INTRODUCTION TO CORPORATE

GOVERNANCE

WHAT IS GOVERNANCE?

Governance is the process of decision-making and the process by which

decisions are implemented (or not implemented) through the exercise of
power or authority by leaders of the country and/or organizations.

CHARACTERISTICS OF GOOD GOVERNANCE

PARTICIPATION:
Freedom of association and
expression while maintaining an
organized civil society.

ACCOUNTABILITY:
RULE OF LAW: An organization or an institution is
Fair legal frameworks that are accountable to those who will be
enforced impartially. Full protection affected by its decisions or actions.
of human rights, especially of Accountability is enforced along hand
minorities. with transparency and the rule of
law.
TRANSPARENCY: EFFECTIVENESS & EFFICIENCY:
Information is freely available and Processes and institutions produce
directly accessible to those who will GOOD results that meet the needs of society
be affected by such decisions and GOVERNAN while making the best use of
their enforcement. CE resources. It is also the sustainable
Information is provided and that it is use of resources and the protection
provided in easily understandable of the environment.
EQUITY & INCLUSIVENESS:
RESPONSIVENESS: All members feel that they have a
Institutions and processes try to stake in
serve the needs of all stakeholders it and do not feel excluded from
within a reasonable timeframe. mainstream society. All groups,
especially the minority, have
opportunities to improve or maintain

CONSENSUS ORIENTED:
Mediation of the different interests in
society to reach a broad consensus
on what is in the best interest of the
whole community and how this can
be achieved.
PURPOSE OF CORPORATE GOVERNANCE

The purpose of 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 interests of other stakeholders by
improving corporate performance and accountability.

OBJECTIVES OF CORPORATE GOVERNANCE

1. FAIR AND EQUITABLE TREATMENT OF SHAREHOLDERS\

Ensures equitable and fair treatment of all shareholders of the company. All
shareholders deserve equitable treatment, and this equity is safeguarded by
a good governance structure in any organization.

2. SELF-ASSESSMENT

Enables firms to assess their behavior and actions before they are scrutinized
by regulatory agencies. Successfully point out deficiencies or loopholes in the
company operations and help solve issues internally on a timely basis.

3. INCREASE SHAREHOLDERS’ WEALTH

To protect the long-term interest of the shareholders.

4. TRANSPARENCY AND FULL DISCLOSURE

Aims at ensuring a higher degree of transparency in an organization by

encouraging full disclosure of transactions in the company accounts.

BASIC PRINCIPLES OF EFFECTIVE CORPORATE GOVERNANCE

Effective corporate governance is transparent, protects the rights of shareholders

and includes both strategic and operational risk management. It is concerned with
both the long-term earning potential as well as actual short-term earnings and holds
directors accountable for their stewardship of the business.

Transparency and Full Accountability:

Disclosure: Is the board taking responsibility?
Is the board telling us what is

GOOD AND EFFECTIVE

GOVERNANCE

Corporate Control:
Is the board doing the right thing?
CORPORATE GOVERNANCE RESPONSIBILITIES AND
ACCOUNTABILITIES

RELATIONSHIP BETWEEN SHAREHOLDERS/OWNER(S) AND OTHER STAKEHOLDERS

Public Corporation Stakeholders

Board of Shareholder
Directors s/ Owners

Executive External
Delegate Management Have Auditors

Shareholder
s/ Owners

Responsibiliti Operational Accountabilities Regulators

es Management

Interna Society and

l Others
Auditor

SHAREHOLDERS

 Delegate responsibilities through an elected board of directors to

management and, in turn, to operating units with oversight and assistance
from internal auditors.
 In return for the responsibilities (and power) given to the management
and the board, accountability is returned through the system of the
shareholders on such things:
o Financial performance
o Financial transparency - financial statements that are clear with full
disclosure and that reflect the underlying economics of the
company.
o Stewardship, including how well the company protects and
manages the resources entrusted to it.
o Quality of internal control
o Composition of the board of directors and the nature of its activities,
including information on how well management incentive systems
are aligned with the shareholders' best interests.

BOARD OF DIRECTORS

 The board of directors and its audit committee oversee management and,
in that role, are expected to protect the shareholders' rights.
MANAGEMENT

 Management is held responsible by the owners.

