SEC MEMORANDUM CIRCULAR NO.

2
Series of 2002
CODE OF CORPORATE GOVERNANCE

In accordance with the States poic! to acti"e! pro#ote corporate $o"ernance refor#s ai#ed to raise in"estor confidence%
de"eop capita #ar&et and hep achie"e hi$h s'stained $rowth for the corporate sector and the econo#!% the Co##ission% in its
Reso'tion No.()*% Series of 2002 dated Apri 0+ 2002% appro"ed the pro#'$ation and i#pe#entation of this Code% which sha ,e
appica,e to corporations whose sec'rities are re$istered or isted% corporations which are $rantees of per#its-icenses and secondar!
franchise fro# the Co##ission and p',ic co#panies. .his Code aso appies to ,ranches or s',sidiaries of forei$n corporations
operatin$ in the /hiippines whose sec'rities are re$istered or isted.

I. Definitions
A. Board of Directors refers to the coe$ia ,od! that e0ercises the corporate powers of a corporations for#ed 'nder the
Corporation Code. It cond'cts a ,'siness and contros or hods a propert! of s'ch corporations.
B. Corporate Governance refers to a s!ste# where,! sharehoders% creditors and other sta&ehoders of a corporation
ens're that #ana$e#ent enhances the "a'e of the corporation as it co#petes in an increasin$! $o,a #ar&et pace.
C. Independent Director 1 refers to a person other than an officer or e#po!ee of the corporation% its parent or s',sidiaries%
or an! other indi"id'a ha"in$ an! reationship with the corporation% which wo'd interfere with the e0ercise of
independent 2'd$#ent in carr!in$ o't the responsi,iities of a director. .his #eans that apart fro# the directors fees and
sharehodin$s% he sho'd ,e independent of #ana$e#ent and free fro# an! ,'siness or other reationship which co'd
#ateria! interfere with the e0ercise of his independent 2'd$#ent.
D. Public Company 1 refers to an! corporation with a cass of e3'it! sec'rities isted in an E0chan$e or with assets in
e0cess of 4ift! Miion /esos 5/*0%000%000.006 and ha"in$ two h'ndred 52006 or #ore stoc&hoders each hodin$ at east
one h'ndred 5(006 shares of a cass of its sec'rities.
E. Management refers to the ,od! $i"en the a'thorit! to i#pe#ent the poicies deter#ined ,! the 7oard in directin$ the
co'rse-,'siness acti"it!-ies of the corporation.
. E!ecutive Director refers to a director who is at the sa#e ti#e appointed to head a depart#ent-'nit within the
corporate or$ani8ation.
G. "on#e!ecutive director refers to a 7oard #e#,er with non9e0ec'ti"e f'nctions.
$. "on#audit %or& refers to other ser"ices offered ,! the e0terna a'ditor to a corporation that are not direct! reated and
ree"ant to its stat'tor! a'dit f'nction. E0a#pes inc'de acco'ntin$% pa!ro% ,oo&&eepin$% reconciiation% co#p'ter
pro2ect #ana$e#ent% data processin$ or infor#ation technoo$! o'tso'rcin$ ser"ices% interna a'ditin$% and ser"ices
that #a! co#pro#ise the independence and o,2ecti"it! of the e0terna a'dit.
I. Internal control 1 refers to the process effected ,! a co#pan!s 7oard of Directors% #ana$e#ent and other personne%
desi$ned to pro"ide reasona,e ass'rance re$ardin$ the achie"e#ent of o,2ecti"es in the effecti"eness and efficienc! of
operations% the reia,iit! of financia reportin$% and co#piance with appica,e aws% re$'ations% and interna poicies.
'. Internal control environment 1 refers to the fra#ewor& 'nder which interna contros are de"eoped% i#pe#ented% aone
or in concert with other poicies or proced'res% to #ana$e and contro a partic'ar ris& or ,'siness acti"it!% or
co#,ination of ris&s or ,'siness acti"ities% to which the co#pan! is e0posed.
(. Internal auditing 1 refers to an independent% o,2ecti"e ass'rance and cons'tin$ acti"it! desi$ned to add "a'e and
i#pro"e an or$ani8ations operations. It heps an or$ani8ation acco#pish its o,2ecti"es ,! ,rin$in$ a s!ste#atic%
discipined approach to e"a'ate and i#pro"e the effecti"eness of ris& #ana$e#ent% contro% and $o"ernance
processes.
). Internal audit department 1 refers to a depart#ent% di"ision% tea# of cons'tants% or other practitioner5s6 that pro"ide
independent% o,2ecti"e ass'rance and cons'tin$ ser"ices desi$ned to add "a'e and i#pro"e an or$ani8ations
operations.
M. C*ief Audit E!ecutive 1 refers to the top position within the or$ani8ation responsi,e for interna a'dit acti"ities. In a
traditiona interna a'dit acti"it!% this wo'd ,e the interna a'dit director. In the case where interna a'dit acti"ities are
o,tained fro# o'tside ser"ice pro"iders% the chief a'dit e0ec'ti"e is the person responsi,e for o"erseein$ the ser"ice
contract and the o"era 3'ait! ass'rance of these acti"ities% and foow9'p of en$a$e#ent res'ts. .he ter# aso
inc'des s'ch tites as $enera a'ditor% chief interna a'ditor% and inspector $enera.
". Independence refers to that en"iron#ent which aows the person to carr! o't his-her wor& free! and o,2ecti"e!.
+. +b,ectivity 1 refers to 'n,iased #enta attit'de that re3'ires the person to carr! o't his-her wor& in s'ch a #anner that
he-she has an honest ,eief in his-her wor& prod'ct and that no si$nificant 3'ait! co#pro#ises are #ade. O,2ecti"it!
re3'ires the person not to s',ordinate his-her 2'd$#ent to that of others.
P. -tandards for t*e Professional Practice of Internal Auditing .-PPIA/ 1 refers to the criteria ,! which the operations of an
interna a'ditin$ depart#ent are e"a'ated and #eas'red. .he! are intended to represent the practice of interna
1
a'ditin$ as it sho'd ,e% pro"ide a fra#ewor& for perfor#in$ and pro#otin$ a ,road ran$e of "a'e9added interna a'dit
acti"ities and foster i#pro"ed or$ani8ationa processes and operations.
II. The Board Governance
.he 7oard of Directors 57oard6 is pri#ari! responsi,e for the $o"ernance of the corporation. It needs to ,e str'ct'red so
that it pro"ides an independent chec& on #ana$e#ent. As s'ch% it is "ita! i#portant that a n'#,er of ,oard #e#,ers ,e independent
fro# #ana$e#ent.
