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GCG MEMORANDUM CIRCULAR NO. 2015 - 07

SUBJECT : coRpoRATE GOVenNANCE SCORECARD (cGS)

FoR GOGGs
Dere 08 October 2015

1. BacxcnouND AND Punpose

Pursuant to the declared policy under the "GOCC Governance Act of 2017" (R.A.
No. 10149), for the State to recognize the potential of Government-Owned or -
Controlled Corporations (GOCCs) as significant tools for economic development, it is
the statutorily-mandated obligation of the State to ensure that the governance of
GOCCs is carried out in a transparent, responsible and accountable manner and with
the utmost degree of professionalism and effectiveness, under Governing Boards who
are competent to carry out their functions, fully accountable to the State as its
fiduciaries and always acting for the best interest of the State.
ln view of the foregoing, and to reinforce the Cooe or Conponere GovERNANcE
ron GOCCs mandated under Section 5(c) of R.A. No. 10149, this Circular has been
issued to establish within the GOCC Sector covered by R.A. No. 10149 a CoRponlre
Govenuruce Sconecano (CGS) ron GOCCs.

2. Oauecnves
The CGS is a quantitatively-driven evaluation tool extracted from existing
and
globally accepted standardsl and practices. The CGS serves as an instrument to
assess the Corporate Governance performance of GOCCs using a methodology
benchmarked against the OECD Principles of Corporate Governance and ASEAN
Corporate Governance Scorecard.
The CGS aims to recognize well-governed GOCCs and raise Corporate
Governance standards and practices.
Accordingly, the CGS shall serve the basis for the following:

(a) Reinforcing the ownership function of the state through GCG;

(b) Establishing a standardized framework in assessing GOCCs' level of
corporate governance;
(c) ldentifying GOCCs' strengths and weaknesses compared to existing
corporate governance provisions;

See R.A. No. 10149; "Code of Corporate Governance for GOCCs" (GCG MC 2O'12-O7): OECD Principtes of
Corporate Governance for State Owned Enterprises; and the ASEAN Corporate Govemance Framework.
 (d) Assessing the level of adherence of GOCCs to best practices and
international standards of corporate governance; and
(d) !n tandem with the Performance Scorecard, ensure the improvement in
transparency of GOCCs' corporate governance initiatives and
practices.

3. CoveRece
The CGS sha!! be implemented to a!! GOCCs covered by the Governance
Commission.

4. Assessuerur
The Governance Commission shall undertake the final and official evaluation on
the basis of the accomplished CGS (see Annex A for the CGS Questionnaire).
Each GOCC shall be appraised of its performance and its level of adherence to
the best practices and international standards of corporate governance. Assessment
shall be based on the disclosures in the GOCC website.

5. Exrr Gorurenexce
An Exit Conference shall be scheduled once the CGS Rating and Results have
been consolidated. The Attendees from the GOCC are: two (2) Board Members and
Corporate Secretary/ Compliance Officer.
The Governance Commission shall discuss the CGS Rating and Results with the
concerned GOCC. The Exit Conference shall be properly documented.

6. Scneoule
The CGS Assessment shall be conducted on the second week of March. The CGS
Assessment shall be processed within forty (a0) working days after which the CGS
Rating and Results shall be discussed with the GOCC in an Exit Conference. The final
CGS Rating and Results will be released by the Governance Commission on first week
of July of the following year.

7. Release oF CGS RRnuc AND RESULTS

The CGS Rating and Results shall be released to the GOCC and its Supervising
Agency.

8. Repeauuc CLAUSE
All other GCG orders, circulars, issuances, and decisions, as well as Board
resolutions, or parts of the foregoing, which are inconsistent with this Memorandum
Circular are hereby repealed or modified accordingly.
I

9. Errecnurv
This Circular shalltake effect immediately upon its publication in the Commission's
website at www.gcg.gov. ph.

