Corporate Governance Flashcards
(30 cards)
What is corporate governance?
The framework of rules, systems, and processes in a corporation that governs the performance by the Board of Directors and Management of their respective duties and responsibilities to stockholders and other stakeholders.
What are the principles that should be promoted in interpreting the Revised Code of Corporate Governance (RCCG)?
Transparency, accountability, responsibility, fairness
What is the role of the Board of Directors?
Primarily responsible for the governance of the corporation, sets policies, provides an independent check on management.
What are the general responsibilities of the Board of Directors?
Foster long-term success, sustain competitiveness and profitability, formulate vision, mission, strategic objectives, policies, and procedures.
What is the composition of the Board of Directors?
At least 5 but not more than 15 members, at least 2 independent directors or 20% of the board (whichever is lesser, but not less than 2).
What factors should be considered in determining the board seat limit for a director?
Capacity to perform duties diligently and efficiently, potential conflicts of interest from concurrent directorships.
What are the qualifications for a Board of Director?
College education or equivalent, practical understanding of the business, membership in relevant organizations, previous business experience.
What are the grounds for permanent disqualification of a director?
Conviction by final judgment of crimes involving securities, fraudulent acts like estafa, embezzlement, theft, counterfeiting.
What are the grounds for temporary disqualification of a director?
Pending final judgment on permanent disqualification grounds, refusal to comply with disclosure requirements, excessive absence from meetings, dismissal for cause, excessive beneficial ownership.
Is it recommended for the Chairperson and CEO to be the same person?
No, it is not recommended, but it is possible with proper checks and balances.
What are the duties and responsibilities of the Chairperson?
Ensure board meetings are held, supervise agenda preparation, maintain communication between the Board and Management.
What are the duties and responsibilities of the CEO?
Set and execute strategy, report to the Board, lead the executive team, oversee operations, allocate capital, represent the business, build work culture, monitor performance.
Can the President and Treasurer or President and Secretary be the same person?
No.
What is an independent director?
A person independent of management and free from any relationship that could interfere with their independent judgment.
What happens if an independent director’s position becomes vacant?
Filled by a majority vote of remaining directors if there’s a quorum, otherwise by stockholders in a meeting.
What is internal audit?
An independent assurance activity to add value and improve operations by evaluating risk management, control, and governance processes.
What is internal control?
A system established by the Board and Management to achieve objectives, ensure efficient operations, reliable financial reporting, and compliance with laws.
What are the minimum internal control mechanisms for the Board’s oversight responsibility?
Define CEO duties, select a competent CEO, evaluate senior management appointments, appoint qualified officers, review HR policies, conflict of interest, compensation, and succession plans.
What is the frequency of regular board meetings?
Monthly, unless the by-laws provide otherwise.
How should board meetings be attended?
In person or via tele/video conferencing.
What should the levels of remuneration for directors and officers be?
Sufficient to attract and retain qualified and competent individuals.
Who determines the remuneration of the Board of Directors?
The Remuneration/Compensation Committee.
How is board assessment conducted?
Through self-rating, independent third party, or other means.
What are the qualifications for a Corporate Secretary?
Resident and citizen of the Philippines, specific duties related to record-keeping, loyalty, fairness, and legal awareness.
