The Company has the following committees:
- Executive Committee
- Audit and Compliance Committee
- Governance, Nomination and Compensation Committee
Board and Committee Members
|Tan Kuang Liang
Kang Siew Fong
Maria Melva E. Valdez
Stefan Tong Wai Mun
|Audit and Compliance Committee
|Ramon J. Abejuela (Lead Independent Director)
|Celso P. Vivas (Independent Director)
Leonardo R. Arguelles, Jr. (Independent Director)
Stefan Tong Wai Mun
|Governance, Nomination and Compensation Committee
|Celso P. Vivas (Independent Director)
Ramon J. Abejuela (Lead Independent Director)
Leonardo R. Arguelles, Jr. (Independent Director)
|Compliance Officer - Maria Melva E. Valdez
Complementary to Law and Articles
The Board Charter (the “Charter”) governs the relationship between the Board Committees and the Board of Directors (the “Board”) as provided in the charters of the Committees which were approved and adopted by the Board. The Charter is intended to complement or supplement the Revised Corporation Code of the Philippines, the Corporation’s Articles of Incorporation and By-laws, issuances of the Securities and Exchange Commission (SEC), Philippine Stock Exchange, Inc. (PSE) and other applicable laws, rules and regulations.
SECTION 1: BOARD COMPOSITION
- Number of Directors – The Corporation’s Board is composed of eight (8) directors, three (3) of whom shall be Independent Directors, who are elected by the stockholders.
- Positions - The membership of the Board may be a combination of executive and non-executive directors (which include independent directors). The non-executive directors should possess such qualifications and stature that would enable them to effectively participate in the deliberations of the Board.
- Committees - The Board shall constitute the proper committees to assist it in good corporate governance. Pursuant to the Corporation’s New Manual on Corporate Governance, the Board must have the following committees: (a) Executive Committee, (b) Audit and Compliance Committee (ACC), and (c) Governance, Nomination and Compensation Committee (GNCC).
- Board Profile – The Board, in consultation with the GNCC, shall be responsible to review the profile of its size and composition, considering the nature of its business and subsidiaries, and the desired expertise and background of the board members.
- Independence – The Board shall have at least three (3) independent directors or such number as to constitute at least one-third (1/3) of the members of the Board, whichever is higher.
For this purpose, an "independent director" shall mean a person who is independent of management and the controlling shareholder, and is free from any business or other relationship which could, or could reasonably be perceived to, materially interfere with his exercise of independent judgment in carrying out his responsibilities as a director.
SECTION 2: BOARD MEETINGS
- Regular Meetings - Regular meetings of the Board of Directors shall be held once every quarter on such dates and at such times and places as the Chairman of the Board, or in his absence, the President, or upon the request of a majority of the directors, and shall be held at such places as may be designated in the notice.
The Corporate Secretary shall schedule all regular board and committee meetings at the start of the financial year.
- Special Meetings - Special meetings of the Board of Directors may be called by the Chairman of the Board, the President, or a majority of the Board of Directors of the Corporation.
- Board Attendance - Each director must attend at least 50% of all the board meetings held during the year.
- Organizational Meetings -The Board of Directors shall meet for the purpose of organization, election of officers and the transaction of other business, as soon as practicable after each annual election of directors or on the same day, and if practical at the same place at which regular meetings of the stockholders are held.
- Notice of Meetings – Notice of either regular or special meetings shall be sent to each director at least five (5) business days before the date of meeting. The notice of meeting shall include the time and place of the meeting and the agenda subjects to be discussed. Each Director is free to raise at any Board meeting subjects that are not on the agenda for that meeting. Subject to any applicable notice requirements, Directors having items to suggest for inclusion on the agenda for future Board meetings should advise the Chairman well in advance of such item.
- Quorum - A quorum at any meeting of the directors shall consist of a majority of the number of directors fixed in the Articles of Incorporation, provided, however that an independent director shall always be in attendance. However, the absence of an independent director shall not affect the quorum requirements if he is duly notified of the meeting but deliberately and without justifiable cause, fails to attend the meeting. Resolutions of the Board of Directors shall be decided upon by at least a majority of the members of the board.
- Conduct of the Meetings
- Board of Directors - Meetings of the Board of Directors shall be presided over by the Chairman of the Board, or in his absence the Vice-Chairman of the Board, or in his absence, the President, or if none of the foregoing is in office and present and acting, by any other director chosen by the Board. The Corporate Secretary, or in his absence, the Assistant Secretary, shall act as secretary of every meeting, but if neither the Secretary nor an Assistant Secretary is present, the Chairman of the meeting shall appoint a secretary for the meeting.
- Board Committees - Members of the Board Committees should attend committee meetings at least twice a year, except for the ACC which should meet at least four times (4) times every year.
- Board Meeting Materials – The board of directors must be provided meeting materials at least five (5) business days in advance of the board meeting.
