Docsity
Docsity

Prepare for your exams
Prepare for your exams

Study with the several resources on Docsity


Earn points to download
Earn points to download

Earn points by helping other students or get them with a premium plan


Guidelines and tips
Guidelines and tips

Roles and Responsibilities of PEATC's Board of Directors, Officers, and Committees, Exams of Business Accounting

The functions and duties of the Board of Directors, Officers, and Committees of PEATC (Philippine Electricity Authority Transmission Corporation). It covers the roles of the Board, Executive Officers, Corporate Secretary, Compliance Officer, and Board Committees. their responsibilities in managing the corporation, ensuring compliance with regulations, and overseeing internal controls.

Typology: Exams

2021/2022

Uploaded on 08/01/2022

hal_s95
hal_s95 🇵🇭

4.4

(646)

10K documents

Partial preview of the text

Download Roles and Responsibilities of PEATC's Board of Directors, Officers, and Committees and more Exams Business Accounting in PDF only on Docsity!

MANUAL OF

CORPORATE

GOVERNANCE

PREAMBLE

As a Government-Owned and Controlled Corporation, it is the

policy of PEA Tollway Corporation (PEATC) to ensure that its

governance is carried out in a transparent, responsible and

accountable manner and with utmost degree of professionalism

and effectiveness. The Board of Directors of PEATC hereby adopts

this code of good public corporate governance as a guiding

principle to significantly enhance the corporate organization of

PEATC and make it a recognized partner of the government in

sustaining transport development.

the rights and duties of its members towards itself and among themselves in reference to the management of its affairs.”

g. Charter Statement refers to PEATC’s vision, mission and core values

h. “Chief Executive Officer” (“CEO”) refers to the highest ranking corporate executive who could be the President or the General Manager, Chairman and Administrator of a GOCC.

i. Confidential Information refers to all non-public information entrusted to or obtained by a member of the Board or Officer by reason of his/her position as such with the PEATC. It includes, but is not limited to, non-public information that might be use to competitors or harmful to the PEATC or its customers/stakeholders if disclosed, such as (a)non-public information about PEATC’s financial condition, prospects or plans, its marketing and sales programs and research and development information, as well as information relating to mergers, acquisitions, divestitures, stock splits and similar transactions; (b) non-public information concerning possible transactions or ventures with other companies, or information about suppliers, joint venture partners, or any information that PEATC is under obligation to keep confidential; and (c) non-public information about internal discussions, deliberations and decisions, between and among Directors and Officers.

j. Corporate Governance refers to a system whereby shareholders, Creditors and other stakeholders of a corporation ensure that Management enhances the value of the corporation as it competes in an increasing global-market place.

k. Director refers to any member of the Board of PEATC.

l. “Executive Officer” (“Officer”) refers to the President, the Vice- President, Secretary and Treasurer as provided for in the Articles of Incorporation and the Department Managers, as appointed by the Board of Directors. As distinguished from Board Officers, Executive Officers, primarily form part of the Management of PEATC.

m. Extra Ordinary Diligence refers to the measure of care and diligence that must be exercised by Directors and Officers in discharging their functions, in conducting the business and dealing with the properties and monies of PEATC, which is deemed met when Directors and Officers act using the utmost diligence of a very cautious person taking into serious consideration all the prevailing circumstances and material facts, giving due regard to the legitimate interests of all affected stakeholders.

n. Fit and Proper Rule refers to a set of standards for determining whether a member of the Board of Directors or the President is qualified to hold a position in a GOCC which shall include, but not limited to, standards on integrity, experience, education, training and competence as such standards are set forth under GCG Memorandum Circular No. 2012-05.

