Finance Secretary Cesar V. Purisima lauded the Insurance Commission’s (IC) circular letter released last December limiting the term of independent directors to 5 consecutive years. Purisima earlier called on the IC to align its policy with that of the Securities and Exchange Commission (SEC), another attached agency of the Department of Finance (DOF), over listed companies with provisions on term limits.
Purisima congratulated the IC saying, “We applaud the Insurance Commission for taking yet another bold step towards good governance in a much-needed regulation for private companies providing life and non-life insurance. Aligning and standardizing good governance policies across all attached agencies of the DOF is a key priority as we aim to institutionalize reforms.”
Circular Letter No. 2014-49 dated 11 December 2014 provided for the term limit rule on the election of independent directors in Life and Non-Life Insurance Companies, pursuant to Section 437 of Republic Act No. 10607 otherwise known as the Amended Insurance Code.
Further to the 5-year term limit, a “cooling period” of 2 years is required for the independent director to be eligible for another election as such in the same company. However, once an independent director already served such position for 10 years, the circular clarifies that the independent director shall become perpetually ineligible to be elected as such in the same company.
IC Commissioner Emmanuel Dooc said, “Imposing term limits on independent directors promotes infusion of new ideas and perspectives in the boards of directors. This is consistent with our government’s philosophy that good governance must extend from the highest ranks of public service to private companies that serve our people.”