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IV.

PRESENTATION OF DATA

Manual on Corporate Governance of Pure Gold Price Club, Inc.

The Board of Directors, key officers and employees of Pure Gold Price Club, Inc. commit
themselves to the principles set forth in this manual for the long-term success of the company
and for the benefit of its shareholders and stakeholders.

Principle 1

Puregold should be headed by a competent and working board of directors to foster the long-
term success of the company, 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
stakeholders.

Principle 2

The fiduciary roles, responsibilities and accountabilities of the Board as provided under the
law, the company’s article and by-laws, and other legal pronouncements and guidelines should
be clearly made known to all directors of Puregold as well as to shareholders and other
stakeholders.

Principle 3

Puregold should set up an Audit Committee and Corporate Governance Committee. The
composition, functions and responsibilities of these committees should be contained in publicly
available committee charter.

Principle 4

To show full commitment to Puregold, all directors should devote the time and attention
necessary to properly perform their duties and responsibilities, including sufficient time to be
familiar with the company’s business.

Principle 5

The Board of Directors of Puregold should endeavor to exercise objective and independent
judgement on all corporate affairs.
Principle 6

The best measure of the Board’s effectiveness is through as 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 background and competencies.

Principle 7

Members of the Board are duty-bound to apply high ethical standards, taking into account the
interests of all stakeholders.

Principle 8

Puregold should establish corporate disclosure policies and procedures that are practical and in
accordance with best practices and regulatory expectations.

Principle 9

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

Principle 10

Puregold should ensure the material and reportable non-financial and sustainability issues are
disclosed.

Principle 11

Puregold should maintain a comprehensive and cost-efficient communications channel for


disseminating relevant information.

Principle 12

To ensure the integrity, transparency and proper governance in the conduct of its affairs,
Puregold should have a strong and effective internal control system and enterprise risk
management framework.

Principle 13

Puregold should treat all shareholders fairly and equitably, and also recognize, protect and
facilitate the exercise of their rights.
Principle 14

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.

Principle 15

A mechanism for employee participation should be developed to create a symbiotic


environment, realize company’s goals and participate in its corporate governance processes.

Principle 16

Puregold 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.

Company Policies

WHISTLE-BLOWING POLICY

Puregold Price Club, Inc. encourages and expects all its employees to report any deviation or
non- compliance with the Company’s Code of Ethics, Revised Manual on Corporate
Governance and the Company’s rules and regulations. Reports may be submitted to the Office
of the Human Resource Department and/or Compliance Officer with mailing address at No
900 Romualdez St., Paco, Manila 1007.

Reports will be entertained with due diligence and fairness in proper investigation. Those found
guilty will be dealt with in accordance with law and rules of the Company.

INSIDER TRADING POLICY

Puregold Price Club, Inc. strictly observes and enforces the rule against insider trading as
defined by the Securities and Regulation Code (SRC). It encourages everyone who has
knowledge of any person who violates the rule to report to the Office of the Compliance Officer
with mailing address, No. 900 Romualdez St., Paco, Manila, 1007.

Those found guilty after investigation shall be prosecuted pursuant to law.


CONFLICT OF INTEREST POLICY

Directors, Officers and Employees of Puregold Price Club, Inc. are expected to act and perform
their duties in promotion of the interest of the Company. They should not receive personal gain,
benefit, grant, gift or any advantage by virtue of their position in the Company.

They must immediately disclose to the Board or to their immediate superior any possible
occurrence of conflict of interest or any offer of cash, gift or any benefit from customer,
supplier or third party contractor of the Company.

Violation shall be dealt with serious disciplinary action and/or dismissal from work.

Privacy Policy

Data Privacy Policy

The privacy and security of personal data collected from you – our customers, suppliers and
trade partners – are important to Puregold. The officers and employees of Puregold adhere to
the principles of Data Privacy Act (RA 10173) and comply with the best data privacy practices
sanctioned in its Implementing Rules and Regulations and Memorandum Circulars issued by
the National Privacy Commission.

Collection of Personal Data

In the ordinary course of business, Puregold may collect your personal data such as your name,
phone number, gender, marital status, age, religious affiliation, health, education, and other
personal information.

Use of Personal Data

We use this data to facilitate our transaction, administer your account with us, and most
especially, to be more efficient in providing you with our products and services.