 It is management’s responsibility to:
o Choose which accounting principles best portray the economic
substance of company transactions.
o Implement a system of internal control that assures completeness
and accuracy in financial reporting.
o Ensure that the financial statements contain accurate and complete disclosure

STAKEHOLDERS

 Companies also have responsibilities to other stakeholders

 Stakeholders can be anyone who is influenced directly or indirectly by the
actions of a company.
 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.

PARTIES INVOLVED IN CORPORATE GOVERNANCE

PARTY ROLES / RESPONSIBILITIES
Provide effective oversight through election of board
members, approval of major initiatives such as buying or
1. Shareholders
selling stock, annual reports on management compensation,
from the board
The major representative of stockholders to ensure that the
2. Board of Directors organization is run according to the organization's charter
and that there is proper accountability
3. Non-Executive or The same as the broad role of the entire board of directors
Independent Directors
Operations and accountability. Manage the organization
4. Management effectively, provide accurate and timely reports to
shareholders and other
stakeholders.
Provide oversight of the internal and external audit function
5. Audit Committees if the
and the process of preparing the annual financial statements
Board of Directors
as well as public
reports on internal control.
a.) Set accounting and auditing standards dictating
6. Regulators underlying financial reporting and auditing concepts, set
a.) Board of Accountancy the expectations of audit quality and accounting quality
b.) Securities and b.) Ensure the accuracy, timeliness and fairness of public
Exchange Commission reporting of financial and other information for public
companies.
Perform audits of company financial statements to ensure that
7. External Auditors the statements are free of material misstatements including
misstatements
that may be due to fraud.
Perform audits of company financial statements to ensure that
8. Internal Auditors the
statements are free of material misstatements including
misstatements that may be due to fraud.
 SEC CODE OF CORPORATE GOVERNANCE FOR
PUBLICLY LISTED COMPANIES
(CG Code for PLCs)

OVERVIEW:

THE BOARD’S GOVERNANCE RESPONSIBILITIES

1. Establishing a Competent Board

2. Establishing Clear Roles and Responsibilities of the Board
3. Establishing Board Committees
4. Fostering Commitment
5. Reinforcing Board Independence
6. Assessing Board Performance
7. Strengthening Board Ethics

DISCLOSURE AND TRANSPARENCY

8. Enhancing Company Disclosure Policies and Procedures

9. Strengthening the External Auditors Independence and Improving Audit Quality
[Link] Focus on Non-Financial and Sustainability Reporting
[Link] a Comprehensive and Cost-Efficient Access to Relevant Information

INTERNAL CONTROL SYSTEM AND RISK MANAGEMENT FRAMEWORK

[Link] the Internal Control System and Enterprise Risk Management Framework

CULTIVATING A SYNERGIC RELATIONSHIP WITH SHAREHOLDERS

[Link] Shareholder Rights

DUTIES TO STAKEHOLDERS

[Link] Rights of Stakeholders and Effective Redress for Violation of

Stakeholders Rights
[Link] Employee’s Participation
[Link] Sustainability and Social Responsibility
 THE BOARD’S GOVERNANCE RESPONSIBILITIES

1. ESTABLISHING A COMPETENT BOARD

Principle

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 interests 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
their positions individually and collectively, to enable it to fulfill 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 judgment 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.

Recommendation 1.4

The Board should have a policy on board diversity.

Recommendation 1.5

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.

Recommendation 1.6

The Board should ensure that it is assisted in its duties by a Compliance

Officer, who should have a rank of Senior Vice President or an equivalent
position with adequate stature and authority in the corporation. The
Compliance Officer should not be a member of the Board of Directors and
should annually attend a training on corporate governance.
2. ESTABLISHING CLEAR ROLES AND RESPONSIBILITIES OF THE BOARD

Principle

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 shareholders and other stakeholders.

Recommendation 2.1

The Board members should act on a 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 2.3

The Boards 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.

Recommendation 2.5

The Board should align the remuneration of key officers and board members
with the long- term interests of the company. In doing so, it should formulate
and adopt a policy specifying the relationship between remuneration and
performance. Further, no director should participate in discussions or
deliberations involving his own remuneration.

