By 
The Central Bank of Nigeria (CBN) has introduced restrictions on the acquisition of controlling stakes in financial holding companies (HoldCos) within the country as part of its corporate governance guidelines.
In a circular addressed to commercial banks, merchant banks, non-interest banks, payment service banks, and financial holding companies, titled “Corporate Governance Guidelines,” the CBN outlined the new regulations. The circular, signed by Chibuzo Efobi, Director of the Financial Policy and Regulation Department, highlighted the requirement for prior approval from the CBN before acquiring majority stakes in HoldCos.
Section 19 of the guidelines, which focuses on the protection of shareholders, specifies the following:
“Unless prior approval from the CBN is granted, no individual, group of individuals, proxies, or corporate entities shall own a controlling interest in more than one Financial Holding Company (FHC).
“Without prior written approval from the CBN, an FHC, its directors, shareholders, or agents shall not enter into an agreement resulting in a change of control of the FHC, the transfer of shareholding of five percent and above in the FHC, and/or an increase in shareholding to five percent or more in the FHC.
“CBN’s prior approval and No Objection must be sought and obtained before any acquisition of shares in an FHC by an investor (including through the capital market), resulting in an equity holding of five percent and above. This includes the sale, disposal, or transfer of the entire or any part of the business of the FHC; the acquisition or merger of the FHC; the reconstruction of the FHC; or the employment of a management agent, management by, or transfer of the business to any such agent.”
Furthermore, the section specifies that subsidiaries of an FHC are prohibited from acquiring shares in the FHC itself or in other subsidiaries within the Group.
These new regulations apply to commercial banks, merchant banks, non-interest banks, payment service banks, and financial holding companies in Nigeria. They form part of the Corporate Governance Guidelines for Financial Holding Companies in Nigeria, as outlined by the CBN.
Comments