o. Government-Owned or Controlled Corporation” (“GOCC”) refers to any agency organized as a stock or non-stock corporation, vested with functions relating to public needs, whether governmental or proprietary in nature and owned by the Government of the Republic of the Philippines, directly or through its instrumentalities, either wholly or, where applicable, as in the case of stock corporations, to the extent of at least a majority of its outstanding capital stock. The term includes Government Instrumentalities with Corporate Powers (“GICP”), Government Corporate Entities (“GCE”) and Government Financial Institutions (“GFI”).

p. “Management refers to the body given the authority to implement the policies determined by the Board in directing the course and business and activities of PEATC.

q. Material Information” (“Material Fact”) refers to information which a reasonable investor, stakeholder or Supervising Agency would consider important relating to corporate acts, contracts and transactions which would adversely affect the operations of the GOCC.

r. Officers refer to both Board Officers and Executive Officers.

II. Rules of Interpretation

a. Unless otherwise indicated in this Code, any reference to a singular, shall apply as well to the plural, and vice-versa.

b. All references to the masculine gender in the salient provisions of this Manual shall likewise cover the feminine gender.

c. All doubts or questions that may arise in the interpretation or application of this Code shall be resolved in favor of promoting transparency, accountability and fairness to the stakeholders of the corporation.

III. The PEATC Board of Directors

The PEATC Board of Directors ensures good corporate governance in the Company. It acts in the interest of PEATC and effectively monitors Management actions in performing its mandate in accordance with the PEATC Articles of Incorporation and By-Laws.

a. Board Directly Vested with Corporate Powers. Having been vested directly by law with the legal capacity and authority to exercise all corporate powers, conduct all the business, and to hold all the properties of PEATC, the Board of Director is primarily responsible for the governance of the PEATC. Consequently, it is the Board and not the Management that is primarily accountable to the State for the operations and performance of PEATC.

b. Board Duty to Properly Select and Provide Independent Check on Management. Concomitant with the power to nominate and elect the President and to appoint other Officers of PEATC, it is the duty of the Board to ensure that they employ only Officers who are fit and proper to hold such offices with due regard to their qualifications, competence, experience and integrity. The Board is therefore obliged to provide an independent check on Management.

c. Mandate and Responsibility for PEATC’s Performance. Although the day-to-day management of the affairs of the PEATC is vested with Management, the Board is, however, responsible for providing policy directions, monitoring and overseeing Management actions, as provided for under relevant legislations, rules and regulations. These mandated functions and responsibilities include the following:

 Provide the corporate leadership subject to the rule of law and objectives set by the National Government through the PRA and the GCG;

 Establish the PEATC’s vision and mission, strategic objectives, policies and procedures as well as defining the values and standards through:

o Charter Statements; o Strategy Maps; and o Other control mechanism mandated by best business practices;

 Determine important policies to foster its long-term success, ensure its long-term viability and strength and secure its sustained competitiveness;

 Determine the organizational structure, defining the duties and responsibilities of its Officers and employees and adopting a compensation and benefit scheme that is consistent with the PEATC Compensation and Position Classification System (CPCS) developed by GCG and formally approved by the President of the Philippines.

 Ensure that personnel selection and promotion shall be on the basis of merit and fitness and that all personnel action shall be in pursuit of the applicable laws, rules and regulations;

 Provide sound written policies and strategic guidelines on the PEATC’s operating budget and major capital expenditures and prepare the annual and supplemental budget of PEATC;

 Comply with all reportorial requirements, by the GCG, as well as applicable laws, rules and regulations;

 Formally adopt and conduct annually the mandated Performance Evaluation System and the Performance Scorecard and timely and accurately report the results to the GCG;

 Ensure the fair and equitable treatment of all Stakeholders and enhancing the PEATC’s relations with Stakeholders.

