On 19th June 2025, the Securities and Exchange Commission (the Commission or SEC) issued a circular directed at public companies and Capital Market Operators (CMOs) classified as Significant Public Interest Entities (SPIEs). The circular focuses on two key areas of corporate governance:
Following the circular, and in response to concerns raised by stakeholders, the SEC released a Guidance Note on 1st July 2025 to clarify the scope and application of these rules, particularly for CMOs operating as Financial Market Infrastructures (FMIs) that have been designated as Significant Public Interest Entities and other affected entities.
According to the SEC, this regulatory intervention was prompted by the observed trend of converting INEDs into Executive Directors (EDs), including Chief Executive Officers(CEOs). The practice contravenes the principle of independent directorship outlined in the Nigerian Code of Corporate Governance (NCCG), 2018. Principle 7 of the NCCG provides that INEDs must bring objectivity to board deliberations and act in the best interest of the company independently of management. They are expected to represent a strong independent voice on the Board, be independent in character and judgment, and be free from relationships or circumstances with the company, its management, or substantial shareholders that may, or appear to, impair their ability to make independent judgments.