- Executive Sessions – The independent and non-executive directors must meet separately at least once during the year without any executives present.
- Minutes of the Meetings – Minutes of the meeting shall be taken and recorded by the Corporate Secretary and signed by the Chairman of the Board or the person who were appointed to take notes during the meeting.
- Attendance in Board Meeting - The members of the Board should attend its regular and special meetings in person or through teleconferencing conducted in accordance with the rules and regulations of the Commission.
Independent directors should always attend board meetings. Unless otherwise provided in the by-laws, their absence shall not affect the quorum requirement. However, the Board may, to promote transparency, require the presence of at least one independent director in all its meetings.
The Chairman, President or Committee Chairpersons may from time to time invite corporate officers, other employees and advisors to attend Board or committee meetings whenever deemed appropriate.
Directors are encouraged to attend all annual meetings of shareholders.
SECTION 3: BOARD DUTIES AND RESPONSIBILITIES
- Duties and Responsibilities of the Board – The Board of Directors is responsible to foster the long-term success of the Corporation and secure its sustained competitiveness in a manner consistent with its fiduciary responsibility, which it shall exercise in the best interest of the Corporation, the stockholders and other stakeholders.
To ensure a high standard of best practice for the Corporation, its stockholders and stakeholders, the Board should conduct itself with honesty and integrity in the performance of, among others, the following duties and responsibilities, aside from such powers prescribed in the SEC Code of Corporate Governance, the Corporation’s New Manual on Corporate Governance, By-Laws and other applicable laws:
- Formulate the corporation’s vision, mission, strategic objectives, policies and procedures that shall guide its activities, including the means to effectively monitor Management’s performance.
- Review of the mission and vision statement of the Corporation at least once a year or whenever deemed necessary.
- Review, monitor and oversee the implementation of the corporate strategy at least once a year.
- Adopt, implement and monitor compliance with the Company’s Code of Conduct.
- Implement a process for the selection of directors who can add value and contribute independent judgment to the formulation of sound corporate strategies and policies.
- Review, evaluate and approve, on a regular basis, long-range plans for the Company.
- Establish committees as prescribed in the SEC Code of Corporate Governance and the Corporation’s New Manual on Corporate Governance.
- Review and approve the Company’s budget and forecasts
- Conduct annual performance assessment of the Chairman, President and the board members.
- Evaluate and approve major resource allocations and capital investments.
- Review the Corporation’s material controls and risk management systems.
SECTION 4: THE CHAIRMAN OF THE BOARD
The duties and responsibilities of the Chairman in relation to the Board may include, among others, the following:
- Make certain that the meeting agenda focuses on strategic matters, including the overall risk appetite of the corporation, considering the developments in the business and regulatory environments, key governance concerns, and contentious issues that shall significantly affect operations;
- Guarantee that the board receives accurate, timely, relevant, insightful, concise, and clear information to enable it to make sound decisions;
- Facilitate discussions on key issues by fostering an environment conducive for constructive debate and leveraging on the skills and expertise of individual directors;
- Ensure that the Board sufficiently challenges and inquires on reports submitted and representations made by Management;
- Assure availability of proper orientation for first-time directors and continuing training opportunities for all directors; and
- Make sure that performance of the Board is evaluated at least once a year and discussed/followed up on.
- The roles of the Chairman and the President shall be separate, to foster an appropriate balance of power, increased accountability and better capacity for independent decision making by the Board. A clear delineation of the functions between the Chairman and the President shall be made upon their election.
Likewise, the Chairman of the Board shall exercise the following functions:
- To preside over all the meetings of the Board of Directors and the stockholders;
- To initiate the development of corporate objectives and policies and formulate long range project, plans and programs for the approval of the Board of Directors, including those for executive training, development and compensation;
- To suggest additional functions or duties to any of the officers of the Corporation;
- To exercise such powers as may be incidental to his office and perform each duty as the Board of Directors may assign to him.
The Chairman of the Board may assign the exercise or performance of any of the foregoing powers, duties and functions to any other officer(s) of the Corporation, subject always to their supervision and control.
SECTION 5: THE PRESIDENT
The President, elected by the Board from among its members, shall have administration and direction of the day-to-day business affairs of the Corporation. He/she shall exercise the following functions:
- To preside at the meetings of the Board of Directors and of the stockholders in the absence of the Chairman;
- To have general management and supervision of the business affairs and property of the Corporation;
- To ensure that the administrative and operational policies of the Corporation are carried out under his/her supervision and control;
- Subject to guidelines prescribed by law, to appoint, remove, suspend or discipline employees of the Corporation, prescribe their duties, and determine their salaries;
- To oversee the preparation of the budgets and the statements of accounts of the Corporation;
- To prepare such statements and reports of the Corporation as may be required of him/her by law;
- To represent the Corporation at all functions and proceedings, when authorized by the Chairman of the Board or the majority of the Board of Directors;
- To render annual reports to the Board of Directors and to the stockholders;
- To perform such duties as incident to his/her office or as entrusted to him/her by the Chairman of the Board, or Board of Directors;
- To sign certificates of stock along with the Corporate Secretary.
