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CORPORATE GOVERNANCE

Corporate GovernanceNLEX Corporation2022-09-30T16:11:39+08:00
  • Corporate Governance

  • Framework

  • Policies and Programs

  • Corporate Governance

Adherence to the highest standards of Corporate Governance is an integral part of the way we do business at NLEX Corporation (the “Company”). Corporate governance is a method of regulating the Company’s affairs through the adoption of rules and regulations designed to ensure that business is conducted with the highest standards of ethics and integrity.

The Company recognizes the importance of corporate governance in building and sustaining its long-term growth and profitability as well as enhancing stakeholders’ interests in the Company. The Company believes that the practice of corporate governance beyond mere compliance with rules and legislation, through a process of developing the proper competencies in order to establish an ethical corporate culture of principled business within the framework of its governance principles of accountability, integrity, fairness, and transparency.

As strong advocates of fairness, accountability, transparency, and integrity in all aspects of the business, the Board of Directors, Management, Officers, and Employees of the Company commit themselves to the principles and best practices of governance in the attainment of its corporate goals.

  • Framework

CORPORATE GOVERNANCE FRAMEWORK  

KEY MANDATES

Guided by the principles of fairness, integrity, transparency, and accountability, our governance framework plays a critical role in championing ethical and sustainable practices.

The BOARD OF DIRECTORS  is mandated to enhance stockholder value by fostering the long-term success of the Company and sustaining its competitiveness and profitability in a manner consistent with the Company’s vision, mission, and corporate objectives.

The CHAIRMAN OF THE BOARD serves to represent the interests of all Shareholders and Stakeholders, and to oversee the performance of the Board and its Directors. He champions exemplary ethical governance principles for Directors, Officers, and Employees to emulate and likewise espouse.

The MANAGEMENT is headed by the PRESIDENT AND CEO. It  is responsible for the Company’s successful implementation of the strategy and direction as approved by the Board and exercises control over the Company’s processes and effective execution of strategies that facilitate performance that are  attuned to the Company’s business environment, and culture.

The CORPORATE SECRETARY, under the direction of the Chairman, is responsible for ensuring that good information flows within the Board and Board Committees and between Management and Non-Executive Directors.

The Board is likewise assisted by the Company’s COMPLIANCE OFFICER who has the duties to monitor, review, evaluate and ensure the compliance by the Company, its Officers and Directors with the relevant laws, rules and regulations and all governance issuances of regulatory agencies and report violations thereof to the Board and recommend the imposition of appropriate disciplinary action.

The CORPORATE GOVERNANCE OFFICE (CGO) attests to the Company’s dedication to pursue excellence in corporate governance. Its mandate is to support the Board of Directors and Management in the formulation and implementation of CG plans, programs and initiatives, and in monitoring compliance among the ranks to achieve the highest standards of competence and ethical culture among Directors, Officers and Employees.

The INTERNAL AUDIT team directly reports to the Audit Committee and is headed by the CHIEF AUDIT EXECUTIVE. The role of the Internal Audit is to provide independent, objective assurance, and consulting services to the Management designed to add value and improve the Company’s operations. The role also includes ensuring the adequacy of the network of risk management, control, and governance processes.

Internal Audit Charter

The EXTERNAL AUDIT is appointed by the Audit Committee which reviews its qualifications, performance and independence. To ensure objectivity in the performance of its duties, the external auditor is subject to the rules on rotation and change (every five years); general prohibitions on hiring by the Company of staff of the external auditor; and full and appropriate disclosure to and prior approval by the Audit Committee of all audit and non-audit services and related fees for such services. Approval of non-audit work by the external auditor is principally tested against the standard of whether such work will conflict with its role as an independent auditor or would compromise its objectivity or independence as such.

BOARD COMMITTEES

To aid in ensuring compliance with the principles of good corporate governance, our Board has constituted the Audit Committee, Governance and Risk Committee, Compensation and Remuneration Committee, and Nomination Committee.

GOVERNANCE AND RISK COMMITTEE

The Governance and Risk Committee shall assist the Board of Directors in establishing the Company’s overall governance, enterprise risk management, and sustainability framework and policies. It is also tasked with ensuring that these policies are aligned with the internally recognized practices and are consistent throughout the Company. An integral task of the Committee is the annual review and implementation of the Company’s Revised Manual on Corporate Governance, execution of risk management strategies and practices including regulatory and ethical compliance monitoring, as well as its sustainability programs and reports in order to sponsor improvements for the Board of Director’s approval.

