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Friday, March 29, 2024

SEC raises standards on corporate governance

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The Securities and Exchange Commission issued the Code of Corporate Governance for public companies and registered issuers as part of its efforts to promote good corporate governance in the country.

The SEC said in a statement over the weekend the code would apply to public companies, or those with assets of at least P50 million and 200 or more shareholders holding at least 100 shares each of equity securities.

The code is part of a series of Corporate Governance Codes that the SEC will issue to different types of corporations. It is rooted in the same corporate governance principles provided in the Code of Corporate Governance for publicly-listed companies with the same intention of raising the standards of Philippine corporations consistent other internationally recognized principles.

“The Code of Corporate Governance aims to steer public companies and registered issuers in the Philippines toward higher standards of corporate governance,” SEC chairperson Emilio Aquino said.

“Compliance with the higher standards of corporate governance should translate to better value propositions for shareholders and customers, minimized risks, growth and sustainability,” he added.

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The code promotes 16 principles across different corporate governance subjects, namely board’s governance responsibilities, disclosure and transparency, internal control and risk management frameworks, cultivating a synergic relationship with shareholders/members and duties to stakeholders.

Among others, the code said companies’ board of directors should always ensure an appropriate mix of competence and expertise and that members must remain qualified for their positions individually and collectively in order for the firm to fulfill its roles and responsibilities and respond to the needs of the organization.

To reinforce independence, the board should be composed of a majority of non-executive directors and must have at least two independent directors, or such number to constitute at least one-third of the members of the board, whichever is higher. Jenniffer B. Austria

The code further encourages the establishment of board committees, such as  audit, corporate governance and risk oversight to support the effective performance of the board’s functions.

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