Corporate Governance
JG Summit Holdings, Inc. (“JGS” or the “Company”) upholds its commitment of doing business in accordance with long-held values and highest ethical standards, acting in good faith and for the best interests of all stakeholders. These values which extend to corporate governance have been the foundation for many years in guiding the Company in advocating and promoting the principles of integrity, fairness, transparency and accountability.
JGS continuously strives to strengthen and improve its governance practices within the framework of evolving laws, Exchange’s recommended corporate governance principles and industry’s best practices. This includes principles across different corporate governance subjects, namely: the board’s governance responsibilities, disclosure and transparency, internal control and risk management frameworks, cultivating a synergic relationship with shareholders, and duties to stakeholders.
In addition to the Principles of Corporate Governance, JGS ensures continuous review of the numerous policies, guidelines and standards, such as the Code of Business Conduct, which all of the operating companies and employees are expected to follow. Compliance with the higher standards of corporate governance should translate to better value propositions for shareholders and customers, minimized risks, growth and sustainability. The economic value generated through a well-managed and governed enterprise not only benefits shareholders but also the local communities through the jobs created and contributions through its corporate social responsibilities (CSR) programs needed to sustain a healthy community.
Board Matters
The Board’s Governance Responsibilities
The Board of Directors is primarily responsible for the governance of the Company and provides an independent check on management. JGS is headed by a competent, working board to foster the long-term success of the Company, and to sustain its competitiveness and profitability in a manner consistent with its objectives, goals, strategies and measures (OGSM) and the long-term best interests of shareholders and other stakeholders.
The Board exercises care, skill and judgment, and observes good faith and loyalty in the conduct and management of the business and affairs of the Company. It ensures that all its actions are within the scope of power and authority as prescribed in the Articles of Incorporation, By-Laws, and existing laws, rules and regulations. To uphold its standards for the Company, its Shareholders and other Stakeholders, the Board conducts itself with honesty and integrity in the performance of its duties and responsibilities.
The detailed roles, duties and responsibilities of the Board of Directors in compliance with relevant laws, rules and regulations are defined in the Company’s Revised Corporate Governance Manual.
Balanced Board Composition and Diversity
The Company recognizes the benefits of having a diverse Board and its value in maintaining sound corporate governance while achieving strategic objectives and sustainable growth. The Board Member’s biographical details are set out in the Information Statement. Each Director provides a unique business perspective, experience and set of skills, all valuable to the Company. The Board plays a vital oversight role, which fosters shareholder value and affects stakeholder confidence, through discussions with senior leaders and external advisers covering a wide range of matters including strategy, financial performance, compliance, and policy.
In the implementation of the Board Diversity Policy in the Company, JGS does not discriminate by reason of gender, age, disability, ethnicity, nationality, political, religious, or cultural backgrounds on its directors or candidates for directors, officers and employees. The incumbent Board is diverse in terms of expertise, gender and professional experience and academic backgrounds. The annually elected Board of Directors is comprised majority of Non-Executive Directors other than the Company’s President and CEO. The Board also has female Directors forming part of the Non-Executive Directors. Furthermore, the posts of Chairman and Chief Executive Officer of the Company are separate to ensure a clear distinction between the Chairman’s responsibility to manage the Board and the Chief Executive Officer’s responsibility to manage the Company’s business.
In November 11, 2021, the Board of Directors approved the Amendment of the Article Sixth of the Articles of Incorporation of JGS in order to reduce the number of seats in the Board of Directors from eleven (11) to nine (9).
The Board Committees
To enable better and more focused attention on the affairs of the Company and aid in the optimal performance of its roles and responsibilities, the Board delegates particular matters to the Board Committees set up for the purpose mainly (a) Audit Committee, (b) Corporate Governance Committee (c) Board Risk Oversight Committee (BROC) and (d) Related Party Transactions Committee.
