News: Estanislao: 65% of PSE-listed co?s now on a par with HK, Thailand -
17 Feb 2008
The Institute of Corporate Directors, the nation’s— and the world’s—most respected Philippine corporate governance watchdog, says 65 percent of PSE-listed corporations are now on a par with Hong Kong and Thailand and some of these on the good-governance level of the best in the United States.
Knowing that a corporation is run with rigorous ethical standards, says former Finance minister Dr. Jesus P. Estanislao, the founding chairman of ICD, is a big reason people buy shares in a company. ICD gave the top 20 PSE-listed companies high marks on the basis of an internationally-accepted scorecard that rates a corporation’s adherence to the best practices.
ICD’s work of promoting good governance in business and government is supported by the World Bank, the US Chamber of Commerce under its CIPE program and the Europe-based Organization for Economic Cooperation and Development. Philippine Stock Exchange President and CEO Francis Lim agrees with Dr. Estanislao.
Lim told The Times statistics show that investors tend to invest more in companies with good corporate governance systems. He says good corporate governance prevents the occurrence of problems similar to that which happened with BW Resources in 1999.
Alleged share price manipulation and insider trading in BW Resources were among the issues raised in the impeachment complaint against ousted President Joseph Estrada who was convicted of plunder (and then pardoned by President Arroyo.)
Lim said strict monitoring of corporate governance can prevent scams and that is why PSE has an agreement with the Institute of Corporate Directors and the Ateneo Law School. ICD, in tandem with Ateneo, will monitor the corporate governance practices of all PSE-listed companies.
ICD will release their scorecards to the PSE management and the public. The PSE has also created a corporate governance office, which will be tasked to evaluate, with the ICD’s support, the corporate governance of listed companies and come up with measures to improve them.
Lim said the PSE Board will issue a circular requiring all listed companies to devote space in their annual reports detailing their corporate governance activities. The PSE president said corporations that fail to comply with the good-governance norms and requirements will be asked by the PSE board to explain.
Some good corporate governance practices recommended by ICD are the employment of independent directors, the education of directors on their functions and responsibilities, the formation and empowerment of committees to enforce succession, compensation and social responsibility norms and codes.
The ICD is also a partner institution of the Securities and Exchange Commission, the government’s regulatory body over corporations. The SEC requires all listed companies in the country to participate in the annual corporate governance scorecard of the ICD. From only 49 in 2005, now 138 corporations have complied.
The partnership between PSE, ICD, Securities and Exchange Commission (SEC) and Ateneo aims to raise the standard of good corporate governance. Early on, the Bangko Sentral assigned ICD to devise a good-corporate governance monitoring and scorecard system for Philippine banks. As a result, the country’s banks that have fared well in the ICD scorecard have also risen in prestige abroad.
The Ateneo Law School will provide a select group of students whose function is to validate the publicly-listed companies’ self-assessment scores against the best-practice standards of the ICD.
The 20 companies with high ICD scorecard marks are the Philippine Long Distance Telephone Co., Ayala Corp., Ayala Land Inc., Bank of the Philippine Islands, First Gen. Corp., First Philippine Holdings Corp., Globe Telecom Inc., Alaska Milk Corp., Alsons Consolidated Resources Inc., Asian Terminals Inc., Manila Electric Co., Manila Water Co., MIC Holdings Corp., Panasonic Manufcturing Phils. Corp., Petron Corp., Philex Mining Corp., San Miguel Corp., Semirara Mining Corp., and Sun Life Financial Inc.