SEC Prohibits Independent Directors from Becoming Executives.
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SEC Prohibits Independent Directors from Becoming Executives.
The Securities and Exchange Commission (SEC) has issued a new directive preventing Independent Non
-Executive Directors (INEDs) from being appointed as Executive Directors within the same company or group. This move aims to strengthen corporate governance across Nigeria’s capital market.
According to 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 SEC noted that converting independent directors into executive roles undermines board objectivity and independence. The Commission expressed concern over the increasing trend of such appointments, particularly into roles like Chief Executive Officer (CEO), which it says conflicts with corporate governance codes and best practices.
Effective immediately, companies and capital market operators deemed of significant public interest must stop this practice. Additionally, a mandatory three-year “cooling-off” period is now required before a former CEO or Executive Director can be appointed Chairman of the same company.
The directive also limits director tenures in such firms: directors may serve up to 10 consecutive years in one company and up to 12 years within a group structure. If a former CEO or Executive Director becomes Chairman after the cooling-off period, their term as Chair is capped at four years.
These regulations are enforced under Section 355(r)(iv) of the Investments and Securities Act (ISA) 2025, empowering the SEC to establish governance standards. The SEC emphasized that compliance is mandatory and applies retroactively, meaning time already served will count toward the new tenure limits. Organizations are expected to begin immediate succession planning and board restructuring accordingly.
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Faith Kegh
Content & Editorial Manager - Leads the creation, review, and publication of high-quality news and media content. She ensures that all editorial work reflects the organization’s standards of accuracy, professionalism, and relevance, while also engaging and informing the audience.
As the key driver of TokinPoint Media LTD's editorial voice, the manager oversees content planning, assigns tasks to writers or editors, enforces deadlines, and ensures consistency across all platforms. She also plays a strategic role in aligning content with audience interests and search engine optimization (SEO) best practices.