In addition to the duties imposed by the Board and responsibilities provided by the Corporation’s By-Laws, the President has the following duties:
- Determines and implements the Board-approved Corporation’s strategic direction and formulates and implements its strategic plan on the direction of the business;
- Communicates and implements the Corporation’s vision, mission, values and overall strategy and promotes any organization or stakeholder change in relation to the same;
- Oversees the operations of the Corporation and manages human and financial resources in accordance with the strategic plan;
- Has a good working knowledge of the Corporation’s industry and market and keeps up- to-date with its core business purpose;
- Directs, evaluates and guides the work of the key officers of the Corporation;
- Manages the Corporation’s resources prudently and ensures a proper balance of the same;
- Provides the Board with timely information and interfaces between the Board and the employees;
- Builds the corporate culture and motivates the employees of the Corporation; and
- Serves as the link between internal operations and external stakeholders.
SECTION 6: THE CORPORATE SECRETARY
- General Access - The Corporate Secretary assists the Board. He/she must be available to provide his/her services to the Board.
- Responsibilities – The Corporate Secretary sees to it that the Board follows correct procedures and that the board complies with its obligations under law and the company's articles of incorporation.
The following are the responsibilities of the Corporate Secretary under the provisions of the Corporation’s By-Laws and the New Manual on Corporate Governance:
- The Corporate Secretary shall record all the votes and proceedings of the meeting of Stockholders and of the Board of Directors in a book kept for that purpose.
- He/she shall have charge of the corporate seal of the Corporation. He/she shall keep at the principal office of the Corporation the stock and transfer book and therein keep a record of all the stock, the names of stockholders alphabetically arranged with the addresses to which notices may be sent, the installments paid and unpaid on all stock for which subscription has been made and the date of payment of any installment, a statement of every alienation, sale of transfer of stock made, the date thereof and by and to whom made.
- Be responsible for the safekeeping and preservation of the integrity of the minutes of the meetings of the Board and its committees, as well as the other official records of the corporation.
- Keeps abreast on relevant laws, regulations, all governance issuances, relevant industry developments and operations of the corporation, and advises the Board and the Chairman on all relevant issues as they arise;
- Works fairly and objectively with the Board, Management and stockholders and contributes to the flow of information between the Board and management, the Board and its committees, and the Board and its stakeholders, including shareholders;
- Advises on the establishment of board committees and their terms of reference;
- Informs members of the Board, in accordance with the by-laws, of the agenda of their meeting at least five working days in advance, and ensures that the members have before them accurate information that shall enable them to arrive at intelligent decisions on matters that require their approval;
- He/she should attend all stockholders and board meetings.
- The company secretary shall assist the Chairman of the board in organizing the board's activities including providing information, preparing an agenda, reporting of meetings, evaluations and training programs.
- He/she shall perform such other duties as may be properly delegated to him/her.
SECTION 7: BOARD COMMITTEES
- The Committees - The Board may appoint committees from among its members to perform specific tasks. The Board shall establish the following committees:
- Executive Committee
- Audit and Compliance Committee
- Governance, Nomination and Compensation Committee
The Board may, from time to time, establish or maintain additional committees as necessary or appropriate.
- Committee Reporting – Each committee must promptly inform the Board of the actions it has taken and major developments of which it becomes aware.
- Committee Charters - The Charters shall indicate the roles and responsibilities of the committee, its composition and how it should perform its duties. It shall set forth the purposes, goals and responsibilities of the committees as well as qualifications for committee membership, procedures for committee member appointment and removal, committee structure and operations and committee reporting to the Board.
SECTION 8: DIRECTORS’ TRAINING AND DEVELOPMENT PROGRAM
- Induction Program - Upon his or her election, each board member shall participate in an induction program that covers the company's strategy, general financial and legal affairs, financial reporting by the company, its compliance programs, the Code of Business Conduct and Ethics, any specific aspects unique to the company and its business activities, and the responsibilities as a board member.
The Company shall provide a comprehensive orientation or training for first-time directors for such number of hours and in accordance with the requirements of the SEC.
- Continuing Education Program - In order to facilitate the Directors’ fulfillment of their responsibilities, the management must provide the following:
- Annual review to identify areas where the board members require further training or education
- Educational programs supplemental to the initial orientation to explain the Company’s business operations
- Access to, or notice of, continuing educational programs that are designed to keep Directors abreast of the latest developments in corporate governance matters and critical issues relating to the operation of public company boards.
- Periodic visits to operating units.
