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CBN limits bank executives’ tenure to 24 years

BANK executives will no longer spend more than 24 years in office effective August 1 2023, the Central Bank of Nigeria (CBN) has said.

The top positions include Executive Directors, Deputy Managing Directors (DMD), and Managing Directors (MDs) of banks and bank holding companies.

The Director, Financial Policy and Regulation department of the apex bank, Chibuzo Efobi, signed the new regulation released in Abuja yesterday.

The circular, with the reference number, ‘FPR/DIR/PUB/CIR/001/078,’ said the circular was in accordance with powers conferred by the Central Bank of Nigeria (CBN) Act 2007 and the Banks and Other Financial Institutions Act 2020.

“The Central Bank of Nigeria (CBN), hereby issues the Corporate Governance Guidelines for Commercial, Merchant, Non-Interest, and Payment Services Banks in Nigeria; and the Corporate Governance Guidelines for Financial Holding Companies in Nigeria,” the circular stated in part.

It explained that in developing the guidelines, the CBN adapted relevant principles and recommended practices of the Nigerian Code of Corporate Governance issued by the
Financial Reporting Council in 2018, global corporate governance practices as well as other related governance codes, circulars and directives made by the CBN.

It called the attention of banks and financial holding companies to note the responsibilities imposed on their boards by these guidelines, and especially on the Executive Compliance Officers (where applicable).

The CBN stressed that the new guidelines supersede all previous codes, circulars and related directives on corporate governance issued by the CBN.

The CBN was quick to note that the circular is subject to a cumulative tenure limit of 24 years, which was covered in Section 8 of the Guidelines.

Section 8 states that the cumulative tenure limit of directors (ED, DMD, MD, and NEDs) on the Board of the same bank is twenty-four (24) years.

The new circular also introduced two years cooling period for banks’ top brass, saying that upon expiration of a maximum tenure, executive directors must serve out a cooling-off two years before being eligible for appointment as non-executive directors in the same bank subject to applicable tenure limits.

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