Economy
SEC Bans Conversion of Independent Directors to Executive Directors
By Adedapo Adesanya
Nigeria’s Securities and Exchange Commission (SEC) has halted the conversion of Independent Non-Executive Directors (INEDs) into Executive Directors within the same company or group structure.
The Nigerian regulator issued the sweeping directive to all public companies and capital market operators to henceforth stop the practice.
Business Post reports that the move comes amid growing concerns over boardroom neutrality and corporate governance standards in Nigeria. Also, the administration of the SEC Director General,Mr Emomotimi Agami, is increasing efforts to uphold transparency, accountability, and investor confidence in Nigeria’s capital markets.
In a circular dated June 19, 2025, the Commission expressed alarm over the increasing practice of rotating directorship roles among individuals within the same entity or group, especially the transition of INEDs into executive positions, including Chief Executive Officer (CEO) roles.
The SEC also warned that such practices erode the independence and objectivity expected of INEDs, and violate the principles enshrined in the National Code of Corporate Governance (NCCG) and the SEC Corporate Governance Guidelines (SCGG).
To preserve corporate governance integrity, the SEC directed the “discontinuance forthwith” of any such transmutation of INEDs by public companies and capital market operators deemed to be of significant public interest.
The SEC also invoked its authority under Section 355(r) (iv) of the newly enacted Investments and Securities Act (ISA) 2025 to cap the tenure of directors at 10 consecutive years within a single company, and 12 years within the same group structure.
It added that any CEO or Executive Director who reaches the tenure limit must observe a mandatory three-year “cool-off period” before being eligible to assume the role of Chairman.
The SEC clarified that if eventually appointed as Chairman, their tenure is capped at a maximum of four years.
The agency emphasized that the new directives are effective immediately and that companies must factor them into their board appointments and succession planning strategies. Importantly, all previous years served by affected individuals will count toward the tenure limits.
