SEC wants independent directors in firms with government contracts
MANILA, Philippines — The Securities and Exchange Commission (SEC) is preparing to enforce stricter governance on corporations vested with public interest or those with significant government contracts.
SEC commissioner Rogelio Quevedo said the commission would come out with a new definition of corporations vested with public interest. Those which will be classified as such will be required to elect independent directors.
He said corporations vested with public interest include contractors and those involved in flood control projects.
“We have noticed – I particularly, as the head of the governance department – that there are corporations whose capitalization is only P1 million, but were awarded with government contracts worth more than billions of pesos,” Quevedo said.
“So you can expect that in the coming months, the SEC will come up with a new definition of corporations vested with public interest, so that we will now be requiring the presence of independent directors in corporations vested with public interest,” he said.
Independent directors are described as persons who are independent of management and the controlling shareholder.
They must be free from any business or other relationship that could, or could reasonably be perceived to materially interfere with their exercise of independent judgment in carrying out their responsibilities as directors.
“As the supervising commissioner of governance, I am advocating that there must be independent directors not only in publicly listed companies, but also in corporations vested with public interest,” Quevedo said.
He said good governance goes beyond regulatory compliance, as it strengthens competitiveness, builds investor confidence and supports sustainable growth.
“The SEC is guaranteeing that it will safeguard good governance. Good governance will at least be the saving factor for encouraging investments in the Philippines,” Quevedo said.
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