NSE Building
By Obinna Chima
The Nigerian Stock Exchange (NSE) at the weekend disclosed that it had entered into a partnership with the Convention on Business Integrity (CBi) to provide a steady flow of data to be used to develop a Corporate Governance Rating/Ranking System (CGRS) for listed companies in the country.
The NSE also said it expected to develop a Corporate Governance Index that would be tradable.
The Chief Executive Officer, NSE, Mr. Oscar Onyema, revealed this in a speech presented at the 1stannual Christopher Kolade Lecture on Business Integrity, held in Lagos.
According to Onyema, in implementing the initiative, the NSE intended to start with 10 pilot companies expected to volunteer to be rated with the CGRS criteria. He explained that the companies would have “first movers’ advantages as they would be celebrated and showcased at every forum and road shows.” This he anticipated would be possible by the end of 2013, adding that by next year, all other companies listed on the NSE would be rated using the CGRS.
Onyema, whose speech was read by the General Manager/Head, Corporate Division, NSE, Mr. Bola Adeeko, explained: “The NSE believes that companies should not only strive to maintain their listing status by adhering and discharging their post-listing obligations to the NSE and investors, and observing the rules of other regulatory authorities as is contained on paper, but also practice sound corporate governance ethics.
“In this regard, the CGRS which is being developed will be used to rank/rate all listed companies on the NSE, based on their corporate governance practice. The Humboldt-Viadrina School of Corporate Governance, Berlin, has been appointed as independent observers of the process to report independently to investor for a on the process applied to establish Nigeria’s CGRS and help promote it internationally.”
Onyema, however pointed out that the role of the corporate governance school would not be a paid one, saying that the primary interest of the institution would be research, as well as to assess the underlying motivations of companies to participate in the corporate governance index of the NSE.
The NSE boss also disclosed that the International Finance Corporation (IFC) recently indicated interest in the NSE/CBi CGRS, adding that the multilateral institution had been keen on supporting the initiative.
“Companies that meet up with the raking/rating criteria of the CGRS would automatically place themselves as the toast of investors. This is because all investors want to ensure that their investments are safe, that there is fiduciary awareness within the board and that investors’ interests are fully protected.
“Foreign investors will be attracted to these companies for long-term investment and not just to pull out after making short-term profit. This will lead to the growth of the economy,” Onyema argued.