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Dealing With Corporate Governance Challenges In Business, By Nonso Obikili
It is also in the interest of the regulators whose job it is to ensure that businesses, especially publicly listed ones, maintain good corporate governance codes, as businesses tend to learn from each other. If one business gets away with sharp practices, then other try their hand at it as well.
Governance is a fundamental part of any functioning entity. The rules and systems which govern how entities function are perhaps the most fundamental thing for survival. Rules and systems that incentivise good decision making generally lead to better performing entities, while rules that incentivise bad behaviour tend to lead to breakdown. Most understand the importance of these rules and systems when we talk about governance with respect to countries, or states. In that instance, fair and enforced rules with proper checks and balances typically lead to countries that make better decisions and end up better off, whereas the opposite of that leads to countries that end up as basket cases.
However, governance rules don’t only apply to countries or states, but to businesses as well. The difference being that for businesses, instead of having presidents, national assemblies, and citizens, you have chief executive officers (CEOs), boards, and shareholders. Regardless, the principles of good governance still apply. Businesses which follow a good set of rules and systems of good behaviour tend to perform better than those that don’t.
Good corporate governance rules help ensure that businesses work in the interest of their shareholders, and don’t take actions that are not in the interest of the business. Good corporate governance rules also try to ensure that transitions within the company, such as in cases of a change of ownership structure, do not impede the normal functioning of the business. And, of course, any good system of rules has to come hand-in-hand with a system of enforcement. For businesses, such enforcement is typically done by regulators who try to make sure that rules are obeyed and penalities imposed on those who break them.
Unfortunately, as most Nigerians can attest to, sometimes the decision makers don’t always act in the interest of those who they should leading. Presidents and national assemblies don’t always act in the interest of their citizens and CEOs and board members don’t always act in the interest of their shareholders. And as you can probably guess, one common reason for this is to remain in power. Presidents want to remain in power. CEOs want to remain in power. Board members want to remain in power and sometimes act against the interest of their shareholders to do so.
One common way CEOs and board members try to stay in power is by a process called stock dilution. You see, if a board wants to act against the interests of shareholders, then one way of doing this is to change the structure of the business so that shareholders you don’t like, end up owning less of the company and having fewer voting rights consequently.
For example, if a board effectively owns 25 per cent of a business and therefore has 25 per cent voting rights and wants to take the business in one direction, but there are other shareholders who own maybe 40 per cent who don’t particularly like that course of action, then the 40 per cent can effectively block the 25 per cent. A board which wants to force through its course against the will of other shareholders, can create and sell more outstanding shares through private placements to people who they know will support them, thereby increasing their effective stake and simultaneously reducing the ownership shares of those shareholders who don’t support that course.
I know what you are thinking. Surely this can’t be right, and you are right. According to the rules, it shouldn’t be that easy. First, according to most corporate governance rules, boards are not allowed to organise private placements without the approval of shareholders. There are valid reasons why a company would want to sell new shares privately, of course, but those are typically only when they are desperate for new capital. But if boards need shareholder approval for this kind of dilution, then why don’t the shareholders who are at risk of their shares being diluted prevent this from happening? Well the unhappy shareholders can only prevent this kind of thing from happening if they know where the meetings are taking place. If they are systematically excluded from the general meetings, then they cannot act or vote against such actions.
This phenomenon repeats itself across many countries with weak corporate governance rules and enforcement and appears to be repeating itself here in Nigeria in the case of NEM Insurance. NEM apparently organised an annual general meeting, which some shareholders were not told about, at least not with the mandatory 21 days’ notice. At the AGM, the shareholders present approved a plan for a new private placement in which shares were to be sold at below the market value of the shares that are publicly traded on the stock exchange. NEM has been one of the better performing insurance companies in recent times, hence it was not clear if there was any emergency cash need. And of course, some shareholders appeared to have been systematically excluded from the AGM by not being notified on time, and therefore were not able to vote against such a plan. As expected, those shareholders are now up in arms fighting against what looks like a brazen attempt to dilute their stock.