A. Audit Committee
The Audit Committee provides oversight over the Company’s financial reporting, Internal Control System, Internal and External Audit processes, and monitors compliance with applicable laws and regulations. It ensures that systems and processes are put in place to provide assurance in areas including reporting, monitoring compliance with laws, regulations and internal policies, efficiency and effectiveness of business operations, and proper safeguarding and use of the Company’s resources and assets.
B. Corporate Governance Committee
The Corporate Governance Committee oversees the development and implementation of Corporate Governance principles and policies and recommends a formal framework on the nomination, remuneration and evaluation of the performance of the Directors and key Management Officers consistent with the Company’s culture, strategies and the business environment.
C. Board Risk Oversight Committee
The Board Risk Oversight Committee (BROC) oversees the establishment of ERM frameworks that effectively identify, monitor, assess and manage key business risks and assess the effectiveness of risk management strategies. The BROC is responsible for defining the Company’s level of risk tolerance and providing oversight over its risk management policies and procedures to anticipate, minimize, control or manage risks or possible threats to its operational and financial viability.
D. Related Party Transactions Committee
The Related Party Transactions Committee ensures that there is a group-wide policy and system governing Material Related Party Transactions (MRPTs), particularly those that breach the materiality threshold. The policy shall include the appropriate review and approval of MRPTs, which guarantee fairness and transparency of the transactions.
At a meeting of the Board of Directors of JGS held on November 11, 2021, the Board approved the reconstitution of the board committees of JGS from four (4) board committees to two (2) major committees, its Chairman, and Members as follows:
Audit, Related Party Transactions, Risk Oversight Committee (AURROC)
Corporate Governance and Sustainability Committee (CGSC)
Board Independence
In the year 2021, the Board has four (4) Independent Directors out of eleven (11) Board seats that possess all the necessary qualifications and none of the disqualifications to hold the position. The Company reinforces proper mechanisms for disclosure, protection of the rights of shareholders, equitable treatment of shareholders, and the accountability of the Board and Management are in place. In cases of conflicts of interest, Directors with a material interest in any transaction with the Company abstain from participating in the deliberation of the same.
Lead Independent Director
The Company’s Revised Corporate Governance Manual provides that the Board may consider designating a Lead Director among the Independent Directors if the Chairman of the Board is not an Independent Director and if the positions of the Chairman of the Board and CEO are held by one person.
On November 11, 2021, the appointment of a Lead Independent Director was endorsed to, and approved by, the Board of Directors. The Board appointed Independent Director (ID) Antonio L. Go as the Lead Independent Director to perform the following functions:
- To serve as an intermediary between the Chairman and the other directors when necessary.
- To convene and chair meeting of the non-executive directors.
- To contribute to the performance evaluation of the Chairman, as required.
The Chairman of the Board and the President and CEO
To further strengthen the Board’s independence, the position of the Chairman of the Board is separated from the President and CEO. Each position has distinct and separate duties and responsibilities in accordance with the Company’s amended By-Laws and Revised Corporate Governance Manual. The Chairman of the Board is James L. Go, while the President and CEO is Lance Y. Gokongwei.
The Chairman
The Chairman of the Board shall preside at all meetings of the Board of Directors and Shareholders. He shall also assist in ensuring compliance with and performance of the Corporate Governance policies and practices. He makes certain that the agenda focuses on strategic matters, guarantees that the Board receives accurate, timely, relevant, insightful, concise, and clear information to enable it to make sound decisions.
The President and CEO
The President and CEO oversees the operations of the Corporation and manages human and financial resources in accordance with the strategic plan. He also provides leadership for Management in determining, developing and implementing business strategies, plans and budgets to the extent approved by the Board. He shall provide the Board with a balanced and understandable account of the Company’s performance, financial condition, results of operations and prospects on a regular basis.
The detailed duties and responsibilities of the Chairman and the President and CEO can be referenced in the Revised Corporate Governance Manual.
