PUBLIC ENTERPRISES REGULATORY COMMISSION ACT

PUBLIC ENTERPRISES REGULATORY COMMISSION ACT
ARRANGEMENT OF SECTIONS
PART I

Establishment, etc., of the Public Enterprises Regulatory Commission and its governing board

SECTION

1. Establishment of the Public Enterprises Regulatory Commission.

2. Membership of the Commission.

3. Tenure of office, etc.

4. Removal from office.

5. Emoluments, etc.

6. Disclosure of interest.

PART II

Functions and powers

7. Functions of the Commission.

8. Powers of the Commission.

9. Directives by the President.

10. Committees of the Commission.

11. Secretary to the Commission.

12. Other staff of the Commission, etc.

PART III

Staff

13. Service in the Commission to be pensionable.

PART IV

Financial provisions

14. Fund of the Commission.

15. Power to accept gifts.

16. Annual estimates, account and audit.

17. Quarterly report.

18. Annual report.

PART V

SECTION

Accounting records, financial statements and audit of financial statements Accounting records

19. Public enterprises to keep accounting records.

20. Place and duration of records.

21. Penalties for non-compliance with sections 19 and 20.

Financial statements

22. Directors’ duty to cause financial statement to be prepared.

23. Form and content of financial statement.

Loans and other credit facilities

24. Restriction on the granting of loans, etc., to directors.

25. Directors’ report.

Delivering of financial statements to Commission

26. Signing of balance sheet and documents to be annexed thereto.

27. Penalty for delivering defective financial statements.

Publication of financial statements

28. Publication by a public enterprise of full individual financial statements.

Alteration of accounting requirements

29. Power to alter accounting requirements.

PART VI

Audit of accounts

30. Appointment of external auditors.

31. Qualification of auditors.

32. Auditor’s report.

33. Auditors’ duties and powers.

34. Remuneration of auditors.

35. Removal of auditors.

36. Resignation of auditors.

37. Liability of auditors for negligence.

38. False statement to auditors.

39. Special examination.

40. Conduct of examination.

41. Report of examination, etc.

42. Duties of directors.

SECTION

PART VII

Supervision

PART VIII

Duties of directors, etc.

43. Conflicts of duties and interests.

44. Multiple directorship.

45. Duty of care and skill.

46. Legal position of directors.

47. Substantial property transactions involving directors, etc.

48. Exceptions from application of section 47.

49. Liabilities arising from contravention of section 47.

50. Directors prohibited from receiving bribes, gifts, etc.

51. Destruction, etc.

52. Jurisdiction.

53. Pending proceedings.

54. Power of the Court.

PART IX

Trial of offences, etc.

55. Power to control property of debtors or accused.

56. Jurisdiction unaffected by separation from office, etc.

PART X

Recovery of debts owed to public enterprises

57. Recovery of debts owed to public enterprises.

58. Proof of debt.

59. Application for recovery of debts owed to public enterprise.

60. Debtor to appear before Court to show cause.

61. Hearing, judgment and execution.

62. Withdrawal of application.

63. Sale of property.

64. Inadequate information on debtor, etc.

65. Exclusion of statutes of limitation.

PART Xl

Offences and penalties

66. Offences by supervising officer, director, etc.

67. Penalties for offences under section 70.

68. Contributing to economic adversity of public enterprise.

69. Failure to execute contract, etc.

70. Failure to supervise performance of contract.

71. Determination of appropriate punishment, etc.

72. Liability of persons who are parties to carrying on fraudulent activities.

73. Attempt to commit offence, etc.

74. Offence by bodies corporate.

PART XII

Miscellaneous

SECTION

75. Withholding of information.

76. Liability where proper accounts not kept.

77. Regulations.

78. Interpretation.

79. Short title.

SCHEDULES

An Act to establish the Public Enterprises Regulatory Commission to regulate the activities of public enterprises and for matters connected therewith.

[1996 No. 35.]

[17th November, 1996]

[Commencement.] PART I

Establishment, etc., of the Public Enterprises Regulatory Commission and its governing board

1. Establishment of the Public Enterprises Regulatory Commission

(1) There is hereby established a body to be known as the Public Enterprises Regulatory Commission (in this Act referred to as “the Commission”).

(2) The Commission-

(a) shall be a body corporate with perpetual succession and a common seal; and

(b) may sue and be sued in its corporate name.