This kind of shareholder infighting is obviously not good for the company. It has the potential to derail the focus that companies, especially publicly listed ones, need to run efficient operations and it casts a cloud over the long-term viability of the business. If board members can implement such an operation, then who is to say they won’t do similar things to future investors? It is in the interest of all shareholders to resolve these issues by following the properly laid out rules and guidelines and to resolve them quickly without putting the overall health of the business at risk.
It is also in the interest of the regulators whose job it is to ensure that businesses, especially publicly listed ones, maintain good corporate governance codes, as businesses tend to learn from each other. If one business gets away with sharp practices, then other try their hand at it as well. If everybody starts engaging in sharp practices, then the overall health of the system suffers. Perhaps the regulators, who are the enforces of good corporate governance, need to take a closer look at this and set a good example.
Nonso Obikili is an economist currently roaming somewhere between Nigeria and South Africa.
The opinion expressed in this article is the author’s and do not reflect the views of his employers.
NASRE Champions Journalistic Welfare And Professionalism At Lagos Television Visit
By Miracle Oyewale
Sahara Weekly Reports That The Nigeria Association of Social and Resourceful Editors (NASRE) has reiterated its strong commitment to raising the standards of journalism and prioritizing the welfare of media practitioners across the country.
This dedication was highlighted during a recent courtesy visit to Lagos Television, where NASRE representatives shared their vision, achievements, and initiatives aimed at fostering collaboration and supporting journalists nationwide.
Speaking during the visit, Adeyemi Obadimu, NASRE’s Public Relations Officer, emphasized the association’s role in providing crucial support to vulnerable journalists. He highlighted the foundation’s efforts to assist journalists facing significant challenges, including illness or bereavement.
“This year alone, we’ve conducted two outreach programs, directly assisting 31 journalists,” Obadimu stated. “Our foundation is particularly focused on supporting the families of deceased journalists, ensuring their children’s education continues uninterrupted despite their loss.”
Building on this, Zakhar Ali, NASRE’s Finance Director, outlined the association’s welfare programs aimed at improving the personal and professional lives of journalists.
“Our mission is to stand by our colleagues in every possible way—be it financial assistance, healthcare, or family support,” Ali remarked. “Journalism is more than a profession; it is a lifelong service to society. Those who dedicate their lives to this noble calling deserve unwavering support.”
The Lagos Television (LTV) General Manager, Adesola Ibironke Kosoko, commended NASRE’s initiatives and expressed readiness to support the association’s programs.
“As journalists, we understand the uncertainties of life. Knowing NASRE is there to support our colleagues during difficult times is both reassuring and inspiring,” Kosoko stated.
NASRE continues to call on individuals, corporations, and government bodies to support its mission. By supporting NASRE’s efforts, these stakeholders can help ensure that those devoted to journalism are adequately cared for in their times of need.
Dr. Abigail Adesina Olagbaye, CEO Desigo Tourism Development and Facility Management Company Ltd and founder, Sayari Dunia Sustainable Tourism Foundation, a seasoned tourism practitioner with 23 years of experience (out of which 21 years have been in Tourism), has announced her candidacy for President of the Association of Tourism Practitioners of Nigeria (ATPN), the oldest and premier tourism trade Association in Nigeria.
With a proven track record of driving innovation and sustainable growth, Dr. Olagbaye is poised to transform Nigeria’s tourism landscape.
” Her vision is to re-position ATPN as the leading voice for Nigeria’s tourism development,” Dr. Olagbaye stated. “I’m committed to empowering our members with the training, resources, and networking opportunities they need to excel in their careers and elevate industry standards.”
Dr. Olagbaye’s campaign focuses on five key objectives:
– Strengthening Industry Partnerships: Fostering collaborations and alliances that drive growth and development.
– Capacity Building: Providing training, resources and opportunities to enhance professionalism.