- Costs - The costs of the induction course and any training or education shall be paid for by the Corporation.
SECTION 9: ANNUAL PERFORMANCE EVALUATION OF THE BOARD and KEY OFFICERS
The Board of Directors shall conduct an annual self-evaluation to determine whether it and its Committees are functioning effectively. Every three (3) years, it is recommended that the assessment should be supported by an external facilitator.
The Governance, Nomination and Compensation Committee shall solicit comments from all Directors and report annually to the Board. The annual performance assessment must be divided into four sets:
- Board Appraisal
- Director Appraisal
- Committee Appraisal
- President Appraisal
The Governance, Nomination and Compensation Committee shall conduct an annual review of the performance of the board as well as the performance of individual board and the President. The process and the criteria in conducting the board, committees, and the President assessment shall be formulated by the Governance, Nomination and Compensation Committee.
SECTION 10: OTHER PROVISIONS
- Conflict of Interests – A board member must report immediately to the Chairman any conflict of interest or potential conflict of interest and shall report all relevant information on this matter under the provision of the Code of Business Conduct and Ethics.
- Holding and Trading Securities – Board members are required to report any holding or trading of Company’s securities within three (3) trading days to the PSE and SEC. Board members shall be refrained to trade the company’s securities during a black out period in compliance with PSE Disclosure Rules and Insider Trading Policy.
- Report on Change of Ownership – Board members shall notify the Chief Compliance Officer within one trading day of all changes in his beneficial ownership, direct and indirect, of the Corporation’s securities, under the provisions of the PSE Disclosure Rules and SEC Implementing Rules and Regulations.
- Confidentiality – No board member shall, during his or her membership, disclose any information of a confidential nature regarding the business of the company. He/she shall not use the confidential information of the Corporation for his/her personal benefit.
SECTION 11: CHARTER REVIEW
This Charter must be reviewed by the Board of Directors at least once a year or as often as deemed necessary. Any amendments and revisions to this Charter must be reviewed and approved by the Board prior to dissemination to the board members and posting it to the Corporation’s website.
Audit and Compliance Committee Charter
In pursuit of good corporate governance, and pursuant to the New Manual of Corporate Governance (New Manual) submitted to the Securities and Exchange Commission on 29 June 2021, the Board of Directors (Board) of Keppel Philippines Properties, Inc. (KPPI) hereby constitutes an Audit and Compliance Committee (ACC) and adopts this Charter to govern the committee’s oversight functions and activities.
The ACC shall be composed of at least three (3) appropriately qualified non-executive directors (majority of whom, including the Chairman, shall be independent directors). All members of the committee shall have relevant background, knowledge, skills and/or experience in the areas of accounting, auditing and finance. The Chairman of the committee should not be the chairman of the Board or of any other committees.
Roles and Responsibilities
The ACC shall assist the Board in its oversight responsibilities on the following areas: (a) auditing and financial reporting, (b) enterprise risk management, and (c) related party transactions.
A. Audit and financial Reporting
The ACC will enhance its oversight capability over KPPI’s financial reporting, internal control system, internal and external audit processes, and compliance with applicable laws and regulations. It will be responsible for overseeing the senior management in establishing and maintaining an adequate, effective and efficient internal control framework. It ensures that systems and processes are designed to provide assurance in areas including reporting, monitoring compliance with laws, regulations and internal policies, efficiency and effectiveness of operations, and safeguarding of assets.
The committee shall have oversight responsibility for the financial reporting process, system of internal control, audit process, and monitoring of compliance with applicable laws, rules and regulations. Detailed functions shall include, among others:
- Recommend the approval of the Internal Audit Charter (IA Charter), which formally defines the role of Internal Audit and the audit plan as well as oversees the implementation of the IA Charter;.
- Monitor and evaluate the adequacy and effectiveness of KPPI’s internal control system, integrity of financial reporting, and security of physical and information assets;oversight activities over the Group’s external auditors and the internal audit function. It should ensure that the internal and external auditors act independently from each other, and that both auditors are given unrestricted access to all records. Properties, and personnel to enable them to objectively perform their respective audit functions. KPPI shall ensure that in the performance of the work of the Internal and external auditors, they shall be free from interference by outside parties.
- Organize an internal audit department and consider the appointment of an independent internal auditor and the terms and conditions of his engagement and removal.
