Corporate Governance, Business Ethics, Risk Management and Internal Control

Corporate Governance, Business
Ethics, Risk Management and internal

Control
Learning Objectives
1. Describe what governance involves
2. Enumerate the different context in which governance
can be applied
3. Name and explain the characteristics of good governance
4. Explain the meaning, purpose and objectives of
corporate governance
5. know and described the principles of effective corporate
governance
6. Understand how the principles of good corporate
governance can be applied.
1. Introduction to Corporate
Governance
What is Governance?
Governance refers to a process whereby
elements in society wield power, authority and
influence and enact policies and decisions
concerning public life and social upliftment.
It comprises all the processes of governing

whether undertaken by the government of a
country, by a market or by a network over a social
system and whether through the laws, norms,
power or language of an organized society
Governance therefore means the process of
decision making and the process by which
decision are implemented (or not implemented)
through the exercise of power or authority by
leaders of the country and or organization
Characteristics of Good Governance
1. Participation by both men and women is a key
cornerstone of good governance. Participation could be
either direct or through legitimate institutions or
representatives. It is important to point out that
representative democracy does not necessarily mean
that the concern of the most vulnerable in society
would not be taken into consideration in decision
making. Participation needs to be informed and
organized. This means freedom of association and
expression on one hand and an organized civil society
on the other hand.
2. Rule of Law – Good governance requires fair

legal frameworks that are enforced impartially, it
also requires full protection of human right,
particularly those of minorities. Impartial
enforcement of laws requires an independent
judiciary and an impartial and incorruptible
police force.
3. Transparency – means that decisions taken

and their enforcement are done in a manner
that follows rules and regulations. It means that
information is freely available and directly
accessible to those who will be affected by such
decisions and their enforcement. It also means
that enough information is provided and that it
is provided in easily understandable forms and
media.
4. Responsiveness – Good governance requires

that institutions and processes try to serves the
needs all stakeholders within a reasonable
timeframe
5. Consensus Oriented – Good governance requires
mediation of the different interest to reach a broad
consensus on what is the bests interest of the whole
community and how this can be achieved. It also
requires a broad and long term perspective on what is
needed for sustainable human development and how
and how to achieve the goals of such development.
This can only result from an understanding of the
historical, cultural and social context of a given society
or community.
6. Equity and Inclusiveness – ensures that all

members feel that they have a stake in it and do
not feel excluded from the mainstream of
society. This requires all groups, but particularly
the most vulnerable, have opportunities to
improve or maintain their well being.
7. Effectiveness and Efficiency – Good

governance means that processes and
institutions produce results that meet the needs
of society while making the best use of
resources at their disposal. The concept of
efficiency in the context of good governance
also covers the sustainable use of natural
resources and the protection of the
environment.
8. Accountability – is a key requirement of good
governance. Not only governmental institutions but also
the private sector and civil society organizations must be
accountable to the public and to their institutional
stakeholders. Who is accountable to whom varies
depending on whether decisions or actions taken are
internal or external to an organization or institution. In
general, an organization or an institution is accountable to
those who will be affected by its decisions or actions.
Accountability cannot be enforced without transparency
and the rule of law
Corporate Governance
Corporate Governance is defined as the system

of rules, practices and processes by which
business corporations are directed and
controlled. It basically involves balancing the
interest of a company’s many stakeholders, such
shareholders, management, customers,
suppliers, government and the community.
The Corporate governance structure specifies

the distribution of rights and responsibilities
among different participants in the corporation,
such as the board, managers, shareholders and
other stakeholders and spells out the rules and
procedures for making decision on corporate
affairs.
Purpose of Corporate Governance
Corporate governance is to facilitate effective,
entrepreneurial and prudent management that can
deliver long term success of the company. The
fundamental aim of corporate governance is to
enhance shareholders’ value and protect the
interest of other stakeholders by improving the
corporate performance and accountability. It is also
about what the board of directors of a company
does, how it sets the values of the business firms.
Objectives of Corporate Governance
1. Fair and Equitable Treatment of

