PhD, Master's degree requirements for Maharlika CEO, board removed in revised IRR

Apart from giving the President authority to accept or reject nominees in the Maharlika Investment Corp.’s (MIC) Board of Directors, the revised implementing rules and regulations (IRR) of the Maharlika Investment Fund (MIF) Act removed the specific advanced educational degree requirements for those who can be appointed to manage the country’s first sovereign wealth fund.

Under Section 39 of the previous IRR, it was specifically stated that the president and chief executive officer (PCEO) of the MIC “must have an advanced degree (MBA, MA, MSc, PhD) in Finance, Economic, Business Administration, or a related field from a reputable university; additional professional certifications such as CFA or CPA is preferred.”

However, in the revised IRR, under Section 37 or the “Duties and Qualifications of the PCEO” the specific advanced degree qualifications stated in the previous were removed.

Likewise, under the Section 40 of the previous implementing rules, the chief investment and operating officer (CIOO) “must have a master’s or advanced degree in Finance, Economics, Business Administration, or a related field.”

The CIOO “must have a proven track record of at least 10 years in senior investment management roles, preferably within sovereign wealth funds, asset management firms, or large institutional investors; and experience in successfully managing complex investment portfolios and driving robust investment strategies with a focus on long-term growth and risk management.”

In Section 38 of the revised IRR, the stringent qualifications for CIOO was simplified to only having “a degree in Finance, or a related field and has a proven expertise in managing a team of financial analysts and investment professionals.”

Moreover, Section 29 or “Additional Qualification of Regular and Independent Directors” of the previous IRR required regular and independent directors of the MIC to have a master’s degree; minimum of 10 years experience in finance, investments, economics, business, or related field; strong track record in making strategic decisions; and demonstrated commitments to highest ethical standards, integrity, and compliance with relevant laws and regulations.

The entire section on additional requirements for regular and independent directors of the MIC is no longer present in the revised IRR.

In a statement, Monetary Board Member and former National Treasurer of the Philippines Rosalia de Leon defended the removal of certain qualification requirements for the officials of the MIC in the revised IRR.

De Leon was the chief of the Bureau of Treasury when the previous IRR was crafted. The Treasury was tasked under the MIF law to formulate the sovereign wealth fund’s implementing rules.

“The reason for removing the qualifications in the IRR is to give more independence to the Board in determining the specific qualifications of the other officers of the MIC in order to carry out its mandate to efficiently manage the MIF,” de Leon said.

“The President wants the Board to be insulated from political influence and considerations and would like to give the leeway to set the qualifications in the best way they know how based on their experience and expertise in fund management,” she said.

In a news release, the Presidential Communications Office (PCO) said that with the revision of the MIF law’s IRR, the MIC “will exercise independence to give the body more latitude in managing the fund, thus promoting good corporate governance.”

The Office of the Executive Secretary, for their part, said that the revisions introduced by the President to the IRR of the law “serve to clarify, while simultaneously buttressing, the exercise of the discretionary powers of the Board of Directors to maintain its independence; ensure that the MIC has a free hand to explore gainful investment opportunities, while adhering faithfully to the letter of the law; and, ensure that investments are of high impact and are in line with the socioeconomic development program of the government.”

The revised IRR of the MIF law was released by the Palace on Saturday, nearly a month after it was recalled for further study by President Ferdinand "Bongbong" Marcos Jr.

Marcos later clarified that it was not on hold and that the government was still working to have it operational by the end of 2023.

"Upon our approval, we'll swiftly establish the corporate structure, getting the MIF up and running," Marcos said earlier this week.

Budget Secretary Amenah Pangandaman, who sits in the MIC Board’s Advisory Body, earlier said that the board of directors of the government-owned company that will manage the sovereign wealth fund will be named in November as the government is committed to finish its review of the IRR “soon.”

The law creates the MIC, a government-owned company that will manage the MIF—a pool of funds sourced from state-run financial institutions that will be invested in high-impact projects, real estate, and financial instruments.

The MIC’s Board of Directors would be composed of the Finance Secretary, who will serve as the ex-officio chairperson; the presidents of Landbank and DBP; two regular directors; and three independent directors from the private sector. — DVM, GMA Integrated News