Principles, Recommendations, and Explanations Flashcards
The company should be headed by a competent, working board to foster the long-term success of the corporation, and to sustain its competitiveness and profitability in a manner consistent with its corporate objectives and the long-term best interests of its
shareholders and other stakeholders.
Principle 1
The Board should be composed of directors with a collective working knowledge, experience or expertise that is relevant to the company’s industry/sector. The Board should always ensure that it has an appropriate mix of competence and expertise and that its members remain qualified for their positions individually and collectively, to
enable it to fulfill its roles and responsibilities and respond to the needs of the organization based on the evolving business environment and strategic direction.
Recommendation 1.1
Competence can be determined from the collective _____, ______, ______ of each director that is relevant to the industry/sector that the company is in.
knowledge, experience and expertise
T or F. A Board with the necessary knowledge, experience and expertise can properly perform its task of overseeing management and governance of the corporation, formulating the corporation’s vision, mission, strategic objectives, policies and procedures that would
guide its activities, effectively monitoring management’s performance and supervising
the proper implementation of the same.
T
The Board sets ______ for its members to facilitate the selection of ___________ for board
seats, and to serve as a benchmark for the evaluation of its performance.
qualification
standards, potential nominees
The Board should be composed of a majority of non-executive directors who possess the
necessary qualifications to effectively participate and help secure objective, independent
judgment on corporate affairs and to substantiate proper checks and balances.
Recommendation 1.2
The right combination of non-executive directors (NEDs) includes _______ and ________.
independent
directors (IDs) and executive directors (EDs)
T or F. The director can dominate the small group of
directors in the decision-making process.
F, No director or small group of
directors can dominate the decision-making process.
A board composed of a
_________ assures protection of the company’s interest over the interest of the individual shareholders.
majority of NEDs
Who determines the qualifications of the NEDs that enable them to effectively participate in the deliberations of the Board and carry out their roles and responsibilities?
The company
The Company should provide in its Board Charter and Manual on Corporate Governance a policy on the training of directors, including an orientation program for first-time directors and relevant annual continuing training for all directors.
Recommendation 1.3
T or F. The orientation program for first-time directors and relevant annual continuing training
for certain directors aim to promote effective board performance and continuing qualification of the directors in carrying-out their duties and responsibilities.
F, all directors
orientation program for first-time directors
at least 8 hours
annual continuing training
at least 4 hours
Only the first-time directors are required to be properly oriented upon joining the board.
F, all directors should be properly oriented upon joining the board. T
The orientation program covers ___________________ and an introduction to the ___________, ____________________, and _________________.
SEC-mandated topics on
corporate governance, company’s business, Articles of
Incorporation, Code of Conduct
It should be able to meet the specific needs of the company and the individual directors and aid any new director in effectively performing his or her functions.
Orientation Program
It makes certain that the
directors are continuously informed of the developments in the business and regulatory environments, including emerging risks relevant to the company
Annual continuing program
It involves courses on
corporate governance matters relevant to the company, including audit, internal controls, risk management, sustainability and strategy.
Annual continuing program
The annual continuing program involves courses on
corporate governance matters relevant to the company, including _________, ___________, ____________, ____________ and _____________.
audit, internal
controls, risk management, sustainability, strategy
T or F. It is not encouraged that companies assess their own training and development needs in determining the coverage of their
continuing training program.
F, it is encouraged
The Board should have a policy on board diversity
Recommendation 1.4
Having a board diversity policy is a move to avoid _____ and ensure that optimal decision-making is achieved.
groupthink
It is a phenomenon that majority wins
groupthink