(. Co#position of the 7oard
.he 7oard sha ,e co#posed of at east fi"e 5*6 ,'t not #ore than fifteen 5(*6 #e#,ers eected ,!
sharehoders. /',ic co#panies sha ha"e at east two 526 independent directors or s'ch independent directors sha
constit'te at east twent! percent 520:6 of the #e#,ers of s'ch 7oard% whiche"er is the esser. A other co#panies are
enco'ra$ed to ha"e independent directors as we.
.he 7oard #a! inc'de a ,aance of e0ec'ti"e and non9e0ec'ti"e directors 5inc'din$ independent non9
e0ec'ti"es6% ha"in$ a cear di"ision of responsi,iities s'ch that no indi"id'a or s#a $ro'p of indi"id'as can do#inate
the 7oards decision #a&in$.
.he non9e0ec'ti"e directors sho'd ,e of s'fficient 3'aifications% stat're and n'#,er to carr! si$nificant wei$ht
in the 7oards decisions. Non9e0ec'ti"e directors considered ,! the 7oard to ,e independent sha ,e identified in the
ann'a report.
2. M'tipe 7oard Seats
.he 7oard #a! consider $'ideines on the n'#,er of directorships for its #e#,ers. .he opti#'# n'#,er is
reated to the capacit! of a director to perfor# his d'ties dii$ent! in $enera. .he Chief E0ec'ti"e Officer and other
e0ec'ti"e directors #a! s',#it the#se"es to a ow indicati"e i#it on #e#,ership in other corporate 7oards. .he
sa#e ow i#it #a! app! to independent% non9e0ec'ti"e directors who ser"e as f'9ti#e e0ec'ti"es in other
corporations. In an! case% the capacit! of directors to ser"e with dii$ence sha not ,e co#pro#ised.
). .he Chair#an and the Chief E0ec'ti"e Officer
.he roes of the Chair#an and the Chief E0ec'ti"e Officer 5;CEO<6 #a! ,e separate to ens're an appropriate
,aance of power% increased acco'nta,iit! and $reater capacit! of the 7oard for independent decision9#a&in$. .he
co#pan! sha discose the reationship ,etween the Chair#an and the CEO 'pon their eection.
=here ,oth positions of the Chair#an and CEO are 'nified% there is cear! one eader to pro"ide a sin$e "ision
and #ission. In this instance% chec&s and ,aances sho'd ,e cear! pro"ided to hep ens're that independent% o'tside
"iews% perspecti"es% and 2'd$#ents are $i"en proper hearin$ in the 7oard.
.he Chair#ans responsi,iities #a! inc'de>
a. sched'e #eetin$s to ena,e the 7oard to perfor# its d'ties responsi,! whie not interferin$ with the fow of the
co#pan!s operations
,. prepare #eetin$ a$enda in cons'tation with the CEO?
c. e0ercise contro o"er 3'ait!% 3'antit! and ti#einess of the fow of infor#ation ,etween Mana$e#ent and the
7oard? and
d. assist in ens'rin$ co#piance with co#pan!s $'ideines on corporate $o"ernance.
.he responsi,iities set o't in the a,o"e $'ideines #a! pertain on! to the Chair#ans roe in respect to the
7oard proceedin$s. It sho'd not ,e ta&en as a co#prehensi"e ist of a the d'ties and responsi,iities of a Chair#an.
+. @'aifications of Directors
E"er! director sha own at east one 5(6 share of the capita stoc& of the corporation of which he is a director%
which share sha stand in his na#e in the ,oo&s of the corporation.
.he 7oard #a! pro"ide for additiona 3'aifications of a director s'ch as% ,'t not i#ited to% the foowin$>
a. Ed'cationa attain#ent
,. Ade3'ate co#petenc! and 'nderstandin$ of ,'siness
c. A$e re3'ire#ent
d. Inte$rit!-pro,it!
e. Assid'o'sness
*. Dis3'aification of Directors
.he foowin$ sha ,e $ro'nds for the dis3'aification of a director>
a. An! person who has ,een fina! con"icted ,! a co#petent 2'dicia or ad#inistrati"e ,od! of the foowin$>
5i6 an! cri#e in"o"in$ the p'rchase or sae of sec'rities% e.$.% proprietar! or non9proprietar! #e#,ership
certificate% co##odit! f't'res contract% or interest in a co##on tr'st f'nd% pre9need pan% pension pan or ife pan?
5ii6 an! cri#e arisin$ o't of the persons cond'ct as an 'nderwriter% ,ro&er% deaer% in"est#ent co#pan!% in"est#ent
ad"iser% principa distri,'tor% #'t'a f'nd deaer% f't'res co##ission #erchant% co##odit! tradin$ ad"isor% foor
,ro&er? and 5iii6 an! cri#e arisin$ o't of his reationship with a ,an&% 3'asi9,an&% tr'st co#pan!% in"est#ent ho'se
or as an affiiated person of an! of the#.
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,. An! person who% ,! reason of an! #iscond'ct% after hearin$ or tria% is per#anent! or te#porari! en2oined
,! order% 2'd$#ent or decree of the Co##ission or an! co'rt or other ad#inistrati"e ,od! of co#petent 2'risdiction
fro#> 5i6 actin$ as an 'nderwriter% ,ro&er% deaer% in"est#ent ad"iser% principa distri,'tor% #'t'a f'nd deaer%
f't'res co##ission #erchant% co##odit! tradin$ ad"isor% or a foor ,ro&er? 5ii6 actin$ as a director or officer of a
,an&% 3'asi9,an&% tr'st co#pan!% in"est#ent ho'se% in"est#ent co#pan! or an affiiated person of an! of the#? 5iii6
en$a$in$ in or contin'in$ an! cond'ct or practice in connection with an! s'ch acti"it! or wif'! "ioatin$ aws
$o"ernin$ sec'rities% and ,an&in$ acti"ities. S'ch dis3'aification sha aso app! when s'ch person is c'rrent!
s',2ect to an effecti"e order of the Co##ission or an! co'rt or other ad#inistrati"e ,od! ref'sin$% re"o&in$ or
s'spendin$ an! re$istration% icense or per#it iss'ed 'nder the Corporation Code% Sec'rities Re$'ation Code% or
an! other aw ad#inistered ,! the Co##ission or 7an$&o Sentra n$ /iipinas% or 'nder an! r'e or re$'ation
pro#'$ated ,! the Co##ission or 7an$&o Sentra n$ /iipinas% or otherwise restrained to en$a$e in an! acti"it!
in"o"in$ sec'rities and ,an&in$. S'ch person is aso dis3'aified when he is c'rrent! s',2ect to an effecti"e order
of a sef9re$'ator! or$ani8ation s'spendin$ or e0pein$ hi# fro# #e#,ership or participation or fro# associatin$
with a #e#,er or participant of the or$ani8ation.
