Ex-PSE prexy not qualified to sit on board — SEC

The Securities and Exchange Commission (SEC) has ruled that former Philippine Stock Exchange (PSE) president Cayetano Paderanga is not qualified to serve as a director of the exchange and may have to relinquish his post to avoid violating the Securities Regulation Code (SRC).

In a memo to the SEC leadership dated Aug. 31, 2004, the Market Regulation Department said Paderanga is not qualified to sit on the board either as an independent or sectoral director representing market participants.

"While the PSE president is required to have some of the qualifications inherent in that of an independent director before he can be elected as president, once he assumes the presidency, he is then disqualified from becoming an independent director of the PSE," the memo said.

Paderanga resigned as PSE president last June 9 after it was discovered he held in a concurrent capacity a government position as president and chief executive officer of PNOC Development and Management Corp. (PMDC) and another private sector job as president of CIBI Information, Inc.

Under the SRC, the PSE president should not be a member nor be associated in any capacity, directly or indirectly, with any broker, dealer or member or listed company of the PSE.

The memo said Paderanga cannot occupy the seat allotted for sectoral director unless nominated by a qualified market participant association.

The SEC memo was in response to a PSE letter dated Aug. 25, 2004 asking for confirmation if Paderanga remains qualified as a director of the bourse as well as the granting of exemptive relief to PSE from the requirement of having three independent directors when lawyer Francis Lim assumes the PSE presidency this month.

The PSE’s request for exemptive relief from the requirement of having three independent directors was denied by the SEC’s Market Regulation Department. With the scheduled assumption of the PSE presidency by Lim, the exchange will only have two independent directors, short of the requirement that there should be three independent directors.

"No later than 15 days after Atty. Lim’s assumption of the PSE presidency, the board should fill up the vacant independent director seat by electing a qualified outsider, in accordance with the PSE bylaws," the memo stated.

The memo pointed out that if the PSE wishes to consider letting Paderanga serve as the sectoral director for other market participants, it should be done under the by-laws and rules and procedures.