Corporate governance reformer appointed new Philippine SEC Chairperson

Corporate governance reformer appointed new Philippine SEC Chairperson

On June 3, President Ferdinand R. Marcos Jr. appointed Francis Ed. Lim as the new Chairperson of The Securities and Exchange Commission (SEC). Attorney Lim assumed the role as Chairperson on June 10, succeeding previous Chairperson, Emilio B. Aquino, who served his mandated and indeed, successful seven-year term.

Lim may be familiar to ACGA members. A senior and successful corporate lawyer in Manila, between 2004 and 2010, he served as the President and CEO of the Philippines Stock Exchange (PSE), where he led several important CG reforms in an attempt to bring local CG standards in line with regional standards. Indeed, it was under Lim’s leadership that the PSE launched the Maharlika Board CG initiative (see our recent Value Up, Asia report), a visionary initiative at the time that was eventually stymied by politics and vested interests on the PSE board.

Lim will likely find the SEC equally challenging, but struck an optimistic note in his inaugural speech: 
“I envision the SEC as a no-nonsense regulator — firm when necessary, but always fair, efficient, reliable, and professional. One that enables investment and business growth without compromising on integrity…. Let’s make it easier to comply, and harder to delay.” 

Lim was also realistic and candid about the challenges ahead:
“Let’s also be honest: the Philippine capital market has been lagging behind. Inclusive  growth  demands  deeper,  broader,  and  more  accessible  capital markets.” He vowed to work with the PSE,   government and other non-governmental stakeholders to push for meaningful reforms.

Lim was certainly being honest. The OECD Capital Market Review of the Philippines 2024, which tracked closely ACGA’s own CG Watch findings, noted just how far behind ASEAN standards the Philippines has slipped. Measured against four key governance criteria - corporate governance, shareholder governance, protection of minority shareholders and regulatory quality – the OECD ranked the Philippines last or second last among its ASEAN peers.

Reforming the local capital market may indeed prove to be existential. More than just improving governance standards, Lim will need to improve access to and attractiveness of the public equity markets (with currently the lowest number of listings and capital raised in ASEAN); increase market liquidity (the lowest of ASEAN with just $25bn traded in 2023); increase the corporate bond market (the local market is tiny at just 11% of GDP in 2023); and deepen the local investor base (institutional investors owned just 7% of listed companies in 2023 according to OECD research). 

As the market’s chief regulator, the SEC faces significant challenges. But to that end, we see Lim’s appointment as positive for these critical capital market reforms. ACGA has engaged with Lim on multiple occasions in the past and over the course of these discussions, found him to be thoughtful, straightforward and clear-eyed about local CG challenges. Whether the SEC, under Lim’s leadership, can deliver the critical reforms needed to improve the Philippines’ capital markets, given likely political and fiscal limitations, remains to be seen. But in ACGA’s view, Lim’s appointment is certainly a step in the right direction.