Corporate Governance Republic of

Republic of the Philippines

SECURITIES AND EXCHANGE COMMISSION

SEC Building, EDSA, Greenhills

Mandaluyong City

SEC Memorandum Circular No. 6

Series of 2009

REVISED CODE OF CORPORATE GOVERNANCE

Pursuant to its mandate under the Securities Regulation Code and the Corporation

Code, the Securities and Exchange Commission (the “Commission”), in a meeting

held on June 18, 2009, approved the promulgation of this Revised Code of

Corporate Governance (the “Code”) which shall apply to registered corporations and

to branches or subsidiaries of foreign corporations operating in the Philippines that

(a) sell equity and/or debt securities to the public that are required to be registered

with the Commission, or (b) have assets in excess of Fifty Million Pesos and at least

two hundred (200) stockholders who own at least one hundred (100) shares each of

equity securities, or (c) whose equity securities are listed on an Exchange; or (d) are

grantees of secondary licenses from the Commission.

Article 1: Definition of Terms

a) Corporate Governance – the framework of rules, systems and processes in

the corporation that governs the performance by the Board of Directors and

Management of their respective duties and responsibilities to the

stockholders;

b) Board of Directors – the governing body elected by the stockholders that

exercises the corporate powers of a corporation, conducts all its business and

controls its properties;

c) Exchange – an organized market place or facility that brings together buyers

and sellers, and executes trades of securities and/or commodities;

d) Management – the body given the authority by the Board of Directors to

implement the policies it has laid down in the conduct of the business of the

corporation;

e) Independent director – a person who, apart from his fees and

shareholdings, is independent of management and 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;

f) Executive director – a director who is also the head of a department or unit

of the corporation or performs any work related to its operation;

g) Non–executive director – a director who is not the head of a department or

unit of the corporation nor performs any work related to its operation;

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h) Non-audit work – the other services offered by an external auditor to a

corporation that are not directly related and relevant to its statutory audit

functions, such as, accounting, payroll, bookkeeping, reconciliation, computer

project management, data processing, or information technology outsourcing

services, internal audit, and other services that may compromise the

independence and objectivity of an external auditor;

i) Internal control – the system established by the Board of Directors and

Management for the accomplishment of the corporation’s objectives, the

efficient operation of its business, the reliability of its financial reporting, and

faithful compliance with applicable laws, regulations and internal rules;

j) Internal control system – the framework under which internal controls are

developed and implemented (alone or in concert with other policies or

procedures) to manage and control a particular risk or business activity, or

combination of risks or business activities, to which the corporation is

exposed;

k) Internal audit – an independent and objective assurance activity designed to

add value to and improve the corporation’s operations, and help it accomplish

its objectives by providing a systematic and disciplined approach in the

evaluation and improvement of the effectiveness of risk management, control

and governance processes;

l) Internal audit department – a department or unit of the corporation and its

consultants, if any, that provide independent and objective assurance services

in order to add value to and improve the corporation’s operations;

m) Internal Auditor – the highest position in the corporation responsible for

internal audit activities. If internal audit activities are performed by outside

service providers, he is the person responsible for overseeing the service

contract, the overall quality of these activities, and follow-up of engagement

results.

Article 2: Rules of Interpretation

A) All references to the masculine gender in the salient provisions of this

Code shall likewise cover the feminine gender.

B) All doubts or questions that may arise in the interpretation or

application of this Code shall be resolved in favor of promoting

transparency, accountability and fairness to the stockholders and

investors of the corporation.

Article 3: Board Governance

The Board of Directors (the “Board”) is primarily responsible for the

governance of the corporation. Corollary to setting the policies for the

accomplishment of the corporate objectives, it shall provide an independent

check on Management.

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A) Composition of the Board

The Board shall be composed of at least five (5), but not more than

fifteen (15), members who are elected by the stockholders.