2. Membership of the Commission

(1) There is hereby established for the Commission a governing Board which shall con- sist of–

(a) a chairman who shall also be the chief executive of the Commission;

(b) eight other members, at least one of whom shall be a woman; and

(c) the secretary to the Commission.

(2) The chairman and members of the Board shall-

(a) be appointed by the President; and

(b) be persons with proven integrity and with relevant cognitive experience.

(3)The supplementary provisions set out in the Schedule to this Act shall have effect with respect to the proceedings of the Board and the other matters contained therein.

[Schedule.]

3. Tenure of office, etc.

(1) The chairman shall hold office-

(a) for a period of five years and may be re-appointed for one further period of five years; and

(b) on such other terms and conditions as may be specified in his letter of appoint- ment.

(2) The other members of the Board shall hold office-

(a) for a period of four years and may be re-appointed for one further period of four years; and

(b) on such other terms and conditions as may be specified in their letters of appoint-

ment.

4. Removal from office

(1) Notwithstanding the provisions of section 3 of this Act, a member may at any time be removed from office by the President for inability to discharge the functions of his office (whether arising from infirmity of mind or body or any other cause) or for misconduct, but

shall not be removed from office except in accordance with the provisions of this subsection.

(2) A member of the Board may resign his appointment by a notice in writing under his hand, addressed to the President and that member shall, on the date of the receipt of the notice by the President, cease to be a member of the Board.

5. Emoluments, etc.

There shall be paid to every member of the Board such emoluments, allowances and benefits as the President may, from time to time, approve.

6. Disclosure of interest

(1) A member of the Board who directly or indirectly has an interest in any public enter- prise, the affairs of which are being deliberated upon by the Board, or is interested in any contract made or proposed to be made by the Commission shall, as soon as possible after the relevant facts have come to his knowledge, disclose the nature of his interest at a meeting of the Board.

(2) A disclosure under subsection (1) of this section shall be recorded in the minutes of meetings of the Board and the member shall-

(a) not take part after such disclosure in any deliberation or decision of the Board with regard to the subject matter in respect of which his interest is thus disclosed; and

(b) be excluded for the purpose of constituting a quorum of any meeting of the Board for any such deliberation or decision.

PART II

Functions and powers

7. Functions of the Commission

The Commission shall-

(a) analyse the approved annual budget of a public enterprise and advise the appropri- ate authority as to its adequacy or suitability in the light of the objects and func- tions of the public enterprise;

(b) monitor the implementation of all the measures enumerated in approved annual budgets of public enterprises;

(c) monitor and identify factors inhibiting the realisation of set revenue targets of any public enterprise;

(d) promote efficiency, monetary stability and a sound financial system in the man- agement of public enterprises;

(e) assist appropriate authorities in the formulation and implementation of policy so as to ensure sound and efficient management of public enterprises;

(f) arrange and conduct investigation or inspection into the affairs of a public enter- prise where the interest of the public so demand;

(g) assess the report on any project being carried out by a public enterprise and confirm that funds released for such projects are judiciously utilised;

(h) give a situation report of all its activities on a quarterly basis to the President;

(i) ensure that a person who defaults in any matter referred to in this section or any other matter related to it is brought before the court under this Act;

(j) receive the annual reports and accounts of all public enterprises and make recom- mendations on them to the President;

(k) advise the President on the appointment of directors of public enterprises; and

(l) carry out such other activities connected with its other functions as may be di- rected, from time to time, by the President.

8. Powers of the Commission

(1) The Commission shall have power to-

(a) invite any director or officer of a public enterprise to appear before it;

(b) call for memoranda from any public enterprise or any director or officer of the public enterprise;

(c) ask for and receive from a public enterprise, reports, audited accounts or such other information relating to the public enterprise as may be required for the pur- poses of the Commission and in whatever manner it deems fit;

(d) monitor any matter to the extent that it affects the functions of the Commission;

(e) enter and inspect premises, projects and such other places as may be necessary for the purposes of carrying out its functions under this Act; and

(f) do such other things as are necessary and expedient for the full discharge of any of its functions under this Act.

(2) Nothing in this section shall affect the powers, duties or jurisdiction conferred on any body established under any other Act or law for the time being in force for the smooth and effective performance of that body.

9. Directives by the President

The President may give to the Commission such directives as appear to him to be just and proper for the effective discharge of the functions of the Commission under this Act and it shall be the duty of the Commission to comply with those directives.

10. Committees of the Commission

(1) The Commission may appoint one or more committees to carry out on behalf of the Commission any of its functions under this Act.