Non-Disclosure of Personal Data

Puregold will not disclose your personal information without your consent or in any
circumstance not authorized by law or any valid order of court or government agencies.
Security of Personal Data

Puregold applies strict security measures and modern technologies to make sure your personal
data are kept confidential and secured with us. Our employees are trained to handle your
personal data with utmost confidentiality and we have internal control in place to avoid security
breach or violation.

Data Privacy Rights

You may inquire or request for information regarding any matter relating to the processing of
your personal data including the data privacy and security policies implemented by Puregold
to ensure the protection of your personal data.

You may also request for an updating, rectification or amendment of your personal data or file
a complaint in case of any breach or violation of your privacy.

CORPORATE GOVERNACE POLICY

Brief summary of the corporate governance policy that the Board of Directors has adopted with
emphasis on the policy/ies relative to the treatment of all shareholders, respect for the rights of
minority shareholders and of other stakeholders, disclosure duties, and board responsibilities.

1. On October 5, 2012, the Board of Directors adopted the Revised Manual on Corporate
Governance issued by the Securities and Exchange Commission (SEC) which contains
stockholders’ rights and protection of minority stockholders interests, including the
basic rights of stockholders under the Philippine Corporation Code:
1. Right to vote on all matters that require their consent or approval
2. Right to inspect corporate books and records
3. Right to information
4. Right to dividends
5. Appraisal right
2. On July 25, 2014, the Board approved the Revised Manual on Corporate Governance
adopting therein the changes and amendments recommended by the Securities and
Exchange Commission in accordance with SEC Memorandum Circular No. 9,
particularly strengthening the Company’s principle on Disclosure and Transparency
and extending the term ‘stockholders’ to all ‘stakeholders’.
3. On March 4, 2016, the Board adopted the following amendments to the Articles of
Incorporation (AOI) and By-Laws with the intention of improving the corporate
governance practices of the company:
Amendments of Article 6, Articles of Incorporation
“SIXTH. That the number of directors of the Corporation be NINE (9) comprising of
six (6) regular members and three (3) independent directors.”

Amendment of Section 6 Article III of the Company’s By Laws:


“Section 6. Quorum. – Two-thirds (2/3) of the number of directors as fixed in the
Articles of Incorporation shall constitute a quorum for the transaction of corporate
business, provided that at least one independent director be present. Every decision of
at least majority of the directors present at a meeting at which there is a quorum shall
be valid as a corporate act, except for the election of officers, which shall require the
vote of majority of all members of the Board.

Amendment of Section 4 (1) Article II of the Company’s By Laws:


“Section 4. Notice of Meeting – Notices of regular or special meetings of stockholders
may be sent by the Office of the Corporate Secretary by personal delivery or mail at
least thirty (30) days prior to the date of the meeting to each stockholder of record at
his last known address. The notice shall state the place, date and hour of the meeting,
and the purpose for which the meeting is called.”
4. On July 19, 2016, the SEC issued approval of the foregoing amendments on the
Company’s Articles and By Laws. The same will take effect in the annual meeting of
the stock holders to be held in May 2017.
CODE OF BUSINESS CONDUCT & ETHICS

1. Stated below are the company’s policies on the business conduct or ethics affecting
directors, senior management and employees.
Business
Conduct & Directors Senior Management Employees
Ethics
Transactions with the
Transactions with
Transactions causing members of the senior
Conflict of employees causing
conflict of interest management causing
Interest conflict of interest
are prohibited. conflict of interest are
are prohibited.
prohibited.
Business and Business and
Conduct of All dealings with Dealings between the Dealings between
Business and directors are at arms- Company and the the Company and
Fair Dealings length basis. Senior Management the employees are
are not encouraged. not encouraged.
Receipt of
gifts from Prohibited. Prohibited. Prohibited.
third parties
Compliance
Full compliance is Full compliance is Full compliance is
with Laws &
required. required. required.
Regulations
Respect for
Trade
Secrets/Use of Required. Required. Required.
Non-public
Information
Use of
Strictly in Strictly in
Company Strictly in accordance
accordance with accordance with
Funds, Assets, with rules of the
rules of the rules of the
and company.
company. company.
Information
Employment
& Labor
Full compliance. Full compliance. Full compliance.
Laws &
Policies
Disciplinary
Strictly observed. Strictly observed. Strictly observed.
action
Whistle
Strictly observed. Strictly observed. Strictly observed.
Blower
The company is yet The company is yet to The company is
Conflict to adopt policy adopt policy yet to adopt policy
Resolution regarding conflict regarding conflict regarding conflict
resolution. resolution. resolution.

