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The Nigerian Stock Exchange (The Exchange) drives Corporate Governance in listed companies through the implementation of the Corporate Governance Rating System (CGRS). The CGRS is a joint initiative between The Exchange and the Convention on Business Integrity (CBI), and was developed to rate the corporate governance and integrity practices of all companies listed on The Exchange. 
The CGRS is designed to strengthen the governance structures of listed companies and provide a valid basis for discerning investors to differentiate listed companies on the basis of their compliance with acceptable standards of corporate governance.
The CGRS project was launched on 3 November 2014, with eight (8) listed companies that volunteered as Pilot companies. However, on 22 February 2018, thirty-five (35) companies and four hundred and thirty-seven (437) directors, were recognized and awarded CGRS certificates, consequent upon the successful CGRS rollout to all listed companies. 

The objectives of the CGRS embodies The Exchange’s value proposition. Hence, it has considered it important to promote corporate governance through certification and rating. The objectives include:
  • To diagnose the status quo of Corporate Governance in Nigeria;
  • To improve Corporate Governance and business culture in Nigeria;
  • To provide incentives for companies committed to good Corporate Governance; and
  • To raise the attractiveness and competitiveness of Nigerian Companies to external capital providers.
The CGRS rates listed companies through a three (3) segment process via:
  • An independently verified, self-assessment by the company;
  • A certification of directors’ awareness of their fiduciary duties through a Fiduciary Awareness Certification Test (FACT); and
  • A corporate integrity assessment where perceptions of actual company behaviour are sought from internal and external stakeholders.
A combination of the three-segment processes with the attendant weighted scores are collated and companies with a score of 70% and above are given the CGRS certification mark. This rating shows the degree to which companies have evolved in the quality of their corporate governance, and also highlights the positive impacts of obtaining the CGRS certification.

The CGRS also led to the launch of the Corporate Governance Index (CGI) in February 2018. The Index is now an important tool for investors keen on investing in well governed companies as well as corporates eager to distinguish themselves on the ground of governance. Helping companies to distinguish themselves with a label of governance excellence is a key reason for creating a corporate governance Index. It allows for the build-up of positive reputation that benefits companies, the stock exchange and the market-place as a whole. Companies on the Index can expect to increase their access to capital, particularly from foreign investors. 

The CGI is therefore a veritable tool for investors in their investment decision-making process, and will provide opportunity for new products such as Exchange Traded Funds.

For more information on the CGRS, please visit www.cgrsng.com or via email to info@cgrsng.com. ​