The Central Bank of Nigeria (CBN) on Friday announced the review of the tenure of Executive Management and Non-Executive Directors of Deposit Money banks and financial institutions in the country.
In the new guidelines contained in circular No. FPR/DlR/PUB/CIR/001/070 dated February 24, 2023 and signed by the Director of Financial Policy & Regulation Department of the CBN, Chibuzo Efobi, the apex bank specified the tenure of Managing Directors, Deputy Managing Directors and Executive Directors.
The statement said: “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/ClR/GEN/01/004), as part of measures aimed at strengthening governance practices in the banking industry.”
Consequently, the requirements for the tenure of Executive Directors (ED), Deputy Managing Directors (DMD) and Managing Directors (MDs), its governor which shall apply effectively from the date of the circular, shall be in accordance with the terms of their engagement approved by the Board of Directors of banks, subject to a maximum tenure of ten years.
The statement explained where an Executive of a bank who is a DMD becomes the Managing Director/Chief Executive Officer of a bank, or any other DMB before the end of his/her maximum tenure, the cumulative tenure of such an Executive shall not exceed 12 years.
However, for an Executive (ED) who becomes a DMD of a bank or any other DMB, the new guidelines said his/her cumulative tenure as ED and DMD shall not exceed 10 years.
In the case of Non-Executive Directors (NEDs), the financial sector regulator said with the exception of Independent Non-Executive Director (INED), they would be entitled to serve for a maximum period of 12 years in a bank, broken into three terms of four years each.
Again, for EDs, DMDs and MDs who exit from the Board of a bank either upon or prior to the expiration of their maximum tenure, the guidelines said they shall serve out a one year cooling-off period before becoming eligible for appointment as a NED to the Board of Directors.
Similarly, NEDs who exit from the Board of a bank either upon or prior to the expiration of their maximum tenure of 12 years (made up of three terms of four years each), shall serve out a one year cooling-off period before becoming eligible for appointment to the Board of Directors of any other DMB.
The guidelines pegged the cumulative tenure limit of EDs/DMDs, MDs and NEDs across the banking industry at 20 years.