SEC to stand its ground on 9-year independent director term limit

THE SECURITIES and Exchange Commission (SEC) said it will stand its ground on its nine-year term limit for independent directors, as it considers its response to a petition challenging the rule, which it said is meant to raise governance standards and restore investor confidence.

“We will stand our ground. Our people clamor against political dynasties — so our public companies must reject boardroom entrenchment. No double standards. We must raise our governance standards to restore investor confidence,” SEC Chairperson Francisco Ed. Lim said in a Viber message on Monday.

He said the regulator is preparing its response to the petition filed by GMA Network, Inc.

Last week, GMA Network said it filed a petition before a Makati court seeking to nullify the SEC’s rule imposing a nine-year term limit on independent directors of publicly listed companies.

“We must raise our governance standards to restore investor confidence. Our stock market has been falling behind. The time to act is now — and we call on everyone to step up for the sake of our country,” Mr. Lim said.

GMA Network said it filed a petition for certiorari on March 26 seeking to set aside the SEC’s memorandum.

The company is also seeking a temporary restraining order from the court to suspend the implementation of the rule while the case is pending. It said the memorandum would require it to replace two incumbent independent directors without sufficient time to conduct a full vetting process.

SEC Memorandum Circular No. 7, signed on Jan. 26, states that an independent director is elected for a one-year term and may serve for a maximum cumulative term of nine years in the same listed company.

The circular took effect on Feb. 1. Under the memorandum, independent directors elected before its effectivity are also covered by the nine-year limit, counted starting calendar year 2012. — Ashley Erika O. Jose