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Corporate governance in the Philippines refers to the system of rules, practices, and processes by which corporations are directed and controlled. It establishes a framework that defines the relationship between the company's management, its board of directors, shareholders, and other stakeholders. The main objective of corporate governance is to ensure accountability, fairness, and transparency in a company’s relationship with all its stakeholders. In the Philippines, corporate governance is influenced by both local laws and standards set by regulatory agencies to boost investor confidence and sustainable growth.
Corporate governance can become complex, especially for business owners, company directors, shareholders, and executives. You may need a lawyer in circumstances such as:
A legal expert ensures your company adheres to best practices, avoids costly penalties, and resolves issues efficiently.
The Philippine legal framework governing corporate governance is primarily defined by:
Companies may also be subject to sector-specific regulations, such as those for banks, insurance firms, or publicly-listed corporations. Regular updates and reforms make legal guidance essential for proper compliance.
Corporate governance aims to ensure that companies are managed in a transparent, accountable, and fair manner. It seeks to protect the interests of shareholders and other stakeholders, and to uphold the integrity of corporate operations.
All registered corporations must comply with the Revised Corporation Code. Publicly listed companies, banks, and certain regulated entities are subject to stricter corporate governance standards set by the SEC and other regulators.
Stakeholders include not only shareholders, but also employees, suppliers, creditors, customers, and the community where the company operates.
Directors have fiduciary duties which include acting in the best interest of the corporation, exercising due diligence and skill, avoiding conflicts of interest, and ensuring compliance with laws and ethical standards.
The SEC is the lead regulatory agency overseeing corporate governance in the Philippines. It issues regulations, monitors compliance, and enforces penalties for violations.
While only publicly listed companies are strictly required to publish a corporate governance manual, private corporations are encouraged to adopt similar policies to improve internal controls and stakeholder confidence.
Yes. Shareholders representing at least two-thirds of the outstanding capital stock may remove a director or trustee during a regular or special meeting called for that purpose, following due process and procedures set in the Corporation Code and company bylaws.
Independent directors are members of the board who do not have any material relationship with the company. Publicly listed companies and certain regulated entities are required to have independent directors, usually constituting at least 20 percent of the board.
Directors and officers must disclose any conflicts of interest and refrain from participating in decision-making where personal interests are involved. Violations can result in civil or criminal liability.
Penalties can include fines, suspension or revocation of business licenses, and potential criminal liability for serious violations such as fraud or misrepresentation.
For more information and guidance, consider consulting the following bodies and resources:
If you believe you need legal assistance in corporate governance, consider the following actions:
Seeking professional help early can help prevent problems, ensure compliance, and support your company’s long-term success.
