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Wafric News – June 21, 2025

Abuja, Nigeria - Nigeria’s Securities and Exchange Commission (SEC) has issued a sweeping directive prohibiting Independent Non-Executive Directors (INEDs) from transitioning into executive roles within the same company or its group structure, citing concerns over compromised board independence and weakened corporate governance.

In a circular titled “Circular to All Public Companies and Capital Market Operators on the Transmutation of Independent Non-Executive Directors and Tenure of Directors,” the Commission said the practice of converting INEDs into executive directors—particularly into CEO positions—erodes neutrality and undermines objective oversight.

The circular also imposes a mandatory three-year “cooling-off” period before a Chief Executive Officer or Executive Director can assume the role of Board Chairman within the same company. This is to ensure a clearer separation of duties and accountability in corporate leadership.

“The transmutation of INEDs into Executive Directors, including to the position of CEO, compromises their objectivity and is contrary to the core principles of independent directorship as outlined in the National Code of Corporate Governance (NCCG) and the SEC’s own Corporate Governance Guidelines (SCGG),” the Commission said.

Effective immediately, public companies and capital market operators deemed of significant public interest must discontinue the practice. The SEC further tightened the rules around board tenure.

According to the directive:

  • Directors in significant public interest entities may only serve 10 consecutive years in the same company, or a total of 12 consecutive years across companies within the same group.

  • A former CEO or Executive Director who reaches the 10- or 12-year limit cannot be appointed Chairman until a three-year waiting period has passed.

  • Once appointed, such Chairmen may serve for a maximum of four years.

The SEC emphasized that years already served will be counted toward the new limits, urging companies to align their board structures and succession plans accordingly.

“These measures are intended to enhance board independence, prevent entrenchment, and ensure stronger corporate governance across Nigeria’s capital market,” the circular added.

The directive takes immediate effect, with full compliance required from all affected public companies and market operators.


By WafricNews Desk.

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