Regulating Financial Information

Foreward by Prof. Jerry Gana
Preface by Senator J. M. Kuye
Financial Environment
Public Finance
Financial Institutions
Public Relations Concepts
Financial Public Relations
Marketing Concepts
Advertising and Integrated Communication
In-House and Consultancy
Target Publics
Research in PR
Budgeting in PR
Planning in PR
Regulating Financial Information
Getting Started and PR Unit
Basic Functions
Requirement for Media Event
Annual Events
Social Responsibility
Information Technology
Reputation Management
Crises Management
Media of FPR
Corporate Identification
Building Brand
Membership of Professional Bodies
Conduct and Ethical Standards
Appendix NIPR Code
Appendix II: IPR Code
Appendix III: PRSA Code
Appendix IV: IPRA Code
Contributions and Reviews


The growth of Investor relations (IR) in Public Relations reemphasises the mandatory adherence to statutory regulations governing financial communication by listed companies. Since financial performance appeals to the investing public, especially as it relates to annual statements of account, stock prices and other market determinants, corporate conglomerates are urged to abide by the rules of information dissemination that are intended to persuade investors to deposit their funds with them.


Andrew Hawkins, Director General of United kingdoms’ Investors Relations Society, in his article “Wising up to Global IR” in Frontline Quarterly, observes that it has certainly taken enough time for listed companies to realise just how important it is to look after their investors – afterall, good IR should enhance a company’s brand value and ultimately, make it cheaper to finance borrowing. He argued: “the changes in UK financial regulation will no doubt be the roles of the in-house IR practitioner being enhanced, as companies face a regulatory minefield supported by an enforcement regime eager to bare its teeth. It certainly concentrates the minds of a company’s board of directors to see the prospect of being sued for selective disclosure of sensitive financial information. So, good IR Officers will be able to put a premium on their service. And it is difficult to envisage the regulatory environment getting easier.”


A very distinct character of financial public relations is the rules and regulations guiding the participants in the financial environment on public disclosures and pronouncements. It is not a matter of just waking up and dishing out information anyhow. There are several laws in place on what, how, when and where sensitive financial statements should be made. In fact, the Central Bank of Nigeria, the Securities and Exchange Commission, Nigerian Stock Exchange and National Insurance Commission have stipulated guidelines on the way and manner information should be made public. Even adverts sometimes are expected to pass through regulatory authorities. A company that flouts the law is adequately penalised.


The Securities and Exchange Commission (SEC) is empowered by the Investment and Securities Act (ISA) of 1999, which allows it to make general and specific rules governing securities exchanges, capital market operators, securities offered, mergers and acquisitions, collective investment schemes, investors’ protection fund and borrowing by the tiers and agencies of government. In the said Act, Section 85 and Rule 190 are specific on information dissemination and all forms of communication. They also state penalties on untrue statements of a material fact, which are otherwise false or misleading. The Commission’s rules and regulations provide all the participants in the capital market on their expectations in the system. It spells out the Code of Conduct and provides fairness and equality, among others.


According to the Head of Corporate Affairs of SEC, Mr. Iliasu Dhacko the act also deals with activities related with securities trading, ranging from market rigging, manipulation to issuance of false or misleading statements and fraudulently inducing trading through dissemination of illegal information or insider dealings. Various penalties including fines, suspensions and prosecution from the market are specified to serve as deterrent.


In the Banks and other Financial Institutions Decree No 40 of 1999, Section 40 precisely deals with the general restrictions on advertisements by banks. Any bank that proposes to issue any advertisement must deliver the text with the latest published accounts to the Central Bank of Nigeria for its consideration. Even though the word advertisement is used frequently in the decree instead of general publicity, it states that it includes any form of advertising, whether in publication or by the display of notice, circular, exhibitions of photographs, cinematography, sound broadcasting, and the likes. The contravention of the provision is an offence, which is liable to a fine or imprisonment or both.


As the Decree authorises the Central Bank of Nigeria to make laws for the banking industry, so also is the National Insurance Commission Decree of 1997 gives NAICOM the instruments to ensure effective administration, supervision, regulation and control of the insurance industry. The Commission also establishes standards for the conduct of insurance business in Nigeria. With the approval of the Minister of Finance, it makes regulations as to the forms and contents of insurance advertisements, which in the same Decree, has the feature and forms of advertising as stated in Decree No 40 of 1999. Apart from a Section on advertisements, it has another on ‘Misleading Statements’ which stipulates penalties for statements, promises and forecasts which may be false, deceptive, or dishonest concealment of material facts or by reckless making of any statement with the intention to induce another person to enter into or offer to enter into any contract of insurance with an insurance company.


The essence of the rules is to guide the investing public from deceitful and fraudulent information. Therefore, organisations need to take note of the following before any serious public disclosure of their financial positions is made:


a.   Central Bank of Nigeria Decree No 24 of 1991 as amended by Decree 41 of 1999;

b.   Banks and other Financial Institution Decree No 25 of 1991 & its amendment Decree no 40 of 1999;

c.   Investment and Security Act (ISA) No 45 1999;

d.   SEC Rules and Regulations Pursuant to the (ISA) act;

e.   Nigeria Deposit Insurance Corporation (Decree No 22) 1988;  and

f.    National Insurance Commission Decree 1997.   

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