[Introduction]

“Classmates, let me ask you something: What do you think would happen if a company had no rules for how their leaders
should act? Or if they just did whatever they wanted, without thinking about the investors, employees, or even us as
customers?

Exactly! Chaos. That’s why today we are excited to share something that actually keeps companies in line—something
that protects everyone involved.

Our topic is about the SEC Code of Corporate Governance for publicly-listed companies, also known as the CG Code for
PLCs.” Particularly SEC Memorandum Circular No. 19, Series of 2016

---We already know about CG

In the Philippines: The Securities and Exchange Commission (SEC) is the government agency that regulates the
securities industry and companies, including corporate registrations, to protect investors.

Not all businesses need to register with the SEC.

 Corporations and partnerships → must register with the SEC.

 Small businesses like sari-sari stores (sole proprietorships) → register with the DTI, not the SEC.

What is Corporate Governance?

“Corporate Governance is a system of rules, practices, and processes used to direct and control a company. It makes
sure that the company is managed responsibly, fairly, and ethically—especially by its top leaders, like the Board of
Directors.

What is a Code?

“When we say ‘Code’, we’re talking about an official set of rules. So the ‘Code of Corporate Governance’ is basically a set
of rules and principles that companies—especially the big ones—should follow to ensure proper management and
accountability.”

What are Publicly Listed Companies?

“Publicly listed companies are large businesses that sell shares of their company to the public through the stock market.

This means ordinary people like you and me—or big investors—can own a part of these companies by buying shares.

Here are some examples of publicly listed companies in the Philippines:

 Jollibee Foods Corporation (JFC)

 SM Investments Corporation (SMIC)

 Ayala Corporation (AC)

 PLDT (TEL)

 BDO Unibank (BDO)

Because these companies are owned by shareholders and influence the economy, it’s very important that they follow
good governance.”

“And that brings us to the SEC Code of Corporate Governance for Publicly-Listed Companies, also known as the CG
Code for PLCs. SEC Memorandum Circular No. 19, Series of 2016 refers to the Code of Corporate Governance for
Publicly-Listed Companies issued by the Philippine Securities and Exchange Commission (SEC) on November 22, 2016.

Now let’s break it down into 5 main areas, with clear principles under each."

A principle = A rule that guides what’s right and smart to do.

(for example her In class, rule or principle no 1, is wearing uiform, or don’t cheat”

THE BOARD’S GOVERNANCE RESPONSIBILITIES

This part talks about the duties of the Board of Directors—the group of people who manage and oversee the company.
They make big decisions and ensure the company is on the right track.

 Principle 1: Competent and Working Board

 Why it matters:
This ensures that the board can guide the company toward sustainable success, align actions with corporate
goals, and protect stakeholder interests.

 Real-life example:
A telecommunications company like PLDT ensures its board includes tech experts and finance professionals to
keep the company innovative and competitive.

 🔹 Principle 2: Clear Fiduciary (duties, Duty of Loyalty , obligations, those things that are entrusted to
them) Responsibilities

 What it means:
Board members must understand their legal and ethical responsibilities,their fiduciary roles like, being loyal to the
company, duty of care , putting the company’s interest above personal gain.

, their responsibilities, and accountabilities,

· Dapat ipinaaalam o ipinapaunawa sa lahat ng direktor ang lawak ng kanilang responsibilidad at pananagutan.

· · Maging ang mga stockholder at stakeholder ay dapat rin maliwanagan sa papel ng Board para sa transparency at
accountability.

🔹 Principle 3: Effective Board Committees

(What is a Committee Charter?

A Committee Charter is a formal document that outlines the purpose, structure, responsibilities, and rules of a
board committee (like the Audit Committee, Risk Committee, or Remuneration Committee).

What is a Remuneration Committee?

A Remuneration Committee is a special group (or sub-committee) within a company’s Board of Directors that
focuses on decisions related to how much and how executives and senior management get paid.

 What it means:
Boards should form smaller groups (committees) to focus on key issues like audits, risks, executive pay, and
appointments.

 Why it matters:
This makes governance more efficient and allows experts to focus on specific areas.

(The composition, functions and their responsibilities esatb;ished should be conatined in a publicly available Committee
Charter.

