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SEC wants majority of PSE board independent directors

By James A. Loyola

The Securities and Exchange Commission (SEC) wants independent directors to constitute a majority in the Board of Directors of exchanges and other organized markets in the Philippines to align with international best practices.

In a statement, the SEC said this is prescribed under Republic Act No. 11232, or the Revised Corporation Code of the Philippines.

Under a draft memorandum circular released for public comment, independent directors shall constitute at least a majority of the members of the board of directors of exchanges and other organized markets.

Section 179 (m) of the Revised Corporation Code authorizes the SEC to “prescribe the number of independent directors” and (d) to “promote corporate governance and the protection of minority investors, through among others, the issuance of rules and regulations consistent with international best practices.”

The draft memorandum circular providing for the SEC Rules on the Number of Independent Directors of Exchanges and Other Organized Markets aligns with the best practices of major and comparable markets in many economies, where independent directors comprise the majority of the board of securities exchanges.

In Bursa Malaysia, for instance, seven of its eight directors are non-executive directors while the Singapore Exchange has eight of its 11 directors who are independent and non-executive.

The Australian Securities Exchange also adopts a policy that a majority of its directors must be independent. In the Stock Exchange of Thailand, six members of its board are appointed by the country’s securities regulator and four are elected by members of the exchange.

Independent or outside directors also currently comprise the majority of the members of the board of the Hong Kong Stock Exchange; Japan Exchange Group, which owns the Tokyo Stock Exchange and Osaka Exchange; Intercontinental Exchange, Inc., which owns the New York Stock Exchange; and the London Stock Exchange.

The draft SEC Rules on the Number of Independent Directors of Exchanges and Other Organized Markets are available on the Commission’s website.


Source: Manila Bulletin (https://business.mb.com.ph/2020/06/27/sec-wants-majority-of-pse-board-independent-directors/)

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