Corporate Governance in the Philippines PDF

**CORPORATE GOVERNANCE IN THE PHILIPPINES** **1. The Audit Committee, whose responsibility is to inculcate in the minds of the board members the importance of a sound system of internal control and the Board's oversight responsibility;** **2. The Nomination Committee, whose function is to review a...

**CORPORATE GOVERNANCE IN THE PHILIPPINES** **1. The Audit Committee, whose responsibility is to inculcate in the minds of the board members the importance of a sound system of internal control and the Board's oversight responsibility;** **2. The Nomination Committee, whose function is to review and evaluate the qualification of all persons nominated to the Board; and** **3. The Compensation or Remuneration Committee, whose task to establish a formal and transparent procedure for developing a policy on executive remuneration.** **INTERNAL FOUNDATION OF CORPORATE GOVERNANCE** **BOARD OF DIRECTORS** **v A board of directors is a body of elected of appointed by shareholders who jointly oversee the activities and the overall managerial and operational aspects of the corporation. The said activities determined by the powers, duties, and responsibilities delegated to it or granted by an authority which can be from the shareholders and / or from the by -- laws itself.** **Authority and Responsibility and Purpose of the Board of Directors** **v The most important responsibility of the board of directors is to protect the resources entrusted to them by the shareholders' and make sure the latter receive a decent return on their investment** **Structure and Makeup of the Board of Directors** **v The board is made up of individual men and woman, the directors who are elected by the shareholders.** **Committees on the Board of Directors** **v The board of director's responsibilities includes the institution of the audit and compensation committees. The audit committee is responsible in making sure that the company's financial statements and reports are reasonably accurate and use fair estimates in accordance with the applicable financial reporting standards.** **Ownership Structure and Its Impact on the Board of Directors** **v The particular ownership structure of a corporation has a huge impact on the efficiency and effectiveness of the board of directors to govern.** **CHIEF EXECUTIVE OFFER CEO** **v *The Chief Executive Officer (CEO*) is usually the singular organizational position that is principally accountable in carrying out the strategic policies and procedure as established by the board of directors.** **The typical responsibilities of a CEO are as follows:** - **Support the Board** **v One of the responsibilities of the CEO is to supports operations and administration of board by giving information and advice to board members CEO should be serving as the crossing point between board and staff, supporting whatever the Board's evaluation of chief executive as well as evaluation of other high ranking people in organization.** - **Delivery of Program, Product and Services (PPS)** **v Administer design, marketing promotion, delivery and quality of programs products and services. The CEO is expected to be the brand bearer.** - **Financial Risk and Tax Management** **v Recommends yearly budget for board's approval and cautiously manages organization's resources within the bounds of budget guidelines.** - **Human Capital Management** **v Efficiently manages the human capital of the organization based on sanctioned personnel policies and procedures that fully conform to current laws, regulations and standards both local and international.** - **Public Relation (PR)** **v It is also a job of the CEO to package and build a positive image of the company to its relevant shareholder.** **CHIEF FINANCIAL OFFICER (CFO)** **v For much privately held business, the decisions to hire a chief financial officer (CFO) are often a difficult decision. Beyond the issue of whether the company can afford a high-calibre financial professional, many business owners are often confused over just what it is that CFO does or should do.** **The following are some of the critical areas which an effective CFO will work on in discharging his functions:** 1. **Implements Internal Control** **v A CFO will be the one responsible for conveying the important financial controls to a company.** 2. **Supervises Major Impact Projects** **v A CFO might also carry out a meticulous analysis of a company's future capital investment requirements as prerequisite in securing additional financing.** 3. **Develops Relations with Financing Sources** **v One of the most important responsibilities of an effective CFO is to institute good working relationships with banks and other financial institutions that may impact on the company's ability to finance its operations.** 4. **Advisor to Management** **v An effective CFO is also an important of the management team of some emergent companies.** 5. **Drives Major Strategic Issues** **v A good CFO can also be expected to take part in important role attending some major strategic issues that will have an impact on the company's long term future.** 6. **Risk Manager** **v The CFO is on the best position to foresee risk considering that they have this rare perspective on how the company operates.** 7. **Relationship Role** **v More often CFO is the nucleus in an organization with many connections. CFO serves the bridge between these a variety of parties within the organizations.** 8. **Objective Referee** **v CFO s are not valued by board of directors or audit committees on attributes or tendencies of boosting financial figures with sacrificed transparency.** **SHAREHOLDERS** **Shareholders Right and Responsibilities** - **Share ownership gives the owner with the right to a share of the income of the company called dividend and a right to a share of net proceeds on the sale during liquidation of the company.** - **They must ensure that the obligation to provide information to shareholders does not detract from the company's ability to complete in its marketplace.** - **They must ensure that their right to attempt to influence the company does not translate into behaviour that will paralyze and detrimental to the company.** **Shareholders Ability to Change the Board** **v Shareholders who are dissatisfied with how the directors are running the corporation may remove the directors of refused to re-elect them. In practice, this may be a difficult course to take, particularly where the shares of the corporation are widely held.** **EXTERNAL ENVIRONMENT OF CORPORATE GOVERNANCE** **AUDITORS** **v One of the most important external institutions in governance is the independent auditors. Their job is to** **help to ensure that firms are run efficiently by keeping public records accurate, adhering standards of** **reporting for public purposes and taxes paid properly and on time.** **LEGAL ENVIRONMENT** **v Some contend that it is the market that can really press real governance considering that it is a variable** **independent from anybody.** **Legal environment has three distinct dimensions:** - **·The domestic laws of home country** - **· The domestic laws of each of foreign markets** - **· International law in general** **MARKETS** **v Market are considered the most important institution of corporate governance.** **There are three central and important points of the term markets, these are:** - **· The firm's product market** - **· Capital market** - **· The managerial labor market** **OTHER EXTERNAL FACTORS** **External Environment may create major threats or in some cases precursor of openings and possibilities for an organizations.** **Political Environment** **v The politics of a country or region that an organization is functioning affects the policies and benefits that an organization derives from a system. It is major pool from which the human resource of an organization is selected from and hence it is likely to shape an organization both internally and externally.** **Technological Environment** **v This becomes even more relevant in case of businesses that rely heavily on technology and are** **technologically sensitive.** **Social Environment** **v Social Environment is practically the ecosystem within which organizations thrive, then enabling atmosphere in which business is situated into.** **CORPORATE PROTECTION WITHIN LEGAL BOUNDARIES** **ANTI -- TAKEOVER DEFENSES** **v Anti -- takeover tactics come in my different forms and appearances. Technical languages such as \