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UPDATED MANUAL OF CORPORATE GOVERNANCE
The Board of Trustees and the Management of the ARMED FORCES AND POLICE
MUTUAL BENEFIT ASSOCIATION, INCORPORATED (AFPMBAI) hereby commit
themselves to the principles and best practices contained in this Manual, and acknowledge that
the same shall guide the attainment of its corporate goals.
This Manual shall institutionalize the principles of good corporate governance in the
AFPMBAI in order to enhance its corporate accountability and promote the interests of its
members, their families and dependents, and other stakeholders.
The AFPMBAI is a non-stock, non-profit Association of the men and women in uniform, the
personnel and officers of military and civil defense agencies, namely the Armed Forces of the
Philippines (AFP) including the Citizen Armed Force Geographical Unit (CAFGU), the
Philippine National Police (PNP), the Bureau of Jail Management and Penology (BJMP), the
Bureau of Fire protection (BFP), the Philippine Coast Guard (PCG), the AFP and PNP
Reservists, and other related agencies or organizations.
Ownership corresponds with membership to AFPMBAI. As such, each individual member is
deemed an owner of the Association. Corporate governance shall ensure the paramount
importance of the interest of the members by strict internal and external controls. In this regard,
the Management and the Board of Trustees shall ensure its independence from conflicting
interests.
The Board Committees shall pre-screen all matters for approval and information of the Board
of Trustees to guarantee an independent and objective compliance with corporate governance
policies.
The External Auditors shall be rotated on a regular basis at intervals of not more than five
years to ensure the impartiality and reliability of the audit process.
DEFINITON OF TERMS
Board of Trustees – refers to the collegial body that exercises the corporate powers of all
corporations formed under the Corporation Code. It conducts all businesses and controls or holds
properties of such corporations.
Corporate Governance - refers to the system by which corporations are directed and controlled.
The governance structure specifies the distribution of rights and responsibilities among different
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participants in the corporation (such as the board of directors, management, shareholders,
creditors, auditors, regulators, and other stakeholders) and specifies the rules and procedures for
making decisions in corporate affairs. Governance provides the structure through which the
Association sets and pursues its objectives, while reflecting the context of the social, regulatory
and market environment. Governance is a mechanism for monitoring the actions, policies and
decisions of the Association, and involves the alignment of interests among the stakeholders.
Independent Trustees – – refers to a person other than an officer or employee of the corporation,
its parent or subsidiaries, or any other individual having any relationship with the Association
which would interfere with the exercise of independent judgment in carrying out the
responsibilities of a Trustee. This means that apart from the trustees’ fees and shareholdings, he
should be independent of management and free from any business or other relationship, which
could materially interfere with the exercise of his independent judgment.
Management – refers to the body given the authority to implement the policies determined by
the Board in directing the course/business activity/ies of the Association.
Executive Trustee – refers to a trustee who is at the same time appointed to head a
department/unit within AFPMBAI, or AFPMBAI itself.
Non-Executive Trustee – refers to a Board member with non-executive functions.
Non-audit work – refers to other services offered by the external auditor to a corporation that are
not directly related and relevant to its statutory audit function. Examples include accounting,
payroll, bookkeeping, reconciliation, computer project management, data processing or
information technology outsourcing services, internal auditing, and services that may
compromise the independence and objectivity of the external audit.
Internal control – refers to the process effected by a company’s Board of Trustees, management
and other personnel, designed to provide reasonable assurance regarding the achievement of
objectives in the effectiveness and efficiency of operations, the reliability of financial reporting,
and compliance with applicable laws, regulations, and internal policies.
Internal control environment – refers to the framework under which internal controls are
developed, implemented, alone or in concert with other policies or procedures, to manage and
control a particular risk or business activity, or combination of risks or business activities, to
which the company is exposed.
Internal auditing – refers to an independent, objective assurance and consulting activity
designed to add value and improve an organization’s operations. It helps an organization
accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve
the effectiveness of risk management, control, and governance processes.
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Audit and Enterprise Risk Management Office – refers to the department, division, team of
consultants, or other practitioner(s) that provide independent, objective assurance and consulting
services designed to add value and improve AFPMBAI’s audit operations.