Chairman Secretary
?OF
028851
.FLORENCI-O B. ABAD

RAINIER B. BUTALID
Commissioner
 ANNEX A:
CORPORATE GOVERNANCE SCORECARD FOR GOCCS QUESTIONNAIRE

# Question Guiding Reference Weight Y/N

l. Stakeholder Relationships (15o/ol

'I Does the GOCC disclose a policv that: 0 030
Stipulates the exislence and scope of its effort to address custome/s GCG MC No. 2012-07 ChapterVll
a 0 010
welfare? Sec. 35. Sec.37
Elaborates its efforts to interact witht the communities in which they GCG MC No. 2012{7 ChapterVll
b 0 010
oDerale? Sec 34
Ensure that its value chain is environmentally friendly or is consistent SCG MC No. 2012-07 Chapter Vll
with oromotino susiainable develoomenl2 i..4n 0.0't0
Does the GOCC disclose the activities that it has undertaken to implement the
2 0.030
,bovementioned policies?

l. SCG MC No. 201247 Chapter Vll

Customer health and ssfety 0.010
Sec. 35, Sec. 37

). lnteraction with the communities 3CG MC No. 2012{7 Chapter Vll 3ECD Principle lV (A) &
0 010
Sec. 34 3lobal Reporting lnitiative
SCG MC No. 2012{7 Chapter Vll
Environmentally-friendly value chain 0.010
3ec. 40
)oes the GOCC have a separate corporate social responsibility (CSR) 3CG MC No. 2012{7 Chapter
€porusection or sustainabilitv reDorusection? 0.010
r'lll Sec. 41. Sec. 43.4.e
Where stakeholder interests are protected by law, stakeholders should have
4 0.010
:he opportunity to obtain effective redress for violation of their riohts.

Does the GOCC provide contact details via the companys website or
Annual Report which stakeholders (e.9. customers, suppliers,
general public, etc.) can use to voice their concerns and/or OECD Principle lV (B) 0.010
lomplaints for possible violation of their rights?

)erformance+nhancing mechanisms for employee participation should be

5 0 040
lermitted to develop.

)oes the GOCC explicitly mention the health, safety and welfare GCG MC No.2012{7 ChapterVl
t. 0.010
colicy for its emplo)rees? Sec. 39
)oes the GOCC publish data relating to health, safety and welfare of
). OECD Pdnciple lV (C) 0.010
ts emolovees?
Global Reporting lnitiative:
)oes th€ GOCC have training and development programmes for its GCG MC No. 2012{7 Chapter Vll Sustainability Report
:mployees? 0 010
Sec. 36
)oes the GOCC publish data on training and development programs
d 0 010
br its employees?

Stakeholders including individual employee and their representative bodies,

should be able to freely communicate their concems about illegal or unethical
6 0.030
practices to the board and their rights should not be compromised for doing
this.

the GOCC have procedures for complaints by employees

l CECD Principle lV (E) 0 015
:rning illegal (including conuption) and unethical behavior?
SCG MC No.2014-04

; the GOCC have procedures to protect an employee/person

) 3ECD Principle lV (E) 0.015
reveals illegal/unethical behavior from retaliation?

Sub Tota 0 150

ll. Disclosure and Transparency (35%
utruu rrrncrpre v (4,
OECD Principle V €
ICGN 2.4 Composition and
Ouality of Annual Report structure of the board
7 0.240
Does the GOCC's annual report disclose the following items: ICGN 2.4.1 Skills and
expenence
ICGN 2 4.3 lndependence
ICGN q n Rom"nar.ti^^
 # Question Guidlng Reference Weight Y/N

a Corporate objectives 0.040

R.A. No. 10149 Chapter V Sec.
b Financial performance indicators 25, GCG MC No. 2012{7 0 040
Non-fi nancial performance indicators
ChapterVlll Sec 41
0 040
J Details of whistle-blowina policy 0 040

Biographical details (at least age, qualifications, date of first

appointment, relevant experience, and any other directorships of 0 040
listed companies) of directors/commissioners

Training and/or continuing education programme attended by each

director/com m issioner 0.040
8 Are the Annual Reports downloadable from the GOCC's website? 0.020
9 Corporate Govemance Confi rmation Statement 0.015
Does the Annual Report contain a statement confirming the
company's full compliance with the code of corporate govemance )ECD PRTNCTPLE v (A) (8)
and where there is non{ompliance, identiry and explain reasons for 0.015
each such issue?

10 Timely filing/release of annual/fi nancial reports 0 075

JEVU rriltUtPtE V.
Are the audited annual financial reporustatement released within 60
lransparency and
I )isclosure, A. 0.025
days upon receipt from COA?
SECD Principle ll. The Stae

ls the annual report released within 90 days from release of audited

). 0 025
financial report?

