As part of its efforts to sanitise the banking sector, the Central Bank of Nigeria, CBN, has issued a new set of corporate governance guidelines for every bank in the country.
As contained in the new guideline, investors are now prohibited from owning more than five per cent stakes in any bank without prior approval of the Central Bank. Similarly, both federal and state governments are now restricted from holding more than 10 per cent stakes in banks.
Also in the new directive, all banks are required to disclose the remuneration package of their board members in their annual reports and they are to formulate whistle-blowing policy, which must be made known to all employees and stakeholders.
This, the apex bank believes, would encourage all stakeholders to report any unethical activity to the bank and/or the CBN.
A section of the new directive states that “Disclosure in the annual report shall include, but not limited to, material information on major items that have been estimated in accordance with applicable accounting and auditing standards; rationale for all material estimates; details on directors-the bank’s remuneration policy for members of the board and executives; total Non-EDs’ remuneration, including fees, allowances.”
In compliance with regards to the whistle-blowing policy, the CBN also demands that all Nigerian banks render reports on quarterly basis.
Substantiating the rationale behind the new code of corporate governance, the CBN explained that the existing code was reviewed in order to update and align it with contemporary developments and international best practices.
The new CBN code takes effect from October 1.