CBN man­dates bureau de change to have board of di­rec­tors, bars govern­ment, MDAs from eq­uity own­er­ship

Business a.m. - - FINANCE & INVESTMENT - Ades­ola Afo­labi

NEW CODE OF COR­PO­RATE gover­nance re­leased last week by the Cen­tral Bank of Nige­ria (CBN) has made it manda­tory for bureau de change (BDC) firms to have boards of di­rec­tors.

Ac­cord­ing to a cir­cu­lar signed by Kevin N Amugo, di­rec­tor, fi­nan­cial pol­icy and reg­u­la­tion de­part­ment of the CBN ad­dressed to all other fi­nan­cial in­sti­tu­tions in Nige­ria, the board of di­rec­tors of a BDC must have at least a min­i­mum of three and max­i­mum of five mem­bers. The code also stip­u­lates re­quire­ments guid­ing eq­uity own­er­ship of BDCs, stat­ing, “no govern­ment, min­istry, de­part­ment or agency shall have di­rect and/or in­di­rect eq­uity hold­ing in any BDC.”

Adding that “ex­cept as ap­proved by the CBN, no in­di­vid­ual, group of in­di­vid­u­als, their prox­ies or cor­po­rate en­ti­ties and/or their sub­sidiaries shall own con­trol­ling in­ter­est in more than one BDC.

High­light­ing the com­po­si­tion of the board as well as an ar­ray of re­spon­si­bil­i­ties, rights and man­age­ment re­quire­ments, the CBN noted that BDCs should have only one ex­ec­u­tive di­rec­tor who will also take the po­si­tion of the MD/CEO.

Bureaux de change are fi­nan­cial in­sti­tu­tions li­censed to carry on small-scale for­eign ex­change busi­ness on a stand-alone ba­sis in Nige­ria, serve as tools for the man­age­ment of ex­change rate and pro­vide eco­nomic data for mon­e­tary pol­icy de­ci­sions.

Ac­cord­ing to the CBN, their ac­tiv­i­ties im­pact on ex­change rates; hence BDCs are im­por­tant play­ers in the money mar­ket.

The CBN also noted that the new code is “to fur­ther strengthen the in­sti­tu­tions and re­po­si­tion them to per­form their statu­tory roles.

The code will also serve as a com­ple­ment to ex­tant op­er­a­tional guidelines and reg­u­la­tions on BDC busi­ness.

As part of the re­quire­ments for ap­point­ing the board, the CBN noted that like banks, “mem­bers of the board of di­rec­tors shall be ap­pointed by the share­hold­ers and ap­proved by the CBN.”

The apex bank fur­ther stated that for remuneration, “MD/CEO shall not re­ceive sit­ting al­lowances and Di­rec­tors’ fees. Non-Ex­ec­u­tive Di­rec­tors’ (NEDs) remuneration shall be lim­ited to di­rec­tors’ fees, sit­ting al­lowances for board meet­ings and re­im­bursable travel and ho­tel ex­penses.

NEDs shall not re­ceive salaries and ben­e­fits whether in cash or in kind, other than those men­tioned above.”

These re­quire­ments along­side sev­eral oth­ers listed on the pub­li­cised code will be ef­fec­tive from December 1st 2018, the CBN noted.

Eme­fiele

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