The Code Of Corporate Governance For Banks And Discount Houses (Ref: FPR/DIR/CIR/GEN/01/004) has been revised by the Central Bank of Nigeria to reflect the regulatory requirements for the terms of executive management and non-executive directors of Deposit Money Banks and Financial Holding Companies.
The central bank’s Director of Financial Policy and Regulation Department, CBN, Chibuzor Efobi, stated in a circular titled “Review of tenure of executive management and non-executive directors of Deposit Money Banks in Nigeria” that the development was a part of steps to improve governance practices in the banking sector.
All DMBs received the circular, which also stated that the tenure restrictions will be in force as of the date of the circular.
The circular states: “Executive directors, deputy managing directors, and managing directors shall hold office for terms of their engagement agreed by the board of directors of banks, subject to a maximum term of ten years.
“If a DMD executive holds the position of MD or CEO of a bank or another DMB before the conclusion of his or her maximum term, the total length of such executive’s employment cannot exceed 12 years.”
The combined tenure of an ED and DMD, however, cannot exceed 10 years in the case of an ED who later becomes the DMD of a bank or another DMB.”
“Non-executive directors, with the exception of independent non-executive directors, shall serve for a maximum duration of 13 years in a bank, split into three periods of four years each,” the circular noted.
“EDs, DMDs, and MDs who leave a bank’s board at or before the end of their maximum term must serve out a one-year cooling-off period before becoming eligible for appointment as a NED to the board of directors.
“NEDs must serve a one-year cooling-off period before being eligible for appointment to the board of directors of any other DMB if they leave the board of a bank at or before the end of their maximum 12-year term (three terms of four years each).”
According to the circular, the maximum tenure for EDs/DMDs, MDs, and NEDs in the banking sector is 20 years.