Introduction to

Corporate
Governance

LYNLE N. MENDOZA
Subject Instructor
Second Semester A.Y. 2022-2023
 Philippines is 2nd in good corporate
governance
The Philippine Star / November 15, 2015

MANILA, Philippines – The Philippines ranks second best among countries belonging to the Association of
Southeast Asian Nations (Asean) when it comes to good corporate governance, with companies owned by
some of the country’s richest families leading the pack.A total of 11 Philippine publicly listed firms made it to
the region’s top 50 companies practicing good governance as graded by the Asean Capital Markets Forum
(ACMF).
Thailand had the most number of listed firms that made it to the top 50 with 23. The Philippines, which was
second with 11, was followed by Singapore with eight, Malaysia with six, and Indonesia with two.
Among the 11 Philippine corporations that made it to the top 50, four are owned by the Ayala group. These
firms were Ayala Corp., Ayala Land Inc., Globe Telecom Inc., and Manila Water Co.
What kind of governance
does the Philippines have?
The Philippines is a republic with a
presidential form of government wherein
power is equally divided among its three
branches: executive, legislative, and
judicial.
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 What is Governance ?
•
UNDP (The United Nations Development Program) defines
governance as “the exercise of economic, political and administrative
authority to manage a country’s affairs at all levels. It comprises the
mechanisms, processes and institutions, through which citizens and
groups articulate their interests, exercise their legal rights, meet their
obligations and mediate their differences”.
World Bank defines governance as “the method through which power
is exercised in the management of a country’s political, economic and
social resource
But of late, it has placed special emphasis on governance issues like
Transparency, Accountability and Judicial reforms. It has started
looking at issues related to good governance.
Distinguishing ‘governance’ from ‘government’
• Governance is what a government does. The government may
be of different kinds. It might be a geo-political government, a
corporate government, a socio-political government etc. The
dynamic exercise of management of power and policy is
known as governance, while the governments act as the
instrument that does it.
Ex. Geopolitics focuses on political power linked to geographic space. In particular, territorial waters
and land territory in correlation with diplomatic history.
Ex. Corporate politics involves the use of power and social networking within a workplace to achieve
changes that benefit the organization or individuals within it.
Ex. Socio-political is something that is sociopolitical is the issue of environmental
conservation, which is influenced by both social attitudes towards "going green" and by
political policies. Involving both social and political factors.
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 Different Aspects of term “Governance”
• This term “governance” is very broad and includes all formal
and informal organizations; and can be used as suffix to a
wide array of processes of governing such as Public
Governance, Private Governance, Global Governance,
Corporate Governance, Non-Profit Governance, Project
Governance, Environmental Governance, Internet
Governance, Meta Governance and so on. They are discussed
briefly as follows:

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• Public Governance- Public Governance is simply the
interaction between government and other actors of the
social sphere and the process of decision making in public
policy sphere. It serves the citizens by safeguarding
territorial integrity of the state, securing individual security,
rule of law, and delivery of services such as education,
health, livelihood and food security.
• Private governance is when the Non-governmental /
private entities make rules and standards which have a
binding effect on life of public at large. This implies that in
private governance, private entities make public policy.
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• Global governance
This refers to the complex of formal and informal institutions,
mechanisms, relationships, and processes between and
among nations, markets, citizens and organizations, both
inter- and non-governmental, through which collective
interests on the global plane are articulated, right and
obligations are established, and differences are mediated”.
• Corporate governance
This term is used to describe the manner in which
corporations are governed and the laws / custom that applies
to such governance. The key players in corporate governance
include shareholders, management, board of directors and
other stakeholders such as employees, suppliers, customers,
credtors, banks and government bodies.
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• Corporate governance in the Philippines is characterized
by concentrated ownership by a limited number of family
shareholders, within a bank-dominated financial market.

• How does corporate governance help companies in the

Philippines?
• Strong corporate governance is founded on the principles
of fairness, accountability and transparency. It is key to
increasing the global competitiveness of Philippine
corporations in a manner that optimizes long term value to
the company and its shareholders, as well as recognizes the
role of its various stakeholders.

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• Who regulates the corporate governance in the
Philippines?
• In this country, the Philippine Securities and Exchange
Commission (SEC), a principal player in matters of
corporate governance, recently issued Memorandum
Circular 2, Series of 2002, otherwise known as the Code of
Corporate Governance, under resolution no. 135 dated
April 4, 2002.

• What are the 4 P's of corporate governance?

• The four P's of corporate governance are people, process,
performance, and purpose.
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• How important is the code of corporate
governance in doing business in the
Philippines?
• It ensures that systems and processes are
designed to provide assurance in areas
including reporting, monitoring compliance
with laws, regulations and internal policies,
efficiency and effectiveness of operations,
and safeguarding of assets.

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 Top 30 Components of PSEI in 2022
The Philippine Stock Exchange carefully selects 30 companies for the PSE Index following strict and expert criteria. It
goes through regular adjustments so the composition may change, and a company may enter or exit.

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 1. Ayala Corporation (AC)
2. AC Energy Corporation (ACEN)
3. Aboitiz Equity Ventures, Inc. (AEV)
4. Alliance Global Group, Inc. (AGI)
5. Ayala Land, Inc. (ALI)
6. Aboitiz Power Corporation (AP)
7. BDO Unibank, Inc. (BDO)
8. Bank of the Philippine Islands (BPI)
9. Converge Information and Communications Technology Solutions, Inc. (CNVRG)
10.Emperador Inc. (EMI)
11.Globe Telecom, Inc. (GLO)
12.GT Capital Holdings, Inc. (GTCAP)
13.International Container Terminal Services, Inc. (ICT)
14.Jollibee Foods Corporation (JFC)
15.JG Summit Holdings, Inc. (JGS)

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 16. LT Group, Inc. (LTG)
17. Metropolitan Bank & Trust Company (MBT)
18.Megaworld Corporation (MEG)
19. Manila Electric Company (MER)
20. Monde Nissin Corporation (MONDE)
21. Metro Pacific Investments Corp. (MPI)
22.Puregold Price Club Inc. (PGOLD)
23. Robinsons Land Corporation (RLC)
24. Semirara Mining and Power Corp. (SCC)
25. SM Investments Corp. (SM)
26.San Miguel Corp. (SMC)
27.SM Prime Holdings, Inc. (SMPH)
28.PLDT, Inc. (TEL)
29.Universal Robina Corporation (URC)
20xx 30.Wilcon Depot, Inc. (WLCON)Sample footer text 15
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