The Central Bank of Nigeria (CBN) has recently implemented a new code of corporate governance that sets a maximum tenure of 12 years for bank CEOs.
This decision was announced in a circular dated July 13, 2023, and signed by Chibuzo Efobi, the director of the financial policy and regulation department.
The new rules supersede all previous codes and directives on corporate governance issued by the CBN. The implementation of these rules will take effect from August 1, 2023.
According to the CBN, the code also specifies that the tenure of deputy managing directors and executive directors of a bank should not exceed 12 years.
Additionally, the code sets the minimum and maximum number of directors on the boards of commercial, merchant, and non-interest banks, as well as payment service banks.
The CBN also emphasizes that remuneration for MD/CEOs, DMDs, and EDs should be linked to performance and structured to prevent excessive risk-taking.
The board is also required to approve a succession plan for the MD/CEO, other EDs, and senior management staff, which should be reviewed at least once every two years.
Furthermore, the code states that no more than two members of an extended family can be on the board of a bank, and only one member of an extended family can hold the positions of MD/CEO, chairman, or ED at any given time.
Lastly, the CBN urges banks and financial holding companies to take note of the responsibilities imposed on their boards by the new rules.