A firm line has been drawn. The Securities and Exchange Commission (SEC) is resolutely defending its nine-year term limit for independent directors, even as a legal challenge mounts against the regulation.
SEC Chairperson Francisco Ed. Lim delivered a powerful message, framing the rule as a critical step towards equitable governance. He directly linked the need for boardroom reform to the public’s rejection of entrenched political dynasties, insisting on consistency and higher standards.
The core aim, according to Lim, is a vital restoration of investor confidence. He expressed concern over the nation’s stock market lagging behind its peers, emphasizing the urgency of action and a collective responsibility to strengthen the country’s financial landscape.
GMA Network, Inc. initiated the challenge, filing a petition in a Makati court seeking to invalidate the SEC’s directive. The network argues the rule’s implementation is premature and disruptive.
Specifically, GMA Network fears being forced to replace experienced independent directors without adequate time for thorough vetting of potential replacements. They have requested a temporary restraining order to halt the rule’s enforcement while the court considers their case.
The SEC’s Memorandum Circular No. 7, enacted on January 26th, limits independent directors to a maximum cumulative term of nine years within the same publicly listed company. Each term is for one year.
Crucially, the nine-year limit isn’t just for newly elected directors. It retroactively applies to those already serving, calculating their tenure back to the start of 2012. This broad application is a key point of contention in the ongoing legal battle.
