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MANUAL

ON

CORPORATE

GOVERNANCE

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ANNUAL

CORPORATE

GOVERNANCE

REPORT

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BOARD COMMITTEES AND MEMBERSHIP


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AUDIT COMMITTEE
Chairman Jose Teodoro K. Limcaoco
Member Anthony T. Huang
Member Bienvenido V. Tantoco III

NOMINATION COMMITTEE
Chairman Carlo L. Katigabk
Member Zenaida R. Tantoco
Member Anthony T. Huang
Member Edgardo T. Pineda

COMPENSATION AND REMUNERATION
Chairman Zenaida R. Tantoco
Member Anthony T. Huang
Member Carlo L. Katigbak
 

BOARD CHARTER


The Board of Directors (the “Board”) is primarily responsible for the governance of the Corporation. Corollary to setting the policies for the accomplishment of the corporate objective, it shall provide an independent check on Management. The Board shall also be responsible for fostering the long-term success of the Corporation and sustaining its competitiveness and profitability in a manner consistent with corporate objectives and the long-term best interests of its shareholders and other stakeholders.

A. Composition of the Board

1. Number of Directors

The Board shall be composed of nine (9) members who are elected by the stockholders.

2. Number of Independent Directors

The Corporation shall have at least two (2) independent directors or such number of independent directors that constitutes twenty percent (20%) of the members of the Board, whichever is lesser but in no case less than two (2). Subject to approval by the majority of the Board of Directors, the number of independent directors may be increased to three (3) independent directors, or such number as to constitute at least one-third (1/3) of the members of the Board, whichever is higher.

3. Executive and Non-executive Directors

The membership of the Board may be a combination of executive and non-executive directors (which include independent directors) in order that no director or small group of directors can dominate the decision-making process.

A majority of the Board must consist of non-executive directors who possess the necessary qualifications and stature that would enable them to effectively participate in the deliberations of the Board, help secure objective, independent judgment on corporate affairs, and substantiate proper checks and balances.

4. Board Diversity

The Board shall endeavor to have members of diverse backgrounds, ethnicity and religion to promote board diversity, to avoid groupthink, and to ensure that optimal decision-making is achieved. The Board should likewise endeavor to have a mix of male and female directors.

5. Multiple Board Seats

The members of the Board of Directors shall exercise discretion in accepting directorships and other positions outside of the Corporation. The capacity of the directors to diligently and efficiently perform their duties and responsibilities to the boards they serve should not be compromised. For this purpose, a director should notify the Board where he is an incumbent director before accepting a directorship in another company.

Other than directorships in the Corporation’s subsidiaries and affiliates, the executive directors of the Board shall limit their directorships in other stock and non-stock corporations to no more than five (5).

The non-executive directors of the Board should concurrently serve as directors to a maximum of five (5) publicly listed companies to ensure that they have sufficient time to fully prepare for meetings, challenge Management’s proposals/views, and oversee the long-term strategy of the Corporation.

B. The Chairperson of the Board and the President

The positions of Chairperson of the Board (“Chair”) and President should be held by separate individuals and each should have clearly defined responsibilities in order to avoid conflict or a split board and to foster an appropriate balance of power, increased accountability, and better capacity for independent decision-making.

The Board should be headed by a competent and qualified Chair. The duties and responsibilities of the Chair in relation to the Board may include, among others, the following:

(i) Ensure that the meetings of the Board are held in accordance with the By-Laws or as the Chair may deem necessary;

(ii) Supervise the preparation of the agenda of the meeting in coordination with the Corporate Secretary, taking into consideration the suggestions of the President, Management, and the directors;

(iii) Maintain qualitative and timely lines of communication and information between the Board and Management;

(iv) Make certain that the meeting agenda focuses on strategic matters, including the overall risk appetite of the Corporation, considering the developments in the business and regulatory environments, key governance concerns, and contentious issues that will significantly affect operations;

(v) Guarantee that the Board receives accurate, timely, relevant, insightful, concise, and clear information to enable it to make sound decisions;

(vi) Facilitate discussions on key issues by fostering an environment conducive for constructive debate and leveraging on the skills and expertise of individual directors;

(vii) Ensure that the Board sufficiently challenges and inquires on reports submitted and representations made by Management;

(viii) Assure the availability of proper orientation for first-time directors and continuing training opportunities for all directors; and

(ix) Make sure that performance of the Board is evaluated at least once a year and discussed/followed up on.

