PSE: Meet corporate governance standards or explain

by Neil Jerome C. Morales for Business World, November 21st,, 2010.

The Philippine Stock Exchange (PSE) has released a guide book to help listed companies meet corporate governance standards, but there will be no sanctions on firms that will be unable to comply.

But listed firms will have to disclose to the public the reasons for their failure to adopt “good governance” practices, PSE officials said.

The non-mandatory rules, published with funding from the British government, can be used by companies to monitor compliance with corporate governance standards. “Now, we have put down on paper what are the expectations of investors locally and internationally for listed companies,” PSE President and Chief Executive Val Antonio B. Suarez said in an interview at the book launch last Friday. “It will be part of their disclosure requirements, which tell us if they have complied or why they have failed to comply,” he said.

The PSE defines corporate governance as “the framework of rules, systems and processes that governs the performance by the board of directors and management of their respective duties and responsibilities to the stockholders, with due regard to the stakeholders.”

Under the bourse’s corporate governance rules, a listed company should develop and execute a sound business strategy, establish a well-structured and functioning board, maintain a robust internal audit and control system, recognize and manage enterprise risks, and ensure the integrity of its financial reports as well as its external auditing function. (continue reading… )

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