Introduction
Until recently, most Nigerian private companies operated with a certain comfort. They were growing, compliant with CAC filings, and largely left alone by federal regulators unless they were in heavily monitored sectors like banking or oil. For many founders, the phrase “corporate governance” felt like boardroom jargon reserved for the Dangotes and the Zenith Banks of the world.
That changed in 2023. What caused the sudden shift? The Financial Reporting Council of Nigeria (Amendment) Act 2023 (“the Act” or “Amended Act”).
This Amendment didn’t just tweak some obscure definitions; it redrew the map. It expanded the category of Public Interest Entities (PIEs) to include many private companies that previously operated far from regulatory spotlight.
As a result, if a company holds a license from a regulator (say in logistics, oil & gas, telecoms, or agriculture), or if the company’s revenue is N30 billion or above a year, such a company is now a PIE. That means such a company is expected to maintain a high standard of governance, and report it annually.
For many founders and directors, this shift feels like moving from a quiet back road to a busy highway, complete with speed limits, traffic rules, and a regulatory patrol. It’s not just about being profitable anymore; it’s about how you lead, report, and govern.
This article breaks down what this new reality means for Nigeria’s private sector. We’ll explore how the 2023 Amendment changes the rules of the game, what private companies must now do to always stay compliant, and how this regulatory evolution could actually become a competitive advantage, if approached strategically.
Background to the FRCN and the Amendment Act.
The FRCN’s Mandate: More Than Just Number
The Financial Reporting Council of Nigeria (FRCN), established in 2011, is much more than a financial watchdog. Think of it as Nigeria’s referee for how companies present their financial health and leadership ethics. It took over from the old Nigerian Accounting Standards Board and expanded its scope, overseeing how companies report their numbers, audit their books, manage their actuaries, and perhaps most crucially, how they govern themselves.
Through its Directorate of Corporate Governance, the FRCN doesn’t just set rules, it sets the tone for integrity in leadership. It’s like having a compass that points businesses toward transparency and accountability, rather than letting everyone follow their own interpretation of “good governance.”
The Nigerian Code of Corporate Governance (NCCG 2018): A Flexible GPS
In 2018, the FRCN rolled out the Nigerian Code of Corporate Governance (NCCG). Now, let’s be honest: the word “code” makes it sound like a set of rigid commandments. But that’s not the case here. The NCCG is more like a GPS, you enter your company’s destination (sustainable success, credibility, ethical operations), and the code offers multiple routes to get there. It is for this reason that the Code adopted an “apply and explain” model. That means companies aren’t expected to follow every rule blindly, but rather to apply the principles in a way that makes sense for them, and then explain their reasoning in their annual Corporate Governance Report.
For example, a family-owned logistics firm in Aba might explain why it hasn’t appointed an Independent Non-Executive Director yet, but also share how they’ve structured oversight differently to ensure accountability. It’s about being intentional and transparent, not perfect.
Key Changes in the FRCN (Amendment) Act 2023
When the Amendment Act dropped, it felt to many private company executives like waking up to find their quiet street now had a toll gate, a speed camera, and a traffic officer asking for their license and registration. For some, it came as a memo from legal or compliance units/departments of private companies; for others, it was a nudge from their auditors: “Hey, you know you’re now considered a Public Interest Entity?” Here’s what actually changed, and why it matters to you, whether you’re running a 40-year-old family business or a fast-growing fintech startup.
Expanded Definition of Public Interest Entities (PIEs): The Game-Changer
Previously, the PIE label was reserved for publicly listed companies and major players in the finance space. The private companies, assumed they were spectators, not players, in the governance compliance league. But now? Not anymore. Under the new law, a private company is a PIE if:
i. it holds a license from a government authority (think NCC for telecoms, NUPRC for oil & gas, or NAFDAC for food processing).
II. Its annual turnover is N30 billion or above.
Enforcement Powers Strengthened: Not Just Talk Anymore
Section 61A of the Amended Act enables the Council to leverage the capabilities of law enforcement for their activities such as investigations, enforcement actions, and ensuring compliance with financial reporting and corporate governance standards. Fortunately, this isn’t about fear-mongering. It’s about awareness. If your company ever been caught off guard by a tax audit, you know that proactive compliance beats reactive scrambling every time. The Council can now prescribe penalties above N5,000.00 through a regulation to be issued by them from time.
Mandatory Corporate Governance Oversight: No More “Optional” Alignment
Before the amendment, it was easy for private companies to treat the NCCG like a suggestion box.
“We’ll get to it, eventually,” many would say. Not anymore. The Directorate of Inspection and Monitoring is now statutorily required to make sure companies comply with the NCCG 2018. This means that private companies will need more than a well-meaning board retreat, they will need a strategy for aligning their governance model with the expectation of the Code and the Amended Act.
