A new directive from the Securities and Exchange Commission (SEC) imposing tenure limits on directors of capital market operators has sent waves of anxiety across Nigeria’s financial markets, with many industry players scrambling to understand who is affected and how soon enforcement will begin. In a circular released last Friday, the SEC announced that directors of all Capital Market Operators (CMOs) designated as “significant public interest entities” will now be subject to strict tenure limits. According to the rule, directors may serve a maximum of 10 consecutive years in the same company and 12 consecutive years across the same group structure.
The Commission also introduced a 3-year “cool-off period” for Chief Executive Officers and Executive Directors who complete their maximum tenure, before they can be appointed as Chairmen. Even then, their tenure as Chairman will be capped at four years. The directive, which took immediate effect, has caused confusion within the capital market community. Several operators who spoke on the issue expressed concern over the lack of clarity on who qualifies as a “significant public interest entity.” Many fear the rules could prematurely end the careers of long-serving executives who have been instrumental in building some of the country’s most prominent capital market institutions.
One source said “this could mark the end for several top executives in some of Nigeria’s largest investment banks, stockbroking firms, and fund managers. We need to know who exactly is affected.” Another operator raised concerns that while some firms may not be listed on the Nigerian Exchange, they may still fall within the SEC’s crosshairs due to their systemic relevance or public-facing operations. “It’s not just listed companies that should be worried. If you’re big, active, and handle public funds—even as a private firm—you may be caught,” the source added.
Interestingly, some operators pointed out that the SEC already plays a central role in approving board appointments for all capital market operators, including Directors, CEOs, and INEDs.
This makes the new directive even more striking, as it suggests that there may have been instances in the past where SEC-approved appointments may not have fully complied with the principles of independence or tenure limits now being emphasized. The circular, in that sense, appears to be both a course correction and a warning shot, signaling tighter enforcement going forward. Although the SEC did not publish a list of affected institutions, the circular specifies that designation as a significant public interest CMO is “as determined by the Commission,” a phrasing that has only fueled speculation. However, sources with knowledge of the circular said that the rule does not apply to publicly quoted companies like banks and financial holding companies, nor to regular private companies. The rule, they clarified, is more likely to affect Financial Market Infrastructure (FMI) companies, including entities like FMDQ Group, Central Securities Clearing System (CSCS), NGX Group, and NG Clearing that such transitions “erode the neutrality” expected of independent directors and compromise their ability to provide objective oversight.