- Oversee the outsourcing of internal audit services, and recommends the appointment and/or grounds for approval of an Internal Audit Head. The Committee shall also approve the terms and conditions for outsourcing internal audit services;
- Review and monitor Management responses to the Internal Auditor’s findings and recommendations;
- Review and approve the Interim and Annual Financial Statements before their submission to the Board, with particular focus on the following matters:
- Any change/s in accounting policies and practices,
- Major judgmental areas,
- Significant adjustments resulting from the audit;
- Going concern assumptions,
- Compliance with accounting standards, and
- Compliance with tax, legal and regulatory requirements;
- Review the disposition of the recommendations in the External Auditor’s management letter;
- Perform oversight functions over KPPI’s Internal and External Auditors; ensure the independence of Internal and External Auditors, and that both auditors are given unrestricted access to all records, properties and personnel to enable them to perform their respective audit functions;
- Coordinate, monitor and facilitate compliance with laws, rules and regulations;
- Recommend to the Board the appointment, reappointment, removal and fees of the External Auditor, duly accredited by the Commission, who undertakes an independent audit of KPPI, and provide an objective assurance on the manner by which the financial statements will be prepared and presented to the stockholders; and
- Evaluate and determine the non-audit work, if any, of the external auditor, and review periodically the non-audit fees paid to the external auditor in relation to their significance to the total annual income of the external auditor and to the Company’s overall consultancy expenses. The committee shall disallow any non-audit work that will conflict with his duties as an external auditor or may pose a threat to his independence. The non-audit work, if allowed, should be disclosed in the annual report of KPPI.
- In case the company does not have a Board Risk Oversight Committee and/or Related Party Transactions Committee, performs the functions of said committees as provided under Recommendations 3.4 and 3.5 of SEC Memorandum Circular No. 19, Series of 2016.
- Perform such other functions as may be delegated or authorized by the Board.
The Audit and Compliance Committee meets with the Board at least every quarter without the presence of the President or other management team members, and periodically meets with the head of the internal audit.
For complete coverage and guidance on auditing and financial reporting oversight responsibilities, ACC shall refer to Article 3, Section 3.3.1 – b, Article 5, Section 5.1 of the New Manual.
B. Enterprise Risk Management (ERM)
The ACC shall provide oversight over management’s activities in managing credit, market, liquidity, operational, legal and other risks faced by KPPI. The committee shall ensure that management identifies key risk areas as well as related performance indicators and monitor these factors with due diligence to enable KPPI to anticipate and prepare for possible threats to its operational and financial viability.
The Board must ensure that management and employees adopt an ERM system and processes across the entire organization that is designed to identify potential events that may affect the Group, manage risks to be within the Board’s risk appetite, and provide reasonable assurance regarding the achievement of the company’s risk management objectives.
Management is primarily responsible for the development and implementation of an ERM as well as the risk management strategies adopted to address the prioritized risks. In turn, the ACC shall oversee the adequacy of the Group’s enterprise risk management process. The committee shall ensure that:
- The President (the ERM champion) is assisted by a Chief Risk Officer (CRO) or in his absence, the head of finance Department or the Treasurer.
- The ERM system contains the following basic elements: (a) overall risk appetite of Group as approved by the Board, (b) risk profile, (c) risk management structure, and (d) risk management process.
- There is an annual evaluation of the results of the risk assessment exercise and other information on risk exposures and risk management activities, and
- There is close monitoring and effective management of identified priority risks.
The ACC shall be further guided by Article 3, Section 3.3.1 - b and Article 5, Section 5.1 of the New Manual in its ERM functions.
C. Related Party Transactions (RPTs)
The committee shall ensure that management formulate and implement policies and procedures that would ensure the integrity and transparency of related party transactions.
RPTs refer to transfer of resources, services or obligations between a reporting entity and a related party, regardless of whether a price is charged. It shall be interpreted broadly to include not only transactions that are entered into with related parties, but also outstanding transactions that are entered into with an unrelated party that subsequently becomes a related party.
RPTs shall cover KPPI and other affiliates that the Company exerts direct or indirect control over; their directors; officers; shareholders and related interests, and their close family members, including corresponding persons in affiliated companies. The coverage shall also include such other person or juridical entity whose interest may pose a potential conflict with the interest of KPPI.
To ensure total coverage and effective oversight, ACC shall be guided by the provisions of Article 3, Section 3.3.1 - b of the New Manual in its RPTs functions.
Committee Policies and Procedures
- Appointment and Removal. The members of the ACC shall be appointed by the Board, taking into consideration the recommendation of the Governance and Nomination Committee, and shall serve at the pleasure of the Board and for such terms as the Board may determine. The members of the committee may be removed, with or without cause, by the action of the Board.
- Availability of Outside Advisors/Observer. The ACC may directly engage outside advisors (legal, accounting, and any others) of its own choosing, as maybe deemed necessary or appropriate in carrying its duties and at the KPPI’s expenses. KPPI shall provide funding determined appropriate by the Committee for any such advisors and firms. Any member may, however, request any advisor/observer to be excluded from the Committee’s meetings (or parts thereof) as such member deems appropriate in order for the Committee to carry out its responsibilities. Such advisor/observer may not rejoin the relevant meeting of the committee, until the committee has completed discussion of the relevant topic.
