The Securities and Exchange Commission is drafting rules to enforce the disqualification of convicted directors, trustees and officers from companies.
Directors and officers of companies, according to the draft guidelines, will be disqualified if they were convicted by final judgment of an offense punishable by imprisonment for a period of more than six years within their tenure, .
They may also lose their positions or be disqualified from being elected in other companies for violating the Revised Corporation Code of the Philippines and the Securities Regulation Code.
Officers found administratively liable for any offense involving fraudulent acts, or found liable by a foreign court or equivalent regulatory authority for acts, violations or misconduct similar to the same conditions will also be disqualified.
The SEC said the drafting of the rules is part of its efforts to promote good corporate governance.
It said it would operationalize Section 26 of RCC, which provides that a person should be disqualified from being a director, trustee or officer of any corporation if, within five years prior to their election or appointment, the person was convicted by final judgment of an offense punishable by imprisonment for a period exceeding six years.
The same provision empowers the SEC and the Philippine Competition Commission to impose other qualifications or disqualifications in its promotion of good corporate governance or as a sanction in its administrative proceedings.
It said the the removal of a disqualified director would be without prejudice to other sanctions that the SEC may impose on the board of directors or trustees who, with knowledge of the disqualification, failed to remove such director or trustee.
The SEC said that on top of the removal of the director, trustee and/or officer, it may also issue a permanent cease and desist order and/or impose a fine from P10,000 to P400,000 for each violation of its orders or any relevant laws and regulations.
Under the proposed guidelines, an independent administrative action for the removal of an officer of a corporation may be commenced upon the motu proprio issuance of a formal charge by the SEC operating department that has jurisdiction over the subject matter, or upon filing of a verified complaint.
The SEC said in case of a one-person corporation whose sole director was removed, the nominee should take the place of the single stockholder as director and manage the corporation’s affairs.
