Securities and exchange commission

Corporate Governance UPDATES

Memorandum Circulars
Series 2014
This Circular issued in 2014
requires the following:
Submission of ACGR every 5
years
Addition of stakeholder to
certain definitions in the
Revised Code of Corporate
Governance
Providing a template for
websites of publicly-listed
companies (PLCs) which
should include items for
corporate governance,
disclosures, press releases,
investor relations
Clarifications for changes &
updates to the ACGR
Exemption from independent
director requirement for close
financing companies
**Changes/updates only needs
the signatures of the company
compliance officer
**ACGR submissions (every 5
years) requires signatures of the
Chairman, CEO, 2 independent
directors and the company
compliance officer

Memorandum Circulars
Series 2015
As an additional guidelines, SEC
issuances requires the following:
Inclusion of additional guidelines on CG
training programs and lectures
Increase in the minimum length of training
to 4 hours per year
Memo Circular Series of 2015 also notes
the Exemption possible for directors/officers
who are:
Accredited with the SEC as a CG
speaker and conduct at least 1 CG
training session per year;
Of known probity and well-recognized
stature, influence & reputation.
Company to which they are affiliated
must stand as testimonies to good
corporate governance.
Filipino or Foreign directors who have
attended overseas CG training
**Attendance by directors/officers via
videoconference is considered as compliance
**Allows inclusion of more relevant matters for
directors/boards who have completed basic
training
On Filing of Annual Corporate Governance
Report (ACGR), ACGR of newly listed
companies shall be submitted to the SEC
and posted in their company website on
May 30 following the one (1) year
anniversary of their listing in the Philippine
Stock Exchange (PSE).
**For companies listed from January 1 to
May 30, their ACGR will be submitted on May
30 of the following year.
**For companies listed from May 31 to
December 31, their ACGR will be submitted
May 30 two years thereafter.

Securities and exchange commission

Corporate Governance UPDATES

SEC Advisory

RECENT INITIATIVES

march 30, 2015

SEC highly recommends to all
publicly-listed companies(PLCs) to
adopt 12 practices in view of the
best
corporate
governance
espoused
in
the
ASEAN
Corporate Governance Scorecard
and in light of the Commissions
vision to develop a strong
corporate governance culture for
Philippine companies.

Proposed Changes to
the Corporation Code
Intra Corporate Disputes
Additional Director Disqualifications
The Emergency Board
Disclosure and Transparency:
Certifying Reports For Submission
to the SEC

PROPOSED Changes to the Revised

Code of Corporate Governance

Chief Executive Officer, Chief

Finance Officer and corporate
secretary (or their counterparts) shall
certify the reports before submission

Setting term limits for independent directors

Creation of the SEC Corporate Governance
Division
Assessment of audit committee performances
Implementation of the Annual Corporate
Governance Report (ACGR)
SEC/PSE Corporate Governance Blueprint

Reduce further the term limit on independent

directors (IDs)
Strengthen the role of compliance officers
Require IDs to submit annual performance
reports
Mandatory disclosure requirements for all
relevant information
Harmonization of CG rules with BSP, IC and
the PSE
Raise public awareness and education
Adopt scale of fines and penalties for
violations

Securities and exchange commission

Corporate Governance UPDATES

Proposed Changes to the
Proposed
Changes
to
Proposed Changes to the Corporation
CodE
Corporation
Code
the Corporation Code
ROLE OF STAKEHOLDERS
Code of ethics or standards of conduct in
dealing with government agencies (bylaws)
Internal procedures for reports by whistle
blowers during and after employment (bylaws)

RIGHTS OF SHAREHOLDER
Attendance at meetings by remote
communication and voting in absentia
Voting on director compensation
Expanded
notice
with
explanatory
materials and expanded minutes (for
meetings)
Extension of right of inspection and
reproduction to counsel and authorized
representative; Corporate Secretarys task
Resort to summary proceedings before the
SEC
to
compel
inspection
and
reproduction when refused (before resort
to courts)

EQUITABLE TREATMENT OF
SHAREHOLDERS
Expressly requiring disclosure of selfdealings and related party transactions and
expanded grounds for the exercise of right to
appraisal
Disclosure of compensation of relativesemployees of directors when employment
was endorsed by the latter

DISCLOSURE AND TRANSPARENCY:

ADDITIONAL DISCLOSURES FOR
ANNUAL MEETINGS

Direct/indirect stockholdings of
directors and officers
Assessment of performance and
strategy
Statement on the adequacy of
internal controls and risk
management systems
Statement of all external audit and
non-audit fees and policy on
dividends\
Director profiles & attendance,
appraisal (with criteria) and
compensation reports

RESPONSIBILITIES OF THE BOARD

Express duty to attend all meetings
One independent director for bigger
corporations
Power to form special committees
SEC with power to require formation of
other committees

Securities and exchange commission

Corporate Governance UPDATES

Proposed
ProposedChanges
Changesto
to the Corporation Code
the Corporation Code
Intra Corporate Disputes
Additional Director
Disqualifications
The Emergency Board

RIGHTS OF SHAREHOLDERS

ROLE OF STAKEHOLDERS
Code of ethics or standards of conduct
in dealing with government agencies
(by-laws)
Internal procedures for reports by
whistle blowers during and after
employment (by-laws)

Attendance at meetings by remote

communication and voting in absentia
Voting on director compensation
Expanded notice with explanatory
materials and expanded minutes (for
meetings)
Extension of right of inspection and
reproduction
to
counsel
and
authorized representative; Corporate
Secretarys task
Resort to summary proceedings
before the SEC to compel inspection
and reproduction when refused
(before resort to courts)

