The Monetary Board, the central bank’s policy-making arm, said it is alright for cabinet officials with ex officio chairmanship or directorship in government financial institutions (GFIs) to skip the required corporate governance seminars.
The Bangko Sentral ng Pilipinas (BSP) in a circular (Circular No. 1188) titled “Amendments to Persons Exempted from Attending the Seminar on Corporate Governance for Board of Directors” and signed by BSP Governor Eli M. Remolona Jr. last Feb. 19, has deemed it unnecessary for department secretaries holding high-ranking GFI positions to comply with the training on corporate governance but did not offer any reasons why.
This includes the new Finance Secretary Ralph G. Recto, who is ex officio chairman of the country’s second largest lender Land Bank of the Philippines (Landbank) and also top honcho of several other GFIs including the Philippine Guarantee Corp. which used to be PhilEXIM.
Recto, a former senator, is a politician and also served briefly as National Economic Development Authority director-general for a year in 2008. He was appointed Secretary of the Department of Finance on Jan. 12, 2024 and Monetary Board member on Jan. 22 in an ex officio capacity. BSP is considered a GFI.
Besides Recto, Department of Trade and Industry (DTI) Secretary Alfredo E. Pascual also holds ex officio chairmanship position in several GFIs, namely the National Development Co, which is DTI’s investment arm.
There are other cabinet officials with ex officio jobs in GFIs. Based on Republic Act No. 10149, otherwise known as the “GOCC Governance Act of 2011”, ex officio board members are “any individual who sits or acts as a member of the Board of Director/Trustees by virtue of one’s title to another office, and without further warrant or appointment.”
According to the BSP circular, which was first taken up as a resolution on Feb. 1, 2024, the Monetary Board said it has “approved the amendments to the eligibility requirements for directors to exempt incumbent Cabinet Secretaries, who serve as directors/chairman in government financial institutions in an ex-officio capacity, from the required corporate governance seminar” under Section 132 of the Manual of Regulations for Banks.
Circular No. 1188 amended two previous circulars, Circular No. 1129 issued on Nov. 12, 2021 and Circular No. 1154 released on Sept. 14, 2022.
The requirement to attend a corporate governance seminar is one of the minimum requirement for board of directors as per BSP rules.
In the 2021 circular, there are also exemptions to the minimum requirements to be a member of a BSP supervised financial institution’s (BSFI) board of directors such as if someone is a Filipino citizen with a “recognized stature, influence or reputation” in the banking community, then the BSP could “consider results of supervisory assessments in evaluating the eligibility” for the exemption.
Generally, qualifications of a director – in BSP’s assessment in the 2021 guidelines – is that he or she “must be fit and proper” which will be based on the following: integrity/probity; physical/mental fitness; relevant education/financial literacy/training; possession of competence relevant to the job such as knowledge and experience, skills, diligence and independence of mind; and sufficiency of time to fully carry out responsibilities and concurrent positions in the same BSFI and interlocking positions in other entities that may pose conflict of interest.
Meanwhile, GFIs and government-owned and controlled corporations or GOCCs have a requirement for appointive directors to attend a corporate governance seminar.
Based on memos of the Governance Commission for GOCCs which was created under RA No. 10149, corporate governance seminars are designed to ensure appointive directors are properly guided to be effective directors or chief executive directors. The seminar is usually taken three months from one’s appointment date.
Incidentally, Recto is an ex officio member of the Governance Commission.