Chief Audit Executive – refers to the top position within the organization responsible for internal
audit activities. In a traditional internal audit activity, this would be the internal audit director. In
the case where internal audit activities are obtained from outside service providers, the chief
audit executive is the person responsible for overseeing the service contract and the overall
quality assurance of these activities, and follow-up of engagement results. The term also includes
such titles as general auditor, chief internal auditor, and inspector general.
Independence – refers to that environment which allows the person to carry out his/her work
freely and objectively.
Objectivity – refers to unbiased mental attitude that requires the person to carry out his work in
such a manner that he has an honest belief in his work product and that no significant quality
compromises are made. Objectivity requires the person not to subordinate his judgment to that of
others.
Standards for the Professional Practice of Internal Auditing (SPPIA) – refers to the criteria by
which the operations of an internal auditing department are evaluated and measured. They are
intended to represent the practice of internal auditing as it should be, provide a framework for
performing and promoting a broad range of value-added internal audit services and foster
improved organizational processes and operations.
BOARD OF TRUSTEES
Commitment to a Common Purpose for AFMPBAI
The Board of Trustees commits to serve and promote the best interest of AFPMBAI.
They shall owe their duty and responsibility to AFPMBAI and in the process promote the
long-term sustainability and success of AFPMBAI in a manner consistent with international
corporate governance best practices.
The Governance Style of the Board
The Board will govern with an emphasis on:
Outward vision rather than an internal preoccupation;
Strategic leadership more than administrative detail;
Clear distinction of board and chief executive roles;
Collective rather than individual decisions;
Future rather than past or present; and
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Proactivity rather than reactivity.
In view of the above, the Board commits to:
1. Deliberate in many voices, but govern in one.
2. Cultivate a sense of group responsibility.
The Board, not Management, will be responsible for excellence in governing. The Board
will be an initiator of policy, not merely a reactor to Management initiatives. The Board will
use the expertise of individual members to enhance the ability of the Board as a body, rather
than to substitute the individual judgments for the Board’s values.
3. Direct, control and inspire the organization through the careful establishment of broad
written policies reflecting the Board’s values and perspectives.
The Board’s major policy focus will be on the intended long-term impacts outside the
operating organization, not on the administrative or programmatic means of attaining those
effects.
4. Enforce upon it whatever discipline is needed to govern with excellence. Discipline will
apply to matters such as attendance, preparation for meetings, policymaking principles,
respect of roles, and ensuring the continuity of governance capability. Continual Board
development will include orientation of new members in the Board’s governance process
and periodic Board discussion of process improvement. The Board will allow no officer,
individual or committee of the Board to hinder or be an excuse for not fulfilling its
commitments.
5. Monitor and discuss the Board’s process and performance at each meeting.
Self-monitoring will include comparison of Board activity and discipline to policies in the
Governance Process.
Powers of the Board.
The Board of Trustee shall have the management and control of the affairs and properties of
AFPMBAI. In addition to the above general powers, the Board of Trustee shall have the
following specific powers:
1. To determine the AFPMBAI’s corporate purpose, its vision and mission and strategies to
carry out its objectives;
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2. To formulate and define the policies, guidelines and controls necessary to carry out its
corporate purposes in accordance with existing laws, rules and regulations, its Articles of
Incorporation and By-Laws, and best business practices;
3. To have overall supervision and control, including the power to hire and fire, promote and
discipline, and fix the remunerations and terms of employment, of the officers and personnel
of the AFPMBAI, and to delegate such powers to the management of AFPMBAI as may be
proper or necessary;
4. To authorize the investment of funds in securities, properties and businesses in accordance
with law;
5. To determine the organization of, and establish the governing rules and regulations for the
AFPMBAI;
6. To perform such acts and exercise such powers necessary to accomplish its corporate
purposes;
7. To adopt a system of internal checks and balances and to ensure that its actions comply with
all laws, rules and regulations, its Articles of Incorporation and By-Laws, and the business
practices;
8. To meet regularly to discharge the functions of the Board; and
9. To delegate any of its powers in accordance with law.
Composition of the Board of Trustees
AFPMBAI shall be managed and its corporate powers exercised by a Board of Trustees
which shall consist of fifteen (15) members:
1. The Chief of Staff, Armed Forces of the Philippines as Chairman of the Board;
2. The President of AFPMBAI;
3. The AFP Sergeant Major or his representative from among his deputies and the Sergeants
Major of any of the major services of the AFP;
4. One (1) representative from the Joint Staff of the Armed Forces of the Philippines;
5. One (1) representative each from every major branch of service of the Armed Forces of
the Philippines (PA, PN, PAF);
6. Two (2) representatives from the Philippine National Police (PNP);
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7. One (1) representative each from the Bureau of Fire Protection (BFP), Bureau of Jail
Management and Penology (BJMP) and Philippine Coast Guard (PCG); and
8. Three (3) Independent Trustees, one (1) of which shall be a retired member of the AFP.
All members must possess the necessary academic education and experience in business and
insurance administration or activities related to the business operations of the Association to
qualify as members of the Board.
