In a statement yesterday, IFC said the new code aims to improve the functioning of boards, strengthen shareholder protection and promote full disclosure in financial and non-financial reporting.
“The new code provides guidance for Philippine publicly-listed companies to adopt best governance practices, which will improve their competitiveness and ability to attract foreign investment,” IFC said.
It added the new code will increase the responsibilities of the board and “ensure the competence and commitment of its directors.”
The code adopts a “comply or explain” approach that combines voluntary compliance with mandatory disclosure. Companies do not have to fully comply with the code, but they must state in their annual corporate governance reports whether they comply with the code provisions, identify any area of non-compliance, and explain the reasons for non-compliance.
The new code took effect last Jan. 1 and as such, all publicly-listed companies are required to submit a new Manual on Corporate Governance to the SEC on or before May 31, 2017.
The revision of the corporate governance code was borne out of the partnership forged between IFC and SEC in May 2016 to enhance the country’s regulatory framework and investment climate. Under the agreement, IFC facilitated the exchange of information on regulatory reforms between SEC officials and international corporate governance experts.
The organization said investors have greater confidence in companies with good governance and in markets that are backed by sound legal and regulatory regimes. It noted that more foreign investment will create jobs, strengthen the business environment, and improve private sector efficacy.
“Our global experience has shown that corporate governance codes set a benchmark and encourage companies to adopt effective governance practices,” said Jane Yuan Xu, IFC Philippines country manager. “Improved corporate governance will make Philippine companies more competitive and enhance their ability to attract foreign capital, leading to the development of a vibrant and sustainable private sector.”
