Securities and Exchange Commission SEC Code

CHAPTER 3
SECURITIES AND
EXCHANGE
COMMISSION (SEC)
CODE OF
CORPORATE
GOVERNANCE
GROUP 3
SECURITIES AND EXCHANGE
COMMISSION SEC MC NO. 19,
SERIES OF 2016
On November 10, 2016, the Securities and Exchange Commission
approved the Code of Corporate Governance for publicly-listed
companies. It's 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". The Board of Directors is required to implement the code and
03/03/2024 Annual Review 2
THE BOARD
GOVERNANCE
RESPONSIBILITIES
ESTABLISHING A COMPETENT
BOARD
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 long-term best interest of its
shareholders and other stakeholders.
BOARD
Principle 2
 The fiduciary roles, responsibilities and
accountabilities of me 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
directions as well as to stockholders and
other stakeholders.
BOARD
Principle 3
 Board committees should be set up to the
extent possible to support the effective
performance of the boards functions,
particularly eith the respect to audit, risk
management, related party transactions, and
other key corporate governance concerns,
such as nomination and remuneration.
BOARD
Principle 4
 To show full commitment to the company,
the directions should be devoting the time
and the attention necessary to properly and
effectively perform their duties and
responsibilities, including sufficient time to
be familiar with the corporations business.

BOARD
Principle 5
 The board should endeavor to exercise
objective and independent judgement
on all corporate affairs.

BOARD
Principle 6
 The best measure of the boards
effectiveness is through an assessment
process. The board should regularly carry
out revaluations to appraise its
performance as a body and assess whether
it’s possess the right mix of backgrounds
and competencies.
BOARD
Principle 7
 Members of the board are duty-bound to
apply high ethical standards, taking into
account the interests of all stakeholders.

DISCLOSURES TRANSPARENCY
Principle 8
 The company should stablish corporate
disclosure policies and procedures that are
practical and in accordance with best
practices and regulatory expectation.

Principle 9
 The company should establish standards
for the appropriate selection of external
auditor, and exercise effective oversight of
the same to strengthen the external
auditors independence and enhance audit
quality.

Principle 10
 The company should ensure that material and
reportable non-financial and sustainability issues and
disclosed.
Principle 11
 The company should maintain a comprehensive and
cost-efficient communication channel for
disseminating relevant information.
INTERNATIONAL 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.

CULTIVATING A SYNERGIC RELATIONSHIP WITH
STOCKHOLDERS
Principle 13
 The company should treat all
shareholders fairly and equitably, and
also recognize, protect and facilitate the
exercise of their rights.

DUTIES TO STAKEHOLDERS
Principle 14
 The rights of stockholders established by
the law, by contractual relations and
through voluntary commitments must be
respected.

Principle 15
 A mechanism for employees' participation
should be develop to create a symbiotic
environment, realize the company goals and
participate in its corporate governance
processes.

Principle 16
 The company should be socially
responsible in all its dealings with the
communities where it operates.

INTRODUCTI
ON
INTRODUCTION
The Code of Corporate Governance
- intended to raise the corporate
governance standards of Philippine
corporations to a level at par with its
regional and global counterparts.
The latest G20/OECD1 Principles of Corporate
Governance and Association of Southeast Asian
Nations Corporate Governance Scorecard used as a
key reference materials in the drafting this Code.
INTRODUCTION
The code will adopt the “comply or
explain” approach
- Combines voluntary compliance with
mandatory disclosure
- Companies voluntarily comply with this
code but an explanation for non-
compliance is required, if they opt not to
conform with the provisions of this Code

INTRODUCTION
ARRANGEMENT OF THE CODE
Principles – high-level statements of corporate governance
good practice and are applicable to all companies
Note:
- Alternatives to a Recommendations may be justified if

good governance may be achieved by other means
- Must be describe and disclose the non-compliance and
explain how overall Principle was achieved.
- Descriptions and explanations must be written in plain
language
- Should be consistent with the overall Principle
INTRODUCTION
Recommendations - objective criteria that are

intended to identify the specific features of
corporate governance good practice that are
recommended for companies operating
according to this Code.