The President of the Corporation shall have the following roles and responsibilities of a chief executive officer as recommended under the Revised Code of Corporate Governance:

(i) Determines the Corporation’s strategic direction and formulate and implements its strategic plan on the direction of the business;

(ii) Communicates and implements the Corporation’s vision, mission, values, and overall strategy and promote any organization or stakeholder change in relation to the same;

(iii) Oversees the operations of the Corporation and manages human and financial resources in accordance with the strategic plan;

(iv) Has a good working knowledge of the Corporation’s industry and market and keeps up-to-date with its core business purpose;

(v) Directs, evaluates, and guides the work of the key officers of the Corporation;

(vi) Manages the Corporation’s resources prudently and ensures a proper balance of the same;

(vii) Provides the Board with timely information and interfaces between the Board and the employees;

(viii) Builds the corporate culture and motivates the employees of the Corporation; and

(ix) Serves as the link between internal operations and external stakeholders.

C. Nomination and Election of Directors

In the nomination and election of directors, the following rules shall apply:

(i) The Nomination and Remuneration Committee shall be composed of at least three (3) members, one of whom shall be an independent director.

(ii) The Nomination and Remuneration Committee shall review and evaluate the qualifications of all persons nominated to the Board and other appointments that require Board approval.

(iii) The Nomination and Remuneration Committee shall likewise assess the effectiveness of the Board’s processes and procedures in the election or replacement of directors.

(iv) All nominations for election of the directors by the stockholders shall be submitted in writing to the Board of Directors and be received at the Corporation’s principal place of business at least thirty (30) days prior to the date of the regular or special meeting of stockholders for the purpose of electing directors. Nominations which are not submitted within such nomination period shall not be valid.

D. Qualifications and Disqualification of Directors

1. Qualification of Directors

In addition to the qualifications for membership in the Board provided for in the Corporation Code, Securities Regulation Code, and other relevant laws, a director of the Corporation must have the following minimum qualifications:

(i) College graduate with a bachelor’s degree (or equivalent academic degree following a four-year college education);

(ii) Practical understanding of the business of the Corporation; and

(iii) Previous business experience.

2. Disqualification of Directors

a. Permanent Disqualification

The following shall be grounds for the permanent disqualification of a director:

(i) Any person convicted by final judgment or order by a competent judicial or administrative body of any crime that (a) involves the purchase or sale of securities, as defined in the Securities Regulation Code; (b) arises out of the person’s conduct as an underwriter, broker, dealer, investment adviser, principal, distributor, mutual fund dealer, futures commission merchant, commodity trading advisor, or floor broker; or (c) arises out of his fiduciary relationship with a bank, quasi-bank, trust company, investment house, or as an affiliated person of any of them.

(ii) Any person who, by reason of misconduct, after hearing, is permanently enjoined by a final judgment or order of the SEC or any court or administrative body of competent jurisdiction from: (a) acting as underwriter, broker, dealer, investment adviser, principal distributor, mutual fund dealer, futures commission merchant, commodity trading advisor, or floor broker; (b) acting as director or officer of a bank, quasi-bank, trust company, investment house, or investment company; (c) engaging in or continuing any conduct or practice in any of the capacities mentioned in sub-paragraphs (a) and (b) above, or willfully violating the laws that govern securities and banking activities.

The disqualification shall also apply if such person is currently the subject of an order of the SEC or any court or administrative body denying, revoking, or suspending any registration, license, or permit issued to him under the Corporation Code, Securities Regulation Code, or any other law administered by the SEC or the Bangko Sentral ng Pilipinas (“BSP”), or under any rule or regulation issued by the SEC or the BSP, or has otherwise been restrained to engage in any activity involving securities and banking; or such person is currently the subject of an effective order or a self-regulatory organization suspending or expelling him from membership, participation, or association with a member or participant of the organization.