The representatives from the Major Service Commands, the Joint Staff of the AFP, and the
PNP shall be recommended by their respective Commanding Generals/The Deputy Chief of
Staff/Chiefs of the PNP, BFP, BJMP and PCG, screened by the Nomination and Remuneration
Committee who will ensure that all fields of expertise are present in the Board, and approved by
the Board of Trustees or elected during the General Membership Meeting.
Independent Trustees are appointed/ elected to provide the Board an objective “compass” to
determine the best interests of AFPMBAI and all its stakeholders.
These Trustees should not be related to any group or Management. Furthermore, they
can/should not be instruments of one group for the purpose of pushing their own sectoral agenda.
Their independence must be perceived as such by stakeholders, the beneficiaries and the general
public.
The Independent Trustees shall meet periodically in an executive session (i.e. with no other
Trustee or Management present). Executive sessions of the independent Trustees shall be called
and chaired by the Chairman of the Governance Committee. Topics for discussion during these
executive sessions shall be determined by the Independent Trustees, but actions of the Board
generally should be taken separately during Board meetings.
Qualifications of a Trustee
Each trustee shall have the qualifications and none of the disqualifications herein provided:
Qualifications:
1. A bona fide member of AFPMBAI;
2. Possesses qualities of integrity and probity;
3. Possesses necessary skills and experience in terms of management capabilities, and
preferably in the field of insurance, legal, finance/ investment management, audit/
accounting or related disciplines;
4. Aware of his role and appreciates the crucial differences between management and
direction;
5. Possesses an understanding of the legal framework within which to operate;
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6. Possesses an understanding of the Board’s operation and how to ensure its effectiveness;
7. Should also possess, or endeavor to acquire, the following basic qualities/ competencies:
a. Strategic business direction
Being charged with determining AFPMBAI’s strategic direction, a Trustee should
know and understand the issues and processes involved in formulating, implementing and
controlling AFPMBAI’s corporate and business strategies.
All Trustees are expected to keep themselves up to date with the affairs of AFPMBAI
and the Board.
b. Basic principles of business management
A Trustee should have sound background knowledge of AFPMBAI’s operations,
asset and liability management, accounting, financial language and concepts, and relevant
financial tools and techniques.
c. Human resource direction
A trustee should be aware of the importance of employing the right people with the
right skills, encouraging their commitment, involvement and contribution, and aligning
human resource strategies with corporate goals.
d. Improving business performance
A trustee should understand the link between total quality techniques and business
results and what are the determining factors in improving the business’s performance.
e. Organizing for the Future
Charged with ensuring the company’s capabilities to meet the demands of the
corporate strategy, a trustee should know how modern companies should be organized
and structured in order to respond successfully to a changing environment.
8. For Board seats that are not positional in nature, upon appointment, preferably the
Trustee should have at least three (3) remaining years prior to retirement from the active
uniformed service; and
9. Within a month after appointment, or when the course is available, must undergo a
seminar on corporate governance principles, on relevant laws and charters applicable to
AFPMBAI and the Board, and on the various businesses of the company.
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Disqualifications:
1. Any person finally convicted judicially of an offense involving moral turpitude or
fraudulent acts or transgressions;
2. Any person finally found by the Commission or a court or other administrative body to
have willfully violated, or willfully aided, abetted, counseled, induced or procured the
violation of, any provision of the Corporation Code, or any other law administered by the
Commission or Bangko Sentral ng Pilipinas, or any rule, regulation or order of the
Commission or Bangko Sentral ng Pilipinas;
3. Any person judicially declared to be insolvent;
4. Any person finally found guilty by court or financial regulatory authority of acts,
violations or misconduct similar to any of the acts, violations or misconduct listed in the
foregoing paragraphs;
5. Any independent trustee who becomes an officer or employee of AFPMBAI; and
6. Conviction by final judgment of an offense punishable by imprisonment for a period
exceeding six (6) years, or a violation of the Corporation Code, committed within five (5)
years prior to the date of his election or appointment.
