The Bank of Ghana has renewed the enforcement of the new corporate governance rules for banks and specialized deposit taking institutions as it works to sanitize the financial sector.
As a result, it has directed all affected institutions (i.e. those in existence as at March 2018), to ensure compliance else face sanctions.
Part of the transitional directives is that from January 1st 2019, a Managing Director of any financial institution who has served eight years, will not be allowed an extension of tenure.
Also, a Board Chair who has served for six years or above, will be compelled to lay down the position from the said date.
According to the Bank of Ghana, its enforcement of the directives on the tenure of Managing Directors, Board Chairs as well as non-Executive Directors will follow the expiration of the nine months grace period offered to banks, which is between March and December 2018.
Aside the Managing Director and the Board Chairman, a non-Executive Director of a bank who has served for nine years, shall not be allowed an extension after December 31st, 2018.
However, the tenure of a person occupying any of such three positions in a bank which has not elapsed, will continue until the full term is reached.
This means that a Managing Director who has served six years by January 1st, 2019 will have two more years to end his tenure.
Likewise, a Board Chair or non-Executive Director who has served three or six years by January 1st 2019, will each have three more years to end the tenure respectively.
Meanwhile, all banks will have to still file for the yearly certification as required by law.
The transitional directives follows the implementation of the new corporate governance rules introduced by the Bank of Ghana in March in 2018.
Amongst others, the corporate governance rules is to ensure separation of powers, control of loans and advances as well as limit the tenure of office of CEOs, Board Chairs as well as non-Executive Directors of banks and specialized deposit taking institutions.
Even though majority of the directives spelt out in the corporate governance rules took immediate effect, the central bank says it is allowing at least nine months for banks to adjust to eight key aspects on corporate governance.