INTRODUCTION
Explanations – strive to provide companies with

additional information on the recommended best
practice
- does not prescribe “one size fit all” framework
- Principle of Proportionality is used in applying

its provisions

DEFINITION
OF
TERMS
DEFINITION OF TERMS

CORPORATE GOVERNANCE
 the system of stewardship and control to guide organizations in
fulfilling their long-term economic, moral, legal and social
obligations towards their stakeholders.
 System of directions, feedback and control using regulations,
performance standards and ethical guidelines to hold the Board
and senior management accountable for ensuring ethical behavior
reconciling long-term customer satisfaction with shareholder
value to the benefit of all stakeholders and society
 Purposes:
(a) Maximize the organization’s long -term success;
(b) Creating sustainable value for its shareholders, stakeholders
and the nation
BOARD OF DIRECTORS
- the governing body elected by the
stockholders that exercises the corporate
powers of acorporation, conducts all its
business and controls its properties (at
least 5-15)

MANAGEMENT
- a group of executives given the

authority by the Board of Directors to
implement the policies.

INDEPENDENT DIRECTOR
is independent of management and the controlling
shareholder and is free from any business or other
relationship which could, or could reasonably be
perceived to, materially interfere with his exercise
of independent judgment in carrying out his
responsibilities as a director.

EXECUTIVE DIRECTOR
a director who has executive responsibility
of day-to-day operations of a part or the
whole of the organization.
EXECUTIVE DIRECTOR
A director who has no executive
responsibility and doea not perform any
work related to the operations of the
corporation.
CONGLOMERATE
A group of corporations that has diversified

business activities in varied industries,
whereby the operations of such business are
controlled and managed by a parent
corporate entity.

INTERNAL CONTROL
A processed design and affected by the board of

directors, senior management, and all levels of
personnel to provide reasonable assurance on the
achievement of objectives through efficient and
effective operations; reliable , complete and timely
financial and management information and the
organizations policies and procedure.
ENTERPRISE RISK MANAGEMENT
a process, effected by an entity’s Board of Directors,
management and other personnel, applied in strategy
setting and across the enterprise that is designed to
identify potential events that may affect the entity,
manage risks to be within its risk appetite, and
provide reasonable assurance regarding the
achievement of entity objectives.
RELATED PARTY
shall cover the company’s subsidiaries, as well as
affiliates and any party, that the company exerts
direct or indirect control over or that exerts direct or
indirect control over the company; the company’s
directors; officers; shareholders and related interests
(DOSRI), and their close family members, as well as
corresponding persons in affiliated companies.
RELATED PARTY TRANSACTIONS
a transfer of resources, services or obligations
between a reporting entity and a related party,
regardless of whether a price is charged
STAKEHOLDERS
any individual, organization or society at large who
can either affect and/or be affected by the company’s
strategies, policies, business decisions and
operations, in general.
THE BOARD
GOVERNANCE
RESPONSIBILITIES
Principle 1
ESTABLISHING A
COMPETENT
BOARD
Principle 1:
ESTABLISHING A COMPETENT BOARD
- The company should be headed by a

competent, 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.
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 the position individually
and collectively, to enable it to fulfil its roles and
responsibilities and respond to the needs of the organization
based on the evolving business environment and strategic
direction.
Recommendation 1.2
 The Board should be composed of a majority of non-executive

directors who possess the necessary qualifications to effectively
participate and help secure objective, independent judgement on
corporate affairs and to substantiate proper checks and balances.

Recommendation 1.3
 The Company should provide in its Board Charter and Manual on

Corporate Governance a policy on the training of directors,
including an orientation program for first-time directors and
relevant annual continuing training for all directors.

Principle 2
ESTABLISHING A CLEAR
ROLES AND
RESPONSIBILITIES OF
THE BOARD
Principle 2:
ESTABLISHING A CLEAR ROLES AND
RESPONSIBILITIES OF THE BOARD
The fiduciary roles, responsibilities and
accountabilities of the Board as provided
under the law, the company’s articles and
by-laws, and other legal pronouncement
and guidelines should be clearly made
known to all directors as well as to
stockholders and other stakeholders.

Recommendation 2.1
 The Board members should act on fully informed basis, in good

faith, with due diligence and care, and in the best interest of the
company and all shareholders.

