An SEC official said the nominees submitted by EPCIBank have yet to be evaluated by the bank’s nominations committee as required under the Securities Regulation Code.
Under Sec. 38 of the Securities Regulation Code (src), the nomination commitee must pre-screen the qualifications and prepare a final list of all candidates which shall contain information about all nominees for independent directors.
The nominations committee is mandated to put in place screening policies and parameters to enable it to effectively review the qualifications of the nominees for independent directors.
The SEC official said the agency sent a letter to EPCIBank last Friday, directing the bank to submit within two days from receipt of order the final list of all nominees to its board of directors in time for its annual stockholders meeting scheduled on July 19.
"This is a requirement they have to comply with," the SEC official said.
Based on the initial list submitted to the SEC, the bank’s nominees for independent directors are Antonio Basilio, Cesar Bautista, Roberto Romulo, Fulgencio Factoran Jr., retired Court of Appeals Justice Teodoro Regino, Anthony Te, former EPCIBank director Ricardo Murillo, First Generation Holdings Corp.’s Peter Garrucho Jr., Isidro Alcantara (former president and chief executive officer of Philippine Bank of Communications), Gregory Domingo, Edward Go, and Jesus Tirona (president of LGU Corp.).
An independent director is defined under the src as someone independent of management and free from any business or other relationship which could reasonably be perceived to materially interfere with his exercise of independent judgment in carrying out his responsibilities as a director.
The independent director should not be related to any director, officer or substantial shareholder of the covered company, any of its related companies or any of its substantial shareholders.
He must not also be employed in any executive capacity by the covered company, any of its related companies and/or by any of its substantial shareholders within the last five years.
A related company means another company which is its holding company, its subsidiary or a subsidiary of its holding company.
Under the rules, issuers of registered securities and public companies are required to have at least two independent directors or at least 20 percent of its board size, whichever is lesser.
The same SEC official said any controversy arising from the selection, nomination or elections of independent directors shall be resolved by the SEC by appointing independent directors from the list of nominees submitted by the stockholders.
Last Friday, the Government Service Insurance System (GSIS), which holds a 12 percent stake in EPCIBank, lodged a complaint against the appointment of Roberto Romulo as independent director, alleging such move was done to allow the Go family to retain control of the country’s third largest bank.
GSIS said Romulo is not qualified to sit on the EPCIBank board due to a provision in the Securities Regulation Code that states that the independent director must not be an officer or employee of the corporation they serve, as well as any affiliate, subsidiary or related company thereof.
GSIS said Romulo should not be allowed to be an independent director because he is a board member of Equicom Systems Management Inc., a joint venture Between the Equitable Group and Telius International.