Tope Adebayo LP outlines impact of corporate governance on sustainability

Funke Olaode

Nigerian businesses have been urged to fully embrace the ethos of corporate governance in their operations as a sure path to sustainability in the long-term. This is the focus of a report by Tope Adebayo LP, a full-service law firm in Nigeria.
In a report under the firm’s Good Governance Series titled Corporate Governance and Board Effectiveness, the law firm urged companies to establish effective corporate governance structure in their organisations to ensure regulatory compliance, earn credibility in the industry, boost investor confidence and trust of stakeholders.
Using Theranos, a start-up founded in 2003 by Elizabeth Holmes which achieved a valuation of about $10 billion before its founder faced fraud charges in 2018 as a case study, the report examined the impact of a deficient corporate governance structure on board effectiveness and the sustainability of the Company.

“The primary responsibility for ensuring good corporate governance in companies lies with the Board. Thus, the composition of a company’s Board should be one that can guide a company to become effective and also sustainable. The Board of Theranos was largely criticised for its composition, and lack in diversity of thought, backgrounds, skills, experiences and expertise needed to drive the Company and perform its oversight function effectively. The Board was composed mainly of politicians and military heads,” the report states.
On how a vibrant management team, company secretary, board and others can propel a company towards sustainability, the report added: “An effective board is pivotal in steering a company towards its goals by providing strategic direction, oversight, and support to its management team. However, creating a robust company culture is fundamental to achieving true board effectiveness. A culture of trust and open communication is essential for fostering an environment where informed decision-making and effective challenge of management can occur. Corporate culture underpins how boards operate and interact. It shapes the behaviours, values, and practices within an organization, directly influencing the board’s ability to function effectively. A strong culture promotes transparency, accountability, and collaborative problem-solving, which are critical for navigating complex business challenges and making strategic decisions.”
In conclusion, the report focuses on how a company secretary, given the individual’s knowledge of legal matters and strategic thinking, is central to effective corporate governance structure and success.
“Effective governance goes beyond procedural rules, it requires a culture of trust and open communication to facilitate informed decision-making and effective challenges to management. Additionally, we must consider the role of the company secretary, this sometimes-hidden figure within the board plays an amazing role in aiding the board and management to be effective. For the company secretary to be effective, a diverse skill set is required, including strong communication, legal knowledge, and strategic thinking. This integrated approach of strong board culture and the strategic role of the CoSec ensures long-term company success and effective governance,” it adds.