- Access to Information and employees. The ACC is empowered to investigate any matter relating to its purpose, duties or responsibilities that it deems appropriate and shall have full and direct access to all books, records, facilities and personnel of the Company.
- Meetings. The ACC shall meet at least four times each year and at such times and places, as the Committee shall consider appropriate to fulfill its duties and responsibilities. Members are expected to attend meetings in person but in special circumstances by means of video or telephone conference call or other electronic means. Written or electronic minutes of each meeting shall be prepared and filed with the records of KPPI and shall be available to any and all directors of the Company.
ACC meetings shall be convened by the Committee Chairman as he considers appropriate, or as may be necessary, or upon the request of a majority of the members.
Members and advisors/observers may participate in a meeting of the Committee through teleconference or video conference by means of which all persons participating in the meeting can hear each other.
- Minutes and Records. The ACC shall appoint a Secretary who shall prepare minutes of meetings of the Committee and keep records of the Committee.
Review of Committee Charter
This ACC Charter shall be reviewed and assessed at least annually. However, it shall not be amended, altered or varied without prior approval of KPPI’s Board of Directors.
Governance, Nomination and Compensation Committee Charter
In pursuit of good corporate governance, and pursuant to the New Manual of Corporate Governance (New Manual) submitted to the Securities and Exchange Commission on 29 June 2021, the Board of Directors (Board) of Keppel Philippines Properties, Inc. (KPPI) hereby constitutes a Governance, Nomination and Compensation Committee (GNCC) and adopts this Charter to govern the committee’s oversight functions and activities.
The GNCC shall consist of at least three (3) members, all of whom shall be independent directors, including the Chairman.
Coverage of Committee Duties and Responsibilities
The GNCC shall assist the Board in its oversight responsibilities on: (a) corporate governance; (b) nomination and election process; and (c) compensation.
The committee may also perform such other functions as may be delegated or authorized by the Board.
A. Corporate Governance
In behalf of the Board, the GNCC shall be tasked to ensure that KPPI adheres to good corporate governance principles and practices as provided for in the New Manual. The Committee shall be assisted in its oversight duties by a Compliance Officer, who shall have a rank of Senior Vice President or an equivalent position with adequate stature and authority in the organization.
The Compliance Officer shall not be a member of the Board of Directors and shall annually attend training on corporate governance. However, due to simple structure and operation of KPPI, its Compliance Officer may also be a member of the Board of Directors. Being a member of the Board, he will not prejudice the compliance functions since he will adhere to the rules and regulations of the SEC and other governing bodies. He shall be a member of KPPI’s management team in charge of corporate governance compliance function. Similar to the Corporate Secretary, he is primarily accountable to the corporation and its shareholders, and not to the Chairman or President of KPPI. The committee shall ensure that the Compliance Officer performs his duties and responsibilities under Section 3.1.6 of the New Manual.
Directors’ Training. In addition, the GNCC shall ensure that a policy is made on the training of directors, including an orientation program for first-time directors and relevant annual continuing training for all directors. The orientation program covers SEC-mandated topics on corporate governance and an introduction to the Company’s business, Articles of Incorporation, and Code of Conduct. Directors shall undergo annual continuing training program concerning courses on corporate governance matters relevant to KPPI, including audit, internal controls, risk management, sustainability and strategy.
Annual Self-Assessment. Lastly, the committee shall assess the performance and compliance of the Group with the New Manual and other relevant regulatory requirements by accomplishing SEC Annual Corporate Governance Report.
The GNCC shall be further guided by Article 3, Section 3.3.1 - c of the New Manual in its Corporate Governance functions.
B. Nomination and Election Process
GNCC shall be tasked to ensure the adoption of applicable guidelines and standards for its members that will facilitate the selection of potential nominees for board seats, and to serve as a benchmark for the evaluation of its performance. The GNCC shall oversee a consistent adoption of a formal and transparent board nomination and election policy that shall include a process of accepting nominations from minority shareholders and vetting nominated candidates.
The Board policy shall also include an annual assessment of the effectiveness of its processes and procedures in the nomination, election, or replacement of a director. In addition, its process of identifying the quality of directors shall be aligned with the strategic direction of Group.
The following comprises the detailed functions the nomination and election process, among others:
- Pre-screen and shortlist all candidates to the Board and other appointments that require Board approval, in accordance with the qualifications and disqualifications enumerated provided under this Manual, the Corporation Code, Securities Regulations Code, and other pertinent rules and regulations;
- Assess the effectiveness of the Board's processes and procedures in the election or replacement of directors;
- In consultation with the Executive Committee, re-define the role, duties and responsibilities of the President by integrating the dynamic requirements of the business as a going concern and future expansionary prospects within the realm of good corporate governance at all times;
- Ensure compliance and proper observance by the directors of the corporate governance principles and practices;
- Oversee the periodic performance evaluation of the Board and its Committees as well as executive management and conduct an annual self-evaluation of its performance;
- Ensure that the results of the Board evaluation are shared, discussed, and that concrete action plans are developed and implemented to address the identified areas for improvement; and
- Ensure the nomination and election process are complied with.
