Atty. Cesar VillanuevaA total of 122 directors and officers of publicly listed companies (PLCs) associated with the Lopez Group underwent advanced corporate governance (CG) training on September 6.
Conducted by the Institute of Corporate Directors (ICD), the training covered topics mandated by the Securities and Exchange Commission (SEC) for the continuing education of professional directors and officers of listed companies.
Atty. Cesar Villanueva, ICD trustee and former chairman and chief executive officer of the Governance Commission for GOCCs (government-owned and -controlled corporations), discussed challenges and opportunities related to the Revised Corporation Code (RCC).
His presentation covered self-dealings and related-party transactions (RPT), reporting on beneficial ownership, disclosure of the individual compensation of directors, provisions relating to increasing ease of doing business, and the differences between a one-person corporation (OPC) and a close corporation. The RCC grants the SEC powers to cite in contempt and impose administrative sanctions on violators, in addition to criminal penalties imposed by the law.
The RCC provides specific criminal penalties for the following: unauthorized use of corporate name; violation of director’s disqualification provisions; violation of duty to maintain records, allow inspection or reproduction; certifying incomplete or inaccurate, false or misleading statements; collusion by independent auditor; obtaining corporate registration through fraud; corporation’s fraudulent conduct of business; corporation’s acting as intermediary for graft and corrupt practices; corporation’s engaging intermediaries for graft and corrupt practices; tolerating graft and corrupt practices; retaliation against whistleblowers; and criminal liability of aiders, abettors and those who counsel them.
Rules on material RPTs
Jessie Carpio, partner and head of the Audit and Assurance division of Punongbayan & Araullo (P&A), used a question-and-answer format to illustrate rules on material RPTs under SEC Memorandum Circular 10 series of 2019. The circular aims to institutionalize good corporate governance by ensuring that transactions between and among RPTs are conducted at arm’s length basis and that material RPTs are approved and reported.
Ina Figueroa, principal of the Tax Advisory group of P&A, discussed various transfer pricing methods to apply the arm’s length principle. RPTs must be made under comparable conditions and circumstances as transactions with independent parties. “Walang kapakapatid, walang kai-kaibigan, walang kama-kamag-anak,” she quipped.
Companies must post their RPT policy on their respective websites as well as submit such to the SEC by October 27, 2019. Material RPTs must be verified by a third party, approved by the board of directors and reported to the SEC through an advisement report within three days after execution or approval. A summary of all RPTs must be included in the integrated annual corporate governance report submitted to the SEC on May 30 every year. The circular provides penalties for noncompliance.
Atty. Teodoro Kalaw IV, ICD trustee, gave an overview of best practices in sustainability reporting. He compared the following sustainability reporting frameworks: Global Reporting Initiative (GRI) Standard; Integrated Reporting; Sustainability Accounting Standards Board; B Corp B Impact Assessment; and Future-Fit Business Benchmark.
Kalaw also presented the steps in the reporting process as follows: management commitment and setting up the project team; materiality assessment; stakeholder engagement; content mapping and development; and production, launch and distribution of the sustainability report (SR).
The SEC required all publicly listed companies to submit SRs with the first one covering 2019, for submission with the 2019 annual report in 2020. The SEC is applying a “comply or explain” approach for the first three years, with companies allowed to explain items where data is still not available. However, eventual full compliance is expected. (Story/Photos by: Carla Paras-Sison)
Atty. Teodoro Kalaw IV