SECURITIES and Exchange Commission (SEC) Chairman Francisco Ed. Lim said the proposed 10-year cumulative term limit for broker-directors of an exchange stays firm, while noting that the Commission is open to valid feedback from market participants.
“So far as I’m concerned, the term limits are non-negotiable, but I’m still listening to their comments. In the event that they have a sound comment, we’ll consider it,” he told reporters on the sidelines of an event last week.
In a draft memorandum circular released on March 3, the Commission said it plans to limit broker-directors, or individuals representing trading participants on an exchange board, to a maximum cumulative service period of 10 years.
The proposal goals to make sure “fair and effective representation” and permit more qualified brokers to bring “recent perspectives” to exchange boards.
Mr. Lim also underscored the importance of public consultation on the proposal. “We have now to take heed to them [the public] and we’ll discuss it. Not only me, however the En Banc — it’s an En Banc decision,” he said.
The Commission invited stakeholders to submit comments, suggestions, and inputs on the draft until March 19, 2026.
Under the proposed guidelines, a broker-director could also be elected for a one-year term. After serving a cumulative period of 5 years, whether consecutive or intermittent, the director must observe a compulsory two-year cooling-off period before becoming eligible for re-election.
After completing the cooling-off period, a director may serve an extra term of as much as five years, provided the general 10-year cumulative limit just isn’t exceeded.
If implemented, the proposal would affect several long-serving broker-directors on the Philippine Stock Exchange (PSE), including Ma. Vivian Yuchengco (28 years), Eddie Gobing (25 years), Wilson Sy (12 years), and Diosdado Arroyo (six years).
Mr. Lim said the draft doesn’t violate existing laws. “I’m very sure of that. I’m not a lawyer for nothing,” he said.
Market participants said the proposal could help balance board renewal with continuity.
“I’m sure they’re [the SEC] just following the Global standards to be certain that we’re in compliance to avoid being downgraded, much like what happened to Indonesia last month,” COL Financial Group, Inc. Chairman Edward K. Lee said in a Viber message.
“The SEC’s proposal goals to maintain the PSE board fresh without losing an excessive amount of experience. By limiting broker-directors to a maximum of 10 years total and requiring a two-year break after five years of service, the SEC creates more probabilities for brand spanking new individuals with fresh/up thus far ideas to manipulate and contribute,” BDO Securities Corp. President John Tristan D. Reyes said in a Viber message.
“At the identical time, the principles still allow experienced directors to serve for an affordable period of time to share their knowledge and even return after a break, so boards don’t lose all their expertise directly and ensure continuity,” he added.
The Shareholders’ Association of the Philippines (SharePHIL) also expressed support for the proposed circular imposing a 10-year cumulative term limit and a cooling-off period for broker-directors of an exchange.
“SharePHIL welcomes the Commission’s initiative to strengthen good corporate governance and protect minority investors,” the organization said in an announcement on Friday.
“By instituting these limits, the SEC is laying the groundwork for meaningful board refreshment, stopping entrenchment, and ensuring that recent perspectives are consistently integrated into the governance structure of the PSE,” it added.
SharePHIL said it supports measures that promote board renewal and investor confidence, and committed to work with regulators and stakeholders to assist develop a good capital market. It also noted that the proposal aligns with International Organization of Securities Commissions (IOSCO) principles on board terms and the Revised Corporation Code’s mandate to adopt internationally accepted best practices.
Similar views were expressed by other business groups, including the Financial Executives Institute of the Philippines (FINEX), Institute of Corporate Directors (ICD), Management Association of the Philippines (MAP), Capital Markets Development Foundation, Inc. (CMDFI), and the Insurance Brokers Association of the Philippines (IBAP).
SharePHIL also called on listed corporations, brokers, institutional investors, and the general public to take part in the SEC’s consultation process. — Alexandria Grace C. Magno