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Corporate Governance Manual

  • Introduction

    The Board and Management of the Corporation commit themselves to the principles and best practices as contained in this Corporate Governance Manual. The Board and Management, employees, and shareholders believe that corporate governance is a necessary component of what constitutes sound business management and will therefore undertake every effort necessary to create and strengthen awareness within the organization.

    The rules embodied in this Manual shall be used as reference by the member of the Board and Management. This Manual shall be made available for inspection by any shareholder at reasonable hours on business days.

    Communication, Education and Training

    A. Communication

    An adequate number of printed copies of this Manual must be reproduced under the supervision of the Compliance Officer. Electronic copies of this Manual shall be maintained in the official website and internal electronic portals of the company.

    This Corporate Governance Manual shall be made available for inspection by any stockholder of the Corporation at reasonable hours on business days.

    All Directors and Management Officers are tasked to ensure the thorough dissemination of this Corporate Governance Manual to all employees and related third parties, and to likewise enjoin compliance.

    B. Education and Training

    Every director shall receive appropriate orientation when he is first appointed to the Board of Directors, in order to ensure that incoming Directors are familiar with the Corporation’s business and governance processes.

    Likewise, Management Officers shall receive appropriate orientation on his duties as a management executive and how to discharge these duties when he is first appointed to the Corporation. This would ensure that incoming Senior Management Officers are familiar with the Corporation’s business and governance processes.

    Each director or key officer shall be required to attend a yearly corporate governance training and other continuous professional education programmes in accordance with the rules and regulations of the Commission. A director or key officer who was exempted from attending the yearly corporate governance training shall present proof of such exemption.

    C. Commitment to Good Governance

    The Board and Management of the Corporation commit themselves to the principles and best practices as contained in this Corporate Governance Manual. The Board and Management, employees, and shareholders believe that corporate governance is a necessary component of what constitutes sound business management and will therefore undertake every effort necessary to create and strengthen awareness within the organization.

    The rules embodied in this Manual shall be used as reference by the member of the Board and Management. This Manual shall be made available for inspection by any shareholder at reasonable hours on business days.

  • Definition of Terms and Rules of Interpretation

    Definition of Terms:

    1. Articles of Incorporation – means the Articles of Incorporation of the Corporation and all amendments thereto

    2. Board of Directors or “Board” – the governing body elected by the stockholders that exercises the corporate powers of a Corporation, conducts all its business and controls its properties

    3. By-Laws – means the By-Laws of the Corporation and all amendments thereto

    4. Corporate Governance – the framework of rules, systems and processes in the Corporation that governs the performance by the Board of Directors and Management of their respective duties and responsibilities to the stockholders

    5. Corporate Internal Audit Department – a department of the Corporation and its consultants, if any, that provide independent and objective assurance services in order to add value to and improve the Corporation’s operations

    6. Corporate Internal Auditor – the highest position in the Corporation responsible for internal audit activities

    7. Exchange – an organized market place or facility that brings together buyers and sellers, and executes trades of securities and/or commodities

    8. Executive Director – a director who is also the head of a department or unit of the Corporation or performs any work related to its operation

    9. Independent Director – a person who, apart from his fees and shareholdings, is independent of management and free from any business or other relationship which could, or could reasonably be perceived to, materially interfere with his exercise of independent judgment in carrying out his responsibilities as a director

    10. Internal Audit – an independent and objective assurance activity designed to add value to and improve the Corporation’s operations, and help it accomplish its objectives by providing a systematic and disciplined approach in the evaluation and improvement of the effectiveness of risk management, control and governance processes

    11. Internal Control – the system established by the Board of Directors and Management for the accomplishment of the Corporation’s objectives, the efficient operation of its business, the reliability of its financial reporting, and faithful compliance with applicable laws, regulations and internal rules

    12. Internal Control System – the framework under which internal controls are developed and implemented (alone or in concert with other policies and procedures) to manage and control a particular risk or business activity, or combination of risks or business activities, to which the Corporation is exposed

    13. Management – the body given the authority by the Board of Directors to implement the policies it has laid down in the conduct of the business of the Corporation

    14. Non-audit Work – the other services offered by an external auditor to a Corporation that are not directly related and relevant to its statutory audit functions, such as, accounting, payroll, bookkeeping, reconciliation, computer project management, data processing, or information technology outsourcing services, internal audit, and other services that may compromise the independence and objectivity of an external auditor

    15. Non-executive Director – a director who is not the head of a department or unit of the Corporation nor performs any work related to its operation.

    Rules of Interpretation

    1. Unless the context otherwise requires:

    1.1 Words in the singular include the plural, and vice versa; and
    1.2 Words importing any gender include all genders.

    2. A reference to a statute of statutory provision shall be construed as a reference to the statute or provision as from time to time amended, modified, or re-enacted, any repealed statute or statutory provision which it re-enacts, and any orders, rules and regulations made under the relevant statute or statutory provision.

    3. The headings of this Revised Corporate Governance Manual (the “Manual”) are inserted solely for convenience of reference and shall not limit or affect the interpretation of the provisions hereof.

    4. All doubts or questions that may arise in the interpretation of application of this Manual shall be in favor of promoting transparency, accountability and fairness to the stockholders and stakeholders of the Corporation.

  • Board Governance

    The Board of Directors (the “Board”) represents the shareholders’ interests in its objective to continuously improve the value of the Corporation and to achieve a successful and long-term business. The Board believes that it has to be actively responsible to ensure that the Corporation is properly managed to attain this result. In addition to fulfilling its obligations for increased shareholder value, the Board has responsibility to other stakeholders as well – customers, employees, suppliers, financiers, government, business partners, and to the communities and environment it operates in, all of whom are important to a successful business.

    The Board of Directors is primarily responsible for the governance of the Corporation. Corollary to setting the policies for the accomplishment of the corporate objectives, it shall provide an independent check on Management.

  • Board of Directors

    Composition, Qualifications and Disqualifications

    1. Composition

    The Board shall be composed of at least five (5), but not more than fifteen (15), members who are elected by the stockholders.

    The Corporation shall have at least two (2) Independent Directors or such number of Independent Directors that constitutes twenty percent (20%) of the members of the Board, whichever is lesser, but in no case less than two (2).

    The membership of the Board may be a combination of Executive and Non-Executive Directors (which include Independent Directors) in order that no Director or small group of Directors can dominate the decision-making process.

    The Non-Executive Directors of the Corporation should possess such qualifications and stature that would enable them to effectively participate in the deliberations of the Board.

    2. Qualifications for or Disqualifications of a Director

    2.1. Qualifications of a Director

    In addition to the pertinent provisions of the Articles of Incorporation and By-Laws of the Corporation, and qualifications for membership in the Board as provided for in the Corporation Code, Securities Regulation Code, and other relevant laws, the following general guidelines shall be observed in the initial evaluation of Director-nominees to the Board:

    2.1.1. He should be a holder of at least one (1) share of stock of the Corporation;

    2.1.2. He shall be at least a college graduate or have sufficient experience in managing the business to substitute for such formal education;

    2.1.3. He shall be at least twenty one (21) years old;

    2.1.4. He must have a practical understanding of the business of the Corporation;

    2.1.5. He shall have been proven to possess integrity and probity;

    2.1.6. He shall be diligent and assiduous in the performance of his functions;

    2.1.7. He must be a member in good standing in relevant industry, business or professional organizations.

    2.1.8. Must have attended corporate governance training conducted by an accredited training provider or through an approved in-house corporate governance training or must have issued an undertaking to attend such seminar as soon as practicable. If exempted from attendance in such corporate governance training, proof of such exemption must be presented.