Recommendation 2.6

The Board should have and disclose in its Manual on Corporate Governance a
formal and transparent board nomination and election policy that should
include how it accepts nominations from minority shareholders and reviews
nominated candidates. The policy should also include an assessment of the
effectiveness of the Board's processes and procedures in the nomination,
election, or replacement of a director. In addition, its process of identifying the
quality of directors should be aligned with the strategic direction of the
company.
Recommendation 2.7

The Board should have the overall responsibility in ensuring that there is a
group-wide policy and system governing related party transactions (RPTs)
and other unusual or infrequently occurring transactions, particularly those
which pass certain thresholds of materiality. The policy should include the
appropriate review and approval of material or significant RPTs, which
guarantee fairness and transparency of the transactions. The policy should
encompass all entities within the group, taking into account their size,
structure, risk profile and complexity of operations.

Recommendation 2.8

The Board should be primarily responsible for approving the selection and
assessing the performance of the Management led by the Chief Executive
Officer (CEO), and control functions led by their respective heads (Chief Risk
Officer, Chief Compliance Officer, and Chief Audit Executive).

Recommendation 2.9

The Board should establish an effective performance management

framework that will ensure that the Management, including the Chief
Executive Officer, and personnel's performance is at par with the standards
set by the Board and Senior Management.

Recommendation 2.10

The Board should oversee that an appropriate internal control system is in

place, including setting up a mechanism for monitoring and managing
potential conflicts of interest of Management, board members, and
shareholders. The Board should also approve the Internal Audit Charter.

Recommendation 2.11

The Board should oversee that a sound enterprise risk management (ERM)
framework is in place to effectively identify, monitor, assess and manage key
business risks. The risk management framework should guide the Board in
identifying units/business lines and enterprise-level risk exposures, as well as
the effectiveness of risk management strategies.

Recommendation 2.12

The Board should have a Board Charter that formalizes and clearly states its
roles, responsibilities and accountabilities in carrying out its fiduciary duties.
The Board Charter should serve as a guide to the directors in the
performance of their functions and should be publicly available and posted on
the company's website.
3. ESTABLISHING BOARD COMMITTEES

Principle

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.

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 tasked 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.

Recommendation 3.4

Subject to a corporation's size, risk profile and complexity of operations, the

Board should establish a separate Board Risk Oversight Committee (BROC)
that should be responsible for the oversight of a company's Enterprise Risk
Management system to ensure its functionality and effectiveness. The BROC
should be composed of at least three members, the majority of whom should
be independent directors, including the Chairman. The Chairman should not
be the Chairman of the Board or of any other committee. At least one
member of the committee must have relevant thorough knowledge and
experience on risk and risk management.
Recommendation 3.5

Subject to a corporation's size, risk profile and complexity of operations, the

Board should establish a Related Party Transaction (RPT) Committee, which
should be tasked with reviewing all material related party transactions of the
company and should be composed of at least three non-executive directors,
two of whom should be independent, including the Chairman.

Recommendation 3.6

All established committees should be required to have Committee Charters

stating in plain terms their respective purposes, memberships, structures,
operations, reporting processes, resources and other relevant information.
The Charters should provide the standards for evaluating the performance of
the Committees. It should also be fully disclosed on the company's website.

4. FOSTERING COMMITMENT

Principle

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

The directors should attend and actively participate in all meetings of the
Board, Committees, and Shareholders in person or through tele-
/videoconferencing conducted in accordance with the rules and regulations of
the Commission, except when justifiable causes, such as, illness, death in the
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 questions or seek clarifications and
explanations.

Recommendation 4.2

The non-executive directors of the Board should concurrently serve as

directors to a maximum of five publicly listed companies to ensure that they
have sufficient time to fully prepare for meetings, challenge Management's
proposals/views, and oversee the long- term strategy of the company.

Recommendation 4.3

A director should notify the Board where he/she is an incumbent director

before accepting a directorship in another company.
5. REINFORCING BOARD INDEPENDENCE

Principle

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 5.3

The Board's independent directors should serve for a maximum cumulative

term of nine years. After which, the independent director should be
perpetually barred from re-election as such in the same company, but may
continue to qualify for nomination and election as a non-independent
director. In the instance that a company wants to retain an independent
director who has served for nine years, the Board should provide meritorious
justification/s and seek shareholders' approval during the annual
shareholders' meeting.

Recommendation 5.4

The positions of Chairman of the Board and Chief Executive Officer should be
held by separate individuals and each should have clearly defined
responsibilities.