(2) A committee appointed by the Commission under this section shall consist of such number of persons as may be determined by the Commission.

PART III

Staff

11. Secretary to the Commission

(1) There shall be, for the Commission, a secretary-

(a) who shall be appointed by the President; and

(b) whose status shall not be below that or a Permanent Secretary.

(2) The secretary shall, subject to the general control of the Board, be-

(a) responsible for keeping proper records of the proceedings of the Commission; and

(b) the head of the secretariat and responsible for-

(i) day-to-day administration; and

(ii) the direction and control of all other employees, of the Commission.

12. Other staff of the Commission, etc.

(1) The Board shall have power to appoint for the Commission such other employees as it may deem necessary for the efficient performance of its functions under or pursuant to this

Act and shall have power to pay persons so employed such remuneration (including allow- ances) as the Commission may determine.

(2) The terms and conditions of service of employees of the Commission shall be as may be determined by the Commission.

(3) For the purposes of the application of the Pensions Act, any power exercisable under the Act by the Minister or authority of the Federal Government (not being the power to make regulations under section 23 thereof) is hereby vested in the Board and not in any other person or authority.

[Cap. P4.]

(4) Subject to subsection (2) of this section, the Pensions Act shall in its application by virtue of subsection (3) of this section to any office, have effect as if the office were in the

civil service of the Federation within the meaning of the Constitution of the Federal Republic of Nigeria, 1999.

[Cap. C23.]

13. Service in the Commission to be pensionable

( 1) Service in the Commission shall be approved service for the purpose of the Pensions Act, and accordingly, an officer and other persons employed in the Commission shall in respect of their service in the Commission be entitled to pensions, gratuities and other retirement benefits enjoyed by persons holding equivalent grades in the public service of the Federation.

[Cap. P4.]

(2) Nothing in this section shall prevent the appointment of a person to any office on terms which preclude the grant of a pension and gratuity in respect of that office.

PART IV

Financial provisions

14. Fund of the Commission

(1) There shall be established and maintained by the Commission a fund into which shall be paid and credited-

(a) the annual subvention received from the Federal Government;

(b) such money as may, from time to time, be lent, deposited with or granted to the Commission by the Federal Government;

(c) all fees and charges for services rendered by the Commission; and

(d) all other sums which may, from time to time, accrue to the Commission.

(2) The Commission may, from time to time, as the Board may direct, apply the funds at its disposal-

(a) to the cost of the administration of the Commission and for the purposes of any activity being undertaken by the Commission;

(b) to the payment of remunerations, allowances, benefits and expenses of members of the Board or of any committee set up by the Board;

(c) to the payment of the salaries, allowances and benefits of officers and servants of the Commission;

(d) for the maintenance of any property vested in the Commission or under its adrnini- stration; and

(e) for and in connection with all or any of the functions of the Commission under this Act or any other enactment.

15. Power to accept gifts

(1) The Commission may accept gifts of land, money or other property on such terms and conditions, if any, as may be specified by the person or organisation making the gift.

(2) The Commission shall not accept any gift if the term or condition attached by the person or organisation making the gift is inconsistent with the functions of the Commission under this Act.

16. Annual estimates, account and audit

(1) The Board shall cause to be prepared not later than 30 September in each year an estimate of the expenditure and income of the Commission during the next succeeding year and when prepared, they shall be submitted 10 the President.

(2) The Board shall cause 10 be kept proper accounts of the Commission and proper rcc- ords in relation thereto and when certified by the Board, the accounts shall be audited by auditors appointed by the Board from the list and in accordance with the guidelines supplied by the Auditor-General for the Federation.

17. Quarterly report

The Board shall, notwithstanding the provisions of sections 16 and 18 of this ACI and at the end of every three months, submit to the President a report on the activities and admini- stration of the Commission.

18. Annual report

The Board shall not later than three months before the end of each year, submit to the President a report on the activities and the administration of the Commission during the immediately preceding year and shall include in such report audited accounts of the Commis- sion and the auditor’s report thereon.

PART V

Accounung records, financial statements and audit of financial statements

Accounting records

19. Public enterprises to keep accounting records

(1) Notwithstanding anything to the contrary contained in any law or enactment, every public enterprise shall cause accounting records to be kept in accordance with the provisions of this Part of this Act.

(2) The accounting records shall be sufficient to show and explain the transactions of the public enterprise and shall be such as to-

(a) disclose with reasonable accuracy, the financial position of the public enterprise; and

(b) enable the directors of the public enterprise to ensure that any financial statement prepared under this Part of this Act complies with the requirements of this Act as to the form and content of the financial statement of the public enterprise.

