The Securities and Exchange Commission (SEC) is ready to face Philippine Stock Exchange (PSE) broker-directors in court if they pursue a legal challenge against the commission’s proposed imposition of term limits for brokers sitting on the board of an exchange.

“We’re not afraid to go to court if they want to go to court,” said SEC Chairman Francis E. Lim in an interview on the sidelines of the Economic Journalists Association of the Philippines (EJAP) sustainability forum on Monday, March 23.

He added that, “The memorandum circular (MC), our proposed draft, contains all the reasons. We honestly believe that it’s the right thing to do for the market, and we will stand by that decision.”

However, Lim said the SEC is still in the process of receiving comments on the proposal and will “decide according to what is best for the market after receiving those comments.”

Last week, Vivian Yuchengco, a 28-year veteran broker-director of the PSE board and chairperson of the Philippine Association of Securities Brokers and Dealers Inc. (PASBDI), said they are opposing the SEC’s proposed term limits.

“I don’t want to be fighting with Francis. We’re friends. I will let the lawyers fight with him. But as long as I’m still able, then I will fight,” she said.

She pointed out that brokers are also shareholders of the PSE and that it is their right to be voted in as directors, just like controlling shareholders of large conglomerates.

But Lim said, “We are not depriving the shareholders of their right to vote in brokers. They can vote brokers to replace the one whose term is going to end. So, they still have the right to vote.”

If brokers seek legal action, Lim said the SEC will play it by ear, but he is confident that the draft rules do not violate any law. “I’m very sure of that. I’m not a lawyer for nothing.”

Yuchengco said that even if the rule is implemented, there will not be enough votes to elect other broker-directors. “They don’t have the votes. Where will they get them? Eddie Gobing [another broker director who will be disqualified by the proposed term limit] has all the foreign votes. I have the Filipino votes.”

She also questioned the SEC’s recently issued rules on term limits for independent directors, which would disqualify PSE Chairman Jose T. Pardo.

“I’m also really upset about that. Because why would you change it? Independent directors are very hard to find—the ones with integrity, who know your markets. Why do you want to limit that? Why are you punishing us? It’s already so hard for listed companies to find independent directors. Even in the PSE, it’s hard to find them—especially in the capital market. Why do you have to fix something that isn’t broken?”