Recommendation 5.5

The Board should designate a lead director among the independent directors
if the Chairman of the Board is not independent, including if the positions of
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

The non-executive directors (NEDs) should have separate periodic meetings

with the external auditor and heads of the internal audit, compliance and risk
functions, without any executive directors present to ensure that proper
checks and balances are in place within the corporation. The meetings should
be chaired by the lead independent director.
6. ASSESSING BOARD PERFORMANCE

Principle

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 performance of the Chairman, individual members and
committees. Every three years, the assessment should be supported by an
external facilitator.

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.

7. STRENGTHENING BOARD ETHICS

Principle

Members of the Board are duty-bound to apply high ethical standards, taking into
account the interests of all 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 of Business Conduct and Ethics and
internal policies.
 DISCLOSURE AND TRANSPARENCY

8. ENHANCING COMPANY DISCLOSURE POLICIES AND PROCEDURES

Principle

The company should establish corporate disclosure policies and procedures that
are practical and in accordance with best 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 judgment.

Recommendation 8.4

The company should provide a clear disclosure of its policies and procedure
for setting Board and executive remuneration, as well as the level and mix of
the same in the Annual Corporate Governance Report. Also, companies
should disclose the remuneration on an individual basis, including termination
and retirement provisions.

Recommendation 8.5

The company should disclose its policies governing Related Party

Transactions (RPTs) and other unusual or infrequently occurring transactions
in their Manual on Corporate Governance. The material or significant RPTs
reviewed and approved during the year should be disclosed in its Annual
Corporate Governance Report.

Recommendation 8.6

The company should make a full, fair, accurate and timely disclosure to the
public of every material fact or event that occurs, particularly on the
acquisition or disposal of significant assets, which could adversely affect the
viability or the interest of its shareholders and other stakeholders. Moreover,
the Board of the offered company should appoint an independent party to
evaluate the fairness of the transaction price on the acquisition or disposal of
assets.
Recommendation 8.7

The company's corporate governance policies, programs and procedures

should be contained in its Manual on Corporate Governance, which should be
submitted to the regulators and posted on the company's website.

9. STRENGTHENING THE EXTERNAL AUDITOR'S INDEPENDENCE AND

IMPROVING AUDIT QUALITY

Principle

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. For removal of the external
auditor, the reasons for removal or change should be disclosed to the
regulators and the public through the company website and required
disclosures.

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. The Charter should also contain the Audit
Committee's responsibility on reviewing and monitoring the external auditor's
suitability and effectiveness on an annual basis.

Recommendation 9.3

The company should disclose the nature of non-audit services performed by

its external auditor in the Annual Report to deal with the potential conflict of
interest. The Audit Committee should be alert for any potential conflict of
interest situations, given the guidelines or policies on non-audit services,
which could be viewed as impairing the external auditor's objectivity.
10. INCREASING FOCUS ON NON-FINANCIAL AND SUSTAINABILITY REPORTING

Principle

The company should ensure that the material and reportable non- financial and
sustainability issues are disclosed.

Recommendation 10.1

The Board should have a clear and focused policy on the disclosure of non-
financial information, with emphasis on the management of economic,
environmental, social and governance (EESG) issues of its business, which
underpin sustainability. Companies should adopt a globally recognized
standard/framework in reporting sustainability and non-financial issues.

11. PROMOTING A COMPREHENSIVE AND COST-EFFICIENT ACCESS TO

RELEVANT INFORMATION

Principle

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.

Recommendation 11.1

The company should include media and analysts' briefings as channels of

communication to ensure the timely and accurate dissemination of public,
material and relevant information to its shareholders and other investors.
 INTERNAL CONTROL SYSTEM AND RISK MANAGEMENT FRAMEWORK

12. STRENGTHENING THE INTERNAL CONTROL SYSTEM AND ENTERPRISE RISK

MANAGEMENT FRAMEWORK

Principle

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.

Recommendation 12.1

The Company should have an adequate and effective internal control system
and an enterprise risk management framework in the conduct of its business,
taking into account its size, risk profile and complexity of operations.

Recommendation 12.2

The Company should have in place an independent internal audit function

that provides an independent and objective assurance, and consulting
services designed to add value and improve the company's operations.

