The Federal Government has suspended the implementation of contentious provisions in the Financial Reporting Council (Amendment) Act 2023 following concerns raised by private sector stakeholders.
But the FRC continues to defend the Act, insisting that it went through legislative process before being amended in 2023 and further review should be subjected to legislative action. Given that that the FRC was established by law, analysts have called for its independence, as practised in other jurisdictions.
With the suspension of the contentious issues in the Financial Reporting Council (Amendment) Act 2023 execution plans come new calls for due process to be followed and respect for agency autonomy in policy implementation.
Minister of Industry, Trade and Investment, Jumoke Oduwole, recently announced the decision halt the sections of the FRC Act implementation following series of high-level consultations with key industry groups.
These include the Nigeria Employers’ Consultative Association (NECA), the Association of Licensed Telecommunications Operators of Nigeria (ALTON), and the Oil Producers Trade Section (OPTS).
At the heart of the concerns is the reclassification of large private companies as Public Interest Entities, requiring them to remit annual dues between 0.02 and 0.05 per cent of turnover without a ceiling.
This is in contrast to the N25 million cap the new FRC Act placed on publicly listed companies regardless of their size. This ignited views that such provision could increase compliance costs and hurt investor confidence.
But analysts insist that Act went through the whole hog of the legislative process before being amended in 2023. The ACT was not amended during the tenure of Dr. Rabiu Olowo and that the provisions of S. 33 were meant to differentiate between listed and non listed entities, as listed entities are subject to numerous oversights from their sectoral regulators, SEC and NGX, while non-listed entities are not.
“The practice is the same in other jurisdictions. The use of turnover is used in other jurisdictions. It is even higher in Kenya. The organised private sector has forced the government to go against the separation of powers, with a presidential directive being used to amend a law rather than going through the legislative process. Now they want to go further to dictate how the presidential directive is to be enforced,” they said.
The source explained that they are also going into specific areas of the law by advocating for further amendment without recourse to the National Assembly. The international and business community is watching , hence there is no need to interfere with a legislative process and descending into the arena of directing and instructing a statutory agency on how to perform its job.
Besides, there is no independence of the regulator established by law. In other jurisdictions, an organisation like the FRC is allowed to be independent since it is established by law.
“What are they telling the FRC to do? Change its laws by itself? Disobey the law of the land? It is a dangerous precedent that would give an agency of government the power to modify its laws at will. If the organised private sector has an issue with the law, let them go to the National Assembly. If they had done so since the beginning of this fight with FRC, the law may have been amended by now. Rather, they have resorted to ambush and arm-twisting the FRC.
Changing laws at will is not to be encouraged,” the experts said. But the minister said the policy was part of President Bola Ahmed Tinubu’s pro-business posture under the 8-Point Agenda and has responded with practical measures.
She explained that a stakeholder consultation was held on March 26, 2025, leading to an administrative pause and the formation of a Technical Working Group.
The group, she noted, comprised representatives from NECA, MAN, ALTON, NACCIMA, CAC, SEC, and others and held six meetings over three weeks that culminated in the submission of a comprehensive report on April 17, 2025.
Based on the findings, Oduwole, said President Tinubu briefed and recommended the continuation of the pause pending legislative review.
“To provide immediate relief, the Ministry has now directed the Financial Reporting Council to impose an interim cap of N25 million on annual dues for private sector PIEs, aligning them with the publicly quoted companies.
“This move will ensure regulatory equity, boost investor confidence, and allow for a broader review of the Act, with input from the Ministry of Justice where necessary”, she added.
FRC defends 2023 Act milestones
The FRC explained that the 2023 Act amendment was to reduce the size of the Board to eliminate conflict of interest, clearly define PIEs to avoid ambiguities, protect significant private entities from failure, make the Council more effective in discharging its mandates and expand the enforcement powers of the Council.
The FRC Act amendment process started on October 28, 2020, during which the Board set up a 6-man committee to review the FRC Act 2011 and recommend amendments to strengthen the Council.
It followed with oversight committees of NASS visits to the Council on the 17th and 18th of June 2021 which identified shortcomings in the 2011 Act to address emerging Financial and Corporate Reporting trends in Nigeria.
The draft Bill underwent legislative readings on October 7, 2021, and November 23, 2021, public hearing was held on February 1, 2022 for stakeholders’ input, the Senate passed the Bill on November 30, 2022 while the National Assembly passed the Bill into Law on January 31, 2023.
Furthermore, Bill was transmitted to Mr. President for assent on April 5, 2023The Bill was assented to on May 3, 2023 by the then President while he Act was gazette on July 19, 2023.
The FRC mandate is to promote trade and investment in Nigeria by ensuring high standards of financial reporting and corporate governance in order to protect Investors and Other stakeholders’ interest.
Its vision is to be the conscience of regulatory assurance in financial reporting and corporate governance in Nigeria” while its mission is to bring utmost confidence to investors, reputation to oversight and ensure quality in accounting, auditing, actuarial, valuation and corporate governance standards and non-financial reporting issues.
The FRC was created to develop, publish, monitor and enforce accounting, auditing, actuarial, valuation, and corporate governance and sustainability standards to be observed by Public Interest Entities (PIEs) in Nigeria, through seven functional directorates.
Definition of PIEs varies by jurisdiction and are skewed towards systemic importance which include public accountability, economic impact, government involvement, regulatory maturity, sectoral significance, transparency, investor/stakeholder interest, market influence, and cross-border effects. S.77 of the Act specifically defines PIE s to include Governments and government organizations, Listed entities on any recognized exchange in Nigeria, Non-listed entities that are regulated, Public limited companies, Private companies that are holding companies of public or regulated entities, Concession entities, Privatized entities in which government retain an interest, Entities engaged by any tier of government in public works with annual contract sum of N1 billion and above, and settled from public funds, Licensees of government and all other entities with an annual turnover of N30 billion and above.
FRC challenges include inadequate funding since its establishment, inadequate manpower, inability to attract and retain skilled manpower, inadequacy of regulatory structured trainings, reduction of inspection and monitoring exercises to desk reviews only, no on-site review, infrastructural deficit (IT equipment, Vehicles, office accommodation).
Key milestones in 18 months
Digital Transformation & National Repository for Financial Statements, Operationalization of Two New Directorates – Actuarial and Valuation, Issuance/implementation of New Regulatory Rules and Guidance: ICFR, Rule 13, Rule 14, Commencement of Audit firm Inspection Visits, Advocacy programs to promote actuarial education and professional development in Nigerian, Corporate Governance Reforms: Issued the Code of Corporate Governance for SMEs, Established the Adoption Readiness Working Group for Sustainability Reporting (ARWG) to guide Nigeria’s transition, Hosting free industry-specific webinars and training to support compliance with IFRS Sustainability Disclosure Standards, Establishment of Islamic Financial Services Division to carryout regulatory oversight on non-interest financial services, Conducted Train the Trainers for MSME accounting practitioners in conjunction with UNCTAD ISAR, Commencement of structured Regulatory capacity building for FRC Staff.
FRC comparative fee is to maintains a fee structure that falls within global regulatory fees, deliberate effort to balance the need for financial sustainability to cover its mandate.
It was observed that listed PIEs have a more robust regulatory ecosystem involving multiple oversights including SEC, NGX, ETC, Higher Regulatory Oversight Resources for Non-Listed PIEs, Many Non-Listed PIEs lack dedicated compliance units, to ensure Non-Listed PIEs contribute fairly to the cost of oversight.
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