All companies covered by this Code shall have at least two (2)

independent directors or such number of independent directors that

constitutes twenty percent (20%) of the members of the Board,

whichever is lesser, but in no case less than two (2). All other

companies are encouraged to have independent directors in their

boards.

The membership of the Board may be a combination of executive and

non-executive directors (which include independent directors) in order

that no director or small group of directors can dominate the decision-

making process.

The non-executive directors should possess such qualifications and

stature that would enable them to effectively participate in the

deliberations of the Board.

B) Multiple Board Seats

The Board may consider the adoption of guidelines on the number of

directorships that its members can hold in stock and non-stock

corporations. The optimum number should take into consideration the

capacity of a director to diligently and efficiently perform his duties and

responsibilities.

The Chief Executive Officer (“CEO”) and other executive directors may

be covered by a lower indicative limit for membership in other boards.

A similar limit may apply to independent or non-executive directors

who, at the same time, serve as full-time executives in other

corporations. In any case, the capacity of the directors to diligently and

efficiently perform their duties and responsibilities to the boards they

serve should not be compromised.

C) The Chair and Chief Executive Officer

The roles of Chair and CEO should, as much as practicable, 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 functions should be made between

the Chair and CEO upon their election.

If the positions of Chair and CEO are unified, the proper checks and

balances should be laid down to ensure that the Board gets the benefit

of independent views and perspectives.

The duties and responsibilities of the Chair in relation to the Board may

include, among others, the following:

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(i) Ensure that the meetings of the Board are held in accordance

with the by-laws or as the Chair may deem necessary;

(ii) Supervise the preparation of the agenda of the meeting in

coordination with the Corporate Secretary, taking into

consideration the suggestions of the CEO, Management

and the directors; and

(iii) Maintain qualitative and timely lines of communication

and information between the Board and Management.

D) Qualifications of Directors

In addition to the qualifications for membership in the Board provided

for in the Corporation Code, Securities Regulation Code and other

relevant laws, the Board may provide for additional qualifications which

include, among others, the following:

(i) College education or equivalent academic degree;

(ii) Practical understanding of the business of the corporation;

(iii) Membership in good standing in relevant industry, business or

professional organizations; and

(iv) Previous business experience.

E) Disqualification of Directors

1. Permanent Disqualification

The following shall be grounds for the permanent disqualification of a

director:

(i) Any person convicted by final judgment or order by a competent

judicial or administrative body of any crime that (a) involves the

purchase or sale of securities, as defined in the Securities

Regulation Code; (b) arises out of the person’s conduct as an

underwriter, broker, dealer, investment adviser, principal,

distributor, mutual fund dealer, futures commission merchant,

commodity trading advisor, or floor broker; or (c) arises out of

his fiduciary relationship with a bank, quasi-bank, trust

company, investment house or as an affiliated person of any of

them;

(ii) Any person who, by reason of misconduct, after hearing, is

permanently enjoined by a final judgment or order of the

Commission or any court or administrative body of competent

jurisdiction from: (a) acting as underwriter, broker, dealer,

investment adviser, principal distributor, mutual fund dealer,

futures commission merchant, commodity trading advisor, or

floor broker; (b) acting as director or officer of a bank, quasi-

bank, trust company, investment house, or investment company;

(c) engaging in or continuing any conduct or practice in any of

the capacities mentioned in sub-paragraphs (a) and (b) above,

or willfully violating the laws that govern securities and banking

activities.

The disqualification shall also apply if such person is currently

the subject of an order of the Commission or any court or

administrative body denying, revoking or suspending any

registration, license or permit issued to him under the

Corporation Code, Securities Regulation Code or any other law

administered by the Commission or Bangko Sentral ng Pilipinas

(BSP), or under any rule or regulation issued by the Commission

or BSP, or has otherwise been restrained to engage in any

activity involving securities and banking; or such person is

currently the subject of an effective order of a self-regulatory

organization suspending or expelling him from membership,

participation or association with a member or participant of the

organization;

(iii) Any person convicted by final judgment or order by a court or

competent administrative body of an offense involving moral