Shareholders
2. Self Assessment
3. Increase Shareholders Wealth
4. Transparency and Fill Disclosure
1. Fair and Equitable Treatment of Shareholders
A corporate governance structure ensures
equitable and fair treatment of all shareholders
of the company and deserve equitable
treatment and this equity is safeguarded by a
good governance structure in any organization
2. Self – Assessment – corporate governance
enables firms to assess their behaviour and
actions before they are scrutinized by regulatory
agencies. Business establishments with a strong
corporate governance system are better able to
limit exposure to regulatory risk and fines. An
active and independent board can successfully
point out deficiencies or loopholes in the
company operations and help solve issues
internally on a timely basis.
3. Increase Shareholders Wealth – another
corporate governance’s main objectives is to
protect the long term interest of the
shareholders. Firms with a strong corporate
governance structure are seen to have higher
valuation attached to their share by
businessmen. This only reflects the positive
perception that good corporate governance
induces potential investors to decide to invest in
a company.
4. Transparency and Full Disclosure – Good
corporate governance aims at ensuring a higher
degree of transparency in an organization by
encouraging full disclosure of transaction in the
company accounts.
Basic Principles of Effective Corporate
Governance
Effective corporate governance is transparent,

protects the right of shareholders and includes
both strategic and operational risk management.
It is concern in both long term earning potential
as well as actual short term earnings and holds
directors accountable for their stewardship of
the business.
Basic Principles of Effective Corporate
Governance
Transparency and full Disclosure

