SEC proposes annual governance training for directors, officers

THE SECURITIES and Exchange Commission (SEC) has released a draft memorandum circular for public comment on corporate governance training for listed firms, public companies, registered issuers, and accredited training providers.

Issued on Feb. 5, the draft circular is open for comments until the end of the month and requires all directors and key officers of covered entities to attend at least one corporate governance training per year.

First-time directors and key officers must undergo initial training covering topics such as OECD governance principles, ASEAN Scorecard, SEC code, ESG (environmental, social, and governance) reporting, board duties, minority protection, financial oversight, compliance, ethics, illegal practices (e.g., insider trading, conflicts), liabilities, confidentiality, and competition law.

Subsequent sessions may delve deeper into these areas and be tailored to each company’s strategy, regulatory environment, and training needs.

Training may be conducted onsite, online, or in hybrid format either by SEC-accredited corporate governance institutional training providers (CG‑ITPs) or through in‑house programs, provided all programs are accredited by the SEC.

Institutions seeking CG‑ITP accreditation must be SEC-registered, demonstrate a track record in training, show sound financials and governance practices, and pay a P50,000 processing fee. Accreditation would be valid for five years, with a lower renewal fee for those in good standing.

Resource speakers must also be accredited, paying a P2,000 fee and meeting minimum qualifications, including relevant expertise, no pending fraud or governance violations, and attendance at least once per year at an SEC governance forum or roundtable.

Companies conducting in-house training must apply for accreditation for each program, show that content covers mandatory topics, maintain systems to document and store training records, pay P10,000 per program and P5,000 per speaker needing accreditation.

Both providers and companies must submit pre-training notices (program details, speakers, materials) and post-training reports (attendance, evaluations, certificates, documentation or recordings) and retain records for five years in an SEC-accessible online repository. Companies must also disclose directors’ and officers’ training in their Annual Corporate Governance Report or Integrated ACGR.

Limited exemptions are allowed, including for SEC-accredited speakers who maintain accreditation and conduct at least one accredited training annually, or for directors and officers attending qualifying foreign governance programs disclosed in governance reports and on company websites. Certain speakers, such as incumbent directors or officers speaking at their own company’s in-house training, incumbent and recently retired senior government officials, and foreign experts, are exempt from SEC accreditation.

Non-compliance may incur escalating fines for late filings, use of non-accredited speakers, failure to attend required training, misrepresentation, or refusal to allow SEC observers during training, with repeated violations potentially resulting in suspension or revocation of accreditation.

The circular would repeal earlier SEC memoranda on corporate governance training, the commission said. — Alexandria Grace C. Magno