    2.1.9. The Governance, Nomination and Election Committee, as defined under Article III-B (3), may consider and recommend to the Board other qualifications which are now or may hereafter be provided in the relevant existing laws or any amendments thereto or new law applicable to the Corporation.

    2.2. Permanent Disqualification of a Director

    Any of the following shall be a ground for the permanent disqualification of a Director:

    2.2.1. Any person convicted by final judgment or order by a competent judicial or administrative body of any crime that (a) involves the purchase or sale of securities as defined in the Securities Regulation Code; (b) arises out of the person’s conduct as an underwriter, broker, dealer, investment adviser, principal, distributor, mutual fund dealer, futures commission merchant, commodity trading advisor, or floor broker; or (c) arises out of his fiduciary relationship with a bank, quasi-bank, trust company, investment house or as an affiliated person of any of them.

    2.2.2. Any person who, by reason of misconduct, after hearing, is permanently enjoined by a final judgment or order of the Commission or any court or administrative body of competent jurisdiction from (a) acting as underwriter, broker, dealer, investment adviser, principal, distributor, mutual fund dealer, futures commission merchant, commodity trading advisor, or floor broker; (b) acting as a director or officer of a bank, quasi-bank, trust company, investment house or as investment company; or (c) engaging in or continuing any conduct or practice in any of the capacities mentioned above or willfully violating the laws that govern securities and banking activities. The disqualification shall also apply if such person is currently the subject of an order of the Commission or any court or administrative body denying, revoking or suspending any registration, license or permit issued to him under the Corporation Code, Securities Regulation Code or any other law administered by the Commission or Bangko Sentral ng Pilipinas (BSP), or under any rule or regulation issued by the Commission or BSP, or has otherwise been restrained to engage in any activity involving securities and banking; or such person is currently the subject of an effective order of a self-regulatory organization suspending or expelling him from membership, participation or association with a member or participant of the organization.

    2.2.3. Any person convicted by final judgment or order by a court or competent administrative body of an offense involving moral turpitude, fraud, embezzlement, theft, estafa, counterfeiting, misappropriation, forgery, bribery, false affirmation, perjury or other fraudulent acts;

    2.2.4. Any person who has been adjudged by final judgment or order of the Commission, court, or competent administrative body to have willfully violated, or willfully aided, abetted, counseled, induced or procured the violation of any provision of the Securities Regulation Code, the Corporation Code, or any other law administered by the Commission or Bangko Sentral ng Pilipinas, or any of its rule, regulation or order;

    2.2.5. Any person earlier elected as Independent Director who becomes an officer, employee or consultant of the same Corporation.

    2.2.6. Any person judicially declared to be insolvent;

    2.2.7. Any person found guilty by final judgment or order of a foreign court or equivalent financial regulatory authority of acts, violations or misconduct similar to any of the acts, violations or misconduct listed in the foregoing paragraphs; and

    2.2.8. Any person convicted by final judgment of an offense punishable by imprisonment for a period exceeding six (6) years, or a violation of the Corporation Code committed within five (5) years prior to the date of his election or appointment.

    2.3. Temporary Disqualification of a Director

    The Board may provide for the temporary disqualification of a Director for any of the following reasons:

    2.3.1. Refusal to comply with the disclosure requirements of the Securities Regulation Code and its Implementing Rules and Regulations. This disqualification shall be in effect as long as his refusal persists;

    2.3.2. Absence in more than fifty percent (50%) of all regular and special meetings of the Board during his incumbency, or any twelve (12) month period during said incumbency, unless the absence is due to illness, death in the immediate family, or serious accident. This disqualification applies for purposes of the succeeding election;

    2.3.3. Dismissal/termination for cause as Director of any Corporation covered by this Manual. This disqualification shall be in effect until he has cleared himself of any involvement in the cause that gave rise to his dismissal or termination.

    2.3.4. If the beneficial equity ownership of an Independent Director in the Corporation or its subsidiaries and affiliates exceeds two percent of its subscribed capital stock. The disqualification shall be lifted if the limit is later complied with.

    2.3.5. If any of the judgments or orders cited in the grounds for permanent disqualification has not yet become final.

    2.3.6. A temporarily disqualified Director shall, within sixty (60) business days from such disqualification, take the appropriate action to remedy or correct the disqualification. If he fails or refuses to do so for unjustified reasons, the disqualification shall become permanent.

    General Responsibility of the Board of Directors

    Compliance with the principles of good corporate governance instituted in this Manual shall be the paramount responsibility of, and shall start with, the Board.

    It is the Board’s responsibility 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 best interests of the Corporation, its stockholders and other stakeholders, as a whole.

    The Board shall formulate the Corporation’s vision, mission, strategic objectives, policies and procedures that shall guide its activities, including the means to effectively monitor Management’s performance.

    The Board shall exercise best care, skill and judgment and observe utmost good faith in the conduct and management of the business and affairs of the Corporation. The Board shall ensure that all its actions are within the scope of power and authority as prescribed in the Articles of Incorporation, By-Laws, and in existing laws, rules and regulations.

    Duties and Functions of the Board

    To ensure a high standard of best practice for the Corporation, its stockholders and other stakeholders, the Board should conduct itself with honesty and integrity in the performance of, among others, the following duties and responsibilities:

    1. Implement, with the assistance of the Governance, Nomination and Election Committee, a nomination and election process to ensure that all shareholders are given the opportunity to nominate and elect directors and to ensure a mix of knowledge, expertise, experience and balance among independent, non-executive and executive competent Directors who can add value and contribute independent judgment to the formulation of sound corporate strategies and policies. Appoint competent, professional, honest, and highly-motivated Management Officers. Adopt an effective succession planning program for Management.

    2. Provide sound strategic policies and guidelines to the Corporation on major capital expenditures. Establish programs that can sustain its long-term viability and strength. Monitor and periodically evaluate the implementation of such policies and strategies, including the business plans, operating budgets, and Management’s over-all performance.

    3. Annually review, together with Management, the Company’s vision, mission and strategic objectives.

    4. Ensure the Corporation’s faithful compliance with all applicable laws and regulations, and best business practices.

    5. Establish and maintain an Investor Relations Program that will keep the stockholders informed of important developments in the Corporation. The Corporation’s Chief Executive Officer (CEO) shall exercise oversight responsibility over this program.

    6. Identify the Corporation’s stakeholders in the community in which it operates or are directly affected by its operations and formulate a clear policy of accurate, timely, and effective communication with them.

