FINEX Folio

By Flor G. Tarriela

Good governance remains a key ingredient for the continued economic growth in the ASEAN region. In 2011, the ASEAN Corporate Governance Scorecard (ACGS) was developed to provide the methodology in assessing the corporate governance performance of publicly listed companies. The program aims to enhance the image of publicly listed ASEAN companies and their ability to attract investments as well as improve the image of capital markets of ASEAN.

Six countries — Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam — participate in this initiative.

The scorecard covers the following five areas:

• rights of shareholders;

• equitable treatment of shareholders;

• role of stakeholders;

• disclosure and transparency; and

• responsibilities of the board.

The assessment starts with the selection of top 100 publicly listed companies in terms of market capitalization. Domestic review is conducted on the basis of publicly available information from annual reports and company websites. Disclosure must be clear, unambiguous and sufficiently complete. The results of the initial domestic assessment will undergo peer review within the region to minimize discrepancies and achieve consistent assessment applied by corporate governance experts.

There are bonus points for companies that go beyond minimum standards and penalties for companies with poor practices. For instance, bonus points are awarded when a company has at least one independent female director, implemented secure electronic voting in absentia at the general meetings of shareholders, financial statements are released within 60 days from yearend. Penalties are given when a company has faced any sanctions by regulators for failure to make announcements within the requisite time period for material events or when there are violations of any laws pertaining to labor, employment, consumer or environmental issues.

The corporate governance recognition was held recently. SEC Chairman Emilio Aquino recounted the achievements of the country in the area of corporate governance and said the ACGS initiative has fortified the cooperation among the ASEAN member countries and sharpened their focus on the goal of branding the region as an asset class based on corporate governance.

ICD Chairman Rex Drilon II explained the coronavirus pandemic is radically changing the rules of corporate governance. Since the onset of this crisis, increased director time commitment has been devoted as boards were confronted with many challenges requiring urgent attention. Corporate boards are faced with a series of difficult decisions few have faced before. There is greater emphasis placed on good governance to address the uncertainties of today’s environment.

Thailand had the highest average score of 96.60 points, followed by Malaysia with an average of 94.99 points and Singapore at 88.27 points. The Philippines scored an average of 77.24 points (from 75.47 in 2018), while Indonesia had 70.80 points and Vietnam had 54.55 points.

There were 63 Philippines companies conferred with the ASEAN Asset Class Award. Globe Telecom, Inc.; Ayala Land, Inc.; SM Prime Holdings, Inc.; SM Investments Corp.; Belle Corp.; and China Banking Corp. received the coveted Four Golden Arrow Award for scoring 110 to 119 points. Three Golden Arrow Awards for scoring 100 to 109 points were given to Ayala Corp.; BDO Unibank, Inc.; DMCI Holdings, Inc.; GT Capital Holdings Inc.; Manila Electric Co.; Manila Water Co.; and Philippine National Bank. The Two Golden Arrow Award was given to companies for scoring 90 to 99 points and the One Golden Arrow Award went to companies with 80 to 89 points.

Clearly, the awardees are serious in their commitment to upholding good governance, particularly in promoting accountability, transparency, and ethics in conducting their business and affairs.

SEC Commissioner Kelvin Lee encouraged the awardees to remain committed to the work ahead. Although the country’s performance has been steadily improving, the work is only just beginning. He said the Philippine corporate sector shall continue to prioritize good corporate governance with the aim of propelling the economy towards long-term sustainable development.

Happy International Women’s Day! Congratulations to the Agri Champ Ambassadors:

Bea Atanacio (Kabataang Filipino Farmer) for Luzon, Dalareich Polot (Bohol’s Chocolate Princess) for Visayas, with Dayang and Alyssa Sahali Tan (Organic Seaweeds Chips) from Mindanao. The goal is to network with other young progressive farmers in the country and represent the voice of the youth in agri food security. Their mentors are Cherrie Atilano and Ginggay Hontiveros Malvar, both of the Kapatid Agri Mentor Me program. I was happy to host them in Flor’s Garden as arranged by Disnee Dioso and Mat Maderazo of Planters Products, with a surprise visit from no less than Agriculture Secretary William Dar.

 

Flor Gozon Tarriela is chairman of the Philippine National Bank, PNB Capital and PNB Mizuho Leasing & Finance Corp. She is a former Undersecretary of Finance and the first Filipina vice president of Citibank N.A. She is a trustee of FINEX and an Institute of Corporate Directors fellow.

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