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					                       COMMENTS ON THE WALKER REPORT
                       BY DR. NECHI EZEAKO, FCIS & MR. ELONNA EZULU
                                      LAGOS NIGERIA


Attention: Mr. David Walker.

By email to: or +442070660032

Terms of Reference
We note that the role of the company secretary in corporate governance which has
been described as ‘pivotal’ by the Kings Reports was overlooked in the Review due
to the restrictive terms of reference. We recommend that liberal cannon of
interpretation should be adopted in reading the Terms of Reference. The scope
should include the role of the Company Secretary as the Board’s governance
structure is in our view incomplete without the Company Secretary.

Recommendation 1
We note that induction, training and development of NEDs as approved by the
Board are the responsibility of the Company Secretary. Under the Combined Code
2006 A5, the Company Secretary’s responsibilities include ensuring good
information flows within the board and its committees and between senior
management and non-executive directors, as well as facilitating induction and
assisting with professional development as required. The recommendation should
expressly assign this responsibility to the Company Secretary to avoid creating a
vacuum and ensure practicality of the recommendation.

Recommendation 2
Coordination of the provision of the dedicated report for the NEDs is the
responsibility of the Company Secretary. The Combined Code charges the Company
Secretary with the responsibility of advising the Board through the Chairman on all
Corporate Governance matters; as well as being available to give advice and support
to individual directors. This duty should not be left for an anonymous performer
but should be charged on the company secretary in the Walker Report.

While 3.4 noted the “high priority for a board to ensure that there is open debate
and challenge within both the executive team and the whole board,” it
recommended “necessary experience and overall capability of NEDs on BOFI
boards” as the solution.

While we agree with the desirability of capacity building for NEDs to facilitate
their governance role, we further recommend definition of a whistle blower to
clearly exclude anonymous petitioners and clear protection of whistle blowers to
make anonymity unnecessary.

Recommendation 3
Respective BOFI Boards to setup policy manuals specifying their specific
requirements for NEDs in respect of the time frame to be dedicated by NEDs to
the business of the BOF1. The Company Secretary to ensure that such policies as
determined by the Board is duly communicated to each NED in writing.

The Recommendation and the Report should include the requirement that every
BOFI should have a Company Secretary with relevant qualification and experience.
The role of Company Secretary of BOFIs should be more clearly specified. The
role of the Company Secretary in the corporate governance of BOFIs is key.
Without an effective and professional input from that role, the successful
implementation of this and other recommendations may not be practicable.

The Nigerian Companies and Allied Matters Act, 1990, Laws of the Federation of
Nigeria Cap 59 (CAMA) provides that every public company must have a secretary
who should have certain attributes and be responsible for certain roles and duties
stipulated therein. According to section 295 CAMA, the secretary of a public
company must have one of the following qualifications:
   a) A member of the Chartered Institute of Secretaries and Arbitrators, or

   b) A legal practitioner within the meaning of the Legal Practitioners Act, 1975,

   c) A member of the Institute of Chartered Accountants of Nigeria, or of such
      other bodies of the Chartered Accountants as are approved from time to
      time by an Act or Decree, or

   d) Any person who held the office of a secretary of a public company for at
      least 3 years of the 5 years immediately preceeding his appointment, or
   e) A body corporate or firm consisting of qualified persons under paragraphs
      (a), (b), (c), or (d).

Duties of the Secretary
Section 298(1) provides that the duties of the secretary include the following:
   a) Attending the meetings of the company, the board of directors and its
      committees, rendering all necessary secretarial services in respect of the
      meeting and advising on compliance by the meetings with the applicable rules
      and regulations.

   b) Maintaining the registers and other records required to be maintained by
      the company under the Act.

   c) Rendering proper returns and giving notifications to the Commission as
      required under the Act.

   d) Carrying out such administrative and other secretarial duties as directed by
      the directors or the company.

The above duties are in addition to the specific duties which he is required to
perform under the Act such as the signing of the annual return (s. 376) and
verifying the statement submitted to the official receiver (s. 420), etc.

We recommend that the Report should provide for professional requirements for
being the Company Secretary of a BOFI.

We note that under Functioning of the Board and Evaluation of Performance, 4.25
provides that “Consultation in the context of this Review suggests that, where the
evaluation process is undertaken with the clear objective of identifying of possible
ways of improving the functioning of the board, the output can be constructively
critical and substantively valuable. … a necessary element in the governance review
process is that contributions by individual directors, which may in some
circumstances, be justifiably quite sharply critical of some part of board process,
of the chairman, of the CEO, or of other board colleagues, should be protected by
anonymity. Without this, the quality and pointedness of individual inputs will
inevitably be attenuated by loyalties, personal sensitivities and concern not to rock
the boat in a way that would undermine the value of the process. Assurance of
anonymity can be provided either through engagement of an external facilitator or
through reliance on the company secretary or general counsel for an appropriate
collation of inputs and presentation of a reporting document that identifies and
categorises issues raised without attribution to individual directors.”

