Any investor looking to acquire up to 5% of any bank in Nigeria will need to obtain prior approval and no objection from the central bank.
This is according to section 20.2 of the new Corporate Governance Guidelines for Commercial, Merchant, Non-Interest, and Payment Service Banks in Nigeria.
Classified under the protection of shareholder’s rights provisions, the new regulations attempts to also address recent events in the capital market affecting some commercial banks.
The regulation also stated that no one can own controlling stake in more than one bank, except there was a prior approval of the apex bank.
The new regulation also states that where the central bank has an objection to any of the acquisition, the notice of the objection must be communicated to the bank. The bank then has 48 hours to notify
The protection of shareholders rights regulation also extends to government ownership of banks, which it states should not exceed more than 10% (direct and indirect) for a maximum of 5 years.
For existing investments above five years, the central bank also gave government two years from the effective date of the Guidelines to comply with the provision.
The central bank regulation also addresses Financial Holding Companies (FHC), and activities around mergers and acquisitions.
According to the regulation, no director or shareholder can change control of a bank without the prior approval of the bank. It also does not allow the transfer of 5% and above of a bank to any shareholder without the prior approval of the CBN.
No FHC or any of its director, shareholder or agent shall enter into an agreement which
results in a change of control of the holding
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