== Course Code: Acct12 Student Activity Sheet Module # 4 Name: ia ( Batten ltt —_f__Batnge Class number: Section, hi-¥861-ol_ Schedule: 1] 140-49 Date: 04) 24] 2 n title: SEC Code of Corporate Governance for Publicly- Materials: Textbook: Cor 7 Corporate ce Companies Part | Governance, Business Ethics. Risk esson Objectives: Management and Internal Control At oe nd of this module, | should be able to: 2019-2020 edition Understand SEC Code of Governance for Publicly-listed References: companies http: sec. gov ph/corporate- 2. Know the govemance responsibilities of the Board of governance/revised-code-of- Directors, Part | Corporate-governance/ ————— Productivity Tip: Start Strong! Get up and get ready for the day, dress for success. A. LESSON PREVIEWREVIEW (5 minutes) 1) Introduction — Gathering Students’ Attention Activity 1: Review Question Identify the parties involved in the Corporate Governance bind dechuy, indeptnnt Te porte tavdied i As Cupncte, Governance ot Sha Folniy ince moragemeel, and cembtte gp baad of dictve Leki silty, rel chrlact ‘When you want to withdraw money from the ATM machine, PIN Code is necessary © Aprudent person would likely set code in his phone as additional security Notice that in the two statements, code plays an important role, for security and validity In this module you will be able study a Code required by the Securities and Exchange Commission from publicly-listed companies. Further, consider the arrangement of the code and the required Board's governance responsibilties. This module aims to prepare you to be better equipped as stakeholder now and very soon as member of your organization B. MAIN LESSON (40 minutes! LO1: Understanding Code of Governance and need for Publicl (Reference: Chapter 3, page 27) > What is the name of the code? This document is the property of PHINMA EDUCATION inutes)es Course Code: ACC1y2 mec AON Student Activity Sheet Module # 4 Name: Class number: _ Section. Schedule Date: ay po Code of Corporate Governance >» When it was approved? SEC Code of Governance was releas: ed on November 10, 2016 during the 3% Annual SEC PSE Corporate Governance Forum * What is the purpose of its released? To raise the corporate govemance standards of Philippine corporations ‘02 level at par with regional and global counter Parts. How's the arrangement of the Code? "18 arranged as to 1.) Principle, 2.) Recommendation, 3.) Explanation * What companies are covered by the Code? priealstered companies and branches or subsidiaries of foreign corporations operating in the Philippines that 3) Sell equity and/ or debt securities tothe public that are required to be registered with the commission ©) Have assets in excess of 50M and al least 200 stockholders ‘who own at least 100 shares of equity securities G) Whose equity are listed on an Exchange ©) Grantees od secondary license from the commission > What is Exchange? An organized marketplace or facility that brings together buyer and seller, and execute trade of Securities and/or commodities. Example is Philippine Stock Exchange. > What are Publicly-listed companies? Those companies whose securities are listed and traded at Exchange. Examples are ABS CBN, PHINMA Corp., Ayala Corp. Activity 2: Think and learn (2 minutes) Based on the above definition of terms, can you give 3 examples of Publicly listed companies in the Philippines? 1. Lantijan Cescustinn 2. Son Wine! Cronin 3. TOM inedmete £02: Understanding the Three Aspects of the Code and its approach (10 minutes) (Reference: Chapter 3, page 30) re, “comply or complait ‘The Code of Corporate Governance is arranged as follows: This document is the Property of PHINMA EDUCATIONIMA EDUCATION oes Course Code: ACC112 Student Activity Sheet Module # 4 Name: Section: Class number: _ Schedule: Date: 1 Principles —. 3 padtingg ag ca be considered to be a high-level statements of corporate governance good 5 poset are applicable to all companies. crdetlce ete ations — objective criteria that are intended to identity the specific features of corporate practice that are recommended for companies operating according to the Code. Alternatives to the Sirammendation may be justied ina parteulercreumatance if good governance can be achieved by a erplanmtions) strive to provide companies with additional information on the recommended best Comply or Complain approach combines the voluntary compliance with mandatory disclosure. ‘Companies do have to comply with the code, but they must state in their annual corporate governance reports whether they comply with the Code Provisions, identify any areas of non-compliance, and explain the reasons for non-compliance. Activity 3: Briefly explain the basic idea of ‘comply or complain approach. (3 minutes) Comply o compli appronch iaphics Hert cempsnies shall explicitly Stat In thos reparts reyancling sivie gemplione with the cede Fewee, in cate ap es-Conphone, they chil debrmie tHe oma Hn provide their ptacoa: LO3. 