The Governance Code And The Church

Code of Corporate Governance
Code of Corporate Governance

It is no longer news that the Federal Government of Nigeria has suspended the Financial Reporting Council of Nigeria’s (FRCN) bye-law which compelled Pastor Enoch Adeboye to step down as the General Overseer of the Redeemed Christian Church of God (RCCG) in Nigeria. The Not-For-Profit Organisations Governance Code (hereinafter referred to as “the Code”) had provided a maximum of 20 years’ tenure for heads of Not-For-Profit Organisations (NFPOs), which includes religious organisations, like churches and mosques. The Ministry of Industry, Trade and Investment reportedly stated that the Code was suspended to enable the government to review it after extensive consultations with all stakeholders and after the reconstitution of the Board of the Financial Reporting Council.

My take on the Code, are as follows:

  1. Corporate Governance & NFPOs: Usually, a board of trustees is entrusted with the overall governance of such organisations. The Code, however, prescribes a governing board as the principal governing body of NFPOs while a management committee will undertake day to day management thereof. The role of the board of trustees appears to be henceforth limited to advisory and mediatory functions vide Section 8.2.3 of the Code. Governance in this sector would then be defined as the way that the governing board works with the management committee, staff, volunteer services, users, members to ensure their organisation is efficiently and appropriately run and meets the needs for which the organisation was set up. It also appears that the principal function of the General Assembly is the appointment or dismissal of directors/trustees.
  2. Renewed Awareness of the Need for Good Governance in NFPOs: The need for good governance has also developed in the voluntary sector in response to sector-specific issues including the increase in size and importance of religious organisations and other voluntary organisations, particularly because of the contracting out of public service to voluntary organisations; a public perception of a decline in public confidence in charities and other NFPOs; greater competition for funding of voluntary organisations; a lack of clarity about the duties of voluntary board members, and concerns about the liabilities of charity trustees; a growing demand for accountability to service users and beneficiaries; demands for greater transparency on how churches spend offerings and tithes (donated income); and the proportion spent on administration.
  3. Status of the Corporate Governance Code: The Corporate Governance Code is not a law or an Act of the National Assembly. A law will have pass through the National Assembly, and the President must assent to it. The Code is just a regulation issued in October 2016 by the Management of the FRCN, just like any bye-law or administrative rules issued where a primary legislation so permits. The Code was made pursuant to the powers of the FRCN under Sections 50 and 51 of the Financial Reporting Council of Nigeria Act 2011 (the “Act”) and has a commencement date of 17 October 2016. The Act passed by the National Assembly in 2011 was for the establishment of the FRCN itself. Part of the FRCN’s functions is the regulation of corporate governance in Nigeria and it is in furtherance of that purpose that it issued the Governance Code. FRCN by law is fully answerable to the Minister of Trade in exercising its functions.
  4. Should the Code Have Prescribed the Tenure for Organisations’ Leaders? Ordinarily, I believe that the Code went too far in prescribing the tenure for the leadership of churches. The tenure of organisations’ leaders should have been left to the Constitution of the NFPO to decide, as the constitution of the organisation ought to have a succession plan like the articles of association of corporations. Granted that various codes made by regulatory agencies in various sectors stipulate tenures of organisational structures and other allied matters, the Code should only have recommended what it deemed as appropriate tenure or age limits for leaders of the church, but this should have remained a suggested best practice for corporate governance and nothing more. Tenure of church leadership should not have been linked to accountability, financial reporting and good governance; especially as the Code had limited the leader’s power to occupy the three governance position prescribed simultaneously. Unlike corporations, and even other NFPOs, the church is a spiritual organisation and her leadership transcends provisions of letters! God, divine revelation and the congregational confidence are often the determinant forces at play in influencing who leads the church.
  5. Should the Code Have Been Suspended? The Code should not have been hurriedly suspended by the government, especially as the FRCN asserts that all stakeholders were consulted before it was made. The Code should have rather been amended to meet the acceptance of all interested parties, more so where judicial interpretations and pronouncements are made about any of its provisions in contention. A country like South Africa has already come up with a King IV Report for Corporate Governance. Their (South Africa) Corporate Governance Code keeps evolving and that is why they are already on the fourth version of their Corporate Governance Code. Law evolves with time, and there is no perfect law. As laws are enacted and implemented, observed defects and lacunas are corrected through amendments.
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