SEC Wants Term Limit Cap on Independent Directors

The Securities and Exchange Commission (SEC) is considering abolishing the "comply or explain" framework on the cumulative term limit for independent directors of publicly listed companies.

- By RICHMOND MERCURIO

SEC chairperson Francis Lim said the commission is looking at enforcing a mandatory nine-year term cap on independent directors, while providing them with security of tenure at the same time.

"Under our present system, it's a comply or explain rule. In other words, while there is that term limit of nine years, the company or the issuer can explain why (it can be extended). If you look at the data, and we have to investigate more deeply, the usual reasons are not compelling, such as we can't find someone or we need this guy and so on and so forth," Lim said.

"That's why we're thinking of creating our own regulations to prescribe things. From now on, absolute nine years. There will no longer be a need to comply or explain. I'm sure that there are equally qualified people who are not just as high profile as those serving as independent directors," he said.