Corporate Governance

As implicated under the Philippine Corporation Code, corporate governance means a

system whereby shareholders, creditors, and other stakeholders of a corporation ensure that

management enhances the value of the corporation as it competes in an increasingly global

marketplace. With this, the government and stakeholders are enjoined to be responsible in

creating a harmonious and efficient realm of corporate management. As initiative, the Philippine

delegates the authority on all matters of corporate governance to the Securities and Exchange

Commission (SEC).

In enforcing the Corporation Code, the SEC ensures "to promote corporate governance

reforms that will raise investor confidence, develop the capital market and help achieve high

sustained growth for the corporate sector and the economy." 1 Assessing the current status of

Philippine corporate governance, it has gradually progressed through the years but there still

needs improvement. Some constraints for the efficient implementation of good corporate

governance are enforcement of existing laws, protection of the rights of minority stockholder,

and the disclosure of internal controls and government issues.

With all the challenges and constraints, enforcement and regulation seems to play the most

important factor and crucial for the corporate system. Based on the studies, corporate

governance failures is deemed harmful for the organizations, economy and the general public

at large. An implication of such impact shows that "there have been public pressures on the

government and regulatory authorities to reform business practices and increase

transparency"2. In effect, "it has become a part of the governments duty to ensure accountability

1 Corporate Governance in the Philippines by Wilfredo Baltazar. Sourced from

http://www.dlsu.edu.ph/research/centers/cberd/pdf/bus_focus/Corporate_Governanc
e.pdf
and responsibility in corporate behavior" 3. Hence, an action to strengthen the enforcement of

existing laws is significantly necessary.

When it comes to the rights of the shareholders, an utmost concern shall be given equally to all

the shareholders. Therefore, the protection shall be equally distributed. It was, however, difficult

to balance the rights of them all. It is somehow proper that the following "stockholders rights

should be respected: (1) voting right; (2) pre-emptive right; (3) power of inspection; (4) right to

information; (5) right to dividends and (5) appraisal right. The management may establish a

performance evaluation system to measure the performance of the Board and top-level

management of the corporation"4.

Lastly, internal control transparency and governmental issues shall ensure to be timely and

accurately disclosed on all material matters particularly the financial situation, performance,

ownership and corporate governance. Disclosure is a highly recognized and acknowledge by

the Corporation Code expressing the thoughts that "the more transparent the internal workings

of the company and cash flows, the more difficult it will be for management and controlling

shareholders to misappropriate or mismanage company assets" 5. The Code suggests that

policies and rules shall be in manual form and openly available for review by the directors and

submitted to the SEC. Otherwise, penalty is imposed upon erring corporation.

2 The Role of Government in Corporate Governance by Cary Coglianese, et. al. from
https://www.hks.harvard.edu/m-rcbg/research/rpp/reports/RPPREPORT8.pdf

3 Ibid.

4 Corporate Governance in the Philippines by Wilfredo Baltazar. Sourced from

http://www.dlsu.edu.ph/research/centers/cberd/pdf/bus_focus/Corporate_Governanc
e.pdf

5 Ibid.
Apparently, "there is no unique structure of corporate governance and secondly, corporate

governance goes far beyond regulation. The quantity, quality and frequency of financial and

managerial disclosure, the extent to which the board of directors exercise their fiduciary

responsibilities towards shareholders, the quality of information that management share with

their boards and the commitment to run transparent companies cannot be legislated at any level

of detail"6. As a conclusion, thorough studies and continuous development on corporate

governance are inevitable in a fluctuating status of business side. As a system, the flow of

corporate governance debunks the complacent rules and regulations which detest the stagnant

nature of corporate progressivity.

6 Corporate Governance Presented By:- Iqra Afsar Disha Satsangi D.Prem Preethi
Garima Chandra from http://www.slideshare.net/IqraAfsar1/corporate-governance-
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