PEBEC wants changes to law affecting companies to ease regulations

The Presidential Enabling Business Environment Council (PEBEC) is asking for changes to the Financial Reporting Council (FRC) Act. They want to reduce the council's control over companies in Nigeria.

Zahrah Audu, the Director-General of PEBEC, spoke to journalists in Abuja on Friday. She pointed out that the current law gives the Financial Reporting Council too much power over almost all registered companies in the country.

Audu stated that PEBEC, a federal agency that works to make it easier to do business, will keep pushing for changes to the law. She specifically mentioned parts of the law that are too broad when defining the council’s responsibilities.

“I am still going to push, when the next administration comes in, God willing, for us to have a bill that amends some parts of the Financial Reporting Council, because when I looked at it, categorically, there are some parts of it that we just couldn’t justify.

“There are some elements within the Financial Reporting Council Acts that were a bit over the top. I think the language that was used within the bill made it appear that they had the right to have some level of oversight over almost every company in Nigeria, because it said something along the lines of every legal entity.

“As long as you have a CAC registration, you’re a legal entity. So that language was a bit… you know. So, some of those things, we will not just stop where we are. We will continue to push until we get it right. So these are things that we are looking at,” she said.

Audu also mentioned that PEBEC recently stepped in to stop new fees proposed by the Financial Reporting Council on businesses. She said her agency talked to stakeholders after hearing complaints from the private sector and managed to get the proposed charges put on hold.

“The Financial Reporting Council, which came up abruptly with some new levies that they wanted to charge the businesses, PEBEC intervened, and swiftly we were able to truncate that, we were able to hold several stakeholder engagements, assess the whole situation, and it was suspended,” she said.

The Financial Reporting Council Act created the Financial Reporting Council of Nigeria. This body is responsible for setting standards for accounting, auditing, and corporate governance in the country. The law was first enacted in 2011 and updated in 2023. It gives the council the power to create, publish, and enforce standards for public interest entities.

The council also checks that companies follow the Nigerian Code of Corporate Governance. It oversees the work of accounting and auditing professionals and carries out inspections to ensure financial statements meet set standards.

A major part of the council's work is regulating Public Interest Entities (PIEs). Section 77 defines PIEs as companies listed on a securities exchange, non-listed public companies, banks, financial institutions, and insurance companies.

Other PIEs include pension fund administrators, government-owned entities, charities, not-for-profit organizations that meet certain criteria, concessionaires, and regulated utilities. These entities must submit their annual financial statements to the council within 60 days after their boards approve them. They face regulatory checks and monitoring. Not following these rules can lead to fines and penalties.

But the council’s power, especially the part that allows it to add more entities as PIEs, has sparked debate in recent times. Critics say this gives the council too much power to oversee more companies.

The Act also allows the council to collect annual fees from registered Public Interest Entities. Critics argue that adding more fees and compliance costs could make it harder for companies to do business in Nigeria.