SEC imposes 10-year cumulative term limit for broker directors

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SEC Chairperson Francis Lim explains that the move aims to strengthen governance standards as strong institutions require regular renewal and independent oversight

MANILA, Philippines – The Securities and Exchange Commission (SEC) has imposed a 10-year cumulative term limit for broker directors of exchanges in a bid to strengthen governance standards and promote fair representation.

In a Memorandum Circular issued on Thursday, May 21, the SEC stated that a broker director may only serve a maximum cumulative limit of 10 years in the same exchange. After five cumulative years of service, a broker director must also observe a one-year cooling-off period before they are eligible for re-election.

Broker directors are board members of an exchange that represent brokerage firms or trading participants.

SEC Chairperson Francis Lim explained that strong institutions require regular renewal and independent oversight. (READ: The high stakes showdown between the SEC and Vivian Yuchengco over PSE board term limits)

“By setting reasonable term limits for broker directors, the SEC seeks to strengthen market governance, mitigate potential conflicts of interest, level the playing field among the different categories of directors in exchanges, and align our regulatory framework with internationally recognized standards, while ensuring a fair and orderly transition,” he said.

The circular also provides a two-year transition period for incumbent broker directors to ease the transition.

Violating the cumulative term limit can cost companies a P1-million fine per broker per year and a P30,000 penalty for every month that the violation continues. 

Court rules vs GMA Network on independent directors

Meantime, a Makati court has denied GMA Network Incorporated’s bid to block the Securities and Exchange Commission’s new rule that limits independent directors’ tenure in publicly listed companies.

Memorandum Circular 7 series of 2026, which took effect on February 1, limits independent directors’ term to a maximum of nine years in the same publicly listed company.

In a decision dated May 11, the Makati City Regional Trial Court Branch 138 denied the TV giant’s application for a temporary restraining order against the independent director term limits. After this period, these independent directors will be banned from being an independent director for the same company, but they can be elected as regular directors instead.

Since this rule will apply retroactively from 2012, these new term limits will affect the positions of former chief justice Artemio Panganiban and former Bangko Sentral ng Pilipinas governor Jaime Laya, who have both been on GMA’s board of directors since 2007.

“[The SEC] cannot allow the Philippine capital market to remain globally uncompetitive simply because a single corporation finds the vital task of board renewal as administratively inconvenient,” the decision read.

“The State’s paramount interest in protecting the investing public and fostering robust economic growth far outweighs the administrative inconvenience claimed by [GMA].”

On Thursday, a GMA Network special board meeting agreed to withdraw the company’s petition for certiorari in the network’s case against SEC Memorandum Circular No. 7 Series of 2026.  – Rappler.com