Governance Frameworks, Codes and Regulation
What the exam tests
This domain tests how Nigerian governance instruments fit together: statute, codes, regulator rules and company-level documents. Expect questions on the Nigerian Code of Corporate Governance (NCCG) 2018, issued by the Financial Reporting Council of Nigeria, and on sector codes.
Core rules
- NCCG 2018 is principle-based and uses “apply and explain”, not “comply or explain”. Entities explain how each principle was applied, or why not, in their annual report.
- It sits alongside CAMA 2020, the Investments and Securities Act, NGX listing rules and sector codes from the CBN (banking), SEC (capital market), NAICOM (insurance) and PenCom (pensions).
- The stricter or more specific rule prevails. A listed bank may need to satisfy CAMA, SEC, NGX, CBN and NCCG requirements simultaneously.
- Company-level instruments - memorandum and articles, board charter, committee terms of reference - operationalise the external rules.
Worked example
A listed bank has one independent director. NCCG expects board independence; the CBN code requires at least two independent directors. The bank cannot rely on NCCG alone. It must meet the CBN minimum, disclose any shortfall and explain remediation. Reasoning: sector-specific prudential rules bind the bank as a licensed institution; listing rules and NCCG add market-facing expectations.
Traps
Calling NCCG “comply or explain”; treating it as a statute with criminal penalties; assuming a private company has no governance code; ignoring the sector regulator because the company is listed; and quoting a code without saying whether it is law, listing rule or guidance.