You are on page 1of 34

REVISED CODE OF

CORPORATE
GOVERNANCE
• is a system of direction, feedback and control using regulations,
performance standards and ethical guidelines to hold the Board and
senior management accountable for ensuring ethical behavior –
reconciling long-term customer satisfaction with shareholder value – to
the benefit of all stakeholders and society.

• CORPORATE GOVERNANCE
• The Board should composed majority with what type of
directors? Why?
• NON EXECUTIVE DIRECTORS

• Who is non executive director?

• a director who has no executive responsibility and does


not perform any work related to the operations of the
corporation.

• In order that no director or small group of directors can


dominate the decision-making process
• The Board shall be composed of how many members?
• AT LEAST 5 BUT NOT MORE THAN FIFTEEN

• The company shall have at least how many independent


directors?
• AT LEAST 2 INDEPENDENT DIRECTORS OR 20% OF
THE NUMBER OF BODS, BUT IN NO CASE LOWER THAN
2.

• Who is independent director?


• a person who is independent of management and the
controlling shareholder, and is free from any business
or other relationship which could, or could reasonably
be perceived to, materially interfere with his exercise
WHAT IS BOARD DIVERSITY PROGRAM? WHY
IS IT RECOMMENDED BY SEC?
• avoid groupthink and ensure that optimal decision-making is achieved.
• gender diversity.
• diversity in age, ethnicity, culture, skills, competence and knowledge.
CORPORATE SECRETARY SHOULD BE A
MEMBER OF THE BOARD?
• WRONG

• CORPORATE SECRETARY IS PRIMARY RESPONSIBLE TO


THE CHAIRMAN AND PRESIDENT OF THE COMPANY?

• WRONG
COMPLIANCE OFFICER SHOULD NOT BE A
MEMBER OF THE BOARD?
• RIGHT

• COMPLIANCE OFFICER IS PRIMARY RESPONSIBLE TO THE


CHAIRMAN AND PRESIDENT OF THE COMPANY?

• WRONG
IMPORTANT FUNCTION OF THE COMPLIANCE
OFFICER

• Ensures proper onboarding of new directors (i.e., orientation on the company’s


business, charter, articles of incorporation and by-laws, among others);

• b. Monitors, reviews, evaluates and ensures the compliance by the corporation, its
officers and directors with the relevant laws, this Code, rules and regulations and all
governance issuances of regulatory agencies;

• Appears before the SEC when summoned in relation to compliance with this Code

• Reports the matter to the Board if violations are found and recommends the
imposition of appropriate disciplinary action;
WHAT ARE THE TWO KEY ELEMENTS OF THE
FIDUCIARY DUTY OF BOARD MEMBERS?
• the duty of care and the duty of loyalty
• WHAT DO YOU MEAN BY DUTY OF CARE?
• to act on a fully informed basis, in good faith, with due
diligence and care
• WHAT DO YOU MEAN BY DUTY OF LOYALTY?
• act in the interest of the company and all its
shareholders, and not those of the controlling company
of the group or any other stakeholder.
THE BOARD SHOULD BE HEADED BY?

• a competent and qualified Chairperson or a Chairman


WHAT IS SUCCESSION PLANNING PROGRAM
FOR DIRECTORS, KEY OFFICERS AND
MANAGEMENT?
• adopting a policy on the retirement age for directors and key officers
• promote dynamism in the corporation.
WHAT IS BOARD CHARTER?

• formalizes and clearly states its roles, responsibilities and


accountabilities in carrying out its fiduciary duties.
• serve as a guide to the directors in the performance of their functions
and should be publicly available and posted on the company’s website.
THE COMPOSITION, FUNCTIONS AND
RESPONSIBILITIES OF ALL COMMITTEES SHOULD
WRITTEN IN WHAT SO CALLED DOCUMENT?
• Committee Charter

• WHAT ARE THE DIFFERENT BOARD COMMITTEES?


