PENCOM has been on a roll. Circulars and guidelines are flying out of the Commission’s doors like confetti, and the pace is impressive.
Compared to the lethargy of many regulators, their work rate stands out. Just last night, two fresh documents dropped. It will take some time to digest everything, but rather than wait for the dust to settle, it makes sense to flag issues as they arise.
Consider this piece an early feedback note on one section of the new releases. There is a lot to commend, but there are also areas where improvements are necessary.
One provision in the Revised Guidelines on Corporate Governance for Licensed Pension Fund Operators caught the eye.
It allows Principal Owners to remain on the board as Non-Executive Directors even after hitting the regulatory tenure limit, so long as they clear a checklist of conditions. On paper, this looks tough and deliberate. In practice, it reads like a polite carve-out that says: the rules apply to everyone except you.
Tenure limits exist for a reason. They are the expiry dates of corporate governance, a safeguard to keep boards fresh, independent, and free from entrenchment. Diluting this standard by granting Principal Owners an exemption turns a hard stop into a revolving door.
The issue is not hard to see. Principal Owners already hold considerable sway through their shareholding. Keeping them on the board indefinitely is a bit like letting the referee also own one of the teams.
Even if they sit quietly and wear the badge of a NED, their presence tilts the power dynamic. Influence in the boardroom is not only about titles; it is about weight, and few voices carry more weight than that of an entrenched owner.
To balance this, the guidelines pile on layers of oversight. Shareholders must re-elect the owner every three years. Boards must run annual performance evaluations.
The Nomination and Governance Committee must certify suitability. Every three years, an external adviser must run a review and report directly to the regulator. Finally, the Commission keeps the right to step in if concerns arise.
It is a long list, but governance by checklist is not the same as governance by principle. Shareholder re-elections rarely amount to a true check in markets with concentrated ownership. Internal reviews of powerful owners tend to be more polite than probing.
Even external evaluations risk capture when the assessor is chosen by the very company being assessed. As for regulatory discretion, history shows it often bends under lobbying and political pressure. A firm rule is always stronger than one full of caveats.
The guidelines also bar Principal Owners from chairing sensitive committees like Audit, Risk, Nomination, and Remuneration. It sounds neat, but it misses the point. You do not need the gavel to sway a conversation. Decisions may come through committees, but they return to the full board, where influence flows freely.
The deeper concern is perception. Allowing such exemptions signals that the governance code is flexible for those with enough clout.
And in pensions, perception matters as much as reality. Operators are custodians of the retirement savings of millions of Nigerians. This is the one industry where the line should never shift.
Corporate governance thrives on universality. Rules work best when they apply to all, regardless of ownership stakes.
Once exceptions are carved out, the fabric weakens. The new guidelines may dress up the exemption with oversight, but the truth is straightforward. Allowing Principal Owners to remain on boards beyond the tenure limit undermines the very standards these rules were designed to uphold.
