Statutory and Compliance Manual

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Allan Lambert
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1 Statutory and Compliance Manual

2 Table of Contents Table of Contents 1. INTRODUCTION THE INTRODUCTION CORPORATE....3 AFFAIRS COMMISSION...4 Pre-incorporation 2. THE CORPORATE Returns...5 AFFAIRS COMMISSION...5 Post-incorporation 2.1 Pre-incorporation Returns...5 Returns.5 Changes 2.2 Post-incorporation Officers of the Returns...5 Company..5 Appointment 2.3 Changes and in Removal Officers of Auditors 6 the Company..6 Changes 2.4 Appointment Share Capital and Removal and Shareholding of Auditors...6 Structure...7 Debentures, 2.5 Changes Charges in Share and Capital Take-over and Bids.7 Shareholding Structure 7 3. THE 2.6 Debentures, NIGERIAN STOCK Charges EXCHANGE and Take-over..8 Bids.8 General 3. THE NIGERIAN Requirements STOCK.8 EXCHANGE....9 Notifications General Returns 9 Annual 3.2 Notifications...9 General Meetings and Dividends...9 Approval 3.3 Annual of Documents.9 General Meetings and Dividends..11 Notifications 3.4 Approval in Respect of Documents 11 of Which Directors Will be Held Responsible.9 Returns 3.5 Notifications Required to in be Respect Filed Through of Which the Directors Issuers Will Portal 10 be Held Responsible.11 Sanctions 3.6 Returns and Penalties..10 Required to be Filed Through the Issuers Portal.12 4.THE 3.7 Sanctions SECUTITIES and AND Penalties 13 EXCHANGE COMMISSION. 12 Mandatory 4. THE SECUTITIES Returns by AND Public EXCHANGE Companies COMMISSION...14 and all Quoted Companies 12 Sanctions 4.1 Mandatory Penalties..13 Returns by Public Companies and all Quoted Companies..14 Corporate 4.2 Sanctions Governance and Penalties.15 Returns CODES 4.3 Corporate OF CORPORATE Governance GOVERNANCE Returns 15 14

3 1. Introduction The Nigerian corporate compliance regime comprises of primary legislations and regulations administered by the relevant statutory agencies. Compliance is compulsory as non-compliance attracts penalties such as fines and the inability to undertake obligations or exercise rights to the detriment of a company s shareholders and other stakeholders. Non-compliance could also attract negative publicity to the erring company and is clearly not an indication of corporate responsibility. It is in the light of the above that we have published this Compliance Manual, comprising checklists of compliance items, to serve as a guide to corporate bodies in the fulfillment of their statutory and regulatory obligations. This Compliance Manual will provide guidance to both existing and prospective public and private companies (including companies limited by guarantee and Incorporated Trusts) regarding their compliance with statutory and regulatory guidelines and other requirements as laid down by the regulatory ombudsmen charged with oversight functions over the activities of corporate entities in Nigeria. This Manual includes compliance with the laws and regulations in relation to the following regulators: Corporate Affairs Commission (CAC) Applicable to all incorporated entities Securities and Exchange Commission (SEC) Applicable to all public companies and private companies with foreign shareholders or seeking to raise funds from the Capital Market Nigerian Stock Exchange (NSE) Applicable to all companies listed on the Nigerian Stock Exchange The Nigerian corporate compliance regime comprises of primary legislations and regulations administered by the relevant statutory agencies. 3

4 2. The Corporate Affairs Commission The Companies and Allied Matters Act, Cap C20, Laws of the Federation of Nigeria, 2004 provides that the following returns and notification shall be filed with the Commission: A. Pre-Incorporation Returns S/N Returns Remarks 1. Statement of Share Capital and Return of Allotment Minimum of 2 shareholders, who can be corporate or individual entities. Shares can be jointly owned. A minimum of 25% of authorized share capital to be allotted at incorporation 2. Particulars of Persons who are the first directors of the company Minimum of 2 directors; only individuals can be Directors 3. Particulars of person who is company secretary or any change therein Can only be a lawyer, an accountant, a chartered secretary or a Firm comprised of such professionals 4. Notice of Situation/Change in Registered Address A postal box address or a private mail box address cannot be used 5. Memorandum and Articles of Association Where a Company intends to operate in certain sectors, a proficiency certificate may be required. This is evidence that the Company is competent to provide the proposed services. 6. Declaration of compliance with requirements of CAMA This is signed by the professional incorporating the Company 4