Governance and Risk Committee Charter

Members:

Lisset Laus-Velasco (Chairman; ID)

Arlyn Sicangco-Villanueva (ID)

Christopher Daniel Lizo (ED)

Jean Claude Neumann (NED)

Frederic DyBuncio (NED)

AUDIT COMMITTEE

The Audit Committee has oversight of financial reporting and internal controls of the Company. It is responsible for recommending the external auditor and ensuring that non-audit work does not compromise their independence. The Audit Committee also approves the Internal Audit function and its scope of work.

Audit Committee Charter

Members:

Arlyn Sicangco-Villanueva (Chairman, ID)

Jean Claude Neumann (NED)

Jose Sio (NED)

Roberto Bontia (NED)

NOMINATION COMMITTEE

The Nomination Committee is responsible for vetting and recommending members for nomination to the Board of Directors, including membership in the various Board Committees. The Nomination Committee has the authority to utilize professional search firms or other external sources of candidates when searching for candidates to the Board of Directors pursuant to its Charter which provides that the Nomination Committee has the authority to avail of resources and authorities appropriate to discharge its functions, duties and responsibilities including the authority to obtain advice from external consultants and functional specialists within the Corporation. The Nomination Committee regularly meets prior to the scheduled Annual Stockholders’ Meeting to review the qualifications of the individuals nominated as the Corporation’s regular and independent directors. Particularly for the latter, the Committee assesses the independence of the Independent Directors.

Nomination Committee Charter

Members:

Jose Ma. Lim (Chairman; NED)

Rodrigo Franco (ED)

Lisset Laus-Velasco (ID)

Lea Wong (HRAD Head; Non-Voting)

COMPENSATION AND REMUNERATION COMMITTEE

The Compensation and Remuneration Committee directly oversees compensation and bonus of senior executives and overall compensation framework for all employees. They ensure bonus targets are set aggressively and management is motivated for the long term. As mandated by its Charter, the Compensation Committee also exercises functional oversight on matters pertaining to the areas of leadership development, including but not limited to the development and administration of leadership/ succession.

Compensation and Remuneration Committee Charter

Members:

Manuel Pangilinan (Chairman; NED)

Rodrigo Franco (ED)

Arlyn Sicangco-Villanueva (ID)

KEY STAKEHOLDERS

We recognize the value of our various stakeholders as an integral part of good corporate governance and building a mutually beneficial future.

SHAREHOLDERS – The Company recognizes its responsibility to protect its shareholders’ rights by creating value and ensuring sustainable growth in business. The Company upholds their rights to obtain relevant information about the Company in a timely and regular basis. The Company’s financial performance are regularly reported, and these reports are immediately made public through press releases and postings in the Company’s website.

BOARD OF DIRECTORS – The Board of Directors (the “Board”) is primarily responsible for the governance of the Company. Corollary to setting the policies for the accomplishment of the corporate objectives, it shall provide an independent check on Management.

COMPLIANCE OFFICER – To ensure adherence to corporate principles and best practices, the Board shall designate a Compliance Officer who shall monitor compliance and determine violations by the Company with the provisions and requirements of the Manual on Corporate Governance, and the rules and regulation of regulatory agency.

CUSTOMERS – The Company continually strives to satisfy its customers’ expectations and concerns. We continuously engage with our customers through various touchpoints with the end in view of knowing and understanding our customers’ needs, promptly addressing their concerns and identifying areas where we could further enhance customer experience.

EMPLOYEES – The Company is committed to the development and welfare of its employees. Career development programs are implemented to ensure professional growth through skills and job enrichment opportunities, learning and development programs, performance management, and promotions systems. Employees are compensated fairly, regardless of gender, based on performance and over-all qualifications, and market competitiveness. Adequate provisions for medical, health and other essential benefits are given, and workplace safety is maintained to engender employee engagement and promote their welfare and well-being.

The Company is further committed in sustaining and/or further enhancing the high level of engagement of employees. Guided by the results of its periodic employee engagement surveys, focused and deliberate initiatives are undertaken to help increase employee motivation and satisfaction. Employee communication is strengthened to keep employees well-informed on significant developments. Employees are likewise encouraged to give feedback and suggestions to Management to further improve corporate and operational performance, promoting employee accountability and empowerment.