Board Training and Orientation
The Company ensures that directors are able to perform their functions effectively in this rapidly changing environment to cope with heightened regulatory policies, foreign and local demands, and the growing complexity of the business. Orientation programs are conducted for first-time directors to ensure that new members are appropriately apprised of their duties and responsibilities. This includes overview of the Company’s operations, Code of Conduct, Corporate Governance framework and other relevant topics essential in the performance of their functions. As a matter of continuous professional education, the Company facilitates the training opportunities provided for the Directors and Key Officers.
Board Meetings
The Board schedules meetings at the last quarter of the preceding year, holds regular meetings in accordance with its By-Laws and convene special meetings when required by business exigencies. The notice and agenda of the meeting and other relevant meeting materials are furnished to the Directors at least five (5) business days prior to each meeting. Meetings are duly minuted. The Independent Directors shall always attend Board meetings. Unless otherwise provided in the By-Laws, their absence shall not affect the quorum requirement.
Attendance of Directors in Board of Directors and Board Committee Meetings
Board of Directors Meetings
*Ms. Lily G. Ngochua resigned as a Director on September 13, 2021
**Mr. Cirilo P. Noel resigned as a Director on May 31, 2021
***Mr. Artemio V. Panganiban attended Board Committee meetings after his election on May 14, 2021
***Mr. Artemio V. Panganiban has 100% attendance in the BOD meetings from the time of his appointment
Board Committee Meetings
Audit Committee
Corporate Governance Committee
Board Risk Oversight Committee
Related Party Transactions Committee
*Mr. Artemio V. Panganiban attended Board Committee meetings after his election on May 14, 2021
*Mr. Artemio V. Panganiban has 100% attendance in the Board Committee meetings from the time of his appointment
**Mr. Cirilo P. Noel resigned as a Director on May 31, 2021
The Corporate Secretary
The Corporate Secretary assists the Board and the Board Committees in the conduct of their meetings, including preparation of the annual schedule of Board and Committee meetings and the annual Board calendar. She also assists the Board Chairs and its Committees in setting agendas for the meetings, safekeeps and preserves the integrity of the minutes of the meeting of the Board and its Committees, as well as other official records of the Company.
Maria Celia H. Fernandez-Estavillo, 50, is the Senior Vice President, General Counsel and Corporate Secretary of JGSHI. She is also the Corporate Secretary of Universal Robina Corporation and JG Summit Olefins Corporation and the Assistant Corporate Secretary of Gokongwei Brothers Foundation, Inc. She is a member of The British School Manila Board of Governors since 2020. Prior to joining JGS in March 2017, Atty. Fernandez-Estavillo was the head of the Legal and Regulatory Affairs Group, the Corporate Secretary and a member of the Board of Directors of Rizal Commercial Banking Corporation. She was Assistant Vice President of Global Business Development of ABS-CBN. She also held positions in government as Head of the Presidential Management Staff, Assistant Secretary at the Department of Agriculture and Chief of Staff of Senator Edgardo J. Angara. She began her legal career in ACCRA. She graduated from the University of the Philippines with a Bachelor of Science degree in Business Economics (Summa Cum Laude) and a Bachelor of Laws degree (Cum Laude). She completed her Master of Laws (LLM) in Corporate Law from New York University School of Law. She received the highest score in the Philippine Bar examinations of 1997.
The Chief Compliance Officer
The Chief Compliance Officer monitors, reviews, evaluates and ensures the compliance by the Company; its Officers and Directors with the provisions and requirements of the Corporate Governance Manual and the relevant laws, the Corporate Governance Code, rules and regulations and all governance issuances of regulatory agencies. She also ensures the integrity and accuracy of all documentary submissions to the regulators; identifies possible areas of compliance issues and works towards the resolution of the same. She assists the Board and the Corporate Governance Committee in the performance of their governance functions, including their duties to oversee the formulation or review and implementation of the Corporate Governance structure and policies of the Company.