5 B. Post Incorporation Returns i. Annual Returns S/N Returns Filing Period Penalties/Remarks 1. Notice of Accounting Reference Date i.e. the financial year Within 14 days of the determination of the period 2. Annual Returns Within 42 days of the AGM which must be held within 6 months of the company s financial year end. Directors are obliged to determine the period at their first meeting after the incorporation of the company. A company need not make a return in the year of its incorporation or within 18 months after incorporation. Penalty: 5, per year (private companies); 10, per year (public companies). 3. Audited Financial Statements Must be made up to a date not exceeding 9 months previous to the date of the meeting at which it is laid ii. Changes in Officers of the Company S/N Return Filing Period Penalty/Remark 1. Any change in the Board of Directors, or in the name, residential address or postal address of a Director Within 14 days of passing the relevant resolution 5, Appointment or removal of the Company Secretary Within 14 days of passing the relevant resolution 2, iii. Appointment and Removal of Auditors S/N Return Filing Period Penalty/Remark 1. Appointment of an Auditor. Filed within a week of the exercise of the power of the Directors to appoint an auditor to fill a casual vacancy in the office of the auditor The notice is necessary only where at the AGM no auditor is either appointed or reappointed and the directors appoint a person to fill the vacancy before the next AGM. Penalty: Daily fine of 100 by the company and every director and officer of the company. 5

6 2 Removal of Auditor Within 14 days of passing the resolution to effect the removal Daily fine of 100 payable levied on the company and every director and officer of the company iv. Changes in Share Capital and Shareholding Structure S/N Returns Filing Period Penalties/Remarks 1. Notice of consolidation, division, conversion, reconversion, cancellation, sub-division, etc. of share capital Within one month of alteration Non-compliance attracts a fine of 50 each for the company and every officer of the company. 2. Notice of increase in share capital Within 15 days after the passing of the relevant resolution 3. Certified copy of order for reduction of capital Notice should contain particulars of the classes of shares affected as well as the conditions attaching to the issue. Penalty: 5, Minutes of the general meeting where the reduction was approved and evidence of approval by the court is to be submitted 4. Particulars of contract relating to shares allotted other than for a cash consideration Within one month. However an application can be made to the court for extension of time within which to file the return The contract is to be submitted. The statement containing the particulars must accompany the return on allotment of shares. Penalty: Fine of 50 per day for every officer of the company in default. 5. Return on allotment of shares Within 30 days of the allotment If shares are allotted otherwise than for cash, the following additional documents must be filed: a contract in respect of the allotment; a return of the amount of shares so allotted; and particulars of the valuation. Penalty: 5,000 for private companies 10,000 for public companies 6

7 V. Debentures, Charges and Take-over Bids S/N Returns Filing Period Remarks/Penalty 1. Debentures and charges Within 90 days of execution of the deed containing the charge. 2. Charges upon acquisition of property. To be delivered within 90 days after the acquisition or if the property is situated and the charges was created abroad, 90 days after delivery of the copy of the instrument 5,000 for private companies 10,000 for public companies Penalty: fine of 250 levied on the company and every officer of the company 3. Complete satisfaction of a charge Applicable when the debt or property to which the charge relates has been discharged or released. Late filing of notice/deed of release: 5, Particulars relating to a unit trust scheme. Filed from time to time as specified by the Commission. The obligation created under this provision is a continuing one and is binding. 6. Order for the transfer of property of one company to another 7. Application for authority to proceed with take over-bid. Filed within 7 days after the order is made. Filed before making the take-over-bid. Notice of relevant court order must be published in minimum of one national newspaper. Penalty: Daily fine of 100 Application may be made by or on behalf of the person(s) proposing the bid. The authority required does not pertain to an arrangement on sale of company s property during members voluntary winding-up. 8. Registration of copy of proposed bid. To be filed before making the bid. Registration required does not apply to an arrangement on sale of company s property during members voluntary winding-up. 9. Dispatch of bid under a take-over-bid to shareholders, etc. When a bid is made under a take-over-bid A copy of the bid or an amendment of such a bid should be sent to the Commission, each director and shareholder of the offeree company. 7