(3) The accounting records shall be in accordance with standards set by the Nigerian Ac- counting Standard Board and in addition shall contain-

(a) entries from day to day of all sums of money received and expended by the public enterprise and the matters in respect of which the money was received and ex- pended;and

(b) a record of the assets and liabilities of the public enterprise.

(4) Where the activities of the public enterprise involves dealing in goods, the accounting records shall contain-

(a) statements of stocks held by the public enterprise at the end of each year;

(b) all statements of stocktaking from which any statement of stock as is mentioned in paragraph (c) of this subsection has been or is to be prepared; and

(c) except in the case of goods sold by way of ordinary retail trade, statements of all goods sold and purchased, showing the goods, the buyers and sellers in sufficient detail to provide easy identification.

20. Place and duration of records

(1) The accounting records of a public enterprise shall be kept at its head office or such other place in Nigeria as the Commission may direct and shall at all times be open to inspec- tion by such officers of the Commission as may be authorised from time to time.

(2) Subject to any direction relating to the disposal of records which may be given by the Commission, accounting records which a public enterprise is required to keep by section 19 of this Act shall be preserved by it for a period of not less than thirty years from the date on which they were made.

21. Penalties for non-compliance with sections 19 and 20

(1) If a public enterprise fails to comply with any provision of section 19 or 20 of this Act, every officer of the public enterprise who is in default is guilty of an offence unless he shows that he acted honestly and that in the circumstances in which the business of the public enterprise was carried on the default was excusable.

(2) An officer of a public enterprise is guilty of an offence if he fails to take all reason- able steps for securing compliance by the public enterprise with the provisions of sections 19 and 20 of this Act, or has intentionally caused any default by the public enterprise.

(3) A person guilty of an offence under this section is liable on conviction to imprison- ment for a term not exceeding two years or to a tine of N500,000 or to both such imprison- ment and tine.

Financial statements

22. Directors’ duty to cause financial statement to be prepared

(1) The directors of a public enterprise shall cause to be prepared every year, in respect of the public enterprise, financial statements in accordance with the provisions of this Part of this Act.

(2) The financial statements required to be prepared under subsection (1) of this section shall include-

(a) a statement of the accounting policies of the public enterprise;

(b) the balance sheet as at the last day of the year;

(c) a profit and loss account or, in the case of a public enterprise not established for profit, the income and expenditure account for the year;

(d) notes on the account;

(e) the auditor’s report;

(f) the directors’ report;

(g) a statement of the source and application of funds;

(h) a value-added statement for the year; and

(i) a five-year financial summary.

23. Form and content of financial statement

(1) The financial statements of a public enterprise prepared under section 22 of this Act shall, subject to the provisions of this Act, comply with the requirements of section 335 of the Companies and Allied Matters Act (so far as applicable).

[Cap. C20]

(2) The balance sheet shall give a true and fair view of the state of affairs of the publ ic enterprise as at the end of the year and the profit and loss account shall give a true and fair view of the profit or loss of the public enterprise for the year.

(3) The statement of the source and application of funds shall provide information on the generation and utilisation of funds by the public enterprise during the year.

(4) The value-added statement shall report the wealth created by the public enterprise during the year and its distribution among various interest groups, including the employees, the Federal, State or local government, creditors and the public enterprise.

(5) The five-year financial summary shall provide a report of vital financial information for a comparison over a period of five years.

(6) If the balance sheet or profit and loss account drawn up in accordance with this sec- tion does not provide sufficient information to comply with subsection (2) of this section, necessary additional information shall be provided in the balance sheet or profit and loss account, or in a note to the accounts.

(7) Where, after additional information has been provided under subsection (6) of this section, special circumstances in the public enterprise prevent compliance with a requirement relating to its balance sheet or profit and loss account from being drawn up in accordance with subsection (2) of this section, the directors may depart from that requirement in prepar- ing the balance sheet or profit and loss account (so far as necessary) in order to comply with subsection (2) of this section.

(8) If the directors disregard a requirement pursuant to subsection (7) of this section, particulars of the requirement, the reason for disregarding it and its effects shall be given in a note to the accounts.

(9) Where there is a failure to comply with the requirement of this section as to the preparation, matters to be stated or particulars to be given in a financial statement, every person who was a director of the public enterprise immediately before the end of the period prescribed for preparing the financial statement is guilty of an offence and liable on convic- tion to a fine not exceeding NI 00,000.

