MANILA, Philippines - The Securities and Exchange Commission (SEC), is studying the coverage of its newly released blueprint on Philippine Corporate Governance to make it suitable for other corporations amid observations the new draft is focused on publicly listed companies (PLC).
“The blueprint is a discussion of the past and present state of corporate governance in the country. It will serve as a guide for future actions of SEC on how to promote corporate governance among PLCs as well as ordinary corporations,” SEC chairperson Teresita Herbosa told The STAR.
She said the coverage is still being finalized, depending on consultations with industry stakeholders.
“What will be the coverage, application, rules will depend on further discussions,” she said.
Corporate governance advocate Rex Drilon, adviser and trustee of the Institute of Corporate Directors (ICD) said there are only 256 PLCs as against 870,000 other corporations
“Assuming only 10 percent of the 870,000 are active and real operating corporations, we are still looking at roughly 90,000 corporations who might find it extremely difficult to comply with the rules under the blueprint,” Drilon said.
He said the SEC could stratify the rules to fit the size and complexity of the corporate operations, depending on the structure.
“For example, a basic or minimum set of rules can be mandated for all corporations. Then another set for PLCs, public companies, insurance companies and other banks. Another set for GOCCs (government owned and controlled corporations). Still another set for the next 5,000 corporations. Finally, a fifth set for the the rest of the SMEs (small and medium enterprises),” Drilon said.
Drilon said the SEC should also ensure proper enforcement.
“Our Achilles’ heel in the corporate governance environment is poor enforcement. There is very little mention of how the enforcement mechanisms can be dramatically improved from the unacceptable 18 percent, according to the Asian Corporate Governance Association, to somewhere more acceptable, say 50 percent,” Drilon said.
Drilon stressed the blueprint is a good step toward improving corporate governance in the country.
“The SEC draft corporate governance Blueprint is a very good attempt at coming up with a country strategy for corporate governance. SEC chair Herbosa should be commended for this effort. It puts us in the same status with some of the other Asean countries who have finalized their own blueprints earlier this year. It is a good start, maybe 80 to 85 percent complete. We need to help SEC bring this up to 95 to 100 percent,” he said.