The Central Bank of Nigeria (CBN) has released code of corporate governance for Microfinance Bank (MFBs), Development Finance Banks (DFBs), Finance Institutions (FIs) and Bureau de Change operators (BDCs). Full implementation of the code becomes effective from April 1, 2019.
Release of the codes is coming more than a year after the apex bank issued exposure draft on the codes of corporate governance for Other Financial Institutions (OFIs) in Nigeria on February 27, 2017. The CBN said it had received comments which were incorporated into the final code that was released yesterday.
In a circular signed by its director, Financial Policy and Regulation Department, Kevin Amugo, the CBN said it had released the code for MFBs, DFBs, BDCs, Finance Companies (FCs), Mortgage Refinance Companies and Primary Mortgage Banks (PMBs) in pursuant to the provisions of sections 33 subsection (1) (b) of the CBN Act No. 7 of 2007, and sections 57, 61-63 of the Banks and Other Financial Institutions Act (BOFIA) of 1991.
The code covers issues ranging from board to shareholders and stakeholders. It also addresses disclosure, transparency, risk management, ethics, professionalism as well as conflict of interest with the institutions required to render returns on compliance twice a year.
According to the document released, the code takes effect from December 1, 2018 while full implementation is effective April 1, 2019. Failure to comply with the Code, the CBN said “will attract appropriate sanctions in accordance with section 64 BOFIA Cap B3 Laws of the Federation of Nigeria (LFN) 2004 or as may be specified in any applicable legislation or regulation.”
The CBN noted that poor governance practices and gross insider abuses had been a major factor in some MFBs becoming insolvent in 2014. It said the code had become pertinent to strengthen corporate governance practices in MFBs in Nigeria.
The objectives of the Code according to the CBN are to define minimum acceptable corporate governance standards for all licensed MFBs in Nigeria, promote high ethical standards among operators; and enhance public confidence in MFBs in Nigeria.
Also it said the activities of BDCs impact exchange rates in the country as they serve as tools for the management of exchange rate and provide economic data for monetary policy decisions. “In 2014, the Central Bank of Nigeria observed some deficiencies in the operational effectiveness of BDCs which militate against the achievement of their objectives.
“To address this challenge, the CBN commenced the reform of the sub-sector and issued revised guidelines which, among others, reviewed upwards the minimum capital requirement for BDCs. To further strengthen the institutions and reposition them to perform their statutory roles, the CBN hereby issues the Code of Corporate Governance for BDCs in Nigeria to complement extant operational guidelines and regulations on BDC business.
“The Operational Guidelines for Finance Companies in Nigeria was revised in 2014 as part of initiatives to establish financial stability as well as reposition the finance company sub-sector for greater effectiveness in the financial sector landscape.
“To complement these efforts, the CBN hereby issues the Code of Corporate Governance for Finance Companies. The Code is expected to enhance good governance practices, engender public confidence to attract investments and promote efficiency and transparency in the sub-sector.
Based on the code, the size of the board of BDCs has been limited to a minimum of three and a maximum of five, while that of FC shall be limited to a minimum of five and a maximum of nine with more than fifty per cent of board membership comprising non-executive directors (NEDs).
The board of DFIs is being limited a minimum of seven and a maximum of 11 or in accordance with the Act establishing the institution, while for MFBs, the minimum and maximum number of Directors on the boards of MFBs shall be five and seven for Unit MFBs; five and nine for State MFBs; and seven and 12 for National MFBs, respectively.
Every Woman Is A Queen – Mary Kanu
Mary Kanu is the brain behind the fast growing beauty home Mauchiqueen Beauty Planet. She speaks with MILLICENT AREBUN ONUOHA...
I Break Barriers To Succeed – Fatima
Fatima Yusuf Giwa from Akwanga local government area of Nasarawa State is the last child of her family. She was...
Internet Fraudsters Riding Roughshod On Nigerian Music’s Image
SAMUEL ABULUDE writes on Nigerian music, its charm, essence and need to rid it off internet fraudsters and bad image....
We Have No Proper Entertainment Arena In Nigeria – Eddie Madaki
Eddie Madaki is an actor, event promoter and planner and one of the first contestants of popular Tv. show, Gulder...
Producing Iron Ore, Phosphate Locally
The Ministry of Mines and Steel Development recently played host to a delegation from two banks and another from a...
Lagos School Where Students Learn In Tears
It was a moment of emotional outbursts as students of Ojota Junior Secondary School, Ojota, Lagos State, relive their efforts...
NEWS15 hours ago
Adamawa Rerun: Don’t Disobey Court Order, Ardo Tells INEC
BANKING AND FINANCE24 hours ago
FCMB Empowers More SME Customers
LAW15 hours ago
Supreme Court Nullifies APC’s Candidates Elections In Zamfara
AVIATION16 hours ago
Aviation Union Suspends Strike, Reopens NCAA Offices
BUSINESS24 hours ago
Equities Market Retains Positive Outlook With 1.07% Gain
BUSINESS23 hours ago
NNPC To Conduct Computer-Based Test For Applicants June 1
POLITICS23 hours ago
News Of Non-payment Of Salaries In Kogi Fake – Oseni
INTERVIEWS22 hours ago
Until We Restructure Nigeria, It Won’t Grow – Prince Momoh