SEC ready for court battle vs brokers over term limits

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March 24, 2026 | 12:00am

MANILA, Philippines — The Securities and Exchange Commission (SEC) is ready to face any legal action that could be taken by those opposing its plan to impose a term limit on broker-directors of an exchange.

“We’re not afraid to go to court if they want to go to court,” SEC chairperson Francis Lim said on the sidelines of the Economic Journalists Association of the Philippines sustainability forum yesterday.

Ma. Vivian Yuchengco, who is among the current broker-directors of the Philippine Stock Exchange (PSE) who will be affected by the SEC’s proposal, has hinted on seeking potential legal action.

“I don’t want to be fighting with Francis (Lim). I will let the lawyers fight with him. But as long as I’m still able, then I will fight. We’re friends. But I mean, I want to ask him, why are you doing this? For whom?” Yuchengco said.

Sought for comment on Yuchengco’s comments, Lim said: “Our proposed draft contains all the reasons. We honestly believe that it’s the right thing to do for the market and we will stand by that decision. We will decide according to what is best to the market after considering those comments.”

The SEC has sought comments, suggestions and inputs from concerned stakeholders on the draft circular it issued on March 4, with the deadline for submission ending last Thursday.

Lim has already stressed that the term limits on the SEC’s draft memorandum circular on broker-directors are non-negotiable, but said that he is also willing to listen to the market.

“If they have a valid comment not to do it, we’ll consider it. We have a proposal, so what’s their counter-proposal? That’s how it is,” the SEC chair said.

“That’s why we have an exposure draft, so that we can listen to what the market says.  But if it’s only up to me, there’s no term limit. But anyway, I’m open-minded,” he said.

Lim also assured that the proposed circular does not violate the shareholders’ right.

“I’m very sure of that. I’m not a lawyer for nothing,” he said.

Yuchengco has expressed her opposition to the SEC’s plan, saying that brokers are also shareholders of the PSE.

“It’s wrong. Number one, we are owners. We are shareholders of PSE. So no matter what, we sit on the board. You can’t limit us. Can you limit Tessie Sy or Jaime Zobel? They are owners of Ayala and SM. We are the owners of the seat. How can he limit us, right?” Yuchengco, founder of First Resources Management and Securities Corp. and chair of the Philippine Association of Securities Brokers and Dealers Inc., said.

For Yuchengco, the SEC chairperson should look for other things to reform instead of limiting the number of years of an independent director and the number of years for brokers.

“Why do you have to fix something that isn’t broken?” she said.

Yuchengco served as a director of the PSE from 1993 to 1994, 1996, 1998, 2000 to 2001, and served as chairperson in 2002. She was re-elected as director in 2004 up to the present.

Last week, big business groups such as the Management Association of the Philippines, Financial Executives Institute of the Philippines, Institute of Corporate Directors, Capital Markets Development Foundation Inc. and Investment House Association of the Philippines issued a joint statement express­ing their sup­port for the SEC’s draft memorandum circular proposing term limits for broker-directors of an exchange.

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

SharePHIL said it welcomes the SEC’s initiative to strengthen good corporate governance and protect minority investors.

“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,” SharePHIL said.

The group said the regulatory initiative is consistent with globally recognized governance standards, affirming that appropriate board term lengths are critical to ensuring active shareholder participation and fair sectoral representation.

“SharePHIL stands firmly behind the SEC in this necessary measure to encourage board renewal and reinforce investor confidence. The association remains fully committed to partnering with the commission and other capital market stakeholders to foster a fair, transparent and globally competitive Philippine capital market,” it said.

Under the SEC’s proposed guidelines, a broker-director may be elec­ted for a term of one year, subject to a maximum cumulative period of 10 years, whether consecutive or intermittent, in the same exchange.

After serving a cumulative term of five years, whether consecutive or intermittent, the broker-director will observe a two-year cooling-off period prior to being eligible for reelection as a broker­-director, provided that any broker-director elected as such after the effectivity of the circular is not covered by the cooling-off period.

A ser­vice for a frac­tion of a year exceeding six months will be considered as one full year for purposes of computing the five-year term and 10-year maximum cumulative service.