Introduction and Definition of Terms Flashcards
The latest _________ Principles of Corporate Governance
G20/OECD1
This is used as key reference material in the drafting of this Code.
Association of Southeast Asian Nations Corporate Governance Scorecard
What approach will the code adopt?
“comply or explain” approach
This approach combines
voluntary compliance with mandatory disclosure
“comply or explain” approach
T of F. Companies are required to comply with the code.
F, not required
T or F. Companies do not have to comply with the Code, but they must state in their annual corporate governance reports
whether they comply with the Code provisions, identify any areas of noncompliance, and explain the reasons for non-compliance.
T
The code is arranged as:
Principles, Recommendations, and Explanations
These are considered as high-level statements of corporate governance good practice, and are applicable to all companies.
Principles
These are objective criteria that are intended to identify the specific
features of corporate governance good practice that are recommended for companies operating according to the Code.
Recommendations
T or F. When a Recommendation is not complied with, the company must disclose and describe this non-compliance, and explain how the overall Principle is being
achieved.
T
T or F. The alternative should not be consistent with the overall Principle.
F, should be
T or F. Descriptions and explanations should be written in plain language and in a clear, complete, objective and precise manner, so that shareholders and other stakeholders can assess the company’s governance framework.
T
They strive to provide companies with additional information on the
recommended best practice.
Explanations
This Code does not, in any way, prescribe a __________ framework.
“one size fits all”
It is designed to allow boards some flexibility in establishing their corporate governance
arrangements.
“one size fits all” framework
T or F. Larger companies and financial institutions are not expected to follow most of the Code’s provisions.
F, would generally be
T or F. Smaller companies and financial institutions would generally be expected to follow most of the Code’s provisions.
F, larger
T or F. Larger companies may decide that the costs of some of the provisions outweigh the benefits, or are less relevant in their case.
F, smaller
It is considered in the application of its provisions.
Principle of Proportionality
This is the first of a series of Codes that is intended to cover all types of corporations in the Philippines under supervision of the Securities and Exchange Commission (SEC).
Code of Corporate Governance for publicly listed companies
It is the system of stewardship and control to guide organizations in fulfilling their long-term economic, moral, legal and social obligations towards their stakeholders.
Corporate Governance
The four obligations of organizations towards their stakeholders.
economic, moral, legal and social
It is a system of direction, feedback and control using regulations, performance standards and ethical guidelines to hold the Board and
senior management accountable for ensuring ethical behavior – reconciling longterm customer satisfaction with shareholder value – to the benefit of all stakeholders and society.
Corporate Governance
Its purpose is to maximize the organization’s long-term success, creating sustainable value for its shareholders, stakeholders and the nation.
Corporate Governance
The governing body elected by the stockholders that exercises
the corporate powers of a corporation, conducts all its business and controls its
properties.
Board of Directors
A group of executives 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.
Management
A person who is independent of management and the controlling shareholder, and is 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.
Independent director
A director who has executive responsibility of day-to-day operations of a part or the whole of the organization.
Executive director
A director who has no executive responsibility and does not perform any work related to the operations of the corporation.
Non-executive director
A group of corporations that has diversified business activities in
varied industries, whereby the operations of such businesses are controlled and managed by a parent corporate entity
Conglomerate
A process designed and effected by the board of directors, senior
management, and all levels of personnel 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.
Internal control
Process, effected by an entity’s Board of Directors, management and other personnel, applied in strategy setting and across
the enterprise that is designed to identify potential events that may affect the entity, manage risks to be within its risk appetite, and provide reasonable assurance regarding the achievement of entity objectives.
Enterprise Risk Management
It shall cover the company’s subsidiaries, as well as affiliates and any party (including their subsidiaries, affiliates and special purpose entities), that the
company exerts direct or indirect control over or that exerts direct or indirect control over the company; the company’s directors; officers; shareholders and related interests (DOSRI), and their close family members, as well as corresponding
persons in affiliated companies.
Related Party
This shall also include such other person or juridical entity whose interest may pose a potential conflict with the interest of the company.
Related Party
It is a transfer of resources, services or obligations between a reporting entity and a related party, regardless of whether a price is
charged
Related Party Transactions
It should be interpreted broadly to include not only transactions that are entered into with related parties, but also outstanding transactions that are entered
into with an unrelated party that subsequently becomes a related party.
Related Party Transactions
Any individual, organization or society at large who can either affect and/or be affected by the company’s strategies, policies, business decisions and operations, in general.
Stakeholders
This includes, among others, customers, creditors, employees,
suppliers, investors, as well as the government and community in which it operates.
Stakeholders
