Code of Corporate Governance for Primary Mortgage banks in Nigeria

Tel: 09-46237401 E-mail:fprd@cbn.gov.ng FPR/DIR/CIR/GEN/07/017 CENTRAL BANK OF NIGERIA Financial Policy and Regulation Department Central Business District P.M.B. 0187 Garki, Abuja.

October 26, 2018 CIRCULAR TO ALL OTHER FINANCIAL INSTITUTIONS IN NIGERIA CODES OF CORPORATE GOVERNANCE FOR OTHER FINANCIAL INSTITUTIONS IN NIGERIA The CBN on February 27, 2017 issued the Exposure Draft on the Codes of Corporate Governance for Other Financial Institutions in Nigeria, and comments received from stakeholders subsequent thereto had been incorporated in the Guidelines as appropriate.

Pursuant to the provisions of Sections 33 subsection (1) (b) of the CBN Act No.7 of 2007; and Sections 57, 61- 63 of the Banks and Other Financial Institutions Act (BOFIA) of 1991 (as amended), the CBN hereby issues the Codes of Corporate Governance in respect of the under-listed six Other Financial Institutions:

1. Microfinance Banks 2. Development Finance Banks 3. Primary Mortgage Banks 4. Mortgage Refinance Companies 5. Finance Companies 6. Bureaux De Change Relevant institutions are required to ensure strict compliance with their respective sector code. The full implementation of the codes shall come into effect from April 1, 2019.

Thank you.

KEVIN N. AMUGO DIRECTOR, FINANCIAL POLICY AND REGULATION DEPARTMENT CENTRAL BANK OF NIGERIA CODE OF CORPORATE GOVERNANCE FOR PRIMARY MORTGAGE BANKS IN NIGERIA ISSUE DATE: OCTOBER 24, 2018 EFFECTIVE DATE: APRIL 01, 2019

CODE OF CORPORATE GOVERNANCE FOR PRIMARY MORTGAGE BANKS IN NIGERIA
CONTENTS
	INTRODUCTION
1.0
1.1	Application .
2.0	BOARD AND MANAGEMENT
2.1	Responsibilities of the Board and Management
2.2	Board size and composition
2.3	Separation of powers of the board .
2.4	Board Appointment and Tenure
2.5	Board Committees.
2.6	Board/Board Committees Meetings .
2.7	Remuneration.
2.8	Board Appraisal .
3.0	SHAREHOLDERS
	Rights and Functions of Shareholders' .
3.1
3.2	Equity Ownership
3.3	Protection of Shareholders' Rights.
	General Meetings
3.4
3.5	Shareholders' Associations
4.0	RIGHTS OF OTHER STAKEHOLDERS.
5.0	DISCLOSURE AND TRANSPARENCY .
5.1	Disclosure
5.2	Transparency and Integrity in Reporting .
5.3	Appointment and Responsibilities of Chief Compliance Officer
5.4	Appointment and Responsibilities of External Auditors .
5.5	Whistle Blowing .
6.0	RISK MANAGEMENT
7.0	ETHICS & PROFESSIONALISM AND CONFLICT OF INTEREST .
7.1	Ethics and Professionalism
7.2	Conflict of Interest.
8.0	COMPLIANCE.
9.0	SANCTIONS .
	EFFECTIVE DATE.
10.0

1.0 Introduction

Corporate Governance assumed heightened supervisory importance in the Nigerian Banking Industry following the issuance of the Code of Corporate Governance for Banks and Discount Houses by the Central Bank of Nigeria in 2006. This was to address the issue of poor governance practices in the banks, which contributed to the failure of most of the banking institutions. Neither the 2006 Code nor its subsequent review in 2014 prescribed governance requirements specific to Other Financial Institutions (OFIs). The non-existence of specific codes for this category of institutions contributed to governance weaknesses experienced in many of the institutions in recent times. The intent of this code, therefore, is to entrench good corporate governance in Primary Mortgage Banks (PMBs) in view of the fact that the safety and soundness of a financial institution depends on the effectiveness of the board of directors' in discharging their oversight functions. The objectives of the Code are to: a) Define minimum acceptable corporate governance standards for all licensed PMBs in Nigeria; b) Promote high ethical standards among operators; and c) Enhance public confidence in PMBs in Nigeria.

