UPDC faces ₦10m fine over repeated failure to appoint independent director

UPDC Plc, a leading Nigerian property development company, is facing a potential ₦10 million fine after repeatedly failing to appoint an independent non-executive director (INED) to its board, in breach of corporate governance principles.

The company disclosed in its 2025 corporate governance compliance report that the requirement does not apply to its board, a position it has maintained consistently since at least 2021.

The Financial Reporting Council of Nigeria (FRCN) requires companies submitting governance reports to adopt the “Apply and Explain” approach, which assumes full application of governance principles alongside clear explanations of how they are implemented.

“Not applicable is not a valid response,” the council stated in its reporting template.

UPDC’s continued non-compliance with Principles 2 and 7 of the Nigeria Code of Corporate Governance (NCCG 2018) raises concerns about transparency and board independence, potentially limiting shareholders’ ability to make informed assessments.

“Independent Non-Executive Directors bring a high degree of objectivity to the board for sustaining stakeholders confidence,” Principle 7 states.

Principle 2 further recommends an appropriate balance of executive, non-executive and independent non-executive directors, noting that a majority of board members should be non-executive, with most of them ideally independent.

Despite these provisions, UPDC has maintained a six-member board for five consecutive years, comprising five non-executive directors and one executive director, while repeatedly indicating “not applicable” in its FRCN reporting template.

Under the Financial Reporting Council of Nigeria Amendment Act 223, companies that fail to comply with governance requirements risk sanctions, including fines of up to ₦10 million or possible prosecution.