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 organizations, quoted and unquoted companies, and any organizations 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:
- Non-listed regulated entities which includes, entities that are regulated by the following regulators:
a) Central Bank of Nigeria;
b) National Insurance Commission;
c) National Pension Commission;
d) Nigerian Upstream Regulatory Commission;
e) Nigerian Midstream & Downstream Petroleum Authority;
f) National Health Insurance Authority;
g) Nigerian Communications Commission;
h) National Broadcasting Commission;
i) National Universities Commission;
j) National Board of Technical Education;
k) National Commission for Colleges of Education;
l) Nigerian Electricity Regulatory Commission;
m) Securities and Exchange Commission;
n) Nigerian Civil Aviation Authority;
o) National Agency for Food and Drug Administration and Control;
p) National Automotive Design and Development Council;
q) Nigeria Shippers Council;
r) Nigeria Port Authority;
s) Infrastructure Concession Regulatory Commission;
t) Estate Surveyors and Valuers Registration Board of Nigeria; and
u) Nigerian Tourism Development Corporation.
- Private companies that are holding companies of public or regulated entities.
- Concession entities.
- Privatized entities in which the government retains an interest.
- Entities engaged by any tier of government in public works with annual contract sum of N1billion and above, payable from public funds.
- Licensees of government.
- All other entities with an annual turnover of N30 billion and above.
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.
For more information on how we can assist you with compliance with FRC rules, regulations and applicable standards, please contact firstname.lastname@example.org