Philippine SEC Unveils Bold Governance Reforms to Attract Global Investors
In a sweeping move to modernize corporate oversight, the Philippine Securities and Exchange Commission (SEC) has launched a series of reforms aimed at elevating corporate governance standards to match global best practices. These measures focus on improving transparency, accountability, and investor protection, all of which are vital pillars for strengthening confidence in the country's capital markets.
Over the past two years, the SEC has introduced five major initiatives targeting publicly listed companies. These include new rules on beneficial ownership transparency, sustainability reporting, auditor fee disclosure, cornerstone investor participation in IPOs, and increased transparency in shareholder meetings.
In July 2024, under SEC Memorandum Circular No. 11, the Commission made it compulsory for publicly listed companies to upload detailed minutes of shareholder meetings within five business days. These must remain accessible on company websites for at least five years. The SEC emphasized that making voting results and board discussions publicly visible enhances shareholder rights and holds corporate boards more accountable.
Earlier, in April 2024, the SEC strengthened disclosure norms around cornerstone investors, i.e., institutional buyers who commit early in IPOs. Under Circular No. 8, companies must publicly disclose the identities, share commitments and roles of such investors in their prospectuses. This move is intended to boost IPO credibility while preventing unfair access to insider information.
The Commission also took steps to protect auditor independence. Effective December 2024, companies must disclose audit fees in their annual financial statements, especially if payments exceed 15% of an auditor’s revenues, a sign of potential dependency. This requirement, in sync with international standards, aims to preempt auditing conflicts of interest reminiscent of scandals like Enron.
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In a further crackdown, the SEC implemented stricter beneficial ownership rules beginning January 2023. All registered corporations must submit and update information on individuals who ultimately own or control the company. Increased monitoring, daily fines, and legal action for non-compliance are now in place. The SEC pointed to past scandals like the Pharmally case as evidence of the need for transparency to prevent illicit financial flows.
Looking ahead, the SEC is gearing up to enforce mandatory sustainability reporting. Beginning in 2026, large organizations will need to report ESG data under global disclosure frameworks such as IFRS S1 and S2. By 2028, all listed firms will be covered. The SEC also plans to launch its own platform to track ESG data, underscoring the growing investor demand for climate-conscious governance.
“These reforms reflect our commitment to a transparent and resilient capital market,” said SEC Chairperson Emilio B. Aquino. “Through digitalization and strict enforcement, we’re future-proofing the Philippine corporate sector.”
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Collectively, the reforms are expected to create a more equitable, investor-friendly environment. By aligning closely with international norms, the Philippine SEC is sending a clear signal implying that the country is ready for greater foreign investment, stronger investor trust, and a more inclusive economy.
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Source: FOX59