(iii) Any person convicted by final judgment or order by a court or competent administrative body of an offense involving moral turpitude, fraud, embezzlement, theft, estafa, counterfeiting, misappropriation, forgery, bribery, false affirmation, perjury, or other fraudulent acts.

(iv) Any person who has been adjudged by final judgment or order of the SEC, court, or competent administrative body to have willfully violated, or willfully aided, abetted, counseled, inducted, or procured the violation of any provision of the Corporation Code, Securities Regulation Code, or any other law administered by the SEC or the BSP, or any of their respective rules, regulations, or orders.

(v) Any person earlier elected as independent director, who becomes an officer, employee, or consultant of the Corporation.

(vi) Any person judicially declared as insolvent.

(vii) Any person found guilty by final judgment or order of a foreign court or equivalent financial regulatory authority of acts, violations, or misconduct similar to any of the acts, violations, or misconduct enumerated in sub-paragraphs (i) to (v) above.

(viii) Conviction by final judgment of an offense punishable by imprisonment for more than six (6) years, or a violation of the Corporation Code committed within five (5) years prior to the date of his election or appointment.

(ix) Other grounds as the SEC may provide.

b. Temporary Disqualification

The Board may provide for the temporary disqualification of a director for any of the following reasons:

(i) Refusal to comply with the disclosure requirements of the Securities Regulation Code and its Implementing Rules and Regulations. The disqualification shall be in effect as long as the refusal persists.

(ii) Absence in more than fifty percent (50%) of all regular and special meetings of the Board during his incumbency, or any twelve (12)-month period during the said incumbency, unless the absence is due to illness, death in the immediate family, or serious accident. The disqualification shall apply for purposes of the succeeding election.

(iii) Dismissal or termination for cause as director of any corporation covered by the Revised Code of Corporate Governance. The disqualification shall be in effect until he has cleared himself from any involvement in the cause that gave rise to his dismissal or termination.

(iv) If the beneficial equity ownership of an independent director in the Corporation or its subsidiaries and affiliates exceeds two percent (2%) of its subscribed capital stock. The disqualification shall be lifted if the limit is later complied with.

(v) If any of the judgments or orders cited in the grounds for permanent disqualification has not yet become final.

A temporarily disqualified director shall, within sixty (60) business days from such disqualification, take the appropriate action to remedy or correct the disqualification. If he fails or refuses to do so for unjustified reasons, the disqualification shall become permanent.

E. Responsibilities, Duties, and Functions of the Board

1. General Responsibility

It is the Board’s responsibility to foster the long-term success of the Corporation, and to sustain its competitiveness and profitability in a manner consistent with its corporate objectives and the best interests of its stockholders and other stakeholders. Members of the Board shall likewise act on a fully informed basis, in good faith, and with due diligence and care.

The Board should formulate the Corporation’s vision, mission, strategic objectives, policies, and procedures that shall guide its activities, including the means to effectively monitor Management’s performance.

The Board must likewise oversee the development of and approve the Corporation’s business objectives and strategy and monitor their implementation in order to sustain the Corporation’s long-term viability and strength. The Board should formulate the Corporation’s vision, mission, strategic objectives, policies and procedures that shall guide its activities, including the means to effectively monitor Management’s performance.

The Board must likewise oversee the development of and approve the Corporation’s business objectives and strategy and monitor their implementation in order to sustain the Corporation’s long-term viability and strength.

2. Duties and Functions

To ensure a high standard of best practice for the Corporation and its stockholders and other stakeholders, the board should conduct itself with honesty and integrity in the performance of, among others, the following duties and functions:

(i) Implement a process for the selection of directors who can add value and contribute independent judgment to the formulation of sound corporate strategies and policies; appoint competent, professional, honest, and highly motivated management officers; adopt an effective succession planning program for Management.

(ii) Provide sound strategic policies and guidelines to the Corporation on major capital expenditures; establish programs that can sustain its long-term viability and strength; periodically evaluate and monitor the implementation of such policies and strategies, including the business plans, operating budgets, and Management’s overall performance.

(iii) Ensure the Corporation’s faithful compliance with all applicable laws, regulations, and best business practices.

