Main duty of independent directors
Independent directors (IDs) are required by law to be elected in publicly-listed corporations.
The new Revised Corporation Code (Republic Act No. 11232) defines an ID as “a person who… is independent of management and free from any business or other relationship which could, or could reasonably be perceived to materially interfere with the exercise of independent judgment in carrying out the responsibilities of a director.”
Apart from this legalistic definition, the duties of IDs are not enumerated in the law. So, I have been asked what their main duty is. My answer: The main duty of every director (including IDs) is fidelity to the corporation—that is, to promote and uphold the interests of the corporation above the pecuniary wants of any shareholder, and beyond the ID’s own personal interests.
What makes IDs different from other directors is precisely their independence from them, and as such, to uphold truth, fairness, transparency, accountability and good corporate governance.
With due respect to those who believe that IDs represent the minority, I think that IDs owe no loyalty or duty to any shareholder or shareholders, whether majority or minority. They owe fidelity only to the law and to the ideals of good corporate governance.
Some ask how a retired jurist, now age 83, can attend to his duties as an ID or adviser of many companies, not to mention his concurrent stint as an officer and/or trustee of several foundations.
My answer: Over the years, I have set my work criteria. First, I join only companies where I feel comfortable with their major shareholders and distinct corporate culture.
Second, I decline to sit in companies with direct and contentious rivalry with another I am already involved with. However, where the major shareholders are friends, even if their companies are rivals, I accept but only with the permission of both.
Third, I study the businesses of the corporations so I could contribute meaningfully during meetings. I need to know details beyond their published financials and financial ratios. I choose corporations with open meetings characterized by transparency and accountability. I try to discover related party transactions, and illegal, irregular or unethical plans and actions, if any.
Fourth, I observe strict time management and self–discipline. I am almost 100 percent in my attendance in all meetings of the boards of directors and board committees of these companies, whether listed or not. How?
Before accepting any post, I find out the days and time of the meetings. Some boards meet monthly, some bi-monthly and some quarterly. Some meet in the morning, some at noon, and some in the afternoon.
Fortunately, the companies schedule their meetings a year in advance, so I am able to juggle them in my memo book. Moreover, since I live in Makati, I can easily commute within Makati, Taguig and Pasig where the meetings are held.
When I was in the Supreme Court, I labored in the office daily, and brought work home so I could read, analyze and tend to the pleadings of the parties and the written positions of my fellow justices in the quiet of my private library during the evenings and weekends.
Modesty aside, I produced the most number of decisions during my over 11 years in the Court, chaired several committees and wrote one book a year; yet I had no backlog at all when I retired. Modesty aside again, no other justice in the Court’s 118-year history has written one book a year in addition to producing the most number of decisions. In the words of Justice Antonio T. Carpio, “CJ Panganiban is the most prolific writer of the Court, bar none.”
I briefly mentioned my work habits during my judicial stint to explain that I am a glutton for work. Believe it or not, I am happy when I am overworked. And this includes this column, which has not missed a single Sunday since I began writing on Feb. 11, 2007.
Now as I conclude, I am reminded that I have spent over 12 years in the corporate and philanthropic worlds from February 2007 up to now, one year longer than my isolated but equally enjoyable time in the Supreme Court from Oct. 10, 1995 to Dec. 6, 2006.
And I will continue working as hard and as happy as long as I can, within the time and space the Good Lord would allow me, before calling me to an even more glorious world in the Great Beyond.
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