Banks required to set board member succession plan

The Central Bank (BDL) has asked the boards of directors of banks to set up a ‘Board Members Succession Plan’.

The succession plan will be used as the basis for proposing new chair people and board members to the general assembly of shareholders.

The plan must be in line with the bank’s strategy and objectives and the board of directors should revise it on an annual basis.

The board, while preparing the plan, must take into consideration both the existing and required qualifications and skills of the board members.

The board should also determine the competency gaps among members, seek to find qualified candidates and then propose their names to the general assembly.

The maximum term that any independent member can hold must be fixed in the plan provided that the importance of electing and bringing on board new members is taken into consideration.

The banks should submit a copy of the succession plan or of any amendments to BDL’s Banking Control Commission of Lebanon (BCCL).

BDL said in the circular that it has given the banks a deadline of one year to implement the new requirements.

The decision is part of BDL’s regulatory endeavors to apply principles of corporate governance to the banking sector. In 2006 the Central Bank issued basic circular 106 to lay the foundation of corporate governance within the sector.