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Macay Holdings, Inc. 2015 Annual Corporate Governance Report 1
MACAY HOLDINGS, INC. ANNUAL CORPORATE GOVERNANCE REPORT
Macay Holdings, Inc. 2015 Annual Corporate Governance Report 2
SECURITIES AND EXCHANGE COMMISSION
SEC FORM – ACGR
ANNUAL CORPORATE GOVERNANCE REPORT
1. Report is Filed for the Year : 2015
2. SEC Identification Number: PW998
3. BIR Tax Identification Number: 000-410-269
4. Exact Name of Registrant as Specified in its Charter: MACAY HOLDINGS, INC.
5. Province , country or other jurisdiction of incorporation or organization
Philippines
6. Industry Classification Code (SEC Use Only)
7. Address of Principal Office Postal Code
137 Yakal Street, San Antonio Village, Makati City 1203
8. Issuer’s Telephone number, including area code
(632) 893-0733
9. Former name or former address, if changed from the last report
Maybank ATR Kim Eng Financial Corporation
10. Securities registered pursuant to Sections 8 and 12 of the Code, or Sections 4 and 8 of the RSA
Title of each Class Number of Shares of common
Stock Outstanding
Amount of debt outstanding (Unpaid
Subscription)
Common Share 1,068,393,223 None
11. Are any or all of the securities listed on a Stock Exchange?
Yes [ x ] No [ ]
If yes, state the name of such Stock Exchange and the class/es of securities listed therein:
THE PHILIPPINE STOCK EXCHANGE, INC.
Macay Holdings, Inc. 2015 Annual Corporate Governance Report 3
TABLE OF CONTENTS
A. BOARD MATTERS ............................................................................................................ 5
1) Board of Directors ................................................................................................................. 5
2) Chairman and CEO .............................................................................................................. 15
3) Succession Plan for Board of Directors and Senior Management ......................................... 17
4) Other Executive, Non-Executive and Independent Directors ............................................... 17
5) Changes in the Board of Directors ....................................................................................... 21
6) Orientation and Education Program .................................................................................... 28
B. CODE OF BUSINESS CONDUCT & ETHICS ....................................................................... 28
1) Policies ............................................................................................................................... 28
2) Dissemination of Cost of Ethics or Conduct ......................................................................... 28
3) Implementation of and Compliance with Code .................................................................... 29
4) Related Party Transactions .................................................................................................. 29
5) Family, Commercial and Contractual Relations .................................................................... 31
6) Alternative Dispute Resolution ............................................................................................ 32
C. BOARD MEETINGS & ATTENDANCE .............................................................................. 32
1) Schedule of Meetings.......................................................................................................... 32
2) Attendance of Directors ...................................................................................................... 32
3) Separate Meetings of Non-Executive Directors ................................................................... 32
4) Quorum Requirement ......................................................................................................... 32
5) Access to Information ......................................................................................................... 33
6) External Advice ................................................................................................................... 34
7) Change/s in existing policies ............................................................................................... 35
D. REMUNERATION MATTERS ........................................................................................... 35
1) Remuneration Process ........................................................................................................ 35
2) Remuneration Policy and Structure for Executive and Non-Executive Directors ................... 35
3) Aggregate Remuneration .................................................................................................... 36
4) Stock Rights, Options and Warrants .................................................................................... 37
5) Remuneration of Management ........................................................................................... 37
E. BOARD COMMITTEES ................................................................................................... 37
1) Number of Members, Functions and Responsibilities .......................................................... 37
2) Committee Members .......................................................................................................... 44
3) Changes in Committee Members ........................................................................................ 45
4) Work Done and Issues Addressed ....................................................................................... 45
5) Committee Program ........................................................................................................... 46
F. RISK MANAGEMENT SYSTEM........................................................................................ 46
1) Overall risk management philosophy of the company. ........................................................ 46
2) Risk Policy ........................................................................................................................... 47
3) Control System Set Up ........................................................................................................ 47
G. INTERNAL AUDIT AND CONTROL .................................................................................. 48
Macay Holdings, Inc. 2015 Annual Corporate Governance Report 4
1) Internal Control System ...................................................................................................... 49
2) Internal Audit ...................................................................................................................... 50
H. ROLE OF STAKEHOLDERS .............................................................................................. 52
