The Central Bank of Nigeria (CBN) has revised the regulatory requirements for the tenure of executive management and non-executive directors of Deposit Money Banks and Financial Holding Companies in the Code of Corporate Governance for Banks and Discount Houses (Ref: FPR/DIR/CIR/GEN/01/004).
This is part of measures aimed at strengthening governance practices in the banking industry.
The apex bank, in a statement on Friday, noted that the following tenure requirements shall apply effective the date of this circular:
“The tenure of Executive Directors (ED), Deputy Managing Directors (DMD) and Managing Directors (MDs) 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/CEO of a bank or any other DMB before the end of his/her maximum tenure, the cumulative tenure of such executive shall not exceed 12 years.
“However, for an executive (ED) who becomes a DMD of a bank or any other DMB, his/her cumulative tenure as ED and DMD shall not exceed 10 years.”
The CBN further stated that Non-Executive Directors (NEDs), with the exception of Independent Non-Executive Director (INED), shall serve for a maximum period of 12 years in a bank, broken into three terms of four years each.
It also stated that EDs, DMDs and MDs who exit from the Board of a bank either upon or prior to the expiration of his/her maximum tenure, shall serve out a cooling-off period of one year before being eligible for appointment as a NED to the Board of Directors.
NEDs who exit from the Board of a bank either upon or prior to the expiration of his/her maximum tenure of 12 years (three terms of four years each), shall serve out a cooling-off period of one year before being eligible for appointment to the Board of Directors of any other DMB.
The cumulative tenure limit of EDs/DMDs, MDs and NEDs across the banking industry is 20 years.
It should be recalled that this rule was initiated under the leadership of Sanusi Lamido Sanusi as the Governor of the Central Bank of Nigeria (CBN) in January 2010 after the sacking of some bank CEOs in 2009.
As a follow-up to the directive and the reforms being carried out to address the challenge, the CBN issued a guideline stating categorically the tenure limit of maximum of 10 years and an effective date of July 31, 2010.
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