    7. Adopt a system of check and balance within the Board. A regular review of the effectiveness of such system should be conducted to ensure the integrity of the decision-making and reporting processes at all times. There should be a continuing review of the Corporation’s financial reporting and internal control systems in order to maintain and ensure its adequacy and effectiveness. Ensure and affirm that the Corporation has an internal audit system that can reasonably assure the Board and Management that the Corporation’s organizational, operational and financial controls are complied with providing reasonable assurance on the truthfulness and fairness of annual financial statements.

    8. Ensure that the Corporation has an independent audit mechanism for the proper audit and review of the Corporation’s financial statements by independent auditors.

    9. Oversee Management’s adoption and implementation of a system for identifying, monitoring and managing key risk areas and performance indicators. Monitor and review Management’s reports to the Board on these factors with due diligence to enable the Corporation to anticipate, minimize, control or manage risks or possible threats to its operational and financial viability.

    10. Ensure that the Corporation establishes appropriate corporate governance policies and procedures pursuant to this Manual and the Governance Code, including but not limited to, policies on conflict of interest, code of business conduct, and oversee the effective implementation thereof.

    11. Formulate and implement policies and procedures that would ensure the integrity and transparency of Related Party Transactions between and among the Corporation and its parent company, joint ventures, subsidiaries, associates, affiliates, major stockholders, officers and directors, including their spouses, children, and dependent siblings and parents, and of interlocking Director relationships by members of the Board.

    12. Review and approve material/significant Related Party Transactions as identified and defined in the policy stated in item 3.2.11 above and ensure that these are conducted on an arm’s length basis.

    13. Ensure that there are no shareholder agreements, by-laws provisions, or other arrangements that constraints the director’s ability to vote independently.

    14. Constitute an Audit and Risk Committee, Governance, Nomination and Election Committee, Remuneration and Compensation Committee and such other committees it deems necessary to assist the Board in the performance of its duties and responsibilities.

    15. Establish and maintain an alternative dispute resolution system in the Corporation that can amicably settle conflicts or differences between the Corporation and its stockholders, and the Corporation and third parties, including regulatory authorities.

    16. Meet at such times or frequency as may be needed and ensure integrity of decision making during Board meetings. The minutes of such meetings should be duly recorded. Independent views during Board meetings should be encouraged and given due consideration.

    17. Ensure that the Board and the Board Committees, as defined under Article III (B), are enabled to obtain independent professional advice at the Corporation’s expense and have access to Management as they may deem necessary or appropriate to carry out their duties.

    18. Keep the activities and decisions of the Board within its authority under the Articles of Incorporation and By-Laws, and in accordance with existing laws, rules, and regulations.

    19. Appoint a Compliance Officer who shall have the rank of at least Vice President.

    Specific Duties and Responsibilities of a Director

    A Director’s Office is one of trust and confidence. A Director should act in the best interest of the Corporation in a manner characterized by transparency, accountability, and fairness. He should also exercise leadership, prudence, and integrity in directing the Corporation towards sustained progress.

    A Director should observe the following norms of conduct:

    1. Conduct fair business transactions with the Corporation, and ensure that his personal interest does not conflict with the interests of the Corporation. The basic principle to be observed is that a Director should not use his position to profit or to gain some benefit or advantage for himself and/or his related interests. He should avoid situations that may compromise his impartiality. If an actual or potential conflict of interest may arise on the part of a Director, he should fully and immediately disclose it and should not participate in the decision-making process. A Director who has a continuing material conflict of interest should seriously consider resigning from his position. A conflict of interest shall be considered material if the Director’s personal or business interest is antagonistic to that of the Corporation, or stands to acquire or to gain financial advantage at the expense of the Corporation.

    2. Devote the time and attention necessary to properly and effectively perform his duties and responsibilities. A Director should devote sufficient time to familiarize himself with the Corporation’s business. He should be constantly aware of and knowledgeable with the Corporation’s operations to enable him to meaningfully contribute to the Board’s work. He should attend at least 75% of the Board meetings and actively participate in Board and Committee meetings, review meeting materials and, if called for, ask questions or seek explanation.

    3. Act judiciously. Before deciding on any matter brought before the Board, a Director should carefully evaluate the issues and, if necessary, make inquiries and request clarification.

    4. Exercise independent judgment. A Director should view each problem or situation objectively. If a disagreement with other Directors arises, he should carefully evaluate and explain his position. He should not be afraid to take an unpopular position. Corollary, he should support plans and ideas that he thinks are beneficial to the Corporation.

    5. Have a working knowledge of the statutory and regulatory requirements that affect the Corporation, including its Articles of Incorporation and By-Laws, the rules and regulations of the Commission and, where applicable, the requirements of relevant regulatory agencies. A Director should keep abreast with industry developments and business trends in order to promote the Corporation’s competitiveness.

    6. Observe confidentiality. A Director should keep secure and confidential all non-public information he may acquire or learn by reason of his position as Director. He should not reveal confidential information to unauthorized persons without the authority of the Board. On the other hand, a Director should not take advantage for himself and/or his related interests or benefit from knowledge which is not generally available to the market.

    7. Have a working knowledge of the Corporation’s control systems. A Director shall ensure the continuing soundness, effectiveness and adequacy of the Corporation’s control environment.

    8. Disclose to the Philippine Stock Exchange (PSE) and the Securities and Exchange Commission (SEC) the trading of the corporation’s shares by directors, officers (or persons performing similar functions) and controlling shareholders. This shall also include the disclosure of the Corporation’s purchase of its shares from the market (e.g. share buy-back program).

    Board Meetings

    1. The Board shall schedule the meeting before or at the beginning of the year, and hold regular meetings in accordance with its By-Laws and convene for special meetings when required by business exigencies.

    2. The notice and agenda of the meeting and other relevant meeting materials shall be furnished to the Directors at least five (5) business days prior to each meeting, which meeting must be duly minuted.

    3. The members of the Board should attend regular and special meetings in person or through teleconferencing conducted in accordance with the rules and regulations of the Securities and Exchange Commission (“Commission”).

    4. Independent Directors should always attend board meetings. Unless otherwise provided in the By-Laws, their absence shall not affect the quorum requirement. However, the Board may, to promote transparency, require the presence of at least one (1) Independent Director in all its meetings.

    5. To monitor the Directors’ compliance with the attendance requirements, the Corporation shall submit to the Commission, within five (5) business days from the end of the Corporation’s fiscal year an advisement letter on Directors’ record of attendance in board meetings.

    Directorships and Officerships in Other Corporations

    The Board may consider the adoption of guidelines on the number of directorships that its members can hold in stock and non-stock Corporations.

    Any limitation in the number of directorships outside of the Company as may be adopted by Corporation shall not include directorships in the Corporation’s subsidiaries, affiliates, parent company (if any), and affiliates and subsidiaries of such parent company.

    A Director shall exercise due discretion in accepting and holding directorships or officerships in other Corporations. A Director may hold any number of directorships or officerships outside of the Corporation provided that, in the Director’s opinion, these other positions do not detract or compromise the Director’s capacity to diligently perform his duties as a Director of the Corporation.