Any of the following shall be a ground for the temporary disqualification of a trustee:
1. Refusal to fully disclose the extent of his business interest as required under the
Securities Regulation Code and its Implementing Rules and Regulations. This
disqualification shall be in effect as long as his refusal persists;
2. Absence or non-participation for whatever reason for more than fifty percent (50%) of all
meetings, both regular and special, of the Board of Trustee during his incumbency, or any
twelve (12) month period during said incumbency;
3. Dismissal or termination from directorship in another corporation for cause. This
disqualification shall be in effect until he has cleared himself of any involvement in the
alleged irregularity;
4. Holding of the position of trustee, director or officer in more than four (4) other
corporations and/or in any corporation having the same business interests as AFPMBAI;
5. Being under preventive suspension by the Head of represented agencies;
6. Conviction that has not yet become final referred to in the grounds for the disqualification
of trustees.
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Term of Office
The CSAFP, the President of AFPMBAI and the AFP Sergeant Major shall have a term of
office as Trustees coterminous with their positions. If the AFP Sgt Major is represented as
provided herein, the said representative shall serve only the term of the AFP Sergeant Major
whom he represents.
The tenure of all the other members of the Board of Trustees shall be for a period of three (3)
years unless sooner terminated, reappointed or extended by the Chief of Staff, AFP as
Chairman of the Board, AFPMBAI, or retired from the active uniformed service, provided that
the representation under Paragraph (1) above shall be maintained.
In the case of the Independent Trustees, no fixed term would apply to them. Instead, their
term of office would be renewable every year, unless sooner terminated by the Chairman of the
Board, AFPMBAI.
Duties and Responsibilities of a Trustee
A trustee shall have the following duties and responsibilities:
1. To exercise his duty of care and loyalty to the AFPMBAI, to conduct fair business
transactions and ensure that personal or sectoral interest does not bias his decisions
during Board meetings;
2. To devote time and attention necessary to properly discharge his duties and
responsibilities. As much as possible, a Trustee shall be present during all Board
meetings and he shall participate productively in all discussions;
3. To act judiciously and to respect and uphold all decisions made by the Board as a
collegial body. No Trustee shall undermine a decision of the Board majority. A
mechanism for the airing of grievances or disagreement on certain Board decisions must
likewise be set in place;
4. To exercise independent judgment;
5. To have a working knowledge of the statutory and regulatory requirements affecting
AFPMBAI, including the contents of its Articles of Incorporation and By-Laws, the
requirements of the Commission, and where applicable, the requirements of other
regulatory agencies;
6. To observe confidentiality and prudence in the handling of sensitive company
information; and
7. To ensure the continuing soundness, effectiveness and adequacy of the AFPMBAI’s
control environment.
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Trustees’ Rights
1. In order to discharge their duties properly, Trustees have a right to identify the information
which they need and to receive it in a timely manner.
2. Individual Trustees have a right to obtain information necessary for them to discharge their
duties from executives employed by AFPMBAI; however, the Trustees agree that if a
question or request to an executive cannot be answered or be given without special attention
it will be put in writing and a copy sent to the Chairman and the President.
3. Outside specialist advice at AFPMBAI’s expense is advice to the Board as a whole and
should normally be arranged by the President at the request of the Board. In exceptional
circumstances, if one or more Trustees wish to obtain special advice the matter should be
raised with the Chairman who may exercise a discretion to arrange for the advice to be
obtained, or may refer the matter to the Board. If such advice is obtained it should be made
available to the Board as a whole.
4. For the responsibilities and accountability they carry, Trustees have a right to prudent
remuneration based on AFPMBAI’s remuneration policy and performance management
system.
Trustees’ Benefits
The members of the Board of Trustees shall not receive any compensation or remuneration
except for reasonable allowances, including travel and other expenses in attending to their
duties, and per diems for attendance during meetings.
1. Trustees who absent themselves during a particular Board meeting shall not be entitled to
any meeting allowance, unless their virtual presence is required to constitute a quorum. In
such cases, each Trustee is only allowed to be present virtually once per calendar year.
2. A Trustee shall not be entitled to a meeting allowance in the event he sends a
representative/proxy to attend the meeting on his behalf.