c. An! person fina! con"icted 2'dicia! or ad#inistrati"e! of an offense in"o"in$ #ora t'rpit'de% fra'd%
e#,e88e#ent% theft% estafa% co'nterfeitin$% #isappropriation% for$er!% ,ri,er!% fase oath% per2'r! or other fra'd'ent
act or trans$ressions.
d. An! person fina! fo'nd ,! the Co##ission or a co'rt or other ad#inistrati"e ,od! to ha"e wif'! "ioated%
or wif'! aided% a,etted% co'nseed% ind'ced or proc'red the "ioation of% an! pro"ision of the Sec'rities
Re$'ation Code% the Corporation Code% or an! other aw ad#inistered ,! the Co##ission or 7an$&o Sentra n$
/iipinas% or an! r'e% re$'ation or order of the Co##ission or 7an$&o Sentra n$ /iipinas% or who has fied a
#ateria! fase or #iseadin$ appication% report or re$istration state#ent re3'ired ,! the Co##ission% or an! r'e%
re$'ation or order of the Co##ission.
e. An! person 2'dicia! decared to ,e inso"ent.
f. An! person fina! fo'nd $'it! ,! a forei$n co'rt or e3'i"aent financia re$'ator! a'thorit! of acts%
"ioations or #iscond'ct si#iar to an! of the acts% "ioations or #iscond'ct isted in para$raphs 5a6 to 5e6 hereof.
$. An! affiiated person who is inei$i,e% ,! reason of para$raphs 5a6 to 5e6 hereof to ser"e or act in the
capacities isted in those para$raphs.
h. Con"iction ,! fina 2'd$#ent of an offense p'nisha,e ,! i#prison#ent for a period e0ceedin$ si0 5A6 !ears%
or a "ioation of the Corporation Code% co##itted within fi"e 5*6 !ears prior to the date of his eection or
appoint#ent.
.he 7oard #a! aso pro"ide for the te#porar! dis3'aification of a director for the foowin$ reasons>
a. Ref'sa to f'! discose the e0tent of his ,'siness interest as re3'ired 'nder the Sec'rities
Re$'ation Code and its I#pe#entin$ R'es and Re$'ations. .his dis3'aification sha ,e in effect as on$ as his
ref'sa persists.
,. A,sence or non9participation for whate"er reason-s for #ore than fift! percent 5*0:6 of a #eetin$s%
,oth re$'ar and specia% of the 7oard of directors d'rin$ his inc'#,enc!% or an! twe"e 5(26 #onth period d'rin$
said inc'#,enc!. .his dis3'aification appies for p'rposes of the s'cceedin$ eection.
c. Dis#issa-ter#ination fro# directorship in another isted corporation for ca'se. .his dis3'aification
sha ,e in effect 'nti he has ceared hi#sef of an! in"o"e#ent in the ae$ed irre$'arit!.
d. 7ein$ 'nder pre"enti"e s'spension ,! the corporation.
e. If the independent director ,eco#es an officer or e#po!ee of the sa#e corporation he sha ,e
a'to#atica! dis3'aified fro# ,ein$ an independent director.
f. If the ,eneficia sec'rit! ownership of an independent director in the co#pan! or in its reated
co#panies sha e0ceed the (0: i#it.
$. Con"iction that has not !et ,eco#e fina referred to in the $ro'nds for the dis3'aification of
directors.
A. D'ties% 4'nctions and Responsi,iities
It is the 7oards responsi,iit! to foster the on$9ter# s'ccess of the corporation and sec're its s'stained
co#petiti"eness in a #anner consistent with its fid'ciar! responsi,iit!% which it sho'd e0ercise in the ,est interest of the
corporation and its sharehoders.
a. Benera Responsi,iit!
A directors office is one of tr'st and confidence. Ce sho'd act in the ,est interest of the corporation in a
#anner characteri8ed ,! transparenc!% acco'nta,iit! and fairness. Ce sho'd e0ercise eadership% pr'dence and
inte$rit! in directin$ the corporation towards s'stained pro$ress o"er the on$ ter#. A director ass'#es certain
responsi,iities to different constit'encies or sta&ehoders% who ha"e the ri$ht to e0pect that the instit'tion is ,ein$
r'n in a pr'dent and so'nd #anner.
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.o ens're $ood $o"ernance of the corporation% the 7oard sho'd esta,ish the corporations "ision and
#ission% strate$ic o,2ecti"es% poicies and proced'res that #a! $'ide and direct the acti"ities of the co#pan!
and the #eans to attain the sa#e as we as the #echanis# for #onitorin$ #ana$e#ents perfor#ance. =hie
the #ana$e#ent of the da!9to9da! affairs of the instit'tion is the responsi,iit! of the #ana$e#ent tea#% the
7oard is% howe"er% responsi,e for #onitorin$ and o"erseein$ #ana$e#ent action.
,. D'ties and 4'nctions
.o ins're a hi$h standard of ,est practice for the co#pan! and its sta&ehoders% the 7oard sho'd cond'ct
itsef with 't#ost honest! and inte$rit! in the dischar$e of its d'ties% f'nctions and responsi,iities which inc'de%
a#on$ others% the foowin$>
i. Insta a process of seection to ens're a #i0 of co#petent directors% each of who# can add "a'e and
contri,'te independent 2'd$#ent to the for#'ation of so'nd corporate strate$ies and poicies. Seect and
appoint the CEO and other senior officers% who #'st ha"e the #oti"ation% inte$rit!% co#petence and
professionais# at a "er! hi$h e"e. Adopt a professiona de"eop#ent pro$ra# for e#po!ees and officers%
and s'ccession pannin$ for senior #ana$e#ent.
ii. Deter#ine the corporations p'rpose and "a'e as we as strate$ies and $enera poicies to ens're that it
s'r"i"es and thri"es despite financia crises and its assets and rep'tation are ade3'ate! protected. /ro"ide
so'nd written poicies and strate$ic $'ideines to the corporation that wi hep decide on #a2or capita
e0pendit'res. Deter#ine i#portant poicies that ,ear on the character of the corporation with a "iew
towards ens'rin$ its on$9ter# "ia,iit! and stren$th. It #'st periodica! e"a'ate and #onitor
i#pe#entation of s'ch strate$ies and poicies% ,'siness pans and operatin$ ,'d$ets as we as
#ana$e#ents o"er9a perfor#ance to ens're opti#'# res'ts.
iii. Ens're that the corporation co#pies with a ree"ant aws% re$'ations and codes of ,est ,'siness
practices.
i". Identif! the corporations #a2or and other sta&ehoders and for#'ate a cear poic! on co##'nicatin$ or
reatin$ with the# acc'rate!% effecti"e! and s'fficient!. .here #'st ,e an acco'ntin$ rendered to the#
re$'ar! in order to ser"e their e$iti#ate interests.
