SEC Limits Independent Director Term to Nine Years

The Securities and Exchange Commission (SEC) has issued Memorandum Circular No. 7, Series of 2026, which introduces a nine-year cumulative term limit for independent directors of publicly listed companies. The measure aims to strengthen corporate governance by preserving the independence and objectivity of directors who are expected to remain free from management influence.

Under the circular, independent directors must meet continuing qualifications, including maintaining beneficial security ownership at or below two percent (2%), attending at least 50% of board meetings unless justified by grave illness or death, and not serving as an officer or employee of the corporation. Furthermore, individuals are disqualified if they are judicially declared insolvent or have final convictions for crimes involving moral turpitude, fraud, or offenses punishable by more than six years of imprisonment.