SEC Ban on Dual Director Roles Wins Stakeholder Support Amid Corporate Governance Push

The Securities and Exchange Commission (SEC) of Nigeria has issued a new directive banning Independent Non-Executive Directors (INEDs) from assuming executive positions within the same company or group structure, a move that has been met with strong support from shareholders and governance advocates. Released on June 19, 2025, the directive also introduces new tenure limits: 10 consecutive years for directors within a single company and 12 years within a corporate group. Additionally, it imposes a mandatory three-year cooling-off period for former CEOs or Executive Directors before they can become Board Chairmen.

According to the SEC, transitioning INEDs into executive roles undermines their neutrality and violates established corporate governance principles outlined in Nigeria’s National Code of Corporate Governance (NCCG) and SEC’s own guidelines. This regulatory clarification is seen as a response to growing concerns about board independence and investor protection, and reflects a broader global trend toward improved separation of oversight and management responsibilities.

Industry leaders, such as Arthur Stevens Asset Management’s CEO Olatunde Amolegbe, have welcomed the development, stating that it enforces existing governance frameworks and echoes reforms already in place in sectors like banking. He emphasized the importance of sustainability in leadership and the need for succession planning to ensure the long-term health of public companies. He also noted that the change should not surprise anyone familiar with governance reform.

Shareholder representatives, particularly the Progressive Shareholders Association of Nigeria (PSAN), hailed the move as long overdue. PSAN’s National Coordinator, Boniface Okezie, argued that allowing INEDs to become executives dilutes their oversight role and jeopardizes minority shareholder protection. However, he criticized the SEC’s broader policy approach, suggesting that some regulations are ill-suited to Nigeria’s corporate environment and seem copied from foreign jurisdictions without proper localization.

Okezie also raised concerns about the increasing use of virtual Annual General Meetings (AGMs), which he claims reduce transparency and limit shareholder engagement. He called on the SEC to conduct wider consultations with market participants before implementing new policies and to focus on addressing deeper, unresolved issues in the capital market. While the directive may enhance Nigeria’s corporate governance reputation, stakeholders stress that real impact depends on fair implementation and genuine board reforms by listed companies.

Source: The Sun