Corporate governance reforms in the Philippines

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Corporate governance reforms in the Philippines

Published 8 febrero 2017

The most widely used form of business organisation in the Philippines is the corporation, which is regulated by the Philippine Securities and Exchange Commission (SEC). The SEC is hoping to secure - sometime early in 2017 - the long-delayed Congressional approval of amendments to the Corporation Code contained in Senate Bill 2945.

A sizeable number of the proposed amendments are aimed at strengthening corporate governance, to better protect the rights of shareholders and deter abuse of the corporate form through fraud, graft and corrupt practices. The amendments set out in Senate Bill 2945 incorporate most of the standards for good corporate governance found in the ASEAN corporate governance scorecard, a joint initiative between the ASEAN Capital Markets Forum and the Asian Development Bank.

Senate Bill 2945 foreshadows increased disclosure and transparency, increased director disqualifications, the introduction of the concept of independent directors, allowing attendance at meetings by remote communication and allowing voting in absentia. Curbs on corporate abuse and corruption are also being introduced, along with whistle-blower provisions and a requirement for a code of ethics/standards of conduct in the by-laws of corporations.

The SEC also gets a helping hand: provisions have been included to harmonise the powers it holds under the Corporation Code with those it holds under the Securities and Regulation Code. The SEC will also acquire greater powers of inspection, the ability to obtain ex parte cease and desist orders and to dissolve corporations and order forfeiture of their assets where fraud, graft or corrupt practices are proven. Significantly, the SEC will also take a step towards fiscal (and operational) autonomy, most likely supported by the ability to levy stiffer administrative fines and penalties.

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Key Contacts

William Allison

William Allison

London - Walbrook

+44 (0) 20 7894 6440

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