Accountability
“Is the board telling us what is
“Is the board taking responsibility?”
going on?”
Good and Effective Governance
Corporate Control
“ Is the board doing the right
thing?”
A. Transparency and full Disclosure
 Does the board meet the information needs
of investment communities?
 Does it safeguard integrity in financial
reporting?
 Does the board have sound disclosure policies
and practices?
 Does it make timely and balance disclosure?
 Can an outsider meaningfully analyse the
organization’s actions and performance?
B. Accountability
 Does the board clarify its role a and that of
management?
 Does it promote objective, ethical and
responsible decision making?
 Does the composition mix of board membership
ensure an appropriate range and mix of
expertise, diversity, knowledge and added value?
 is the organization’s senior official committed to
widely accepted standards of correct and proper
behavior?
C. Corporate Control
 Has the board built long term sustainable growth
in shareholders value for the corporation?
 Does it create an environment to take risk?
 Does it encourage enhanced performance?
 Does it recognize and manage risk?
 Does it remunerate fairly and responsibly?
 Does it recognize the legitimate interest of
stakeholders?
 Are conflicts of interest avoided such that the
organization’s best interest prevail at all times?
Illustrative Application of the basic principles of corporate
governance and best practice recommendations
Principles of Good Corporate Governance Best Practice Recommendations
1. A company should lay solid foundation for 1-a. Formalize and disclose the functions
management and oversight. It should reserved to the board and those delegated to
recognize and publish the respective roles management
and responsibilities of board and
management
2. Structure the board to add value. Have a 2-a. A board should have independent
board of an effective composition, size and directors.
commitment to adequately discharge its 2-b. the roles of chairperson and chief
responsibilities executive officer should not be exercised by
the same individual.
2-b. the board should establish a nomination
n committee
3. Promote ethical and responsible decision 3-a. Establish a code of conduct to guide the
making. Actively promote ethical and directors, the chief executive officer (or
responsible decision making. equivalent), the chief financial officer ( or
equivalent) and any other key executives as
to:
 the practices necessary to maintain
confidence in the company’s integrity and
 the responsibility and accountability of
individuals for reporting and investigating
reports of unethical practices
3-b.Disclose the policy concerning trading in
company securities by directors, officers and
employees
4. Safeguard integrity in financial reporting. 4-a. Require the chief executive of (or
Have structure to independently verify and equivalent) and the chief financial officer (or
safeguard the integrity of the company’s equivalent) to state in writing to the board
financial reporting that the company’s financial report present a
true and fair view, in all material respect, of
the company’s financial condition and
operational results and are in accordance
with relevant accounting standards
4. Safeguard integrity in financial reporting. 4-b. the board should establish an audit
Have structure to independently verify and committee
safeguard the integrity of the company’s 4-c. Structure the audit committee so that it
financial reporting consist of.
 only non executive or independent
directors
 an independent chairperson who is not
chairperson of the board and
 At least three (3) members
5. Make timely and balanced disclosure. 5-a. establish written policies and procedures
Promote timely and balanced disclosure if all designed to ensure compliance with IFRS.
material matters concerning the company 5-b. Listing rule disclosure requirements and
to ensure accountability at a senior
management level for compliance
6. Respect the rights of shareholders and 6-a. Design and disclose a communications
facilitates the effective exercise of those strategy to promote effective communication
rights with shareholders and encourage effective
participation at general meetings
6-b. request the external auditor to attend
the annual general meeting and be available
to answer shareholder questions about the
audit.
7. Recognize and manage risk. Establish a 7-a. the board or appropriate board
sound system of risk oversight and committee should establish policies on risk
management and internal control oversight and management.
7-b. the chief executive officer (or equivalent)
should state to the board in writing that:
 the statement given in accordance with
best practice recommendation 4-a ( the
integrity of financial statements) is
founded on a sound system of risk
management and internal compliance and
control which implements the policies
adopted by the board: and
7. Recognize and manage risk. Establish a  the company’s risk management and
sound system of risk oversight and internal compliance and control system is
management and internal control operating efficiently in all material
respects.
8. Encourage enhanced performance. Fairly 8-a. Disclose the process for performance
review and actively encourage enhanced evaluation of the board, its committees and
board and management effectiveness. individual directors and key executives.
9. Remunerate fairly and responsibly. Ensure 9-a. Provide disclosure in relation to the
that the level and composition of company’s remuneration polices to enable
remuneration is sufficient and reasonable investors to understand:
and that its relationship to corporate and  the costs and benefits of those policies
individual performance is defined. and
 the link between remuneration paid to
directors and key executives and key
executives and corporate performance
9-b. the board should establish a
remuneration committee.
9-c. clearly distinguish the structure of non
executive director’s remuneration from that
of executives.
9-d. Ensure that payment of equity-based
executive remuneration is made in
accordance with thresholds set in plans
approved by shareholders.
10. Recognize the legitimate interest of 10-a. Establish and disclose a code of conduct
stakeholders. Recognize legal and other to guide compliance with legal and other
obligations to all legitimate stakeholders. obligations to legitimate stakeholders
