The Central Bank of Nigeria has restricted the acquisition of controlling stakes in financial holding companies in the country in its corporate governance guidelines.
The CBN said this in a circular to all commercial, merchant, non-interest and payment service banks, and financial holding companies titled ‘Corporate Governance Guidelines’, and signed by the Director, Financial Policy and Regulation Departmen, Chibuzo Efobi,.
The new guidelines stated that investors would need prior approval from the CBN before they could acquire majority stakes in holdcos.
In Section 19, which dealt with the protection of shareholders, the new guideline said, “Except where prior approval of the CBN is granted, no individual, group of individuals, their proxies or corporate entities shall own controlling interest in more than one FHC.
“Except with the prior written approval of the CBN, no FHC or any of its director, shareholder or agent shall enter into an agreement which results in: a change in the control of the FHC, the transfer of shareholding of five per cent and above in the FHC; and/or an increase in shareholding to five per cent or more in the FHC.
“Provided that CBN’s prior approval and No Objection shall be sought and obtained, before any acquisition of shares of an FHC by an investor (including through the capital market), that would result in equity holding of five per cent and above: the sale, disposal or transfer of the whole or any part of the business of the FHC; the acquisition or merger of the FHC; the reconstruction of the FHC; or the employment of a management agent, management by or transfer of its business to any such agent.”
The section also added that subsidiaries of an FHC were prohibited from acquiring shares in its FHC and/or other subsidiaries within the Group.
According to the CBN, the new rules were meant for commercial, merchant, non-interest, and payment services banks in Nigeria; and the Corporate Governance Guidelines for Financial Holding Companies in Nigeria.