On the 19 of June 2025, the Securities and Exchange Commission (SEC) released a circular addressed to all public companies and capital market operators on the tenure of directors and the transmutation of Independent Non-Executive Directors (INEDs). The directive, made pursuant to the powers of SEC under the Investment and Securities Act (ISA) 2025, introduces binding governance measures designed to reinforce board independence, improve transparency, and close longstanding gaps in board appointment practices.
Provisions of the SEC Circular
The Circular introduces the following key provisions:
1.Prohibition on the transmutation of INEDS into Executive Directors: INEDs of public companies and
significant public interest capital market operators are now expressly prohibited from transitioning into
executive roles within the same entity or within a group structure. This includes positions such as Chief
Executive Officer or other Executive roles. This provision seeks to preserve the objectivity and oversight
function of the INEDs, in line with the expectations under the Nigerian Code of Corporate
Governance and the SEC Code of Corporate Governance.
