SEC Memorandum Circular NO. 19

Question 1

Approved to promote the development of a strong corporate governance culture and keep abreast with recent developments in corporate governance.

Answer 1

Code of Corporate Governance for Publicly-Listed Companies

Question 3

It is intended to raise the corporate governance standards of Philippine corporations to a level at par with its regional and global counterparts.

Answer 3

Code of Corporate Governance

Question 4

These can be considered as high-level statements of corporate governance good practice, and are applicable to all companies.

Answer 4

Principles

Question 5

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..

Answer 5

Recommendations

Question 6

These strive to provide companies with additional information on the recommended best practice.

Answer 6

Explanations

Question 8

the system of stewardship and control to guide organizations in fulfilling their long-term economic, moral, legal and social obligations towards their stakeholders.

Answer 8

Corporate Governance

Question 9

Purpose of Corporate Governance

Answer 9

Maximize the organization’s long-term success, creating sustainable value for its shareholders, stakeholders, and the nation.

Question 12

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.

Answer 12

Management

Question 12

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.

Answer 12

Independent Director

Question 12

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

Answer 12

Conglomerate

Question 14

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.

Answer 14

Internal Control

Question 15

a 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.

Answer 15

Enterprise risk Management

Question 15

the governing body elected by the stockholders that exercises the corporate powers of a corporation, conducts all its business and controls its properties.

Answer 15

Board of Directors

Question 15

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. This includes, among others, customers, creditors, employees, suppliers, investors, as well as the government and community in which it operates

Answer 15

Stakeholders

Question 15

Two key elements of the fiduciary duty of board members:

Answer 15

Duty of Care and Duty of Loyalty

Question 16

Key consideration in determining proper compensation:

Answer 16

1. The level of remuneration is commensurate to the responsibilities of the role
2. No director should participate in deciding his remuneration
3. Remuneration pay-out schedules should be sensitive to risk outcomes over a multi-year horizon