New rules require firm directors to shape up

Directors of listed corporations including those of the Philippine Stock Exchange who are often absent in board meeting had better shape up, especially if they still have plans of running in the next board elections.

The Securities and Exchange Commission, in response to a query by PSE corporate secretary Francisco Villaroman, ruled that a provision in the Corporate Governance rules for the temporary disqualification of a director due to absences from board meetings is now effective and enforceable.

Under the rules, the absence of a director of a listed company for more than half of all meetings called by the board is a ground for temporary disqualification. The disqualification will apply for purposes of the succeeding election.

Other grounds include the refusal of a director to fully disclose his/her business interests as required under the Securities Regulation Code and the dismissal from directorship in another listed company for cause.

Corporate secretaries are required to file after the end of the fiscal year a certification as to the attendance of directors at board meetings.

Tougher responsibilities have been given to corporate secretaries of listed firms to make sure that board procedures are being followed and that rules and regulations are being complied with.

Villaroman was apparently trying to send a strong signal to a group of directors, headed by Robert Coyiuto Jr., that he will effectively perform his responsibilities and obligations as corporate secretary of the PSE.

The group, tagged as the opposition bloc in the PSE, has reportedly failed to attend a number of meetings of the board of directors, especially during the first few months since Vivian Yuchengco assumed the chairmanship of the exchange.

Apart from Coyiuto, the other PSE directors comprising the group are Eddie Gobing, Federico Lim, Harry Liu and Edwin Luy.

These five directors have been at loggerheads with Yuchengco and PSE president Ernest Leung on certain issues.

They have earlier asked PSE management to defer the acquisition of a new computer system worth $700,000. They said the purchase of the new computer system is not practical at this time given the current low trading volume, a sluggish global economy, the impending war in the Middle East.

The group said the move will just tie up a substantial amount of PSE money in a system that the exchange may not be able to utilize to its full capacity given the lean trading volume it has.

The Coyiuto group also asked for transparency in the transaction, like what items were considered in choosing the entity that will provide the new computer system.

Leung, on the other hand, said the new computer system will have stock transactions settled and cleared the same day the trade was made.

While acknowledging the objections raised by the Coyiuto group, Leung said now is still the right time to purchase a new computer system to help speed up the PSE’s clearing and settlement system.

The Coyiuto group likewise protested the current PSE management’s alleged prejudice against broker-stockholders and asked non-broker directors to be impartial and objective when certain issues are raised or policies are adopted affecting the majority of the brokers.