The biggest obstacle to raising corporate governance standards in the Philippines to a regional and global par is the failure of local listed companies to adapt to key regulations under the new corporate governance code, according to the country’s corporate regulator.
The new code, implemented at the start of 2017, comprises new regulations for listed firms in the Philippines which include enhanced responsibilities for the board of directors, improved risk management responsibilities, as well as advice on how to maintain board independence and to improve decision-making.
“(Adherence to the rules is) for sustainability, investor protection and national economic development, increased share value and, more importantly, lasting contribution that the company can make to stakeholders and shareholders to the country as a whole,” said Securities and Exchange Commission chairwoman Teresita J. Herbosa, during the Good Governance Advocates and Practitioners of the Philippines’ forum in Pasay City.
Currently, the corporate governance code works under the “comply or explain” approach, which combines voluntary compliance with mandatory disclosure. The regulator, along with analysts, argues that global corporate governance standards for listed companies must become mandatory, and to shift away from “explain”.