    Trainings and Orientation Processes

    Every director shall receive appropriate orientation when he is first appointed to the Board of Directors, in order to ensure that incoming Directors are familiar with the Corporation’s business and governance processes.

    Likewise, Management Officers shall receive appropriate orientation on his duties as a management executive and how to discharge these duties when he is first appointed to the Corporation. This would ensure that incoming Senior Management Officers are familiar with the Corporation’s business and governance processes.

    Each director or key officer shall be required to attend a yearly corporate governance training and other continuous professional education programmes in accordance with the rules and regulations of the Commission. A director or key officer who was exempted from attending the yearly corporate governance training shall present proof of such exemption.

  • Board Committees

    To aid in ensuring compliance with the principles of good corporate governance, the Board shall constitute an Audit and Risk Committee, as defined under Article III – B(2), a Governance, Nomination and Election Committee, as defined under Article III – B(4), and a Remuneration and Compensation Committee. The Board may establish other specialized Committees with specific responsibilities as it may deem appropriate or necessary to assist in the development and implementation of systems and practices that would promote good corporate governance. Depending on foreseen governance requirements and circumstances, the Board may disband a current committee.

    Appointment of Members of the Board Committees

    The Board shall appoint the members and chairman (from among the members) of each Board Committee following the annual meeting of stockholders at which the Directors are elected. In case of any vacancy in the Committee, the Board shall appoint a replacement who will fill up the vacancy at any meeting of the Board.

    Charter of the Board Committees

    Each Board Committee shall have a Charter which shall define and govern, among other matters, its purposes, composition, membership qualifications and disqualifications, duties and responsibilities, conduct of meetings, and procedures for escalation to the Board of decisions of such Board Committees.

    The respective Charters of the Board Committee shall be approved by the Board and shall not be amended, altered, or varied unless the Board shall have approved such amendments, alteration or variation.

    Audit and Risk Committee

    1. Mission of the Audit and Risk Committee

    The mission of the Audit and Risk Committee is to assist the Board in its fiduciary responsibilities by providing an independent and objective assurance to the Corporation’s stakeholders for the continuous improvement of risk management systems, internal control systems, governance processes, business operations, and proper safeguarding and use of the Corporation’s resources and assets.

    2. Organization of the Audit and Risk Committee

    2.1. The Board establishes the Audit and Risk Committee and appoints the members of the Committee.

    2.2. This Audit and Risk Committee reports functionally to the Board.

    2.3. The Audit and Risk Committee shall be composed of at least three (3) members from the Board, at least one (1) of whom shall always be an Independent Director. The Board shall ensure that each member should have adequate competence and/or experience on accounting, finance and audit to enable them to discharge their responsibilities.

    2.4. The Board shall appoint an Independent Director as Committee Chairman.

    2.5. The Audit and Risk Committee, as a body, shall have neither executive nor managerial powers nor duties in the Corporation except those relating to the management of the Corporate Auditor.

    3. Principal Duties and Responsibilities

    The Audit and Risk Committee shall have the following functions:

    3.1. Assist the Board in the performance of its oversight responsibility for the financial reporting process, system of internal controls, audit process and monitoring of compliance with applicable laws, rules and regulations.

    3.2. Provide oversight over Management’s activities in managing credit, market, liquidity, operational, legal and other risks of the Corporation. This function may include regular receipt from Management of information on risk exposures and risk management activities.

    3.3. Perform oversight functions over the Corporation’s Internal and External Auditors. It should ensure that the Internal and External Auditors are given reasonable access to all material records, properties and personnel to enable them to perform their respective audit functions.

    3.4. Review the Annual Internal Audit Plan to ensure its conformity with the objectives of the Corporation. The Plan shall include the audit scope, resources, and budget necessary to implement it.

    3.5. Recommend the appointment, re-appointment and removal of External Auditor.

    3.6. Prior to the commencement of the audit, discuss with the External Auditor the nature, scope, and expenses of the audit, and ensure proper coordination if more than one audit firm is involved in the activity to secure proper coverage and minimize duplication of efforts.

    3.7. Ensure the establishment of an Internal Audit Department and the appointment of a Corporate Auditor and the terms and conditions of its engagement and removal.

    3.8. Monitor, evaluate and confirm the adequacy and effectiveness of the Corporation’s internal control system, including financial reporting control and information technology security.

    3.9. Review the reports submitted by the Internal and External Auditors.

    3.10. Review the quarterly, half-year, and annual financial statements before their submission to the Board, with particular focus on the following:

    • any change/s in accounting policies and practices;
    • major judgmental areas;
    • significant related party transactions;
    • significant adjustments resulting from the audit;
    • going concern assumptions;
    • compliance with accounting standards; and
    • compliance with tax, legal, and regulatory requirements.

    3.11. Coordinate, monitor, and facilitate compliance with laws, rules, and regulations.

    3.12. Evaluate and determine the non-audit work, if any, of the External Auditor, and review periodically the non-audit fees paid to the External Auditor in relation to their significance to the total annual income of the External Auditor and to the Corporation’s overall consultancy expenses. The Committee shall disallow any non-audit work that will conflict with his duties as an External Auditor or may pose a threat to his independence. If the non-audit work is allowed, this should be disclosed in the Corporation’s Annual Report.

    3.13. Establish and identify the reporting line of the Corporate Auditor to enable him to properly fulfill his duties and responsibilities. He shall functionally report directly to the Audit and Risk Committee.

    3.14. The Audit and Risk Committee shall ensure that, in the performance of the work of the Corporate Auditor, he shall be free from interference by outside parties.

    4. Meetings

    4.1. The Audit and Risk Committee shall meet as many times as the Committee deems necessary, four (4) times per financial year being the minimum.

    4.2. The notice and agenda for each meeting shall be circulated to all Audit and Risk Committee members at least five (5) business days before each meeting.

    4.3. The Audit and Risk Committee may invite other Directors and Management Officers to attend any meeting.

    4.4. The Audit and Risk Committee Chairman shall preside in all meetings of the Committee. In his absence, the members present shall elect from among themselves one member to preside over the particular meeting.

    4.5. A quorum shall be present as long as an Independent Director is present or if at least a majority of the members of the Audit and Risk Committee are present. No business shall be transacted at any meeting unless a quorum is present.

    4.6. Voting on all Audit and Risk Committee resolutions shall be carried by a simple majority of votes. Each member is entitled to one vote save and except that in the event of an equality of votes, the Audit and Risk Committee Chairman shall have the casting vote.

    4.7. The Audit and Risk Committee shall cause proper records of its proceedings to be kept. Members may nominate a member or some other person to be the Committee Secretary to record and keep minutes of meetings and other proceedings.

    4.8. Minutes of each meeting are to be prepared and subsequently circulated to the Audit and Risk Committee members for approval.

    4.9. The minutes and attendance of the Directors shall be circulated and disclosed to the Board and the Corporate Secretary for record purposes.

    4.10. The Audit and Risk Committee may make further rules of procedures or vary or amend existing ones from time to time as the Committee deems fit.

