QUESTIONS over corporate governance and board independence have surfaced ahead of the May 12 stockholders’ meeting of Shell Pilipinas Corp., with the Securities and Exchange Commission (SEC) having reviewed alleged irregularities.
In a May 7 letter addressed to SEC Chairman Francis Lim, lawyer and shareholder Jordan Pizarras questioned the nomination of former Shell Pilipinas country chairman Edgar Chua as an independent director.
Pizarras said that Chua’s previous role as the company’s top executive from 2003 to 2016 could cast doubt on his ability to exercise independent judgment, which is a key requirement for independent directors under corporate governance rules.
“Under existing SEC rules and corporate governance standards, an independent director must be free from any relationship that could interfere, or be perceived to interfere, with the exercise of independent judgment,” the letter stated.
The complaint said the issue involved not only actual independence but also the appearance of independence given Chua’s long-standing ties to the company.
Pizarras also raised concerns over what he described as a possible conflict of interest in the nomination process.
According to the letter, Chua was allegedly a member of the company’s nomination committee, while also being a nominee for election as an independent director.
“This creates the anomalous situation where a nominee participates in the evaluation process that determines his own eligibility,” the letter read.
The shareholder likewise questioned the extent of the company’s disclosures regarding how the independence of nominees was assessed, particularly those with prior executive roles and long affiliations with Shell Pilipinas.
“The absence of such disclosures may suggest that the determination of independence was largely procedural rather than substantive.”
Pizarras claimed that Shell Pilipinas’ ownership structure allows controlling shareholders to significantly influence the election of directors, including independent directors, potentially weakening protections for minority investors.
He also scrutinized the use of proxy voting, remote communication and in absentia voting mechanisms, saying these may consolidate voting power among institutional investors and dominant shareholders.
“These methods, while enhancing formal inclusivity, inadvertently undermine substantive shareholder democracy by skewing electoral outcomes in favor of already dominant interests,” the letter stated.
Pizarras said the issues raised reflected a broader distinction between “formal compliance” and “substantive adherence” to corporate governance principles.
Lim, Chua or representatives of Shell were not immediately available for comment.
Shell’s share price rose by nine centavos to close at P9.00 each last Friday.
