THE SECURITIES and Exchange Commission (SEC) plans to introduce recent rules inside the first quarter setting fixed terms for independent directors, as a part of efforts to strengthen corporate governance and accountability in listed corporations.
Under the proposed rules, independent directors — board members who represent shareholders and help oversee company management — would serve three-year terms, with a maximum cumulative service of nine years.
The SEC also plans to stagger terms in order that not all seats are renewed at the identical time.
“This ensures that boards remain balanced and independent while giving corporations time to plan leadership transitions,” SEC Chairperson Francisco Ed. Lim said on Wednesday.
Currently, independent directors can serve as much as nine years, with some corporations allowed to increase their terms under special exemptions.
Mr. Lim said the SEC intends to implement the nine-year cap more strictly going forward.
The changes aim to strengthen the role of independent directors in holding management accountable, protecting shareholder interests, and promoting transparency in company operations. — Alexandria Grace C. Magno