Jaca, Glenn Jay B. 4BFM 1.

What is Corporate Governance and be able to describe its application to both public and private entities. Corporate governance refers to the way that Boards over see the running of a company bits managers, and how Board members are held accountable to shareowners and the company. This has implications for company behavior not only to shareowners but also to employees, customers, those financing the company, other stakeholders, including the communities in which the business operates. In public entities, corporate governance gives all the needs of the people adequately. All information is disclosed. Transparency is highlighted when corporate governance for public entities is discussed. Accountability is also a part of the discussion in corporate governance for the public. For private entities, the responsibilities of the board are explained, as well as the rights of the shareholders. The framework of corporate governance is built with basis. 2. Enumerate and briefly discuss the nature and scope covered by Corporate Governance in a organization a. Ensuring the Basis for an Effective Corporate Governance Framework The corporate governance framework should promote transparent and efficient markets, be consistent with the rule of law and clearly articulate the division of responsibilities among different supervisory, regulatory and enforcement authorities. b. The Rights of Shareholders and Key Ownership Functions The corporate governance framework should protect and facilitate the exercise of shareholders rights. Basic shareholder rights should include the right to: 1) secure methods of ownership registration; 2) convey or transfer shares; 3) obtain relevant and material information on the corporation on a timely and regular basis; 4) participate and vote in general shareholder meetings; 5) elect and remove members of the board; and 6)share in the profits of the corporation. c. The Equitable Treatment of Shareholders The corporate governance framework should ensure the equitable treatment of all shareholders, including minority and foreign shareholders. All shareholders should have the opportunity to obtain effective redress for violation of their rights. All shareholders of the same series of a class should be treated equally. d. The Role of Stakeholders in Corporate Governance The rights of stakeholders that are established by law or through mutual agreements are to be respected. Where stakeholder interests are protected by law, stakeholders should have the opportunity to obtain effective redress for violation of their rights. Performance-enhancing mechanisms for employee participation should be permitted to develop. Where stakeholders participate in the corporate governance process, they should have access to relevant, sufficient and reliable information on a timely and regular basis. e. Disclosure and Transparency

The corporate governance framework should ensure that timely and accurate disclosure is made on all material matters regarding the corporation, including the financial situation, performance, ownership, and governance of the company. f. The Responsibilities of the Board The corporate governance framework should ensure the strategic guidance of the company, the effective monitoring of management by the board, and the boards accountability to the company and the shareholders. Board members should act on a fully informed basis, in good faith, with due diligence and care, and in the best interest of the company and the shareholders. Where board decisions may affect different shareholder groups differently, the board should treat all shareholders fairly. The board should apply high ethical standards. It should take into account the interests of stakeholders. 3. Be able to discuss the following core values of Corporate Governance and be able to give at least five examples/ practices or manifestations in a given organization a. Fairness - Ensuring the protection of shareholders rights and the enforceability of contracts with service/resource providers y Provide effective redress to violations. y Protect shareholders rights. y Treat all shareholders including minorities, equitably. y Give employees their rights/ benefits. y Increase and bonuses must have a basis. b. Accountability- Clarifying governance roles & responsibilities, and supporting voluntary efforts to ensure the alignment of managerial and shareholder interests and monitoring by the board of directors capable of objectivity and sound judgment. y Department head must be responsible for the mistake of his/her member. y Ensure that management is accountable to the Board y Ensure that the Board is accountable to shareholders y Any mistakes in the financial statements must be reported by the auditor. y The firm must be liable for the wrong disclosed material information. c. Transparency- Requiring timely disclosure of adequate information concerning corporate financial performance. y Any adjustments made in the financial statement must be properly noted. y Plans of expansions must be echoed to concerned entities. y Financial statements must be reported frequently and properly. y Window-dressing must be prohibited. y Benefits of employees must be properly explained to them. d. Competence- is the ability of an individual to perform a job properly. y Any employee or manager must react and think quickly in any given situation. y Top management should have a wide knowledge of all the departments. y Employees must be flexible. y Management must give trainings and seminar to employees.

H.R. department must filter possible employees. Only the best and fit for the job must be hired. 4. Enumerate and briefly discuss and provide at least 10 examples of the ff: a. Good corporate governance policies and practices in the financial institutions. y Corporate Social Responsibility- A companys sense of responsibility towards the community and environment (both ecological and social) in which it operates. Companies express this citizenship (1) through their waste and pollution reduction processes, (2) by contributing educational and social programs, and (3) by earning adequate returns on the employed resources. y Giving free trainings abroad to deserving employees. y Salary Increases for workers/employees and managers who are doing great in their jobs. y Transparency- Lack of hidden agendas and conditions, accompanied by the availability of full information required for collaboration, cooperation, and collective decision making. y Whistle blowing- The disclosure by a person, usually an employee in a government agency or private enterprise, to the public or to those in authority, of mismanagement, corruption, illegality, or some other wrongdoing. y Promotion of deserving employees. y Profit sharing- Employee motivation plan (established and maintained by an employer) under which employees receive a share of the firm's profits determined by an agreed upon formula. y Unison of local accounting standards with the international accounting standards. y Kaizen- gradual approach to ever higher standards in quality enhancement and waste reduction, through small but continual improvements involving everyone from the chief executive to the lowest level workers. y Setting of rules, guidelines, core values and regulations within the firm. y b. Unethical and malicious corporate governance practices in a financial institution. y Insider Trading- The buying or selling of a security by someone who has access to material, nonpublic information about the security. y Bribery- An illegal payment from one party to another, usually in return for a legal or financial favor. y Kickback- The payment of something of value to an individual with the goal of persuading or influencing his or her decision or performance in a certain situation. y Corruption- Wrongdoing on the part of an authority or powerful party through means that are illegitimate, immoral, or incompatible with ethical standards. Corruption often results from patronage and is associated with bribery. y Limited decision making capacity of bottom employees. y Selective Disclosure- disclosing of insufficient material information.

y y y

Window Dressing- A strategy used by mutual fund and portfolio managers near the year or quarter end to improve the appearance of the portfolio/fund performance before presenting it to clients or shareholders. Fraud- Act or course of deception, an intentional concealment, omission, or perversion of truth, to gain unlawful or unfair advantage. Improper way of firing an employee. (without due process) Bias- An inclination or preference that influences judgment from being balanced or even-handed.

References/sources: http://www.ifc.org/ifcext/cgf.nsf/AttachmentsByTitle/UNGCBROCHURE/$FILE/IFC_UNG C_brochure.pdf http://www.oecd.org/dataoecd/32/18/31557724.pdf http://www.scribd.com/doc/33692045/Corporate-Governance http://en.wikipedia.org/wiki/Competence_(human_resources) http://www.businessdictionary.com/ http://www.investopedia.com/terms/