MC No. 04 s. 2022Disqualifications of Directors, Trustees and Officers of Corporations; and the Guidelines on the Procedure for their Removal

% Securities and Exchange Commission PHILIPPINES SEC Memorandum Circular No. 4 Series of 2022 TO ALL CONCERNED SUBJECT : Disqualifications of Directors, Trustees and Officers of Corporations; and the Guidelines on the Procedure for their Removal (Pursuant to Sections 26 and 27 of the Revised Corporation Code of the Philippines) WHEREAS, under Section 26 of Republic Act No. 11232, or the Revised Corporation Code of the Philippines ("RCC"), a person shall be disqualified from being a director, trustee, or officer of any corporation if, within five (5) years prior to the election or appointment as such, the person was: (a) Convicted by final judgment: (1) Of an offense punishable by imprisonment for a period exceeding six (6) years; (2) For violating this Code; and (3) For violating Republic Act No. 8799, otherwise known as "The Securities Regulation Code"; (b) Found administratively liable for any offense involving fraudulent acts; and (c) By a foreign court or equivalent foreign regulatoiy authority for acts, violations or misconduct similar to those enumerated in paragraphs [a] and [b] above; WHEREAS, the same section provides that the Securities and Exchange Commission ("Commission") or the Philippine Competition Commission ("PCC") may impose qualifications or other disqualifications in its promotion of good corporate governance or as a sanction in its administrative proceedings; WHEREAS, Section 27 of the RCC provides that the Commission shall, motu proprio or upon a verified complaint, and after due notice and hearing, order the removal of a director or trustee elected despite the disqualification, or whose disqualification arose or is discovered subsequent to an election, and the removal of a disqualified director shall be without prejudice to other sanctions that the Commission may impose on the board of directors or trustees who, with knowledge of the disqualification, failed to remove such director or trustee; WHEREAS, Section 96 of the RCC provides that, unless the context clearly provides otherwise, the stockholders of a close corporation shall be deemed to be directors, for the Published: Page 1 of 14 Manila Bulletin, 4 March 2022 Business World, 4 March 2022 Filed with UP Law Center: 3 March 2022

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