3. All provisions on the remuneration of Trustees are embodied in the Memorandum Circular
for such purpose, including all amendments thereto, and the Performance Management
System for the Board and its Trustees.
Performance Assessment of Trustees
All Trustees shall be subject to a Performance Management System (PMS), in compliance
with the requirements of the Securities and Exchange Commission on Board Assessment, and to
establish a performance feedback system. Below are the criteria for assessment of the Board, the
Board Committee Chairmen, the Trustees, the President and the Corporate Secretary:
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BOT and BOT Chairman Quantitative: Strategic Objectives 60%
Qualitative: 40%
Compliance to Board Protocol 10%
Fairness 10%
Accountability 10%
Transparency and Ethics 10%
Committee Chairmen Quantitative: 60%
Performance of Committee Roles
and Responsibilities
Qualitative: 40%
Meeting Facilitation 10%
Ethics and Professionalism 10%
Initiative 10%
Communication Role 10%
Trustees Quantitative: 40%
Attendance to BOT and
Committee Meetings
Qualitative: 60%
Meeting Participation 20%
Ethics and Professionalism 10%
Initiative 10%
Service Representation 10%
Communication Role 10%
President Quantitative: Strategic Objectives 60%
Qualitative: 40%
Board Resolution Implementation 20%
Relationship with BOT 10%
Transparency and Ethics 10%
Corporate Secretary Quantitative: 30%
Attendance to the BOT and
Committee Meetings where required
Qualitative: 70%
Meetings 30%
Ethics/Professionalism 10%
Legal Expertise 20%
Communication 10%
Performance Assessment shall be conducted at the end of each fiscal year, or by January of
the following year.
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Multiple Board Seats
The Trustees shall not hold the position of a trustee, director or officer in not more than four
(4) other corporations and/or in any corporation having the same business interests as
AFPMBAI.
Vacancies
Any vacancies occurring in the Board of Trustees other than by removal of the members or
by expiration of term may be filled by the vote of at least a majority of the remaining Trustees, if
still constituting a quorum, in a regular or special meeting called for that purpose.
BOARD MEETINGS
Board meetings shall be subject to the approved protocol (Annex A).
BOARD COMMITTEES
The Board of Trustees shall create committees as may be necessary, proper or convenient for
the interest of AFPMBAI with powers and authorities necessary to carry out their functions.
The effectiveness of the Board depends in part on the operation of these committees. The
Trustees understand that committee work can impose a considerable burden and agree to share it
as equitably as possible.
A Board committee member is first a Trustee. The AFPMBAI President cannot be a
Chairman or Vice Chairman of a committee, nor be a member of the Audit and Enterprise Risk
Management Committee. Each committee is supported administratively by a secretariat or
technical working group (TWG).
The following are the committees of the Board, which shall be exclusively composed of
Trustees. All Board Committees have their own committee Charters (see attached Annexes). The
Committees shall:
1. Function as part of and under the control of the Board, not Management;
2. Have no authority that does not come from the Board;
3. Have no authority or accountability that is also delegated to Management;
4. Not relieve the full Board of its ultimate accountability for everything;
5. Not have the authority to instruct Management;
6. Be charged to produce products (values added), not to engage in activities; and
7. Have authority to use money or support personnel only if that is granted by the Board.
Board Committee meetings shall be conducted according to the approved protocol (Annex
B). Additional committees may be created by the Board when necessary.
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Audit and Enterprise Risk Management Committee (Annex C)
The Audit and Enterprise Risk Management Committee assists the Board in fulfilling its
oversight responsibilities through review of:
• financial reporting process and system of internal control
• audit process
• process of monitoring compliance with exisiting laws and regulations and its own code of
business conduct
It ensures that a risk management system is established to minimize and control the
probability/impact of unfortunate events, or maximize the realization of opportunities.
Investment Committee (Annex D)
The Investment Committee evaluates and endorses to the Board proposed investments from
Management, ensuring that such proposals meet the requirements and guidelines it will establish
and enforce for sound investments of the Association, as embodied in the Investment Charter.
Governance Committee (Annex E)
The Governance Committee exercises oversight over AFPMBAI’s decision-making process
by setting guidelines for the Board of Trustees and its committees, executive management, and
AFPMBAI as a whole in accordance with corporate governance principles. It monitors the
performance of the Board as a collegial body and the individual Trustees, and formulates
continuing professional development programs for Trustees.