SUPPLIERS – The Company aspires to maintain mutually beneficial relationships only with like-principled suppliers that uphold the Company’s core values of fairness, accountability, integrity, and transparency in their own businesses. The Company’s Supplier/Contractor Relations Policy provides for the general principles to be followed in vendor selection. Suppliers are required to undergo an accreditation process before they engage in business with the Company. Among the criteria for accreditation are financial capability, technical capability, compliance with all applicable laws, rules, and regulations, including those pertaining to industrial relations, environment, health and safety, and intellectual property rights. The Company’s purchases, as a general rule, are made on the basis of competitive bidding of accredited and qualified suppliers, in accordance with the aforementioned policy.

COMMUNITIES AND ENVIRONMENT – The Company actively engages with the communities, including the sectors directly affected by its operations, through CSR projects in education, livelihood, health, disaster preparedness and response, and environment.

The Company is committed to do its part in addressing the pressing need to preserve and protect our environment. As such, the Company ensures compliance with all applicable environment and community-related laws, rules, and regulations from local government regulatory offices and other similar agencies and offices. Furthermore, projects to reduce waste and the Company’s carbon footprint are also being implemented. The Company regularly monitors its sustainability-related data while deliberately focusing on improving its performance by integrating sustainability to the Company’s business strategies and operations.

CREDITORS – In accordance with the Code, we protect the rights of our creditors by publicly disclosing all material information, such as earnings results and risk exposures relating to loan covenants.

  • Policies and Programs

These policies were based on best Corporate Governance practices and adapted to the Company’s business environment:
(Click the title to download the PDF)

MANUAL ON CORPORATE GOVERNANCE is the foundation of the Company’s governance policies, which states the responsibilities of the Board, Management and the Company to stockholders and all other stakeholders. It complies with the SEC Code of Corporate Governance under SEC Memorandum Circulars No. 2 Series of 2002, No. 6 Series of 2009. The Corporate Governance Manual was amended and approved by the Board on May 2, 2022. All relevant Company policies and committee charters are annexed to the MOCG.

CODE OF BUSINESS CONDUCT AND ETHICS establishes the commitment of everyone in the Company to do business according to the highest standards of ethics. The Code decrees the principles and values which shall guide and govern all decisions and actions of the Company’s Directors, Officers, and Employees when performing their respective duties and responsibilities, and all of the Company’s business relationships. This was adopted by the Company on July 30, 2019.

CONFLICT OF INTEREST POLICY sets the requirements for all Directors, Officers and Employees to observe the highest degree of transparency, selflessness and integrity in the performance of their duties, free from any form of conflict with personal interest. This was adopted by the Company on July 30, 2019.

Conflict of Interest – Implementing Policy and Procedure

POLICY ON GIFTS, ENTERTAINMENT AND SPONSORED TRAVEL regulates the acceptance of gifts offered and given by third parties to prevent all directors, officers and employees from putting themselves in situations that could affect the fair, objective and effective performance of their duties. This was adopted by the Company on July 30, 2019.

Gifts, Entertainment, and Sponsored Travel – Implementing Policy and Procedure

POLICY ON GIFT GIVING ACTIVITIES provides guidance and procedural safeguards with respect to giving gifts to government officers/officials and business partners for or on behalf of the Company in accordance with applicable laws and Company policies. Directors, officers, employees and consultants are enjoined to strictly comply with this Policy. This was adopted by the Company on July 30, 2019.

POLICY ON HANDLING OF EMPLOYEE WHISTLEBLOWING provides guidelines on handling employee disclosures or complaints of violation of rules pertaining to the aforestated matters, protects whistleblowers from retaliation, and ensures confidentiality and fairness in the handling of a disclosure or complaint. This was adopted by the Company on July 30, 2019.

Handling of Employee Whistleblowing – Implementing Policy and Procedure

Employees’ conduct can reinforce an ethical atmosphere and positively influence the conduct of fellow colleagues. Any suspected misconduct or awareness of irregularities may be reported to the appropriate level of management or to the CG office through the following channels:

All text messages, calls, detailed notes and/or emails received will be dealt with confidentially.

SUPPLIER-CONTRACTOR RELATIONS POLICY seeks to ensure that the Company upholds the highest professional standards in business practices and ethics in its dealings with suppliers and contractors in the procurement of goods and services. The policy also seeks to maintain the Company’s reputation for equal opportunity and honest treatment of suppliers in all business transactions. It establishes clear rules for arm’s length transactions and fair treatment of prospective and existing suppliers with the objectives of always obtaining the best value for the company. The policy specifically adopts the processes of vendor accreditation and competitive bidding as the general rule and establish practices to ensure the contracts are awarded only to qualified and duly-accredited suppliers and vendors who offer the best value for money for the Company’s requirements. This was adopted by the Company on July 30, 2019.

