With the drive toward ASEAN economic integration in 2015, publicly listed companies in the Philippines are aligning their corporate governance with international best practices. The ASEAN Corporate Governance Scorecard gauges progress in this area and has become a valuable tool for international investors.
The ASEAN Capital Markets Forum developed the scorecard to help promote an integrated capital market in parallel with efforts to create an ASEAN economic community in 2015. The scorecard assesses corporate governance practices of publicly listed companies in six participating ASEAN member countries based on a methodology benchmarked against OECD principles.
In addition to serving as a guide for reform, the areas of strength and weakness highlighted in the scorecard assist investors in conducting due diligence and structuring investments.
Report on the Philippines
In the Philippines, the Institute of Corporate Directors assessed over 200 publicly listed companies, of which the top 50 were also reviewed by governance experts from other ASEAN countries. The latest scorecard showed improvement among these companies as a group from 2012 to 2013, and highlighted key areas for further improvement:
- Greater number and enhanced role of independent directors
- Independent directors’ review of material related party transactions
- Term limits for independent directors
- Annual assessments of internal controls and risk management systems
- Greater opportunity for shareholders to participate in annual shareholders’ meetings
- Enhanced disclosure in annual reports
Many Philippine companies have taken note of the scorecard rankings as a means of differentiating among publicly listed companies in the Philippines and in the ASEAN region generally. The market should benefit from this trend as these companies promote themselves as an asset class.