Social Services Program Committee (Annex F)
The Social Services Program Committee oversees the budget and implementation of the
AFPMBAI Social Services Program in the areas of education, health, livelihood, donations, and
corporate social responsibility programs.
Nomination and Remuneration Committee (Annex G)
The Nomination and Remuneration Committee is tasked with the ff:
• Evaluates nominees for Trustees and Committee members based on guidelines set by the
Governance Committee,
• Endorses nominees for election to the BOT and its committees,
• Monitors the participation and performance of Trustees, and
• Oversees the development and policy and implementation of Board and Committee
remuneration and rewards.
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CORPORATE OFFICERS
Unless otherwise provided by the Board of Trustees, the officers of the Association shall be a
Chairman, a Vice Chairman, a President, a Secretary, and a Treasurer. The Association shall also
have at the discretion of the Board of Trustees, such other executive officers as it shall deem
necessary. Officers, other than the Chairman and Vice Chairman of the Board, and the President,
need not be Trustees.
Chairman of the Board
The Chairman shall preside over the meetings of the Board. In his absence, the Vice
Chairman shall preside. In the absence of the Chairman and Vice Chairman, the Trustees present
may elect from among themselves an Acting Chairman for that particular meeting.
1. The Chairman shall exercise independent judgment, act objectively, and ensure (alongside
the President) that all relevant matters are included in the agenda and prioritized properly,
giving more weight to “performance duties” (i.e. strategy and policy) over “compliance
duties” (i.e. monitoring and accountability).
2. The Chairman shall ensure that all the Trustees are fully involved and informed of any
business issue on which a decision has to be taken.
3. The Chairman, with the assistance of the Corporate Secretary and the President, shall
determine the annual Board Plan/Agenda and other strategic issues.
4. The Chairman shall be responsible for the integrity of the Board process, such that decisions
made shall be explicit, timely, relevant to the AFPMBAI’s vision and strategy, and anchored
on policies, values, and ethical standards.
5. The Chairman should be guided by the following:
Wide experience, preferably at board level, in successful organizations;
Capacity for strategic thinking and ability to make quick and important decisions;
Working understanding of finance, accounts and reports systems;
Excellent leadership and communications skills;
Appropriate training in corporate governance and professional Trusteeship;
President
All Board authority delegated to Management is delegated through the President, so that all
authority and accountability of Management – as far as the Board is concerned – is considered to
be the authority and accountability of the President.
The Board will specify to the President AFPMBAI’s strategic directions and expects him to
achieve certain results based on a set of measures/milestones and targets that had been clearly
communicated and understood.
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As long as the President uses any reasonable interpretation of the Board’s directions, the
President is authorized to establish all further policies, make all decisions, take all actions,
establish all practices, and develop all initiatives.
Only decisions of the Board acting as a body are binding upon the President.
Decisions or instructions of individual Board members, officers, or committees are not
binding on the President except in rare circumstances when the Board has specifically authorized
such exercise of authority. Individual Board members must therefore refrain from participating
in the day-to-day management of AFPMBAI.
In the case of Board members or committees requesting information or assistance without
Board authorization, the President can refuse such requests that require – in the President’s
judgment – a material amount of staff time or funds, or are disruptive.
The President shall have general supervision, direction and control of the business and affairs
of the Association. He shall have the general powers and duties of Management usually vested in
the office of the President of the Association:
1. He shall call and preside over all meetings of the members (except the General Membership
Meeting, unless so required), and shall submit an annual report to the members and to the
Chairman;
2. He shall execute the resolutions of the Board, the Articles of Incorporation and By-Laws,
and the policies issued by regulatory bodies;
3. He shall exercise general supervision over all officers of the Association;
4. He shall execute on behalf of the Association all contracts and agreements which the
Association may enter into; and
5. He shall sign, endorse and deliver all checks, drafts, bills of exchange, promissory notes, and
orders of payment of sums of money, unless such acts are specifically designated to another
authorized signatory/ies as approved by the Board of Trustees.
