Philippines - Report on the Observance of Standards and Codes (ROSC) : corporate governance country assessment

REPORT ON THE OBSERVANCE OF STANDARDS AND CODES CORPORATE GOVERNANCE COUNTRY ASSESSMENT REPUBLIC OF THE PHILIPPINES September 2001 This Corporate Governance Assessment of the Philippines has been completed as part of the joint World Bank-IMF program of Reports on the Observance of Standards and Codes (ROSC), which are designed to strengthen the international financial architecture. This ROSC is based upon a template structured around the OECD Principles of Corporate Governance completed by a consultant, and a team of specialists, based upon a review of relevant law and regulation, and interviews with leading agencies in the Philippines. These include the Department of Finance, Bangko Sentral ng Pilipinas, , Institute of Corporate Directors of the Philippines, Capital Markets Development Council, the Philippines Stock Exchange, Securities and Exchange Commission, the Bankers' Association of the Philippines and a range of private sector groups. The assessment was conducted in the first half of 2001 by Dr. Cesar Saldana, in collaboration with the World Bank's East Asia and Pacific private sector development unit (EASPS) and the World Bank's central corporate governance unit, in the Private Sector Advisory Services department. This study was financed in part by the Asia-Europe Meeting (ASEM) Trust Fund 2.  REPORT ON THE OBSERVANCE OF STANDARDS AND CODES Corporate Governance Assessment Republic of The Philippines Contents I. EXECUTIVE SUMMARY II. DESCRIPTION OF PRACTICE A Capital Market Overview A1 Capital market structure A2 Ownership structure A3 Legal, regulatory framework and professional/best practice bodies A4 Registration and listing requirements B Shareholder Protections B1 Shareholder rights B2 Shareholder meetings B3 Disclosures on corporate ownership B4 Market for corporate control B5 Insider trading and self-dealing B6 Equitable treatment and statutory remedies C The Role of Stakeholders in Corporate Governance C1 Respect of legal rights C2 Disclosure requirements and mechanism for redress of stakeholders' rights C3 Performance-enhancing mechanisms for stakeholder participation D Financial and Non-Financial Disclosure D1 Disclosure of material information D2 Domestic and international accounting standards D3 External audit D4 Professional institutions and audit/accounting standards D5 Public access to disclosure through regulators E The Governing Body E1 Structure and legal duties E2 Nomination E3 Key functions E4 Director liability and disclosures relating to directors III. SUMMARY NOTE ON POLICY RECOMMENDATIONS Table 1: Summary Fact Sheet Table 2: OECD Principles