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The Financial Reporting Council of Nigeria (Amendment) Act 2023 (the Amendment Act) made several changes to the Financial Reporting Council of Nigeria Act 2011. A key amendment is the expansion of the definition of Public Interest Entities (PIE). The PIE was previously defined to include governments, government organisations, quoted and unquoted companies, and any organisations required by law to file returns with any regulatory authorities excluding private companies that only file returns with the Corporate Affairs Commission and the Federal Inland Revenue Service.
Prior to the Amendment Act, the FRC had tried to extend its regulatory oversight to private companies. This was challenged in the courts and the Federal High Court in FHC/L/CS/1430/2012 Eko Hotels Limited v. FRCN (unreported), held that the FRCN cannot extend its powers to regulate all private companies which are outside its purview. In that case, the FRCN argued that Eko Hotels Limited (EHL) must comply with the Act because it is regulated by the Nigerian Tourism Development Corporation (NTDC). However, EHL argued that it is not a PIE because the NTDC Act does not impose mandatory filing obligation on hotel operators. The Federal High Court agreed with EHL’s position.
The Amendment Act has now broadened the scope of PIE to include the following categories of private companies, which is not an exhaustive list:
Government owned enterprises, public liability companies and all listed companies in Nigeria remain subject to the Act.
The entities listed as PIEs must comply with the Act and do the following: (i) register with the FRC; (ii) ensure their financial statements or reports comply with the FRC-approved accounting and financial reporting standards and (iii) file any financial statements or report filed at any government department or authority with the FRC. The application for registrations can be done via the FRC online portal under any of the following appropriate categories: professional firms (for audit and other firms), not-for-profit organisations (private companies limited by guarantee, NGOs, etc), public sector entities, companies/enterprises. Individual professionals (i.e. directors, CFOs, CEOs, members of professional organisations, etc.) may also register on the online portal.
Should you have any questions regarding the information in this legal alert, please contact Oghogho Makinde.
Cephas Caleb – Managing Associate
Titilope Sinmi-Adetona – Associate
Zainab Akintola – Associate