PwC GGAPP Philippines Corporate Governance Survey Finding the true north Advancing corporate governance in the Philippines www.pwc.com/ph Foreword Message from the SEC Chairperson My warmest congratulations to In addition, the SEC believes that the the Good Governance Advocates results of this Survey would be most and Practitioners of the Philippines beneficial in the implementation (GGAPP) on the success of its 2016 of the 2016 Code of Corporate Code of Corporate Governance Governance for PLCs. The new Survey. The GGAPP has been a Code aims to make Philippine consistent partner of the Securities corporate governance standards at and Exchange Commission (SEC) par with regional and international in its advocacy to promote good standards and this Survey would corporate governance for Philippine be a useful tool for providing both corporations. As actual practitioners the SEC and PLCs the necessary of good corporate governance from information on the focus areas to various publicly listed companies be addressed in the advancement of (PLCs), GGAPP has consistently corporate governance for Philippine provided the SEC invaluable insights corporations. Atty. Teresita J. Herbosa Chairperson, Securities & Exchange on the application of best corporate Commissions (SEC) governance and ethical practices. The promotion of good corporate Moreover, GGAPP has contributed governance is an uphill battle. greatly to both the SEC Philippine However, with partners such as Corporate Governance Blueprint GGAPP assisting SEC in instilling and the 2016 Code of Corporate the proper corporate governance Governance for PLCs. foundation in PLCs, it is certain that the time will come when corporate This recent initiative of conducting governance will be second nature to the 2016 Code of Corporate companies and due recognition will Governance Survey in partnership be given to the benefits of compliance with Isla Lipana & Co./PwC with good practices. Philippines highlights GGAPP’s desire to continuously contribute Congratulations once again to GGAPP to the development of appropriate and looking forward to a continuing and progressive rules, standards and partnership in the promotion of good practices on good governance. It is a corporate governance! testament to the group’s increasing role in the improvement of the Philippine corporate governance ecosystem. ii Finding the true north: Advancing corporate governance in the Philippines Message from the PSE President Congratulations to the Good companies that practice it are highly Governance Advocates and transparent about their business Practitioners of the Philippines thereby making the business easy (“GGAPP”) and Isla Lipana & Co. to assess and evaluate. This in turn / PwC Philippines (“PwC”) for enables the company to win the their successful conduct of the PH trust of its stakeholders including Governance Survey in the fourth investors, making it easy for such quarter of 2016. The Philippine Stock company to raise funds from the Exchange (“PSE”) fully supported this capital market. Companies practicing undertaking not only by promoting corporate governance usually and encouraging its roster of publicly outperform those that don’t. listed companies to participate but by participating in the survey as a Like most of the companies who participated in said survey, PSE is Photo not yet final listed company and meticulously answering the survey questions. happy that the results are finally out. The results will provide Philippine Ramon S. Monzon PSE believed this survey was very President and Chief Executive important to form a well-founded companies with a clearer path on Officer, Philippine Stock Exchange basis for assessing the present state their journey to faithful compliance (PSE) of corporate governance among with the new Governance Code. Philippine companies and their Mabuhay GGAPP and PwC! readiness to comply with the new Corporate Governance Code for Listed Companies, which took effect last January 2017. Corporate governance is something PSE strongly subscribes to and it actively supports several initiatives to improve the corporate governance of publicly listed companies. Some companies equate corporate governance with increased costs and additional burden to their management not realizing that practicing it yields the opposite results. Because corporate governance is based on the principle of transparency and disclosure, PwC GGAPP Corporate Governance Survey 2016 iii Foreword Message from the ICD CEO On behalf of the Board of Trustees More importantly, these documents and Fellows of the Institute of can also yield valuable lessons, Corporate Directors (ICD), I wish to which are used to form the basis of congratulate the Good Governance policies and programs that will guide Advocates and Practitioners of the regulators, companues, investors Philippines (GGAPP) and Isla Lipana and other members of the corporate & Co./PwC Philippines (PwC) on the governance ecosystem in working publication of their 2016 Corporate together to realize their common Governance survey. objective of making the Philippines one of the leading practitioners of Surveys such as this one provide corporate governance in the ASEAN important benchmarks and region. perspectives which, when added to other references which ICD has Mabuhay ang GGAPP at ang PwC! developed and worked on such as Ricardo Nicanor N. Jacinto the ASEAN Corporate Governance Chief Executive Officer, Institute of Corporate Directors (ICD) Scorecard, provide a clearer picture on the state of corporate governance in the country. iv Finding the true north: Advancing corporate governance in the Philippines Message from the GGAPP Chairman It is indeed a proud moment for both Finally, as Chairman of GGAPP, I GGAPP and PwC to finally launch this would like to thank our Knowledge Survey Report. Partner, PwC, for this initiative. None of this would have been possible This report was conceived as a way without the dedication and passion for individual companies to assess of their personnel. I would also where they may find themselves in like to thank Chairperson Teresita terms of compliance with the new J. Herbosa of the SEC, and former Code of Corporate Governance for President of the PSE, Mr. Hans Sicat Publicly Listed Companies. for their support and assistance. It is our hope that through this report, We hope GGAPP and PwC’s modest companies will be able to steadily and effort at developing substantive progressively adopt more and more knowledge and information on of these best practices on Corporate corporate governance in the Atty. Vincent Edward Festin Governance in order to attain their Philippines will inspire others to Chairman, Good Governance objectives and also to positively Advocates & Practitioners of the contribute to enriching this body of Philippines (GGAPP) respond to the needs of their various knowledge further. stakeholders. Thank you very much. It is also our hope to conduct this survey annually in order to monitor adoption and progress. We trust that companies will find value in the survey and the insights generated therefrom and that more and more companies will respond to this survey. PwC GGAPP Corporate Governance Survey 2016 v Foreword Message from the GGAPP President Last year, we in GGAPP had the Fortunately, we found a wonderful privilege of working together and like-minded partner in Isla with regulators headed by SEC Lipana & Co./PwC. Chairperson Teresita J. Herbosa and other organizations that The resulting survey provided us share our advocacy to improve the a tool to be able to benchmark corporate governance framework with our peers and extract a more of the Philippine capital market and realistic view of the readiness of the hammer out a new Code of Corporate participant companies to adopt the Governance for publicly listed new Code. companies (‘PLCs”). We are learning that although This Code recommends much has been achieved since 2002 internationally recognized best when the first Philippine Corporate practices that will hopefully heighten Governance Code was promulgated, Atty. Jocelyn C. Villar-Altamira the accountability of boards, enhance there are still gaps that need to be President, Good Governance addressed. Advocates & Practitioners of the the competence of directors and ensure the protection of stockholders Philippines (GGAPP) This survey is just the first step that and other stakeholders. hopefully will enable all of us to However, as practitioners in the make better informed decisions and field of governance in our respective take innovative measures to ensure companies and organizations, we continued adherence by all to the realize how difficult it is to comply corporate governance principles of with some of the recommendations of fairness, accountability, integrity and the Code. transparency. PLCs, depending on various factors such as shareholder structure and industry, are in different stages of development as far as their governance frameworks are concerned. vi Finding the true north: Advancing corporate governance in the Philippines Message from the PwC Philippines Chairman Balancing short-term with long-term PwC is honored to embark with goals, creating sustainable value for GGAPP on this first-ever journey to stakeholders, achieving growth but capture on paper the actual practices helping inclusive growth. These are and intention of public companies the issues organizations commonly on corporate governance. These address, but moreso for those whose speak volumes about the leadership businesses are grounded on