1.1 Application

The code shall apply to all licensed PMBs in Nigeria.

2.0 Board And Management 2.1 Responsibilities Of The Board And Management

2.1.1 The Board shall be accountable and responsible for the performance and affairs of the PMB. Specifically, and in line with the provisions of the Companies and Allied Matters Act (CAMA) 1990 (as amended), Directors owe the PMB the duty of care and loyalty and to act in the interest of the PMB's shareholders and other stakeholders.

2.1.2 Members of the Board are severally and jointly liable for the activities of the PMB.

2.1.3 The Board shall define and document the PMB's strategic goals, approve its long and short-term business strategies and monitor their implementation by management.

2.1.4 The Board shall determine the skills, knowledge and experience that members require which shall, at the minimum, be in line with the requirements of the Approved Persons Regime.

2.1.5 The Board shall ensure that its human, material and financial resources are effectively deployed towards the attainment of set goals of the PMB.

2.1.6 The Board shall appoint the CEO as well as top management staff and establish a framework for the delegation of authority in the PMB, which shall comply with extant regulations issued by the CBN from time to time.

2.1.7 The Board shall establish and monitor agreed performance targets for the management.

2.1.8 The Board shall set limits of authority, specifying the threshold for large transactions which it must approve before they take place.

2.1.9 The Board shall ensure that a succession plan is in place for the MD/CEO, executive directors and management staff of the PMB.

2.1.10 The Board shall consider, approve and monitor the implementation of the PMB's budget, including setting expenditure limits for management and Board Committees.

2.1.11 The Board shall approve credit facilities in line with the approved limits of authority of the PMB.

2.1.12 The Board shall ensure strict adherence to the Code of Conduct for Directors of Banks and Other Financial Institutions in Nigeria.

2.2 Board Size And Composition

2.2.1 The minimum number of Directors on the boards of PMBs shall be seven (7) and a maximum of twelve (12) for both State and National PMBs.

2.2.2 Members of the Board shall be persons of proven integrity and shall meet the requirements of the Revised Assessment Criteria of Approved Persons Regime. At least two (2) members of the Board of Directors other than the Executive Directors shall be required to have banking or related financial industry experience.

2.2.3 The Board shall consist of Executive and Non-Executive Directors. The number of Non-Executive Directors shall be more than that of Executive Directors.

2.2.4 The Board of a State PMB shall comprise at least one (1) Independent Non-Executive Director (INED) while that of a National PMB shall comprise a minimum of two (2) INEDs. An Independent Director is a member of the Board of Directors who has no direct material relationship with the PMB or any of its officers, major shareholders, subsidiaries and affiliates.

2.3 Separation Of Powers Of The Board

2.3.1 The positions of the Board Chairman and the Managing Director/Chief Executive Officer (MD/CEO) shall be separate. No one person shall combine the two positions in any PMB at the same time. For the avoidance of doubt, no executive Vice Chairman shall be allowed in the Board structure.

2.3.2 Not more than two members of a family shall be on the board of a PMB at the same time. The expression 'family' includes director's spouse, parents, children, siblings, cousins, uncles, aunts, nephews, nieces and in-laws.

2.3.3 Where the PMB is a member of a holding company, not more than two family members shall be allowed to serve on the Boards of the PMB and the holding company.

2.3.4 No two members of a family shall occupy the positions of Chairman and MD/CEO or Executive Director of the PMB and Chairman or MD/CEO of a PMB's subsidiary at the same time.

2.4 Board Appointment And Tenure

2.4.1 Members of the Board of Directors shall be appointed by the shareholders and approved by the CBN.

2.4.2 Procedure for appointment to the Board shall be formal, transparent and documented in the board charter.

2.4.3 To qualify for the position of a Non-Executive Director, it is required that the nominee shall not be an employee of a bank or other financial institution, except where the PMB is promoted by the bank or other financial institution and the proposed director is representing the interest of such an institution.

