SEC 'ready to face court' over 10-year broker-director limit

The Securities and Exchange Commission (SEC) on Monday defended its proposal to impose a 10-year cumulative term limit for broker-directors, saying it is prepared to go to court after an affected party challenged the measure.

SEC Chairman Francis Lim said the agency stands by its planned memorandum circular (MC) on limiting the terms of independent directors, capping them at 10 years — a move that could affect four of the five current broker-directors.

“We honestly believe that it’s the right thing to do for the market and we will stand by that decision. But in any event, we’re still in the process of receiving comments, and we will decide what is best for the market after considering those comments,” Lim told reporters on the sidelines of the EJAP Sustainability Forum in Makati City.

“We’re not afraid to go to court if they want to go to court,” he added.

The draft MC, released on March 3, proposes to limit broker-directors — individuals representing trading participants on an exchange board — to a maximum cumulative service period of 10 years. The draft was open for public comments until March 19, 2026.

Under the proposal, a broker-director may be elected for a one-year term and serve a cumulative total of five years, whether consecutive or intermittent, followed by a mandatory two-year cooling-off period before being eligible for reelection.

A director may then serve an additional term of up to five years, as long as the 10-year cumulative cap is not exceeded.

The SEC said the measure aims to promote “fair and effective representation” and allow qualified brokers to bring “new perspectives” to exchange boards.

The proposal would impact several broker-directors at the Philippine Stock Exchange, including Ma. Vivian Yuchengco (28 years), Eddie Gobing (25 years), Wilson Sy (12 years), and Diosdado Arroyo (6 years). Yuchengco, who heads First Resources Management and Securities Corp., reportedly said that ownership rights must also be respected and that she would have her lawyers review the matter.

Several business groups, including the Management Association of the Philippines (MAP), the Financial Executives Institute of the Philippines (FINEX), the Institute of Corporate Directors, the Capital Markets Development Foundation Inc., and the Investment House Association of the Philippines, issued a joint statement supporting the proposal.

“The proposed circular introducing reasonable term limits for broker-directors would be a valuable step toward reinforcing the integrity and resilience of the Philippine capital markets,” the statement read.

“Term limits do not diminish shareholder choice — they activate it. They ensure that the right to vote is exercised on a continuing basis, with stockholders periodically selecting from among other qualified brokers to bring fresh perspectives and renewed accountability to the board,” it added.—MCG, GMA Integrated News