(iv) Establish and maintain an investor relations program that will keep the stockholders informed of important developments in the Corporation. If feasible, the Corporation’s President or Chief Financial Officer shall exercise oversight responsibility over this program.

(v) Identify the Corporation’s stakeholders in the community in which the Corporation operates or are directly affected by its operations, and formulate a clear policy of accurate, timely, and effective communication with them.

(vi) Adopt a system of checks and balances within the Board. A regular review of the effectiveness of such system should be conducted to ensure the integrity of the decision-making and reporting processes at all times. There should be continuing review of the Corporation’s internal control system in order to maintain its adequacy and effectiveness.

(vii) Identify key risk areas and performance indicators and monitor these factors with due diligence to enable the Corporation to anticipate and prepare from possible threats to its operational and financial viability.

(viii) Formulate and implement policies and procedures that would ensure integrity and transparency of related party transactions (“RPTs”) between and among the Corporation and its joint ventures, subsidiaries, associates, affiliates, major stockholders, officers and directors, including their spouses, children, and dependent siblings and parents, and of interlocking director relationships by members of the Board.

(ix) Constitute an Audit Committee and such other committees it deems necessary to assist the Board in the performance if its duties and responsibilities.

(x) Establish and maintain an alternative dispute resolution system in the Corporation that can amicably settle conflicts or differences between the Corporation and its stockholders, and the Corporation and third parties, including regulatory authorities.

(xi) Meet at such times or frequency as may be needed. The minutes of such meetings should be duly recorded. Independent views during Board meetings should be encouraged and given due consideration.

(xii) Keep the activities and decisions of the Board within its authority under the Articles of Incorporation and By-Laws of the Corporation, and in accordance with existing laws and regulations.

(xiii) Appoint a Compliance Officer who shall have the rank of at least vice president or an equivalent position, with adequate stature and authority in the Corporation and who should not be a member of the Board of Directors.

(xiv) Be responsible for ensuring and adopting an effective succession planning program for directors, key officers, and management to ensure growth and a continued increase in shareholder value. This should include adopting a policy on the retirement age for directors and key officers as part of management succession and to promote dynamism in the Corporation.

(xv) Align the remuneration of key officers and Board members with the long-term interests of the Corporation. In doing so, it should formulate and adopt a policy specifying the relationship between remuneration and performance. Further, no director should participate in discussions or deliberations involving his own remuneration.

(xvi) Have overall responsibility in ensuring that there is a group-wide policy and system governing RPTs and other unusual or infrequently occurring transactions, particularly those which pass certain thresholds of materiality. The policy should include the appropriate review and approval of material or significant RPTs, which guarantee fairness and transparency of the transactions. The policy shall encompass all entities within the group, taking into account their size, structure, risk profile, and complexity of operations.

(xvii) Be primarily responsible for approving the selection and assessing the performance of Management led by the CEO, and control functions led by their respective heads (Chief Risk Officer, Chief Compliance Officer, and Chief Audit Executive).

(xviii) Establish an effective performance management framework that will ensure that Management, including the CEO, and personnel’s performance are at par with the standards set by the Board and Senior Management.

(xix) Oversee that an appropriate internal control system is in place, including setting up a mechanism for monitoring and managing potential conflicts of interest of Management, Board members, and shareholders. The Board should also approve the Internal Audit Charter.

(xx) Oversee that a sound enterprise risk management (“ERM”) framework is in place to effectively identify, monitor, assess, and manage key business risks. The risk management framework should guide the Board in identifying units/business lines and enterprise-level risk exposures, as well as the effectiveness of risk management strategies.

(xxi) Have a Board Charter that formalizes and clearly states its roles, responsibilities, and accountabilities in carrying out its fiduciary duties. The Board Charter should serve as a guide to the directors in the performance of their functions and should be publicly available and posted on the Corporation’s website.

3. Specific Duties and Responsibilities of a Director

A director’s office is one of trust and confidence. A director should act in the best interest of the Corporation, in a manner characterized by transparency, accountability, and fairness. He should also exercise leadership, prudence, and integrity in directing the Corporation towards sustained progress.

A director should observe the following norms of conduct:

(a) Conduct fair business transactions with the Corporation and ensure that his personal interests do not conflict with the interests of the Corporation.