2.4.4 The appointment to the Board of PMBs shall be in accordance with extant regulations issued by the CBN from time to time.

2.4.5 To ensure continuity and injection of fresh ideas, Non-Executive Directors of PMBs shall serve for a maximum of three (3) terms of four (4) years each.

2.4.6 The term of office of an Independent Director shall be 4 years for a single term and a maximum of 8 years of two consecutive terms if reelected upon the expiration of the first term.

2.4.7 Track record of appointees shall be an additional eligibility requirement.

Such records shall cover both integrity and past performance, in accordance with the extant CBN Guidelines.

2.4.8 The tenure of the MD/CEO shall be in accordance with the terms of engagement subject to a maximum period of ten (10) years. Such tenure shall be limited to periods not exceeding five (5) years at a time. Any person who has served as MD/CEO for the maximum tenure (of ten years) in a PMB shall not qualify for appointment in any capacity in the same PMB or its subsidiaries until after a period of three (3) years after the expiration of his tenure as MD/CEO.

2.4.9 Where the PMB is a member of a Group or is owned by another financial institution, a director in the PMB may be allowed to serve on the Boards of the PMB and its holding company at the same time, provided the aggregate number of directors from the subsidiaries and associates at any point in time shall not exceed 30 per cent of the membership of the Board of Directors of the holding company.

2.4.10 To enhance effectiveness, all Directors shall have access to corporate information under conditions of confidentiality; undergo training and continuing education and have access to independent professional advice.

2.5 Board Committees 2.5.1 The Board shall establish at a minimum the following Committees: a. Risk Management Committee b. Audit Committee c. Board Governance and Nominations Committee d. Board Credit Committee The functions of Risk Management and Audit Committees may be carried out by one committee for a State PMB. This is without prejudice to the requirements of CAMA 1990 (as amended) on the Statutory Audit Committee which is not a Board Committee. Each PMB shall have a Risk Officer and Internal Auditor who shall report directly to the Committee(s) responsible for Risk Management and Audit function(s).

2.5.2 Where there is a Remuneration Committee in addition to the four Committees prescribed in Section 2.5.1, the membership shall comprise NEDs only. Where both Committees (Remuneration Committee and Governance & Nominations Committee) are combined, its membership shall be drawn only from NEDs.

2.5.3 The Remuneration Committee shall determine the remuneration of Executive Directors and management.

2.5.4 The Board and its Committees shall each have a charter to be approved by the CBN. The charter shall be reviewed every three (3) years or as may be determined by the CBN from time to time.

2.5.5 The Chairman of the Board shall not be a member of any Board Committee.

2.5.6 All Board Committees shall be headed by Non-Executive Directors. 2.5.7 The Board Audit Committee (BAC) shall have unrestricted access to the financial records of the PMB including external auditors' reports.

2.5.8 The MD/CEO and other Executive Directors (EDs) shall not be members of the BAC.

2.5.9 The Board Credit Committee shall comprise members knowledgeable in credit analysis.

2.5.10 The Board shall not replace members of the BAC and External Auditors at the same time.

2.6 Board/Board Committees Meetings

2.6.1 To effectively perform its oversight function and monitor management's performance, the Board and each of the Board Committees shall meet at least once every quarter.

2.6.2 Minutes of meetings of the Board/Board Committees shall be properly written in English language, adopted and signed off by the Board/Committee Chairman and Secretary, pasted in the minutes book and domiciled at the PMB's Head Office.

2.6.3 Every Director is required to attend all meetings of the Board, and Board Committees in which he is a member. In order to qualify for re-election, a Director must have attended at least two-thirds of all Board and Board Committee meetings in a financial year.

2.6.4 The Board shall disclose, in the Corporate Governance Section of the Annual Report, the total number of Board and Board Committee meetings held in the financial year and attendance by each Director.

2.6.5 Board/Board Committee meetings shall be deemed to be duly constituted where two-third of members are present, provided that a majority of Non-Executive Directors are present at the meeting.