1) Policies and Activities .......................................................................................................... 52
2) Corporate Social Responsibility ........................................................................................... 53
3) Performance-Enhancing Mechanisms for Employee Participation ....................................... 53
4) Procedures for Handling Employee Complaint .................................................................... 54
I. DISCLOSURE AND TRANSPARENCY ............................................................................... 54
1) Ownership Structure ........................................................................................................... 54
2) Annual Report Disclosures .................................................................................................. 54
3) External Auditor’s Fee ......................................................................................................... 55
4) Medium of Communication ................................................................................................ 55
5) Date of Release of Audited Financial: April 15, 2015 ............................................................ 55
6) Company Website ............................................................................................................... 55
7) Disclosure of RPT ................................................................................................................ 56
J. RIGHTS OF STOCKHOLDERS .......................................................................................... 56
1) Right to participate effectively in and vote in Annual/Special Stockholders’ Meetings ......... 56
2) Treatment of Minority Stockholders ................................................................................... 68
K. INVESTOR RELATIONS PROGRAM ................................................................................. 68
L. CORPORATE SOCIAL RESPONSIBILITY INITIATIVES........................................................ 69
M. BOARD, DIRECTOR, COMMITTEE AND CEO APPRAISAL ................................................ 70
N. INTERNAL BREACHES AND SANCTIONS......................................................................... 71
Macay Holdings, Inc. 2015 Annual Corporate Governance Report 5
A. BOARD MATTERS 1) Board of Directors
1. Number of Directors per Articles of Incorporation 13
2. Actual number of Directors for the year 13
(a) Composition of the Board (as of 31 December 2015)
Director’s Name Type [Executive (ED), Non-Executive (NED) or Independent Director (ID)]
If nominee, identify the principal
Date first elected
Date last elected (if ID, state the number of years served as ID)1
Elected when (Annual/ Special Meeting)
No. of Years served as Director
Alfredo M. Yao NED n.a. 25-Oct-2013 30-Jul-2015 Annual Stockholders Meeting
2 years and 3 months
Armando M. Yao NED n.a. 25-Oct-2013 30-Jul-2015 Annual Stockholders Meeting
2 years and 3 months
Jeffrey S. Yao ED n.a. 25-Oct-2013 30-Jul-2015 Annual Stockholders Meeting
2 years and 3 months
Carolyn S. Yao NED n.a 25-Oct-2013 30-Jul-2015 Annual Stockholders Meeting
2 years and 3 months
Mary Grace S. Yao NED n.a 25-Oct-2013 30-Jul-2015 Annual Stockholders Meeting
2 years and 3 months
Roberto A. Atendido
NED Mazy’s Capital, Inc.
25-Oct-2013 30-Jul-2015 Annual Stockholders Meeting
2 years and 3 months
Fernando R. Balatbat
ED Mazy’s Capital, Inc.
25-Oct-2013 30-Jul-2015 Annual Stockholders Meeting
2 years and 3 months
Antonio I. Panajon ED Mazy’s Capital, Inc.
25-Oct-2013 30-Jul-2015 Annual Stockholders Meeting
2 years and 3 months
Albert S. Toribio NED Mazy’s Capital, Inc.
25-Oct-2013 30-Jul-2015 Annual Stockholders Meeting
2 years and 3 months
Gerardo T. Garcia ED Mazy’s Capital, Inc.
25-Jul-2014 30-Jul-2015 Annual Stockholders Meeting
1 year and 6 months
Rinaldi C. Aves ED Mazy’s Capital, Inc.
25-Jul-2014 30-Jul-2015 Annual Stockholders Meeting
1 year and 6 months
1 Reckoned from the election immediately following July 30, 2015.
Macay Holdings, Inc. 2015 Annual Corporate Governance Report 6
Jesus G. Gallegos, Jr.
ID n.a. 25-Oct-2013 30-Jul-2015 Annual Stockholders Meeting
2 years and 3 months
Roberto F. Anonas, Jr.
ID n.a. 25-Oct-2013 30-Jul-2015 Annual Stockholders Meeting
2 years and 3 months
(b) Provide a brief summary of the corporate governance policy that the board of directors has adopted. Please emphasize the policy/ies relative to the treatment of all shareholders, respect for the rights of minority shareholders and of other stakeholders, disclosure duties, and board responsibilities.
The corporate governance policies adopted by the board of directors of the Corporation (the “Board”) are found in the Corporation’s Revised Manual on Corporate Governance (the “Manual”), as of 03 September 2014. The Manual contains sections on Shareholders’ Benefits, covering Investor’s Rights and Protection. Under the Manual, it is the duty of the directors to promote, and remove the impediments to, the exercise of shareholder’s rights and allow possibilities to seek redress for violation of their rights. The Board shall encourage the exercise of shareholder’s voting rights and the solution of collective action problems through appropriate mechanisms. The Board shall also be instrumental in removing excessive costs and other administrative or practical impediments to shareholders participating in meetings and/or voting in person. The directors shall pave the way for the electronic filing and distribution of shareholder information necessary to make informed decisions subject to legal constraints. Sec. 7 on Shareholders’ Benefits recognizes and enjoins the Board to respect the following rights of stockholders, to wit -
Voting Right - Shareholders have the right to elect, remove and replace directors
and vote on certain corporate acts in accordance with the Corporation Code.
- Cumulative voting shall be used in the election of directors. - A director shall not be removed without just cause if it will deny
minority shareholders representation in the Board.
Power of Inspection - All shareholders are allowed to inspect corporate books and
records, including minutes of Board meetings and stock registries in accordance with the Corporation Code and shall be furnished with annual reports, including financial statements, without cost or restrictions.
Right to Information - Shareholders shall be provided, upon request, with periodic reports
which disclose personal and professional information about the directors and officers and certain other matters such as their holdings with the Corporation’s shares, dealings with the
Macay Holdings, Inc. 2015 Annual Corporate Governance Report 7
Corporation, relationship among directors and key officers, and the aggregate compensation of directors and officers.
