The Bangko Sentral has amended the regulation on interlocking directorship and/officership of government representatives to clarify their positions vis-à-vis their offices’ share holdings in banks and non-bank financial institutions.
According to BSP Circular No. 953, Series of 2017, the amendment was approved by the central bank’s policy-making Monetary Board in Resolution No. 416 dated March 9, 2017.
It explained that the amendment targets “to limit the applicability of the rules on interlocking directorship and/or officerships of representatives of government to those of government or government-owned or controlled entities holding voting shares of stock of banks/quasi-banks/non-bank financial institutions/trust corporations.”
Interlocking directorsip or officership happens when a representative of a company holds directorate positions in more than one company.
BSP Deputy Governor Nestor Espenilla Jr., in a text message to PNA, said the change in the rules “is just a refinement of the rules to recognize situations where a GFI (government financial institution) invests in a private bank and consequently appoints a representative to protect its interests.”
He explained that “such representative was counted as a “director” in some cases.”
“C953 clarifies that such representatives shall not be treated as director if the GFI’s stake is not in the form of voting shares. Therefore interlock rules don’t apply,” he added.