Question & AnswerQ&A (CIRCULAR LETTER NO. 2018-36)
The board must have at least two (2) independent directors or twenty percent (20%) of the members of the board, whichever is higher.
Any fractional result from applying the required minimum proportion shall be rounded off to the nearest whole number.
A formal written justification for non-compliance must be submitted to the Insurance Commission for its consideration and/or approval.
An independent director is a person other than an officer or employee of the corporation, its parent or subsidiaries, or anyone with a relationship that could interfere with independent judgment in carrying out director responsibilities.
An independent director must not have been a regular director, officer, or employee of the covered entity or related companies in the past three (3) years from the date of appointment/election.
An independent director must not own more than two percent (2%) of the outstanding shares or have shares sufficient to elect one (1) board member.
An independent director shall serve for a maximum cumulative term of nine (9) years.
No, an independent director who has served the maximum term is perpetually barred from re-election as an independent director but may continue as a non-independent director.
Yes, if the company submits a formal written justification to the Commission and obtains majority shareholder approval, an independent director may continue to serve beyond the nine-year term limit.
The Insurance Commission may impose a penalty of Two Hundred Thousand Pesos (PhP200,000.00) per calendar year of non-compliance.
Failure to comply or pay penalties will be considered during the renewal of the Certificate of Authority and may affect renewal.
An independent director must be at least a college graduate or have at least five (5) years exposure to the business, and must possess proven integrity, probity, and independence.
For insurance companies, the term limit is reckoned from January 2, 2015; for prenew companies and HMOs, from September 21, 2016; for others, previous terms before the Circular do not count.
No, an independent director cannot be a relative by affinity or consanguinity within the fourth degree of a director, officer, or substantial shareholder.
No, securities broker-dealers of listed companies and registered issuers are disqualified from being independent directors.