The nomination and election process includes the review and evaluation of the qualifications of all persons nominated to the Board, in relation to criteria set forth in KPPI’s Manual on Corporate Governance, By-laws, and applicable regulations, including whether the candidate:
- Possesses the knowledge, skills, experience;
- Has independence of mind, especially to the NED, given their responsibilities to the Board;
- Has a record of integrity and good repute;
- Has sufficient time to carry out the responsibilities; and
- Has the ability to promote smooth interaction between board members.
The process includes monitoring the qualifications of the directors and the grounds for the disqualification of a director under the New Manual.
The GNCC’s functions will establish a formal and transparent procedure to develop a policy for determining the remuneration of directors and officers that is consistent with KPPI’s culture and strategy as well as the business environment in which it operates.
The Compensation functions are as follows:
- Establish a formal and transparent procedure for developing a policy on executive remuneration and for fixing the remuneration packages of corporate officers and directors, and provide oversight over remuneration of senior management and other key personnel, ensuring that compensation is consistent with KPPI’s culture, strategy and control environment;
- Designate amount of remuneration, which will be in a sufficient level to attract and retain directors and officers who are needed to run KPPI successfully;
- Develop a form on Full Business Interest Disclosure as part of the pre-employment requirements for all incoming officers, which among others compel all officers to declare under the penalty of perjury all their existing business interests or shareholdings that may directly or indirectly conflict in their performance of duties once hired;
- Disallow any director ensuing to decide his or her own remuneration;
- Provide in KPPI's annual reports, information and proxy statements a clear, concise and understandable disclosure of compensation of its executive officers for the previous fiscal year and the year;
- Review (if any) of the existing Human Resources Development or Personnel Handbook, to strengthen provisions on conflict of interest, salaries and benefits policies, promotion and career advancement directives and compliance of personnel concerned with all statutory requirements that must be periodically met in their respective posts, and
- In the absence of such Personnel Handbook, cause the development of such, covering the same parameters of governance stated above.
The GNCC will further be guided by Article III, Section 10, and Article VII, Section 18 of KPPI’s By-laws on its Compensation functions.
Committee Policies and Procedures
- Appointment and Removal. The members of the committee shall be appointed by the Board of Directors, taking into consideration the recommendation of the GNCC, and shall serve at the pleasure of the Board and for such terms as the Board may determine. The members of the Committee may be removed, with or without cause, by the action of the Board of Directors.
- Availability of Outside Advisors/Observer. The GNCC may directly engage outside advisors (legal, accounting, and any others) as maybe deemed necessary or appropriate in carrying its duties and responsibilities. The Company shall provide funding determined appropriate by the committee for any such services. Any member may however request any advisor/observer to be excluded from the committee’s meetings (or parts thereof) as such member deems appropriate in order for the committee to carry out its responsibilities. Such advisor/observer may not rejoin the relevant meeting of the committee, and until the committee has completed discussion of the relevant topic.
- Access to Information and employees. The GNCC is empowered to investigate any matter relating to its purpose, duties or responsibilities that it deems appropriate and shall have full and direct access to all books, records, facilities and personnel of the Company.
- Meetings. The GNCC shall meet at least two (2) times each year and at such times and places, as the committee shall consider appropriate to fulfill its duties and responsibilities. Members are expected to attend meetings in person but in special circumstances by means of video or telephone conference call or other electronic means. Written or electronic minutes of each meeting shall be prepared and filed with the records of KPPI and shall be available to any and all directors for the Company.
GNCC meetings shall be convened by the committee chairman as and when he considers appropriate, or as may be necessary, or upon the request of a majority of the members.
A committee meeting shall be convened upon notice in writing at least three (3) days prior to the meeting and specifying the place, date and time of the meeting and the matters to be discussed at the meeting.
Notice of any meeting of the committee shall be deemed to be duly served upon a member/advisor if it is given to him personally, or sent to him by mail or through electronic means as appropriate.
The quorum for any meeting of the committee shall be at least a majority of the members present throughout the meeting.
Members and advisors/observers may participate in a meeting of the Committee through teleconference or video conference by means of which all persons participating in the meeting can hear each other.
- Minutes and Records. The committee shall appoint a secretary who shall prepare minutes of meetings of the committee and keep records of the committee. Any such records shall be open for inspection by any member upon reasonable prior notice during usual office hours of the KPPI. Minutes of any meeting shall be signed by the chairman and members present in the meeting.
Review of Committee Charter
This GNCC Charter shall be reviewed and assessed at least annually. However, it shall not be amended, altered or varied without prior approval of KPPI’s Board of Directors.