8 3 The Nigerian Stock Exchange a. General Requirements Compliance with Listing Rules and Regulations Payment of listing fees Compliance with corporate governance disclosure requirements b. Notifications S/N Notification Timeframe 1. Any announcement of dividend, changes in capital structure or any other change that could affect the price Immediately of the company s shares on the market; 2. Any changes in the composition of the Board of Directors of the company; Immediately 3. Any proposed alteration of the Memorandum or Articles of Association; Immediately 4. Any proposed change in the general character or nature of the business and structure of the company; Immediately 5. Any change in voting control or in beneficial ownership of the securities carrying voting control; Immediately 6. Any information necessary to enable shareholders to appraise the position of the company and to avoid the Immediately establishment of a false market in the shares of the company; 7. Any other information that is considered to be price-sensitive which has not been made public; Immediately 8. Disclosure in the accounts of holders of 5% or more in the company s capital. Immediately 9. Any decision of the company or any of its subsidiaries to acquire shares in another company which thereby Immediately becomes a subsidiary or another business or a section of another business 10. Date and time of the board meeting at which dividend or bonus shares will be discussed Minimum of 14 days before the date of the board meeting 11. Board s approval of interim results, changes in the capital structure of the company amongst others 48 hours after the relevant board meeting 12. An intention to make a drawing or redemption of any securities and the amount of security outstanding after 48 hours after the relevant board meeting the purchase of drawing has been made 13. Any preliminary results for any year, half year, quarterly and the comparative figures in respect of profits 48 hours after the relevant board meeting before taxation and after taxation, 14. Any dividend and other distributions to members recommended or declared to be paid including approval 48 hours after the relevant board meeting for payment of dividend, interests, rights or scrip issues 15. Short particulars of any proposed change in the capital structure, redemption of securities 48 hours after the relevant board meeting 16. Issue of letters of allotment and of rights simultaneously Morning after allotment letters have been posted 8

9 c. Annual General Meetings and Dividend Proxy forms are sent out to all shareholders entitled to attend and vote at general meetings and to provide that such proxy forms are so worded that a shareholder or debenture holder may vote either for or against each resolution; Registers and Books of transfer remain open for minimum of 21 days of the passing of the board resolution recommending payment of dividends and remain closed for minimum of 5 working days to allow for settlement of transactions on the last day of business before closure; Notice of closure of the books of transfer is filed with the Exchange not less than 14 days before closure of Registers ad Books of Transfer whether or not the Board has passed a resolution recommending a distribution; Payment of dividend to shareholders within 48 hours of declaration. d. Approval of Documents The following documents may not be circulated to shareholders and the general public without the NSE s prior approval: Printers proof copy of the Annual Report; Audited financial statements; Notice of annual general meeting; All circulars to holders of listed securities; and Proxy forms issued to shareholders e. Notifications in Respect of Which the Directors will be Held Responsible All circulars and notices to shareholders with accompanying documents; Quarterly reports and forecast; Bi-annual and annual reports and accounts not less than 14 days before dispatch or publication; and Delivery of published accounts of the company minimum of 21 days prior to the date of the Annual General Meeting. 9