Corporate Secretary
The Corporate Secretary shall be elected by the Board. He shall be a resident of the
Philippines, a member of the Bar, and may or may not be a member of the Association. He shall
be the primary executive that shall administer the affairs of the Board of Trustees, and he shall
have the following duties and powers:
1. Working closely with the Board Chairman or Lead Trustee, he shall help ensure that the
Board functions effectively by providing the entire Board and individual Trustees with
detailed guidance as to the nature and extent of their duties and responsibilities, and how
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such duties and responsibilities should be properly discharged in the best interest of the
AFPMBAI and its stakeholders;
2. He shall facilitate the induction of new Trustees;
3. He shall assist the Chairman and the President in determining the annual Board Plan/Agenda
and other strategic issues;
4. He shall be responsible for reporting on and noting any inconsistencies of Board actions;
5. He shall be responsible for the interpretation of all Board decisions/resolutions;
6. He shall be responsible for the integrity of Board documents;
7. He shall keep, or cause to be kept, a book of minutes of the principal office, of all meetings
of Trustees and members with the time and place of such meetings, whether regular or
special, and if special, how authorized, the notice given thereto, the name of those present or
represented at member’s meetings, and the proceeding thereof;
8. He shall keep or cause to be kept at the principal office, or at the Association’s Chapter or
Branch Office, a member’s register, or a duplicate member’s register, showing the names
and dates of certificates issued to them and such other pertinent information as may be
required by law;
9. He shall give, or cause to be given, notice of all the meetings of the members, and of the
Board, required by law or by the Articles of Incorporation and By-Laws; and shall certify all
minutes, records and proceedings of the Board, and of the members;
10. He shall keep the seal of the Association in safe custody, turn-over to its successor all
records in his custody;
11. He shall exercise such power and perform such duties as may be prescribed by the Board of
Trustees or by the Insurance Commission, the Securities and Exchange Commission, and
other regulatory bodies, including these By-Laws and this Governance Manual;
12. He shall submit to the Commission, at the end of every fiscal year, an annual certification as
to the attendance of the Trustees during Board meetings.
Treasurer
The Treasurer, duly elected by the Board of Trustees, shall have the following powers and
duties:
1. He shall have the custody of, and be responsible for, all the funds, money and other
securities of the Association;
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2. He shall keep and maintain, or cause to be kept and maintained, adequate and correct
accounts of the properties and business transactions of the Association, including accounts
of the assets, liabilities, receipts, disbursements, gains, losses, reserves and surplus;
3. He shall deposit all moneys, funds, bonds, securities, and other valuables in the name and to
the credit of the Association with such banks or other depositories as may be designated by
the Board of Trustees;
4. He shall receive and issue receipts for all moneys paid to the Association and disburse funds
as may be authorized;
5. He shall render an annual statement showing the financial condition of the Association on
the 31st day of December each year and shall render an account of his transactions as
Treasurer and of the financial condition of the Association at time, as may be deemed
necessary; and
6. He shall put up a bond as may be required by the Board of Trustees; turn-over all records
and properties under his custody to his successor; exercise such other powers and perform
such other duties may be prescribed by the Board of Trustees.
INTERNAL AUDITOR
The Association shall have in place an independent internal audit function which shall be
performed by an Internal Auditor or a group of Internal Auditors, through which its Board,
senior management, and members shall be provided with reasonable assurance that its key
organizational and procedural controls are effective, appropriate, and complied with.
The Internal Auditor shall report to the Audit and Enterprise Risk Management Committee.
The minimum internal control mechanism for management’s operational responsibility shall
center on the President, being ultimately accountable for the Association’s organizational and
procedural controls.
The scope and particulars of a system of effective organizational and procedural controls
shall be based on the following factors:
1. The nature and complexity of business and business culture;
2. The volume, size and complexity of transactions;
3. The degree of risk;
4. The degree of centralization and delegation of authority;
5. The extent and effectiveness of information technology; and
6. The extent of regulatory compliance.
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EXTERNAL AUDITOR
An external auditor shall enable an environment of good corporate governance as reflected in
the financial records and reports of the company. An external auditor shall be selected and
appointed upon recommendation of the Audit and Enterprise Risk Management Committee.
The reason/s for the resignation, dismissed or cessation from service and the date thereof of
an external auditor shall be reported in the company’s annual and current reports. Said report
shall include a discussion of any disagreement with said former external auditor on any matter of
accounting principles or practices, financial statement disclosure or auditing scope or procedure.
The external auditor of the company shall not at the same time provide the services of an
internal auditor to the same client. The Association shall ensure that other non-audit work shall
not be in conflict with the functions of the external auditor.