The basic principle to be observed is that a director should not use his position to profit or gain some benefit or advantage for himself and/or his related interests. He should avoid situations that may compromise his impartiality. If an actual or potential conflict of interest may arise on the part of a director, he should fully and immediately disclose it and should not participate in the decision-making process. A director who has continuing material conflict of interest should seriously consider resigning from his position.

A conflict of interest shall be considered material if the director’s personal or business interest is antagonistic to that of the Corporation, or if the director stands to acquire or gain financial advantage at the expense of the Corporation.

Any contract, agreement, transaction, arrangement, or dealing of the Corporation with a director, officer, or any related party (each such transaction, a “Related Party Transaction”) shall be entered into by the Corporation on an “arm’s length basis,” and under such terms that inure to the benefit and best interest of the Corporation and its shareholders as a whole, considering relevant circumstances. All Related Party Transactions shall be reviewed and approved by the appropriate approving authority, as may be determined by the Board. Material Related Party Transactions or those which involve an amount or value equal to or greater than Twenty Million Pesos (Php20,000,000.00) in a given month shall be submitted for the approval of at least a majority of the Board.

If a Related Party Transaction involves a director or officer of the Corporation, or the Immediate Family Members of such director or officer, then in addition to the foregoing, such Related Party Transactions shall be subject to the quorum, voting, and other requirements of Sections 32 and 33 of the Corporation Code.

(b) Devote time and attention to properly and effectively perform his duties and responsibilities.

A director should devote sufficient time to familiarize himself with the Corporation’s business. He should be constantly aware of and knowledgeable with the Corporation’s operations to enable him to meaningfully contribute to the Board’s work. He should attend and actively participate in Board and committee meetings, review meeting materials, and, if called for, ask questions or seek explanation.

(c) Act judiciously.

Before deciding on any matter brought before the Board, a director should carefully evaluate the issues and, if necessary, make inquiries and request clarification.

(d) Exercise independent judgment

A director should view each problem or situation objectively. If a disagreement with other directors arises, he should carefully evaluate and explain his position. He should not be afraid to take an unpopular position. On the other hand, he should support plans and ideas that he thinks are beneficial to the Corporation.

(e) Have a working knowledge of the statutory and regulatory requirements that affect the Corporation, including its Articles of Incorporation and By-Laws, the rules and regulations of the SEC and, where applicable, the requirements of relevant regulatory agencies

A director should also keep abreast with industry developments and business trends in order to promote the Corporation’s competitiveness.

(f) Observe confidentiality

A director should keep secure and confidential all non-public information he may acquire or learn by reason of his position as director. He should not reveal confidential information to unauthorized persons without the authority of the Board.

4. Internal Control Responsibilities of the Board

The control environment of the Corporation consists of (1) the Board, which ensures that the Corporation is properly and effectively managed and supervised; (2) a Management that actively manages and operates the Corporation in a sound and prudent manner; (3) the organizational and procedural controls, supported by effective management information and risk management reporting systems; and (4) an independent audit mechanism to monitor the adequacy and effectiveness of the Corporation’s governance, operations, and information systems, including the reliability and integrity of financial and operational information, the effectiveness and efficiency of operations, the safeguarding of assets, and compliance with laws, rules, regulations, and contracts.

(i) The minimum internal control mechanisms for the performance of the Board’s oversight responsibility may include:

(a) Definition of the duties and responsibilities of the President, who is ultimately accountable for the Corporation’s organizational and operational controls;

(b) Selection of the person who possesses the ability, integrity, and expertise essential for the position of President;

(c) Evaluation of proposed senior management appointments;

(d) Selection and appointment of qualified and competent management officers; and

(e) Review of the Corporation’s human resource policies, conflict of interest situations, compensation program for employees, and management succession plan.

(ii) The scope and particulars of the systems of effective organizational and operational controls may be based on the nature and complexity of the business and the business culture; volume, size, and complexity of transactions; degree of risks involved; degree of centralization and delegation of authority; extent and effectiveness of information technology; and extent of regulatory compliance.

