As provided in the Revised Corporation Code, the board of the following corporations vested with public interest shall have independent directors constituting at least twenty percent (20%) of such board:
- a) Corporations covered by Republic Act No. 8799, otherwise known as “The Securities Regulation Code”, namely those whose securities are registered with the Securities and Exchange Commission, corporations listed with an exchange, or with assets of at least P50,000,000 and having two hundred (200) or more holders of shares, each holding at least one hundred (100) shares of a class of its equity shares. These are also called “public companies“;
- b) Banks and quasi-banks, Non- Stock Savings and Loan Associations (NSSLAs), pawnshops, corporations engaged in money service business, pre-need, trust and insurance companies, and other financial intermediaries; and
- c) Other corporations engaged in business vested with public interest similar to the above, as may be determined by the SEC, after taking into account relevant factors which are germane to the objective and purpose of requiring the election of an independent director, such as the extent of minority ownership, type of financial products or securities issued or offered to investors, public interest involved in the nature of business operations, and other analogous factors.
An independent director is a person who, apart from shareholdings and fees received from the corporation, is independent of management and free from any business or other relationship which could, or could reasonably be perceived to materially interfere with the exercise of independent judgment in carrying out the responsibilities as a director.
[See also Board of Directors/Trustees under the Revised Corporation Code]
Independent directors must be elected by the shareholders present or entitled to vote in absentia during the election of directors. Independent directors shall be subject to rules and regulations governing their qualifications, disqualifications, voting requirements, duration of term and term limit, maximum number of board memberships and other requirements that the SEC will prescribe to strengthen their independence and align with international best practices.
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