 🔹 Principle 4: Committed Directors

 What it means:
Directors must invest time to understand the business, attend meetings, and contribute meaningfully.

 Why it matters:
A disengaged or uninformed director can’t make good decisions.

 Real-life example:
Board members at an airline company undergo orientation and even fly on routes to understand customer
experience and business challenges.

 🔹 Principle 5: Independent and Objective Judgment

 What it means:
Directors should make decisions based on facts and company interests—not personal relationships or external
[Link] should have objective and independent judgment wherein they shouldn’t be influence with their
personal feelings.

 Why it matters:
Objective decisions prevent favoritism, corruption, and poor performance.
  Real-life example:
An independent director on a mining company board opposes a land deal that benefits a related party but would
harm local communities.

 🔹 Principle 6: Performance Evaluation of the Board

 What it means:
The board should regularly evaluate how well it’s performing, individually and as a group.

 🔹 Principle 7: High Ethical Standards

 What it means:
Board members must act with integrity and promote ethical culture in the organization.

 Why it matters:
Ethical behavior builds trust with the public, investors, and employees.

Example: they should be duty-bound to act with honesty.

 DISCLOSURE AND TRANSPARENCY

 🔹 Principle 8: Practical Disclosure Policies

 What it means:
The company must have clear, doable ways of disclosing corporate information to the public and regulators.

 Why it matters:
Transparent companies attract more investors and stay legally compliant.

 Example- bank-website

 🔹 Principle 9: Independent Auditing

 What it means:
Choose external auditors carefully, and ensure they are free to do their work without interference.

 Background checking, skileld, knowledgable, walay bad backgroudn0

 🔹 Principle 10: Non-Financial Disclosure

 What it means:
Report on environmental, social, and governance (ESG) issues—not just financial ones.

 Why it matters:
Stakeholders now care about how sustainable and responsible a company is, not just its profit.

 Real-life example:
A food manufacturing firm reports carbon emissions, water usage, and employee well-being statistics in its annual
report.

 🔹 Principle 11: Efficient Communication Channels

 What it means:
Maintain easy-to-access channels for stakeholders (investors, media, employees) to get information.

 Why it matters:
Good communication builds trust and helps stakeholders make informed decisions.

 Real-life example:
posting in their fb page, website, in their dashboard.

 INTERNAL CONTROL SYSTEM AND RISK MANAGEMENT

· ✅ Internal Control System

It helps prevent errors, fraud, and mismanagement.

· ⚠️Risk Management Framework

This is the system the company uses to identify and manage possible problems or risks (like financial loss, cyber
attacks, or natural disasters).

It helps the company prepare for and avoid big losses.

 CULTIVATING A SYNERGIC RELATIONSHIP WITH SHAREHOLDERS

What does "Cultivating a Synergic Relationship" mean?

Cultivating = to grow or build

Synergic (or “synergistic”) = working together for a better result

 🔹 Principle 13: Fair and Equal Shareholder Treatment

Treat all shareholders equally and fairly — whether they own a lot or just a little.

Make sure they know their rights — like the right to:

Vote during meeting

Get correct information about the company

Receive dividends (their share of company profits)

Give them a chance to participate in decisions and ask questions

 DUTIES TO STAKEHOLDERS

 🔹 Principle 14: Respect for Stakeholder Rights

 What it means:
Companies must protect the rights of employees, suppliers, customers, and the public.

 Why it matters:
When stakeholder rights are ignored, companies can face backlash, lawsuits, or protests.

 Real-life example:
A construction firm facing delays ensures all contractors are still paid on time and that laborers have access to
grievance redress.

 🔹 Principle 15: Employee Participation

 What it means:
Employees should have a voice in company operations, policies, or decisions affecting them.

 Why it matters:
It boosts morale, loyalty, and innovation.

 Real-life example:
An IT company holds regular "employee voice forums" to get feedback on policies, which are then used to shape
HR decisions.

 🔹 Principle 16: Social and Environmental Responsibility

 What it means:
The company should support the communities and environment where it operates.

 Why it matters:
Responsible companies earn long-term goodwill and avoid reputational risks.
 Real-life example:
A beverage company builds wells and sanitation facilities in local villages where it sources water, boosting both
health and brand trust.