… End Boardroom Role Swaps, Tightens Tenure Rules
The Securities and Exchange Commission (SEC) has issued a sweeping directive banning Independent Directors from being appointed as Executive Directors within the same company or group, citing the threat such transitions pose to board independence and sound corporate governance.
In a circular to public companies and capital market operators, the SEC condemned the increasing trend of directors switching roles across entities within the same corporate group—particularly the conversion of Independent Non-Executive Directors (INEDs) into CEOs and other executive positions. The Commission said the practice compromises objectivity and weakens the very essence of independent oversight, which is vital to effective governance.
The SEC also unveiled a new rule mandating a three-year “cooling-off” period before a Chief Executive Officer or Executive Director can be appointed as Chairman of the same company. The measure is aimed at strengthening the separation of powers at the highest levels of corporate leadership and ensuring proper checks and balances.
In addition to this, the SEC set tenure limits for directors in capital market entities considered to be of significant public interest. Directors may now serve a maximum of 10 consecutive years in a single company, and up to 12 years across the same group structure. Those who complete their tenure as executives must observe the mandatory three-year break before returning as Chairmen, whose own term will be capped at four years.
The Commission stated that the new rules take immediate effect and urged all companies and operators to adjust their board structures and succession plans accordingly. It also clarified that years already served by current directors will count toward the newly prescribed tenure limits.
These measures, according to the SEC, are designed to uphold the integrity of corporate boards, prevent governance abuses, and align Nigeria’s capital market practices with international standards.
