Insurers struggle to comply on position of executive directors
Ahead of 90-days compliance deadline given to insurance companies not having executive directors in their management and board to do so or face sanctions, affected insurance companies are struggling for compliance.
Our investigations show that middle managers who have waited for long are smiling into the new positions of executive directors, as most of the affected companies are hiring with speed.
The intention is to ensure that there is proper succession plan in all the companies so that in the event that the managing directors leaves either voluntarily or retire, their positions could easily be filled, without it impacting negatively on the establishment.
The National Insurance Commission had in circular to all insurance institutions in the country with the title “Circular on Code of Good Corporate Governance” said “consequent upon the various requests for clarifications from the operators on 2009 Code of Corporate Governance, the Commission hereby issues the following clarifications and amendments:
The circular signed Agbola Pius, director, Authorization and Policy, for Commissioner for Insurance stated that by Composition and mix of the board of directors, the 40 percent maximum stipulated for executive management in the board structure of the code of corporate governance must include managing director/CEO and at least one executive director(ED) to be responsible for technical/operational matters.
The ED shall have the qualifications and experience as required in law for that of the CEO (on meeting of the requirement, companies may have other executive directors they wish up to the limit of the 40 percent).
And compliance of this shall be completed with 90 days from the date of the circular which was issued on August 25, 2016.
BusinessDay had reported a few weeks back the no fewer than 13 chief executive officers (CEOs) in the insurance industry were going to vacate their positions in line with the requirements of the new Corporate Governance Code 2016 before its suspension past week by the Federal Government.
The new governance code released by Financial Reporting Council (FRC) of Nigeria with effect from 17 October and mandatory for all public companies had planned to send home all CEO’s that have spent ten years in Office.
Section 14.3 of the new code on tenure of the Managing Director/Chief Executive Officer says that the managing director shall not exceed two terms of five years each. The CEO also can only be appointed as chairman after a cooling period of 7 years. So, the owner managers cannot sit on the boards of the affected companies until seven years after their exit.
Some of the complaints and reactions that trailed the new code was possible vacuum that was going to be created in the industry when implemented, since a large number of the companies did not have executive directors.
But with the NAICOM deadline, most of the affected companies would have instituted proper succession plan in line with the industry’s corporate governance code and international best practice.
Modestus Anaesoronye