2.7 Remuneration

2.7.1 PMBs shall align executive and Board remuneration with the long term interests of their institutions and their shareholders.

2.7.2 Levels of remuneration should not be excessive but sufficient to attract, retain and motivate executive officers, management and members of staff of the PMB.

2.7.3 Where remuneration is linked to performance, it shall be designed in such a way as to prevent excessive risk taking.

2.7.4 Every PMB shall have a remuneration policy put in place by the Board of Directors, which shall be disclosed to the shareholders in the annual report.

2.7.5 The MD/CEO and other Executive Directors shall not receive sitting allowances and Directors' fees.

2.7.6 Non-Executive Directors' (NEDs) remuneration shall be limited to Directors' fees, sitting allowances for Board and Board Committee 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.

2.7.7 Where share options are adopted as part of executive remuneration or compensation, the Board shall ensure that the share options are not priced at a discount except with the prior authorization of the relevant regulatory agencies.

2.7.8 Share options shall be tied to performance and subjected to the approval of the shareholders at Annual General Meetings (AGMs).

2.7.9 Share options shall not be exercisable until one year after the expiration of the tenure of the Director.

2.7.10 PMBs shall disclose in their annual reports, details of the shares held by Directors and their related parties.

2.8 Board Appraisal

2.8.1 There shall be annual Board and Directors' appraisal covering all aspects of the Board's structure, composition, responsibilities, processes relationships and performance or as may be prescribed by the CBN.

2.8.2 The annual Board appraisal shall be conducted by an independent consultant. The report shall be presented to shareholders at the AGM and a copy forwarded to the CBN by the independent consultant, not later than March 31 of the following year.

3.0 Shareholders 3.1 Rights And Functions Of Shareholders'

3.1.1 Shareholders shall have the right to obtain relevant and material information from the PMB on a timely and regular basis.

3.1.2 Shareholders shall have the right to participate actively and vote in general meetings.

3.1.3 In addition to the traditional means of communication, PMBs are encouraged to have a website and communicate with shareholders via the website, newsletters, Annual General Meetings (AGMs) and/or Extraordinary General Meetings (EGMs). Such information shall include major developments in the PMB, risk management practices, executive compensation, branch expansion, investments, Board and top management appointments, sustainability initiatives and practices, and any other relevant information.

3.2 Equity Ownership

3.2.1 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 (1) PMB.

3.2.2 An equity holding of 5% and above by any investor shall be subject to CBN's prior approval. Where such shares are acquired through the capital market, the PMB shall apply for a No Objection Letter from the CBN immediately after the acquisition.

3.3 Protection Of Shareholders' Rights

3.3.1 Every shareholder shall be treated fairly. 3.3.2 The Board shall ensure that minority shareholders are adequately protected from overbearing influence of controlling shareholders.

3.3.3 The Board shall ensure that the PMB promptly provides to shareholders documentary evidence of ownership interest in the PMB such as share certificates, dividend warrants and related instruments. Where these are rendered electronically, the Board shall ensure that they are sent in a secure manner.

3.4 General Meetings

3.4.1 Notice of general meetings shall be as prescribed by the Companies and Allied Matters Act (CAMA) 1990 (as amended).

3.4.2 The Board shall ensure that all general meetings of shareholders hold at a convenient and easily accessible venue to the majority of shareholders.

3.4.3 The Board shall ensure that unrelated issues for consideration are not lumped together at general meetings. Statutory business shall be clearly and separately set out. Separate resolutions shall be proposed and voted on each substantial issue.

3.4.4 The Board shall ensure that decisions reached at general meetings are properly documented and fully implemented.

3.5 Shareholders' Associations

3.5.1 The Board shall ensure that dealings of the PMB with shareholders' associations are in strict adherence with the Code for Shareholders' Associations issued by the Securities and Exchange Commission (SEC). Where a PMB is not listed, its dealings with the Association shall be transparent and in line with the relevant governance codes.

4.0 Rights Of Other Stakeholders

4.1 Stakeholders shall have the right to freely communicate their concerns about illegal or unethical practices to the Board. Where such concerns border on the activities of the Board, such individuals shall have recourse to the CBN Whistle Blowing Guidelines.