Li&ewise% an in"estor reations pro$ra# that reaches o't to a sharehoders and f'! infor#s the# of
corporate acti"ities sho'd ,e de"eoped. As a ,est practice% the chief financia officer or CEO sho'd ha"e
o"ersi$ht of this pro$ra# and sho'd acti"e! participate in p',ic acti"ities
". Adopt a s!ste# of interna chec&s and ,aances% which #a! ,e appied in the first instance to the 7oard. A
re$'ar re"iew of the effecti"eness of s'ch s!ste# #'st ,e cond'cted so that the decision9#a&in$
capa,iit! and the inte$rit! of corporate operations and reportin$ s!ste#s are #aintained at a hi$h e"e at
a ti#es.
"i. Endea"or to pro"ide appropriate technoo$! and s!ste#s ratin$ to acco'nt for a"aia,e reso'rces to
ens're a position of a stron$ and #eanin$f' co#petitor. Identif! &e! ris& areas and &e! perfor#ance
indicators and #onitor these factors with d'e dii$ence.
"ii. Constit'te an A'dit and Co#piance Co##ittee.
"iii. /roper! dischar$e 7oard f'nctions ,! #eetin$ re$'ar!. Independent "iews d'rin$ 7oard #eetin$s sho'd
,e $i"en d'e consideration and a s'ch #eetin$s sho'd ,e d'! #in'ted.
i0. Deep 7oard a'thorit! within the powers of the instit'tion as prescri,ed in the artices of incorporation% ,!9
aws and in e0istin$ aws% r'es and re$'ation. Cond'ct and #aintain the affairs of the instit'tion within the
scope of its a'thorit! as prescri,ed in its charter and in e0istin$ aws% r'es and re$'ations.
c. Specific D'ties and Responsi,iities of a Director
i. To conduct fair business transactions ith the cor!oration and to ensure that !ersona" interest
does not bias Board decisions. .he ,asic principe to ,e o,ser"ed is that a director sho'd not 'se his
position to #a&e profit or to ac3'ire ,enefit or ad"anta$e for hi#sef and-or his reated interests. Ce sho'd
a"oid sit'ations that #a! co#pro#ise his i#partiait!. If an act'a or potentia confict of interest sho'd
arise on the part of directors or senior e0ec'ti"es% it sho'd ,e f'! discosed and the concerned director
sho'd not participate in the decision #a&in$. A director who has a contin'in$ confict of interest of a
#ateria nat're sho'd consider resi$nin$.
ii. To devote ti#e and attention necessar$ to !ro!er"$ dischar%e his duties and res!onsibi"ities. A
director sho'd de"ote s'fficient ti#e to fa#iiari8e hi#sef with the instit'tions ,'siness. Ce sho'd ,e
constant! aware of the instit'tions condition and ,e &nowed$ea,e eno'$h to contri,'te #eanin$f'! to
the 7oards wor&. Ce sho'd attend and acti"e! participate in 7oard and co##ittee #eetin$s% re3'est and
re"iew #eetin$ #aterias% as& 3'estions% and re3'est e0panations.
iii. To act &udicious"$. 7efore decidin$ on an! #atter ,ro'$ht ,efore the 7oard of directors% e"er! director
sho'd thoro'$h! e"a'ate the iss'es% as& 3'estions and see& carifications when necessar!.
i". To e'ercise inde!endent &ud%#ent. A director sho'd "iew each pro,e#-sit'ation o,2ecti"e!. =hen a
disa$ree#ent with others occ'rs% he sho'd caref'! e"a'ate the sit'ation and state his position. Ce
sho'd not ,e afraid to ta&e a position e"en tho'$h it #i$ht ,e 'npop'ar. Coroari!% he sho'd s'pport
pans and ideas that he thin&s are ,eneficia to the corporation.
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". To have a or(in% (no"ed%e of the statutor$ and re%u"ator$ re)uire#ents affectin% the
cor!oration* inc"udin% the contents of its artic"es of incor!oration and b$+"as* the re)uire#ents of
the Co##ission* and here a!!"icab"e* the re)uire#ents of other re%u"ator$ a%encies. A director
sho'd aso &eep hi#sef infor#ed of ind'str! de"eop#ents and ,'siness trends in order to safe$'ard the
corporations co#petiti"eness.
"i. To observe confidentia"it$. A director sho'd o,ser"e the confidentiait! of non9p',ic infor#ation ac3'ired
,! reason of his position as director. Ce sho'd not discose an! infor#ation to an! other person witho't the
a'thorit! of the 7oard.
"ii. To ensure the continuin% soundness* effectiveness and ade)uac$ of the co#!an$,s contro"
environ#ent.
d. Interna Contro Responsi,iities of the 7oard
.he contro en"iron#ent is co#posed of> 5a6 the 7oard which ens'res that the co#pan! is appropriate!
and effecti"e! #ana$ed and controed% 5,6 a #ana$e#ent that acti"e! #ana$es and operates the co#pan! in a
so'nd and pr'dent #anner% 5c6 the or$ani8ationa and proced'ra contros s'pported ,! an effecti"e #ana$e#ent
infor#ation s!ste# and ris& #ana$e#ent reportin$ s!ste#% and 5d6 the independent a'dit #echanis#s to #onitor
the ade3'ac! and effecti"eness of the or$ani8ations $o"ernance% operations% infor#ation s!ste#s% to inc'de
reia,iit! and inte$rit! of financia and operationa infor#ation% effecti"eness and efficienc! of operations%
safe$'ardin$ of assets% and co#piance with aws% r'es% re$'ations% and contracts.
i. .he #ini#'# interna contro #echanis#s for the 7oards o"ersi$ht responsi,iit! #a! inc'de>
Definin$ the d'ties and responsi,iities of the CEO?
Seectin$ or appro"in$ an indi"id'a with appropriate a,iit!% inte$rit!% e0perience to fi the CEO roe?
Re"iewin$ proposed senior #ana$e#ent appoint#ents?
Ens'rin$ the seection% appoint#ent and retention of 3'aified and co#petent #ana$e#ent?
Re"iewin$ the co#pan!s personne and h'#an reso'rce poicies and s'fficienc!% confict of interest
sit'ations% chan$es to the co#pensation pan for e#po!ees and officers and #ana$e#ent s'ccession
pan.
ii. .he #ini#'# interna contro #echanis#s for #ana$e#ents operationa responsi,iit! wo'd center on the
CEO% ,ein$ 'ti#ate! acco'nta,e for the co#pan!s or$ani8ationa and proced'ra contros.
iii. .he scope and partic'ars of a s!ste# of effecti"e or$ani8ationa and proced'ra contros #a! differ a#on$
co#panies dependin$ on factors s'ch as> the nat're and co#pe0it! of ,'siness and the ,'siness c't're?
the "o'#e% si8e and co#pe0it! of transactions? the de$ree of ris&? the de$ree of centrai8ation and
dee$ation of a'thorit!? the e0tent and effecti"eness of infor#ation technoo$!? and the e0tent of re$'ator!
co#piance.
i". Each co#pan! #a! ha"e in pace an independent a'dit f'nction% thro'$h which the co#pan!s 7oard%
senior #ana$e#ent% and stoc&hoders #a! ,e pro"ided with reasona,e ass'rance that its &e!
or$ani8ationa and proced'ra contros are effecti"e% appropriate% and co#pied with. .he 7oard #a!
appoint a chief a'dit e0ec'ti"e to carr! o't the a'dit f'nction% and #a! re3'ire the chief a'dit e0ec'ti"e to
report to a e"e within the or$ani8ation that aows the interna a'dit acti"it! to f'fi its responsi,iities.
