New corporate governance circular eyed

THE SECURITIES and Exchange Commission (SEC) wants to ensure that independent directors of publicly listed companies have security of tenure.

- R.M.D.Ochave

SEC Chairperson Francisco Ed. Lim told reporters on Friday that they are currently looking at issuing a new memorandum circular on corporate governance, including a provision on security of tenure for independent directors.

Mr. Lim said independent directors should have security of tenure during their nine-year term so they can speak up on company policies without fear of being removed from their post.

“We're still discussing the issue because what I would want is a new memorandum circular purely on corporate governance-related matters, which will include like the term of independent directors, even their security of tenure... What we're thinking is security of tenure within that nine-year limit,” he said.

“If you're an independent director and you fight for something which you believe is right, but it’s not consistent with what the controlling shareholders say, you're putting your tenure at risk,” he added.

An independent director is a member of a company’s board but does not have any material relationship with the company, its parent, subsidiaries or affiliates, and is independent of management.