Recommendation 2.2
 The Board should oversee the development of and approve the

company’s business objectives and strategy, and monitor their
implementation, in order to sustain the company’s long-term
viability and strength.

Recommendation 2.2
 The Board should oversee the development of and approve the
company’s business objectives and strategy, and monitor their
implementation, in order to sustain the company’s long-term
viability and strength.
Recommendation 2.3
 The Board should be headed by a competent and qualified
chairperson.

Recommendation 2.4
 The Board should be responsible for ensuring and adopting an

effective succession planning program for directors, key officers
and management to ensure growth and a continued increase in the
shareholders’ value. This should include adopting a policy on the
retirement age for directors and key officers as part of management
succession and to promote dynamism in the corporation.

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

Recommendation 3.2
 The Board should establish an Audit Committee to enhance
its oversight capability over the company’s financial
reporting, internal control system, internal and external audit
processes, and compliance with applicable laws and
regulations. The Committee should be composed of at least
three appropriately qualified non-executive directors, the
majority of whom, including the Chairman, should be
independent. All of the members of the committee must have
relevant background, knowledge, skills, and/or experience in
the areas of accounting, auditing and finance. The Chairman
of the Audit Committee should not be the chairman of the
Board or of any other committees.
Recommendation 3.3
 The Board should establish a Corporate Governance

Committee that should be task to assist the Board in the
performance of its corporate governance responsibilities,
including the functions that were formerly assigned to a
Nomination and Remuneration Committee. It should be
composed of at least three members, all of whom should be
independent directors, including the Chairman.

Principle 4
FOSTERING
COMMITMENT
Principle 4:
FOSTERING COMMITMENT
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.

Recommendation 4.1
 Directors must actively participate in Board, Committee, and

Shareholder meetings, unless deemed necessary due to
illness, death, or serious accidents. They should review
materials and seek clarifications.

Recommendation 4.1
 Directors must actively participate in Board, Committee, and

Shareholder meetings, unless deemed necessary due to
illness, death, or serious accidents. They should review
materials and seek clarifications.

Recommendation 4.2
 Non-executive board directors should serve as directors for
up to five publicly listed companies to ensure sufficient time
for meetings, challenge management's proposals, and oversee
long-term company strategy.
Recommendation 4.3
 A director should notify the Board where he/she is an
incumbent director before accepting a directorship in another
company.

Principle 5
REINFORCING BOARD
INDEPENDENCE
Principle 5:
REINFORCING BOARD INDEPENDENCE
The board should endeavor to exercise
an objective and independent judgment
on all corporate affairs.

Recommendation 5.1
 The Board should have at least three independent
directors, or such number as to constitute at least one-third
of the members of the Board, whichever is higher.
Recommendation 5.2
 The Board should ensure that its independent directors
possess the necessary qualifications and none of the
disqualifications for an independent director to hold the
position.
Recommendation 5.5
 The Board should designate a lending director among

independent directors if the Chairman is not openly
indignant, including if the Chairman of the Board and Chief
Executive Officer are held by one person.

Recommendation 5.6
 A director with a material interest in any transaction
affecting the corporation should abstain from taking part
in the deliberations for the same.
Recommendation 5.7
 NEDs should hold periodic meetings with auditors and
internal audit heads to ensure proper checks and balances,
chaired by the lead independent director.

Principle 6
ASSESSING BOARD
PERFORMANCE
Principle 6:
ASSESSING BOARD PERFORMANCE
The best measure of the Board's
effectiveness is through an 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.

Recommendation 6.1
 The Board should conduct an annual self-assessment of its

performance, including the Chairman, individual members,
and committees, with an external facilitator supporting the
assessment every three years.

Recommendation 6.2
 The Board should have in place a system that provides, at the

minimum, criteria and process to determine the performance
of the Board, the individual directors, committees and such
system should allow for a feedback mechanism from the
shareholders.

PRINCIPLE 7: STRENTHENING BOARD ETHICS
members of the board are duty-bound to apply high ethical

standards, taking into account the interests of all the
stakeholders.

Recommendation 7.1
 The board should adopt a Code of Business Conduct and Ethics,

which would provide standards for professional and ethical
behavior, as well as articulate acceptable and unacceptable
conduct and practices in internal and external dealings. The Code
should be properly disseminated to the Board, senior
management and employees. It should also be disclosed and
made available to the public through the company website.

