The Securities and Exchange Commission (SEC) has officially introduced a major governance shift affecting the Philippine capital markets. Under the newly issued Memorandum Circular No. 17, the commission is imposing a cumulative 10-year term limit for broker directors serving on the boards of stock exchanges.
This policy aims to enhance corporate governance standards by ensuring board rotations and preventing the entrenchment of long-standing directors. The regulation stipulates that any broker director reaching this 10-year threshold within a single exchange will be required to vacate their position, regardless of whether the service was consecutive or intermittent.
While the SEC views this as a necessary step toward professionalizing board compositions and promoting healthy institutional oversight, the directive has met with resistance from various market participants. Critics argue that such rigid term limits may deplete exchanges of institutional knowledge and seasoned leadership that has been vital to market stability.
As the industry navigates this transition, the SEC is expected to monitor the implementation closely to ensure that the integrity of exchange governance is maintained while balancing the concerns raised by stakeholders regarding leadership continuity.