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CBN issues new governance guidelines

21 May 2014, 09:29

Abuja - The Central Bank of Nigeria has released a new set of corporate governance guidelines for all banks operating in the country.

It said this was part of efforts to sanitise the banking sector.

Part of the new guidelines stipulate that all banks  shall henceforth disclose the remuneration package of their board members in their annual reports.

The guideline also prohibited investors from owning more than five stakes in any bank without prior approval from the central bank.

According to the guidelines, both federal and state governments are now barred from holding more than a 10 percent stake in any bank.

Part of the new directive reads: “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."

The CBN, in the new code,  also directed banks to formulate whistle-blowing policy, which must be made known to employees and stakeholders.

It asked banks to render reports on quarterly basis on compliance with regards to whistle-blowing policies.

“Banks shall have a whistle blowing policy made known to employees and other stakeholders. The policy shall contain mechanisms, including assurance of confidentiality, that encourage all stakeholders to report any unethical activity to the bank and/or the CBN."

Justifying the need for the new code of corporate governance, the CBN noted that the existing code of corporate governance was reviewed because of the need to update it in order to align it with contemporary developments and international best practices.

The apex bank said corporate governance has received increased attention because of high-profile scandals involving abuse of corporate power and, in some cases, criminal activities by corporate officers.

The new code is expected to become effective from October 1.

- CAJ News

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