Section 74-84 BOFIA 2020

Section 74 to 84 of the Bank and Other Financial Institutions Act 2020 is part of Part IX (RESOLUTION FUND AND RESOLUTION TOOLS) of the Act.

Section 74 BOFIA 2020

Establishment of banking sector resolution fund

(1) Without prejudice to the provisions of the Asset Management Corporation of Nigeria Act, there is hereby established a “Fund” to be known as the Banking Sector Resolution Fund (in this Act referred to as “Resolution Fund”) which shall be
domiciled with the Bank, and into which shall be paid all contributions and levies imposed under this Part:
Provided that the Governor shall with the approval of the Board, determine the date of commencement of the Fund (commencement date).

(2) The Resolution Fund shall not be subject to tax and accordingly, all moneys accruing to, payments made from, and instruments and transactions relating to, the Resolution Fund shall be exempt from all forms of taxes, levies, duties, charges or imposition howsoever described.

Section 75 BOFIA 2020

Contribution by Bank

(1) On the commencement date of the Resolution Fund, and on the first business day in each calendar year thereafter, the Bank shall pay into the Resolution Fund, the sum of N10,000,000,000 (Ten Billion Naira) or such amount as the Board of the Bank may, from time to time determine.

(2) For the purposes of making the payment required under subsection (1) of this section, the Bank shall appropriate the said sum of N10, 000,000,000 (Ten Billion Naira) or such amount determined by the Board of the Bank in pursuance
of subsection (1) of this section, from the general reserves or other funds of the Bank, and cause the sum so appropriated to be paid into the Resolution Fund in immediately available funds.

Section 76 BOFIA 2020

Contribution by the Corporation

At the commencement date, and thereafter, on the first business day in each calendar year, following the commencement date the Corporation shall pay into the Resolution Fund the sum of N4, 000,000,000 (Four Billion Naira) or such amount as
the Board of the Bank may from time to time determine.

Section 77 BOFIA 2020

Levy on banks, specialised banks and other financial institutions

There is hereby imposed with effect from the commencement date, on each bank, specialised bank and other financial institution in Nigeria, an annual levy, in an amount equivalent to ten (10) basis points (or such basis points as may from time to time be determined by the Bank) of its total assets as at the date of its audited financial statements for the immediately preceding financial year published pursuant to this Act, and which shall be payable on the commencement date, and on or before the 30th day of April in each subsequent calendar year following the commencement date.

Section 78 BOFIA 2020

Purpose of the resolution fund

The Resolution Fund shall be utilised exclusively for the following purposes-
(a) to pay the operating costs of a bridge bank;
(b) to pay the costs of transferring the whole or any part of the business at the bank, specialised bank or other financial institution pursuant to a resolution measure;
(c) to provide a loan, advance, overdraft or other credit facility to a bank, Specialised Bank or Other Financial Institution financial institution under resolution or a bridge bank;
(d) to pay any other costs reasonably incurred in the resolution measure, such as legal cost, cost of any advisory services, and the cost of an independent valuation of the bank, specialised bank or other financial institution under resolution;
(e) for such other purposes in support of resolution measure as may be prescribed by the Governor; and
(f) to pay expenses and costs specifically incurred for the administration and management of the Resolution Fund, up to an annual limit of an amount equivalent to 0.5 per cent of the total amount paid into the Resolution Fund for the calendar year in which the expense or cost is incurred.

Section 79 BOFIA 2020

Tax deductibility of annual levy and vested contributions

Any annual levy paid by a bank, specialised bank or other financial institutions in pursuance of this Act, shall be deductible for the purposes of the companies’ income tax of the paying bank, specialised bank or other financial institution, under the
Companies Income Tax Act.

Section 80 BOFIA 2020

Prohibition on payment of dividend and bonuses by defaulting eligible financial institution

A bank, specialised bank or other financial institution that is in default of payment of the levy imposed under this Act or any part thereof shall be prohibited from paying dividends or other like distribution to its shareholders, and from paying any bonuses however to its directors or employees, while such payment default continues.

Section 81 BOFIA 2020

Establishment and composition of Board of Trustees

There is established for the Resolution Fund, a Board of Trustees which shall consist of-
(a) two representatives of the Bank to be nominated by the Governor, one of whom shall be a Deputy Governor who shall appointed as the Chairman of the Board of Trustees;
(b) four representatives of banks to be appointed by the Bank from among officers of four banks not below the level of a director, on a 2-year rotational basis;
(c) representative, of the Corporation from among its officers not below the level of a director; and
(d) one representative from other financial institutions to be appointed by the Bank.

Section 82 BOFIA 2020

Duties and responsibilities of Board of Trustees

(1) The Board of Trustees shall be responsible for the supervision, administration and management of the Resolution Fund and shall discharge the following duties –
(a) collection of the contributions and levies levied under this Act as and when due;
(b) disbursement of moneys standing to the credit of the Resolution Fund;
(c) formulating investment policies for the Resolution Fund and causing moneys standing to the credit of the Resolution Fund to be invested in accordance with the provisions of this Bill; and
(d) performing other functions that are consistent with the purpose of the Resolution Fund as specified in this Act.

(2) The Board of Trustees may delegate any part of its responsibilities under this Act as it may deem fit and may appoint independent service providers, professional advisers and consultants for the performance of any of its functions and for running the Secretariat.

(3) In the discharge of their responsibilities and duties, members of the Board of Trustees shall be deemed to stand in a fiduciary relationship with the Bank, the Corporation, banks, specialised banks, and other financial institutions and shall act with due care and skill, in utmost good faith.

Section 83 BOFIA 2020

Tenure, cessation of membership, and casual vacancy

(1) Subject to subsection (2) of this section, members of the Board of Trustees, except the members nominated by banks, and other financial institutions, shall hold office for as long as they continue to hold the office by virtue of which they were appointed to the Board of Trustees.

(2) A member of the Board of Trustees shall cease to hold office as such member if such person ceases for any reason howsoever to hold the office by reason of which such person holds membership of the Board of Trustees.

(3) If a vacancy occurs as a result of the death, resignation, retirement, disqualification or removal of a member of the Board of Trustees, the entity or entities that such member represents on the Board of Trustees shall nominate another of its members to fill the vacancy so occasioned, for the remainder of the term of office of the member whose death, resignation, retirement, disqualification or removal occasioned the vacancy.

Section 84 BOFIA 2020

Secretariat of the Board of Trustees

(1) There is hereby established for the Board of Trustees, a Secretariat which shall situate at the head office of the Bank, or such other place as the Bank may determine, and shall be staffed by such number of persons to be seconded from the Bank or any of the other institutions on which a levy or contribution is levied under this Part of this Act as the Board of Trustees may from time to time determine.

(2) The Secretariat shall have such functions as are, from time to time, prescribed by the Board of Trustees.