The Securities and Exchange Commission (SEC) has prohibited Independent Directors from transitioning into Executive Director roles within the same company or group.

The Commission stated that the practice of allowing Independent Directors to assume executive positions undermines the core principle of board independence and weakens the value of having an impartial voice in company governance.

The SEC also introduced a three-year cooling-off period before a Chief Executive Officer (CEO) can be appointed as Chairman of the same company, aimed at strengthening corporate governance and ensuring a clear separation of roles and oversight.

The SEC in the circular also streamlined the tenures on CEOs and Board Chairmen, barring CEOs from becoming chairmen directly from their positions.