, member economic participation, autonomy, education and training, cooperation among cooperatives, and concern for community.

Restricted funds

Charitable or cooperative funds that donors or the governing document commit to a specific purpose, accounted for separately from unrestricted funds and not available for general spending.

Whistleblowing

Disclosure by an employee or stakeholder of suspected wrongdoing through a protected channel, requiring confidential handling, non-retaliation safeguards and escalation to the audit committee or an independent officer.

Adequate procedures defence

Under the UK Bribery Act 2010, a commercial organisation may defend a failure-to-prevent-bribery charge by showing proportionate procedures covering risk assessment, top-level commitment, due diligence, communication and monitoring.

ICPC

Independent Corrupt Practices and Other Related Offences Commission, established by the Corrupt Practices and Other Related Offences Act 2000, which investigates and prosecutes corruption involving public officers in Nigeria.

Derivative action

Court action brought by a member on behalf of the company against a director or third party for breach of duty, permitted under CAMA 2020 with leave of court where the company will not act.

Stakeholder salience model

Mitchell, Agle and Wood model that ranks stakeholders by power, legitimacy and urgency; those holding all three attributes are definitive stakeholders who receive priority in engagement.

Proxy

Written authority by which a shareholder appoints another person to attend and vote at a general meeting, a right preserved for members of public companies under CAMA 2020.

Closed period

Window before announcement of results, or any time unpublished price-sensitive information exists, during which directors and insiders of a listed company must not deal in its shares.

Related party transaction

Deal between the company and a director, substantial shareholder or their connected persons, which must be disclosed, approved at the proper level and reported in the financial statements.

Integrated reporting capitals

The IIRC framework's six capitals - financial, manufactured, intellectual, human, social and relationship, and natural - used to explain how an organisation creates value over the short, medium and long term.

Family constitution

Written statement of a family business's values, governance structures, employment and dividend rules and exit arrangements, agreed by family members to guide decisions and manage succession.

Host community development trust

Entity required under Nigeria's Petroleum Industry Act 2021, funded by a statutory percentage of an operator's operating expenditure, to manage development projects for communities hosting petroleum operations.

Petroleum Industry Act 2021

Nigerian law creating the NUPRC for upstream and the NMDPRA for midstream and downstream regulation, incorporating NNPC Limited under CAMA and establishing host community development trusts.

Small company exemptions

CAMA 2020 reliefs for companies within statutory size thresholds, including exemption from mandatory statutory audit, while accounting records, annual returns and tax filings remain compulsory.