c. Independent Directors

Requirements:

Independent directors must be:

• independent of management and free from any relationship which could materially interfere with the exercise of independent judgment as a director
• a holder of at least one share registered in the corporation’s books; receipt of director’s fees from the corporation does not, by itself, defeat independence (RA 11232, Sec. 22)
• elected by the shareholders present or entitled to vote in absentia during the election of directors.
• 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.

Corporations required to have Independent Directors

The board of the following corporations vested with public interest shall have independent directors constituting at least twenty percent (20%) of such board:

• Corporations covered by “The Securities Regulation Code”¹, namely:
• those whose securities are registered with the SEC,
• corporations listed with an exchange or with assets of at least Fifty million pesos (P50,000,000.00) 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;
• Banks and quasi-banks, NSSLAs, pawnshops, corporations engaged in money service business, pre-need, trust and insurance companies, and other financial intermediaries; and
• Other corporations engaged in business vested with public interest similar to the above, as may be determined by the SEC, considering such factors:
• 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.

Term, Holdover, and Removal –R.A. No. 11232, Section 22² and 27

Term of Office (Sec. 22)³

• Directors shall be elected for a term of one (1) year from among the holders of stocks registered in the corporation’s books
• Trustees shall be elected for a term not exceeding three (3) years from among the members of the corporation.

Each director/trustee shall hold office until the successor is elected and qualified.