(iii) The Corporation may establish an internal audit system that can reasonably assure the Board, Management, and stockholders that its key organizational and operational controls are faithfully complied with. The Board may appoint an Internal Auditor to perform the audit function, and may require him to report to a level in the organization that allows the internal audit activity to fulfill its mandate. The Internal Auditor shall be guided by the International Standards on Professional Practice of Internal Auditing.

F. Board Meetings and Quorum Requirements

To show full commitment to the Corporation, the directors should devote the time and attention necessary to properly and effectively perform their duties and responsibilities, including sufficient time to be familiar with the Corporation’s business. The directors should attend and actively participate in all meetings of the Board, Committees, and shareholders in person or through tele-/videoconferencing conducted in accordance with the rules and regulations of the SEC, except when justifiable causes, such as, illness, death in the immediate family, and serious accidents, prevent them from doing so. In Board and Committee meetings, the directors should review meeting materials and if called for, ask the necessary questions or seek clarifications and explanations.

Independent directors should always attend Board meetings. Their absence, however, shall not affect the quorum requirement.

To monitor the directors’ compliance with the attendance requirements, the Corporation shall submit to the SEC, on or before January 30 of the following year, a sworn certification about the directors’ record of attendance in Board meetings. The certification may be submitted through SEC Form 17-C or in a separate filing.

The absence of a director in more than fifty percent (50%) of all regular and special meetings of the Board during his incumbency is a ground for disqualification in the succeeding election, unless the absence is due to illness, death in the immediate family, serious accident or other unforeseen or fortuitous events.

G. Remuneration of Directors and Officers

The levels of remuneration of the Corporation should be sufficient to be able to attract and retain the services of qualified and competent directors and officers. A portion of the remuneration of executive directors may be structured or be based on corporate and individual performance.

The Corporation may establish formal and transparent procedures for the development of a policy on executive remuneration or determination of remuneration levels for individual directors and officers depending on the particular needs of the Corporation. The Board should align the remuneration of key officers and Board members with the long-term interests of the Corporation. In doing so, it should formulate and adopt a policy specifying the relationship between remuneration and performance. Further, no director should participate in deciding on his remuneration.

Key considerations in determining proper compensation include the following: (i) the level of remuneration is commensurate to the responsibilities of the role; (ii) no director should participate in deciding on his remuneration; and (iii) remuneration pay-out schedules should be sensitive to risk outcomes over a multi-year horizon.

For employees in control functions (e.g., risk, compliance and internal audit), their remuneration shall be determined independently of any business line being overseen, and performance measures shall be based principally on the achievement of their objectives so as not to compromise their independence.

The Corporation’s annual reports and information and proxy statements shall include a clear, concise and understandable disclosure of all fixed and variable compensation of directors and management for the preceding year, including termination and remuneration provisions, consistent with the disclosure requirements under applicable laws and rules and regulations of the SEC.

To protect the funds of a Corporation, the SEC may, in exceptional cases, e.g., when the Corporation is under receivership or rehabilitation, regulate the payment of the compensation, allowances, fees and fringe benefits to its directors and officers.

E. Continuing Education and Training

Board members shall attend annual training and seminars on corporate governance.

The orientation program for first-time directors shall be for at least eight (8) hours, while the annual continuing training shall be for at least four (4) hours.

The orientation program shall cover SEC-mandated topics on corporate governance and an introduction to the Corporation’s business, Articles of Incorporation, and Code of Conduct.

The annual continuing training program shall involve courses on corporate governance matters relevant to the Corporation, including audit, internal controls, risk management, sustainability, and strategy.

F. Board Independence

The Board should endeavor to exercise an objective and independent judgment on all corporate affairs. The Board should ensure that its independent directors possess the necessary qualifications and none of the disqualifications for an independent director to hold the position.

