Andolana, Grielecent Bs Marketing 3-B

Toribio, Karl Dryx 3-012 MGT 2255

Vacaro, Azmarrah Rayanna

SEC Memorandum Circular 19 Series of 2016

1. What is the content of Principle 1, 2, 3, 7, 12, 13, 14, 16?

Principle 1: The company should be headed by a competent, working board to foster
the long-term success of the corporation, and to sustain its competitiveness and profitability in a
manner consistent with its corporate objectives and the long-term best interests of its
shareholders and other stakeholders.

Principle 2: The fiduciary roles, responsibilities and accountabilities of the Board as

provided under the law, the company’s articles and by-laws, and other legal pronouncements
and guidelines should be clearly made known to all directors as well as to stockholders and
other stakeholders.

Principle 3: Board committees should be set up to the extent possible to support the
effective performance of the Board’s functions, particularly with respect to audit, risk
management, related party transactions, and other key corporate governance concerns, such
as nomination and remuneration. The composition, functions and responsibilities of all
committees established should be contained in a publicly available Committee Charter.

Principle 7: Members of the Board are duty-bound to apply high ethical standards, taking
into account the interests of all stakeholders.

Principle 12: To ensure the integrity, transparency and proper governance in the conduct
of its affairs, the company should have a strong and effective internal control system and
enterprise risk management framework.

Principle 13: The company should treat all shareholders fairly and equitably, and also
recognize, protect and facilitate the exercise of their rights.
 Principle 14: The rights of stakeholders established by law, by contractual relations
and through voluntary commitments must be respected. Where stakeholders’ rights and/or
interests are at stake, stakeholders should have the opportunity to obtain prompt effective
redress for the violation of their rights.

Principle 16: The company should be socially responsible in all its dealings with the
communities where it operates. It should ensure that its interactions serve its environment and
stakeholders in a positive and progressive manner that is fully supportive of its comprehensive
and balanced development.

2. Definition of corporate governance and Board of Directors?

Corporate governance in simple terms is the combination of rules and laws to regulate
and control businesses. This system aims to help businesses maximize long term success not
just for the shareholders and stakeholders but also for the nation. A strong and transparent
corporate governance will make a company flourish, while bad corporate governance will bring
forth a company’s downfall.

An elected group of individuals that represents the shareholders are known as the
Board of Directors. The board of directors exercises the corporate power of a corporation.
They are incharge of safeguarding shareholders' interests, setting management policies,
overseeing the business or organization, and making critical decisions in the organization. The
activities of an organization, both for-profit and nonprofit, are overseen by the board of directors.

3. Who are independent directors and stakeholders?

Independent Directors represent the interests of the company’s shareholders and how
it creates value for them. An independent director brings to the company an impartial and
independent judgment. An independent director has no material link with the firm, is not a
member of the executive team, and is not involved in the company's day-to-day operations.
Independent directors are a fundamental component of strong corporate governance and are
generally preferable to be nominated to the board of directors. A successful independent
director has the ability to lead impartial board debates and, if necessary, drive better
decision-making and outcomes.

A Stakeholder is a party/individual or group that has an interest in a company and can either
affect or be affected by the business. The primary stakeholders in a typical corporation are its
investors,employees,customers and suppliers. These stakeholders can be internal or external to
an organization. Internal stakeholders are people whose interest in a company comes through a
direct relationship, such as employment, ownership, or investment. A stakeholders primary role
is to help the company attain and meet its strategic objectives by contributing their experience
and perspective to a project. They can also provide necessary materials and resources.