- The minority shareholders shall be granted the right to propose the holding of a meeting, and the right to propose items in the agenda of the meeting; provided the items are for legitimate business purposes.
- The minority shareholders shall have access to any and all information relating to matters for which the Management is accountable, except for matters covered by confidentiality agreements.
Right to Dividends - Shareholders shall have the right to receive dividends subject to the
discretion of the Board. - The Corporation shall be compelled to declare dividends when its
retained earnings is in excess of 100% of its paid-in capital stock, except: a) when justified by definite corporate expansion projects or programs approved by the Board or b) when the Corporation is prohibited under any loan agreement with any financial institution or creditor, whether local or foreign, from declaring dividends without its consent, and such consent has not been secured; or c) when it can be clearly shown that such retention is necessary under special circumstances obtaining in the Corporation, such as when there is a need for special reserve for probable contingencies.
Appraisal Right - The shareholders shall have appraisal right or the right to dissent and
demand payment of the fair value of their shares in the manner provided for under Sec. 82 of the Corporation Code of the Philippines, under any of the following circumstances:
a) In case any amendment to the articles of incorporation has the
effect of changing or restricting the rights of any stockholders or class of shares, or of authorizing preferences in any respect superior to those of outstanding shares of any class, or of extending or shortening the term of corporate existence;
b) In case of sale, lease, exchange, transfer, mortgage, pledge or other disposition of all or substantially all of the corporate property and assets as provided in the Corporation Code: and
c) In case of merger or consolidation. Furthermore, Sec. 6 of the Manual on the Reportorial or Disclosure System of the Company’s Corporate Governance Policies provides that the essence of corporate governance is transparency. It is therefore essential that all material information about the Corporation which could adversely affect its viability or interest of its stockholders and other stakeholders, such as earnings results, acquisition or disposition of assets, off balance sheet transactions, related party transactions, and direct and indirect remuneration of members of the Board and management, should be publicly and timely disclosed. All such information should be disclosed through the appropriate Philippine
Macay Holdings, Inc. 2015 Annual Corporate Governance Report 8
Stock Exchange (“PSE”) mechanism and submissions to the Securities and Exchange Commission (“SEC”). The Board is committed at all times to full disclosure of material information dealings and shall cause the filing of all required information through the appropriate PSE mechanisms for listed companies and submissions to the SEC for the interest of its stockholders and other stakeholders. The general responsibility of the Board of Directors include the following:
- The Board shall conduct itself with utmost honesty and integrity in the
discharge of its duties, functions, and responsibilities. - It is the Board’s responsibility to foster the long-term success of the
Corporation, and to sustain its competitiveness and profitability in a manner consistent with its corporate objectives and the best interests of its stockholders and other stakeholders.
- The Board should 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.
To ensure a high standard of best practice for the Corporation, shareholders, and other stakeholders, the Board shall conduct itself with honestly and integrity in the performance of its specific duties and functions –
a) 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. Appoint competent, professional, honest, and highly motivated management officers. Adopt an effective succession planning program for Management.
b) Provide sound strategic policies and guidelines to the Corporation on major investments and capital expenditures. Establish programs that can sustain its long-term viability and strength. Periodically evaluate and monitor the implementation of such policies and strategies, including the business plans, operating budgets and Management’s overall performance.
c) Ensure the Corporation’s faithful compliance with all applicable laws, regulations and best business practices.
d) Establish and maintain an investor relations program that will keep the stockholders informed of important developments in the Corporation. If feasible, the CEO or chief financial officer shall exercise oversight responsibility over this program.
e) Identify the Corporation’s stakeholders in the community in which it operates or are directly affected by its operations, and formulate a clear policy of accurate, timely and effective communication with them.
f) Adopt a system of check and balance within the Board. A regular review of the effectiveness of such system should be conducted to ensure the integrity of the decision-making and reporting processes at all times. There should be a continuing review of the Corporation’s internal control system in order to maintain its adequacy and effectiveness.
Macay Holdings, Inc. 2015 Annual Corporate Governance Report 9
g) Identify key risk areas and performance indicators and monitor these factors with due diligence to enable the Corporation to anticipate and prepare for possible threats to its operational and financial viability.
h) Formulate and implement policies and procedures that would ensure the integrity and transparency of related party transactions between and among the Corporation and its parent company, joint ventures, subsidiaries, associates, affiliates, major stockholders, officers and directors, including their spouses, children and dependent siblings and parents and of interlocking director relationships by members of the Board.
i) Constitute an Audit Committee and such other committees it deems necessary to assist the Board in the performance of its duties and responsibilities.
j) Establish and maintain an alternative dispute resolution system in the Corporation that can amicably settle conflicts or differences between the Corporation and its stockholders, and the Corporation and third parties, including regulatory authorities.
k) Meet at such times or frequency as may be needed but no less than four (4) times during one calendar year. The minutes of such meetings should be duly recorded. Independent views during Board meetings should be encouraged and given due consideration.
l) Keep the activities and decisions of the Board within its authority under the articles of incorporation and by-laws, and in accordance with existing laws, rules and regulations.
m) Appoint a Compliance Officer with the rank of at least vice-president. In the absence of such appointment, the Corporate Secretary, preferably a lawyer, shall act as Compliance Officer.
n) Perform such other responsibilities as may be required under relevant rules and regulations.
