4: Engage

A. Internal Foundation of Corporate Governance

Internal Foundation Functions, Duties and Responsibilities Example/s

1. Board of Directors 1. The board is responsible for protecting
shareholders’ interests, establishing policies
for management, oversight of the corporation
or organization, and making decisions about
important issues a company or organization
faces.
Source:
https://corporatefinanceinstitute.com/resources/
careers/jobs/board-of-directors/
2. The board has a strategic function in providing
the vision, mission, and goals of the
organization. Also in recruiting, supervising,
retaining, evaluating, and compensating the
CEO or general manager are also the most
important functions of the board of directors
Source:
https://www.extension.iastate.edu/agdm/
wholefarm/html/c5-71.html
3. The board of directors of an incorporated,
non-profit organization is legally responsible
for the governance of the organization.
Within that mandate is the expectation that
the board will develop, implement, and
monitor policies that will allow the
organization to carry out its work. A board is
elected by, and accountable to, its
membership.
Source:
https://literacybasics.ca/board-governance/board-
roles-and-responsibilities/
(Jaime Augusto Zobel de
Ayala)- Chairman of the Board
and CEO of the Ayala
Corporation since April 2006
(Fernando Zobel de Ayala)-
Vice Chairman of the Board
and President of the Company
since April 2006.
(Delfin L. Lazaro)- Non-
Executive Director of Ayala
Corporation since January
2007
(Keiichi Matsunaga)- Director
of Ayala Corporation since
April 2017.
(Cezar P. Consing) – director
of Ayala Corporation since
December 3, 2020.
(Antonio Jose U. Periquet)-
Independent Director of Ayala
Corporation since September
2010

2. Chief executive 1. The CEO is responsible for the overall success

Officer (CEO) of a business entity or other organization and
in making top-level managerial decisions.
Source:
https://corporatefinanceinstitute.com/resources/care
ers/jobs/what-is-a-ceo-chief-executive-officer/
2. A chief executive officer’s primary
responsibilities include making major (Jaime Augusto Zobel de
corporate decisions, managing the overall Ayala)- Chairman and CEO of
operations and resources of a company, Ayala Corporation since April
acting as the main point of communication 2006 up to the present
between the board of directors and corporate
operations
Source:
https://www.investopedia.com/terms/c/ceo.asp
 3. The CEO is responsible for leading the
organization and making major decisions for
the organization. It has also the duty to act as
the figurative head of the organization when
communicating with stockholders,
government entities and the public and lead
the development of the organization’s long-
and short-term strategies.
Source:
https://www.indeed.com/hire/job-description/ceo-
chief-executive-officer

1. Chief financial officer (CFOs) holds the top

3. Chief Financial financial position in an organization. They are
Officer (CFO) responsible for tracking cash flow and
financial planning and analyzing the
company's financial strengths and weaknesses
and proposing strategic directions.
Source:
https://www.netsuite.com/portal/resource/articles/
accounting/chief-financial-officer-cfo.shtml
2. The Chief Financial Officer (CFO) of a company
has the responsibility for the planning, (Alberto M. de Larrazabal)-
implementation, managing and running of all Chief Financial Officer of Ayala
the finance activities of a company, including Corporation since April 23,
business planning, budgeting, forecasting and 2021.
negotiations.
Source:
https://www.roberthalf.co.nz/our-services/finance-
accounting/cfo-jobs
3. A Chief Financial Officer is responsible for
overseeing the financial operations of a
company and making decisions based on the
company’s financial stability. Their duties
include monitoring cash flow, meeting with
the CEO to discuss the best practices for
company finances and coming up with
strategic plans to improve their company’s
overall financial health
Source:
https://www.indeed.com/hire/job-description/cfo-
chief-financial-officer

