Phl prepares to join Asean corporate governance plan

The Philippines is expected to join the ASEAN Corporate Governance Scorecard (ACGS) in preparation for the integration of the ASEAN by 2015, a government official said.

Securities and Exchange Commission chairperson Teresita Herbosa told reporters on the sideline of the 2013 Institute of Corporate Directors’ Forum that they are currently laying down the framework for the participation of the Philippines publicly-listed companies (PLCs) in the ASEAN-led corporate governance program.

Herbosa explained that at present, the SEC is implementing the compulsory Annual Corporate Governance Report (ACGR) by PLCs.

She said the ACGRs are expected to be submitted by the PLCs today. Administrative fines would be slapped on PLCs that will fail to submit their respective ACGRs.

The SEC chief, however, pointed out that the participation of local PLCs to the ACGS would be voluntary in nature.

During the forum, Herbosa spearheaded the launch of the ACGS, signaling the intention of the Philippines to be part of this initiative.

“We hope that the participation of our PLCs in the ACGS would put them at par with other PLCs in the region. The scorecard would be used by investors in gauging the adherence of a PLC in pursuing corporate governance efforts,” she said.

The ACGS is an initiative of the ASEAN Capital Markets Forum (ACMF), a body composed of the capital market regulates from 10 ASEAN members.

ACGS is a corporate governance rating system that is being applied to PLCs across ASEAN. It presents a list of 179 questions that are used to rate a PLC’s governance policies and practices on the OECD principles of corporate governance.

In addition, the ASEAN scorecard has bonus and penalty sections that reward or penalize the PLC for certain governance practices which are to be encouraged and discouraged,as a case may be. The use of scorecard allows PLCs throughout the region to be compared to each other, either within industries or even by countries.

The SEC is the official Philippine representative to the ACMF.

The SEC, in turn, has appointed ICD as the Philippine representative to the ASEAN Corporate Governance Experts (ACGE) group.

ICD was also appointed as the domestic ranking body (DRB) of the Philippines for the ACGS.

The International Finance Corp. of the World Bank group provides funding for ICD on this endeavor.

To date, only Malaysia, Philippines and Indonesia have fully adopted the ACGS. Thailand is now transitioning to the ACGS from their own scorecard. Singapore and Vietnam have yet to decide when to fully adopt the ACGS.

For now, the SEC and ICD will apply the ACGS only to PLCs. In the future, it can be applied in the appropriate additional sectors for specific regulatory needs of banks, insurance companies and even government-owned and controlled corporations (GOCCs).

As its DRB, ICD will submit the scores of PLCs for fiscal years 2012 and 2013 to the SEC for evaluation. The SEC may use these results as the basis for taking steps to improve the overall level of corporate governance scores in the future.

However, the Philippines is committed to share its ACGS scores with the rest of the ACMF members in 2015.

SEC and ICD aim to have at least 20 Philippine PLCs within the top ranking 50 ASEAN PLCs based on the ACGS results by then.