Responsibilities and Accountabilities
Learning Objectives
 Explain the relevance of good governance to
both large publicly-listed companies and SMEs
 know the relationship between shareholders
or owners and other stakeholders
 Identify the parties involved in Corporate
Governance
 Describe the respective broad rate and
specific responsibilities of the different parties
in a corporate setting
Relationship between shareholders/owner(s) and other
stakeholders
Governance start with Shareholders/Owners delegating
responsibilities through an elected board of directors to
management and, in to operating units with oversight and
assistance from internal auditors.
The board of directors and its audit committee oversee
management and in the that role are expected to protect
the shareholders’ right. However, it is important to
recognize that management is part of the governance
framework; management can influence who sits on the
board and the audit committee as well as other governance
controls that might be put into place.
In return for the responsibilities (and power) given to
management and the board, governance demands
accountability back through the system to the
shareholders. However, the accountabilities do not
extend only to the shareholders. Companies also have
responsibilities to other stakeholders. Stakeholders
can be anyone who is influenced, whether directly or
indirectly, by the actions of a company. Management
and the board have responsibilities to act within the
laws of society and to meet various requirements of
creditors, employees and the stakeholders.
A broad group of stakeholders has an interest in
the quality of corporate governance because it
has a relationship to economic performance and
the quality of financial reporting.
For example, it is likely that many employees
have significant funds invested in pension plans.
Those pension plans are designed to protect the
financial interests of the employees in their
retirement.
Question: what is the implication the “society
and others” indicating in the diagram?
Is to indicate those broad interests. Employees
and creditors have a vested interest in
organization and how it is governed. Regulators
are response to society’s wishes to ensure that
organization, in their pursuit of returns for their
owners, act responsibly and operate in
compliance with relevant laws.
While shareholders/owners delegate responsibilities to
various parties within the corporation, they also
require accountability as to how well the resources
that have been entrusted to management and the
board have been used. Owners want accountability like
 Financial performance
 Financial transparency
 Stewardship
 Quality of internal Control
 Composition of the board of directors and the
nature of its activities.
The owners want disclosures from management
that are accurate and objectively verifiable. For
instance, management gas a responsibility to
provide financial reports and in some cases,
reports on internal control effectiveness.
Management has always had the primary
responsibility for the accuracy and completeness
of an organization's financial statements.
Financial reporting perspective. It is
management responsibility to:
 Choose which accounting principles best
portray the economic substance of the
company transactions.
 implement a system of internal control that
assures completeness and accuracy in
financial reporting.
 ensure that the financial statements contain
accurate and complete disclosure
PARTIES INVOLVED IN CORPORATE GOVERNANCE: THEIR
RESPECTIVE BROAD ROLE AND SPECIFIC RESPONSIBILITIES
Party Overview of responsibilities
1. Shareholders Provide effective oversight through election
of board members, approval of major
initiatives such as buying or selling stock,
annual reports on management
compensation, from the board.
2. Board of Directors The major representative of stockholders to
ensure that the organization is run according
to the organization’s charter and that there is
proper responsibility.
Specific activities include among others:
1. Over all Operations
 Establishing the organization’s vision,
mission, values and ethical standards
 Delegating an appropriate level of
authority to management
 Demonstrating Leadership
2. Board of Directors The major representative of stockholders to
ensure that the organization is run according
to the organization’s charter and that there
is proper responsibility.
1. Over all Operations
 Establishing the organization’s vision,
mission, values and ethical standards
 Delegating an appropriate level of
authority to management
 Demonstrating Leadership
 Assuming responsibility for the business
relationship with CEO including his or her
appointment, succession, performance
remuneration and dismissal.
 Overseeing aspect of the employment of
the management team including
management remuneration, performance
and succession planning
2. Board of Directors  Recommending auditors and new
directors to shareholders
 Ensuring effective communication with
shareholders
 Crisis management
 Appointment of the CFO and corporate
secretary.
2. Performance
 Ensuring the organization’s long term
viability and enhancing the financial
position.
 Formulating and overseeing
implementation of corporate strategy
 Approving the plan, budget and
corporate policies.
 Agreeing key performance indicators
(KPIs)
 Monitoring/ assessing assessment,
performance of the organization, the
board itself, management and major
projects.
2. Board of Directors  Overseeing the risk management
framework and monitoring business risks
 Monitoring developments in the industry
and the operating environment
 Oversight of the and organization,
including its control and accountability
systems.
 Approving and monitoring the progress
of major capital expenditure, capital
management and acquisitions and
divestitures.
3. Compliance/Legal Conformance
 Understand and protecting the
organization’s financial position.
 Requiring and monitoring legal and
regulatory compliance including
compliance with accounting standards,
unfair trading legislations, occupational
health and safety and environmental
standards
2. Board of Directors  Approving annual financial reports,
annual reports and other public
documents/sensitive reports.
 Ensuring an effective system of internal
controls exists and is operating as
expected.
3. Non Executive or Independent directors Broad Role:
The same as the broad role of the entire

