SEC fines four inactive listed firms

Keeping a tight lid over erring entities, the Securities and Exchange Commission has fined four inactive listed corporations for their failure to submit their own corporate governance manuals.

The companies were meted a penalty of P100,000 each for non-submission of their manuals on corporate governance.

The SEC official said even if these four paid the assessed penalty, they would still have to file with the Commission their own Code of Corporate Governance in compliance with the SEC directive.

The adoption of a Code of Corporate Governance was required by the SEC of all listed corporations, brokerage houses, investment houses, pre-need companies, mutual fund firms and other companies with a secondary license from the Commission.

Bent on improving the quality of governance in the corporate sector, the SEC will monitor the compliance by listed companies of commitments they made in their corporate governance manuals.

SEC said the mere submission by listed corporations of their respective corporate governance manuals does not necessarily mean that they already adhere to sound business principles.

The submission of the manual should serve as a reminder to all listed firms to observe the principles of good corporate governance, the corporate watchdog said.

The code is intended to provide guidance to corporate directors so that they can carry out their rules and responsibilities effectively and in accordance with the highest professional standards.

Under the SEC’s model manual, listed firms were required to install a process of selection of competent directors. As annual assessment should be made on the performance of the board’s effectiveness as a whole and that of the individual directors, including the chief executive officer.

Listed firms were, also asked to put in place an internal system, including checks and balances, which will apply in the first instance to the board, where power and authority are properly distributed and the process is free and open with sufficient and meaningful participation by independent outside directors.

They were also required to set up an audit committee, composed mainly of independent, outside directors who should be free to hire independent advisers when necessary.

The SEC said directors of listed corporations must conduct fair business transactions and ensure that personal interest does not bias board decisions. They should not use their position to make profit or acquire advantage for themselves. They must act honestly and in good faith and in the best interests of the company and of its stockholders.

Corporate governance manuals are aimed at increasing transparency and accountability in company operations and strengthening minority shareholder rights.