A director’s office is one of trust and confidence. A director should act in the best interest of the Corporation in a manner characterized by transparency, accountability, and fairness. He or she should also exercise leadership, prudence, and integrity in directing the Corporation towards sustained progress. Accordingly, the Manual provides the duties and responsibilities of individual directors, as follows –
(a) Conduct fair business transactions with the Corporation and ensure that
his personal interest does not conflict with the interests of the Corporation.
The basic principle to be observed is that a director should not use his position to profit or gain some benefit or advantage for himself and/or his related interests. He should avoid situations that may compromise his impartiality. If an actual or potential conflict of interest may arise on the part of a director, he should fully and immediately disclose it and should not participate in the decision-making process. A director who has a continuing material conflict of interest should seriously consider resigning from his position.
A conflict of interest shall be considered material if the director’s
personal or business interest is antagonistic to that of the Corporation,
Macay Holdings, Inc. 2015 Annual Corporate Governance Report 10
or stands to acquire or gain financial advantage at the expense of the Corporation.
(b) Devote the time and attention necessary to properly and effectively
perform his duties and responsibilities. A director should devote sufficient time to familiarize himself with the
Corporation’s business. He should be constantly aware and knowledgeable of the Corporation’s operations to enable him to meaningfully contribute to the Board’s work.
Attendance in board meetings is crucial to the effectiveness of the
Board and establishing a quorum at meetings. He should attend and actively participate in Board and committee meetings, review meeting materials and, if called for, ask questions or seek explanation. He should be physically present in at least 50% of the Board meetings.
(c) Act judiciously. Before deciding on any matter brought before the Board, a director
should carefully evaluate the issues and, if necessary, make inquiries and request clarification.
The Board shall have access to complete, adequate, and timely
information from Management about matters to be taken up in their meetings. Reliance on information volunteered by Management may not be sufficient in all circumstances and further inquiries may have to be made by members of the Board to enable them to properly perform their duties and responsibilities. For this purpose, members shall be given independent access to Management and the Corporate Secretary on any issue which requires clarification.
(d) Exercise independent judgment. A director should view each problem or situation objectively. If a
disagreement with other directors arises, he should carefully evaluate and explain his position. He should not be afraid to take an unpopular position. Corollary, he should support plans and ideas that he thinks are beneficial to the Corporation.
(e) A director shall have working knowledge of the statutory and regulatory
requirements that affect the Corporation, including its articles of incorporation and by-laws, the rules and regulations of the Commission, and where applicable, the requirements of relevant regulatory agencies.
A director should keep abreast with industry developments and business
trends in order to promote the Corporation’s competitiveness.
Macay Holdings, Inc. 2015 Annual Corporate Governance Report 11
(f) Observe confidentiality. A director should keep secure and confidential all non-public
information he may acquire or learn by reason of his position as director. He should not reveal confidential information to unauthorized persons without the authority of the Board.
The Manual also provides for the duties and responsibilities of various Corporate Officers, namely, the Chairman, President, Treasurer, Corporate Secretary, Compliance Officer, External Auditor, and Internal Auditor.
(c) How often does the Board review and approve the vision and mission?
Under the Manual, it is the responsibility of the Board to 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. The Board has the authority and discretion to periodically review said vision, mission, strategic objectives, policies, and procedures.
(d) Directorship in Other Companies
(i) Directorship in the Company’s Group2
Identify, as and if applicable, the members of the company’s Board of Directors who hold the office of director in other companies within its Group:
Name Corporate Name of the Group Company
Type of Directorship (Executive, Non-Executive, Independent).
Indicate if the Director is also the Chairman.
Alfredo M. Yao ARC Refreshments Corp. Mega Asia Bottling Corp.
Asiawide Refreshments Corp. Money Mover’s Inc. AMY Holdings, Inc. Zest-O Corporation
Semexco Marketing Corp. Harman Foods
Uni-Ipel Industries, Inc. Solmac Mktg., Inc.
Pharma-Rex Asiawide Kalbe Phil., Inc.
ARC Holdings, Inc. SMI Development Corporation
Amchem Mktg., Inc. Bev-Pack, Inc.
Downtown Realty Investment Corp.
Mazy’s Capital, Inc.
Chairman Chairman Chairman Chairman Chairman Chairman Chairman Chairman Chairman Chairman Chairman
Non-Executive Chairman Chairman Chairman Chairman Chairman
Chairman
2 The Group is composed of the parent, subsidiaries, associates and joint ventures of the company.
Macay Holdings, Inc. 2015 Annual Corporate Governance Report 12
Armando M. Yao ARC Refreshments Mega Asia Bottling Corp.
Asiawide Refreshments Corp. AMY Holdings, Inc. Zest-O Corporation
Semexco Marketing Corp. Harman Foods
Uni-Ipel Solmac Mktg., Inc. ARC Holdings, Inc.
SMI Development Corporation Bev-Pack, Inc.
Down Town Realty Investment Corp.