4.2 Where stakeholder interests are protected by law, stakeholders shall have the opportunity to obtain effective redress for violation of their rights.

4.3 PMBs shall demonstrate good Corporate Social Responsibility (CSR) to their stakeholders such as customers, employees, host communities, and the general public.

5.0 Disclosure And Transparency 5.1 Disclosure

5.1.1 In order to foster good corporate governance, PMBs are encouraged to make timely, accurate and robust disclosures beyond the statutory requirements in BOFIA 1991 (as amended), CAMA 1990 (as amended), and other applicable laws, regulations and standards.

5.1.2 Disclosure in the annual report shall include, but not limited to, material information on: a) Major items that have been estimated in accordance with applicable accounting and auditing standards.

b) Rationale for all material estimates. c) Details on Directors: i. The PMB's remuneration policy for members of the Board and Executives; ii. Total NEDs remuneration including fees, allowances; iii. Total Executive compensation, including bonuses paid/payable; iv. Details and reasons for share buy-backs, if any, during the period under review; v. Board of Directors' performance evaluation; and vi. Details of Directors, shareholders and their related parties who own 5% and above of the PMB's shares as well as other shareholders who, in conjunction with others, control the PMB.

d) Corporate governance: i. Governance structure; and ii. Composition of Board Committees including names of chairmen and members of each Committee.

E) Risk Assets:

i. Concentration of assets, liabilities and off-balance sheet engagements by sector, geography, and product.

ii. Loan quality. iii. Lending/borrowing to/from subsidiaries and associates. iv. Loans and advances/funding or commitment lines from institutions outside Nigeria.

v. Related party transactions.

vi. Insider-related credits in accordance with the extant CBN circular.

F) Risk Management:

i. All significant risks; and ii. Risk management practices indicating the Board's responsibility for the entire process of risk management as well as a summary of external auditors' observed lapses thereon.

g) Information on strategic modification to the core business. h) All regulatory/supervisory contraventions during the year under review and infractions uncovered through whistle blowing, including regulatory sanctions and penalties.

i) Capital Structure/Adequacy. j) Any service contracts and other contractual relationships with related parties.

k) Frauds and Forgeries. l) Contingency Planning Framework. m) Any matter not specifically mentioned in this code but which is capable of affecting in a significant form, the financial condition of the PMB or its status as a going concern.

5.2 Transparency And Integrity In Reporting

5.2.1 PMBs shall have a structure to independently verify and safeguard the integrity of their financial reporting, which shall: i. Entail the review and consideration of the financial statements by the BAC; and ii. Enhance the independence and competence of the Institution's external auditors.

5.2.2 The BAC shall be structured in such a way that it: i. has at least three members.

ii. consists of NEDs; iii. is chaired by an INED.

5.2.3 The BAC shall be independent and possess technical expertise to discharge its mandate effectively.

5.2.4 The BAC shall include members who are financially literate (that is, be able to read and understand financial statements). At least one of the members shall have relevant qualifications and experience (that is, shall be a qualified accountant or other finance professional with experience in finance and accounting matters).

5.2.5 The BAC shall review the integrity of the PMB's financial reporting and oversee the independence of the external auditors.

5.2.6 The BAC shall meet at least once every quarter. Deliberations shall include at least consideration of the quarterly reports of the internal auditor. All audit queries shall be investigated and resolved promptly.

5.2.7 Every PMB shall have a Chief Compliance Officer (CCO) whose responsibility shall include monitoring compliance with the corporate governance code and Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) requirements.

5.2.8 The office of the CCO and that of the Internal Auditor may be combined in a State and National PMB.

5.3 Appointment And Responsibilities Of Chief Compliance Officer

5.3.1 The appointment and removal of the Chief Compliance Officer/Head of Internal Audit shall be the responsibility of the Board subject to CBN's ratification. The CBN must be notified of any change and reasons thereof, within fourteen (14) days of such change. The Head of Internal Audit shall report directly to the Board Audit Committee.