• Audit Committee,
• Corporate Governance Committee,
• Board Risk Oversight Committee and
• Related Party Transaction Committee
• Nomination and Remuneration
WHAT ARE THE IMPORTANT OBJECTIVE OF
AUDIT COMMITTEE?
• enhance its oversight capability over the company’s financial reporting,
internal control system, internal and external audit processes, and
compliance with applicable laws and regulations
• WHAT IS THE IMPORTANT FUNCTION OF AUDIT COMMITTEE?

• Recommends the approval the Internal Audit Charter (IA Charter),


which formally defines the role of Internal Audit and the audit plan as
well as oversees the implementation of the IA Charter
WHAT IS THE COMPOSITION AND
QUALIFICATIONS OF AUDIT COMMITTEE?
• composed of at least three appropriately qualified non-
executive directors,
• the majority of whom, including the Chairman, should be
independent.
• All of the members of the committee must have relevant
background, knowledge, skills, and/or experience in the
areas of accounting, auditing and finance.
• The Chairman of the Audit Committee should not be the
chairman of the Board or of any other committees.
THE AUDIT COMMITTEE IS RESPONSIBLE TO
REPORT TO WHOM?
• meets with the Board at least every quarter without the
presence of the CEO or other management team
members
WHAT COMMITTEE IS RESPONSIBLE TO OVERSIGHT THE
ENTERPRISE MANAGEMENT SYSTEM OF THE COMPANY?

Board Risk Oversight Committee (BROC)


What is the composition and qualifications of audit committee?
• least three members, the majority of whom should be independent
directors, including the Chairman.
• The Chairman should not be the Chairman of the Board or of any other
committee.
• At least one member of the committee must have relevant thorough
knowledge and experience on risk and risk management.
WHAT COMMITTEE IS RESPONSIBLE TO REVIEW ALL MATERIAL
RELATED PARTY TRANSACTIONS OF THE COMPANY?

• Related Party Transaction (RPT) Committee,


• What is the composition and qualifications of audit committee?

• composed of at least three non-executive directors, two of whom


should be independent, including the Chairman.
THE DIRECTORS CAN ATTEND AND ACTIVELY
PARTICIPATE IN ALL MEETINGS OF THE BOARD AND
COMMITTES THROUGH TELE-/VIDEOCONFERENCING?
• YES
• The absence of a director in more than fifty percent (50%) of all regular
and special meetings of the Board during his/her incumbency is a
ground for TEMPORARY OR PERMANENT disqualification OF THE
BOARD?

• TEMPORARY - FOR SUCCEEDING ELECTION ONLY


• The non-executive directors of the Board should
concurrently serve as directors to a maximum
of how many publicly listed companies?
• FIVE

• The Board should at least have how many


independent directors?
• Three or from one-third up to substantial majority of the
members of the Board
THE BOARD’S INDEPENDENT DIRECTORS SHOULD
SERVE FOR HOW MANY YEARS IN THE BOARD?
• a maximum cumulative term of nine years.
• may continue to qualify for nomination and election as a non-
independent director.
• If a company wants to retain an independent director who has served
for nine years, the Board should provide meritorious justification/s and
seek shareholders’ approval during the annual shareholders’ meeting.
• For balance of power the positions of Chairman
of the Board and Chief Executive Officer may
be assigned to the same individual?
• IF POSSIBLE NO
• each should have clearly defined responsibilities
delineated and disclosed in the Board Charter.
• In cases where the Chairman is not independent and where
the roles of Chair and CEO are combined, what is the remedy
of the code?
• The Board should designate a lead director among the
independent directors
• How often the Board should do the evaluation of Board
performance?
• Annually
• Every three years, the assessment should be supported by
an external facilitator.
WHAT IS CODE OF BUSINESS CONDUCT AND
ETHICS?
• provide standards for professional and ethical behavior,
as well as articulate acceptable and unacceptable
conduct and practices in internal and external dealings.
• It should known to all stakeholders and also be disclosed
and made available to the public through the company
website.
• What committee of the Board is responsible for the
appointment, reappointment, removal, and fees of the
external auditor? Who should approved the recommendation?
• Audit Committee
• The Board
• What should the Board do when there is removal or change
of external auditor?
• disclosed to the regulators and the public through the
company website and required disclosures the reason/s of
removal and change.
INTERNAL CONTROL SYSTEM AND ENTERPRISE RISK
MANAGEMENT FRAMEWORK