Mazy’s Capital, Inc.
Non-Executive Director Executive Director
Non-Executive Director Non-Executive Director Non-Executive Director Non-Executive Director Non-Executive Director Non-Executive Director Non-Executive Director Non-Executive Director Non-Executive Director Non-Executive Director Non-Executive Director
Non-Executive Director
Jeffrey S. Yao ARC Refreshments Corp. Mega Asia Bottling Corp.
Asiawide Refreshments Corp. AMY Holdings, Inc. Zest-O Corporation
Semexco Marketing Corp. ARC Holdings, Inc.
Amchem Mktg., Inc. Bev-Pack, Inc.
Down Town Realty Investment Corp.
Mazy’s Capital, Inc. Philippine Business Bank
Executive Director Executive Director Executive Director
Non-Executive Director Non-Executive Director Non-Executive Director
Executive Director Non-Executive Director
Executive Director Executive Director
Executive Director
Vice-Chairman
Carolyn S. Yao Mega Asia Bottling Corp. AMY Holdings, Inc. Zest-O Corporation
Semexco Marketing Corp. Bev-Pack, Inc.
Down Town Realty Investment Corp.
Mazy’s Capital, Inc.
Non-Executive Director Executive Director Executive Director
Non-Executive Director Executive Director Executive Director
Executive Director
Mary Grace S. Yao ARC Refreshments Corp. Semexco Marketing Corp.
Down Town Realty Investment Corp.
Mazy’s Capital, Inc.
Non-Executive Director Non-Executive Director Non-Executive Director
Non-Executive Director
Antonio I. Panajon ARC Refreshments Corp. Asiawide Refreshments Corp.
Asiwide Kalbe Phil., Inc. ARC Holdings, Inc.
Pharmarex
Non-Executive Director Non-Executive Director Non-Executive Director Non-Executive Director
Executive Director
Albert S. Toribio ARC Refreshments Corp. Asiawide Refreshments Corp.
ARC Holdings, Inc.
Non-Executive Director Non-Executive Director Non-Executive Director
Fernando R. Balatbat Pharma-Rex
Executive Director
Macay Holdings, Inc. 2015 Annual Corporate Governance Report 13
Roberto A. Atendido Pharma-Rex Philippine Business Bank
Non-Executive Director Non-Executive Director
Gerardo T. Garcia ARC Refreshments Corp. Asiawide Refreshments Corp.
ARC Holdings, Inc.
Executive Director Executive Director Executive Director
Rinaldi C. Aves ARC Refreshments Corp. Asiawide Refreshments Corp.
ARC Holdings, Inc.
Non-Executive Director Non-Executive Director Non-Executive Director
(ii) Directorships in Other Listed Companies
Identify, as and if applicable, the members of the company’s Board of Directors who are also directors of publicly-listed companies outside of its Group:
Director’s Name Name of Listed
Company
Type of Directorship (Executive,
Non-Executive, Independent).
Indicate if director is also the
Chairman
Roberto A. Atendido Paxys, Inc. Non-Executive
(iii) Relationship with the Company and its Group
Provide details, as and if applicable, of any relation among the members of the Board of Directors, which links them to significant shareholders in the company and/or in its group:
Director’s Name Name of the Significant
Shareholder
Description of the
relationship
Alfredo M. Yao Mazy’s Capital, Inc. These directors are
incorporators and directors
of Mazy’s Capital, Inc. Mr.
Alfredo M. Yao and Mr.
Armando M. Yao are
brothers. Mr. Jeffrey S.
Yao, Ms. Carolyn S. Yao, and
Ms. Mary Grace S. Yao are
children of Mr. Alfredo Yao.
They are all thus relatives
up to the third degree of
consanguinity.
Armando M. Yao
Jeffrey S. Yao
Carolyn S. Yao
Mary Grace S. Yao
Macay Holdings, Inc. 2015 Annual Corporate Governance Report 14
(e) Has the company set a limit on the number of board seats in other companies (publicly listed, ordinary and companies with secondary license) that an individual director or CEO may hold simultaneously? In particular, is the limit of five board seats in other publicly listed companies imposed and observed? If yes, briefly describe other guidelines.
Guidelines Maximum Number
of Directorships in
other companies
Executive
Directors
The Chief Executive Officer and other executive
directors shall submit themselves to a low
indicative limit on membership in other
corporate boards. The same low limit shall apply
to independent, non-executive directors who
serve as full-time executives in other
corporations. In any case, the capacity of
directors to serve with diligence shall not be
compromised. (Section 3.2.1.2, Revised Manual
on Corporate Governance)
“low indicative limit”
Non-Executive
Directors
CEO
(f) Shareholding in the Company
Complete the following table on the members of the Company’s Board of Directors who directly and indirectly own shares in the Company.