board of directors

 to understand the organization, its
business, its operating environment and
its financial position,
 to apply expertise and skills in the
organization’s best interest,
 to assist management to keep
performance objectives at the top of its
agenda,
 to understand that his/ her role is not to
act as auditor, nor to act as a member of
the management team
 to respect the collective, cabinet nature
of the board’s decision,
3. Non Executive or Independent directors Broad Role:
The same as the broad role of the entire

board of directors

 to prepare for and attend board
meetings,
 to seek information on a timely basis to
ensure that he/she is in a position to
contribute to the discussion when a
matter comes before the board, or alert
the chairman in advance to the need for
further information in relation to a
particular matter and,
 to ask appropriate questions relative to
operations
4. Management Broad Role:
Operations and accountability. Manage the

organization effectively; provide accurate
and timely reports to shareholders and
other stakeholders.

 recommend the strategic direction and
translate the strategic plan into the
operations of the business
 management the company’s human,
physical and financial resources to
achieve the organization’s objectives-run
the business
 assume day to day responsibility for the
organization’s conformance with relevant
laws and regulations and its compliance
framework
4. Management  develop, implement and manage the
organization’s risk management and
internal control frameworks
 develop, implement and update policies
and procedures
 be alert to relevant trends in the
industry and the organization’s operating
environment
 provide information to the board
 act as conduit between the board and
the organization
 Developing financial and other reports
that meet public stakeholder and
regulatory requirements.
5. Audit Committees of the Board of Broad Role:
Directors
Provide oversight of the internal and
external audit function and the process of
preparing the annual financial statements as
well as public reports on internal control.
 Selecting the external audit firm

 Approving any non-audit work
performed by the audit firm
 selecting and/ or approving the
appointment of the Chief Audit Executive
(internal auditor)
 reviewing and approving the scope and
budget of the internal audit function
 discussing audit findings with internal
auditor and external auditor and advising
the board (and management0) on
specific actions that should be taken
6. Regulators Broad Role:
a. Board of accountancy
Set accounting and auditing standards
dictating underlying financial reporting and
auditing concepts; set the expectations of
audit quality and accounting quality.
 Conducting CPA Licensure Board

Examinations
 Approving accounting principles
 Approving audit standards
 interpreting previously issued standards
implementing quality control processes
to ensure audit quality
 Educating members on audit and
accounting requirements
6. Regulators Broad Role:
a. Securities and Exchange Commissions
Ensure the accuracy, timeliness and fairness
of public reporting of financial and other
information for public companies.
 Reviewing filings with the SEC

 Interacting with the Financial Reporting
Standards Council in setting accounting
standards
 specifying independence standards
required of auditors that report on public
financial statements
 identify corporate frauds, investigate
causes, and suggest remedial actions
7. External Auditors Broad Role:
Perform audits of company financial

statements to ensure that the statements
are free of material misstatements including
misstatements that may be due to fraud.
 Audit of public company financial

statements
 Audits of non public company financial
statements
 Other services such as tax or consulting
8. Internal Auditors Broad Role:
Perform audits of companies for compliance

with company policies and laws, audits to
evaluate the efficiency of operation, and
periodic evaluation and tests of controls
 Reporting results and analyses to

management (including operational
management) and audit committees
 Evaluating internal controls
Securities and Exchange Commission
(SEC) Code of Corporate Governance
Learning objectives
1. Understand the need for the code of Governance for
publicly-listed companies.
2. know the sixteen governance responsibilities of the
board of directors of publicly-listed companies
3. Explain the meaning of “comply and explain
approach
4. Describe the three aspects of the code, namely
 Principles
 Recommendations
 Explanations
(SEC) Code of Corporate Governance
Learning objectives
5. Know what constitutes a competent board and how can it be
established
6. Understand the composition, functions and responsibilities of the
board committees that can be established such as the
 Audit Committee
 Corporate Governance Committee
 Board Risk Oversight Committee
 Related Party Transaction Committee
7. Know how the directors can show full commitment to the company
8. Understand how independence and objectivity of the board can be
reinforced and enhanced.
9. Describe how the performance and effectiveness of the board can be
assessed.
SEC CODE OF CORPORATE GOVERANANCE FOR PUBLICLY LISTED
COMPANIES
SEC MC No. 19, Series of 2016
On November 10, 2016 the Securities and Exchange

