The Securities and Exchange Commission has issued a guidance note to clarify its recent directive on director tenure and board appointments, offering reassurance to capital market operators unsettled by last week’s announcement.

The note specifies that the directive applies to Capital Market Operators identified as Financial Market Infrastructures and Significant Public Interest Entities, and provides detailed direction on how the new rules should be applied.

The clarification follows an earlier announcement that had left market operators scrambling to interpret its implications, amid widespread concerns that the rules could trigger mass exits of long-serving executives, disrupt board structures, threaten business continuity, and impose onerous compliance burdens across the sector.

However, in the new guidance note released to stakeholders over the weekend, the SEC clarified that the rules apply only to Capital Market Operators that operate as Financial Market Infrastructures—entities involved in trading, clearing, settlement, or depository services—and have been designated by the Commission as Significant Public Interest Entities.

According to the guidance, a SPIE is any operator considered systemically important, managing substantial investor exposure or serving a critical infrastructure function within the capital market.

This category may include exchanges, clearing houses, and securities depositories, with likely affected entities such as FMDQ Group, NGX Group, Central Securities Clearing System, and NG Clearing.

It also notes that where specific provisions apply only to Public Limited Companies, such instances will be clearly indicated.

Crucially, the guidance makes clear that the rules do not extend to private companies or to most Capital Market Operators, except those explicitly designated as SPIEs by the Commission.

The guidance makes the following clear:

Private companies and most CMOs that are not designated as SPIEs are exempt from the rules;

Public Liability Companies are required to comply only to the extent prescribed by the Nigerian Code of Corporate Governance (NCCG 2018);

Other CMOs are encouraged to adopt the provisions as best practice but are not mandated to do so.

While the rules currently have a limited scope, the SEC is encouraging all capital market operators—particularly those aiming for systemic relevance—to consider adopting the standards as a proactive governance measure.