2. How the Company implements and monitors compliance with the code of ethics or
conduct.
Any person may file any complaint of misconduct against any employee or any
violation with the code of ethics or conduct to the Office of the Chairman or the Human
Resource (HR) Department. The HR will serve notice to the employee concerned and
give him chance to explain himself why he should not be given a disciplinary action.
There after the HR in coordination with the Legal Department and Office of the
Chairman, will reserve whether or not to cite the employee for disciplinary action.

CORPORATE SOCIAL RESPONSIBILITY

 Blood-Letting Activities
 National Teacher’s Day – “Guro Kabalikat sa Pagbabago”
 Brigada Eskwela
 Tree Planting Activities
 “Buhayani’ Festival
 Emergency Disaster Preparedness
 Christmas Gift Giving

Company’s Social Responsibility Initiatives

 50 Million Donation
A 50 Million Peso donation by Puregold Price Club, Inc. and Luis Co Chi Kiat
Foundation was given to The One La Salle Scholarship Endowment Fund on October
7, 2010. In a simple turn-over ceremony held at the De La Salle University along Taft
Avenue, Manila.
Mr. Lucio Co, Director of the LCCK Foundation handed over the donation to One La
Salle Steering Committee Co-Chairman Br. Augustine Boquer FSC and the Vice
Chancellor for Lasallian Mission & External Relations for DLSU Br. Bernard Oca FSC.
The aim of Puregold and LCCK Foundation is to provide scholarships to deserving
children who do not have the means to enroll in prestigious schools such as DLSU.
With this donation, more children will be able to realize their dreams of pursuing
college degrees.
 Puregold Gets Four
Laguna Lake Development Authority headed by its General Manager, Mr. Rodrigo E.
Cabrera, in a night of recognition of socially responsible companies conferred awards
to various industries in the Laguna Lake Region for its good environmental
performance for the year 2009. The awards were in compliance with effluent standards
and with the regulatory requirements set by LLDA.
Puregold received a total of four Blue Rating for the 5th Cycle of the Laguna Lake
Region Public Disclosure Program given last December 14, 2010 at the Hotel
Rembrandt in Quezon City. The awards were conferred to Puregold Qi-Central,
Puregold San Pablo, Puregold Taytay and Puregold Zabarte.
On hand to receive the awards were Ms. Nicy D. Carolino, Puregold Vice-President for
Administration, Puregold Store Managers Mr. William Chiucinco and Ricky Yebra and
Puregold Pollution Control Officer, Mr. Clarence Clarito.
Puregold continues to commit itself not only to improving the community in inspiring
its entrepreneurial spirit and ensuring best value for all its customers but also to be a
responsible organization committed to advocating the proper care and preservation of
the environment.
 Puregold Donates Blood to Philippine National Red Cross
Last June 28, 2011, Puregold, in collaboration with the Philippine Red Cross (PRC) –
National Blood Center, initiated a mass blood donation activity. A total of 52 units of
blood were collected from enthusiastic Puregold employees from different departments.
Each blood unit will benefit two to three blood recipients. PRC deeply expressed its
gratitude for the generosity of Puregold employees, as this will contribute in their
advocacy to save lives and alleviate human sufferings. Puregold in the same way felt
privileged as the event led them to partially fulfill its mission to humanity.
RISK MANAGEMENT SYSTEM & INTERNAL AUDIT AND CONTROL

Internal Control Policy Framework

The Board of Directors is responsible in formulating clearly defined internal control and risk
management systems and policies including guidelines in the determination of the appropriate
nature and extent of business risks that the company is willing to take to ensure achievement
of strategic objectives based on annual and long term business plans.

The Board is assisted by the Executive Committee (ExeCom) which is in charge with
accountability and responsibility to design and ensure that risk management policies and
procedures are strictly implemented by all business units within the group in the conduct of its
day to day business operations and activities. Major policy decisions and actions are elevated
to Board of Directors for approval.

The company’s internal controls are designed to provide reasonable assurance regarding the
safeguarding of company’s resources, reliability of operating and financial records and
information, and compliance with policies and regulations.

Internal controls are designed and continuously enhanced to have reasonable but not absolute
assurance against material misstatement, loss or fraud.

