DUCUSIN, ARAMAE A.

AE115

Sir Carlos Vicuña

Below is a summary of the SEC corporate governance requirements of companies publicly-listed in the
stock exchange. For each requirement, state how it is intended to help to address the risk of fraud in
publicly traded organizations.

A. Boards need to consist of at least 3 independent directors or 1/3 of the board which is higher.

The non-executive directors have such qualifications and stature that enables them to effectively
participate in the deliberations of the Board wherein the board is composed of directors with a
collective working knowledge, experience or expertise that is relevant to the company’s industry or
sector. The board help to address the risk of fraud because they always ensure that it has an appropriate
mix of competence and expertise and that its members remain qualified for their positions individually
and collectively, to enable it to fulfill its roles and responsibilities and respond to the needs of the
organization based on the evolving business environment and strategic direction.

B. Boards need to hold regular executive sessions of independent directors without management
present.

Executive board sessions were designed as part of the board’s risk oversight process. For the most
part, board activity should be open, accountable and transparent. Boards may also use executive board
sessions to discuss issues related their own performance or to hash out board director conflicts or
disagreements. The board may discuss issues related to policies and the board’s performance in
executive session. Boards may also use this platform to iron out differences between board members or
to resolve conflicts.

C. Boards must have a or corporate governance committee composed at least 3 of independent

directors.

The Corporate Governance Committee is in charge of assisting the board of directors in fulfilling its
corporate governance responsibilities. They decide whether or not a Director is able to and has been
adequately carrying out his or her duties as Director based on its own assessment or the assessment of
external facilitators, bearing in mind the Director’s contribution and performance.

D. The corporate governance committee must have a written charter that addresses the
committee’s purpose and responsibilities, and there must be annual performance evaluation of
the committee.

The Corporate Governance Committee could oversee the periodic performance evaluation of the
Board and its committees as well as executive management, and conducts an annual self-evaluation of
its performance. They ensure that the results of the Board evaluation are shared, discussed, and that
concrete action plans are developed and implemented to address the identified areas for improvement.
Also, to ensure that the nomination and election policy and procedures are well conducted.

E. Boards must have an audit committee with a minimum of three independent members.
 The Audit Committee primarily oversees all matters pertaining to audit – a company’s internal
audit function and performance, the integrity of financial statements, and the accounting processes in
general, among other things. They provide oversight on the management’s activities, as well as the
company’s internal and external auditors and monitors and evaluates the adequacy and effectiveness of
a company’s internal control system.

F. The audit committee must have a written charter that addresses the committee’s purpose and
responsibilities, and the committee must produce an audit committee report; there must also be
an annual performance evaluation of the committee.

The Audit Committee ensures that the Chief Audit Executive and internal audit function are free
from interference by outside parties and ensure that there is an annual review of the effectiveness of
the Internal Audit function. Also, to evaluate the effectiveness of the system for monitoring compliance
with laws and regulations and the results of management’s investigation and follow-up (including
disciplinary action) of any instances of non-compliance and to obtain regular updates from management
and company legal counsel regarding compliance matters and to issue certifications on critical
compliance matters or issues.