Commission approved the Corporate Governance for
publicly-listed companies. Its goal is to help companies
develop and sustain an ethical corporate culture and keep
abreast with recent developments in corporate
governance.
One of its salient provisions is for publicly –listed
companies to establish a code of business conduct and
submit a new manual on Corporate Governance that
would “provide standards for professional and ethical
behavior as well as articulate acceptable and unacceptable
conduct and practices”.
SEC CODE OF CORPORATE GOVERANANCE FOR PUBLICLY LISTED
COMPANIES
SEC MC No. 19, Series of 2016
The Board of Directors is required to implement

the code and make sure that management and
employees comply with the internal policies set.
While many companies have already developed
their Code of Business Conduct and Ethics, the
real challenge is in its implementation and
monitoring compliance.
CODE OF CORPORATE GOVERANCE FOR PUBLICLY-
LISTED COMPANIES
THE BOARD’S GOVERNANCE RESPONSIBILITIES
Principle 1: The company should be headed by a

component, working board to foster the long
term success of the corporation, and to sustain
its competitiveness and profitability in a manner
consistent with its corporate objectives and the
long term best interest of its shareholders and
other stakeholders.
LISTED COMPANIES
Recommendation 1.1 The Board should be composed of

directors with a collective working knowledge,
experience or expertise that is relevant to the
company’s industry/sector. The Board should always
ensure that it has an appropriate mix of competence
and expertise and that its members remain qualified for
their positions individual and collectively, to enable it to
fulfil its role and responsibilities and respond to the
needs of the organization based on the evolving
business environment and strategic direction.
LISTED COMPANIES

Explanation: Competence can be determined from the
collective knowledge, experience and expertise of each
director that is relevant to industry/ sector that the company is
in. A Board with the necessary knowledge, experience
expertise can properly perform its task of overseeing
management and governance of the corporation, formulating
the corporation’s vision, mission, strategic objectives, policies
and procedures that would guide its activities, effectively
monitoring management’s performance and supervising the
proper implementation of the same time. Board sets
qualification standards for its member to facilitate the
selection of potential nominees for board seats and to serve as
a benchmark for the evaluation of its performance.
LISTED COMPANIES
Principle 2: The fiduciary roles, responsibilities

and accountabilities of the Board as provided
under the law, the company’s articles and by-
laws, and other legal pronouncements and
guidelines should be clearly made known to all
directors as well as to stockholders and other
stakeholders.
LISTED COMPANIES
Recommendation 2.1
The Board members should act on a fully
informed basis, in good faith, with due diligence
and care, and it’s the best interest of the
company and all shareholders.
LISTED COMPANIES

Explanation: there are two key elements of the
fiduciary duty of board members: the duty of
care and the duty of loyalty. The duty of care
requires board members to act on a fully
informed basis, in good faith, with due diligence
and care. The duty of loyalty is also of central
importance; the board member should act in the
interest of the company and all its shareholders
and not those of the controlling company of the
group or any other stakeholders
LISTED COMPANIES

ESTABLISHING BOARD COMMITTEES
Principle 3: Board committees should be set up to
the extent possible to support the effective
performance of the Board’s functions, particularly
with respect to audit, risk management, related party
transactions and other key corporate governance
concerns such as nomination and remuneration. The
composition, functions and responsibilities of all
committees established should be contained in a
publicly available Committee Charter.
LISTED COMPANIES

Recommendation 3.1
The Board should establish board committees
that focus on specific board functions to aid in
the optimal performance of its roles and
responsibilities.
LISTED COMPANIES

Explanation: Board committees such as the Audit
Committee, Corporate Governance Committee,
Board Risk Oversight Committee and Related
Party Transaction Committee are necessary to
support the Board in the effective performance of
its functions. The establishment of the same, or
any other committees that the company deems
necessary, allows for specialization in issues and
leads to a better management of the Board’s
workload.
LISTED COMPANIES

