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Lecture 2-SEC Code of Corporate Governance

Lecture 2 focuses on the SEC Code of Corporate Governance for publicly-listed companies, emphasizing the importance of governance responsibilities of the Board of Directors. It outlines the 'comply and explain approach' and the need for a code of business conduct to ensure ethical behavior within companies. The lecture also discusses the establishment of board committees and the assessment of board performance and effectiveness.

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FELIPE, GLAISEN PEARL M.
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19 views1 page

Lecture 2-SEC Code of Corporate Governance

Lecture 2 focuses on the SEC Code of Corporate Governance for publicly-listed companies, emphasizing the importance of governance responsibilities of the Board of Directors. It outlines the 'comply and explain approach' and the need for a code of business conduct to ensure ethical behavior within companies. The lecture also discusses the establishment of board committees and the assessment of board performance and effectiveness.

Uploaded by

FELIPE, GLAISEN PEARL M.
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

ACC 132 – Governance, Business Ethics, Risk Management, and Internal Control

LECTURE 2: SEC Code of Corporate Governance for Publicly-Listed Companies

Expected Learning Outcomes


After studying Lecture 2, we should be able to:
1. Understand the need for the Code of Governance for publicly-listed companies;
2. Know the sixteen (16) governance responsibilities of the Board of Directors of publicly-listed
companies;
3. Explain the meaning of “comply and explain approach”;
4. Describe the three aspects of the Code, namely Principles, Recommendations and
Explanations;
5. Know what constitutes a component board and how can it be established;
6. Understand the composition, functions and responsibilities of the board committees that can
be established such as the Audit Committee, Corporate Governance Committee, Board Risk
Oversight Committee and Related Party Transaction Committee;
7. Know how the directors can show full commitment to the company;
8. Understand how independence and objectivity of the board can be reinforced and enhanced;
and
9. Describe how the performance and effectiveness of the board can be assessed.

Securities and Exchange Commission (SEC) Memorandum Circular No. 19, Series of 2016

On November 10, 2016, the Securities and Exchange Commission approved the Code of Corporate
Governance for publicly-listed companies. Its goal is to help companies develop and sustain an
ethical corporate culture and keep abreast with recent developments in corporate governance.

One of its salient provisions is for publicly-listed companies to establish a code of business conduct
and submit a new manual on Corporate Governance that would “provide standards for professional
and ethical behavior as well as articulate acceptable and unacceptable conduct and practices”. The
Board of Directors is required to implement the code ad make sure that management and
employees comply with the internal policies set.

While many companies have already developed their Code of Business Conduct and Ethics, the
real challenge is in its implementation and monitoring compliance.

References:
Cabrera, M. B., Cabrera, G. B. and Cabrera, B. B. (2021). Corporate Governance, Business Ethics,
Risk Management and Internal Control (2021-2022 Edition). GIC Enterprises & Co., Inc.

Meneses, J. L. and Villaceran, E. V. (2022). Governance, Business Ethics, Risk Management and
Internal Control (First Edition).

Securities and Exchange Commission. (2016). Memorandum Circular No. 19. s. 2016 – Code of
Corporate Governance for Publicly-Listed Companies. Retrieved September 10, 2021 from
[Link]

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