46 Principles of Code of Corporate Governance (Reference: Chapter 3, page 34 - 73) “The Code of Corporate Governance have 16 principles that are distributed among 5 main sections: * Board's Governance Responsibilities — Principle 1-7 «Disclosure and Transparency ~ Principle 8 -11 * Internal Control and Risk Management Framework — Principle 12 = Cultivating a Synergic Relationship with Shareholders ~ Principle 13 Duties to Stakeholders — Principle 14 — 16 For you to appreciate these principles, we will divide it into two parts, Part | will focus on the 1°'two main sections while the remaining 3 sections will be covered by module no. 4. SECTION PRINCIPLE Recommendation Explanation Board's Principle 1 = 1.1 Board should always ensure | 1.1 Competence enables Governance Establishing a that it has appropriate mix of | company to property perform i Responsibilities | competent board | expertise relevant to company's | task of overseeing manageme (Principle 1 -7) ‘Acompany should be | industry/sector and governance of the headed by a corporation, formulating visior competent, working mission, strategic objectives, board to foster the policies and procedures. long-term success of the corporation, and _| 1.2 Should composed of 1.2 Right combination ensure This document is the property of PHINMA EDUCATIONcourse Code: ACC112 natn OUCATION student Activity sheet Module # 4 Class number: _— free ‘ oS Section: ‘Schedule: Date tS nee ik of fraud in publicly traded ‘State how the following code requirement intended to help address the rs organizations. t Board must have a/corporate governance committee composed at least 3 of independent directors. Ye is Wpertart ty hive a'leas three le peded dup iors 10 erder to reingerce bend indepentnee ond fo avon ot shpchily ie evacced and okciims thet me mate ae free fom biares Activity 5 Checking Understanding ’. Audit Committee activities and responsibilities include which of the following? ’@) Selecting the external audit fir Approving corporate strategy. ¢. Reviewing management performance and determining compensation. d. None of the above 2. Which of the following audit committee responsibilities has the SEC mandated? 2. Obtaining each year a report by the intemal auditor that address the company's internal aontrol or tegulatory problems, and any relationships that might threaten the independence of the internal auditor. b. Discussing in its meetings the company's earnings press releases, as well as financial information and eamings guidance provided to analyst. ©. Reviewing with the intemal auditor any audit problems or difficulties that they have had with management @Allof the above. C. LESSON WRAP-UP (5 minutes) Activity 6 Congratulations for finishing this module! Shade the number of the module that you finished. This document is the property of PHINMA EDUCATIONCourse Code: ACC112 ‘Student Activity Sheet Module # 4 PHINMA EOUICATION & Name Se ection: ___ Schedule Class number: Date: You are done with th 3 seo Lets track your progres Period 1 | ered? 1 2] MM De DD Do ff Pe] foe ae Te | 2s fae 29 [20]3" parts of the module helped you Did you have challenges learning the concepts in this module? If none, which learn the concepts? fienctiog Hy quuation punidid allow we ty {eau is tonceoks ‘Some question/s | want to ask my teacher about this module is/are: plo FAQs 4. What is the difference between executive directors and non-executive direct not employees of the company and are not involved in its day-to-day eas of the company therefore have set of ors? Non-executive directors are running while executive directors are full-ime employ' duties. « Nonexecutive directors usually receive a flat fee for their services and are engage under a contract for service while executive directors are the highest earners in the company, with remuner packages made up of partly of basic pay and fringe benefits and partly performance-related pay. 2. Is corporate governance costly? and resources however this cost should be considered as credible, independent directors may ‘ost in terms of their fees but the cist is in the market and help company obtain y Reform involve the use of time investment in the future of company. Attracting respected, involve considerable effort to identify the right people and c incredibly worthwhile since boards presence offer credibilty | credit approval from the banks > cost can be controlled and assessed against benefits _nothing follows_ DHTINGS to REPORTERS’ 4 of PHINMA EDUCATION This document is the property