Philippine SEC plans independent director rule for government contractors
The regulator plans to redefine which corporations fall under the public-interest category, including contractors involved in flood control projects.
Companies handling government contracts could face a requirement to elect independent directors under governance changes being prepared by the Philippines’ Securities and Exchange Commission (SEC), commissioner Rogelio Quevedo said.
Quevedo said the SEC would revise its definition of corporations vested with public interest in the coming months. Businesses covered by that classification would have to elect independent directors. He identified contractors, including companies working on flood control projects, as falling within the category.
Explaining the planned changes, Quevedo said the regulator had observed companies with capitalisation of only ₱1 million receiving government contracts worth billions of pesos. He advocated extending independent-director requirements beyond publicly listed businesses to other corporations considered to have a public-interest role.
Independent directors must be separate from management and controlling shareholders, without business ties or other relationships that could materially compromise their judgement, or reasonably appear to do so. Quevedo said stronger governance could bolster competitiveness, investor confidence and sustainable growth.