Internal Audit Charter
In compliance with the Securities and Exchange Commission’s (“SEC”) Revised Code of Corporate Governance for Publicly-Listed Companies, Keppel Philippines Properties Inc. (“KPPI”) hereby adopts this Internal Audit Charter (this “Charter”) as recommended by the Audit and Compliance Committee (“ACC”) of the Board of Directors (“Board”).
- INTERNAL AUDIT FUNCTION AND MISSION
The main Internal Audit Function (IAF) is to provide independent and objective assurance, as well as consulting and advisory services, designed to add value to KPPI as the organization move forward to meet its strategic objectives. It shall provide risk-based and objective assurance, advice, and insight by adopting a systematic and disciplined approach to evaluate and improve the effectiveness of governance, risk management, and control processes.
- STANDARDS FOR THE PROFESSIONAL PRACTICE OF INTERNAL AUDITING
The IAF shall strictly adhere to the mandatory elements of the International Professional Practices Framework (“IPPF”) of the Institute of Internal Auditors (“IIA”) as well as the Core Principles for the Professional Practice of Internal Auditing, the Code of Ethics, the International Standards for the Professional Practice of Internal Auditing (“Standards”).
The Head of the IAF shall have unrestricted access to information relevant to audit engagements (assurance/advisory), and to communicate and interact directly with the ACC, including during executive meetings without the presence of management.
The Head of the IAF shall likewise have full, free, and unrestricted access to all functions, records, property, and personnel pertinent to carrying out any engagement, but at all times and circumstances subject to accountability for confidentiality, security of records and information, and of safeguarding them.
- INDEPENDENCE AND OBJECTIVITY
The Head of the IAF shall report functionally to the ACC and administratively to the President of KPPI. He/she shall ensure that the IAF remains free from all conditions that threaten the ability of internal auditors to carry out their responsibilities in an unbiased manner, including matters of audit selection, scope, procedures, frequency, timing, and report content. If he/she determines that independence or objectivity may be impaired in fact, or appearance, the details of the impairment shall be disclosed to the Board, through the ACC.
The internal auditors comprising the IAF shall always maintain an unbiased mental attitude that allows them to perform engagements objectively, with skepticism, and in such a manner that they believe in their work product, that no quality compromises are made, and that they do not subordinate their judgment on audit matters to others.
The internal auditors shall have no direct operational responsibility or authority over any of the activities audited. Accordingly, internal auditors shall not implement internal controls, develop procedures, install systems, prepare records, or engage in any other activity that may impair their independent judgment.
Where the Head of the IAF has, or is expected to have, roles and/or responsibilities that fall outside of internal auditing, safeguards must be established to prevent and limit impairments to independence or objectivity. He/she shall confirm to the Board, through the ACC, at least annually, his/her independence as well as the IAF team.
- SCOPE OF INTERNAL AUDIT ACTIVITIES
The scope of internal audit activities encompasses, but is not limited to, an independent and objective assessment and evaluation of the (a) adequacy of internal controls, (b) effectiveness of the ERM System, (c) corporate governance processes, and (d) attending to the requests of the Board and top management using the RBIA methodology.
The Head of the IAF shall also coordinate activities, where possible, and consider relying on the work of other internal and external assurance and consulting service providers, as needed. The IAF may perform advisory and related client service activities, the nature and scope of which shall be agreed upon with the client, and provided that the IAF does not assume management responsibility.
- RBIA Methodology
The IA functions shall be premised on a customized RBIA methodology. The Institute of Internal Auditing (IIA) defines RBIA (Risk-based Internal Auditing) as a methodology that links internal auditing to an organization’s (a) enterprise risk management framework (ERM), (b) internal control, and (c) corporate governance processes.
The board of directors has the oversight responsibility and accountability on the effectiveness of risk management, internal control and governance processes within the organization. Applying the RBIA methodology empowers the IAF to give assurance to the board and top management that the KPPI’s risk management process is managing priority risks within board-approved risk appetite and tolerance; that a strong internal control system is maintained across the organization; and that there is an assurance that corporate governance structure, mechanism, and other related elements are “fit for purpose”.
The Head of the IAF has the responsibility to:
- Implement the annual risk-based audit plan, as approved, including, and as appropriate, any special tasks or projects requested by management and the ACC.
- Issue periodic reports to the ACC and management summarizing results of audit activities.
- Report on any response to risk by management that may be unacceptable to the Board and the ACC.
- Maintain a professional audit staff with sufficient knowledge, skills, experience, and professional certifications to meet the requirements of this Charter.
- Perform advisory services, within the bounds of independence and objectivity guidelines, to assist the board and senior management in meeting corporate objectives.
- Keep the ACC informed of emerging trends and successful practices in internal auditing; and
- Assist in the investigation of significant reported suspected illegal or fraudulent activities; and notify senior management and the ACC of any findings.