MANILA, Philippines – The Shareholders Association of the Philippines (SharePhil), a group advocating for investor protection, wants minority shareholders to have a significantly stronger voice in appointing independent directors to ensure that a company is able to operate independently.
SharePhil has written Sen. Paolo Benigno Aquino, proposing amendments to the Corporation Code, among which include requiring companies to elect independent directors using a dual voting structure.
In particular, SharePhil wants independent directors to be voted by the shareholders as a whole and the minority shareholders as a separate class.
“This is to help ensure that our independent directors are truly independent as they will be elected not only by the controlling shareholders but also the minority shareholders,” SharePhil said.
Aquino, chairman of the Senate Committee on Trade, Commerce and Entrepreneurship, has filed a bill seeking amendments to the Corporation Code.
SharePhil also wants material related party transactions to be approved by the majority of the independent directors which in no case shall be less than two independent directors of the covered corporation. This is to prevent abusive related party transactions which are detrimental to the interest of the minority shareholders.
Apart from this, the group proposed a nine-year maximum term limit for independent directors of publicly-listed and insurance companies to align with other Asean countries under the Asean Corporate Governance Scorecard.
SharePhil likewise wants external auditors and corporate secretaries to be chosen by the majority of independent directors to help strengthen the independence of the external auditor and corporate secretary who play a crucial role in protecting the interest of the minority shareholders of a company.
The organization also proposed the presence of at least one independent director for the existence of quorum for meetings of the board of directors of covered companies.
SharePhil likewise wants to make it part of the fiduciary duty of directors and trustees to promote and develop a culture of corporate governance in the corporation.
“Covered corporations must adopt a system of compensation and reimbursement of reasonable expenses at such level to attract and retain the quality of independent directors needed by the corporation,” SharePhil said.
SharePhil said the Securities and Exchange Commission shall have the authority to define, add or otherwise modify the corporate governance requirements prescribed by the Corporation Code, in line with best international practices on good corporate governance.
“The proposals are envisioned to strengthen the independence of independent directors, corporate secretaries and external auditors which play crucial roles in protecting minority shareholders’ interest in our public companies,” SharePhil president Francis Lim said.
SharePhil is an organization which seeks to protect and promote shareholders’ rights in our country. Its mission is to be a major player in promoting domestic capital market development through advocacy, education and enlightenment of shareholders.
The organization’s vision is that by 2020, it shall be the leading institution and catalyst in the protection and promotion of shareholder rights, duties and responsibilities.