The Central Bank of Nigeria (CBN) has increased the tenure of the Managing Director/Chief Executive of banks to a maximum of 12 years from 10 years.

This was disclosed in a circular on the new, “Corporate Governance Guidelines for Commercial, Merchant, Non-interest and Payment Service Banks in Nigeria.”

The circular dated July 13, 2023, was signed by CBN Director, Financial Policy and Regulation Department, Chibuzo Efobi, and addressed to commercial, merchant, non-interest, Payment Service Banks and Financial Holding Companies (FHCs).

The central bank also increased the tenure of Deputy Managing Director (DMD/Executive Director (ED) of a bank to a maximum period of 12 years.

The CBN stated that the objectives of the guidelines are to among other things provide additional guidance on the principles, recommended practices, and responsibilities contained in NCCG 2018; outline industry-specific corporate governance standards for banks; and promote high ethical standards amongst operators, while enhancing public confidence.

Also, in line with the Nigeria Code of Corporate Governance (NCCG) 2018, the apex bank further stipulated that no board of a bank shall consist of only one gender.

Hence, to achieve gender diversity and promote a gender inclusive board, banks shall take a practical approach to women’s economic empowerment in line with Principle 4 of the Nigerian Sustainable Banking Principles (NSBP).

The apex bank explained that the guidelines followed the pronouncement of the Financial Reporting Council of Nigeria (FRCN) for sector regulators to issue sector-specific guidelines on corporate governance for institutions under their regulatory purview.

The CBN has therefore, adapted the principles and recommended practices of NCCG 2018 in developing the new guidelines for affected entities, taking into account, the peculiarities of the sub-sectors.

The central bank said the regulation was issued pursuant to the provisions of Section 2(d) of the CBN Act 2007, and Sections 56(2) and 67(1) of the Banks and Other Financial Institutions Act (BOFIA 2020).

Essentially, the regulation noted that where an ED becomes a DMD, a cumulative tenure of 12 years applies and shall not be extended.

Also, Non-Executive Directors (NEDs) (with the exception of Independent NEDs) of a bank shall serve for a maximum of 12 years comprising three terms of four years each.

The CBN stressed that to qualify as a NED in a bank, the proposed NED shall not be an employee of a financial institution except where the bank is promoted by that financial institution and the proposed NED is representing the interest of that financial institution.

The guidelines further stated that an executive (ED, DMD or MD/CEO) who exits from the board of a bank either upon or prior to the expiration of his/her maximum tenure, shall serve out a cooling period of two years before being eligible for appointment as a NED in the same bank, subject to applicable cumulative tenure limits.

It stated that where an executive (ED, DMD or MD/CEO) of a bank is appointed to the board of its FHC in any role, a cooling-off period of two years shall apply.

The central bank added that the cumulative tenure limit of directors (ED, DMD, MD and NEDs) on the board of the same bank is 24 years. The cumulative period is calculated from the date of first appointment to the board of the bank.

The regulation among other things, stipulated that banks shall disclose a summary of their risk management policies in their annual financial statements, adding that in the case of a publicly quoted bank, such summary shall be hosted on its website.

NEDs inclusive of the Chairman (excluding INEDs) of an FHC shall serve a maximum tenure of three terms of four years each.

Consequently, the cumulative tenure limit of a NED in an FHC or any other FHC shall be 12 years and shall have unfettered access to corporate information from the MD/CEO, company secretary, internal auditor, and heads of other control functions with direct/indirect reporting lines to the board, while access to other senior management shall be through the MD/CEO.

Furthermore, Independent Non-Executive Directors (INEDs) in an FHC shall have sound knowledge of the operations, relevant laws, and regulations guiding the business of its subsidiaries in the relevant sub-sectors. The INED shall also have proven skills and competencies in his/her field.

However, the term of office of an INED shall be four years and may be renewable only once for another consecutive term of four years.


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