The Central Bank of Nigeria (CBN) has givea new code of corporate governance which specified that the tenure of a bank’s managing director or chief executive officer (CEO) can only last for a maximum of 12 years.
The apex bank disclosed this in a circular dated July 13, 2023, and signed by Chibuzo Efobi, director, financial policy and regulation department.
The CBN said the new rules supercede all previous codes, circulars and related directives on corporate governance issued by the CBN.
According to the apex bank, the implementation of the new rules will come into effect by August 1, 2023.
It added that the new code fixes the tenure of deputy managing directors and executive directors (ED)of a bank at a maximum period of 12 years.
The apex bank directed that when an executive director becomes a deputy managing director, a cumulative tenure of 12 years applies and shall not be extended.
It also specified that the minimum and maximum number of directors on the boards of commercial, merchant and non-interest banks (CMNIBS) shall be seven and 15, respectively.
But,for a payment service bank (PSB), the minimum and maximum number of directors on the board shall be seven and 13.
The apex said the board, subject to its approval,will appoint the MD/CEO, executive directors as well as senior management staff.
“Where a DMD/ED becomes an MD/CEO of the same bank, his/her previous tenure as DMD/ED is not included in computing his/her as MD/CEO,” the circular said.
It added“Remuneration of MD/CEO, DMD, and EDs shall be linked to performance and structured to prevent excessive risk taking.The board shall approve a succession plan for the MD/CEO, other EDs and senior management staff, which shall be reviewed at least once every two years.”
The new policy added that not more than two members of an extended family shall be on the board of a bank.Only one member of an extended family can occupy the position of MD/CEO, chairman or ED at any point in time,” the circular reads.