E. 7oard Meetin$s and @'or'# Re3'ire#ent
Me#,ers of the 7oard sho'd attend re$'ar and specia #eetin$s of the 7oard in person. In "iew of #odern
technoo$!% howe"er% attendance at 7oard #eetin$s thro'$h teeconference #a! ,e aowed.
An independent director sho'd awa!s ,e in attendance. Cowe"er% the a,sence of an independent director #a!
not affect the 3'or'# re3'ire#ents if he is d'! notified of the #eetin$ ,'t dei,erate! and witho't 2'stifia,e ca'se fais
to attend the #eetin$. F'stifia,e ca'ses #a! on! inc'de $ra"e iness or death of i##ediate fa#i! and serio's
accidents.
.o #onitor co#piance with the a,o"e re3'ire#ent% corporations #a!% at the end of e"er! fisca !ear% pro"ide the
Co##ission with a sworn certification that the fore$oin$ re3'ire#ent has ,een co#pied with. .he said certification #a!
,e s',#itted with the co#pan!s c'rrent report 5SEC 4or# (E9(6 or on a separate fiin$.
G. Re#'neration of the Me#,ers of the 7oard and Officers
Le"es of re#'neration sha ,e s'fficient to attract and retain the directors% if an!% and officers needed to r'n the
co#pan! s'ccessf'!. Corporations% howe"er% sho'd a"oid pa!in$ #ore than what is necessar! for this p'rpose. A
proportion of e0ec'ti"e directors re#'neration #a! ,e str'ct'red so as to in& rewards to corporate and indi"id'a
perfor#ance.
Corporations #a! esta,ish a for#a and transparent proced're for de"eopin$ a poic! on e0ec'ti"e
re#'neration and for fi0in$ the re#'neration pac&a$es of indi"id'a directors% if an!% and officers. No director sho'd ,e
in"o"ed in decidin$ his or her own re#'neration.
.he corporations ann'a reports% infor#ation and pro0! state#ents sha inc'de a cear% concise and
'nderstanda,e discos're of a pan and non9pan co#pensation awarded to% earned ,!% paid to% or esti#ated to ,e
paid to% direct! or indirect! to a indi"id'as ser"in$ as the CEO or actin$ in a si#iar capacit! d'rin$ the ast co#peted
5
fisca !ear% re$ardess of the co#pensation e"e and the corporations fo'r 5+6 #ost hi$h! co#pensated e0ec'ti"e
officers other than the CEO who were ser"in$ as e0ec'ti"e officers at the end of the ast co#peted !ear.
.o protect the f'nds of the corporation% the Co##ission #a! re$'ate the pa!#ent ,! the corporation to
directors and officers of co#pensation% aowance% fees and frin$e ,enefits in "er! e0ceptiona cases% e.$.% when a
corporation is 'nder recei"ership or reha,iitation.
H. 7oard Co##ittees
.he 7oard sha constit'te Co##ittees in aid of $ood corporate $o"ernance.
A. .he A'dit Co##ittee sha ,e co#posed of at east three 5)6 7oard #e#,ers% prefera,! with acco'ntin$ and
finance ,ac&$ro'nd% one of who# sha ,e an independent director and another sho'd ha"e reated a'dit e0perience. It
sha ha"e the foowin$ specific f'nctions>
a. /ro"ide o"ersi$ht o"er the senior #ana$e#ents acti"ities in #ana$in$ credit% #ar&et% i3'idit!% operationa% e$a
and other ris&s of the corporation. .his f'nction sha inc'de recei"in$ fro# senior #ana$e#ent periodic
infor#ation on ris& e0pos'res and ris& #ana$e#ent acti"ities. Cowe"er% in consideration of the ris& profie of the
corporation% the 7oard #a! constit'te a separate Ris& Mana$e#ent Co##ittee to foc's on carr!in$ o't this
o"ersi$ht roe o"er ris& #ana$e#ent?
,. /ro"ide o"ersi$ht of the corporations interna and e0terna a'ditors?
c. Re"iew and appro"e a'dit scope and fre3'enc!% and the ann'a interna a'dit pan?
d. Disc'ss with the e0terna a'ditor ,efore the a'dit co##ences the nat're and scope of the a'dit% and ens're
coordination where #ore than one a'dit fir# is in"o"ed?
e. Responsi,e for the settin$9'p of an interna a'dit depart#ent and consider the appoint#ent of an interna a'ditor
as we as an independent e0terna a'ditor% the a'dit fee and an! 3'estion of resi$nation or dis#issa?
f. Monitor and e"a'ate the ade3'ac! and effecti"eness of the corporations interna contro s!ste#?
$. Recei"e and re"iew reports of interna and e0terna a'ditors and re$'ator! a$encies% where appica,e and ens're
that #ana$e#ent is ta&in$ appropriate correcti"e actions% in a ti#e! #anner in addressin$ contro and co#piance
f'nctions with re$'ator! a$encies?
h. Re"iew the 3'arter!% haf9!ear and ann'a financia state#ents ,efore s',#ission to the 7oard% foc'sin$
partic'ar! on>
An! chan$e-s in acco'ntin$ poicies and practices
Ma2or 2'd$#enta areas
Si$nificant ad2'st#ents res'tin$ fro# the a'dit
Boin$ concern ass'#ption
Co#piance with acco'ntin$ standards
Co#piance with ta0% e$a% and stoc& e0chan$e re3'ire#ents
i. Responsi,e for coordinatin$% #onitorin$ and faciitatin$ co#piance with e0istin$ aws% r'es and re$'ations. It
#a! aso constit'te a Co#piance Unit for this p'rpose.
2. E"a'ate and deter#ine non9a'dit wor& ,! e0terna a'ditor and &eep 'nder re"iew the non9a'dit fees paid to the
e0terna a'ditor ,oth in reation to their si$nificance to the a'ditor and in reation to the co#pan!s tota e0pendit're
on cons'tanc!. .he non9a'dit wor& sho'd ,e discosed in the ann'a report.
