The Securities and Exchange Commission (SEC) is looking at giving independent directors a security of tenure, according to Francis Lim, SEC chairman.
On the sidelines of the Financial Executives Institute of the Philippines (FINEX) membership meeting Friday, Lim said that the SEC is looking at strictly enforcing the nine-year term cap for independent directors.
“If you are an independent director and you fight for something which you believe is right but is not consistent with what the controlling shareholders say, you are putting your tenure at risk” Lim said.
“As to whether we will actually do it or a number of years, we have to study that carefully,” he added.
The existing term limit is not more than nine years.
“ What we are thinking is giving independent directors security of tenure within the nine-year period,” he emphasized.
Lim said the SEC may issue a memorandum circular that will include all corporate governance rules on independent directors and their security of tenure.
Under the current rules, an independent director can be elected for a maximum period of nine years.
Companies wanting to re-elect an incumbent independent director beyond the term cap has to seek an exemptive relief, by justifying the need for the individual.
Lim however noted that most reasons are “not really compelling”.
He said, “there is monopoly of talent. There are available talents in the market. Independent directors can also be independent directors of other companies,” Lim said.
Lim said that under the planned new rule, “exemptions will be few and far between.”
