AmendmentInvestment

Limits on Board Remuneration and Number of Employees Who Sit on a Bank Board (Directive No. 193/2021)

National Bank Of Ethiopia193/2021

Summary

This directive amends previous regulations concerning the remuneration of bank directors and the eligibility of bank employees to sit on a bank's board. It sets limits on annual board compensation and monthly allowances for directors, and prohibits any bank employee, whether permanent or contractual, from serving on a bank's board.

Who's affected

Banks operating in Ethiopia, their directors, and their employees.

Action required

Banks must ensure their director remuneration policies and board composition comply with the new limits and restrictions.

Key points

5
  • Annual director compensation capped at Birr 150,000.
  • Monthly director allowance capped at Birr 10,000.
  • No additional remuneration or benefits for directors.
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    • Bank employees are barred from serving on bank boards.
    • Directive No.SBB/63/2016 is replaced.

Requirements

4
  • Annual board compensation to a director shall not exceed Birr 150,000.
  • Monthly allowance paid to a director shall not exceed Birr 10,000.
  • No financial or other remuneration or benefits beyond stated limits shall be paid to directors.
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    • No permanent or contractual employee of a bank shall sit on the board of any bank.

Rights and permissions

1
  • Directors are entitled to receive board compensation and allowances within the specified limits.

Restrictions

4
  • Annual board compensation for a director cannot exceed Birr 150,000.
  • Monthly allowance for a director cannot exceed Birr 10,000.
  • Banks are restricted from paying any other form of remuneration or benefits to directors.
    • Show 1 more
    • Bank employees are restricted from serving on any bank's board.

Objectives

3
  • To ensure fair remuneration for directors that contributes to the safety and soundness of the banking system.
  • To maintain a separation between board and executive functions for proper checks and balances.
  • To prevent conflicts of interest by prohibiting bank employees from serving on bank boards.

Organizations

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  • National Bank of Ethiopia

Legal references

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  • Banking Business Proclamation No. 592/2008, Article 14, Sub-article 4, Paragraphs 'e' and 'f'.
Original sourcehttps://justice.gov.et/en/directives/limits-on-board-remuneration-and-number-of-employees-who-sit-on-a-bank-board-directive-no-193-2021/
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