MANILA, Philippines - The Bangko Sentral ng Pilipinas (BSP) has revised its rules on the appointments of independent directors of banks and other financial institutions.
Under Circular 793 dated April 8, the central bank said independent directors cannot be a “relative, legitimate or common-law of any director, officer or majority shareholder of the bank or any of its related companies.â€
“For this purpose, relatives refer to the spouse, parent, child, brother, sister, parent-in-law, son-/daughter-in-law, and brother-/sister-in-law,†the circular stated.
The amendment changed the original provisions in both the Manual of Regulations for Banks and Manual of Regulations for Non-Bank Financial Institutions, which stated that “relatives within the fourth degree of consanguinity†cannot be appointed.
Under the original rule, first cousins and nephews, among others, may not be named as independent directors. The circular effectively removed that provision but added in-laws among the prohibited candidates.
BSP officials cannot be immediately reached for comment. But the circular stated the move was meant to “align†bank rules with that of other corporations governed by the Securities Regulations Code.
Under the Code, an independent director is a “person other than an officer or employee of the corporation, its parent or subsidiaries, or any other individual having a relationship with the corporation.â€
In 2002, the Securities and Exchange Commission issued Memorandum Circular 16 which laid out the guidelines on the nomination and election of independent directors for public companies. A provision banning relatives to the position was included.