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The Securities and Exchange Commission (SEC) plans to require local exchanges and other organized markets to reserve at least a majority of the corporate board seats for independent directors, citing the need to align with global best practices.
This is sharp increase from the current requirement under the Securities Regulation Code (SRC)’s 2015 implementing rules and regulations to have at least three independent directors in the board of an operating exchange.
Based on a draft memorandum circular released on June 23 for public comment, the SEC wanted independent directors to constitute at least a majority of the members of the board of directors of exchanges and other organized markets.
Section 179 (m) of the Revised Corporation Code authorizes the SEC to “prescribe the number of independent directors” and (d) to “promote corporate governance and the protection of minority investors, through among others, the issuance of rules and regulations consistent with international best practices.”
In the Philippines, three of the 15-member board of the Philippine Stock Exchange (PSE) are independent directors, in compliance with the existing requirement. Eight or majority of the PSE board members are not affiliated with trading participants.