The Securities and Exchange Commission (SEC) of Nigeria in a circular dated 23rd September 2026 drew attention to the Financial Reporting Council (FRC) of Nigeria’s Roadmap for the adoption of IFRS S1 & S2 which has been structured into three phases (1) Early Adoption – for accounting periods ending on or before December 31, 2023; (2) Voluntary Adoption – for accounting periods beginning on or after January 1, 2024 through periods ending on or before December 31, 2027; and (3) Mandatory Adoption for accounting periods beginning on or after January 1, 2028. Small and Medium-sized Entities (SMEs) will be subject to mandatory adoption for accounting periods beginning on or after January 1, 2030.
The Circular drew attention to Nigeria’s commitment to adopt the IFRS Sustainability Disclosure Standards and the fact that the FRC developed the Roadmap for the Adoption of IFRS Sustainability Disclosure Standards in Nigeria in collaboration with relevant stakeholders, including the Commission. This to me suggests a complementary and supportive role of SEC in ensuring the implementation of IFRS S1 & S2, which is good.
The Circular then stated that all Public Companies and Significant Public Interest Capital Market Operators are required to commence preparations for sustainability reporting in accordance with the IFRS Sustainability Disclosure Standards and the implementation timelines as set out and prescribed in the FRC Roadmap. Many voluntary adopters did not understand this as they have already gone past the preparation-for-adoption stage.
To enable the Commission to monitor the preparedness of regulated entities and facilitate a smooth transition to mandatory sustainability reporting, the circular directed every Public Company and Significant Public Interest Capital Market Operator to submit to the Commission, on or before 15 October 2026, an implementation plan which should address as a minimum, the following:
- Governance arrangements for sustainability reporting, including Board oversight;
- Gap assessment against the requirements of IFRS S1 and IFRS S2;
- Implementation roadmap and timelines;
- Data collection and reporting systems;
- Internal control and assurance arrangements;
- Capacity building and training plans;
- Expected year of first sustainability reporting in accordance with the FRCN Roadmap; and
- Key implementation challenges.
The Commission, according to the circular, will continue to engage with regulated entities and monitor compliance with the implementation timelines as part of its oversight of financial reporting and corporate governance practices in the Nigerian capital market.
The circular in drawing attention to the monitoring role of SEC over regulated entities transitioning to mandatory reporting and compliance role with the implementation timeline, as part of its oversight of financial reporting, has sent panic among listed entities. They argue that the circular has raised many questions seeking clarifications which they want us to provide answers to.
The first question they want to clarify is whether the eight listed items (documents) to be included in the SEC’s Implementation Plan to be submitted by October 15, 2026, are different from the FRC’s 17 Implementation documents which the Early and Voluntary Adopters have already submitted to FRC.
The second question is whether the content of the documents that SEC is asking for is the same as those of FRC. For example, the FRC 17 documents distinguish between Implementation Plan and Gap Analysis unlike the SEC’s Circular that has embedded separate FRC documents into Implementation Plan. ‘Data collection and reporting system’ is not among FRC 17 documents. ‘Expected year of reporting’ is not a separate document but is part and parcel of ‘Implementation Plan’.
These clarifications are pertinent because the implication of the timeline given by the SEC’s circular is that a Voluntary Adopter is expected to submit all the eight documents to SEC by 15th October 2026, which to me sounds like a big bang. This big bang differs from the phased approach of the FRC Roadmap.
The FRC Roadmap sequences the submission of its 17 implementation documents into Phases – Phase 1 to Phase 3, spread over 12 months, making them manageable for submission to the Regulator. For example, items (documents) 1 to 3 listed in the SEC’s Implementation Plan are Phase 1 documents under FRC 17 documents, which are to be submitted three months before the beginning of the first financial year of adoption. Item (document) 4 under SEC Implementation Plan, which is on data, is an issue of consideration throughout the FRC implementation period. Item 6 on Capacity building and training and Item 1 on Governance are Phase 2 activities under FRC Implementation. Specifically, Item (document) 5 which is on Internal Control Over Sustainability Reporting is a Phase 3 document under the FRC 17 documents.
The third question that arises is, if the FRC Implementation Roadmap has phased the submission of these documents, why is the SEC Circular demanding the submission of all these documents by 15 October all at once. This is where the listed entities in the capital market require clarification and education. They need education to understand. Many have argued that if the SEC circular had specifically asked entities to submit to SEC what they have submitted to FRC, the circular may have become clearer.
However, asking for what has been submitted to FRC is compounded for an entity that has not opted to be a voluntary adopter. As stated above, an entity has a free choice to wait and become a Mandatory Adopter. As of today, Mandatory Adopters have not submitted any of the 17 documents to FRC. According to the Roadmap, the first 3 of the 17 documents are due for submission to FRC by October 2027 for those whose financial year runs from January to December every year. What the Circular has now done is to require such entities to submit some Phase 1 to Phase 3 documents by October 15, 2026. This is not only a big bang but a contradiction to the FRC Adoption Roadmap which SEC seeks to support its implementation.
Following from the above is the fourth question around whether the SEC will sanction entities that do not meet its 15 October 2026 submission deadline. This question has troubled banks more, because of the market interpretation of regulatory sanction as a governance failure issue. They call for more clarification on the part of SEC because the FRC Roadmap has promised no regulatory sanction during the voluntary adoption phase. If SEC sanctions any entity for not meeting the October 15 deadline, it will conflict with and contradict FRC Roadmap.
That last point has now led them to ask whether it is no longer enough to want to comply with the FRC Roadmap and whether they are no longer allowed the option to opt to become a mandatory adopter, thus raising frustration and panic. This again requires clarification and education.
Clearly, this is not the intention of SEC in that circular, a reason why more clarification is required. But above all, it is the reason why listed companies in the capital market should not panic as the SEC is known to rise and be on top of situations like this. I am aware of the Regulatory Round Table which provides opportunities for interaction between FRC and SEC as well as other Sectoral Regulators like CBN, NDIC, NAICOM, PenCom etc. I am also aware of the excellent coordination between FRC and SEC in working towards a harmonious implementation of IFRS Sustainability Standards in Nigeria, which is the original intention of the circular.
I am optimistic that the above provides a good background for the clarification that will come from the SEC in the days ahead of October 15, 2026.