FOSTERING COMMITMENT
Principle 4. To show full commitment to the
company, the directors should devote the time
and attention necessary to properly and
effectively perform their duties and
responsibilities, including sufficient time to be
familiar with the corporation’s business.
LISTED COMPANIES

Recommendation 4.1
The directors should attend and actively participate in all
meetings of the Board, Committees, and Shareholders in
person or through tele-/videoconferencing conducted
accordance with the rules and regulations of the
commission, except when justifiable causes, such as,
illness, death in immediate family and serious accidents,
prevent them from doing so. In Board and Committee
meetings, the director should review meeting materials
and if called for, ask the necessary question or seek
clarifications and explanations.
LISTED COMPANIES

Explanation
A director’s commitment to the company is
evident in the amount of time he dedicates to
performing his duties and responsibilities, which
includes his presence in all meetings of the
Board, committees and shareholders. In this
way, the director is able to effectively perform
his/her duty to the company and its
shareholders.
LISTED COMPANIES

Explanation
The absence of a director in more than fifty
percent (50%) of all regular and special meetings
of the board during/her incumbency is a ground
for disqualification in the succeeding election,
unless the absence is due to illness, death in the
immediate family, serious accident or other
unforeseen or fortuitous events.
LISTED COMPANIES

REINFORCING BOARD INDEPENDENCE
Principle 5: The Board should endeavour to

exercise objectives and independent judgement
on all corporate affairs
LISTED COMPANIES

Recommendation 5.1
The Board should have at least three
independent directors, or such number as to
constitute at least one third of its members of
the Board, whichever is higher.
LISTED COMPANIES

Explanation
The presence of independent directors in the Board
is to ensure the exercise of independent judgement
on corporate affairs and proper oversight of
managerial performance, including prevention of
conflict of interest and balancing of competing
demands of the corporation. There is increasing
global recognition that more independent directors
in the Board lead to more objective decision
making, particularly in conflict situations.
LISTED COMPANIES
Principle 6: The best measure of the Board’s

effectiveness is through or assessment process.
The Board should regularly carry out evaluations
to appraise its performance as a body, and
assess whether it possesses the right mix of
backgrounds and competencies.
LISTED COMPANIES

Recommendation 6.1
The Board should conduct an annual self-
assessment of its performance, including the
performance of the chairman, individual
members and committees. Every three years,
the assessment should be supported by an
external facilitator.
LISTED COMPANIES

Explanation
Board assessment helps the directors to
thoroughly review their performance and
understand their roles and responsibilities. The
periodic review and assessment of the Board’s
performance as a body the board committees,
the individual directors, and the chairman show
how the aforementioned should perform their
responsibilities effectively.
LISTED COMPANIES
Principle 7: Members of the Board are duly-

bound to apply high ethical standards, taking
into account the interest of all stakeholders.
LISTED COMPANIES
DISCLOSURE AND TRANSPARENCY
Principle 8: The company should establish

corporate disclosure policies and procedures
that are practical and in accordance with best
practices and regulatory
LISTED COMPANIES
Principle 9: The company should establish

standards for the appropriate selection of an
external auditor and exercise effective oversight
of the same to strengthen the external auditors
independence and enhance audit quality.
LISTED COMPANIES
Principle 10: The company should ensure that

material and reportable non financial and
sustainability issues are disclosed
LISTED COMPANIES
Principle 11: the company should maintain a

comprehensive and cost efficient
communication channel for disseminating
relevant information. This channel is crucial for
informed decision making by investors,
stakeholders and other interested users.
LISTED COMPANIES
INTERNAL CONTROL SYSTEM AND RISK

MANAGEMENT FRAMEWORK
Principle 12: To ensure the integrity,

transparency and proper governance in the
conduct of its affairs, the company should have a
strong and effective internal control system and
enterprise risk management framework.
LISTED COMPANIES
CULTIVATING A SYNERGIC RELATIONSHIP WITH