Ms. Michele F. Abellanosa, 51, is the Vice President, Corporate Controllership and Chief Compliance Officer of JGSHI. She was appointed as the Chief Compliance Officer on May 14, 2021. She brings with her 24 years of experience in finance and is mainly responsible for the consolidated financial statements of the JG group of companies, as well as heading the Controllership of JGSHI and JG Summit Capital Services Corporation. Prior to joining JGSHI, she practiced public accounting with SGV & Co. She obtained her BS Accountancy degree, cum laude from the University of Santo Tomas and is a Certified Public Accountant.
Compliance Report
The Company submitted the Integrated Corporate Governance Report (I-ACGR) to the Securities and Exchange Commission (SEC) and Philippine Stock Exchange (PSE) on May 27, 2021. The I-ACGR is a reportorial requirement under SEC Memorandum Circular No. 15 series of 2017 to all PLCs to disclose the Company’s compliance/non-compliance with the recommendations provided under the Corporate Governance Code for PLCs. With the “comply or explain” approach, voluntary compliance to recommended CG best practices is combined with mandatory disclosure.
The Revised Corporate Governance Manual (RCGM) institutionalizes the principles of good corporate governance throughout the organization. It lays the foundation to the Company’s compliance system and identifies the responsibilities of the Board of Directors and Management in relation to corporate governance. It also states the Company's policies on disclosure and transparency, and mandates the conduct of communication and training programs on corporate governance. The Manual further provides the rights of all shareholders and the protection of the interest of the minority shareholders.
The Company's RCGM, Board of Directors and different Board Committee Charters, corporate governance organizational structure are regularly reviewed to ensure compliance with regulatory issuances and to keep pace with the constant development of corporate governance best practices. Continuous improvement and monitoring of governance and management policies have been undertaken to ensure that the Corporation observes good governance. The Company also consistently strives to raise its financial reporting standards by adopting and implementing prescribed Philippine Financial Reporting Standards.
Corporate Governance Policies
To reinforce the governance framework, the Company put in place and adopted policies on Board Diversity, Board Nomination and Election, Succession Planning and Remuneration, Material Related Party Transactions, Insider Trading, Whistleblowing, Stakeholders Health, Safety and Welfare, Information Security, Data Privacy, Supplier Accreditation, Directors, Officers, Stockholders and Related Interests (DOSRI), Disclosure, among others.
The above-mentioned corporate governance documents and policies may be accessed in the Company’s website, in the Governance section.
Stakeholders Welfare, Transparency, and Anti-corruption
Duty to Shareholders
The Company is committed to ensuring fair and equitable treatment of all shareholders, including the minority, and the protection of their rights that include, right to vote on all matters that require their consent or approval, right to inspect corporate books and records, right to information, right to dividends and appraisal right.
JGS is transparent and fair in the conduct of its annual and special Shareholders’ meetings. To foster active shareholder participation, the Board sends the Notice of Annual and Special Shareholders’ Meeting with sufficient and relevant information at least fifteen (15) business days before the meeting, which also complies with the Securities Regulation Code. The Shareholders are encouraged to personally attend such meetings. Shareholders who are unable to attend are apprised ahead of time of their right to appoint a proxy. Subject to the requirements of law, rules and regulations and the By-Laws, the exercise of that right shall not be unduly restricted and any doubt about the validity of a proxy shall be resolved in the favor of the shareholder.
Duty to Other Stakeholders
The Company recognizes and places importance on the interdependence between business and society, and promotes a mutually beneficial relationship that encourages the Company’s sustainable growth, while contributing to the advancement of the society where it operates. The Company employs value chain processes that take into consideration the Economic, Environmental, Social and Governance (EESG) issues and concerns.
Customers’ Welfare
The Company adopts customer relations policies and procedures to protect customer’s welfare. This includes providing and making available the customer relations contact information empowered to address and attend to customer questions and concerns.
Supplier & Contractor Selection
The Company follows the Supplier Accreditation Policy to ensure that the Company’s suppliers and contractors are qualified to meet its commitments. Apart from the accreditation process, suppliers and contractors also undergo orientation on Company policies and ethical practices.