1. Qualifications of an Independent Director

An Independent Director refers to a person who, ideally:

(i) Is not, or has not been a senior officer or employee of the Corporation, unless there has been a change in the controlling ownership of the Corporation;

(ii) Is not, and has not been, in the three (3) years immediately preceding the election, a director of the Corporation; a director, officer, employee, of the Corporation’s subsidiaries, associates, affiliates, or related companies; or a director, officer, or employee of the Corporation’s substantial shareholders and its related companies;

(iii) Has not been appointed in the Corporation, its subsidiaries, associates, affiliates, or related companies as Chairman “Emeritus,” “Ex-Officio” Directors/Officers, or Members of any Advisory Board, or otherwise appointed in a capacity to assist the Board in the performance of its duties and responsibilities within three (3) years immediately preceding his election;

(iv) Is not an owner of more than two percent (2%) of the outstanding shares of the Corporation, its subsidiaries, associates, affiliates, or related companies;

(v) Is not a relative of a director, officer, or substantial shareholder of the Corporation or any of its related companies or of any of its substantial shareholders. For this purpose, relatives include spouse, parent, child, brother, sister, and the spouse of such child, brother or sister;

(vi) Is not acting as a nominee or representative of any director of the Corporation or any of its related companies;

(vii) Is not a securities broker-dealer of listed companies and registered issuers of securities. “Securities broker-dealer” refers to any person holding any office of trust and responsibility in a broker-dealer firm, which includes, among others, a director, officer, principal stockholder, nominee of the firm to the Exchange, an associated person or salesman, and an authorized clerk of the broker or dealer;

(viii) Is not retained, either in his personal capacity or through a firm, as a professional adviser, auditor, consultant, agent, or counsel of the Corporation, any of its related companies or substantial shareholders, or is otherwise independent of Management and free from any business or other relationship within the three (3) years immediately preceding the date of his election;

(ix) Does not engage or has not engaged, whether by himself or with other persons or through a firm of which he is a partner, director, or substantial shareholder, in any transaction with the Corporation or any of its related companies or substantial shareholders, other than such transactions that are conducted at arm’s length and could not materially interfere with or influence the exercise of his independent judgment;

(x) Is not affiliated with any non-profit organization that receives significant funding from the Corporation or any of its related companies or substantial shareholders; and

(xi) Is not employed as an executive officer of another company where any of the Corporation’s executives serve as directors.

Related companies, as used in this article, refer to (i) the Corporation’s holding/parent company; (ii) its subsidiaries; and (iii) subsidiaries of its holding/parent company.

2. Term

The independent directors shall serve for a maximum cumulative term of nine (9) years, after which, the independent director shall be perpetually barred from re-election as such in the Corporation, but may continue to qualify for nomination and election as a non-independent director. In the instance that the Corporation would want to retain an independent director who has served for nine (9) years, the Board should provide meritorious justification/s and seek shareholders’ approval during the annual shareholders’ meeting.

The reckoning of the cumulative nine-year term is from 2012, in accordance with SEC Memorandum Circular No. 9, Series of 2011.

G. Conflict of Interest/ Related Party Transactions

1. Abstention in Case of Material Interest in a Transaction

A director with a material interest in any transaction affecting the Corporation should abstain from taking part in the deliberations for the same.

The abstention of a director from participating in a meeting when related party transactions, self-dealings, or any transactions or matters on which he has a material interest are taken up ensures that he has no influence over the outcome of the deliberations. This ensures that a director does not use his position to profit or gain some benefit or advantage for his himself and/or his related interests.

2. Related Party Transactions

Any contract, agreement, transaction, arrangement, or dealing of the Corporation with a director, officer, or any related party shall be entered into by the Corporation on an “arm’s length basis,” and under such terms that inure to the benefit and best interest of the Corporation and its shareholders as a whole, considering relevant circumstances. All Related Party Transactions shall be reviewed and approved by the appropriate approving authority, as may be determined by the Board. Material Related Party Transactions or those which involve an amount or value equal to or greater than Twenty Million Pesos (Php20,000,000.00) in a given month shall be submitted for the approval of at least a majority of the Board.

If a Related Party Transaction involves a director or officer of the Corporation, or the Immediate Family Members of such director or officer, then in addition to the foregoing, such Related Party Transactions shall be subject to the quorum, voting, and other requirements of Sections 32 and 33 of the Corporation Code.

H. Strengthening Board Ethics

Members of the Board are duty-bound to apply high ethical standards, taking into account the interests of all stakeholders.

The Board shall abide by the Code of Business Conduct and Ethics of the Company.