10 f. Returns Required to be Filed Through the Issuers Portal S/N Returns Timeframe Remarks 1. Interim Results/Accounts: (1 st Quarter, ½ year and 9 months) approved by the Directors (whether or not audited). Not later than 6 weeks after the relevant quarter Results are to be circulated to all shareholders via publication in two national newspapers. The results can only be published upon receipt of an approval letter from the NSE. 2. Quarterly statements Not later than six weeks after the end of the period 3. Earning forecast Minimum of 20 days before the beginning of the relevant quarter 4. Audited Financial Statements Not later than 3 months after the end of the financial year g. Sanctions and Penalties S/N Rule/Regulation Sanctions and Penalties 1 Publication of the following without prior written approval: A fine of 50% of the company s annual listing fee Accounts; Notice of annual general meetings; Closure of register; Payment date; Changes in composition of Board of Directors; Changes in capital structure; Alteration of Memorandum and Articles of Association; Changes in general character of the company; and 10

All corporate information/development with potential to impact on the company s performance 2 Releasing to the press or otherwise allowing a leak in financial results without informing the Exchange

11 All corporate information/development with potential to impact on the company s performance 2 Releasing to the press or otherwise allowing a leak in financial results without informing the Exchange Suspension from trading and a fine equivalent to 50% of the annual listing fees. 3 Late submission of accounts A fine of N100,000 per week from the due date until the date of submission 5 Failure to pay dividend on the due date A fine of 5% of the total dividend amount declared h. Failure to Pay Penalty Within the Timeframe Specified i. Failure to pay any penalty on or before the due date will attract a further fine of N300,000 and an additional sum of N25,000 per day for the period the violation continues 11

12 4 The Securities and Exchange Commission a. Mandatory Returns by Public and all Quoted Companies Notice of AGM together with the published audited accounts must be delivered to SEC, a minimum of 14 days before they are circulated to shareholders. Earning Forecast minimum of 20 days before the commencement of a quarter. Quarterly Reports within 30 days from the end of each quarter and simultaneously to the NSE and the investing public through publication in two newspapers. Publish signed Quarterly Balance Sheet, Income Statement and Cash Flow Statement in minimum of one national daily newspaper. Half yearly returns within 30 days from the end of the half year period either in hard or electronic form A report of unclaimed dividends in the prescribed form on a half yearly basis. A separate interest yielding escrow account shall be opened by a Company within 24 hours of the approval of dividend at a general meeting (for final dividend) or a board meeting (for interim dividend) and evidence of this forwarded to the Commission within 24 hours of the account being opened. Every Registrar shall on an annual basis file information on: o beneficial owners of more than 5% or more of the company s shares and o any transaction that brings the beneficial ownership of shares in the company to 5% not more within five days of the change in ownership. Application of registration of bonus shares to be filed within one month of shareholders approval. 12

13 b. Sanctions and Penalties S/N Rule/Regulation/Failure Sanction/Penalty 1 Filing of the Annual Reports outside the stipulated timeframe 1,000,000 (One Million Naira) and the sum of 25,000 (Twenty Five Thousand Naira) for every day that the default continues. 2 Failure to open and fully fund the escrow account for the payment of dividend 3 Failure to effect dividend payment either by electronic transfer or dispatch of dividend warrant to beneficiaries within the time stipulated 1,000,000 (One Million Naira) per day and a further penalty of 5% above the Monetary Policy Rate on the amount declared. The company s Registrar shall be liable to a penalty of 1,000,000 (One Million Naira) for every day of default. 4 Failure to file quarterly reports 1,000,000 (One Million Naira) and 25,000 (Twenty Five Thousand Naira) for every day that the default continues. 5 Failure to File the report on unclaimed dividends 1,000,000 (One Million Naira) and 25,000 (Twenty Five Thousand Naira) for every day that the default continues. 6 Application for registration of bonus shares outside the stipulated period 5,000 for each day of default; c. Corporate Governance Returns Published annual reports and accounts must include a report on Corporate Governance that should include information in respect of the following: Composition of the Board and Board Committees; The roles and responsibilities of the Board; Board appointment process including induction; and Policies on sustainability, human resources, management, etc. 13