Annual Governance Reporting
Going forward, companies that meet the PIE definition must file an annual corporate governance compliance report. This report needs to show:
I. Which NCCG principles the company adopted in the year under review;
II. How the company applied them;
III. And if the company didn’t adopt some, why not?
It is important to reemphasize that the private companies are not being judged for not being perfect, they are being assessed on whether they are being thoughtful, responsible, and transparent. Thus, we recommend that companies start treating their governance records the way they treat their audited financials. It might feel like extra work, but it can save private companies from costly penalties or reputational damage down the road.
3. Implications for Private Companies in Nigeria
For many private company founders, this new compliance era feels like a curveball. They built their business through grit and sacrifice. Now, seemingly out of nowhere, they are being asked to align with a national governance framework they hadn’t really thought about. Let’s break down what this means for such business owners and how they can turn it from a burden into a boost.
3.1 Immediate Compliance Obligations: Ready or Not, It’s Time
If your company meets the new Public Interest Entity (PIE) criteria, whether because of its license or turnover, here’s what’s expected:
I. Submit annual governance reports starting from the 2023 financial year
II. Adopt the “apply and explain” model of the NCCG 2018. That means you don’t just follow the rules, you explain how and why you applied them.
III. Keep records of the board decisions, risk assessments, and other governance matters like your life depends on it (because your business reputation might).
3.2 Board Composition and Committee Requirements: Time to Rethink the Roundtable
One area where the FRCN is gently nudging private firms is board structure, particularly around Independent Non-Executive Directors (INEDs). Here’s what the NCCG 2018 suggests:
Governance and Nominations Committees. Members of the committee should be NEDs, and a majority of them should be INEDs “where possible”, while the Chairman should be a NED.
Remuneration Committees should follow a similar pattern, and it’s “desirable” that the Chair is an INED.
Audit Committee. Similarly, members of the committee should be NEDs, and a majority of them should be INEDs “where possible”.
Now, there is no need to panic as the above provisions have made the principles aspirational standards. However, if a private company wants to demonstrate maturity and credibility to investors, lenders, or regulators, these are worth aiming for.
3.3 Industry-Wide Effects: No One’s Really Exempt Anymore
Wondering if this applies to your industry? Chances are, your company is on the radar now. Let’s take a look at who’s being affected
I. Oil & Gas: If you’ve got a marginal field license or a downstream operation, you’re likely in.
II. Telecoms: NCC-licensed players, even medium-sized ones, are now PIEs.
III. Logistics & Transport: Your revenue and your NPA or NRC license might qualify you.
IV. Manufacturing: If your turnover is healthy or you require regulatory oversight, welcome aboard.
V. Fintech & Digital Services: Central Bank license + big revenues? You’re in.
VI. Agribusiness: Exporting, processing, or licensed large-scale farming? You guessed it, PIE.
4. Legal Context: A Shift from Judicial Immunity to Statutory Compliance
For years, many private companies operated under the assumption that they were shielded from the oversight of the Financial Reporting Council of Nigeria (FRCN)—as if protected by a legal force field. And to be fair, that assumption wasn’t baseless. In the landmark 2012 case Eko Hotels Ltd. v. FRCN, the court ruled that unless a company met the definition of a Public Interest Entity (PIE), it fell outside the Council’s jurisdiction. That decision quickly became an unofficial doctrine in corporate boardrooms across the country. But with the passage of the FRCN (Amendment) Act, 2023, the landscape has changed. The law now makes it clear: many private companies do, and in fact, qualify as PIEs, either because they are licensed by a government agency or because they generate annual revenue of ₦30 billion or more.
What this means in practice:
The 2012 court decision no longer offers protection to private companies that now fall within the expanded PIE definition.
The FRCN no longer needs to go through the courts to enforce compliance.
If your company meets the PIE criteria, your governance practices are now under the Council’s direct oversight.
5. Why This Shift Matters
This shift from judicial immunity to statutory obligation is not about punishment. It’s about recognizing the growing influence of private companies in shaping Nigeria’s economic future. When a private firm with ₦30 billion in revenue or a national license makes a governance error, the ripple effects are real; on jobs, supply chains, and investor confidence. We’re no longer in the era where only banks and listed companies matter. The FRCN Amendment Act 2023 has simply acknowledged what was already true: private companies can and they do have tremendous public impact, and governance should reflect that.
6. Conclusion: A Compliance Turning Point for Private Companies.
As businesses grow and gain regulatory significance, their responsibilities evolve beyond profit-making to national economic contribution. The FRCN (Amendment) Act, 2023 marks a turning point for private companies, introducing higher expectations for governance and accountability. While compliance may seem burdensome, it offers a path to stronger structures, greater transparency, and lasting trust, an essential asset in today’s competitive business landscape. If anything, it’s a chance to professionalize your house, inspire confidence, and scale with integrity.
Written by Emeka Ogenyi (LP), Lead Partner, ThinkField Law, can reached at: Info.thinkfieldlaw@gmail.com Meogenyi@gmail.com