5.3.2 The qualification and experience of the Chief Compliance Officer/Head of Internal Audit shall be in accordance with the provisions of extant regulations issued by the CBN from time to time.

5.4 Appointment And Responsibilities Of External Auditors

5.4.1 Appointment of external auditors shall be approved by the CBN. 5.4.2 External auditors shall: i. render reports to the CBN on PMB's risk management practices, internal controls and level of compliance with regulatory directives.

ii. review the work of the internal auditor on each of the PMB's key risk elements to cover risk identification, measurement, monitoring and control.

iii. review compliance with policies and internal control procedures put in place by the Board to manage and mitigate the institution's risks.

iv. report on the level of each key risk element as well as the composite risk profile of the PMB and make recommendations to the Board to enhance the effectiveness of risk management processes in the PMB.

v. forward copies of their report to the CBN, together with the external auditor's management letter on the PMB's audited financial statements.

5.4.3 External auditors of PMBs shall not provide client services that shall amount to conflict of interest including the following: i. Book-keeping or other services related to the accounting records or financial statements of the audit client; ii. Appraisal or valuation services, fairness opinion or contribution-inkind reports; iii. Actuarial services; iv. Internal audit outsourcing services; and v. Management or human resource functions including broker or dealer, investment banking services and legal or expert services.

5.4.4 The tenure of auditors in a PMB shall be for a maximum period of ten (10) cumulative years after which the audit firm shall not be eligible for reappointment in the PMB until after a period of another ten (10) consecutive years.

5.4.5 An audit firm shall not provide audit services to a PMB if one of the PMB's top officials (Directors, top management, Chief Finance Officer, Chief Audit Officer) was employed by the firm and worked on the PMB's audit during the immediate past two (2) years.

5.4.6 The MD/CEO of a PMB shall certify in the statutory returns submitted to the CBN that he/she has reviewed the reports, and that based on his/her knowledge: i. The report does not contain any untrue statement of a material fact.

ii. The financial statements and other financial information in the report, fairly represent, in all material respects the financial condition and results of operations of the PMB as of, and for the periods presented in the report.

5.4.7 Rendition of false information to the CBN shall attract appropriate sanctions including monetary penalties and suspension of the MD/CEO for six (6) months in the first instance and possible removal. .

5.4.8 There shall be due process in all the procedures of PMBs. 5.4.9 All insider credit applications pertaining to directors and management staff and parties related to them, irrespective of size, shall be sent for consideration/approval to the Board Credit Committee.

5.4.10 Any director whose facility or that of his/her related interests remains nonperforming for more than one year shall cease to be on the board of the PMB and could be blacklisted from sitting on the board of any other financial institution.

5.4.11 The practice/use of anticipatory approvals by Board Committees shall be limited strictly to emergency cases only and ratified at the next board meeting.

5.4.12 No director-related credit facilities and/or interest thereon shall be written off without CBN prior approval.

5.5 Whistle Blowing

5.5.1 PMBs shall have a whistle-blowing policy, which shall be made known to employees and other stakeholders.

5.5.2 The policy shall contain mechanisms, including assurance of confidentiality, that encourage all stakeholders to report any unethical activity to the PMB and/or the CBN.

5.5.3 PMBs are required to submit returns on the compliance with the whistleblowing policy on a semi-annual basis to the Director, Other Financial Institutions Supervision Department, not later than 7 days after the end of the relevant period.

6.0 Risk Management

6.1 Every PMB shall have a risk management framework specifying the governance architecture, policies, procedures and processes for the identification, measurement, monitoring and control of the risks inherent in its operations.

6.2 The Board is responsible for the PMB's policies on risk oversight and management and shall satisfy itself that management has developed and implemented a sound system of risk management and internal control.

6.3 Risk management policies shall reflect the PMB's risk management mandate, which shall include: (i) Clear objectives and enterprise-wide authority for its activities; (ii) Risk philosophy, vision and mission; (iii) Authority to carry out its responsibilities independently; (iv) Scope of Enterprise Risk Management; (v) A requirement for it to be communicated throughout the organization to promote transparency; (vi) Periodic review to ensure continued appropriateness; (vii) A requirement for management to report regularly on the effectiveness of the institution's risk management processes and on its aggregate exposures compared to approved limits; and (viii) Authority to follow-up on action taken by management in response to identified issues and related recommendations.

