With the controversy over the implementation of the Financial Reporting Council (Amendment) Act 2023 not abating, COLLINS OLAYINKA examines how the conflict could weaken the financial watchdog and create a culture of undue interference in the activities of business regulatory agencies.
The 2023 amendment to Section 33 of the Finance Reporting Act is unsettling the business community. Under the aegis of the Organised Private Sector of Nigeria (OPSN), the business entities said the implementation of the section would lead to a delay in audit sign-off and that uncertain regulatory dues would raise the cost of capital, impede access to credit and erode investor trust.
But those calling for the full implementation of the provisions said forcing the Financial Reporting Council of Nigeria (FRC) to abandon the enforcement of a law that went through the lawmaking process is setting a wrong precedent.
There are also consequences of getting the executive to suspend the amendment of a law that was duly passed by the National Assembly for the principle of separation of powers, especially without recourse to the parliament.Indeed, the FRC said the amendment did not happen under the new helmsman, Dr Rabiu Olowo, saying the 2023 amendment was meant to correct defects noticed in the FRC Act of 2011.
It maintained that the provisions of Section 33 were meant to differentiate between listed and non-listed entities, as listed entities are subject to numerous oversights from their sectoral regulators, the Securities and Exchange Commission (SEC) and the Nigerian Exchange Group (NGX), while non-listed entities are not.
Whereas the non-listed entities are not under the grip of super regulators such as the SEC like their quoted counterparts, experts said under-regulation is a major burden they have had to carry. For instance, under-regulation breeds excessive personalisation of responsibilities, poor governance and poor audit. In many cases, some find it difficult to attract long-term funding and attract professionals owing to these factors.
While the private sector succeeded in getting President Bola Tinubu and the cto halt the implementation of Section 33 of the Act and capped annual dues for public interest entities (PIEs) at a maximum of N25 million, aligning treatment with publicly quoted companies, analysts said the involvement of the President and the Minister is against the principle of separate of autonomy that ministries, departments and agencies (MDAs) should enjoy for efficiency. There is also an argument that suspending or tweaking a law duly passed by the National Assembly is against the principle of separation of powers.
In response, the OPSN had noted that the President’s action reflected the administration’s commitment to protecting local investors, attracting new investors and deepening the administration’s ease of doing business.
As it is, the OPSN may be setting a wrong precedent in arm-twisting the executive into dictating how the law that affects them must be implemented to the detriment of the overall good of the economy and even when their wish is at variance with the spirit of the law as enacted by the National Assembly.
No doubt, the independence of the FRC seems to be under a threat with businesses now dictating to the Council on what to do through subtle pressure on its supervisory ministry—the Ministry of Industry, Trade and Investment, under the guise of encouraging investment.
Analysts insist that the new normal in government-business relationships is a dangerous trend that would not bode well for the country.
“In other jurisdictions, an organisation like the FRC is allowed to be independent since it is established by law. What are the OPS telling the FRC to do? Change an existing law? 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, they should go to the National Assembly to lobby for an amendment. If they had done so since the beginning of this fight with FRC, the law would have been amended by now. Rather, they have resorted to ambush and arm-twisting the FRC,” ‘Lede Boye, a financial analyst, said.
Despite the calls, the OPSN, which includes Small and Medium Enterprises (NASME), in collaboration with the Association of Licensed Telecommunications Operators of Nigeria (ALTON) and the Oil Producers Trade Section (OPTS), is not backing down.
It is urging the FRC to align with the presidential directive by withdrawing backlog demands, suspending clearance bottlenecks, working with stakeholders on graduated bands and legislative amendment of the vexatious section 33.
In a position paper signed by the Director-General of MAN, Segun Kadiri, Director-General of NACCIMA, Sola Obadimu, Director-General of NECA, Adewale-Smatt Oyerinde, Director-General of NASSI, Ifeanyi Oputa and the Executive Secretary of NASME, Eke Ubiji, the OPSN argued that the presidential directive followed months of structured consultation and technical review after widespread concern that the turnover-based, open-ended levy embedded in Section 33 would impose disproportionate costs on large but unlisted Nigerian companies. It dismissed the fear of arm-twisting the Federal Government into directing FRC to go against the law.
Indeed, the Minister of Industry, Trade and Investment had convened a stakeholder forum on 26 March 2025 and empanelled a technical working group (TWG) drawing regulators, including FRC, CAC, SEC and leading OPS bodies toanalyse the economic impact and recommend a fair, proportionate framework.
The minister subsequently announced that the administrative pause would hold pending a broader legislative review and that the N25 million interim cap was intended to create stability, reinforce transparency and shore up investor confidence while longer-term statutory amendments are prepared.
OPSN disclosed that during the TWG process, it presented a data-backed comparative analysis of levy and funding models used by peer regulators in the United Kingdom, United States, South Africa, Kenya, Canada, Australia, France, Germany, Egypt and others.From its findings, the group said it was evident that business laws must be guided by proportionality and predictability.
It explained that oversight funding must not scale infinitely with turnover and that predictable ceilings are international best practice. On regulatory equity, IOPSN observed that where listed entities face a fixed maximum, unlisted PIEs of comparable economic footprint should not face open-ended exposure.
Accordingly, the OPSN proposed a graduated schedule of revenue bands with modest rates and a firm ceiling of N25 million for the top band (N1 trillion+ turnover, mirroring the effective burden faced by quoted PIES).
While faulting the implementation of Section 33, the OPSN noted that despite clear policy direction and a firm pronouncement by the Federal Government, emerging implementation steps by the FRC risk undermining both the letter and spirit of the presidential directive.
Its grievances include a unilateral cut-off date, a portal configuration that defaults to N25 million plus legacy assessments, rule 14 and audit sign-off bottlenecks and backlog penalties and interest.
In its public notice on the administrative review of yearly dues stipulated in Section 33(d), the FRC stated: “This adjustment takes effect from 1st July 2025.” to the OPSN, this language used appeared to cabin the presidential cap to future periods only, ignoring the fact that the OPSN’s objections predated assessment cycles and that relief was sought, and granted against liabilities already challenged.
The OPSN declared that the FRC online portal auto-populates a 25 million ‘2025 subscription’ while simultaneously leaving in place pre-cap turn-over based demands for earlier periods running into hundreds of millions, and in some cases tens of billions of naira, defeats the equity intent of the presidential decision and creates confusion in audit accruals.
According to the business group, the planned Rule 14, which is intended to be used to block external auditors from signing financial statements unless an FRC clearance is obtained, is seen as an affront to the administration’s efforts to promote investment and build stakeholders’ confidence.
It complained that many of its members have received or continue to face the excessive due, penalty and interest calculations tied to the now-questioned turnover-based levy despite the Presidential pause and cap.