&. Esta,ish and identif! the reportin$ ine of the chief a'dit e0ec'ti"e so that the reportin$ e"e aows the interna
a'dit acti"it! to f'fi its responsi,iities. .he chief a'dit e0ec'ti"e sha report direct! to the A'dit Co##ittee
f'nctiona!. .he A'dit Co##ittee sha ens're that the interna a'ditors sha ha"e free and f' access to a the
co#pan!s records% properties and personne ree"ant to the interna a'dit acti"it! and that the interna a'dit acti"it!
sho'd ,e free fro# interference in deter#inin$ the scope of interna a'ditin$ e0a#inations% perfor#in$ wor&% and
co##'nicatin$ res'ts% and sha pro"ide a "en'e for the A'dit Co##ittee to re"iew and appro"e the ann'a
interna a'dit pan.
.he Chair#an of this co##ittee sho'd ,e an independent director. Ce sho'd ,e responsi,e for inc'catin$ in
the #inds of the 7oard #e#,ers the i#portance of #ana$e#ent responsi,iities in #aintainin$ a so'nd s!ste# of
interna contro and the 7oards o"ersi$ht responsi,iit!.
4or /hiippine ,ranches or s',sidiaries of forei$n corporations co"ered ,! this Code% the oca a'dit head for
s'ch entities sho'd ,e independent of the /hiippine operations and sho'd report to the re$iona or corporate
head3'arters.
7. .he 7oard #a! aso constit'te the foowin$ co##ittees>
a. .he No#ination Co##ittee which #a! ,e co#posed of at east three 5)6 #e#,ers% one of who# sho'd ,e an
independent director #a! re"iew and e"a'ate the 3'aifications of a persons no#inated to the 7oard as we as
those no#inated to other positions re3'irin$ appoint#ent ,! the 7oard and pro"ide assess#ent on the 7oards
effecti"eness in directin$ the process of renewin$ and repacin$ 7oard #e#,ers.
,. .he Co#pensation or Re#'neration Co##ittee #a! ,e co#posed of at east three 5)6 #e#,ers% one of who#
sho'd ,e an independent director. It #a! esta,ish a for#a and transparent proced're for de"eopin$ a poic! on
6
e0ec'ti"e re#'neration and for fi0in$ the re#'neration pac&a$es of corporate officers and directors% and pro"ide
o"ersi$ht o"er re#'neration of senior #ana$e#ent and other &e! personne ens'rin$ that co#pensation is
consistent with the corporations c't're% strate$! and contro en"iron#ent.
(0. .he Corporate Secretar!
.he Corporate Secretar!% who #'st ,e a 4iipino% is an officer of the corporation. /erfection in perfor#ance and
no s'rprises are e0pected of hi#. Li&ewise% his o!at! to the #ission% "ision and specific ,'siness o,2ecti"es of the
corporate entit! co#e with his d'ties.
Li&e the CEO% he sho'd wor& and dea fair! and o,2ecti"e! with a the constit'encies of the corporation%
na#e!% the 7oard% #ana$e#ent% stoc&hoders and other sta&ehoders. As s'ch% he sho'd ,e so#eone his coea$'es
and these constit'encies can t'rn to% tr'st and confide with on a re$'ar ,asis.
Ce sho'd ha"e the ad#inistrati"e s&is of the chief ad#inistrati"e officer of the corporation and the interpersona
s&is of the chief h'#an reso'rces officer. If the Corporate Secretar! is not the $enera co'nse% then he #'st ha"e the
e$a s&is of a chief e$a officer. Ce #'st aso ha"e the financia and acco'ntin$ s&is of a chief financia officer% and%
ast! the "ision and decisi"eness of the CEO.
Since there are different indi"id'as on top of "ario's corporate acti"ities% the Corporate Secretar! sho'd ,e
f'! infor#ed and ,e part of the sched'in$ process of the different acti"ities. As to a$endas% he sho'd ha"e the
sched'e thereof at east for the c'rrent !ear and sho'd p't the 7oard on notice ,efore e"er! #eetin$. It is a "er!
i#portant discipine to $et the 7oard to thin& ahead. Ce sho'd ser"e as an ad"iser to directors responsi,iities and
o,i$ations.
.he Corporate Secretar! sho'd #a&e s're that directors ha"e ,efore the# e"er!thin$ that the! need to #a&e
an infor#ed decision. =hen the 7oard #a&es a decision% it is co"ered ,! a ,'siness 2'd$#ent that can ,e arri"ed at ,!
the #e#,ers actin$ in $ood faith with the assistance of the Corporate Secretar! who sho'd re"iew caref'! the
infor#ation presented to the directors at the ti#e the! are to #a&e a decision.

III. -u!!"$ Infor#ation
In order to f'fi their responsi,iities% 7oard #e#,ers% sho'd ,e pro"ided with co#pete% ade3'ate and ti#e! infor#ation
prior to 7oard #eetin$s on an on9$oin$ ,asis.
Mana$e#ent sho'd ha"e an o,i$ation to s'pp! the 7oard with co#pete% ade3'ate infor#ation in a ti#e! #anner.
Reiance p're! on what is "o'nteered ,! Mana$e#ent is 'ni&e! to ,e eno'$h in a circ'#stances and f'rther in3'iries #a! ,e
re3'ired if the partic'ar director is to f'fi his or her d'ties proper!. Cence% the 7oard #a! ha"e separate and independent access to
the co#pan!s senior #ana$e#ent.
.he infor#ation #a! inc'de the ,ac&$ro'nd or e0panator! infor#ation reatin$ to #atters to ,e ,ro'$ht ,efore the 7oard%
copies of discos're doc'#ents% ,'d$ets% forecasts and #onth! interna financia state#ents. =ith respect to the ,'d$et% an! "ariance
,etween the pro2ections and act'a res'ts sho'd aso ,e discosed and e0pained.
Directors sho'd aso ha"e a separate and independent access to the Corporate Secretar!. .he roe of the Corporate
Secretar! sho'd ,e cear! defined and sho'd inc'de responsi,iit! for ens'rin$ that 7oard proced'res are ,ein$ foowed and that
appica,e r'es and re$'ations are co#pied with. .he Corporate Secretar! sho'd attend a 7oard #eetin$s.
.he 7oard sho'd ha"e a proced're for directors% either indi"id'a! or as a $ro'p% in the f'rtherance of their d'ties% to ta&e
independent professiona ad"ice% if necessar!% at the corporations e0pense.