    Governance, Nomination and Election Committee

    1. Mission of the Governance, Nomination and Election Committee

    The mission of the Governance, Nomination and Election Committee is to oversee the development and implementation of corporate governance principles and policies and to provide the shareholders with an independent and objective evaluation and assurance that the membership of the Board and other appointments that require Board approval are competent and will foster the long-term success of the Corporation and secure its sustained competitiveness.

    2. Organization of the Governance, Nomination and Election Committee

    2.1. The Board establishes the Governance, Nomination and Election Committee and appoints the members of the Committee.

    2.2. The Governance, Nomination and Election Committee shall report directly to the Board.

    2.3. The Governance, Nomination and Election Committee may be composed of at least three (3) members from the Board, one (1) of whom shall be an Independent Director. The Board shall ensure that the members of the Governance, Nomination and Election Committee are appropriately qualified to discharge their responsibilities.

    2.4. The Governance, Nomination and Election Committee shall appoint one of its members to be the Committee Chairman.

    3. Principal Duties and Responsibilities

    The Governance, Nomination and Election Committee shall be responsible for overseeing the development and implementation of corporate governance principles and policies and ensuring that the nomination and election of new members of the Board is transparent with the end objective of having the Board increase shareholder value and aligned with the Corporation’s strategic direction. For this purpose, the Governance, Nomination and Election Committee shall:

    3.1. Pre-screen, evaluate the qualifications and shortlist all candidates nominated to become a Director in accordance with pertinent provisions of the Articles of Incorporation and By-Laws of the Corporation, as well as established guidelines on qualifications, disqualifications and succession planning.

    3.2. Recommend guidelines in the selection of nominee/s for Director/s which may include the following based on the perceived needs of the Board at a certain point in time:

    • Nature of the business of the Corporations which he is a Director of
    • Age of the Director nominee
    • Number of directorships/active memberships and officerships in other Corporations or organizations
    • Possible conflict of interest

    3.3. Recommend guidelines in the determination of the optimum number of directorships/active memberships and officerships in other Corporations allowable for Directors. The capacity of Directors to serve with diligence shall not be compromised.

    3.4. Recommend to the Board regarding the size and composition of the Board in view of long term business plans, and the needed appropriate skills and characteristics of Directors.

    3.5. Assess the effectiveness of the Board’s processes and procedures in the election or replacement of Directors.

    3.6. Assist the Board of Directors in performing the corporate governance duties in compliance with the Corporation’s Manual, the Revised Code of Corporate Governance, the Corporate Governance Guidelines and the listing rules of the Philippines Stock Exchange.

    3.7. Monitor, evaluate and confirm the Corporation’s full compliance with the code of corporate governance and where there is non-compliance, identify and explain reasons for each such issue.

    3.8. Use professional search firms or other external sources of candidates when searching for candidates to the Board or Management as deemed necessary.

    4. Meetings

    4.1. The Governance, Nomination and Election Committee shall meet as many times as the Committee deems necessary, twice per financial year being the minimum.

    4.2. The notice and agenda for each meeting shall be circulated to all Governance, Nomination and Election Committee members at least five (5) business days before each meeting.

    4.3. The Governance, Nomination and Election Committee may invite other Directors and Management Officers to attend any meeting.

    4.4. The Governance, Nomination and Election Committee Chairman shall preside in all meetings of the Committee. In his absence, the members present shall elect from among themselves one member to preside over the particular meeting.

    4.5. A quorum shall be present if at least a majority of the members of the Governance, Nomination and Election Committee are present. No business shall be transacted at any meeting unless a quorum is present.

    4.6. Voting on all Governance, Nomination and Election Committee resolutions shall be carried by a simple majority of votes. Each member is entitled to one vote save and except that in the event of an equality of votes, the Governance, Nomination and Election Committee Chairman or the member presiding over the meeting shall have the casting vote.

    4.7. The Governance, Nomination and Election Committee shall cause proper records of its proceedings to be kept. Members may nominate a member or some other person to be the Committee Secretary to record and keep minutes of meetings and other proceedings.

    4.8. Minutes of each meeting are to be prepared and subsequently circulated to the Committee members for approval.

    4.9. The minutes and attendance of the Directors shall be circulated and disclosed to the Board and the Corporate Secretary for record purposes.

    4.10. The Governance, Nomination and Election Committee may make further rules of procedures or vary or amend existing ones from time to time as the Committee deems fit.

    Remuneration and Compensation Committee

    1. Mission of the Remuneration and Compensation Committee

    The mission of the Remuneration and Compensation Committee is to objectively recommend a formal and transparent framework of remuneration and evaluation for Directors and key Management Officers to ensure that their compensation is consistent with the Corporation’s culture, strategies and the business environment in which it operates and to enable them to run the Corporation successfully.

    2. Organization of the Remuneration and Compensation Committee

    2.1. The Board establishes the Remuneration and Compensation Committee and appoints the members of the Committee.

    2.2. The Remuneration and Compensation Committee shall report directly to the Board.

    2.3. The Remuneration and Compensation Committee may be composed of at least three (3) members from the Board, one (1) of whom shall be an Independent Director.

    2.4. The Remuneration and Compensation Committee shall appoint one of its members to be Committee Chairman.

    3. Principal Duties and Responsibilities

    The Remuneration and Compensation Committee recommends for Board approval a formal and transparent policy and system of remuneration and evaluation of the Directors and Management Officers. For this purpose, the Committee shall:

    3.1. Recommend a formal and transparent procedure for developing a policy on executive remuneration and evaluation and for fixing the remuneration packages of Directors and Management Officers that is consistent with the Corporation’s culture, strategy, and business environment.

    3.2. Recommend the amount of remuneration, which shall be in a sufficient level to attract and retain Directors and Management Officers who are needed to run the company successfully.

    3.3. Disallow any Director to decide his remuneration.

    3.4. Ensure that Full Business Interest Disclosure is part of the pre-employment requirements for all incoming Management Officers, which among others compel all Management Officers to declare under the penalty of perjury all of their existing business interests or shareholdings that may directly or indirectly conflict in their performance of duties once hired.

    3.5. Review recommendations concerning the existing Human Resources Development Handbook, with the objective of strengthening provisions on conflict of interest, salaries and benefits policies, promotion and career advancement directives, and compliance of personnel concerned with all statutory requirements that must be periodically met in their respective posts.

    3.6. Provide in the Corporation’s Annual Reports, information statements a clear, concise and understandable disclosure of aggregate compensation of its Chief Executive Officer and four (4) most highly compensated executive officers for the two most recent financial year and the ensuing year.

    4. Meetings

    4.1. The Remuneration and Compensation Committee shall meet as many times as the Committee deems necessary, twice per financial year being the minimum.

    4.2. The notice and agenda for each meeting shall be circulated to all Committee members at least 5 days before each meeting.

    4.3. The Remuneration and Compensation Committee may invite other Directors and Management Officers to attend any meeting.

    4.4. The Committee Chairman shall preside in all meetings of the Committee. In his absence, the members present shall elect from among themselves one member to preside over the particular meeting.

