Question & AnswerQ&A (BSP CIRCULAR NO. 592)
The primary objective is to safeguard against excessive concentration of economic power, unfair competitive advantage, or conflict of interest situations to the detriment of others through the exercise by the same person or group of persons of undue influence over the policy-making and/or management functions of similar financial institutions, while allowing organizational synergy and effective sharing of managerial and technical expertise.
QBs refer to investment houses, finance companies, trust entities, and all other non-bank financial institutions with quasi-banking functions.
NBFIs include investment houses, finance companies, trust entities, insurance companies, securities dealers/brokers, credit card companies, non-stock savings and loan associations, holding companies, investment companies, government non-bank financial institutions, asset management companies, insurance agencies/brokers, venture capital corporations, foreign exchange dealers, money changers, lending investors, pawnshops, fund managers, mutual building and loan associations, remittance agents, and other non-bank financial institutions without quasi-banking functions.
No. Except as authorized by the Monetary Board or as otherwise provided, there shall be no concurrent directorships between banks or between a bank and a QB without prior approval.
Concurrent directorships without prior Monetary Board approval are allowed between a bank and one or more of its subsidiary banks, QBs, and NBFIs, provided investment houses are excluded in some contexts.
Except as authorized by the Monetary Board or otherwise provided, there shall be no concurrent directorship and officership between banks or between a bank and a QB or an NBFI. Exceptions exist for a bank and its subsidiaries subject to conditions.
As a general rule, concurrent officerships, including secondments, between banks, or between a bank and a QB or an NBFI, are not allowed unless prior approval from the Monetary Board is obtained and conditions are met.
Secondment refers to the transfer or detachment of a person from his regular organization for temporary assignment elsewhere, where the seconded employee remains the employee of the home employer, although remuneration may be borne by the host organization.
Key conditions include: no functional conflict of interests; officers holding top executive positions may not hold equivalent positions concurrently; ownership limits on subscribed capital stock are observed; adequate justification is submitted if positions are full-time; and that some roles may be allowed if they do not involve management functions.
A husband and his wife shall be considered as one person for purposes of applying the rules on concurrent directorships and officerships.
The Corporate Governance Committee is responsible to conduct an annual performance evaluation of the Board of Directors and senior management, determine if directors or officers with multiple positions are adequately carrying out their duties, and recommend changes to the board as necessary based on the review.
Officers holding the positions of President, Chief Executive Officer, Chief Operating Officer, or Chief Financial Officer or their equivalents may not be concurrently appointed to any of said positions or their equivalent in other financial institutions covered by the rules.
The provisions apply to persons appointed as representatives of the government or government-owned or controlled entities unless otherwise provided under existing laws.
Concurrent officership positions, such as internal auditor, corporate secretary, assistant corporate secretary, and security officer, that do not involve management functions are allowed between a bank and its subsidiaries or between financial institutions, provided that at least 20% of equity is owned by a holding company or group member.
The Circular took effect fifteen (15) calendar days following its publication in the Official Gazette or in a newspaper of general circulation.