Both the Securities Regulation Code (RA 8799) and the Revised Corporation Code (RA 11232), unlike its predecessor, require the election of independent directors in specified instances.
Under the Securities Regulation Code, the following corporations are required to have independent directors in their respective boards:
- A corporation with a class of equity securities listed for trading on an exchange;
- A corporation with assets in excess of ₱50,000,000 and having 200 or more holders, at least 200 of which are holding at least 100 shares 0f a class of its equity securities; and
- A corporation which has sold a class of equity securities to the public pursuant to a effective registration statement in compliance with Section 12.
The Revised Corporation Code provides that the board of the following corporations vested with public interest shall have independent directors:
- Corporations covered by Section 17.2 of Republic Act No. 8799, otherwise known as “The Securities Regulation Code”, namely those whose securities are registered with the Commission, corporations listed with an exchange or with assets of at least Fifty million pesos (50,000,000.00) 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, preneed, trust and insurance companies and other financial intermediaries; and
- Other corporations engaged in businesses vested with public interest similar to the above, as may be determined by the Commission, 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.
Required Number of Independent Directors
The minimum number of independent directors required under the Securities Regulation Code is whichever is lesser between 2 or such number constituting at least 20% of the board.
Under the Revised Corporation Code, the independent directors shall constitute at least 20% of the board.
In case of Conflict
Should there be irreconcilable differences between the provisions of the Securities Regulation Code and the Revised Corporation Code, it is submitted that the latter will prevail in accordance with Sec. 187 thereof.