IN ACCORDANCE WITH the power and authority of the Securities and Exchange Commission (SEC) to promote corporate governance and the protection of minority investors, through, among other things, the publication of rules and regulations consistent with best practice international organizations, the SEC has prepared the draft guidelines on the annual corporate governance report for public companies (PC) and registered issuers (RI) or the SEC – ACGR (For PC / RI) form, which was posted for public comment on June 25.
The objective of the draft guidelines is to facilitate the disclosure of compliance / non-compliance of CPs and IRs with the recommendations provided under the SEC Memorandum Circular 24, Series of 2019 (MC24, s. Of 2019), or the Corporate Governance Code for CPs and IRs.
A public company, within the meaning of MC24, art. of 2019, refers to a company with assets of at least 50 million pesos and having 200 or more shareholders holding at least 100 shares each of equity securities. Meanwhile, a registered issuer is a company that issues exclusive and / or non-exclusive shares / certificates; public equity securities that are not listed on a stock exchange; or debt securities to the public that must be registered with the SEC, whether publicly traded.
CPs and IRs will be required to submit their ACGR using the proposed SEC-ACGR form no later than May 30 while they qualify as such. For the period January to December 2021, the ACGR is due by May 30, 2022. These companies will be required to submit three copies of the completed form to the SEC main office or nearest extension office. At least one copy must be duly notarized and bear the original and manual signatures of the Chairman of the Board of Directors, the Chief Executive Officer or the President of the Company, all independent directors, the Chief Compliance Officer and the Corporate Secretary.
Regarding content, ACGR will cover all relevant information from January to December of the given year, regardless of the date of registration. However, companies can indicate that they are “newly registered” in the explanatory part of the ACGR for their first communication.
In addition to the ACGR, newly registered CPs and IRs must file their corporate governance manual with the SEC, in accordance with MC24, art. of 2019 and the SEC Memorandum Circular 19, Series of 2020, or the signatories of the manual on corporate governance and sanctions for failure to comply with the requirement.
However, please note that PCs and IRs listed on the Philippine Stock Exchange are excluded from the new guidelines. The commission asked publicly traded companies to submit their ACGR earlier through SEC Circular 15, 2017 series.
Once the new guidelines come into effect, CPs and IRs will no longer need to comply with Sections 15 and 16 of the SEC Memorandum Circular 3, Series of 2007 (MC3, s. Of 2007), or amendments to reporting requirements, for the period covered. January to December 2021.
Article 15 of MC3, art. 2007 requires the presentation of a certificate of compliance with the Corporate Governance Handbook for covered entities, including listed issuers, while Article 16 provides for the presentation of a certificate of attendance of directors at meetings of the Board of Directors for Covered Companies, including Listed Issuers.
We invite all interested parties to submit their comments, reactions and contributions on the draft guidelines by July 9, 2021 (Friday). Please send them to [email protected], with the subject “Draft Memorandum Circular on ACGR for PCs and RIs” using the template provided on the official SEC website – https://www.sec.gov.ph/notices/draft-memorandum-circular-on -annual-corporate -governance-report-for-public-companies-and-registered-issuers /.
Kelvin Lester K. Lee is Commissioner of the Securities and Exchange Commission (SEC). The views and opinions expressed here are hers. You can send your comments and questions to [email protected]