The Central Bank of Nigeria (CBN) has approved a new code of corporate governance specifying that the tenure of banks’ managing directors or Chief Executive Officers (CEOs) can only last for a maximum of 12 years.
The apex bank disclosed this on July 13, 2023 circular signed by its Financial Policy and Regulation Department, Chibuzo Efobi.
CBN negates earlier circular extending bank CEOs tenure to 20 years
In February 2023, the bank said that executives of banks could only serve a cumulative tenure of 20 years across the banking sector.
But in the recent circular, CBN said the new rules would replace all previous codes, circulars, and related orders on corporate governance.
The implementation of the new code becomes effective from August 1, 2023.
Per the circular, the new code fixes the tenure of managing directors and executive directors of banks at a maximum period of 12 years.
It also said that when an executive director assumed the duty of a deputy managing director, a tenure of 12 years applies and shall not be extended.
TheCable reports that the code also stated that the minimum and maximum number of directors on the commercial, merchant, and non-interest bank boards should be seven and 15 years, respectively.
Other bank CEOs can serve up to 13 years.
The bank extended the tenure of directors on the board of payment service banks to 13 years.
The bank said the board, subject to approval, will appoint the MD/CEO, executive directors, and senior management staff.
CBN said: “Where a DMD/ED becomes an MD/CEO of the same bank, his/her previous tenure as DMD/ED is not included in computing his/her as MD/CEO,” the circular reads.
The new policy added that up to two members of an extended family should be on the bank board.
“Only one member of an extended family can occupy the position of MD/CEO, chairman, or ED at any time,” the circular read.