 Identify and monitor, and provide appropriate technology and systems for identification and monitoring of, key risks and key performance areas;

 Adopt, implement and oversee the process of disclosure and communications;

 Constitute an Audit Committee and such other specialized committees as may be necessary, or required by applicable regulations, to assist the Board in discharging its functions; and

 Conduct and maintain the affairs of PEATC within the scope of its authority, as prescribed under applicable laws, rules and regulation.

e. Composition of the PEATC Board of Directors. The PEATC Board shall be composed of a Chairman and six (6) members, all of whom are appointed by the President of the Philippines.

f. Fiduciary capacity of Board members. A PEATC Board Membership is a position of trust and confidence and as such, acts on the best interest of PEATC and devotes time and attention necessary to the proper discharge of his duties and responsibilities.

g. Multiple Board Seats. The capacity of Appointive Directors to serve with diligence shall not be compromised. As such, no Appointive Director may hold more than two (2) other Board seats in other GOCCS, Subsidiaries and/or Affiliates.

h. Appointment of Appointive Directors.

 All Appointive Directors in PEATC shall be appointed by the President of the Philippines from a shortlist prepared by the GCG.

 The selection and nomination and shortlisting of prospective Appointive Directors shall be pursued in accordance with the rules and criteria formulated by the GCG, which shall include the following statutorily-mandated conditions, thus:

o The GCG shall cause the creation of search committees to pursue the process of selection, nomination and shortlisting of prospective appointees;

o All nominees included in the list submitted by the GCG to the President shall meet the Fit and Proper Rule and such other qualifications which the GCG may determine taking into consideration the unique requirements of PEATC.

o The GCG shall ensure that the shortlist shall exceed by at least fifty percent (50%) of the number of Directors to be appointed; and

o In the event that the President does not see fit to appoint any of the nominees included in the shortlist, the President shall ask the GCG to submit additional nominees.

i. Fit and Proper Rule. All members of the Board, the President and other Officers of PEATC shall be qualified by the Fit and Proper rule adopted by the GCG in consultation and coordination with PRA and approved by the President.

To maintain the quality of management of PEATC, the GCG in coordination with the PRA, shall, subject to the approval of the President, prescribe, pass upon and review the qualifications and disqualifications of individuals appointed as Directors, President and other Executive Officers and shall disqualify those found unfit.

In determining whether an individual is fit and proper to hold the position of an Appointive Directors, President or Executive Officer of PEATC due regard shall be given to one’s integrity, experience, education, training and competence.

j. Term of Office of Appointive Director

 Pursuant to Section 17 of the Act, the term of office of each Appointive Director shall be for one (1) year, unless sooner removed for cause: Provided, however, that each Appointive Director shall continue to hold office until the successor is appointed or qualified.

 By virtue of the provisions of Section 17 of the Act, notwithstanding any provision in the Articles of Incorporation, the one (1) year Term of Office of all Appointive Directors shall begin on 01 July of the year of appointment and ending on 30 June of the following year.

Corporate Secretary - The Corporate Secretary must possess organizational and interpersonal skills and the legal skill of the Chief Legal Officer and need not be a member of the Governing Board. The Corporate Secretary shall have the following functions:

o Serve as an adviser to the Board members on their responsibilities and obligations;

o Keep the minutes of meetings of the shareholders, the Board, the Executive Committee and all other committees in a book or books kept for that purpose and furnish copies thereof to the Chairman, the President and other members of the Board as appropriate;

o Keep in in safe custody the seal of PEATC and affix it to any instrument requiring the same;

o Have charge of the stock certificate book and such other books and papers as the Board may direct;

o Attend to the giving and serving of notices of Board and shareholder meetings, if applicable;

o Be fully informed and be part of the scheduling process of another activities of the Boards;

o Receive instructions from the Chairman on the preparation of an annual schedule, the calling of Board meetings and notifying the Board of such agenda at every meeting;

o Oversee the adequate flow of information to the Board prior to meetings; and

o Ensure fulfillment of disclosure requirements to the regulatory Bodies.

