Philippine SEC Proposes 9-Year Cap for Independent Directors to Boost Governance

Philippine SEC independent directors face stricter limits under a draft circular proposing fixed three-year terms and a maximum nine-year cumulative cap, aligning with global governance standards. Issued on 30 September and open for comment until 15 October, the rules would end exemptions that previously allowed IDs to exceed the limit. SEC Chairperson Francisco Ed. Lim said the reform aims to strengthen board independence under the Revised Corporation Code. Companies will also be required to stagger terms to avoid simultaneous expirations. Violations may incur fines starting at PHP1m (USD17,600) plus monthly penalties. The rules, effective 1 January 2026, permit incumbents exceeding the cap to serve until 2026 stockholders’ meetings.