The Financial Reporting Council of Nigeria (FRCN) issued a Public Notice today, 5 August 2019, revoking its “Rule 4” titled “Transactions requiring registration from statutory bodies such as the National Office for Technology Acquisition and Promotion”.
The revocation became effective on 11 July 2019 and would apply prospectively.
Rule 4 provided that transactions that require the approval of, and or registration with, a statutory body in Nigeria would have financial reporting implication only when the relevant regulatory approval is obtained and or registration is completed. Consequently, companies which failed to meet these requirements were unable to recognize the related expenses in their financial statements.
The revocation of Rule 4 follows the recent decision of the Court of Appeal (CoA) in the case of Stanbic IBTC Holdings Plc and FRCN & National Office for Technology Acquisition and Promotion (NOTAP) where the CoA held that failure to register an agreement with NOTAP does not render it illegal, null and void.
The revocation of Rule 4 is a welcome development as it effectively lays to rest the controversies attendant to its promulgation in 2016.
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