Philippine Securities and Exchange Commission imposes strict nine-year term cap and permanent re-election bar for independent directors in listed companies

The Philippine Securities and Exchange Commission issued SEC Memorandum Circular No. 7, Series of 2026, tightening term limits for independent directors of companies with a class of equities listed for trading with an Exchange. From February 1, independent directors who have reached the maximum cumulative term are perpetually barred from re-election as an independent director in the same company, replacing prior guidance that allowed extensions beyond the cap subject to justification and shareholder approval. Independent directors may serve a maximum cumulative period of nine years in the same company, reckoned from 2012, with both continuous and intermittent service counted and any fractional period exceeding six months treated as one full year. Where an individual has not yet reached nine years but has served in the interim as a non-independent director or as an officer, a two-year cooling-off period applies before re-election as an independent director, while a director who has already served the maximum term may continue as a non-independent director or officer without any cooling-off period. Non-compliance triggers a basic penalty of PHP 1 million per year for each independent director in breach, plus a monthly fine of PHP 30,000 while the director remains on the board, and a third and succeeding offense may result in suspension or revocation of the company’s secondary or primary license. As a transitional measure, incumbent independent directors who have already served the maximum term upon effectivity may continue to serve until the 2026 annual stockholders’ meeting or another day previously approved by the Commission.