(10) In the trial of an offence under subsection (9) of this section, it shall be a defence for the director to prove that he took all reasonable steps for securing compliance with the requirements.

Loans and other credit facilities

24. Restriction on the granting of loans, etc., to directors

(1) No public enterprise shall by itself or through its officers grant a loan, an advance or any other credit facility to any of its directors unless the director is in full-time employment of the public enterprise.

(2) No director of a public enterprise shall receive a loan, an advance or any other credit facility from the public enterprise unless he is in the full-time employment of the public enterprise.

(3) A public enterprise, officer or director who contravenes the provisions of subsec- tion (1) or (2) of this section is guilty of an offence and liable on conviction-

(a) in the case of a public enterprise, to a fine of N200,000; and

(b) in the case of an officer or director of a public enterprise, to a fine of not less than two times the loan, advance or credit facility, as the case may be, or imprisonment for a term of not less than two years or to both such fine and imprisonment.

25. Directors’ report

(1) The directors shall cause to be prepared, in each year, a report containing a fair view of the development of the activities of the public enterprise during the year, and of its position at the end of that year.

(2) The directors’ report shall state the names of the persons who, at any time during the year, were directors of the public enterprise and the principal activities of the public enter- prise in the course of the year and any signi ficant changes in those activities in the year.

(3) The report shall also state the matters and give the particulars required by paragraphs I, 3 and 4 of Part I of Schedule 5 to the Companies and Allied Matters Act.

[Cap. C20.]

(4) Part III of Schedule 5 to the Companies and Allied Matters Act, shall apply as re- gards the matters to be stated in the directors’ report as they relate to the employment, training and advancement of disabled persons, the health, safety of work and welfare of the employees of the public enterprise and the involvement of employees in the affairs, policy and performance of the public enterprise.

(5) Where there is failure to comply with the requirements of this section as to the mat- ters to be stated or the particulars to be given in the directors’ report, every person who was a director of the public enterprise immediately before the end of the period prescribed for submitting the report is guilty of an offence and liable on conviction to a fine of N500,000 or imprisonment for a term not exceeding two years or to both such fine and imprisonment.

(6) In the trial of an offence under subsection (5) of this section, it shall be a defence for the person to prove that he took all reasonable steps for securing compliance with the requirements in question.

Delivering of financial statements to Commission

26. Signing of balance sheet and documents to be annexed thereto

(1) The balance sheet of a public enterprise and every copy thereof delivered to the Commission shall be approved by the board of directors and signed on behalf of the public enterprise by the chairman and the chief executive of the public enterprise.

(2) If the balance sheet of a public enterprise or copy thereof—-

(a) is delivered to the Commission; or

(b) is issued, circulated or published,

without the approval and signatures specified under subsection (1) of this section, the publ ic enterprise and every officer of the public enterprise who is in default is guilty of an offence and liable on conviction to a fine not exceeding N I 00,000.

(3) The balance sheet shall be accompanied with the following documents, that is-

(a) the profit and loss account, except where it has already been incorporated in the balance sheet;

(b) the auditor’s report; and

(c) the directors’ report.

(4) The profit and loss account shall be approved by the board of directors and authenti- cated on behalf of the public enterprise by any two directors appointed by the Board.

27. Penalty for delivering defective financial statements

If a financial statement of a public enterprise delivered to the Commission does not com- ply with the requirements of this Act as to the matters to be included in, or in a note to the financial statement, every person who at the time when the statement is so delivered is-

(a) a director, manager, secretary or other similar officer of the public enterprise; or

(b) any other person purporting to act in the capacity of a director, manager, secretary or other similar officer,

is guilty of an offence and liable on conviction to a fine of not less than N 100,000.

Publication of financial statements

28. Publication by a public enterprise of full individual financial statements

(1) The provisions of this Part of this Act shall apply to the publication by a public en- terprise of the financial statements required by section 22 of this Act to be delivered to the Commission, including the directors’ report.

(2) No public enterprise shall publish an individual financial statement for a year unless it is accompanied with the relevant auditor’s report.

(3) References in this section to the relevant auditor’s report are to the auditor’s report specified under section 32 of this Act.

(4) A public enterprise which contravenes any provision of this section and any officer of the public enterprise who is in default, is guilty of an offence and liable 10 a penalty of N5,OOO for every day in which the default continues.

Alteration of accounting requirements

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