Internal control set-up and continuous system enhancements:

Internal control and risk management system comprise of the following areas:

A. CONTROL SET-UP
Key officers are identified to establish the proper environment for internal control
compliance as policies and procedures approver; ensuring adequate controls are in place
based on pre-identified risks; where preventive measure are supplemented in the
process. Departmental management is given responsibility as processes reviewers; with
objective of advance detection of improprieties. Each store has an identified Key
Personnel for effective Procedure Implementation from the Store Management and
Store auditor; both of which are accustomed with the processes. Based on pre-
determined annual audit plans and timelines, auditors are tasked to perform periodic
compliance review, determine process implementation strengths and areas of
improvements. Each process-owner ensures adherence on strict implementation and
controls based on pre-defined ad agreed Key Results Area as part of their accountability.
The management is continuously refining the internal control frameworks to ensure fair
business activity in compliance with the related laws and regulations. The directors and
management are well-informed of the review and enhancements of the internal control
system. Based on the covered areas, stores, scope of transactions and processes
reviewed by the company’s Internal Audit Division, the internal control systems are
fairly effective and adequate.
B. RISK MANAGEMENT
There are constant improvements on risk management processes where enhanced
reporting is implemented as one of the tools to easily detect quality of risk information.
Risk management features are embedded on the enhanced policies and procedures
headed by each functional division and department heads.
On a monthly basis, the Executive Committee aims to review and enhance certain
policies, systems, and procedures related to operations and financial recording and
reporting to continuously assess effectiveness of the internal control and risk
management programs.
The Board of Audit Committee reviews high risk areas once a year based on internal
audit reports; the company aims to increase frequency of reviews on a quarterly basis
to determine effectiveness in relation to identified risk on financial reporting process.
Regular internal management coordination meetings are held to fully discuss immediate
action plans and solutions on identified risks and determine further enhancements on
overall risk assessment process through the build-up teamwork of the group.
C. CONTROL ACTIVITIES
A regular and continuing internal audit and review process are implemented by Internal
Audit Division covering the group’s operating and support organizational structures,
systems and processes to ensure compliance with established internal control systems
and standards. Identify possible non-compliance on internal controls, financial
standards policies and procedures and corrective measures necessary.
Defined internal control standards are more focused on accountability segregation,
established gray areas clarity on functions and responsibilities and early detection of
preventive measures and controls.
ROLE OF STAKEHOLDERS

The company’s policy and activities relative to the following:

Policy Activities
Total satisfaction for our customers It can be shown in the daily
Customer’s welfare from the kind of service to the prices operation in all of the
of our merchandise Company’s stores
Supplier must be accredited, we
Consistently practiced by the
Supplier/Contractor make sure that their goods are safe,
vendors in the merchandising
selection practice genuine, and registered with
department
government bodies regulating them
From the construction of the
All our stores have sufficient
Environmentally store up to its opening, the
environment compliance certificate
friendly value- Company ensures to have all
and continuously observing
chain the environmental permits
environmental laws
required
The Company is in
coordination with LCCK
Foundations granting
scholarships to well
Community Supportive of educational
deserving students and the
Interaction foundations and small enterprise
Aling Puring Program is
reaching out to sari-sari store
owners to enhance their
businesses.
Gift or any form of
consideration from any party
Anti-corruption
Strictly no bribery to any agency and with dealings in the company
programs and
no bribery within the company are prohibited and this policy
procedures
is widely known especially
among suppliers.
The policy of not accepting gifts or
any form of consideration from any Any complaint of such is
Safeguarding
party with dealings in the company strictly monitored by the
creditors’ gifts
are widely known to all the company.
employees.

COMPANY’S POLICY FOR ITS EMPLOYEES’ SAFETY, HEALTH AND WELFARE

The company complies with the following workplace policies mandated by the Department of
Labor and Employment (DOLE):

1. Company Safety Policies


2. Contingency plans and procedures
3. Company Policy and Rule on STD/HIV/AIDS
4. Drug-free Workplace Policy
5. Anti-sexual Harassment Policy
6. Workplace Policy and Program on Tuberculosis (TB) Prevention and Control
7. Workplace Policy and Program on Hepatitis B
8. Workplace Policy and Program on Maternity Leave
9. Workplace Policy and Program on Paternity Leave
10. Workplace Policy and Program on Solo Parents
11. Workplace Policy and Program on Special Leave for Women
12. Workplace Policy and Program on Leave for Victims of Violence against Women
and their Children
13. Breastfeeding Policy

Together with the above company policies, the company submits annual report on Safety and
Health Organization, Medical Report and Accident/Illness Report to DOLE.