OECD Principle V (C)

ls the true and faimess/fair representation of the annual financial OECD Principle V (E)
GCG MC No. 2012{7 Chapter OECD Principle V-(A.
statemenureports affirmed by the board of directors/commissioners 0.025
and/or the relevant officers of the company?
Vlll Sec. 42 (d) ICGN 7 2 Timely disclosure
lCGNT3Affirmationof
financial statements
Sub Tota 0.350

lll. Responsib:lities of the Board (50%

11 3orporate Vision/Mission 0.030
Has the Board of Directors reviewed the vision and mission/ strategy GCG MC No, 2012{6 Chapter lll UEUU P|(NUTPLE b (P5U)
l. 0.015
n the last financial vear? Sec.27.1 (a) ICGN:3.2 lnteqriw
Does the Board of Directors monitor/oversee the implementation of GCG MC No, 2012{6 Chapter lll
the comorale slraleov? 0.015
Sec.27.1 (b)
12 lid the GOCC achieve 90% in the PES? 0 040
13 lode of ethics or conduct GCG MC No 2012{7 Chapter
OECD PRINCIPLE VI 0 030
Vlll Sec- 4l

I qre the details of the code of ethics or conduct disclosed?

0.010

)oes the GOCC disclose that all Directors/Commissioners, senior

). 0 010
Tanagement and employees are required to comply with the code?
)oes the company disclose how it implements and monitors
:ompliance wilh the code of ethics or conduct? 0 010

OECD Principle ll. The

State Acting as an Owner,
F.(2)
GCG MC No. 2012{7 Chapter lll ICGN Global Corporate
Does the Board appoint a Nomlnatlon and Compensaflon / Remuneraflon Sec. 16.2.4. Principl6s 5.0 Remuneration
14 RA No. 10149 Chapter lV Sec.23 & 5.4 Transparency 0.005
Committee?
GCG MC No.2012{7 Chapter 2013 ASEAN Corporate
Vlll Sec.41 Govemance Scorecard
E.2.10 & E.2.16
SEC MC No.2. s. 2002 Sec.
e (BXb)
Did the Nomination and Compensation/Remuneration Committee meet at l€ast
15 0.015
lwice during the year?
't6 lf yes, is the report of the Nomination and
Compensation/Renumeration Committee publicly disclosed? 0.015
# Question Guiding Reference Weight Y/N

3ECD Principle V.
lransparency and
3CG MC No.2012{7 Sec.8 (i)
)isclosure, B.
3CG MC No. 2012{7 Chapter lll
2013 ASEAN Corporate
17 Does the Board appoint an Audit Committee? Sec.16.2.2 0.005
3ovemance Scorecard
3CG MC No.20'12{7 Chapter
22
r'lll. Sec. 41 =.2 MC N0.2
SEC s. 2002 Sec
I tAl
18 lf yes, is the report of the Audit Committee publicly disclosed? 0 015
Does at least one member of the Audit Committee have an audit, accounting
19 0 015
cr finance background (qualification or experience)?

20 Did the Audit Committee meet at least four times during the year? 0 015

sCG MC No.201247 Chapter lll

Does the Board appoint a Risk Manaoement Committee?
Sec.16.2.5.
21 )ECD Principle Vl D (6) 0.005
3CG MC No. 2012-07 Chapter lll
Sec. 8 (b), (h)

22 f yes, is the report on Risk Management Committee publicly disclosed? 0.015

Does at least one member of the Risk Management Committee have a sCG MC No. 2012-07 Chapter lll
23 0 015
cackground in finance and investments? Sec.16.2.5.
24 Board meetings and attendance 0.075
Are the Board of Directors meetings scheduled at the beginning of
t 0.015
the vear? (end of O'l )

) Does the Board of Directors meet at least monthly? 3CG MC No.2012{7 Sec.8 (a) 0.015
Did lhe Board of Directors meet on at least 75% on their scheduled
mcclinos? NDO SCORECARD 0.015