6.4 PMBs shall disclose a summary of its risk management policies in its annual financial statements.

6.5 A PMB's risk management policy shall clearly describe the roles and responsibilities of the Board, Board Risk Management Committee (BRMC), management and internal audit function.

6.6 Boards of PMBs shall ensure that the framework provides for regular and independent reviews of the risk management policies and procedures as well as periodic assessment of the adequacy and effectiveness of the risk management function.

6.7 The composition of the BRMC shall include at least 2 NEDs and the Executive Director in charge of risk management.

7.0 Ethics & Professionalism And Conflict Of Interest 7.1 Ethics And Professionalism

7.1.1 To make ethical and responsible decisions, PMBs shall comply with their legal obligations and have regard to the reasonable expectations of their stakeholders.

7.1.2 PMBs shall establish a code of conduct and disclose in the code or a summary of the code such information as: i. The practices necessary to maintain confidence in the PMB's integrity; ii. The practices necessary to take into account their legal obligations and the reasonable expectations of their stakeholders; iii. The responsibility and accountability of individuals reporting and investigating reports of unethical practices.

7.1.3 The Code Should:

(a) Commit the PMB, it's Board, management and employees to the highest standards of professional behaviour, business conduct and sustainable business practices; (b) Be developed in collaboration with management and employees; (c) Receive commitment for its implementation from the Board and the Managing Director/Chief Executive Officer and individual Directors of the company; (d) Be sufficiently detailed as to give clear guidance to users including advisers, consultants and contractors; (e) Be formally communicated to the persons to whom it applies; and (f) Be reviewed regularly and updated when necessary.

7.1.4 Where applicable, PMBs shall establish and disclose a policy concerning trading in the PMB's securities by directors, senior executives and employees. The trading policy shall contain appropriate compliance standards and procedures to ensure that the policy is properly implemented. There shall also be an internal review mechanism to assess compliance and effectiveness.

7.1.5 PMBs shall publish the policy concerning the issue of Board and employee trading in its securities.

7.2 Conflict Of Interest

7.2.1 Every PMB shall have in place an approved policy on conflict of interest which shall, at the minimum, cover the following areas: a) Approval & Revision date; b) Purpose of the policy; c) Definition of conflict of interest; d) Examples of conflict of interest situations; e) Procedures to follow in situations of conflict of interest.

7.2.2 The Board of Directors shall be responsible for managing conflicts of interest.

7.2.3 Directors shall promptly disclose to the Board any real or potential conflict of interest that they may have regarding any matter that may come before the Board or its Committees.

7.2.4 Directors shall abstain from discussions and voting on any matter in which they have or may have a conflict of interest.

7.2.5 Directors who are aware of a real, potential or perceived conflict of interest on the part of a fellow Director, have a responsibility to promptly raise the issue for clarification with the Board.

7.2.6 Disclosure by a Director of a real, potential or perceived conflict of interest or a decision by the Board as to whether a conflict of interest exists shall be recorded in the minutes of the meeting.

8.0 Compliance

8.1 All PMBs shall comply with the provisions of this Code. External auditors of PMBs shall report annually to the CBN, the extent of the PMB's compliance with the provisions of this Code.

8.2 Returns on the status of each institution's compliance with this Code shall be rendered to the CBN semi-annually (30th June and 31st December every year) or as may be specified by the CBN from time to time. The returns shall be addressed and submitted to the Director, Other Financial Institutions Supervision Department not later than 2 weeks after the end of the relevant reporting period.

9.0 Sanctions

Failure to comply with the Code will attract appropriate sanctions in accordance with section 64 BOFIA Cap B3 Laws of the Federation of Nigeria (LFN) 2004 or as may be specified in any applicable legislation or regulation.

10.0 Effective Date

This code shall take effect from December 1, 2018.