Recommendation 7.2
 The board should ensure the proper and efficient

implementation and monitoring of compliance with the Code,
appropriate orientation and training of the Board, senior
management and employees on the same are necessary.

DISCLOSURE AND
TRANSPARENCY

Principle 8
ENHANCING THE
COMPANY DISCLOSURE
POLICIES AND
PROCEDURES
Principle 8:
ENHANCING THE COMPANY DISCLOSURE POLICIES
AND PROCEDURES
The company should establish

corporate disclosure policies and
procedures that are practical and in
accordance with practices and
regulatory expectations.

Recommendation 8.1
 The board should establish corporate disclosure policies and

procedures to ensure a comprehensive, accurate, reliable and
timely report to shareholders and other stakeholders that gives a
fair and complete picture of a company’s financial condition,
results and business operations.

Recommendation 8.2
 The company should have a policy requiring all directors

and officers to disclose/report to the company any dealings in the
company’s shares within three business days.

Recommendation 8.3
 The board should fully disclose all relevant and material

information on individual board members and key executives to
evaluate their experience and qualifications, and assess any
potential conflicts of interest that might affect their judgement.

Principle 9
STRENGTHENING THE
EXTERNAL AUDITOR’S
INDEPENDENCE AND
IMPROVING AUDIR
QUALITY
Principle 8:
STRENGTHENING THE EXTERNAL AUDITOR’S INDEPENDENCE AND
IMPROVING AUDIR QUALITY
The company should establish

standards for the appropriate selection
of an external auditor, and exercise
effective oversight of the same to
strengthen the external auditor’s
independence and enhance audit quality.

Recommendation 9.1
 The Audit Committee should have a robust process for

approving and recommending the appointment, reappointment,
removal, and fees of the external auditor. The appointment,
reappointment, removal, and fees of the external auditor should
be recommended by the Audit Committee, approved by the
Board and ratified by the shareholders.

Recommendation 9.2
 The Audit Committee Charter should include the Audit

Committee’s responsibility on assessing the integrity and
independence of external auditors and exercising effective
oversight to review and monitor the external auditor’s
independence and objectivity and the effectiveness of the audit
process, taking into consideration relevant Philippine
professional and regulatory requirements.

Recommendation 9.3
 The board should fully disclose all relevant and material

information on individual board members and key executives to
evaluate their experience and qualifications, and assess any
potential conflicts of interest that might affect their judgement.

GROUP 3
JABIEN, JOHN MARK

CABAEL,KAREN
LOPEZ, TRISHA
DAROY, PAMELA
SILAGAN, KIM

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CHAPTER 3

One of its salient provisions is for publicly-listed companies to establish a

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- Alternatives to a Recommendations may be justified if

Recommendations - objective criteria that are

03/03/2024 Annual Review 23

Explanations – strive to provide companies with

- does not prescribe “one size fit all” framework

- Principle of Proportionality is used in applying

03/03/2024 Annual Review 24

03/03/2024 Annual Review 26

03/03/2024 Annual Review 28

- a group of executives given the

03/03/2024 Annual Review 29

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A group of corporations that has diversified

03/03/2024 Annual Review 32

A processed design and affected by the board of

- The company should be headed by a

 The Board should be composed of a majority of non-executive

03/03/2024 Annual Review 41

 The Company should provide in its Board Charter and Manual on

03/03/2024 Annual Review 42

03/03/2024 Annual Review 44

 The Board members should act on fully informed basis, in good

03/03/2024 Annual Review 45

 The Board should oversee the development of and approve the

03/03/2024 Annual Review 46

03/03/2024 Annual Review 47

 The Board should be responsible for ensuring and adopting an

03/03/2024 Annual Review 48

 The Board should establish board committees that focus on specific

03/03/2024 Annual Review 51

 The Board should establish a Corporate Governance

03/03/2024 Annual Review 53

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 Directors must actively participate in Board, Committee, and

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 Directors must actively participate in Board, Committee, and

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 The Board should designate a lending director among

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 The Board should conduct an annual self-assessment of its

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 The Board should have in place a system that provides, at the

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members of the board are duty-bound to apply high ethical

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 The board should adopt a Code of Business Conduct and Ethics,