Recommendation 12.3

Subject to a company's size, risk profile and complexity of operations, it

should have a qualified Chief Audit Executive (CAE) appointed by the Board.
The CAE shall oversee and be responsible for the internal audit activity of the
organization, including that portion that is outsourced to a third party service
provider. In case of a fully outsourced internal audit activity, a qualified
independent executive or senior management personnel should be assigned
the responsibility for managing the fully outsourced internal audit activity.

Recommendation 12.4

Subject to its size, risk profile and complexity of operations, the company
should have a separate risk management function to identify, assess and
monitor key risk exposures.

Recommendation 12.5

In managing the company's Risk Management System, the company should

have a Chief Risk Officer (CRO), who is the ultimate champion of Enterprise
Risk Management (ERM) and has adequate authority, stature, resources and
support to fulfill his/her responsibilities, subject to a company's size, risk
profile and complexity of operations.
 CULTIVATING A SYNERGIC RELATIONSHIP WITH SHAREHOLDERS

13. PROMOTING SHAREHOLDER RIGHTS

Principle

The company should treat all shareholders fairly and equitably, and also
recognize, protect and facilitate the exercise of their rights.

Recommendation 13.1

The Board should ensure that basic shareholder rights are disclosed in the
Manual on Corporate Governance and on the company's website.

Recommendation 13.2

The Board should encourage active shareholder participation by sending the

Notice of Annual and Special Shareholders' Meeting with sufficient and
relevant information at least 28 days before the meeting.

Recommendation 13.3

The Board should encourage active shareholder participation by making the

result of the votes taken during the most recent Annual or Special
Shareholders Meeting publicly available the next working day. In addition, the
Minutes of the Annual and Special Shareholders' Meeting should be available
on the company website within five business days from the end of the
meeting.

Recommendation 13.4

The Board should make available, at the option of a shareholder, an

alternative dispute mechanism to resolve intra-corporate disputes in an
amicable and effective manner. This should be included in the company's
Manual on Corporate Governance.

Recommendation 13.5

The Board should establish an Investor Relations Office (IRO) to ensure

constant engagement with its shareholders. The IRO should be present at
every shareholders' meeting.
 DUTIES TO STAKEHOLDERS

14. RESPECTING RIGHTS OF STAKEHOLDERS AND EFFECTIVE REDRESS FOR

VIQLATION OF STAKEHOLDER'S RIGHTS

Principle

The rights of stakeholders established by law, by contractual relations and

through voluntary commitments must be respected. Where stakeholders' rights
and/or interests are at stake, stakeholders should have the opportunity to obtain
prompt effective redress for the violation of their rights.

Recommendation 14.1

The Board should identify the company's various stakeholders and promote
cooperation between them and the company in creating wealth, growth and
sustainability.

Recommendation 14.2

The Board should establish clear policies and programs to provide a

mechanism on the fair treatment and protection of stakeholders.

Recommendation 14.3

The Board should adopt a transparent framework and process that allow
stakeholders to communicate with the company and to obtain redress for the
violation of their rights.

15. ENCOURAGING EMPLOYEES' PARTICIPATION

Principle

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.

Recommendation 15.1

The Board should establish policies, programs and procedures that encourage
employees to actively participate in the realization of the company's goals
and in its governance.

Recommendation 15.2

The Board should set the tone and make a stand against corrupt practices by
adopting an anti-corruption policy and program in its Code of Conduct.
Further, the Board should disseminate the policy and program to employees
across the organization through trainings to embed them in the company's
culture.
Recommendation 15.3

The Board should establish a suitable framework for whistleblowing that

allows employees to freely communicate their concerns about illegal or
unethical practices, without fear of retaliation and to have direct access to an
independent member of the Board or a unit created to handle whistleblowing
concerns. The Board should be conscientious in establishing the framework,
as well as in supervising and ensuring its enforcement.

16. ENCOURAGING SUSTAINABILITY AND SOCIAL RESPONSIBILITY

Principle

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

Recommendation 16.1

The company should recognize and place an importance on the

interdependence between business and society, and promote a mutually
beneficial relationship that allows the company to grow its business, while
contributing to the advancement of the society where it operates

8. ENHANCING COMPANY DISCLOSURE

SEC CODE OF CORPORATE POLICIES AND PROCEDURES
GOVERNANCE FOR PUBLICLY THE BOARD’S GOVERNANCE The company should establish corporate
LISTED COMPANIES RESPONSIBILITIES disclosure policies and procedures that are
practical and in accordance w ith best
(CG Code for PLCs) practices and regulatory expectations.

