The Central Bank of Nigeria (CBN) has extended the maximum tenure of Managing Directors/Chief Executives (MD/CEOs) and Deputy Managing Directors/Executive Directors (DMDs/EDs) of banks from 10 to 12 years.
The CBN issued a circular titled “Corporate Governance Guidelines for Commercial, Merchant, Non-interest and Payment Service Banks in Nigeria” on July 13, 2023, announcing the changes.
The circular, signed by CBN Director Chibuzo Efobi, was addressed to commercial, merchant, non-interest, Payment Service Banks, and Financial Holding Companies (FHCs).
The guidelines aim to provide additional guidance on corporate governance principles and recommended practices, outline industry-specific standards, and promote high ethical standards among operators while enhancing public confidence.In line with the Nigeria Code of Corporate Governance (NCCG) 2018, the CBN stipulates that bank boards should not consist of only one gender.
The goal is to achieve gender diversity and promote gender-inclusive boards, aligning with the Nigerian Sustainable Banking Principles.
The CBN has adopted the principles and recommended practices of the NCCG 2018, taking into account the peculiarities of different sub-sectors.
The regulation applies to executive directors, deputy managing directors, managing directors/CEOs, and non-executive directors (excluding independent non-executive directors) of banks.
The cumulative tenure limit for directors on the board of the same bank is set at 24 years.
Non-Executive Directors (NEDs) (excluding independent NEDs) shall serve for a maximum of 12 years, consisting of three terms of four years each. Additionally, NEDs in Financial Holding Companies (FHCs) shall have a cumulative tenure limit of 12 years.
In response to the changes, the guidelines state that executives who exit from the board before or upon the expiration of their maximum tenure must serve a cooling-off period of two years before becoming eligible for appointment as a non-executive director in the same bank.
The regulations also cover risk management policy disclosure in banks’ annual financial statements and the tenure of Independent Non-Executive Directors (INEDs) in FHCs.
