The Central Bank of Nigeria, released a new code of corporate governance and whistleblowing guidelines for Deposit Money Banks and discount houses.
In the 40-page code of corporate governance, which will become effective from October 1, 2014, the CBN barred governments from holding more than 10 per cent stake in any bank.
The CBN also directed banks to henceforth disclose the remuneration package of the board members in their annual reports.
It prohibited investors from owning more than five stakes in any bank without prior approval from the central bank.
The document obtained from the central bank’s website read in part, “An equity holding of five per cent and above by any investor shall be subject to the CBN’s prior approval. Where such shares are acquired through the capital market, the bank shall apply for a no objection letter from the CBN immediately after the acquisition. In order to discourage government(s) from having majority shareholding in banks, government(s) direct and indirect equity holding in any bank shall be limited to 10 per cent.”
The last code of corporate governance was issued in March 2006 shortly after the banking sector consolidation of 2005. The 40-page document was posted on the CBN’s website on Tuesday.
According to the CBN, 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 central bank recalled that poor corporate governance practice in banks that had led to the removal of five chief executive officers of banks during the banking sector crisis of 2009.
Justifying the need for the new code of corporate governance, the CBN further 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.
It also stated, “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 of corporate governance, 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.
The document stated, “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.
( Courtesy Business News, Punch & AGENCIES …… Source ………. Our Freelance Contributor in Lagos)