14 5 Codes of Corporate Governance Provisions SEC Code 211 CBN 2012 Draft Code NAICOM Code 2011 PENCOM CODE 2012 Applicability Publicly listed companies Banks and Discount Houses Enforcement, Compliance and Sanctions Principles based - defines minimum standards including listing rules Compliance is mandatory Principles based minimum standards outlined Compliance is mandatory and attracts sanctions. Sanctions not spelt out in the Code Insurance companies Principles basedminimum standards outlined Compliance is mandatory and attracts sanctions. Sanctions not spelt out in the Code Licensed Pension Operators Principles based- minimum standards outlined Compliance is mandatory and attracts sanctions. Sanctions not spelt out in the Code Board Meetings Minimum of quarterly meetings Quarterly Board meetings Quarterly meetings Quarterly meetings Number of Executive/Non- Executive Directors Number and type of Board committees The majority of Board members should be Non-Executive Directors 3 - Statutory Audit Committee; Governance/Remuneration Committee; Risk management Committee Tenure of office of NEDs Re-election at regular intervals of minimum of once every three (3) years Composition of Committees Directors may be members Senior management may attend The Board shall consist of Executive and Non- Executive Directors. Executive Directors shall not be more than 40% of the entire Board size. 4 - Statutory Audit Committee; Board Risk Management Committee; Board Audit Committee; Governance & Nominations Committee Three (3) terms of four (4) years each. Board committees must be headed by NEDs. Chairman may only be a member of the Governance and Nominations Committee. Board Audit Not more than 40% of the members of the Board shall be Executive Directors 5 - Finance & General Purpose; Investment Committee; Enterprise Risk Management Committee; Audit & Compliance Committee; Establishment and Governance Committee Three (3) terms of three (3) years each Audit Committee must be chaired by an Independent Director The number of Non- Executive Directors shall at all times (in the minimum) equate the number of Executive Directors 4 - Nomination; Risk Management; Investment Strategy & Audit Committee Specific terms subject to Articles of Associations Nomination Committee should include Chairman and the Independent Director 14

15 Committee to be chaired by Independent Director Board Appraisal Annual appraisal of Board, Board Committees, Chairman and Director performance. May be carried out by independent consultant Annual Board and Director appraisal must be conducted by independent consultant Annual Board appraisal by an external consultant to be appointed by shareholders Annual appraisal of the Board, Committee & Individual directors by an external third party or Nomination Committee Independent Director (ID) At least one ID At least 2 IDs At least 1 ID At least 1 ID Shareholder communication Communication encouraged Shareholder communication encouraged Requirement for Risk framework External auditor appointment External audit tenure Provision of non-audit services Requires a risk framework which should be approved by board Audit Committee responsibility to recommend and set audit firm hiring policies where firm has former external auditors as employees Maximum 10 years, no reappointment within 7 years Audit Committee should ensure that there is no conflict of interest Mandatory risk framework Audit Committee recommends to the Board, appointment subject to CBN approval.. Firms whose ex staff now work for the bank are restricted Maximum 10 years no reappointment within 10 years Specifies services which the auditors may not provide Shareholder communication encouraged Not fully addressed however, the Board and the Audit Committee have oversight responsibility over internal control and risk management functions Audit Committee recommends to the board and appointment approved by the Commission Maximum period of 5years No reference to the provision of non-audit services by external auditors Shareholder communication encouraged No reference is made to a risk framework No reference is made to the process of appointing external auditors No maximum period of office is stated No reference to the provision of non-audit services by external auditors 15

TRINIDAD AND TOBAGO STOCK EXCHANGE LIMITED SMALL & MEDIUM ENTERPRISE LISTING AGREEMENT. THIS LISTING AGREEMENT is entered into on this day.

TRINIDAD AND TOBAGO STOCK EXCHANGE LIMITED SMALL & MEDIUM ENTERPRISE LISTING AGREEMENT THIS LISTING AGREEMENT is entered into on this day. of... between......... (hereinafter called the Issuer ) whose