Compliance Officer – The Board shall appoint a Compliance Officer who shall report directly to the Chairman. In the absence of such office or appointment, the Corporate Secretary, who is preferably a lawyer, shall act as Compliance Officer. The Compliance Officer shall perform the following duties:

o Monitor compliance of PEATC of the requirements under the Act, this Code, the rules and regulations of the appropriate Government agencies and, if any violations are found, report the matter to the Board and recommend the imposition of appropriate disciplinary action on the responsible parties and the adoption of measures to prevent a repetition of the violation;

o Appear before the GCG when summoned in relation to compliance with this Code or other compliance issues; and

o Issue certification every 30 May of the year on the extent of the PEATC’s compliance with the government corporate standards governing PEATC for the period beginning 01 July of the immediately preceding calendar year and, if there are any deviations, explain the reason for such deviation.

The appointment of the Compliance Officer shall not relieve the Board of its primary responsibility vis-à-vis the State, acting through the GCG, to ensure that PEATC has complied with all its reportorial, monitoring and compliance obligations.

l. Collective and individual liability of Board members. Board members who willfully and knowingly vote or consent to patently unlawful acts of PEATC or who are guilty of gross negligence or bad faith in directing the affairs of the corporation or acquire any personal or pecuniary interest in conflict with their duty as board members, shall be liable jointly and severally for all damages resulting there from suffered by PEATC, shareholders, stakeholders and/or persons, without prejudice to the imposition of criminal or administrative penalties.

In addition, when a Board Member attempts to acquire or acquires, in violation of his duty, any interest adverse to PEATC in respect of any matter which has been reposed in him in confidence as to which equity imposes a disability upon him to deal in his own behalf, he shall be liable as a trustee for PEATC and must account for profits which otherwise could have accrued to PEATC.

Any Board Member, who enters into a transaction or contract grossly disadvantageous to the government, whether he profited from it or not, shall be liable for violation of Republic Act No. 3019 or the Anti-Graft and Corrupt Practices Act.

o Exercise of powers delegated by the Board exclusively to other Committees.

The Executive Committee shall fix its own rules of procedure. An act of the Executive Committee, which is within the scope of its powers, shall not require ratification or approval for its validity and effectivity, provided however that the Board may, at any time, enlarge or redefine the powers of the Executive Committee. All actions of the Executive Committee shall be reported to the Board at the meeting thereof following such action and shall be subject to revision or alteration by the Board, provided that no rights or acts of third parties shall be affected by any such revision or alteration.

Audit Committee. There shall be an Audit Committee composed of three (3) Directors, whose Chairman should have audit, accounting or finance background. The Committee shall be responsible for the following:

o Oversee, monitor and evaluate the adequacy and effectiveness of PEATC’s internal control system, engage and provide oversight of the PEATC’s internal and external auditors and coordinate with the Commission on Audit (COA);

o Review and approve audit scope and frequency, and the annual internal audit plan, quarterly, semi-annual and annual financial statements before submission to the Board, focusing on changes in accounting policies and practices, major judgmental areas, significant adjustments resulting from the audit, going concern assumptions, compliance with accounting standards, and compliance with tax, legal, regulatory and COA requirements;

o Receive and review reports of internal and external auditors and regulatory agencies and ensure that Management is taking appropriate and corrective actions, in a timely manner in addressing control and compliance functions with regulatory agencies;

o Ensure that internal auditors have free and full access to all PEATC’s records, properties and personnel relevant to and required by its functions and that the internal audit activity

shall be free from interference in determining its scope, performing its work and communicating its results; and

o Develop a transparent financial management system that will ensure the integrity of internal control activities throughout PEATC through a procedures and policies handbook that will be used by the entire organization.

Risk Management Committee. The Risk Management shall be composed of at least three (3) members, with at least one member having a background in finance and investments. The Committee shall have the following functions:

o Perform oversight risk management functions specifically in the areas of managing credit, market, liquidity, operational, legal, reputational, and other risks of PEATC and crisis management, which shall include receiving from Senior Management periodic information on risk exposures and risk management activities;

o Develop the Risk Management Policy of PEATC ensuring compliance with the same and ensure that the risk management process and compliance are embedded throughout the operations of PEATC especially at the Board and Management level; and

o Provide quarterly reporting and update the Board on key risk management issues as well as ad hoc reporting and evaluation of investment proposals.