The Association’s external auditor shall be changed no longer than every five (5) years. If an
external auditor believes that the statements made in the company’s annual report, information
statement or proxy statement filed during his engagement is incorrect or incomplete, he shall
present his views in said reports.
MANAGEMENT ACCOUNTABILITY
To insure adherence to corporate principles and best practices, a Compliance Officer shall be
designated by the Board of Trustees. He shall have direct reporting responsibilities to the
Chairman of the Board and shall perform the following duties:
1. Monitor compliance with the provisions and requirements of this Manual and the other
requirements of regulating agencies such as the Securities and Exchange Commission, the
Insurance Commission, the Bureau of Internal Revenue, et.al;
2. Appear before these regulating agencies upon summon on matters that need to be clarified by
the said agencies;
3. Determine violations of this Manual and other regulations and recommend penalty for
violation thereof for review and approval of the Board;
4. Issue a certification every January 30th
of the year on the extent of AFPMBAI’s compliance
with this Manual for the completed year, explaining the reasons of the latter’s deviation from
the same; and
5. Identify, monitor and control compliance risks.
The appointment of the Compliance Officer shall be immediately disclosed to the Securities
and Exchange Commission. All correspondence relative to his functions as such shall be
addressed to said Officer.
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FINANCIAL REPORTING
1. The reports or disclosures required under this Manual shall be prepared and submitted to the
Commission by the responsible Committee or officer through the Association’s Compliance
Officer.
2. All materials information, i.e., anything that could potentially affect net worth, shall be
publicly disclosed. Such information shall include earnings results, acquisition or disposal of
assets, board changes, related party transactions and changes to ownership.
3. Other information that shall always be disclosed includes remuneration of all trustees and
senior management corporate strategy, and off balance sheet transactions.
4. All disclosed information shall be released via company announcements as well as through
the annual report.
5. The Board shall commit at all times to fully disclose material information dealings. It shall
cause the filing of all required information for the interest of the stakeholders.
PUBLIC ACCOUNTABILITY
1. This manual shall be available for inspection by any member of the Association at reasonable
hours on business days.
2. All trustees, executives, division and officer heads are tasked to ensure the thorough
dissemination of this Manual to all employees and related third parties, and to likewise enjoin
compliance in the process.
3. An adequate number of printed copies of this Manual must be reproduced under the
supervision of the Board Relations Office, with a minimum of at least one (1) hard copy of
the Manual per division/office.
RESPONSIBILITY FOR GOOD GOVERNANCE
Good governance shall be the main responsibility of the Board of Trustees and its
Committees:
1. Each Committee shall report regularly to the Board of Trustees.
2. The Compliance Officer shall establish an evaluation system to be conducted thereon to
determine and measure compliance with this Governance Manual. Any violation thereof shall
subject the responsible officer or employee to an investigation to determine his culpability
for possible removal as Trustee or any sanction against him.
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3. The establishment of such evaluation system, including the features thereof, shall be
disclosed in the company’s annual report or in such form of report that is applicable to the
Association. The adoption of such evaluation system must be covered by a Board resolution.
4. This Manual shall be subject to annual review every March unless the same frequency is
amended by the Board.
5. All business processes and practices being performed within any Group, Division or business
unit that are not consistent with any portion of this manual shall be revoked unless upgraded
to the compliant extent.
IMPLEMENTATION AND ENFORCEMENT
1. To strictly observe and implement the provisions of the Manual, after notice and hearing, any
violation of the provisions of the Manual by any member of the Board of Trustees shall be
sufficient cause for removal from trusteeship.
2. The Compliance Officer shall be responsible for determining any violation hereof and subject
to the requirements of due process, shall recommend to the Chairman of the Board the
investigation thereof and if warranted, the termination of the concerned trustee subject to
review and approval of the Board.
3. All other violations by the officers and staff of AFPMBAI shall be dealt with in accordance
with the AFPMBAI’s Employee Code of Conduct.
GEN GREGORIO PIO P CATAPANG JR AFP
Chief of Staff, AFP and
Chairman of the Board, AFPMBAI
References:
1. Board Resolution No 42, Series of 2014
2. AFPMBAI Manual of Corporate Governance dated May 2011
3. Approved Board Protocol
4. Approved Board Committee Charters
5. Approved Protocol for Board Meetings
6. Approved Protocol for Board Committee Meetings
7. Articles of Incorporation and By-Laws, and its proposed amendments