1. ESTABLISHING A COMPETENT BOARD 2. ESTABLISHING CLEAR ROLES AND

9. STRENGTHENING THE EXTERNAL AUDITOR'S
The company should be headed by a RESPONSIBILITIES OF THE BOARD
INDEPENDENCE AND IMPROVING AUDIT
competent, w orking board to foster the The fiduciary roles, responsibilities and
QUALITY
long-term success of the corporation, and accountabilities of the Board as provided
The company should establish standards for
to sustain its competitiveness and under the law , the company's articles and
the appropriate selection of an external
profitability in a manner consistent w ith its by-law s, and other legal pronouncements
auditor, and exercise effective oversight of
corporate objectives and the long-term best and guidelines should be clearly made know
the same to strengthen the external
interests of its shareholders and other n to all directors as w ell as to shareholders
auditor's independence and enhance audit
stakeholders. and other stakeholders.
quality.

3. ESTABLISHING BOARD COMMITTEES

Board committees should be set up to the
extent possible to support the effective 4. FOSTERING COMMITMENT
10. INCREASING FOCUS ON NON-FINANCIAL AND
performance of the Board's functions, To show full commitment to the company,
SUSTAINABILITY REPORTING
particularly w ith respect to audit, risk the directors should devote the time and
The company should ensure that the
management, related party transactions, attention necessary to properly and
material and reportable non- financial and
and other key corporate governance effectively perform their duties and
sustainability issues are disclosed.
concerns, such as nomination and responsibilities, including sufficient time to
remuneration. The composition, functions be familiar w ith the corporation's business.
and responsibilities of all committees
established should be contained in a
publicly available Committee Charter.

11. PROMOTING A COMPREHENSIVE AND

6. ASSESSING BOARD PERFORMANCE
COST- EFFICIENT ACCESS TO
The best measure of the Board's
RELEVANT
5. REINFORCING BOARD INDEPENDENCE effectiveness is through an assessment
INFORMATION
The board should endeavor to exercise an process. The Board should regularly carry
The company should maintain a
objective and independent judgment on all out evaluations to appraise its
corporate affairs. performance as a body and assess w hether comprehensive and cost-efficient
it possesses the right mix of backgrounds communication channel for disseminating
and competencies. relevant information. This channel is crucial
for informed decision-making by investors,
stakeholders and other interested users.

7. STRENGTHENING BOARD ETHICS INTERNAL CONTROL SYSTEM

Members of the Board are duty-bound to DISCLOSURE AND
apply high ethical standards, taking into
AND RISK MANAGEMENT
TRANSPARENCY
account the interests of all stakeholders. FRAMEWORK

12. STRENGTHENING THE INTERNAL CONTROL

SYSTEM AND ENTERPRISE RISK MANAGEMENT
FRAMEWORK 13. PROMOTING SHAREHOLDER RIGHTS CULTIVATING A SYNERGIC
To ensure the integrity, transparency and The company should treat all shareholders
proper governance in the conduct of its fairly and equitably, and also recognize,
RELATIONSHIP WITH
affairs, the company should have a strong protect and SHAREHOLDERS
and effective internal control system and facilitate the exercise of their rights.
enterprise risk management framew ork.

14. RESPECTING RIGHTS OF STAKEHOLDERS

AND EFFECTIVE REDRESS FOR VIQLATION OF
STAKEHOLDER'S RIGHTS
15. ENCOURAGING EMPLOYEES' PARTICIPATION
The rights of stakeholders established by
A mechanism for employee participation
law , by contractual relations and through
DUTIES TO STAKEHOLDERS voluntary commitments must be respected.
should be developed to create a symbiotic
environment, realize the company's goals
Where stakeholders' rights and/or interests
and participate in its corporate governance
are at stake, stakeholders should have the
processes.
opportunity to obtain prompt effective
redress for the violation of their rights.

16. ENCOURAGING SUSTAINABILITY AND

SOCIAL RESPONSIBILITY
The company should be socially responsible
in all its dealings w ith the communities w
here it operates. It should ensure that its
interactions serve its environment and
stakeholders in a positive and progressive
manner that is fully supportive of its
comprehensive and balanced development.