CBN PUBLISHES RULES FOR CORPORATE BEHAVIOR.

Tunji Wusu –

The Corporate Governance Guidelines for commercial, merchant, non-interest, payment service banks and Financial Holding Company, FHC, in Nigeria were released by the Central Bank of Nigeria, CBN, today.

The CBN highlighted that the Guidelines were released in an effort to increase public confidence by, among other things, outlining industry-specific corporate governance norms for banks and encouraging high ethical standards among operators.

“In exercise of powers conferred by CBN Act 2007 and the Banks and Other Financial Institutions Act 2020, the CBN hereby issues the Corporate Governance Guidelines for commercial, merchant, non-Interest, and payment services banks in Nigeria, and the Corporate Governance Guidelines for FHC in Nigeria,” the apex bank stated in a circular signed by its director of financial policy and regulation, Mr. Chibuzo Efobi.

The Nigerian Code of Corporate Governance, published by the Financial Reporting Council in 2018, international corporate governance standards, and other related governance codes, circulars, and directives issued by the CBN were all taken into consideration by the CBN in developing these Guidelines.

“Banks and financial holding companies are invited to note the responsibilities imposed on their boards by these guidelines, and especially on the Executive Compliance Officers (where applicable).”All earlier CBN corporate governance rules, circulars, and associated directives are superseded by these Guidelines.

“These Guidelines shall take effect on August1, 2023.”

The apex bank further stated that any directors, managers, or officers of a Financial Holding Company (FHC) who violate the rules will be initially suspended for six months and may also be fired from their positions.

“Failure of an FHC to comply with any of the requirements under this Guidelines and the recommended practices in Nigeria Code of Corporate Governance, NCCG, 2018, constitutes a regulatory breach and shall attract a penalty as may be prescribed by the CBN,” the guidelines’ Section 27 stated.

“The FHC and/or its directors will face the relevant penalties, including monetary fines and administrative punishments, if they provide incorrect, misleading, or incomplete information to the CBN.

A director, manager, or officer of the FHC who violates one of these guidelines will face the relevant penalties, which may include financial fines and administrative actions against them.

In addition to the provisions of section 27.3, a director, manager, or officer of the FHC faces a six-month suspension in the first instance and possible dismissal from the board or from employment with the FHC if the violation persists.