While we agree with the spirit and intent of the provision, we further recommend
that the Company Secretary should also make contributions to the process and
enjoy anonymity for them. The Company Secretary watches the “Board in Action”
and is therefore in a position to assess/appraise contributions where he/she is an
appropriately-qualified professional as we recommend should be the case.

Recommendation 4
The Recommendation is silent on the party responsible for this function. The
Company Secretary is responsible for induction of new directors under the
Combined Code. The induction should include training on Corporate Governance and
enlightenment of the NEDs on their obligation for constructive dissent. This
Recommendation should expressly assign this responsibility to the Company

Recommendation 5
For BOFIs, the participation of consultants appointed by regulators in the
appointment of NEDs is key. However, to avoid compromising the process, it is
suggested that the consultants should be appointed on Ad Hoc basis, alternated
yearly and rotated among different companies. This recommendation could also be
extended to the appointment of EDs as well.

Recommendation 6
The NEDs should be empowered and encouraged to challenge proposals which
should not be limited to risk matters, but extended particularly to strategy,
succession planning, etc. put forward by the executive. There should be adequate
safeguards Jeffrey Sonnenfeld in his article “What Makes Great Boards Great”
observed that the ‘highest performing companies have extremely contentious
boards that regard dissent as an obligation and treat no subject as undiscussable.’
We are of the view that a culture of dissent will be fostered where board
members air their views and criticize one another without fear of intimidation or
of their views being misconstrued.
Recommendation 7
It is not stated whether the Chairman is to be Executive of NE Chairman. This
should be stipulated as preferably Non Executive Chairman. Whether the Chairman
is Non Executive or Executive, while he is responsible for ensuring that directors
receive all information relevant for the discharging of their obligations which
should be accurate, timely and in a clear form, the Chairman can only achieve this
through the Company Secretary.

Recommendation 8
The Recommendation is supported since leadership is key. Leadership qualities
supercede relevant BOFI experience as leadership has been described as the
ability to make ordinary human being to perform extraordinary feats. While
experience is necessary to enable the chairman appreciate and give directions on
strategic issues, the role of chairman is principally that of leadership and no
amount of experience can fill the gap of poor leadership attributes. Napoleon
stated succinctly that “there are no bad soldiers, only bad officers.”

Recommendation 9
The Combined Code charges the company secretary with responsibility for
supporting the Chairman in the design of the agenda and ensuring that the non-
executive directors receive adequate information, information flow between the
executive management and non-executive directors. The role of the company
secretary in setting the agenda of the meeting is complementary to the chairman’s
responsibility and should be highlighted in the recommendation.

Recommendation 10
Proposal of BOFI Chairman election on a periodic basis is strongly supported.
However, in view of the undesirability of frequent changes in the market’s
perception and confidence and need to ensure some level of continuity, it is
suggested that the BOFI Chairman’s tenure should be two years rather than one.
However, exceptional circumstances under which the election of the Chairman on
an annual basis may be proposed can be stipulated in the company’s articles of

Recommendation 11
The Senior Independent Director (SID) role should be absolutely required for
BOFI Boards in which the Chairman is also to Chief Executive. His role in relation
to access to Shareholders should not be limited to individual shareholders only but
include access to Shareholders’ Associations and the role of the Company
Secretary in facilitating this could be critical.

Recommendation 12
The evaluation of the Board should be on an annual basis and reported in the annual
report as suggested. Measures should be taken to ensure the independence of the
external facilitator appointed. Requirement of the professional standing of such
external facilitators could be specified in this Report.

Recommendation 13
The level of disclosure should be sufficient to assist shareholders’ understanding
of the evaluation process and appraisal of the skill and competence of those
appointed by them to run their enterprise.

The Directors’ Report should state the optimal skills mix being targeted by the
Board of Directors.

Recommendation 14
Notification of the Board of any material charges in the Register should be the
responsibility of the Company Secretary. The type of change which is considered
material for this purpose should be clearly stipulated either by the Board itself or
in terms of percentages or ratios, in the report.