IV. Accountabi"it$ and Audit
(. .he 7oard is pri#ariy acco'nta,e to the sharehoders and Mana$e#ent is pri#ari! acco'nta,e to the 7oard. .he 7oard
sho'd pro"ide the sharehoders with a ,aanced and 'nderstanda,e assess#ent of the corporations perfor#ance%
position and prospects on a 3'arter! ,asis. .he Mana$e#ent sho'd pro"ide a #e#,ers of the 7oard with a ,aanced
and 'nderstanda,e acco'nt of the corporations perfor#ance% position and prospects on a #onth! ,asis. .his
responsi,iit! sho'd e0tend to interi# and other price sensiti"e p',ic reports and reports to re$'ators 5if re3'ired6. It
sho'd ,e pri#ari! responsi,e in #a&in$ financia reportin$ and interna contro in accordance with the foowin$
$'ideines>
a. /resent a ,aanced and 'nderstanda,e assess#ent of the co#pan!s position and prospects. .he 7oards
responsi,iit! to present a ,aanced and 'nderstanda,e assess#ent sho'd e0tend to interi# and other price9
sensiti"e p',ic reports and reports to re$'ators as we as to infor#ation re3'ired to ,e presented ,! stat'tor!
re3'ire#ents?
,. E0pain their responsi,iit! for preparin$ the acco'nts% for which there sho'd ,e a state#ent ,! the a'ditors a,o't
their reportin$ responsi,iities?
c. Report that the ,'siness is a $oin$ concern% with s'pportin$ ass'#ptions or 3'aifications% if necessar!?
d. Maintain a so'nd s!ste# of interna contro to safe$'ard sta&ehoders in"est#ent and the co#pan!s assets?
e. 7ased on the appro"ed a'dit pans% scope and fre3'enc! of a'dits% ens're that interna a'dit e0a#inations co"er%
at east% the e"a'ation of ade3'ac! and effecti"eness of contros enco#passin$ the or$ani8ations $o"ernance%
operations% infor#ation s!ste#s% to inc'de reia,iit! and inte$rit! of financia and operationa infor#ation%
effecti"eness and efficienc! of operations% safe$'ardin$ of assets% and co#piance with aws% r'es% re$'ations%
and contracts.
7
f. Re3'ire the chief a'dit e0ec'ti"e to render to the A'dit Co##ittee and senior #ana$e#ent an ann'a report on the
interna a'dit depart#ents acti"it!% p'rpose% a'thorit!% responsi,iit! and perfor#ance reati"e to the a'dit pans
and strate$ies appro"ed ,! the A'dit Co##ittee of the 7oard. S'ch ann'a report sho'd inc'de si$nificant ris&
e0pos'res and contro iss'es% corporate $o"ernance iss'es% and other #atters needed or re3'ested ,! the 7oard
and senior #ana$e#ent. .he chief a'dit e0ec'ti"es ann'a report sha i&ewise ,e #ade a"aia,e to the
stoc&hoders of the co#pan!. Interna a'ditors sha report that their acti"ities are ;cond'cted in accordance with
the Standards for the /rofessiona /ractice of Interna A'ditin$<. Otherwise% the chief a'dit e0ec'ti"e sha discose
to the 7oard and senior #ana$e#ent that it has not !et achie"ed f' co#piance with the standards for the
professiona practice of interna a'ditin$.
2. Seection-Appoint#ent% Resi$nation% Dis#issa or Cessation of Ser"ice of an E0terna A'ditor
.he 7oard% thro'$h the A'dit Co##ittee% sha reco##end to the stoc&hoders a d'! accredited e0terna a'ditor
who sha 'nderta&e an independent a'dit and sha pro"ide an o,2ecti"e ass'rance on the wa! in which financia
state#ents sha ha"e ,een prepared and presented. S'ch e0terna a'ditor cannot at the sa#e ti#e pro"ide the
ser"ices of an interna a'ditor to the sa#e cient. Other non9a'dit wor& sho'd not ,e in confict with the f'nctions of the
e0terna a'ditor.
.he e0terna a'ditor sho'd ,e rotated e"er! fi"e 5*6 !ears or earier or the handin$ partner sha ,e chan$ed.
.he reason-s for the resi$nation% dis#issa or cessation fro# ser"ice and the date thereof of an e0terna a'ditor
sha ,e reported in the co#pan!s ann'a and c'rrent reports. Said report sha inc'de a disc'ssion of an!
disa$ree#ent with said for#er e0terna a'ditor on an! #atter of acco'ntin$ principes or practices% financia state#ent
discos're or a'ditin$ scope or proced're% which if not reso"ed to the satisfaction of the for#er a'ditor% wo'd ha"e
ca'se #a&in$ reference to the s',2ect #atter of the disa$ree#ent in connection with its report.
If an e0terna a'ditor ,eie"es that the state#ents #ade in an ann'a report% infor#ation state#ent or pro0!
state#ent fied d'rin$ his en$a$e#ent are incorrect or inco#pete% he sha aso present his "iews in said reports.
V. -toc(ho"ders, Ri%hts and Protection of .inorit$ -toc(ho"ders, Interests
.he 7oard sha ,e co##itted to respect the foowin$ ri$hts of the stoc&hoders>
(. Iotin$ Ri$ht
Sharehoders ha"e the ri$ht to eect% re#o"e and repace directors and "ote on certain corporate acts in
accordance with the Corporation Code.
.he Code #andates the 'se of c'#'ati"e "otin$ in the eection of directors. Atho'$h directors #a! ,e re#o"ed
with or witho't ca'se% the Code prohi,its re#o"a witho't ca'se if it wi den! #inorit! sharehoders representation in the
7oard. Re#o"a of directors re3'ires an affir#ati"e "ote of two9thirds of the o'tstandin$ capita.
2. /re9e#pti"e Ri$ht
A stoc&hoders ha"e pre9e#pti"e ri$hts% 'ness there is a specific denia of this ri$ht in the artices of
incorporation or an a#end#ent thereto. .he! sha ha"e the ri$ht to s',scri,e to the capita stoc& of the corporation.
.he Artices of Incorporation #a! a! down the specific ri$hts and powers of sharehoders with respect to the partic'ar
shares the! hod% a of which are protected ,! aw so on$ as the! are not in confict with the Corporation Code.
). /ower of Inspection
.he Corporation Code #andates corporations to aow sharehoders to inspect corporate ,oo&s and records
inc'din$ #in'tes of 7oard #eetin$s and stoc& re$istries in accordance with the Corporation Code and to pro"ide the#
an ann'a report% inc'din$ financia state#ents% witho't cost or restrictions.
+. Ri$ht to Infor#ation
.he Sharehoders sha ,e pro"ided% 'pon re3'est% with periodic reports which discose persona and
professiona infor#ation a,o't the directors and officers and certain other #atters s'ch as their hodin$s of the
co#pan!s shares% deain$s with the co#pan!% reationships a#on$ directors and &e! officers% and the a$$re$ate
co#pensation of directors and officers. .he Infor#ation State#ent-/ro0! State#ent where these are fo'nd #'st ,e
distri,'ted to the sharehoders ,efore ann'a $enera #eetin$s and in the Re$istration State#ent and /rospect's in
case of re$istration of shares for p',ic offerin$ with the Co##ission.
