Makati RTC denies TRO vs SEC director term limit rule

THE Makati Regional Trial Court (RTC) Branch 38 denied an application for a temporary restraining order (TRO) against a Securities and Exchange Commission (SEC) circular that imposes term limits on independent directors of publicly listed companies, the regulator said.

“The RTC denied GMA’s application for a TRO following revelations that the network failed to disclose a key board decision. While GMA’s petition, filed on March 26, claimed an urgent need for relief due to a looming May 2026 ASM, evidence presented by the SEC, through the OSG (Office of the Solicitor General), revealed that GMA’s board had already approved postponing the meeting to December 2026,” the SEC said in a statement on Tuesday.

“The RTC ruled that no ‘extreme urgency’ exists, as the network now has ample time to vet potential independent directors in compliance with SEC regulations,” it added.

SEC Memorandum Circular No. 7, Series of 2026 (MC 7), which took effect on Feb. 1, imposes a maximum cumulative term of nine years for an independent director in the same company, reckoned from 2012. After reaching the limit, the individual may no longer serve as an independent director of that company but may still be elected as a regular director.

On March 26, GMA filed a petition for certiorari seeking to nullify and set aside MC 7, and requested the immediate issuance of a TRO and/or a writ of preliminary injunction.

In its opposition, the SEC said GMA failed to meet the requisites for the issuance of a TRO, including showing that a clear and unmistakable right was being violated by the implementation of the circular.

Through the Office of the Solicitor General, the SEC said that when the petition was filed on March 26, GMA had already disclosed to the Philippine Stock Exchange on March 25 that it was rescheduling its ASM from May 20 to Dec. 9.

The SEC said MC 7 is consistent with the state’s policy to promote corporate governance reforms aimed at raising investor confidence, developing the capital market, and supporting economic growth.

It added that Section 22 of the Revised Corporation Code authorizes the SEC to prescribe the “qualifications, disqualifications, voting requirements, duration of term and term limit, maximum number of board membership and all other requirements” for independent directors to strengthen their independence and align with international best practices.

In response to the petition, SEC Chairperson Francis Ed. Lim earlier said public companies should avoid entrenched board positions. “Our people clamor against political dynasties — so our public companies must reject boardroom entrenchment. No double standards,” he said.

“We must raise our governance standards to restore investor confidence. Our stock market has been falling behind. The time to act is now-and we call on everyone to step up for the sake of our capital markets,” he added. — A.G.C. Magno