The federal government has approved a N25 million cap on dues payable to the Financial Reporting Council of Nigeria (FRC), giving the private sector leverage over section 33 of the Financial Statement Regulator’s amended act.
This is as the Ministry of Justice will now decide whether a formal legislative amendment is necessary to correct the FRC 2023 Amended Act, especially its Section 33(1)(c), which stipulates the controversial levy that has faced widespread criticism from the private sector.
Minister of Industry, Trade and Investment, Jumoke Oduwole, in a signed statement on Sunday, announced the N25 million cap by President Tinubu and the approval of the temporary pause earlier ordered by the ministry on the implementation of the controversial provision in Section 33 of the FRC Act 2023.
Section 33(1)(c) of the FRCN Act stipulates that quoted companies are to pay annual dues based on 0.002 per cent of their market capitalisation or N25 million, whichever is lower. This provision, which has no cap, has raised concerns among private sector players, who argue that it creates an unfair financial burden.
“To provide immediate clarity, the Honourable Minister has directed the Financial Reporting Council to apply an interim cap on annual dues payable by private sector PIEs at N25 million, aligned with the cap already in place for publicly listed entities under the legislation.
“The minister of Industry, Trade and Investment provided a detailed briefing to Mr. President on the critical concerns raised by organised private sector stakeholders before the implementation of the administrative pause and made recommendations based on the submitted report and affirms that the administrative pause will be maintained in the mid-to-long-term, pending a broader legislative review.
“This directive creates a stable environment for compliance for affected companies in the short term and reflects the Ministry’s commitment to prioritising transparency, investor confidence, and regulatory equity while allowing the Ministry of Justice to appropriately determine the longer-term path for seeking legislative amendments on behalf of the federal government if required.
“Mr President has listened to the legitimate concerns of the business community and has directed that implementation of the provision be paused while a comprehensive review is conducted.”
This directive by President Tinubu, which has now given the private sector a breather, may, however, close the scandalous tap in the FRC through which part of the levies collected by proxies under the obnoxious provision is distributed among the staff.
Oduwole had earlier ordered a pause in the implementation of the provision at the March 26 Stakeholders’ Consultative Forum in Abuja, where business leaders, industry groups, and regulators lamented the levy’s negative economic impact.
At the forum, she announced that a technical working group will be established to review the contentious provisions to align them with the views of the private sector stakeholders who had communicated with President Bola Tinubu regarding the provisions’ impact on their businesses.
“The President has clarified that we must listen to the people, and in line with that directive, and given that the Act has been passed into law by the National Assembly, we cannot suspend the implementation. However, we ask that the FRCN pause the implementation and undertake this robust review”.
“We will work with key critical stakeholders, escalate the review and take the outcome of the process further. We will also engage the National Assembly and the chairman of the committees who are paying attention to this conversation right now”.
The FRCN levy was introduced as part of the council’s expanded mandate under the 2023 amendment of the FRC Act. The levy applies to businesses classified as Public Interest Entities (PIEs) and is intended to fund regulatory oversight on financial reporting, corporate governance, and valuation standards.
However, stakeholders argued that the fee structure is disproportionately high, particularly for private companies, and harmful to business sustainability.