    4.5. A quorum shall be present if at least a majority of the members of the Remuneration and Compensation Committee are present. No business shall be transacted at any meeting unless a quorum is present.

    4.6. Voting on all Remuneration and Compensation Committee resolutions shall be carried by a simple majority of votes. Each member is entitled to one vote save and except that in the event of an equality of votes, the Remuneration and Compensation Committee Chairman or the member presiding over the meeting shall have the casting vote.

    4.7. The Remuneration and Compensation Committee shall cause proper records of its proceedings to be kept. Members may nominate a member or some other person to be the Committee Secretary to record and keep minutes of meetings and other proceedings.

    4.8. Minutes of each meeting are to be prepared and subsequently circulated to the Remuneration and Compensation Committee members for approval.

    4.9. The minutes and attendance of the Directors shall be circulated and disclosed to the Board and the Corporate Secretary for record purposes.

    4.10. The Remuneration and Compensation Committee may make further rules of procedures or vary or amend existing ones from time to time as the Committee deems fit.

  • Disclosure and Transparency

    The Board have strong adherence to the principles of transparency, accountability and fairness in order to ensure good corporate governance. The Board shall therefore commit at all times to full disclosure of material information dealings. It shall cause the filing of all required information through the appropriate Exchange mechanisms for listed companies and submissions to the Commission for the interest of its stockholders and other stakeholders.

    The Board shall ensure that the following are complied with:

    A. All material information requiring disclosure under the Revised Disclosure Rules and the Securities Regulation Code shall be publicly and timely disclosed. Such information includes, among others, earning results, acquisition or disposition of assets, off balance sheet transactions, related party transactions, and direct and indirect remuneration of members of the Board and Management.

    B. The Board shall ensure that the Corporation complies with the rules and regulations of the Exchange and the Commission pertaining to the disclosure of material information.

    C. The Corporation and its officers, staff and any other person who are privy to the material non-public information are prohibited to communicate material non-public information about the Corporation to any person, unless the Corporation is ready to simultaneously disclose the material non-public information to the Commission and to the Exchanges except if the disclosure is made to:

    1. A person who is bound by duty to maintain trust and confidence to the Corporation such as but not limited to its auditors, legal counsels, investment bankers, financial advisers; and

    2. A person who agrees in writing to maintain in strict confidence the disclosed material information and will not take advantage of it for his personal gain.

  • Executive Officers

    Executive Officers

    A. The Chairman

    The Chairman shall assist in ensuring compliance with and performance of the corporate governance policies and practices.

    As needed or In accordance with applicable regulations, the roles of Chairman and the CEO may be separated in order to foster an appropriate balance of power, increased accountability, and better capacity for independent decision-making by the Board. A clear delineation of functions should be made between the Chairman and CEO upon their election.

    Principal Duties and Responsibilities

    The duties and responsibilities of the Chairman in relation to the Board may include, among others, the following:

    1. Ensure that the meetings of the Board are held in accordance with the By-Laws or as the Chairman may deem necessary.

    2. Supervise the preparation of the agenda of the meeting in coordination with the Corporate Secretary, taking into consideration the suggestions of the Directors and Management.

    3. Maintain qualitative and timely lines of communication and information between the Board and Management.

    4. Provide leadership to the Board and ensure that the Board works effectively and performs its duties responsibly.

    5. Ensure that the lines of communication and flow of information between Management and Board are maintained.

    B. The Chief Executive Officer (CEO) and Management

    Principal Duties and Responsibilities

    1. The CEO shall have general care, management and administration of the business operations of the Company. He shall ensure that: (a) the business and affairs of the Company are managed in a sound and prudent manner; and (b) operational, financial and internal controls are adequate and effective to ensure reliability and integrity of financial and operational information, effectiveness and efficiency of operations, safeguarding of assets and compliance with laws, rules, regulations and contracts.

    2. The CEO shall provide leadership for Management in developing and implementing business strategies, plans and budgets to the extent approved by the Board. He shall provide the Board with a balanced and understandable account of the Company’s performance, financial condition, results of operations and prospects on a regular basis.

    3. Management shall provide the Directors/Board with adequate and timely information about the matters to be taken up in their Board meetings and, upon the request of any Director or the Board, make presentations on specific topics and respond to further inquiries in relation thereto during Board meetings. The Directors shall have independent access to Management.

    4. Management shall formulate, under the oversight of the Audit and Risk Committee, financial reporting and internal control systems, rules and procedures.

    Compensation

    The compensation of the CEO and other Officers shall be subject to review and approval by the Remuneration and Compensation Committee. Equity-based plans, short and long-term incentive plans for the Officers which the Remuneration and Compensation Committee may recommend shall be subject to the review and approval by the Board, and as applicable, stockholders’ approval.

    C. The Corporate Secretary

    1. Qualifications of the Corporate Secretary

    The Corporate Secretary, a Filipino citizen and a resident of the Philippines, is an officer of the Corporation and must be exemplary in performance. The Corporate Secretary should:

    1.1. Possess appropriate administrative and interpersonal skills.

    1.2. Have a working knowledge of the operations of the Corporation.

    1.3. Be aware of the laws, rules, and regulations necessary in the performance of his duties and responsibilities.

    2. Duties and Responsibilities of the Corporate Secretary

    2.1. Be loyal to the mission, vision, and objectives of the Corporation.

    2.2. Work fairly and objectively with the Board, Management, stockholders, and other stakeholders.

    2.3. Be responsible for the safekeeping and preservation of the integrity of the minutes of the meeting of the Board and its Committees, as well as other official records of the Corporation.

    2.4. Gather and analyze all documents, records and other information essential to the conduct of his duties and responsibilities to the Corporation.

    2.5. Provide the Board of Directors the schedule of meetings before the start of the financial year and provide notice before every meeting

    2.6. As to agenda, get a complete schedule thereof and put the Board on notice at least five (5) business days before every meeting.

    2.7. Inform the members of the Board, in accordance with the By-Laws, of the agenda of their meetings together with the rationale and explanation of each item in the agenda and ensure that the members have before them accurate information that will enable them to arrive at intelligent decisions on matters that require their approval.

    2.8. Release to the Exchange the notice of Annual Shareholders’ Meeting (ASM) with detailed agendas and explanatory circulars, at least twenty eight (28) days before the date of the meeting.

    2.9. Attend all Board meetings, except when justifiable causes, such as illness, death in the immediate family and serious accidents, prevent him from doing so.

    2.10. Ensure that all Board procedures, rules, and regulations are strictly followed by the Directors.

    2.11. Submit within five (5) business days from the end of the Corporation’s fiscal year an advisement letter on the attendance of the Directors during Board meetings.

    D. Corporate Internal Auditor

    1. Mission

    The mission of Corporate Internal Audit is to provide independent and objective assurance within the Corporation, designed to add value and improve the Corporation’s operations. It helps the Corporation accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control and governance processes.

    2. Organization

    2.1. The Corporate Internal Auditor heads the Internal Audit.

    2.2. The Corporate Internal Auditor reports functionally to the Audit and Risk Committee and administratively to the Chief Executive Officer.

