The Nigerian Electricity Regulatory Commission (NERC) has introduced new rules governing board membership in the power sector. According to the Commission’s ‘Code of Corporate Governance’ report, directors are now restricted from serving on more than two companies’ boards in the electricity industry.
“An individual shall not concurrently serve as a director of more than two companies in NESI,” the report reads.
“Simultaneous service on numerous boards may impede an individual’s capacity to discharge their duties equitably and impartially, potentially leading to conflicts of interest.
“The board and shareholders must thoroughly assess the suitability of nominees for appointment, taking into account their other obligations and commitments.”
According to the report, a prospective nominee to the board of a licensee must disclose any memberships on other boards before their appointment.
“The board shall consider the nominee’s other directorships and ascertain whether the nominee can effectively contribute to the board’s performance and responsibilities prior to endorsing them for appointment. Serving directors shall inform the board, through the chairman, of any potential appointments to other boards,” the NERC said.
The commission mandated individuals who are currently directors in more than two companies within the sector to “inform the board, through the chairman, of any potential appointments to other boards”.
“Each director is expected to avoid any conflict of interest, whether arising directly or indirectly through affiliations with other entities.” The NERC emphasized the importance of directors prioritizing their responsibilities and avoiding potential conflicts of interest in the sector.