Name of Director Number of
Direct Shares
Estimated Number of Indirect hares/Through (name of record owner)
Total direct & indirect shares
% to Total Outstanding
Shares
Alfredo M. Yao 1 0 1 -nil-
Armando M. Yao 1 0 1 -nil-
Carolyn S. Yao 1 0 1 -nil-
Jeffrey S. Yao 1 0 1 -nil-
Mary Grace S. Yao 1 0 1 -nil-
Antonio I. Panajon 1 0 1 -nil-
Fernando R. Balatbat 1 0 1 -nil-
Roberto A. Atendido 1 0 1 -nil-
Albert S. Toribio 1 0 1 -nil-
Gerardo T. Garcia 1 0 1 -nil-
Rinaldi C. Aves 1 0 1 -nil-
Jesus G. Gallegos, Jr. 1 0 1 -nil-
Roberto F. Anonas, Jr. 1 0 1 -nil-
Total 13 0 13
Macay Holdings, Inc. 2015 Annual Corporate Governance Report 15
2) Chairman and CEO
(a) Do different persons assume the role of Chairman of the Board of Directors and CEO? If no, describe the checks and balances laid down to ensure that the Board gets the benefit of independent views.
Yes ☑ No ☐ Identify the Chairman and CEO
Chairman of the Board Alfredo M. Yao
CEO/President Antonio I. Panajon
(b) Roles, Accountabilities and Deliverables
Define and clarify the roles, accountabilities and deliverables of the Chairman and CEO. As provided under the Manual and the Amended By-laws of the Corporation.
Definition Chairman President/Chief Executive Officer
Role,
Accountabilities
and Deliverables
Under Art. III, Sec. 5 of the
Corporation’s Amended By-laws
and Sec. 3.3.3 of the Manual, it is
the duty of the Chairman to
preside at all meetings of the
Board of Directors and the
stockholders and to exercise such
powers and perform such duties
as the Board of Directors may
assign to him.
Furthermore, Sec. 3.3.3 of the
Manual also provides the
following duties and
responsibilities for the Chairman:
(a) Ensure that the meetings of
the Board are held in
accordance with the
Corporation’s By-laws or as
he may deem necessary.
(b) Supervise the preparation of
the agenda of the meeting in
coordination with the
The President or Chief Executive
Officer of the Corporation shall be
responsible for the effective
management of the Company. Under
the Amended By-laws of the
Corporation and the Manual, he is
tasked with the following:
To be responsible for the general supervision of the business affairs and property of the Corporation;
Have general supervision and
management of the business
affairs and property of the
Corporation.
To initiate and develop corporate objectives and policies and formulate long range projects, plans and programs for the approval of the Board;
Macay Holdings, Inc. 2015 Annual Corporate Governance Report 16
Corporate Secretary, taking
into consideration the
suggestions of the Chief
Executive Officer,
Management, and the
directors.
(c) Maintain qualitative and
timely lines of
communication and
information between the
Board and Management.
To establish general administrative and operating policies and to ensure that they are carried out under his supervision and control;
To assign the exercise or performance of his powers, duties and functions to any other officer or officers, subject always to his supervision and control;
To represent the Corporation at all functions and proceedings or to designate the representative or proxy of the Corporation in all meetings at which the Corporation must be present;
To execute on behalf of the corporation all contracts, obligations and agreements which require the approval of the board of directors, except as otherwise directed by the board of directors;
To make and present reports to the board of directors and stockholders;
To sign certificates of stock;
To preside at meetings of the board of directors and stockholders in the absence of the Chairman;
Identify, evaluate, and
recommend investment
opportunities for the
Corporation, for the approval
of the Board.
Provide the necessary
leadership for Management
in planning, developing, and
implementing business
strategies, plans, and budgets
as approved by the Board in
keeping with the
Corporation’s mission, vision,
and corporate objectives.
Macay Holdings, Inc. 2015 Annual Corporate Governance Report 17
Oversee the preparation of
the budgets and the financial
statements of the
Corporation; sign/execute
such reports of the
Corporation as may be
required by regulatory
bodies.
To exercise such other powers and perform such other duties as are incident to his office or are entrusted and assigned to him by the Board of Directors.
3) Succession Plan for Board of Directors and Senior Management
Explain how the board of directors plans for the succession of the CEO/Managing
Director/President and the top key management positions?
It is the duty of the Board to adopt an effective succession planning program for Management under Sec. 3.1.3(a) of the Manual.
4) Other Executive, Non-Executive and Independent Directors Does the company have a policy of ensuring diversity of experience and background of directors in the board?
Sec. 3.1.1 of the Manual mandates that the Board should have a mix of executive and non-executive members, including independent directors. Under Sec. 3.1.3(a) of the Revised Manual on Corporate Governance, the Board is tasked to 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 and appoint competent, professional, honest, and highly motivated management officers. Does it ensure that at least one non-executive director has an experience in the sector or industry the company belongs to? Please explain. Yes. The Manual provides that the Nomination Committee shall consider the nature of the business of the corporations of which a candidate is a director among the guidelines in the determination of the number of directorships for the Board (Sec. 3.2.1.2, Revised Manual on Corporate Governance). Sec. 3.2.1.2 of the Manual also requires that a director must be at least a college graduate or possess an equivalent academic degree or have at least five (5) years experience in business to substitute for such formal education.
Macay Holdings, Inc. 2015 Annual Corporate Governance Report 18
Further, one of the specific duties and responsibilities of a director is to keep abreast with industry developments and business trends in order to promote the Corporation’s competitiveness.