The Board shall ensure the proper and efficient implementation and monitoring of compliance with the Code of Business Conduct and Ethics and internal policies. The Board has the primary duty to make sure that the internal controls are in place to ensure the Corporation’s compliance with the Code of Business Conduct and Ethics and its internal policies and procedures. Hence, it needs to ensure the implementation of said internal controls to support, promote and guarantee compliance. This includes efficient communication channels, which aid and encourage employees, customers, suppliers, and creditors to raise concerns on potential unethical/unlawful behavior without fear of retribution.

 

CODES OF BUSINESS CONDUCT AND ETHICS


COMPLIANCE
All directors, officers and employees shall conduct business in accordance with all applicable Philippine laws and regulations.

All directors, officers and employees shall also adhere to all rules and standards contained in the Company’s written policies, rules and manuals.

All directors, officers and employees are also enjoined to align their decisions and actions with the Company’s core values of service, synergy, integrity, leadership, innovation, faith and excellence.

FAIR DEALING
All directors, officers and employees shall act in good faith and with integrity at all times. Directors, officers and employees shall deal fairly amongst themselves and with the Company’s customers, suppliers, partners, regulators and competitors.

CONFLICT OF INTEREST
No director, officer or employee should use his position to profit or gain some benefit or advantage for himself and/or his related interests, or to have an interest adverse to that of the Company. Directors, officers and employees should avoid situations that may compromise their impartiality or loyalty to the Company. If an actual or potential conflict of interest arises on the part of a director, officer or employee, this must be fully disclosed by the individual involved and by any others who are aware of this conflict.

SECURITIES TRADING AND MATERIAL NON-PUBLIC INFORMATION
Directors, officers and employees must maintain the confidentiality of material non-public information. Any director or employee in possession of material non-public information must not buy, sell or otherwise trade in SSI securities, until at least two (2) days after such material non-public information has been disclosed to the public.

Disclosure of material non-public information to the public shall be made through SSI’s designated senior officers.

ANTI-BRIBERY POLICY
Directors, officers and employees of the Company shall not offer, promise or give bribes, whether monetary or in kind, in order to obtain or facilitate favors or business for the Company. Also, directors, officers and employees shall not request or accept bribes, whether monetary or in kind, from any person or organization. All directors, officers and employees shall comply with all applicable anti-bribery laws and regulations.

GENDER EQUALITY
The Company upholds the principle of gender equality in the workplace and in all areas of its operations by ensuring that all persons have the same opportunities, resources, benefits, rights and respect, regardless of gender, ethnicity or religion.

WHISTLE BLOWER POLICY
An employee may discuss or disclose in writing any concern or potential violation of the Code of Business Conduct and Ethics or any concern or potential violation of the Company’s Rules and Regulations, or any potential illegal acts with the Company’s Compliance Officer and/or the Head of the Human Resources Department Complaints may be brought up with the Compliance Officer and/or the Human Resources Department through a face to face meeting, or via e-mail, or anonymously, via letter addressed to those Offices.

All information received shall be held in strict confidence and all reports will be investigated. Any violations will be dealt with in accordance with the Company’s Rules and Regulations.




 

COMPANY POLICIES


RELATED PARTY TRANSACTIONS POLICY
Any contract, agreement, transaction, arrangement, or dealing of the Corporation with a director, officer, or any related party (each such transaction, a “Related Party Transaction”) shall be entered into by the Corporation on an “arm’s length basis,” and under such terms that inure to the benefit and best interest of the Corporation and its shareholders as a whole, considering relevant circumstances. All Related Party Transactions shall be reviewed and approved by the appropriate approving authority, as may be determined by the Board. Material Related Party Transactions or those which involve an amount or value equal to or greater than Twenty Million Pesos (Php20,000,000.00) in a given month shall be submitted for the approval of at least a majority of the Board.

“Related party transactions” means a transfer of resources, services, or obligations between the Corporation and a Related Party, regardless of whether a price is charged. These also include outstanding transactions that are entered into with an unrelated party that subsequently becomes a Related Party.

HEALTH AND SAFETY POLICY
Download the SSI's Health and Safety Policy Here