Governance Committee. The Governance Committee shall assist the Board of Directors in fulfilling its corporate governance responsibilities. The Committee shall be composed of at least three (3) members of Board, and chaired by the Chairman of the Board. The Committee shall be responsible for the following:

o Oversee the periodic performance evaluation of the Board and its committees and Management and shall also conduct a self evaluation of their performance;

o Decide whether or not a Director is able to and has been adequately carrying out his/her duties as director bearing in mind the director’s contribution and performance (e.g. competence, candor, attendance, preparedness and

o. Other Committees Required by Law, Rules and Regulations. In addition to the committees required in the GCG Code, the PEATC, when so covered, shall also establish the committees required under the corresponding and applicable rules and regulations issued by Supervising Agencies such as, but not limited to, the Bangko Sentral ng Pilipinas (BSP), the Insurance Commission (IC), the Securities and Exchange Commission (SEC) and the Toll Regulatory Board.

p. Annual Performance Evaluation of the Board. PEATC shall develop a systematic evaluation process of the Board as a necessary tool in enhancing its professionalism and as a useful incentive for Board members to devote sufficient time and effort to their duties. The evaluation should also be instrumental in developing effective and appropriate induction and training programs for new and existing members of the Board.

q. Fines and Consequences when Directors violate or omit to carry out their Duties. Any Board Director who by act of commission or omission, fails to carry out his duties in accordance with law upon determination or judgment by competent authorities of his liability and as may be provided by law shall be subject to the following sanctions:

 Suspension or Removal from office;  Payment of Fine or Restitution;  Perpetual Disqualification from Public office;  Forfeiture of all benefits from government; and/or  Imprisonment.

IV. Management

a. Role of Management****. The Management stands as the locus of decision-making for the day-to-day affairs of the PEATC. It determines Company activities by putting the targets in concrete terms and by implementing basic strategies for achieving these targets. The Management puts in place the infrastructure for the corporation’s success by establishing the following mechanisms in PEATC: organizational structures that work effectively in attaining the goals of the corporation, useful planning, control and risk managements that assess risks on an integrated cross-functional approach; and information systems that are defined and aligned with an information technology strategy and the business goals of PEATC; and a plan of succession that formalizes the process of identifying, training and selection of successors in key position in PEATC.

b. Management Primarily Accountable to the Board. Management is primarily accountable to the Board for the operations of PEATC. As part of its accountability, Management shall provide all members of the Board with a balanced and understandable account of PEATC’s performance, position and prospects on a monthly basis. This responsibility shall extend to interim and other price sensitive public reports to regulators.

c. Executive Officers

President. The President is the Chie Executive Officer (CEO) of PEATC and shall be elected annually by the members of the Board from among its ranks as provided for in the By-Laws. He shall be subject to the disciplinary powers of the Board and may be removed by the Board for cause. In addition to the duties imposed on him by the Board, he shall:

o Exercises overall supervision and authority over the regular course of business, affairs, and property of the PEATC, and over its employees and officers;

o See to it that all orders and resolutions of the Board are carried into effect;

o Submit to the Board as soon as possible after the close of each fiscal year, and to the shareholders at the annual meeting, if applicable, a complete report of the operations of the Company for the preceding year, and the state of its affairs;

o Report to the Board from time to time all matters which the interest of the PEATC may require to be brought to its notice; and

o Exercises such other powers and performs such other duties as the Board may impose upon him.

Vice-President. Like the President, the Vice-President shall likewise be elected annually by the members of the Board from among its ranks. He shall, if qualified, act as President in the absence of the latter. He shall have other powers and duties