Employees
The Board also establishes policies, programs and procedures that encourage employees to actively participate in the realization of the Company’s goals and its governance including but not limited to:
- Health, Safety and Welfare
- Training and Development
- Rewards, Compensation and Benefits
Performance-enhancing mechanisms for employee participation
The Company complies with the standards and policies set by the Department of Labor and Employment. Likewise, the Company has Security and Safety Manuals that are implemented, reviewed and regularly updated to ensure the security, safety, health, and welfare of the employees in the workplace.
Anti-corruption programs and procedures
The ethical and behavioral standards that are expected of Directors, Officers and Employees are set out and embodied in the Company’s Code of Conduct and Ethics, Anti-Corruption Programs, Company Policies and Offenses Subject to Disciplinary Action (OSDA), among others. The same are disseminated to all employees across the Company through training sessions to embed them in the Company culture. New employees are oriented regarding policies and procedures related to Business Conduct and Ethics. Further, all concerned employees of the Conglomerate are required to comply with the Self-Disclosure Activity on Conflict of Interest and Declaration of Gifts Received on an annual basis.
The Company also has an established suitable framework for whistleblowing and carries out its enforcement to allow employees and other stakeholders to freely communicate their concerns about illegal or unethical practices, without fear of retaliation and to have direct access to an independent member of the Board or a unit created to handle whistleblowing concerns.
Any employee, business partner and other stakeholders may discuss or disclose in writing any concern on potential violation of the Code of Business Conduct with the Conflicts of Interest Committee (CICOM). Reports can be made in writing or by email using the following contact details:
Email:
Mailing Address:
40/F Robinsons Equitable Tower ADB Avenue cor P. Poveda St.,
Ortigas Center, Pasig City Metro Manila, Philippines
All information received in connection with the reports or disclosures shall be strictly confidential and shall not be disclosed to any person without prior consent of CICOM.
The Company also launched “i-Speak”, an online whistleblowing portal available for access 24/7 by the public in the Company’s website. Access to i-Speak is through this web link: i-Speak Report
The anti-corruption programs and procedures of the Company covers the following:
- Conflict of Interest
- Conduct of Business and Fair Dealings
- Receipt of Gifts from Third Parties
- Compliance with Laws and Regulations
- Respect for Trade Secrets/Use of Non-public Information
- Use of Company Funds, Assets and Information
- Employment and Labor Laws and Policies
- Disciplinary Action
- Whistleblowing
- Resolution of Conflicts
Enterprise Risk Management and Internal Controls
The Company recognizes the increasing importance of sound risk management practices to drive business growth and sustainability. The Company implemented systems and processes to facilitate proper risk identification, monitoring and control, which are key to effective corporate governance. Timely and accurate management and financial reporting systems, internal controls, and audits are also employed to protect and maximize stakeholders’ value.
The Board oversees Management’s adoption and implementation of a sound risk management framework for identifying, monitoring and managing key risk areas. The Board of Directors reviews Management reports with due diligence to enable the company to anticipate, minimize, control and manage risks or possible threats to its operational and financial viability.
Effective July 1, 2021, the Board has appointed Mr. Brian M. Go as Chief Finance and Risk Officer (CFRO) of JGSHI. Under the controls function, the CFRO is the steward of risk management, specifically those that have financial impact and affect company value.
Enterprise Risk Management (ERM)
The role of ERM is to oversee that a sound ERM framework is in place to effectively identify, monitor, assess and manage key business risks. The risk management framework shall guide the Board in identifying units/business lines and enterprise-level risk exposures, as well as the effectiveness of risk management strategies.
