Rules for Independent Directors in Insurance Boards

An independent director must not be an officer, employee, or person with relationships that could affect independent judgment.
Key criteria include:
1. Not a regular director, officer, or employee of the company or its affiliates in the past three years.
2. Not a director, officer, or employee of substantial stockholders or related companies in the past three years.
3. Does not own over 2% of outstanding shares or enough shares to elect a board member.
4. Not related within the fourth degree to directors, officers, or significant stockholders.
5. Not acting as nominee or representative of any director or substantial shareholder.
6. Not retained as professional adviser, auditor, consultant, agent, or counsel in the past three years.
7. Not a securities broker-dealer with trust responsibilities in listed companies.
8. Independent of management, free from business relationships that could influence judgment; only arm's length transactions allowed.
9. Not appointed in capacities such as Chairman Emeritus or advisory boards in related companies in past three years.
10. Not affiliated with nonprofits receiving significant funding from covered entities or substantial shareholders.
11. Not an executive officer in companies where executives of the covered entity serve as directors.
Related companies include parent, subsidiaries, affiliates, and companies where majority shareholders hold controlling interest.

Must be a college graduate or have at least five years’ experience or exposure to the corporation’s business.
Must possess proven integrity, probity, and independence.

Maximum cumulative term is nine years.
Term limit reckoning dates differ: January 2, 2015 for insurance companies; September 21, 2016 for pre-need companies and HMOs; other entities exclude prior terms.
Independent Directors who reach term limits are barred from re-election as independent directors but may serve as non-independent directors.
Exceptions allow continuation as independent directors if the board submits written justification and obtains majority shareholder approval during the annual meeting.

The Insurance Commission may impose a penalty of PhP200,000 per calendar year of non-compliance.
Failure to comply or pay penalties affects the renewal of the Certificate of Authority.