Introduction

The Nigerian Communication Commission (“NCC” or the “Commission”) in December 2023, issued the Guidelines on Corporate Governance for the Communication Sector 2023 (the “Guidelines”). The Guidelines apply to all licensed communication companies in Nigeria (“Licensee”) and were issued pursuant to the powers conferred on the Commission under the NCC Act, 2023 to make additional regulations.¹ The Guidelines adopt the principles of the Nigerian Code of Corporate Governance, 2018 (“NCCG 2018”) and the Companies and Allied Matters Act, 2020 (“CAMA 2020”) and effectively repeals the Code of Corporate Governance for the Communications Industry released in 2016.

The Guidelines seek to facilitate the pursuit of good corporate governance in the interest of Licensees, shareholders, and other stakeholders and ensure that the highest industry transparency standard, due process, accountability, and ethics are maintained without hindering enterprise or innovation. Essentially, the Guidelines intend to guarantee an improvement in the way and manner corporate governance is observed in the communications sector.² In addition to other recommended practices, the Guidelines also set out principles for the applicable entities to comply with in the composition and structuring of their Board of Directors (“Board”). These principles aim to enhance the transparency, diversity, and efficiency of the Board.

Key Provisions of the Guidelines Focused on Board Governance

1. Responsibilities and Characteristics of the Board

1. The Guidelines recognize the fiduciary relationship between the Board and the company and mandate directors to be individually and collectively accountable to the Commission and the Government for directing and controlling the affairs of the company.³ The Board is also expected to delegate the authority to run the company to management without abdicating its responsibility.⁴
2. The Board is required to ensure that its members possess the required knowledge and understanding of the company’s business and to guarantee the integrity of annual reports and all other materials submitted to the Commission.⁵
3. The Guidelines also mandate the Board to establish a code of conduct and principles to which the company shall align its core values.⁶
4. The Board is to ensure that all its deliberations and decisions are founded on the value-based principles of corporate governance: accountability, transparency, equity, integrity, and independence.⁷

2. Board Size, Composition and Structure

1. The Guidelines require the number of directors on the Board of a Licensee to be a minimum of 5 (five) with a recommended composition as follows:
1. A minimum of 2 (two) Executive Directors (“ED”) one of which shall be the Chief Executive Officer (“CEO”);
2. A minimum of 1/3 (one-third) of the Board shall be Independent Directors; and
3. The number of Non-Executive Members of the Board shall always, at the minimum, be equal to the number of Executive Members.⁸
2. The Chairman of the Board is to be a Non-Executive Director (“NED”) and under no circumstance is the office of the Chairman and CEO to be held by the same person. Additionally, the Guidelines sets a cool-off period of 5 (five) years before a person who has held the position of the Chairman of the Board can be eligible to be appointed as the CEO of the Licensee.⁹
3. No more than two members of the same nuclear family shall be on the Board of a Licensee concurrently.¹⁰

3. Board Committees

1. The Guidelines mandate the Board to establish appropriate Committees to assist in its governance functions and duties and to help improve efficiency. These Committees are to comprise of directors with relevant skills and knowledge. The mandatory Committees to be set up by the Board of a Licensee are:¹¹
1. Audit Committee - to be comprised of NEDs and include at least one Independent Non- Executive Director (“INED”).
2. Governance, Remuneration, and Nominations Committee (“GRN”) – to be chaired by an INED and shall be comprised of NEDs with a majority of INEDs where possible.
3. Risk Management Committee - to be comprised of EDs and NEDs with a majority of NEDs. The Chairman of this Committee is also required to be an NED.
2. The Chairman of the Board and the CEO are not to be members of any of the Committees and can only attend Committee meetings by invitation.¹²
3. Each Committee shall comprise of at least 3 (three) directors and no director shall be a member of more than 2 (two) Committees.¹³
4. All Committees shall have a Board approved Code of Operation/Charter and shall meet at least twice a year.¹⁴

4. Board Meetings¹⁵

1. Under the Guidelines, the Board is required to meet at least once every quarter in the discharge of its duties.
2. To qualify for re-election, every director is expected to attend at least 2/3 (two-thirds) of all Board and Committee meetings.
3. In line with the provisions of CAMA 2020, written notice and agenda for Board meetings are to be circulated at least 14 (fourteen) days before the meeting. This notice period may be waived in cases of extraordinary meetings.

5. Board Evaluation¹⁶

1. The Audit Committee of a Licensee is expected to appoint an External Auditor to carry out an annual evaluation and appraisal of the Board. The evaluation process and report will consider the composition, competence, and objectivity of directors. The appraisal is to be carried out before the election to the Board and the report shall be instrumental in the re-election process of directors.
2. A Licensee is required to submit its Annual Evaluation report to the Commission together with its Annual Report.

6. Tenure and Re-election of Directors¹⁷

1. The tenure of Directors on the Board is for 2 (two) terms of 5 (five) years, each subject to outstanding performance and re-election. Under the repealed 2016 Guidelines, the tenure was 3 (three) terms of 5 (five) years each.
2. No director shall serve on the Board for a period exceeding ten (10) years and any director who has exhausted the 10 (ten) year tenure is required to observe a cool-off period of 5 (five) years before being eligible for re-appointment in the Licensee or its subsidiary.
3. Directors are also required to undergo a formal induction program upon appointment and are to participate in bi-annual continuing education programs to update their knowledge and skills. The continuing education requirement shall be a criteria for re-election to the Board.

Conclusion

Replacing the repealed 2016 guidelines, the newly issued Guidelines mark a significant step forward for corporate governance in the communications sector. Developed in line with the NCCG and CAMA 2020, these Guidelines introduce novel practices and update outdated ones, ensuring they remain relevant and effective. This timely update is expected to not only promote sound corporate governance practices but also actively combat unfair practices within the industry. By embracing these Guidelines, the communications sector can confidently navigate an increasingly complex landscape, fostering transparency, accountability, and ultimately, sustained growth.¹⁸

1. Section 2 of the Guidelines
2. Section 3 of the Guidelines
3. Section 6(1)(a) of the Guidelines
4. Section 6(1)(c) of the Guidelines
5. Section 6(1)(d) of the Guidelines
6. Section 6(1)(g) of the Guidelines
7. Section 6(1)(i) of the Guidelines
8. Section 7(2)(3) of the Guidelines
9. Section 7(4)(5) of the Guidelines
10. Section 8(6) of the Guidelines
11. Section 10 of the Guidelines
12. Section 12 of the Guidelines
13. Section 22 of the Guidelines
14. Section 7(7) of the Guidelines
15. Section 8(4) of the Guidelines
16. Section 8(5) of the Guidelines
17. Section 8(6) of the Guidelines
18. We acknowledge the valuable contribution of Bolutife Adeniji to this newsletter.