The Securities and Exchange Commission (SEC) has stood by its decision to set term limits for broker-directors of the Philippine Stock Exchange (PSE). Under SEC Memorandum Circular No. 17, these directors may serve a maximum of 10 years in total at any exchange.
The SEC explained the rule was issued under its authority from Republic Act No. 8799 or the Securities Regulation Code, and Republic Act No. 11232 or the Revised Corporation Code. It stated the measure aims to raise corporate governance standards, improve transparency, and boost integrity and accountability—key steps toward building a strong, world-class capital market that draws investment and supports growth.
Former PSE chair Ma. Vivian Yuchengco and director Eddie Gobing have asked the Court of Appeals to declare the policy unconstitutional. Yuchengco served 28 years on the board, while Gobing served 25 years.
The SEC said it was disappointed the rule now faces legal challenge, noting it followed two years of consultations and gave a reasonable transition period. It added the measure does not take away shareholders’ right to choose their directors, as they may still elect anyone qualified under the law. There is no unlimited right to pick specific individuals who no longer meet regulatory standards, the agency said.
In their petition filed last week, Yuchengco and Gobing argued the rule wrongly excludes the most experienced leaders just to make space for others who could not win enough votes in elections. They claimed the policy effectively bars long-serving directors who consistently earned strong shareholder support.
SEC Chairman Francis E. Lim said the agency is ready to defend the reform. He emphasized that serving as an exchange director is a privilege, not a guaranteed right, and must follow legal and regulatory standards. Good governance needs fresh ideas and regular board renewal, with focus on the market’s long-term good rather than personal or group interests, Lim added.