DISCLOSURE AND TRANSPARENCY

EQUITABLE TREATMENT OF
SHAREHOLDERS
Expressly requiring disclosure of selfdealings and related party transactions
and expanded grounds for the exercise
of right to appraisal
Disclosure
of
compensation
of
relatives-employees of directors when
employment was endorsed by the
latter

Direct/indirect
stockholdings
of
directors and officers
Assessment of performance and
strategy
Statement on the adequacy of internal
controls and risk management systems
Statement of all external audit and
non-audit fees and policy on dividends\
Director
profiles
&
attendance,
appraisal
(with
criteria)
and
compensation reports

Securities and exchange commission

Corporate Governance UPDATES

Proposed Changes to the Corporation Code
Disclosure and Transparency:
Additional Disclosures For
Annual Meetings
Direct/indirect stockholdings of
directors and officers
Assessment of performance and
strategy
Statement on the adequacy of
internal controls and risk
management systems
Statement of all external audit
and non-audit fees and policy on
dividends
Director profiles & attendance,
appraisal (with criteria) and
compensation reports

Disclosure and Transparency:

Certifying Reports For
Submission to the SEC
Chief executive officer, chief
finance officer and corporate
secretary (or their
counterparts) shall certify the
reports before submission

Responsibilities Of The Board

Express duty to attend all meetings

One independent director for bigger corporations
Power to form special committees
SEC with power to require formation of other committees

Securities and exchange commission

Corporate Governance UPDATES

Memorandum
Circulars
Series
Memorandum Circulars
Series
2014 2014
Certain Directors of Banks and Non-Bank Financial Institutions is allowed to
be exempted from the requirement to attend a corporate governance
seminar.
Foreign nationals who have attended CG training
Filipino citizens with recognized stature, influence and reputation in the banking community
Distinguished Filipino and foreign nationals who served in central banks and/or financial
regulatory agencies
Former Chief Justices of the Philippine Supreme Court

The board of directors of the bank or its equivalent in a foreign bank branch
shall oversee the implementation of its policies relating to cross-selling
arrangements/collective investment schemes.

Establishing an Appropriate Credit Risk Environment

a) The board of directors shall be responsible for the approval and regular review of credit risk
strategy and credit policy, as well as the oversight of the implementation of a comprehensive
and effective credit risk management system
b) Senior management shall be responsible for ensuring that the credit risk-taking activities of
an FI are aligned with the credit risk strategy approved by the Board

Regulations on Financial Consumer Protection

While Senior Management is responsible for the implementation of the consumer
protection policies approved by the Board, the latter shall be responsible for monitoring
and overseeing the performance of Senior Management in managing the day to day
consumer protection activities of the BSFI

Bangko sentral ng pilipinas

Corporate Governance UPDATES

Memorandum Circulars Series 2014
No. 860 Adoption and full compliance with a BSP-Approved Manual of
Corporate Governance is a Qualification/Accreditation Requirement for
banks, trust entities to be eligible as an Administrator of Personal Equity and
Retirement Account (PERA) Market Participants and PERA Investment
Products.
No. 862 - Appraisal of the overall quality of corporate governance of banks
and quasi-banks may be included in the scope of BSP Examination

Memorandum Circulars Series 2015

No. 871 Internal Control and Internal Audit

Each Bank shall have a permanent internal audit function based on their
size, risk profile and complexity of operations
Internal Audit function shall either be established in each of the BSP
supervised FIs or centrally by the parent bank in a conglomerate set-up
Internal Audit of each BSP-supervised should report

Not only to its own Board of Directors

But also to the Head of the Internal Audit Function of the Parent Bank
within frequency and guidelines prescribed by the Board of Directors of
the Parent Bank

The Board of Directors, the Audit Committee and senior management

shall ensure an adequate, effective and efficient internal control
framework is established and maintained.
Banks may outsource IA activities, except for areas covered by existing
statutes on bank secrecy
Branches of foreign banks may establish their own Internal audit
function or may be covered by regional or group IA function (subject to
Senior Management assessment of effectiveness)

Insurance commission

Corporate Governance UPDATES

Circular letter Series
2014
The appointment of at least two
independent directors who shall meet
mandatory qualifications is one of the
conditions for the grant of registration
as a self-regulatory organization.
Candidates should; Board committees
may consist wholly of other persons or
partly of directors and partly of other
persons.

Insurance
providers
engaged
in
electronic commerce of insurance
products should pay due regard to the
interests of consumers and act in
accordance
with
fair
business,
advertising and marketing practices;
establish a Customer Charter which
should state the insurance providers
commitment to safe and secure
operations, maintenance of customer
privacy, quality services and transparent
product information, and provision of
prompt response to inquiries and
complaints

Term Limits for Independent Directors

Independent Directors (IDs) in Life and Non-Life Insurance Companies can serve as
such for five (5) consecutive years, provided the service for a period of at least six
(6) months shall be equivalent to one (1) year
An ID re-elected as such in the same company after the cooling off period of two
(2) years can serve for another five (5) consecutive years
After serving as ID for ten (10) years, the ID shall be perpetually barred to be an ID
in the same company

Circular letter Series 2015

ASEAN Corporate Governance
Asean
corporate governance scorecard
Scorecard
Company websites should contain
the accomplished ACGS Response
Forms of 2014 operations as well as
a link for supporting documents, by
June 15, 2015

Assessment of assessors shall be

conducted every 01 July up to 30
September of the year