4. Shareholders 1. A shareholder doesn’t manage the day-to-day

business of the company as this is handled by
the board of directors. However, decisions in
relation to the company’s goals and overall
performance often require shareholder Shareholders of Ayala
approval, which include the changes to the Corporation are Mermac,
constitution of the company, declaring a Incorporation, Mitsubishi
dividend, approving the financial statements Corporation, SM
of the company, and winding up of the Investments Corporation,
company by way of voluntary liquidation. Orbis Investment
 Source: Management Ltd., BDO
https://www.pearse-trust.ie/blog/roles- Unibank, Inc. (Investment
responsibilities-of-company-shareholder Management).
2. The shareholders of any company have a
responsibility to ensure that the company is
well run and well managed. They do this by
monitoring the performance of the company
and raising their objections or giving their
approval to the actions of the management of
the company.
Source:
https://www.managementstudyguide.com/
responsibilities-of-shareholders.htm
3. Shareholders have a responsibility to monitor
the conduct of the board of directors and
exercise their voting rights by casting
thoughtful and informed votes that safeguard
their financial and other interests.
Source:
https://jamapunji.pk/knowledge-center/shareholders-
responsibilities

B. External Environment of Corporate Governance

External Foundation Functions, Duties and Responsibilities Example/s

1. Auditors 1. An auditor is authorized personnel that
reviews and verifies the accuracy of financial
records and ensures that companies comply
with tax norms. Their primary objective is to
protect businesses from fraud, highlight any
discrepancies in accounting methods, among
other things.
Source: (Catherine Hufana-Ang
https://cleartax.in/s/duties-of-auditor Chief) - Audit Executive at
2. Auditors are responsible for tracking the cash Ayala Corporation.
flow and accounts of companies to ensure
that they are being recorded and processed
correctly, that assets are protected through
appropriate control measures, and that
financial records meet legal standards
Source:
https://www.glassdoor.com/Job-Descrip
tions/Auditor.htm
3. Auditors review the accounts of companies
and other organizations to ensure their
financial records are correct and in line with
the law.
Source:
https://targetjobs.co.uk/careers-advice/job-
 descriptions/auditor-job-description

2. Legal 1. Legal environments regulate, restrict, or

Environment prohibit the importation, manufacture,
processing, sale, distribution, use and disposal COMPLIANCE WITH
of chemical substances and mixtures the PHILIPPINE LAWS AND
present unreasonable risk to human health. REGULATIONS
Source: Ayala Corporation expects its
https://ecac.emb.gov.ph/?page_id=43 employees to conduct
2. It determines how businesses are created, the business in accordance with
ways contractual arrangements are Philippine laws and
structured, the enforcement of contracts, and regulations. Employees are
how businesses close. encouraged to consult with
Source: Legal and Compliance
https://www.adb.org/publications/legal-business- whenever there is any doubt
environment concerning the legality of any
3. The business legal environment plays a very matter.
important role in determining the success of
any businesses around the globe.
Source:
https://www.marketingtutor.net/legal-factors-affect-
business-environment/

3. Markets 1. Market-based corporate governance systems

place the responsibility of corporate
management on investors and relies on
capital markets to influence the management
of the company.
Source: https://www.google.com/search?
q=functions+and+duties+of+market+in+a+corporate+
governance
2. One of the functions of markets include
providing opportunities for the exchange of
goods and services and allocating resources to
their highest-valued uses.
Source:
http://yadayadayadaecon.com/concept/functions-of-
markets/
3. Markets facilitate trade and enable the
distribution and allocation of resources in a
society. It allows any tradeable item to be
evaluated and priced.
Source:
https://en.wikipedia.org/wiki/Market_(economics)
The Ayala Corporation has a
market that is known for its
financial and organizational
strength, its business stability,
quality products and services.
Its diverse product mix
includes insurance,
telecommunications, banking,
mall operations, commercial
buildings, residential
construction, and residential
real estate sales.

4. Other External 1. External environment factors cause direct and

Factors indirect effects on business operations,
personnel, and revenue. These outside forces
have the function in helping the business or
present challenges to its current processes. The Ayala Corp uses PESTEL
Source: Analysis that will look at the
https://www.indeed.com/career-advice/career- external factors such as
development/external-environment-factors political, economic, social,
2. External environment plays a critical role in technological, environmental,
shaping the future of entire industries and and legal. The PESTEL Analysis
those of individual businesses. To keep the of Ayala Corp will help the
business ahead of the competition, managers company make strategic
must continually adjust their strategies to decisions correctly, keeping in
reflect the environment in which their perspective the external
businesses operate. trends, and factors of the
Source: external environment.
https://m360.sim.edu.sg/article/pages/Importance-
of-the-External-Environment.aspx
3. External factors can influence in creating
suitable strategies to handle any predicted
situation.
Source:
https://www.google.com/search?
q=what+is+the+importance+of+external+factors&biw