Chapter 1: Transparency

Introduction to Corporate Governance -means that decisions taken and their enforcement
are done in a manner that follows the rules and
regulations. It means information is freely available
Governance accessible and understandable to those who are
affected by such decisions and their enforcement.
- It refers to a process whereby elements in society
wield power, authority and influence and enact Responsiveness
policies and decisions concerning public life and
social upliftment. -Good governance requires that institutions and
processes try to serve the needs all stakeholders
- It is the process of decision making and the within a reasonable timeframe. “BIR reminding all
process by which decisions are implemented or not, taxpayers to file on time.”
through the exercise of power or authority by leaders
of the country and or organization. Consensus Oriented

- Governance can be used in different contexts, such -Good governance requires mediation of the different
as corporate governance, international governance, interests in society to reach a broad consensus on
national governance and local governance. what is in the best interest of the whole community
and how this can be achieved.
Characteristics of Good Governance
Example: According to Robert’s Rules, the quorum
 Participation definition is the minimum number of voting members
 Responsiveness who must be present at a properly called meeting to
 Rule of Law conduct business in the group’s name.
 Consensus Oriented
 Transparency Effectiveness and efficiency
 Accountability
-Good governance means that processes and
 Effectiveness and efficiency
institution produce results that meet the needs of
 Equity and inclusiveness
society while making the best use of resources at
Participation their disposal.

-Participation of every individual is the key to good Example: Several cities in the Philippines have
governance. It could be either direct or through implemented policies to reduce or ban use of plastic,
legitimate institutions or representatives. It has to be including Davao City, Batangas City, Quezon City,
informed and organized. This means freedom of Baguio City and Zamboanga City.
association and expression on one hand and an
Equity and inclusiveness
organized civil society on the other hand.
-Ensures that all its members feel that they have a
Example: Every Filipino Citizen, of legal age, should
stake in it and do not feel excluded from the
participate in the election process to practice their
mainstream of the society.
right to vote and choose their leaders.
Example: The BARMM is more than Muslim
Rule of Law
Mindanao, and it is the responsibility of the BTA to
-Good governance requires fair legal framework that ensure that the region’s diversity is appropriately
are enforced impartially. It requires full protection of represented. Everyone must have a seat at the table
human rights particularly minorities, underprivileged as stipulated in Article XVI, Section 2 of the BOL.
or marginalized sectors of the society. Enforcement of
Accountability
the law requires the independent judiciary and
incorruptible police force. -is a key requirement to good governance. All
institutions and organizations must be accountable to
Example: Features of Philippines Constitution include
the public and its stakeholders.
Bill of Rights, Due Process of Law, Protection of
Privacy. Example: Several cities in the Philippines have
implemented policies to reduce or ban use of plastic,
including Davao City, Batangas City, Quezon City,
Baguio City and Zamboanga City.
OBJECTIVES Enhance Financial Performance

[Link] and equitable treatment of shareholders  Why it Matters: Companies with sound
governance practices tend to make better
2. Self-assessment
strategic decisions, manage risks effectively,
3. Increase shareholders’ wealth and avoid costly scandals or lawsuits.

4. Transparency and full disclosure  Impact: Improved financial performance,

stability, and resilience against economic
Basic Principles of Effective Corporate challenges.
Governance/ Good and Effective Governance
Encourages Ethical Behavior
 Transparency and full disclosure
 Accountability  Why it Matters: Ethical governance creates
 Corporate Control a corporate culture that prioritizes doing the
right thing, reducing corruption, fraud, and
Corporate Governance
other unethical practices.
It is defined as the system of rules, practices, and  Impact: Compliance with laws and
processes by which business corporations are regulations while maintaining a strong moral
directed and controlled. It involves balancing the compass boosts internal morale and external
interests of a company’s many stakeholders reputation.
(shareholders, management, customers,
suppliers, financiers, government and the Promotes Long-Term Sustainability
community)
 Why it Matters: Governance practices that
consider environmental, social, and
Purpose
governance (ESG) factors enable companies
to address sustainability challenges
The purpose of Corporate Governance is to proactively.
facilitate effective, entrepreneurial and prudent  Impact: Aligns business strategies with
management that can deliver long term success global challenges like climate change,
of the company. Its fundamental goal is to ensuring long-term viability.
enhance the shareholders’ value as well as
protecting the interests of stakeholders. Reduces Risk

 Why it Matters: Effective governance

involves identifying, managing, and
Chapter 2: mitigating risks, whether financial,
operational, or reputational.
Corporate Governance Responsibilities and  Impact: Fewer disruptions, better crisis
Accountabilities management, and reduced vulnerabilities.
Relevance of Good Corporate Governance
Improves Decision Making
Good corporate governance is essential for the long-
term success, sustainability, and reputation of any  Why it Matters: A well-structured
organization. Here are some key reasons why it is governance framework ensures that
highly relevant. decisions are made with the input of diverse
perspectives and aligned with corporate
Build Trust with Stakeholders values.
 Impact: More informed, balanced, and
 Why it Matters: Good governance fosters strategic decision-making.
transparency and accountability, which build
trust among investors, employees, Attracts and Retains Talents
customers, and other stakeholders.
 Why it Matters: Companies with strong
 Impact: This trust leads to stronger governance practices often have better
relationships, improved brand loyalty, and working environments, which attract and
increased investor confidence. retain top talent.
  Impact: Employees are more motivated and or selling of stocks, annual reports on management
loyal, contributing to the organization's compensation, from the board.
success.
Board of Directors
Facilitates Access to Capital
-The major representative of stockholders to ensures
that the organization is run according to the
 Why it Matters: Investors and financial
institutions prefer companies with robust organization’s charter and that there is proper
governance because they are seen as lower- accountability.
risk and more likely to generate returns.
Management

 Impact: Easier access to funding and -Operations and accountability. Manage the
potentially lower cost of capital. organization effectively, provide accurate and timely
reports to shareholders and other stakeholders.
Ensures Regulatory Compliance
Audit Committees of the BOD
 Why it Matters: Corporate governance
-Provide oversight of the internal and external audit
frameworks help ensure adherence to local
and international laws, reducing the risk of function and the process of preparing the annual
legal penalties. financial statements as well as public reports on
 Impact: Avoidance of fines and legal internal control
disputes, maintaining business continuity.
Regulators: Board of Accountancy
Enhances Corporate Reputation -Set accounting and auditing standards dictating
underlying financial reporting and auditing concepts,
 Why it Matters: Companies with strong set the expectations of audit quality and accounting
governance are perceived as responsible, quality.
reliable, and forward-thinking.
 Impact: A better public image, increased Regulators: Securities and Exchange Commission
goodwill, and a competitive advantage in the
marketplace. -Ensure the accuracy, timeliness and fairness of
public reporting financial and other information for
Relevance of Good Corporate Governance public companies.

External Auditors
Good corporate governance is not just about avoiding
failure; it is a proactive approach to ensuring a -Perform audits of the company financial statements
company thrives in a competitive and ever-evolving to ensure that the statements are free of material
business environment. It builds resilience, promotes misstatements including cases of fraud.
ethical practices, and aligns the interests of all
stakeholders, making it a cornerstone of sustainable Internal Auditors
success.
-Perform audits of companies for compliance with
company policies and laws, audits to evaluate the
efficiency of operations, and periodic evaluation and
tests of controls.

Shareholder

-Provide effective oversight through election of board

members, approval of major initiatives such as buying