SHAREHOLDERS
Principle 13: The company should treat all

shareholders fairly and equitably, and also
recognize, protect and facilitate the exercise of
their rights.
LISTED COMPANIES
DUTIES TO STAKEHOLDERS
Principle 14: The rights of stakeholders

established by law, by contractual relations and
through voluntary commitments must be
respected. Where stakeholders’ right and/or
interest are at stake, stakeholders should have
the opportunity to obtain prompt effective
redress for the violations of their rights.
LISTED COMPANIES
Principle 15: A mechanism for employee

participation should be developed to create a
symbiotic environment, realize the company’s
goals and participate in its corporate governance
processes.
LISTED COMPANIES
Principle 16: The company should be socially

responsible in all its dealings with the
communities where it operates. It should ensure
that its interactions serve its commitment and
stakeholders in a positive and progressive
manner that is fully supportive of its
comprehensive and balanced development.

Corporate Governance, Business Ethics, Risk Management and Internal Control

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Corporate Governance, Business Ethics, Risk Management and Internal Control

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Corporate Governance, Business

Ethics, Risk Management and internal

It comprises all the processes of governing

2. Rule of Law – Good governance requires fair

3. Transparency – means that decisions taken

4. Responsiveness – Good governance requires

6. Equity and Inclusiveness – ensures that all

7. Effectiveness and Efficiency – Good

Corporate Governance is defined as the system

The Corporate governance structure specifies

1. Fair and Equitable Treatment of

Effective corporate governance is transparent,

Transparency and full Disclosure

Good and Effective Governance

The same as the broad role of the entire

Specific activities include among others:

The same as the broad role of the entire

Specific activities include among others:

Operations and accountability. Manage the

Specific activities include among others:

Specific activities include among others:

 Selecting the external audit firm

Specific activities include among others:

 Conducting CPA Licensure Board

Specific activities include among others:

 Reviewing filings with the SEC

Perform audits of company financial

Specific activities include among others:

 Audit of public company financial

Perform audits of companies for compliance

Specific activities include among others:

 Reporting results and analyses to

On November 10, 2016 the Securities and Exchange

The Board of Directors is required to implement

THE BOARD’S GOVERNANCE RESPONSIBILITIES

Principle 1: The company should be headed by a

THE BOARD’S GOVERNANCE RESPONSIBILITIES

Recommendation 1.1 The Board should be composed of

THE BOARD’S GOVERNANCE RESPONSIBILITIES

THE BOARD’S GOVERNANCE RESPONSIBILITIES

Principle 2: The fiduciary roles, responsibilities

THE BOARD’S GOVERNANCE RESPONSIBILITIES

THE BOARD’S GOVERNANCE RESPONSIBILITIES

THE BOARD’S GOVERNANCE RESPONSIBILITIES

THE BOARD’S GOVERNANCE RESPONSIBILITIES

THE BOARD’S GOVERNANCE RESPONSIBILITIES

THE BOARD’S GOVERNANCE RESPONSIBILITIES

THE BOARD’S GOVERNANCE RESPONSIBILITIES

THE BOARD’S GOVERNANCE RESPONSIBILITIES

THE BOARD’S GOVERNANCE RESPONSIBILITIES

THE BOARD’S GOVERNANCE RESPONSIBILITIES

Principle 5: The Board should endeavour to

THE BOARD’S GOVERNANCE RESPONSIBILITIES

THE BOARD’S GOVERNANCE RESPONSIBILITIES

THE BOARD’S GOVERNANCE RESPONSIBILITIES

Principle 6: The best measure of the Board’s

THE BOARD’S GOVERNANCE RESPONSIBILITIES

THE BOARD’S GOVERNANCE RESPONSIBILITIES

THE BOARD’S GOVERNANCE RESPONSIBILITIES

Principle 7: Members of the Board are duly-

DISCLOSURE AND TRANSPARENCY

Principle 8: The company should establish

DISCLOSURE AND TRANSPARENCY