    2.3. The Corporate Internal Auditor shall have no executive or managerial powers and duties in the Corporation except those relating to the management of the Internal Audit.

    Corporate Internal Audit shall have an independent status and will not be involved in the day-to-day internal checking systems of the business units and corporate centers in the Corporation. It is the responsibility of Management to plan, organize, and direct activities to provide reasonable assurance that established goals will be achieved. Internal Audit will examine and evaluate the planning, organizing, and directing processes established and maintained by Management.

    3. Purpose and Scope of Work of Corporate Internal Audit

    The purpose of Corporate Internal Audit is to examine and evaluate whether the Corporation’s risk management, controls, and processes, as designed by Management, are adequate, efficient, and functioning in a manner to ensure that:

    3.1. Programs, plans, goals and objectives are achieved.

    3.2. Employee’s actions are in compliance with policies, code of conduct, standards, procedures, and applicable laws and regulations.

    3.3. Authorities and responsibilities are clear, properly assigned, and documented.

    3.4. Risks are appropriately identified, evaluated, and managed.

    3.5. Changes in functions, services, processes, and operations are properly evaluated.

    3.6. Significant legislative or regulatory issues impacting the Corporation are recognized and addressed appropriately.

    3.7. Control activities are integral part of daily operations.

    3.8. Adequate controls are incorporated into information technology systems.

    3.9. Assets or resources are acquired economically, used efficiently, and adequately protected or safeguarded.

    3.10. Financial, management, and operating information are reliable, timely, relevant, accurate, accessible, and provided in a consistent format.

    3.11. Channels of communication are effective to ensure that interaction with business units and corporate centers occurs as needed.

    3.12. Continuous quality improvement is fostered in the business unit and corporate center’s control processes.

    E. Compliance Officer

    1. Appointment of the Compliance Officer

    The Board shall appoint a Compliance Officer who shall have direct reporting responsibilities to the Chairman of the Board. The appointment of the Compliance Officer shall be disclosed immediately to the Commission. All correspondences relative to his functions as such shall be addressed to the said Compliance Officer.

    2. The Compliance Officer shall perform the following duties:

    2.1. Monitor the actual compliance by the Corporation with the provisions and requirements of this Corporate Governance Manual and the rules and regulations of regulatory agencies and, if any violations are found, report the matter to the Chairman of the Board and recommend the imposition of appropriate disciplinary action on the responsible parties and the adoption of measures to prevent a repetition of the violation.

    2.2. Issue a certification thirty (30) days after the end of each financial year on the extent of the Company’s compliance with the provisions of this Manual and the Governance Code for the immediately preceding financial year and, if there are any deviations, to explain the reason for such deviations.

    2.3. Appear before the Commission when summoned in relation to compliance with this Manual.

    2.4. Assist the Board and the Governance, Nomination and Election Committee in the performance of the their governance functions, including their duties to oversee the formulation or review and implementation of the corporate governance structure and policies of the Corporation, and to assist in the conduct of self-assessment of the performance and effectiveness of the Board, the Board Committees and individual Board members in carrying out their functions as set out in this Manual and the respective charters of the Board Committees.

  • Adequate and Timely Information

    To enable the Directors to properly fulfill their duties and responsibilities, Management should provide the Directors with complete, adequate, and timely information about the matters to be taken in their meetings.

    Reliance on information volunteered by Management would not be sufficient in all circumstances and further inquiries may have to be made by a Director to enable him to properly perform his duties and responsibilities. Hence, the Directors should be given independent access to Management and to the Corporate Secretary.

    The information may include the background or explanation on matters brought before the Board, disclosures, budgets, forecasts, and internal financial documents.

    The Directors, either individually or as a Board, and in furtherance of their duties and responsibilities, should have access to independent professional advice at the Corporation’s expense.

  • Accountability and Audit

    The Board is primarily accountable to the stockholders. The Board regularly provides its stockholders with a balanced and comprehensible assessment of the Corporation’s performance, position and prospects on a quarterly basis, including interim and other reports that could adversely affect its business through its website and its submissions and disclosures to the Commission and Exchange.

    Thus, it is essential that Management provide all members of the Board with accurate and timely information that would enable the Board to comply with its responsibilities to the stockholders.

    Management shall formulate, with oversight of the Audit and Risk Committee, the rules and procedures on financial reporting and internal control in accordance with the following guidelines:

    1. The extent of its responsibility in the preparation of the financial statements of the Corporation, with the corresponding delineation of the responsibilities that pertain to the External Auditor, should be clearly defined.

    2. An effective system of internal control that will ensure the integrity of the financial reports and protection of the assets of the Corporation for the benefit of all stockholders and other stakeholders.

    3. On the basis of the approved Internal Audit Plan, internal audit examinations should cover, at the minimum, the evaluation of the adequacy and effectiveness of controls that cover the Corporation’s governance, operations and information systems, including the reliability and integrity of financial and operation information, effectiveness and efficiency of operations, protection of assets, and compliance with contracts, laws, rules, and regulations.

    4. The Corporation should consistently comply with the financial reporting requirements of the Commission.

    5. The External Auditor should be rotated or changed every five (5) years or earlier, or the signing partner of the external auditing firm assigned to the Corporation, should be changed with the same frequency. The Corporate Internal Auditor should submit to the Audit and Risk Committee and Management an annual report on the internal audit department’s activities, responsibilities, and performance relative to the Internal Audit Plan as approved by the Audit and Risk Committee. The annual report should include significant risk exposures, control issues, and such other matters as may be needed or requested by the Board and Management. The Corporate Auditor should certify that he conducts his activities in accordance with the International Standards on the Professional Practice of Internal Auditing. If he does not, the Corporate Auditor shall disclose to the Board and Management the reasons why he has not fully complied with the said documents.

    The Board, after consultations with the Audit Committee, shall recommend to the stockholders an External Auditor duly accredited by the Commission who shall undertake an independent audit of the Corporation, and shall provide an objective assurance on the matter by which the financial statements shall be prepared and presented to the stockholders. The External Auditor shall not, at the same time, provide internal audit services to the Corporation. Non-audit work may be given to the External Auditor, provided it does not conflict with his duties as an independent External Auditor, or does not pose a threat to his independence.

    If the External Auditor resigns, is dismissed or ceases to perform his services, the reason/s for and the date of effectivity of such action shall be reported in the Corporation’s annual and current reports. The report shall include a discussion of any disagreement between the External Auditor and the Corporation on accounting principles or practices, financial disclosures or audit procedures which the former External Auditor and the Corporation failed to resolve satisfactorily. A preliminary copy of said report shall be given by the Corporation to the External Auditor before its submission.

    If the External Auditor believes that any statement made in the Annual Report, Information Statement or any report filed with the Commission or any regulatory body during the period of his engagement is incorrect or incomplete, he shall give his comments or views on the matters in the said reports.

  • Remuneration of Directors and Officers

    The levels of remuneration of the Corporation should be sufficient to be able to attract and retain the services of qualified and competent Directors and Officers. A portion of the remuneration of Executive Directors may be structured or be based on corporate and individual performance.