– Advocacy: Amplifying the voice of tourism practitioners in Nigeria and beyond.
– Tourism Promotion: Showcasing Nigeria’s hidden gems both domestically and internationally.
– Improved Member Benefits: Enhancing the overall experience for ATPN members.
Additional initiatives to consider include:
– Faith-based International Conference Tourism: Tapping into the MICE potential of faith-based tourism.
– Medical Tourism: Promoting Nigeria as a hub for medical excellence.
– Sports Tourism: Leveraging sports to drive tourism growth.
– Language Training: Enhancing language skills to improve tourist experiences.
– Youth Tourism: creating opportunities for youths to be actively engaged in Tourism leveraging their potentials, talents and energies and enabling them to benefit from the socio-economic opportunities that tourism offers.
– Agro Tourism: Develop agro-tourism as a sub-sector of Tourism through partnerships and collaboration with the ministry of agriculture to ensure regulatory support, international organisations for cross pollination of ideas and knowledge transfer and capacity building, encourage our members to organise more farm stays, rural tours, food tourism events for more authentic experiences. Advocate for infrastructural development for rural roads and other amenities. Collaborate with locals for sustainability and inclusion.
To further enhance Nigeria’s tourism industry, Dr. Olagbaye plans to create robust social media platforms for the association. This will enable people at home and abroad to access tourism companies in Nigeria with international standard websites and social media focusing on major sites.Social media being an essential tool for promoting tourism.
As the pioneer of initiatives like Africa Tourism Climate Action Forum ATCAF and Africa Tourism Day, a nouveaux initiative in Africa which she started in 2020 in collaboration with the African Tourism Board, now in its 5th edition, Dr. Olagbaye has demonstrated her passion for sustainable tourism practices and her ability to drive meaningful change. “I invite fellow tourism practitioners to join me in transforming Nigeria’s tourism landscape,” she concluded.
Get in touch with Dr. Abigail Olagbaye:
Email: [email protected]
Phone: +2349122525250
Social Media: @abbieolagbaye
@abigailolagbaye
@Dr. Abigail Olagbaye
(Twitter, Instagram, Facebook, LinkedIn)
*Campaign Slogan:* “Transforming Tourism, Empowering Practitioners”.
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The Next Chapter of Amen City: Sade Balogun talks about TIARA Estates & Amen Phase 3 in Lagos, Nigeria
In a move that underscores her commitment to excellence, Sade Balogun, the mastermind behind Redbrick Homes International Limited and Amen City Ltd, has introduced TIARA Estates and Amen Estate Phase 3, expanding the renowned Amen City in a big way!
Situated in the picturesque Ibeju-Lekki area, Amen City has become synonymous with luxury and elegance. The launch of TIARA and TIARA 2.0 by Amen City Ltd soon after Amen Estate Phase 3 is set to elevate this community to new heights.
With its refined homes and superior amenities, the TIARA series embodies royalty and opulence. Amen Phase 3 enhances the living experience with modern architecture and top-tier facilities.
A nearby hospital at Amen Estate Phase 2 offers swift healthcare access, contributing to residents’ peace of mind. This proximity to medical facilities is especially important in emergencies, ensuring that help is always close by.
A large supermarket within the estate provides convenience for everyday shopping, eliminating the need for long trips to distant markets. The presence of excellent schools nearby ensures quality education for children, making it an ideal location for families. The coastal road that reduces travel time to Victoria Island to under 40 minutes makes Amen City a practical choice for professionals who need to commute to the city.
The estate 24-hour light supply from a dedicated turbine engine ensures uninterrupted power, which is a significant benefit for those seeking reliable energy solutions.
Sade Balogun’s innovative vision has transformed Amen City into a model of luxury living and community development. This expansion marks another milestone in her illustrious career, reinforcing Amen City’s status as a premier investment destination. With her ability to foresee market trends and deliver projects that exceed expectations, Sade Balogun continues to set new standards in Nigerian real estate.
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