Philippines Reforms Corporate Governance with Stricter Independent Director Term Limits

MANILA, Philippines — Several of the country’s sought-after independent directors have lost their posts after the Securities and Exchange Commission (SEC) decided that their time was up. With familiar names stepping down and new faces stepping up, SEC chairperson Francis Lim seemed pleased with the outcome of the commission’s reform as board election results for 2026-2027 of many listed companies have started coming out one after another as early as April this year. “Based on the data, (I am) satisfied with the compliance by our publicly listed companies,” Lim told The STAR. However, Lim believes it is still too early to say if the boards of listed firms improved following the boardroom shakeup caused by SEC Memorandum Circular 7, Series of 2026, which resulted in several listed companies losing long-tenured independent directors. The memorandum issued on Jan. 26, which became effective on Feb. 1, mandates that an independent director may serve a maximum cumulative term of nine years in the same company, reckoned from 2012. Independent directors are now barred from serving as such in the same company after reaching the maximum cumulative term limit, but they can be elected as a regular director. The SEC’s goal in imposing stricter term limits on independent directors was simple: to promote efficient corporate governance, align with international best practices and open opportunities for other qualified individuals to serve as independent directors. An independent director, as the SEC puts it, is someone free from any relationship with the company that could impair the director’s ability to make objective decisions. Independent directors must not have any business or family ties with the management or major shareholders. Their role is to bring impartial judgment, promote transparency and protect the interests of minority shareholders and the investing public. Some companies previously provided meritorious justification for retaining independent directors after they had served the maximum nine-year term, citing factors like deep institutional knowledge and extensive expertise regarded as vital for the company’s stability and growth. For its opening salvo this year, the SEC circular had several casualties, with retired chief justice Artemio Panganiban taking the biggest hit. Panganiban, who served as Supreme Court chief justice from Dec. 21, 2005 to Dec. 6, 2006, saw his stints as independent director in listed firms GMA Network Inc., PLDT Inc., Petron Corp. and Manila Electric Co. (Meralco) end this year. Panganiban, together with veteran banker and economist Jaime Laya, was replaced by retired chief justice Reynato Puno and former Deustche Bank Manila Branch chief Enrico Cruz as GMA Network’s independent directors. In PLDT, Panganiban and Penshoppe Group executive chairman Bernie Liu were replaced by scientist and 2025 Eisenhower Fellow Erika Legara and former Sun Life Philippines CEO Benedicto Sison. Panganiban and Roxas Holdings chairman Pedro Emilio Roxas were replaced by Liu and veteran banker Bernadine Siy in utility giant Meralco. In Petron, Panganiban and former finance secretary Margarito Teves ended their term, with former chief justice Teresita Leonardo-de Castro and former associate justice Consuelo Ynares-Santiago taking over their spots. Teves also lost his spot as independent director of diversified conglomerate San Miguel Corp. due to the nine-year term cap, and was replaced by former Monetary Board member Antonio Abacan Jr. Pilipinas Shell Corp. said farewell to tycoon Fernando Zobel de Ayala and former Far Eastern University president Lydia Echauz as independent directors after they also reached the maximum allowable term. They were replaced by former Public Works Secretary Rogelio “Babes” Singson and retail tycoon Robina Gokongwei-Pe. Echauz, together with Corazon de la Paz-Bernardo, also completed their nine-year term limit for D&L Industries Inc., which in turn welcomed Cesar Romero, who held senior executive roles across Asia, Europe and worldwide operations within the Shell Group, and Richard Tantoco, who served as president of Energy Development Corp. from 2009 to 2023, as new independent directors. Puregold Price Club Inc. named banking executive and governance expert Gilda Pico as a new independent director following the completion of the nine-year term limit of Jaime Dela Rosa, while Filinvest Development Corp. welcomed Gemilo San Pedro as a new independent director as Virginia Obcena exited. In PAL Holdings Inc., former Procter & Gamble Philippines president Johnip Cua also reached the maximum nine-year term limit for independent directors and was replaced by former CATS Motors chairman Gregorio Yu. ABS-CBN president and CEO Carlo Katigbak ended his long run as independent director of SSI Group Inc. after reaching maximum cumulative term, and was superseded by former BPI Capital president and CEO Roland Gerard Veloso Jr. Philex Mining Corp. welcomed three independent directors – Benjamin Austria, Emerlinda Roman and Gerard Brimo – and saw the exit of Wilfredo Paras, who has been an independent director of the company since June 2011. The SEC circular was also felt in Wilcon Depot Inc. as the company’s previous independent directors Ricardo Pascua, Rolando Narciso and Delfin Warren likewise reached their maximum cumulative term of nine years and were replaced by Echauz, Florencia Tarriela and Arthur Aguilar. The Philippine Stock Exchange Inc. also complied with the SEC directive, electing new independent directors Jikyeong Kang and Niek Johan van Veen to replace Vicente Panlilio, who has reached his ninth year, and Jose Pardo, a former independent director who has been moved to a regular director representing other market participants. With new independent directors taking their seats at the board of many Philippine listed companies, the success of the SEC’s reform will ultimately be measured not by how many names were replaced, but whether those elected prove willing to exercise independence when it matters most.