    Formal and transparent procedures for the development of a policy on executive remuneration or determination of remuneration levels for individual Directors and Officers may be established for the Corporation depending on the particular needs of the Corporation. No Director should participate in deciding on his remuneration.

    The Corporation’s annual reports and information and proxy statements shall include a clear, concise and understandable disclosure of the list of names of the Corporation’s Chief Executive Officer and the four (4) most highly compensated executive officers and a summary of their aggregate compensation for the two most recent financial year and the ensuing year.

    The compensation of the CEO and other Officers shall be subject to review and approval by the Remuneration and Compensation Committee. Equity-based plans, short and long-term incentive plans for the Officers which the Remuneration and Compensation Committee may recommend shall be subject to the review and approval by the Board, and as applicable, stockholders’ approval.

  • Internal and External Audit

    A. Corporate Internal Audit

    The mission of Corporate Internal Audit is to provide independent and objective assurance within the Corporation, designed to add value and improve the Corporation’s operations. It helps the Corporation accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control and governance processes.

    The Corporate Internal Audit shall be solely responsible for the planning, implementation, and reporting of the internal audits. For this purpose, Corporate Internal Audit shall:

    1. Prepare a forward Strategic Audit Plan to set the direction and approach of audits in the long term.

    2. In consultation with the Chief Executive Officer and Management Officers, prepare a detailed and flexible Annual Internal Audit Plan using risk-based, process focused methodology. This Annual Internal Audit Plan is submitted to the Audit and Risk Committee for approval.

    3. Implement the approved Annual Internal Audit Plan in an effective, professional, and timely manner.

    4. Report in a timely manner significant issues noted during the audit relating to the adequacy, efficiency, and effectiveness of policies, controls, processes, and activities of the Corporation. As directed by or under the policies of the Audit and Risk Committee, furnishes auditees and/or any other member of Management copies of the reports.

    5. Recommend any improvement in policies and procedures, systems of controls, processes, and other financial and operational matters to assist Management in the effective discharge of their responsibilities, in order to minimize or prevent waste, extravagance, negative image, and fraud. Management is responsible to implement specific recommendations.

    6. Draw attention to any failure to take remedial actions

    7. Report quarterly to the Audit and Risk Committee on the performance of the Corporate Internal Audit, which includes the status of audits, compliance with Annual Internal Audit Plan, significant interim changes, and the sufficiency of available resources to Internal Audit.

    8. Keep informed the Audit and Risk Committee of emerging trends and successful practices in the field of internal audit.

    9. Coordinate with External Auditors and ensure that the audit works are complementary to optimize coverage at a reasonable cost.

    10. Comply with standards that are promulgated by the relevant professional and regulatory bodies.

    B. External Audit

    The Board, after consultations with the Audit Committee, shall recommend to the stockholders an External Auditor duly accredited by the Commission who shall undertake an independent audit of the Corporation, and shall provide an objective assurance on the matter by which the financial statements shall be prepared and presented to the stockholders. The External Auditor shall not, at the same time, provide internal audit services to the Corporation. Non-audit work may be given to the External Auditor, provided it does not conflict with his duties as an independent External Auditor, or does not pose a threat to his independence.

    If the External Auditor resigns, is dismissed or ceases to perform his services, the reason/s for and the date of effectivity of such action shall be reported in the Corporation’s annual and current reports. The report shall include a discussion of any disagreement between the External Auditor and the Corporation on accounting principles or practices, financial disclosures or audit procedures which the former External Auditor and the Corporation failed to resolve satisfactorily. A preliminary copy of said report shall be given by the Corporation to the External Auditor before its submission.

    If the External Auditor believes that any statement made in the Annual Report, Information Statement or any report filed with the Commission or any regulatory body during the period of his engagement is incorrect or incomplete, he shall give his comments or views on the matters in the said reports.

    The External Auditor should be rotated or changed every five (5) years or earlier, or the signing partner of the external auditing firm assigned to the Corporation, should be changed with the same frequency.

  • Stockholders’ Rights and Protection

    The Corporation recognizes that the strongest proof of good corporate governance is what is publicly seen and experienced by its stockholders. Therefore, the following provisions are issued for the guidance of all internal and external parties concerned, as governance covenant between the Corporation and all its stockholders.

    A. Stockholders’ Rights

    The Board shall be committed to respect the following rights of the stockholders in accordance with the Corporation Code and the Corporation’s Articles of Incorporation and By-Laws:

    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

    B. Promotion of Shareholders’ Rights

    1. The Board shall be transparent and fair in the conduct of the annual and special stockholders meetings of the Corporation. The stockholders shall be encouraged to personally attend such meetings. If they cannot attend, they shall be apprised ahead of time of their right to appoint a proxy. Subject to the requirements of the By-Laws, the exercise of that right shall not be unduly restricted and any doubt about the validity of a proxy should be resolved in the stockholder’s favor.

    2. It shall be the duty of the Board to promote the rights of the stockholders, remove impediments to the exercise of those rights and provide an adequate avenue for them to seek timely redress for violation of their rights.

    The Board should take the appropriate steps to remove excessive or unnecessary costs and other administrative impediments to the stockholders’ meaningful participation in meetings, whether in person or by proxy. Accurate and timely information should be made available to the stockholders to enable them to make a sound judgment on all matters brought to their attention for consideration or approval.

  • Penalties for Non-Compliance

    To strictly observe and implement the provisions of this Manual, the following penalties shall be imposed, after notice and hearing, on the company’s Directors, Management Officers, staff, subsidiaries and affiliates and their respective Directors, Management Officers and staff in case of violation of any of the provision of this Manual:

    A. First Violation - The subject person shall be reprimanded.

    B. Second Violation - Suspension from office shall be imposed. The duration of the suspension shall depend on the gravity of the violation.

    C. Third Violation - The maximum penalty of removal from office shall be imposed.

    The commission of a third violation of this Manual by any Director of the Corporation or its subsidiaries and affiliates shall be a sufficient cause for removal from directorship.

    The Compliance Officer shall be responsible for determining violation/s through notice and hearing and shall recommend to the Chairman of the Board the imposable penalty for such violation, for further review and approval of the Board.

  • Monitoring and Self-Assessment

    The Board may create an internal self-rating system that can measure the performance of the Board, individual Director, CEO, President and Management in accordance with the criteria provided for in this Manual. The creation and implementation of such self-rating system, including its salient features, may be disclosed in the Corporation’s Annual Report.

    The Compliance Officer shall establish an evaluation system to determine and measure compliance with this Manual. The establishment of such evaluation system, including the features thereof, may be disclosed in the Corporation’s Annual Report or in such form of report that is applicable to the Corporation. The adoption of such performance evaluation system must be approved by the Board.

    The Corporation shall ensure that its business processes and practices are consistent with the provisions of this Manual.

    This Manual shall be subject to review as the need arises in order to take into account the Corporation’s changing needs, business, technological and environmental conditions, and regulatory requirements. Any recommended changes to the Manual shall be subject to approval by the Board.

Download: RLC Revised Corporate Governance Manual 2015