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-governance13958616