06/02/2026
SEC MEMORANDUM CIRCULAR NO 7 SERIES OF 2026 dated January 26, 2026 effective February 1, 2026
RE: TERM LIMIT OF INDEPENDENT DIRECTORS ( IDs)
Highlights:
• Term Limit:
IDs should serve one-year terms, with a maximum cumulative service of nine (9) years in the same company, covering both continuous and intermittent service.
• Calculation:
Any fraction of a year over six (6) months counts as a full year; the nine-year count for incumbents began in 2012.
• Permanent Bar:
After nine years, an ID is permanently barred from being re-elected as an ID in that company but can still serve in a non-independent role.
• Cooling-Off:
An ID who moves to a non-independent role and wants to return as an ID must wait two years (a cooling-off period) and still stay within the nine-year cap.
• Penalties:
Non-compliance carries hefty fines (e.g., PHP 1M basic penalty per ID per year) and potential license suspension.
• Objective:
To strengthen board independence and align Philippine practices with international standards.