Has each of the directors/commissioners attended at least 90% of all

J. 3ECD PRTNCTPLE Vr (E) 0 015
the board meetings held during the year?
Did the Board of Directors meet separately at least once during the /VORLDBANK PRINCIPLE
vear withoill lhc President/CFO nrasenl? 0.015
25 Access to information 0 020
Does the GOCC have a policy that stipulates board papers for Board
, of Directors/Commissioners meetings be provided to the Board at 0.010
least three (3) working days in advance ofthe board meeting?
ls the Board Secretary trained in legal, accountancy or company
) 0 010
secretarial Dractices?
26 nternal Audit 0.030
SCG MC No. 20120-07 Chapter
I Does the company have a separate internal audit function? SECD PRtNCtPLE Vt (D) 0 015
ll Sec 16 1, 16.2.2. (a) & (d)
JEUU PLTNUTPLE Vt (U)
Does the appointment and removal of the intemal auditor require the
c /VORLDBANK PRINCIPLE 0.015
approval of the Audit Committee? "7)
l
ASX Princinlcs on CG
27 Risk Oversight 0.040
Does the company disclose the intemal control procedures/risk 3ECD PRTNCTPLE 6 (Vr)
l 0.010
management systems it has in place? lD) (7)

Does the Annual Report disclose that the Board of

Directors/Commissioners has overseen a review of the company's
c. uK coDE (JUNE 2010) 0.010
material controls (including operational, financial and compliance
controls) and risk management systems?

Does the company disclose how key risks are manaqed? OECD PRINCIPLE V (A) 0.010
Does the Annual Report contain a statement from the Board of
i. Directors or Audit Committee commenting on the adequacy of the 0.010
GOCC's internal controls/risk manaoement svstems?
 I
t\

* Question Guiding Reference Weight Y/N

28 3oard Chairman 0 010

Do different persons assume the roles of Chairman and CEO? OECD PRINCIPLE VI
0.010
ICGN: 2.5 Role of the Chair
29 Joard of Directors Development 0.045

I foes the GOCC have orientation programmes for new Directors? 0.0't 5
R.A. No. 10149 Sec. 16, GCG MC
foes the GOCC have a policy that encourages
No. 2012{5 Art. 5 (0
). )irectors/Commissioners to attend on{oing or continuous OECD PRINCIPLE VI (E) 0.015
,rofessional education programmes?

)id all Appointive Directors attend at least 1 training for the calendar
0.015
@at?

30 Board Appraisal OECD PRINCIPLE VI (D)

0 045
l)\
UEUU Hnnctpte vt. tne
Responsibilities of the
Boards of State-Owned
s an annual performance assessment conducted ofthe Board of
a
)irectors?
GCG MC No.201247 Chapter lll Enterprises, F. 0.015
2013 ASEAN Corporate
Governance Scorecard
FqSl'F6A
)oes the GOCC disclose the process followed in conducting the
b. 0 0'r5
loard assa<smcnl?

)oes the GOCC disclose the criteria used in the Board assessment? 0.015

31 Committee Appraisal UK CODE (JUNE 20.IO) 0.015

s an annual performance assessment conducted ofthe Board of

)irectors Committees? 0 015

Sub Tota 0 500

BONUS
Stakeholder Relationships
lntemational <lR>
1 Does the GOCC practice Global Reporting lndex (GRl) on its annual reports? Framework - DRAFT ,llRC 0.020
Council ltem 3b Meeting of

Disclosure and Transparency

2 luality of Annual Report 0 020
)ECD Principle V (C)
Are the audited annual financial reporustatement released within 30 )ECD Principle V (E)
Cays upon the receipt from COA? 0.020
CGN 7 2 Timely disclosure

Sub Tota 0 040

PENALTY
Responsibilities of the Board
\re there members of the Board of Directors who hold more than five (5)
1
)ositions in GOCCs and PLCs? 0 020

2 ls there nonrcompliance with Good Govemance Conditions? 0.020

Sub Tota 0 040

CORPORATE GOVERNANCE SCORECARD SCORE WEIGHT AVERAGE

I Stakeholder Relationships (1 5%) 15 1s00% '100.00%
I Disclosure and Transparency (35%) 35 35.00%
il Responsibilities of the Board (50%) 50 50.000/o '00.00%
100.00%
Bonus 4
Penalty 4
100 't00.00% 100%