Revised Code of Corporate Governance

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Republic of the Philippines
SEC Building, EDSA, Greenhills Mandaluyong City

SEC Memorandum Circular No. 6
Series of 2009 REVISED CODE OF CORPORATE GOVERNANCE Pursuant to its mandate under the Securities Regulation Code and the Corporation Code, the Securities and Exchange Commission (the “Commission”), in a meeting held on June 18, 2009, approved the promulgation of this Revised Code of Corporate Governance (the “Code”) which shall apply to registered corporations and to branches or subsidiaries of foreign corporations operating in the Philippines that (a) sell equity and/or debt securities to the public that are required to be registered with the Commission, or (b) have assets in excess of Fifty Million Pesos and at least two hundred (200) stockholders who own at least one hundred (100) shares each of equity securities, or (c) whose equity securities are listed on an Exchange; or (d) are grantees of secondary licenses from the Commission. Article 1: Definition of Terms

a) Corporate Governance – the framework of rules, systems and processes in the corporation that governs the performance by the Board of Directors and Management of their respective duties and responsibilities to the stockholders; b) Board of Directors – the governing body elected by the stockholders that exercises the corporate powers of a corporation, conducts all its business and controls its properties; c) Exchange – an organized market place or facility that brings together buyers and sellers, and executes trades of securities and/or commodities; d) Management – the body given the authority by the Board of Directors to implement the policies it has laid down in the conduct of the business of the corporation; e) Independent director – a person who, apart from his fees and shareholdings, is independent of management and free from any business or other relationship which could, or could reasonably be perceived to, materially interfere with his exercise of independent judgment in carrying out his responsibilities as a director; f) Executive director – a director who is also the head of a department or unit of the corporation or performs any work related to its operation; g) Non-executive director – a director who is not the head of a department or unit of the corporation nor performs any work related to its operation;

h) Non-audit work – the other services offered by an external auditor to a corporation that are not directly related and relevant to its statutory audit functions, such as, accounting, payroll, bookkeeping, reconciliation, computer project management, data processing, or information technology outsourcing services, internal audit, and other services that may compromise the independence and objectivity of an external auditor; i) Internal control – the system established by the Board of Directors and Management for the accomplishment of the corporation’s objectives, the efficient operation of its business, the reliability of its financial reporting, and faithful compliance with applicable laws, regulations and internal rules; j) Internal control system – the framework under which internal controls are developed and implemented (alone or in concert with other policies or procedures) to manage and control a particular risk or business activity, or combination of risks or business activities, to which the corporation is exposed; k) Internal audit – an independent and objective assurance activity designed to add value to and improve the corporation’s operations, and help it accomplish its objectives by providing a systematic and disciplined approach in the evaluation and improvement of the effectiveness of risk management, control and governance processes; l) Internal audit department – a department or unit of the corporation and its consultants, if any, that provide independent and objective assurance services in order to add value to and improve the corporation’s operations; m) Internal Auditor – the...
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