INSIDER TRADING POLICY regulates trading of shares by Company executives, officers, and employees with direct access to unpublished information relating to the Company’s financial and operating results, in the interest of CG and transparency. This was adopted by the Company on July 30, 2019.

RELATED PARTY TRANSACTIONS POLICY ensures that the transaction of the Company with its related parties are conducted in fair and at arms’ length terms. This was amended and approved by the Board on May 2, 2022

The Company aims to establish the right culture and promote the right behavior. These are integral aspects of corporate governance in the company. Doing this requires the proper structures, policies and processes which are all made relevant to company personnel through education and communication initiatives.

EDUCATION

Annual Corporate Governance Enhancement Session
The Company provides continuous corporate governance training for its directors and senior management. The MVP Group of Companies has organized and conducted the corporate governance enhancement sessions and has invited internationally-known and local experts to share their insights and interact with the Board and senior management. See list of trainings.

Corporate Governance Orientation
The Company not only trains to get the right “tone at the top”, but also applies efforts to “shape the middle”. The Company provides corporate governance training for its middle management and extends its corporate governance enhancement sessions to executives. At the beginning of their engagement, all employees go through a corporate governance orientation.

Orientation of Newly Elected Directors
At the start of the service of a new director, the Chairman, President & CEO, Chief Financial Officer, Corporate Secretary, Chief Audit Executive, and Chief Governance Officer give a newly appointed director a briefing on the Company’s structure, business and the responsibilities of the Board and its Committees and how each operates. Updates on business and governance policies and requirements as well as new laws applicable or relevant to the company and its business, particularly on financial reporting and disclosures and corporate governance, are presented in Board meetings or furnished to directors.

COMMUNICATION

Focus Group Discussion and Advisories
Education and training is supplemented by the production and dissemination of relevant communication materials.  Focus Group Discussions are additionally held in order to: (i) gather employees’ perception about the state of the Company’s corporate governance culture building efforts and the CGO’s education and communication programs; (ii) solicit comments and suggestions on how to further enhance the effectiveness of corporate governance programs; (iii) seek feedback regarding the relevance and effectiveness of past and current CG themes, including the communication medium used; and (iv) receive suggestions and recommendations for possible CG themes in the future, including appropriate materials and medium. The Company also issues Periodic Advisories on corporate governance.

MONITORING AND EVALUATION

The Company monitors and evaluates the effectiveness of its corporate governance (CG) framework, policies, and programs through the following, among other initiatives: (i) an annual performance self-assessment conducted by the Board and the Board Committees, and (ii) the periodic review of the effectiveness of the implementation of the Company’s CG policies.

Board, Board Committees, and selected Officers Performance Assessment
The Board conducts a self-assessment each calendar year to evaluate the performance of the Board as a whole, the Board Committees and the individual directors. The process, which includes an evaluation of the performance of the CEO and the CAE, enables the Board to identify strengths, and areas for improvement and to elicit individual director’s feedback and views on the Company’s strategy, performance, and future direction.

Annual Corporate Governance Report
The Company filed with the SEC on 30 June 2022 a copy of its Annual Corporate Governance Report (ACGR) for 2022. The SEC Form – Annual Corporate Governance Report shall be used as a tool to disclose Public Companies’ and Registered Issuers’ compliance /  non-compliance with the recommendations provided under the Code of Corporate Governance for Public Companies and Registered Issuers, which follows the “comply or explain” approach, pursuant to SEC Memorandum Circular No. 24, Series of 2019 and SEC Memorandum Circular No. 19, Series of 2020.

Policy Review and Alignment
The Company’s CG policies, including the Manual and the Code of Business Conduct and Ethics, are reviewed at least once every two years to ensure that they are appropriate for the Company, benchmarked with global best practices, and compliant with all applicable laws, rules, and regulations.

Online Quiz and Perception Survey
The level of observance of the CG Rules and the principles of accountability, integrity, fairness, and transparency, are monitored through the results of Online Quizzes as well as questions propounded during learning interventions, reports to the CGO of complaints or violations of CG and other Company policies, and feedback from collaboration with various business units of the Company.

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