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The Central Bank of Nigeria (CBN) which stated this, noted that the directive would help foster good corporate governance in the banking industry.
To this end, the banking sector regulator in its “Code of Corporate Governance for Banks and Discount Houses in Nigeria” stressed the need for robust disclosures beyond the statutory requirements in the Bank and Other Financial Institutions Act (BOFIA) 1991 as amended and other applicable laws.
It stated that disclosure in the annual report should 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; amongst other.
For board and executives members, the central bank also stressed the need to ensure disclosure in total non-executive directors' remuneration, including fees, allowances, etc; total executive compensation, including bonuses paid/payable; details and reasons for share buy-backs, if any, during the period under review; among others.
“Effective corporate governance practices provide a structure that works for the benefit of stakeholders by ensuring that the enterprise adheres to accepted ethical standards and best practices as well as formal laws.
“A country’s economy depends on the safety and soundness of its financial institutions. Thus the effectiveness with which the boards of financial institutions discharge their responsibilities determines the country’s competitive position.
“They must be free to drive their institutions forward, but exercise that freedom within a framework of transparency and effective accountability. This is the essence of any system of good corporate governance,” it added.
In order to effectively perform its oversight function and monitor management’s performance, the new code which would become effective this October, states that the board shall meet at least once a quarter.
It also stated that every director is required to attend all meetings of the board and board committees.
In order to qualify for re-election, a director must have attended at least two-thirds of all board and board committee meetings.
The board shall disclose, in the corporate governance section of the annual report, the total number of board meetings held in the financial year and attendance by each director.
According to the CBN, corporate governance has received increased attention because of high-profile scandals involving abuse of corporate power and, in some cases, alleged criminal activity by corporate officers.
“Returns on the status of each institution’s compliance with the code shall be rendered to the CBN at the end of every quarter or as may be specified from time to time by the CBN.
“Failure to comply with the code will attract appropriate sanctions in accordance with Section 60 of BOFIA 1991 as amended or may be specified in any applicable legislation or regulation,” it added.