Recommendation 15
We support this Recommendation for introducing a proactive regulatory response
to disinvestment which can nip in the bud the propensity for insider-trading and

Recommendation 19
This Recommendation adopts a “comply or explain” basis which often leads to
mechanical adoption of best practices to achieve regulatory compliance. We are of
the view that caution should be taken in adopting this approach to avoid falling into
the pitfall of regulatory compliance with the structural aspects to governance
devoid of the spirit of corporate governance. Richard Leblanc observed in his
article, “The Eight ‘Cs’ of Board Performance Assessment”, that ‘some boards that
exhibit all the structural indicators of good governance can fail. Others that might
seem to be deficient by external measures of good governance, manage to perform
exceptionally well over long periods’. We therefore suggest that FSA should in
addition, organize regular seminars for the fund managers and other institutions
facilitated by professionals on the trends and importance of imbibing good
corporate governance and best practices.

Recommendation 21
Adoption of a Memorandum of Understanding among long-only investors to enhance
resource commitment and collaboration is supported. However, the criteria for
determining who the long-only investors are should be clearly spelt out. The
Recommendation should also state the nature of the relationship between the
parties, the enforceability of the MOU, qualification of prospective investor for
invitation and grounds under which membership may be terminated or request for
membership declined.

Other Proposed Recommendations
Terms of Reference for Company Secretaries of BOFIs
The Board should stipulate the terms of Reference and responsibilities of the
Company Secretary. Flowing from David Buckle, (Senior Consultant, The Institute
of Directors, London); the Combined Code as well as the King Reports, the role of
the Company Secretary could be articulated by way of terms of reference and
categorised into broad headings including the following:

      Board Meetings
        o   Coordinating the operation of the company’s formal decision making
            and reporting machinery
        o   Formulating meeting agendas with the chairman and/or managing
        o   Attending and minuting meetings
        o   Maintaining Minutes books
        o   Certifying copies of Minutes
        o   Ensuring correct procedures are followed e.g. notices, quorum, voting,
            compliance with articles, etc.

      General Meetings
       o   Originating and obtaining internal and external agreement to all
           documentation for circulation to shareholders
       o   Coordinating the administration and minuting of meetings
 o    Ensuring that correct procedures are followed

Memorandum and Articles of Association
 o   Ensuring that the company complies with its memorandum and articles
 o   Drafting and incorporating amendments

General Compliance
 o   Monitoring and ensuring compliance with legal requirements
 o   For listed companies, monitoring and compliance with listing rules
 o   Maintaining statutory registers

Reports and Accounts
 o    Coordinating the publication and distribution of the company’s annual
      reports and accounts
 o    Preparation of directors’ reports

 o   Maintaining the register of shareholders
 o   Dealing with transfers and other matters affecting shareholders
 o   Payments of dividends and interests
 o   Issuing documentation regarding rights issues and capitalisation issues
 o   Relations with institutional shareholders and their investment
     protection committees

Corporate Governance
  o   Reviewing developments in corporate governance and bringing them to
      the attention of the board
  o   Maintenance of the corporate governance manual, communication and
  o   Advising and assisting the directors in respect of their legal duties
      and responsibilities
  o    Acting as a channel of information for the NEDs
  o   As directed by the board, reviewing the legal risk audit with the
      assistance of internal and external advisers
  o   As directed by the board, reviewing and monitoring insurances,
      contractual and commercial matters, statutory compliance including
      health and safety, employment law, pensions, data protection, etc.
      New Directors’ Induction/NEDs’ Support
       o   Arranging the training of directors and induction of new board
       o   Providing information that would aid the understanding of new
           directors of their roles and responsibilities, the company and the
       o   Being available to give advice and support to individual directors and
           providing them individually and collectively with detailed guidance
           regarding their responsibilities.

Remuneration of NEDs of BOFIs
The present stipulation in several jurisdictions, Nigeria inclusive, of remuneration
limited to directors’ fees, sitting allowances and reimbursable travel expenses is in
our view, no longer adequate. The remuneration of directors of BOFIs should in the
new dispensation cover the level of risk and amount of time to be dedicated to the
business of the BOFI. Thus the remuneration should be commensurate with the
recommended increase in the number of hours to be dedicated to the board and
the prohibition of multiple directorships.

Dear Sir,

We undertook a detailed review of the Recommendations of your Committee. We
are excited about the work which is coming at the heels of critical loss and failure
in the banking system in the UK and most parts of the world. We observe that the
global loss is attributable in part to the governance failures occasioning excessive
risk taking without recourse to risk management guidelines. We experienced this
financial crisis first hand in Nigeria as employees in the BOFI in Nigeria.
We observed that the work focused on the needs of BOFI which are very unique
and critical to the national economy. Though the Recommendations are innovative
and solution oriented, it is our humble view that they are far from exhaustive.

We hereby submit our contribution for your evaluation and possible incorporation.

Thank you.