Define and clarify the roles, accountabilities and deliverables of the Executive, Non-Executive and Independent Directors: Sec. 3.1.2 of the Manual provides for the general responsibility of the Board of Directors include the following:
- The Board shall conduct itself with utmost honesty and integrity in the
discharge of its duties, functions, and responsibilities. - It is the Board’s responsibility to foster the long-term success of the
Corporation, and to sustain its competitiveness and profitability in a manner consistent with its corporate objectives and the best interests of its stockholders and other stakeholders.
- The Board should 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.
To ensure a high standard of best practice for the Corporation, shareholders, and other stakeholders, Sec. 3.1.3 of the Manual provides that the Board shall conduct itself with honestly and integrity in the performance of its specific duties and functions –
a) 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. Appoint competent, professional, honest, and highly motivated management officers. Adopt an effective succession planning program for Management.
b) Provide sound strategic policies and guidelines to the Corporation on major investments and capital expenditures. Establish programs that can sustain its long-term viability and strength. Periodically evaluate and monitor the implementation of such policies and strategies, including the business plans, operating budgets and Management’s overall performance.
c) Ensure the Corporation’s faithful compliance with all applicable laws, regulations and best business practices.
d) Establish and maintain an investor relations program that will keep the stockholders informed of important developments in the Corporation. If feasible, the CEO or chief financial officer shall exercise oversight responsibility over this program.
e) Identify the Corporation’s stakeholders in the community in which it operates or are directly affected by its operations, and formulate a clear policy of accurate, timely and effective communication with them.
f) Adopt a system of check and balance within the Board. A regular review of the effectiveness of such system should be conducted to ensure the integrity of the decision-making and reporting processes at all times. There should be a continuing review of the Corporation’s internal control system in order to maintain its adequacy and effectiveness.
Macay Holdings, Inc. 2015 Annual Corporate Governance Report 19
g) Identify key risk areas and performance indicators and monitor these factors with due diligence to enable the Corporation to anticipate and prepare for possible threats to its operational and financial viability.
h) Formulate and implement policies and procedures that would ensure the integrity and transparency of related party transactions between and among the Corporation and its parent company, joint ventures, subsidiaries, associates, affiliates, major stockholders, officers and directors, including their spouses, children and dependent siblings and parents and of interlocking director relationships by members of the Board.
i) Constitute an Audit Committee and such other committees it deems necessary to assist the Board in the performance of its duties and responsibilities.
j) Establish and maintain an alternative dispute resolution system in the Corporation that can amicably settle conflicts or differences between the Corporation and its stockholders, and the Corporation and third parties, including regulatory authorities.
k) Meet at such times or frequency as may be needed but no less than four (4) times during one calendar year. The minutes of such meetings should be duly recorded. Independent views during Board meetings should be encouraged and given due consideration.
l) Keep the activities and decisions of the Board within its authority under the articles of incorporation and by-laws, and in accordance with existing laws, rules and regulations.
m) Appoint a Compliance Officer with the rank of at least vice-president. In the absence of such appointment, the Corporate Secretary, preferably a lawyer, shall act as Compliance Officer.
n) Perform such other responsibilities as may be required under relevant rules and regulations.
Keeping in mind that a director’s office is one of trust and confidence, individual directors are enjoined to act in the best interest of the Corporation in a manner characterized by transparency, accountability, and fairness. He or she should also exercise leadership, prudence, and integrity in directing the Corporation towards sustained progress. Thus, Sec. 3.1.4 of the Manual provides the duties and responsibilities of individual directors, as follows –
(a) Conduct fair business transactions with the Corporation and ensure that
his personal interest does not conflict with the interests of the Corporation. – A director should not use his position to profit or gain some benefit or advantage for himself and/or his related interests. He should avoid situations that may compromise his impartiality. If an actual or potential conflict of interest may arise on the part of a director, he should fully and immediately disclose it and should not participate in the decision-making process. A director who has a continuing material conflict of interest should seriously consider resigning from his position.
(b) Devote the time and attention necessary to properly and effectively
perform his duties and responsibilities. – A director should devote sufficient time to familiarize himself with the Corporation’s business. He should be constantly aware and knowledgeable of the Corporation’s
Macay Holdings, Inc. 2015 Annual Corporate Governance Report 20
operations to enable him to meaningfully contribute to the Board’s work. He should attend and actively participate in Board and committee meetings, review meeting materials and, if called for, ask questions or seek explanation. He should be physically present in at least 50% of the Board meetings.
(c) Act judiciously. – Before deciding on any matter brought before the
Board, a director should carefully evaluate the issues and, if necessary, make inquiries and request clarification.
(d) Exercise independent judgment. – A director should view each problem
or situation objectively. If a disagreement with other directors arises, he should carefully evaluate and explain his position. He should not be afraid to take an unpopular position. Corollary, he should support plans and ideas that he thinks are beneficial to the Corporation.
(e) A director shall have working knowledge of the statutory and regulatory
requirements that affect the Corporation, including its articles of incorporation and by-laws, the rules and regulations of the Commission, and where applicable, the requirements of relevant regulatory agencies.
