A Federal High Court sitting in Lagos has overruled the Financial Reporting Council of Nigeria (FRCN)’s rule which stated that only qualified accountants can be a chairman of the Audit Committee of a public liability company.
The FRCN earlier in 2015 had issued and published that any person attesting as Chairman of Audit Committee to annual report statement, accounts, report, return, and other documents of a financial nature, shall be a professional member of an accounting body established by Act of the National Assembly.
The move was, however, condemned by the Independent Shareholders Association of Nigeria (ISAN), labelling the rule an anomaly and meddlesome in the extreme, adding that it was against the letters and spirit of the Companies and Allied Matters Act (CAMA), Section 359.
In a signed statement, National Coordinator, ISAN, Adeniyi Adebisi, explained that the association had held talks severally with the Executive Secretary of the FRCN on reversing the said rule but the agency remained obstinate.
“It insisted that a chairman of an Audit Committee of a public quoted company must be one professionally qualified as an accountant. To add salt to injury, public companies that could not provide a professionally qualified accountant as their Audit Committee chairman were required to apply for a waiver before their annual accounts can be approved. FRCN collects a sum of N600,000 for the so called waiver to be granted.
“In view of this rascally behaviour of the FRCN, our association felt compelled to institute a legal action under Suit No FHC/L/ CS/1026/16 before Justice A O Faji with Barrister Chuks Chukwemeka as our lead counsel,” he said.
Adebisi said that in his ruling, Justice Faji declared that FRCN has no power under the FRCN Act to make any rule stipulating a qualification for membership or headship of audit committees of companies incorporated under CAMA.
“With this ruling, the Rule 2(c) of FRCN is now null and void and affected companies should be able to apply and collect refunds from the FRCN for the N600,000 received for waivers under the Rule 2(c) now declared null and void.”
Adebisi thereafter called for the cooperation of relevant government agencies, public quoted companies, shareholders’ groups and shareholders to help checkmate persistent impunities of various government regulatory agencies in the capital market .