A recent directive from Nigeria’s Securities and Exchange Commission (SEC) has created significant anxiety among capital market operators. The new rule, released in a circular last Friday, imposes strict tenure limits on directors of Capital Market Operators (CMOs) deemed “significant public interest entities.” Directors can now only serve a maximum of 10 consecutive years in the same company and no more than 12 years across entities within the same group.
Further tightening governance rules, the SEC has also introduced a mandatory three-year “cooling-off” period for Chief Executive Officers (CEOs) and Executive Directors who reach their maximum tenure. These individuals must wait three years before they can become Board Chairmen, and their tenure in that role is limited to just four years. The directive, which takes immediate effect, has sent shockwaves through the market, with many unsure of its full implications.
Operators are especially concerned about the ambiguous definition of a “significant public interest entity.” Without clear criteria, there is widespread fear that the regulation could displace long-serving leaders at major financial institutions. Executives from investment banks, stockbroking firms, and fund managers are particularly anxious, given their visible roles in Nigeria’s financial ecosystem.
Some industry insiders worry the rule may apply not only to listed companies but also to large private firms that manage public funds or play systemically important roles. These concerns are further amplified by the SEC’s history of directly approving board appointments at CMOs, raising questions about the regulator’s sudden shift in governance standards. Market participants believe the circular signals a move toward stricter enforcement and deeper scrutiny of corporate governance practices.
Despite the tension, the SEC has not provided a list of affected companies, stating only that the designation of a “significant public interest entity” will be determined at its discretion. This lack of transparency has fueled more confusion, speculation, and calls for clarification from affected stakeholders, who now face an uncertain regulatory landscape. The directive marks a potentially transformative moment in how corporate leadership is structured within Nigeria’s capital markets.
Source: The Sun