Chapter 3 Flashcards
is needed to make corporate management more accountable and auditors more rigorous.
Corporate Governance
requires fair legal frameworks that should be enforced impartially.
Good Governance
The Philippine Securities and Exchange Commission (SEC) issued Memorandum Circular No. 2, s. 2002, otherwise known as the
Code of Corporate Governance
internal control and BOD as overseer
Audit Committee
review and evaluate BOD nominated persons
Nomination Committee
in charge of establishing procedure and policy on executive remuneration.
Compensation or renumeration committee
may establish a performance evaluation system to measure performance of the Board and top-level management of the corporation
management
making sure FS and reports are reasonably accurate and fair.
Audit Committee
decides on the base compensation, stock option awards, and incentive bonuses for the company’s executives and CEO
Compensation Committee
are one of the most important external institutions in governance. They 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.
Independent Auditors
is derived partly from the general political climate in a country.
The legal environment
are considered the most important institution of corporate governance.
Markets
may create major threat or open possibilities for an organization.
External Environment
the politics of a country or a region affects the policies and benefits that a firm derives from the system.
Political Environment
any new development may render an organization’s processes and systems obsolete if it is not quick to respond to the new changes
Technological Environment
comprises the general behavior of the society and includes the ethical leanings of individuals responsible for the functioning and survival of the organization.
Social Environment
is combining of two or more corporations into one.
Merger
can also be employed in a hostile takeover, a setting where a business is acquired against the management’s or some shareholders’ wishes.
Anti-takeover defenses
are designed to make a company unattractive to predators.
Anti-takeover tactics
allows existing shareholders to purchase more shares at a discount.
flip-in
allow shareholders to purchase the bidder’s shares at a discount
flip-over
It refers to the act of the reimbursing officers and directors for expenses incurred, liabilities accrued, and amounts paid to defending claims brought to them for actions taken on behalf of the corporation.
Indemnification of Officers and Directors
no special rights or restrictions
Ordinary shares
gives the holder preferential treatment
Preference shares
gives holders the right that, if a dividend cannot be paid one year, it will be carried forward to the succeeding years
Cumulative preference shares
comes with an agreement that the company can buy them back at a future date.
Redeemable shares
It refers to percentage of ownership that is way above the simple majority which is , one half plus one share of the total shares outstanding.
Supermajority
Usually supermajority could mean
67% to 90%
is a legal contract among shareholders of a corporation involving voting of shares.
Legal Voting arrangement
agreement to establish right of representation to the BOD.
Board appointment rights
right to overturn decisions reach by the board.
Veto Rights
