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THE PHILIPPINE STOCK EXCHANGE, INC.
MANUAL ON CORPORATE GOVERNANCE
2022
MANUAL ON CORPORATE GOVERNANCE
TABLE OF CONTENTS
PREAMBLE ................................................................................................................................................. 3
DEFINITION OF TERMS .......................................................................................................................... 3
RULES OF INTERPRETATION ............................................................................................................... 5
THE BOARD’S GOVERNANCE RESPONSIBILITIES ......................................................................... 5
1. Establishing a competent Board of Directors ............................................................................. 5
2. Establishing Clear Roles and Responsibilities of the Board of Directors ............................. 10
3. Establishing Board Committees ................................................................................................. 24
4. Fostering Commitment ............................................................................................................... 35
5. Reinforcing Board Independence .............................................................................................. 36
6. Assessing Board Performance .................................................................................................... 40
7. Strengthening Board Ethics ........................................................................................................ 41
DISCLOSURE AND TRANSPARENCY ............................................................................................... 42
1. Enhancing the Exchange’s Disclosure Policies and Procedures ............................................ 42
2. Strengthening the External Auditor’s Independence and Improving Audit Quality ........ 45
3. Increasing Focus on Non-Financial and Sustainability Reporting ........................................ 45
4. Promoting a Comprehensive and Cost-efficient Access to Relevant Information ............. 46
INTERNAL CONTROL SYSTEM AND RISK MANAGEMENT FRAMEWORK .......................... 47
1. Strengthening the Internal Control System and Enterprise Risk Management Framework
……………………………………………………………………………………………………. 47
CULTIVATING A SYNERGIC RELATIONSHIP WITH SHAREHOLDERS .................................. 49
1. Promoting Shareholder Rights ................................................................................................... 49
2. Alternative Dispute Resolution .................................................................................................. 51
3. Investor Relations Office ............................................................................................................. 52
DUTIES TO STAKEHOLDERS .............................................................................................................. 52
1. Respecting Rights of Stakeholders and Effective Redress for Violation of Stakeholders’
Rights .............................................................................................................................................. 52
2. Encouraging Employees’ Participation ..................................................................................... 53
3. Encouraging Sustainability and Social Responsibility ........................................................... 56
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MANUAL ON CORPORATE GOVERNANCE
ARTICLE I
PREAMBLE
The Board of Directors, management, officers and employees of The Philippine Stock
Exchange, Inc. (the “Exchange”) hereby commit themselves to the principles and best
practices contained in this Manual on Corporate Governance (“Manual”), and
acknowledge that the same shall aid in the attainment of the Exchange’s corporate goals.
This Manual institutionalizes principles of good corporate governance in the Exchange.
The Board of Directors, management, officers, employees and shareholders of the
Exchange believe that corporate governance is a necessary component of sound strategic
business management and will therefore undertake every effort necessary to create
awareness and enforce compliance within the organization.
ARTICLE II
DEFINITION OF TERMS
1. Board of Directors (the “Board”) – the governing body elected by the shareholders
that exercises the corporate powers of the Exchange, conducts all its business and
controls its properties.
2. Broker directors – persons who proportionately represent the Exchange
membership in terms of volume/value of trade and paid-up capital.
3. Chief Internal Auditor – the highest position in the Exchange responsible for
internal audit services. If the internal audit activities are performed by outside
service providers, he is the person responsible for overseeing the service contract,
the overall quality of these activities, and follow-up of engagement results.
4. Corporate Governance – the system of stewardship and control to guide the
Exchange in fulfilling its long-term economic, moral, legal and social obligations
towards its stakeholders. It is also a system of direction, feedback and control
using regulations, performance standards and ethical guidelines to hold the Board
of Directors and management accountable for ensuring ethical behavior –
reconciling long-term success and customer satisfaction with sustainable
shareholder value – to the benefit of the stakeholders and the society.
5. Enterprise Risk Management – a process, effected by the Exchange’s Board of
Directors, management and employees, applied in strategy setting and across the
enterprise that is designed to identify potential events that may affect the
Exchange, manage risks to be within its risk appetite, and provide reasonable
assurance regarding the achievement of entity objectives.
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MANUAL ON CORPORATE GOVERNANCE
6. Exchange or PSE – The Philippine Stock Exchange, Inc.
7. Executive director – a director who has executive responsibility of day-to-day
operations of a part or the whole of the organization.
8. Independent directors – persons who, apart from their fees and shareholdings, are
independent of management and the controlling shareholder, and are free from
any business or other relationship which could, or could reasonably be perceived
to, materially interfere with their exercise of independent judgment in carrying out
their responsibilities as directors.
9. Internal Audit Group – a department or unit of the Exchange and its consultants,
if any, that provide independent and objective assurance services in order to add
value to and improve the Exchange’s operation.
10. Internal Control – a process designed and effected by the Board of Directors,
management, and employees of the Exchange to provide reasonable assurance on
the achievement of objectives through efficient and effective operations; reliable,
complete and timely financial and management information; and compliance with
applicable laws, regulations, and the organization’s policies and procedures.
11. Internal Control System – the framework under which internal controls are
developed and implemented (alone or in concert with other policies or
procedures) to manage and control a particular risk or business activity, or
combination of risks or business activities, to which the Exchange is exposed.
12. Management – the body given the authority by the Exchange’s Board of Directors
to implement the policies it has laid down for the conduct of the Exchange’s
business.
13. Non-audit Work – the other services offered by an external auditor to the
Exchange that are not directly related and relevant to its statutory audit functions,
such as, accounting, payroll, bookkeeping, reconciliation, 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.
14. Non-broker directors – persons who are not associated with any broker or dealer
or member of the Exchange.
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