• The Company should have an adequate and effective


internal control system and an enterprise risk
management framework in the conduct of its business,
taking into account its size, risk profile and complexity of
operations.
WHY INTERNAL AUDIT IS ESSENTIAL IN THE
COMPANY?
• to monitor and guide the implementation of company
policies.
• helps the company accomplish its objectives by bringing
a systematic, disciplined approach to evaluating and
improving the effectiveness of the company’s
governance, risk management and control functions.
WHAT ARE THE FUNCTIONS OF INTERNAL
AUDIT?
• Provides an independent risk-based assurance service to the Board

• Performs regular and special audit as contained in the annual audit plan and/or based on the company’s risk
assessment;

• c. Performs consulting and advisory services related to governance and control as appropriate for the
organization;

• d. Performs compliance audit of relevant laws, rules and regulations, contractual obligations and other
commitments, which could have a significant impact on the organization;

• e. Reviews, audits and assesses the efficiency and effectiveness of the internal control system of all areas of
the company;

• f. Evaluates operations or programs to ascertain whether results are consistent with established objectives
and goals, and whether the operations or programs are being carried out as planned;

• g. Evaluates specific operations at the request of the Board or Management, as appropriate; and

• h. Monitors and evaluates governance processes.


WHO SHOULD OVERSEE AND BE RESPONSIBLE FOR
THE INTERNAL AUDIT ACTIVITY OF THE COMPANY?

• Chief Audit Executive (CAE)


• appointed by the Board.
• CAE should directly reports to whom in order to achieve the
necessary independence to fulfill his/her responsibilities?
• Functionally to Audit Committee
• Administratively to the CEO
WHAT IS THE FUNCTION OF RISK
MANAGEMENT?
• to identify, assess and monitor key risk exposures.
• Who should be responsible for the risk management
system of the company?
• Chief Risk Officer (CRO),
SHAREHOLDERS’ RIGHTS RELATE TO THE FOLLOWING, AMONG
OTHERS:

• Pre-emptive rights;
• Dividend policies;
• Right to propose the holding of meetings and to include
agenda items ahead of the scheduled Annual and Special
Shareholders’ Meeting;
• Right to nominate candidates to the Board of Directors;
• Nomination process; and
• Voting procedures that would govern the Annual and
Special Shareholders’ Meeting.
• The Board should encourage active shareholder
participation by sending the Notice of Annual and Special
Shareholders’ Meeting with sufficient and relevant
information within how many days before the meeting?

• at least 28 days before the meeting.


• Required information in the Notice include, among
others, the date, location, meeting agenda and its
rationale and explanation, and details of issues to be
deliberated on and approved or ratified at the meeting
• What is Investor Relations Office (IRO) and its function?
• to ensure constant engagement with its shareholders.
• should be present at every shareholders’ meeting.
• avenue to receive feedback, complaints and queries from
shareholders
• assure their active participation with regard to activities
and policies of the company.
• creating an Investor Relations Program ensures that all
information regarding the activities of the company are
properly and timely communicated to shareholders.
ASSIGNMENT: PREPARE AN OUTLINE PRESENTATION OF
SEC REVISED CODE OF CORPORATE GOVERNANCE

• Short bond paper


• Over page
• With USC Logo
• Subject
• Title of the requirement
• Semester
• Group # and names of members
• Name of Course Adviser

You might also like