The Central Bank of Nigeria on the 24th of February , 2023 carried out a regulatory review of requirements governing the tenure of executive management & non-executive directors of Deposit Money Banks (DMBs) & Financial Holding Companies (FHCs) as contained in the Code of Corporate Governance for Banks & Discount Houses.
This review was carried out with the aim of improving on governance practices and standards within the banking and financial sector in Nigeria.
This article will be looking at the notable provisions on this regulatory review which are as follows :-
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Executive Directors
– The tenure of Executive Directors (EDs), Deputy Managing Directors (Deputy MDs) & Managing Directors shall be in accordance with the terms of their engagement approved by the board of directors of banks, subject to a maximum tenure of 10 years.
– Where an executive who is a DMD becomes the MD or Chief Executive Officer of a bank or any other DMB before the end of his maximum tenure, the cumulative tenure of such an executive shall not exceed a period of 12 years.
– The cumulative tenure of an executive director who becomes a DMD of a bank shall not exceed 10 years.
– Executive Directors, DMDs & MDs who exit from the board of a bank either upon or prior to the expiration of their maximum tenure of 12 years (calculated as 3 terms of 4 years each) shall serve out a cooling off period of 1(One) year before being eligible for appointment as a non-executive directors to the board of directors.
– The cumulative tenure limit of EDs/DMDs, & MDs across the banking industry is 20 years.
Non-Executive Directors
– Non-Executive Directors (NEDs) who exit from the board of directors of a bank either upon or prior to the expiration of their maximum tenures which is 12 years (calculated as 3 terms of 4 years each) shall serve out a cooling off period of 1 year before being eligible for appointment to the board of directors of any other DMB.
– The cumulative tenure limit for NEDs across the banking industry is also 20 years.