.he #inorit! sharehoders sho'd ,e $ranted the ri$ht to propose the hodin$ of a #eetin$% and the ri$ht to
propose ite#s in the a$enda of the #eetin$% pro"ided the ite#s are for e$iti#ate ,'siness p'rposes.
.he #inorit! sharehoders sho'd ha"e access to an! and a infor#ation reatin$ to #atters for which the
#ana$e#ent is acco'nta,e for and to those reatin$ to #atters for which the #ana$e#ent sho'd inc'de s'ch
infor#ation and% if not inc'ded% then the #inorit! sharehoders can propose to inc'de s'ch #atters in the a$enda of
stoc&hoders #eetin$% ,ein$ within the definition of ;e$iti#ate p'rposes<.
*. Ri$ht to Di"idends
Sharehoders ha"e the ri$ht to recei"e di"idends s',2ect to the discretion of the 7oard. Cowe"er% the
Co##ission #a! direct the corporation to decare di"idends when its retained earnin$s is in e0cess of (00: of its paid9
in capita stoc&% e0cept> a6 when 2'stified ,! definite corporate e0pansion pro2ects or pro$ra#s appro"ed ,! the 7oard
or ,6 when the corporation is prohi,ited 'nder an! oan a$ree#ent with an! financia instit'tion or creditor% whether oca
or forei$n% fro# decarin$ di"idends witho't its consent% and s'ch consent has not ,een sec'red? or c6 when it can ,e
8
cear! shown that s'ch retention is necessar! 'nder specia circ'#stances o,tainin$ in the corporation% s'ch as when
there is a need for specia reser"e for pro,a,e contin$encies.
A. Appraisa Ri$ht
.he Corporation Code aows the e0ercise of the sharehoders appraisa ri$hts 'nder the foowin$
circ'#stances>
a. In case an! a#end#ent to the artices of incorporation has the effect of chan$in$ or restrictin$ the ri$hts of an!
stoc&hoders or cass of shares% or of a'thori8in$ preferences in an! respect s'perior to those of o'tstandin$
shares of an! cass% or of e0tendin$ or shortenin$ the ter# of corporate e0istence?
,. In case of sae% ease% e0chan$e% transfer% #ort$a$e% ped$e or other disposition of a or s',stantia! a of the
corporate propert! and assets as pro"ided in the Corporation Code? and
c. In case of #er$er or consoidation.
It is the d't! of the directors to pro#ote sharehoder ri$hts% re#o"e i#pedi#ents to the e0ercise of sharehoders
ri$hts and aow possi,iities to see& redress for "ioation of their ri$hts. .he! sha enco'ra$e the e0ercise of
sharehoders "otin$ ri$hts and the so'tion of coecti"e action pro,e#s thro'$h appropriate #echanis#s. .he! sha
,e instr'#enta in re#o"in$ e0cessi"e costs and other ad#inistrati"e or practica i#pedi#ents to sharehoders
participatin$ in #eetin$s and-or "otin$ in person. .he directors sha pa"e the wa! for the eectronic fiin$ and
distri,'tion of sharehoder infor#ation necessar! to #a&e infor#ed decisions s',2ect to e$a constraints.
VI. Eva"uation -$ste#s
.he #ana$e#ent #a! esta,ish a perfor#ance e"a'ation s!ste# to #eas're the perfor#ance of the 7oard and top9e"e
#ana$e#ent of the corporation.
.he esta,ish#ent of s'ch e"a'ation s!ste#% inc'din$ the feat'res thereof% #a! ,e discosed in the co#pan!s ann'a
report 5SEC 4or# (E9A6.

VII. Disc"osure and Trans!arenc$
A do#inant the#e in a iss'es reated to corporate $o"ernance is the "ita i#portance of discos're. .he #ore transparent
the interna wor&in$s of the co#pan! and cash fows% the #ore diffic't it wi ,e for #ana$e#ent and controin$ sharehoders to
#isappropriate co#pan! assets or #is#ana$e the co#pan!.
.he #ost ,asic and a enco#passin$ discos're re3'ire#ent is that a #ateria infor#ation% i.e.% an! thin$ that co'd
potentia! affect share price% sho'd ,e p',ic! discosed. S'ch infor#ation wo'd inc'de earnin$s res'ts% ac3'isition or disposa of
assets% ,oard chan$es% reated part! transactions% sharehodin$s of directors and chan$es to ownership. Other infor#ation that sho'd
awa!s ,e discosed inc'des re#'neration 5inc'din$ stoc& options6 of a directors and senior #ana$e#ent corporate strate$!% and off
,aance sheet transactions. A discosed infor#ation sho'd ,e reeased "ia the appro"ed stoc& e0chan$e proced're for co#pan!
anno'nce#ents as we as thro'$h the ann'a report.
.he 7oard sha therefore% co##it at a ti#es to f' discos're of #ateria infor#ation deain$s. It sha ca'se the fiin$ of a
re3'ired infor#ation for the interest of the sta&ehoders.
VIII. Co##it#ent to Cor!orate Governance
Corporations sha pro#'$ate and adopt its corporate $o"ernance r'es and principes in accordance with this Code. Said
r'es sha ,e in #an'a for# and a"aia,e as reference ,! the directors. It sha ,e s',#itted to the Co##ission% which sha e"a'ate
the sa#e and their co#piance with this Code ta&in$ into acco'nt the si8e and nat're of ,'siness. .he said #an'a sha ,e a"aia,e
for inspection ,! an! stoc&hoder of the corporation at reasona,e ho'rs on ,'siness da!s. .he Chair#an of the 7oard sha ,e
specifica! tas&ed with the responsi,iit! of ens'rin$ adherence to the corporate $o"ernance code and practices.
Uness #andated ,! aw% other corporations are i&ewise enco'ra$ed to o,ser"e this Circ'ar in the a,sence of an!
#andated corporate $o"ernance r'es adopted ,! other a$encies.
I/. Ad#inistrative -anction
4ai're to adopt a #an'a of corporate $o"ernance as specified therein sha s',2ect a corporation% after d'e notice and
hearin$% to a penat! of /(00%000.00.
/. Transitor$ Provision
A corporations affected ,! this Code sha s',#it their #an'a ,! F'! (% 2002 to ,e effecti"e Fan'ar! (% 200). A #ode
#an'a wi ,e drafted ,! the Co##ission and wi ,e a"aia,e ,! Ma! (*% 2002 in the SEC we, pa$e.
/I. Effective Date
.his Me#orand'# Circ'ar sha ta&e effect after fifteen 5(*6 da!s fro# p',ication in a newspaper of $enera circ'ation.
Apri *% 2002.
Manda'!on$ Cit!% /hiippines.
0I0IA R. BA1TI-TA
Chairperson
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