SEC’s Lim firm on broker-director term limits

SECURITIES and Exchange Commission (SEC) Chairman Francisco Ed. Lim said the proposed 10-year cumulative term limit for broker-directors of an exchange remains firm, while noting that the Commission is open to valid feedback from market participants.

“As far as I’m concerned, the term limits are non-negotiable, but I’m still listening to their comments. If they have a valid comment, we’ll consider it,” he told reporters on the sidelines of an event last week.

In a draft memorandum circular released on March 3, the Commission said it plans to limit broker-directors, or individuals representing trading participants on an exchange board, to a maximum cumulative service period of 10 years.

The proposal aims to ensure “fair and effective representation” and allow more qualified brokers to bring “new perspectives” to exchange boards.

Mr. Lim also underscored the importance of public consultation on the proposal. “We have to listen to them [the public] and we will discuss it. Not only me, but the En Banc — it’s an En Banc decision,” he said.

The Commission invited stakeholders to submit comments, suggestions, and inputs on the draft until March 19, 2026.

Under the proposed guidelines, a broker-director may be elected for a one-year term. After serving a cumulative period of five years, whether consecutive or intermittent, the director must observe a mandatory two-year cooling-off period before becoming eligible for re-election.

After completing the cooling-off period, a director may serve an additional term of up to five years, provided the overall 10-year cumulative limit is not exceeded.

If implemented, the proposal would affect several long-serving broker-directors at the Philippine Stock Exchange (PSE), including Ma. Vivian Yuchengco (28 years), Eddie Gobing (25 years), Wilson Sy (12 years), and Diosdado Arroyo (six years).

Mr. Lim said the draft does not violate existing laws. “I’m very sure of that. I’m not a lawyer for nothing,” he said.

Market participants said the proposal could help balance board renewal with continuity.

“I am sure they’re [the SEC] just following the Global standards to make sure we are in compliance to avoid being downgraded, similar to what happened to Indonesia last month,” COL Financial Group, Inc. Chairman Edward K. Lee said in a Viber message.

“The SEC’s proposal aims to keep the PSE board fresh without losing too much experience. By limiting broker-directors to a maximum of 10 years total and requiring a two-year break after five years of service, the SEC creates more chances for new people with fresh/up to date ideas to govern and contribute,” BDO Securities Corp. President John Tristan D. Reyes said in a Viber message.

“At the same time, the rules still allow experienced directors to serve for a reasonable amount of time to share their knowledge and even return after a break, so boards don’t lose all their expertise at once and ensure continuity,” he added.

The Shareholders’ Association of the Philippines (SharePHIL) also expressed support for the proposed circular imposing a 10-year cumulative term limit and a cooling-off period for broker-directors of an exchange.

“SharePHIL welcomes the Commission’s initiative to strengthen good corporate governance and protect minority investors,” the organization said in a statement on Friday.

“By instituting these limits, the SEC is laying the groundwork for meaningful board refreshment, preventing entrenchment, and ensuring that new perspectives are consistently integrated into the governance structure of the PSE,” it added.

SharePHIL said it supports measures that promote board renewal and investor confidence, and committed to work with regulators and stakeholders to help develop a fair capital market. It also noted that the proposal aligns with International Organization of Securities Commissions (IOSCO) principles on board terms and the Revised Corporation Code’s mandate to adopt internationally accepted best practices.

Similar views were expressed by other business groups, including the Financial Executives Institute of the Philippines (FINEX), Institute of Corporate Directors (ICD), Management Association of the Philippines (MAP), Capital Markets Development Foundation, Inc. (CMDFI), and the Insurance Brokers Association of the Philippines (IBAP).

SharePHIL also called on listed companies, brokers, institutional investors, and the public to participate in the SEC’s consultation process. — Alexandria Grace C. Magno