By 
The Central Bank of Nigeria (CBN) has announced an extension of the tenure for Managing Directors/Chief Executives (MD/CEOs) of banks to a maximum of 12 years, up from the previous limit of 10 years. This update is outlined in the new “Corporate Governance Guidelines for Commercial, Merchant, Non-interest, and Payment Service Banks in Nigeria,” as stated in a circular dated July 13, 2023.
The circular, signed by Chibuzo Efobi, Director of the Financial Policy and Regulation Department at the CBN, addresses commercial, merchant, non-interest, and Payment Service Banks, as well as Financial Holding Companies (FHCs).
In addition to the extended CEO tenure, the CBN has also increased the tenure of Deputy Managing Directors (DMDs)/Executive Directors (EDs) of banks to a maximum of 12 years.
The guidelines aim to provide additional guidance on the principles and recommended practices of the Nigerian Code of Corporate Governance (NCCG) 2018, establish industry-specific corporate governance standards for banks, and promote high ethical standards while enhancing public confidence.
To ensure gender diversity and inclusivity, the CBN emphasizes that no bank board should consist of only one gender, in line with the NCCG 2018. The guidelines encourage banks to take practical steps towards women’s economic empowerment, as outlined in Principle 4 of the Nigerian Sustainable Banking Principles (NSBP).
The CBN’s guidelines align with the pronouncement of the Financial Reporting Council of Nigeria (FRCN), which urged sector regulators to issue sector-specific guidelines on corporate governance. In developing these guidelines, the CBN incorporated the principles and recommended practices of the NCCG 2018 while considering the unique characteristics of the sub-sectors.
The regulation is issued in accordance with the provisions of Section 2(d) of the CBN Act 2007 and Sections 56(2) and 67(1) of the Banks and Other Financial Institutions Act (BOFIA) 2020.
The guidelines also outline cumulative tenure limits for various board positions, including Executive Directors, Non-Executive Directors (NEDs), and Independent NEDs. Cooling-off periods are specified for executives transitioning to non-executive roles within the same bank or being appointed to the board of a Financial Holding Company (FHC).
Furthermore, the guidelines require banks to disclose a summary of their risk management policies in their annual financial statements, with publicly quoted banks hosting this summary on their websites.
The tenure limits for NEDs, including the Chairman, in an FHC are defined, and INEDs are expected to possess knowledge of relevant laws, regulations, and operational aspects of subsidiaries within the relevant sub-sectors.
Overall, these guidelines aim to strengthen corporate governance in the banking sector and ensure transparency, accountability, and sustained performance.
Comments