Internal Controls
To further advocate the Company’s commitment in the pursuit of good governance and achieving compliance with applicable laws and Company policies and procedures, the Company ensures to strengthen the Enterprise Governance, Risk Management and Compliance (GRC) Culture and maintain a strong system of internal controls focused on accountability and oversight of operations. With the leadership of the Company’s Chief Finance and Risk Officer (CFRO), internal control is embedded in the operations of the company and in each Business Unit (BU) and Corporate Center Unit (CCU). To accomplish the established goals and objectives, the BUs and CCUs implement robust and efficient process controls to ensure:
- Compliance with policies, procedures, laws and regulations
- Economic and efficient use of resources
- Check and balance and proper segregation of duties
- Identification and remediation control weaknesses
- Reliability and integrity of information
- Proper safeguarding of company resources and protection of company assets through early detection and prevention of fraud
Accountability and Audit
The Board ensures that its Shareholders are provided with a balanced and comprehensive assessment of the Company’s performance, position and prospects on a quarterly basis. Interim and other reports that could adversely affect its business are also made available in the Company website including its submissions and disclosures to the SEC and PSE.
Effective July 1, 2021, the Board has appointed Ms. Rya Aissa Agustin as the new Chief Audit Executive (CAE) upon the recommendation of the Audit Committee.
Internal Audit
The Internal Audit Group is focused on adhering to their purpose, mission and vision to be the trusted advisors of the Conglomerate’s Board and Management and be world-class internal audit professionals who deliver independent, objective, quality and agile audit services at benchmark value, enabled by innovative audit systems and technologies.
The scope of internal audit activities encompasses, but is not limited to, objective examinations of evidence for the purpose of providing independent assessments to the Audit Committee, management, and outside parties on the adequacy and effectiveness of governance, risk management, and control processes for JGS. The Internal audit assessments include evaluating whether:
- Risks relating to the achievement of JGSHI’s strategic objectives are appropriately identified and managed.
- The actions of JGSHI officers, directors, employees, and contractors are in compliance with JGSHI’s policies, procedures, and applicable laws, regulations, and governance standards.
- The results of operations or programs are consistent with established goals and objectives.
- Operations or programs are being carried out effectively and efficiently.
- Established processes and systems enable compliance with the policies, procedures, laws, and regulations that could significantly impact JGSHI.
- Information and the means used to identify, measure, analyze, classify, and report such information are reliable and have integrity.
- Resources and assets are acquired economically, used efficiently, and protected adequately.
The Internal Audit Group provide the following services to the Company:
Assurance Services
Refers to the objective examination of evidence to provide an independent assessment of risk management, control or governance processes for the organization.
Consulting Services
Refers to the advisory or partnering activities, beyond JGSHI Internal Audit’s assurance services, intended to directly aid line managers in meeting their goals. The nature and scope of the work to be performed under these engagements are agreed upon with the clients/proponents.
Investigative Services
Refers to an investigation which is a special purpose type of audit. Its primary purpose is to gather, develop, examine and/or evaluate evidence to determine if there has been an improper act committed by a person or entity and allegations of an improper act which carry with them the possibility of legal action, whether in the form of hearings, litigations, or criminal proceedings.
Other Matters
External Auditor and their fees
Name of Auditor
Audit and Audit-Related Fees
Fees for services that are normally provided by the external auditor in connection with statutory and regulatory filings or engagements
Total
Year 2021
Php 4,200,000
Php 4,200,000
Dividends
The Board of Directors of JGS approved on May 13, 2021 the declaration of a regular cash dividend in the amount of Thirty Eight Centavos (P0.38) per common share from unrestricted retained earnings of JGS as of December 31, 2020 to all stockholders of record as of June 11, 2021 and paid on July 7, 2021.
Company Website
The Company updates the public with operating and financial results through timely disclosures filed with SEC and PSE. The company website is maintained to ensure investor-friendliness and the convenient access of information for all the shareholders and various stakeholders. The Company website contains comprehensive information about the Company’s business portfolios, disclosures and reports, corporate governance reports, manual and policies, press releases and an archive thereof, vision, mission, core values, investor relations program, sustainability and corporate social responsibility activities, among others. The Company ensures that all information included in the Company website is accurate, relevant and up-to-date. These are available on the company’s website:
