The Internal and External Institutions of Corporate Governance: Regulators, Markets, Auditors and Others
As reported by:
Gallardo, Ralph Lauren
Granada, Mon Cedric
April 20, 2013
A Reaction Paper by:
Lacsamana, Rodrigo II
Carolina Guerrero, CPA
The External Institutions of Corporate Governance:
Regulators, Markets, Auditors and Other Institutions
“The Price of Greatness is Responsibility”
Corporate governance may refer to the structures and processes for the efficient and proper direction and control of companies (both public and private) in the interest of all stakeholders, though the bottom line of it all is RESPONSIBILITY. Responsibility to direct the business’ core processes to be able to maximize the shareholders’ wealth; Responsibility to ensure that in attaining that goal, the entity is playing on fair ground, that is, providing employees with proper remuneration, adhering to set rules and regulations (external and internal),; Responsibility to other stakeholders such as the government, markets, environment and the general public by securing that their interests are given equal attention and action and not just being left on the bottom list of their priorities. Since a corporate entity, a major contributor and creator of wealth to the society, is the pivot player on our economic activities, they too, have the most critical responsibilities to name a few. These “critical responsibilities” are the price they have to pay for using the society’s key resources, such as people (human resources), the environment (natural resources), the government (political resources), and money (economic resources). They have to guarantee that whatever is taken, is given back, in its form or another, and to ensure that at the end of the day, everyone is happy and fulfilled. Having forenamed all of these, external institutions are given the power and much greater responsibility to check and account if the corporate governance of an entity is fulfilling its responsibilities. To encapsulate therefore, external institutions has the “Responsibility over Responsibilities”.
Top of the list are the regulators. They consist of government and some other institutions that ultimately articulate accurately the community’s voice concerning power relationships, responsibility and accountability. Specifically, government agencies regulate corporate governance through formulation and implementation of rules and regulations on the operations of corporate institutions within of course its jurisdiction. In instance, the Corporation Code of the Philippines or the Batas Pambansa Bilang 68 is where all other laws and interpretations are derived concerning a corporation and corporate governance. It is, in my opinion, the mother of all corporation laws, bylaws, rules and regulations and policies. Discussing it immensely will require tedious hours to complete. Aside from this constitutional law, the government also provided specific special laws; most of them enable the government to create agencies, commissions, and overseeing committees to help them ensuring that all laws are practiced, are incorporated to its activities, and that the interest of the people (by saying people it is because our government is by the people, of the people and for the people) are taken into account. The list goes on and on, from Securities and Exchange Commission, Bangko Sentral ng Pilipinas, Department of Trade and Industry to name a few. In having this long list of government-regulating agencies, the good, and the bad happen. On the general concept of law, everyone is given fair and equal treatment; may you be a small-medium enterprise or a multinational corporation. But as I said, concept. Let’s take a look at the adverse effects of having multitude laws for corporate regulation. I’m not kind enough to tell the happy tales of law implementation because that side of story is given enough emphasis. Let’s...
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