The Securities and Exchange Commission (SEC) of Nigeria has issued a new directive limiting the tenure and subsequent roles of CEOs and executive directors in public companies, sparking concerns over succession planning. According to the June 19 circular, any CEO or executive director who serves for 10 to 12 consecutive years cannot immediately assume the position of board chairman without a three-year “cool-off” period, and even then, their chairmanship is capped at four years. These rules also prohibit the conversion of Independent Non-Executive Directors (INEDs) into executive roles, including that of CEO.
The move has stirred discomfort among CEOs, directors, and capital market operators (CMOs), many of whom argue that the directive could be counterproductive, particularly for founder-led firms where leadership transition can impact business continuity, investor confidence, and strategic relationships. One CEO cited the hypothetical case of asking Aliko Dangote to step down, suggesting such enforcement might damage the business ecosystem connected to iconic figures. Another expressed concern that these changes should be shareholder-driven, not regulatory-imposed.
Despite the pushback, other stakeholders have voiced strong support for the directive, describing it as necessary for improved corporate governance. Some point to successful leadership transitions in Nigeria’s banking sector following similar tenure limits imposed by the Central Bank of Nigeria (CBN). Advocates argue that no one is indispensable and the new rules will help curb entrenchment and bring a fresh wave of leadership into corporate boards.
Critics of the practice of turning independent directors into executives warn that doing so undermines the objectivity and oversight expected from independent directors. They argue this compromises board balance, weakens governance, and discourages frank and unbiased decision-making. Some fear it could lead to unchecked dominance by a few powerful individuals who rotate roles within the same company, eroding transparency and fairness in board dynamics.
The SEC emphasized that these directives take immediate effect and are mandatory. The Commission expressed concern over increasing instances of directors rotating between independent and executive roles within the same corporate structure, stating this undermines the intent of independent directorship. It reiterated its commitment to strengthening corporate governance and protecting public investors by enforcing clear succession guidelines that discourage board monopolies and encourage institutional renewal.