The Securities and Exchange Commission (SEC) plans to institute a security of tenure for independent directors.
SEC chairman Francisco Lim said the corporate regulator also plans to strictly implement the nine-year term cap for independent directors already established under current regulations.
Lim said SEC may issue a memorandum circular that will include all corporate governance rules on independent of directors and their security of tenure.
“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.
At present, independent directors can be elected for a maximum period of nine years.
“What we are thinking is giving independent directors security of tenure within the nine-year period,” Lim said.
The SEC noted several instances where a company would seek an exemptive relief from the term limit to enable it to re-elect an independent director even after the 9-year limit.
Under the current rules, companies can explain why they want to seek an exemption. Lim noted, however, that most reasons being given by these companies are “not really compelling”.
“There is monopoly of talent. There are available talents in the market. Independent directors can also be independent directors of other companies,” Lim said.
With the planned new rules, Lim said “exemptions will be few and far between” to bring back integrity to the securities market.
Meanwhile, Lim annunced more upcoming reforms in the SEC to strengthen the capital markets and ensure ease of doing business.
The SEC recently reduced fees for documents by 50 percent and instituted the “deemed approved” policy.
I5t also expanded its one-day, fully-digital registration system. As a result, the SEC was able to register 2,938 companies in July, a 300-percent increase compared to 1,014 in May.