A director should keep abreast with industry developments and business
trends in order to promote the Corporation’s competitiveness. (f) Observe confidentiality. – A director should keep secure and confidential
all non-public information he may acquire or learn by reason of his position as director. He should not reveal confidential information to unauthorized persons without the authority of the Board.
Independent Directors In order for the Board to exercise objective judgment in fulfilling its duties and functions, the Corporation has at least two (2) independent directors elected to the Board. Independent Directors should always attend Board Meetings. The Board may, to promote transparency, require the presence of at least one Independent Director in all its meetings. An Independent Director shall have the qualifications and none of the disqualifications as set forth in Corporation’s by-laws and the Securities Regulation Code, its Implementing Rules and Regulations, and relevant issuances of the SEC. Provide the company’s definition of “independence” and describe the company’s compliance to the definition. The Corporation abides by the definition of “independent director” as provided in the Securities Regulation Code and its Implementing Rules and Regulations and related regulations (Art. II, Sec. 1, Amended By-laws of the Corporation). Does the company have a term limit of five consecutive years for independent directors? If, after two years, the company wishes to bring back an independent director who has served for five years, does it limit the term for no more than four additional years? Please explain.
Macay Holdings, Inc. 2015 Annual Corporate Governance Report 21
The Company follows the SEC’s guidelines as provided in Memorandum Circular No. 9, series of 2011, on setting the term limits for Independent Directors.
5) Changes in the Board of Directors (Executive, Non-Executive and Independent Directors) (a) Resignation/Death/Removal
Indicate any changes in the composition of the Board of directors that happened during the period There were no resignations or removal of any of the members of the Board of Directors of the Corporation for 2015.
(b) Selection/Appointment, Re-election, Disqualification, Removal, Reinstatement and Suspension
Describe the procedures for the selection/appointment, re-election, disqualification, removal, reinstatement and suspension of the members of the Board of Directors. Provide details of the processes adopted (including the frequency of election) and the criteria employed in each procedure:
Procedure Process Adopted Criteria
a. Selection/Appointment
Executive Directors
The Directors of the
Company are elected at the
annual stockholders’
meeting to hold office until
the next succeeding annual
meeting and until their
respective successors have
been appointed or elected
and qualified (Amended By-
laws of Macay Holdings, Inc.).
The Directors possess all the
qualifications and none of
the disqualifications provided
for in the SRC and its
Implementing Rules and
Regulations as well as the
Company’s By-laws and the
Manual.
i. He must be a holder of at least
one (1) share of stock of the Corporation;
ii. He must be at least a college graduate or possess an equivalent academic degree or have at least five (5) years’ experience in business to substitute for such formal education;
iii. He must be at least twenty-five (25) years old at the time of his election or appointment;
iv. He shall have been proven to possess integrity and probity; and
v. He shall be assiduous and diligent.
(Section 3.2.1.2, Revised Manual
on Corporate Governance)
Non-Executive
Directors
Macay Holdings, Inc. 2015 Annual Corporate Governance Report 22
The Nomination Committee shall
consider the following guidelines
in the determination of the
number of directorships for the
Board:
The nature of the business of the Corporation of which he is a director;
Age of the director;
Number of directorships/active memberships and officerships in other corporations or organizations; and
Possible conflict of interest (Section 3.2.1.2, Revised Manual on Corporate Governance).
Independent
Directors
The Corporation follows the
requirements of the
Securities Regulation Code
(SRC) and its Implementing
Rules and Regulations as well
as the SEC guidelines on the
nomination and election of
Independent Directors.
Independent Directors
In order for the Board to exercise
objective judgment in fulfilling its
duties and functions, the
Corporation has at least two (2)
independent directors elected to
the Board.
Independent Directors should
always attend Board Meetings. The
Board may, to promote
transparency, require the presence
of at least one Independent
Director in all its meetings.
Macay Holdings, Inc. 2015 Annual Corporate Governance Report 23
An Independent Director shall have
the qualifications and none of the
disqualifications as set forth in
Corporation’s by-laws and the
Securities Regulation Code, its
Implementing Rules and
Regulations, and relevant issuances
of the SEC.
(Section 3.1.3, Revised Manual on
Corporate Governance)
3.
b. Re-appointment
Executive Directors Same as above. 4. Same as above.
Non-Executive
Directors
Independent
Directors
c. Permanent Disqualification
Executive Directors Directors/ Officers elected or
appointed without
possessing the qualifications
or possessing any of the
disqualifications as
enumerated herein, or in the
By-laws of the corporation,
shall vacate their respective
positions immediately.
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 SRC; (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;
Non-Executive
Directors
Independent
Directors
Macay Holdings, Inc. 2015 Annual Corporate Governance Report 24
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 the BSP, or
under any rule or regulation
issued by the Commission or
the BSP, or has otherwise been
restrained to engage in any
activity involving securities and
banking; or such person is
Macay Holdings, Inc. 2015 Annual Corporate Governance Report 25
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;
Any person convicted by final
judgment or order by a court or
competent administrative body
of an offense involving moral
turpitude, fraud,
embezzlement, theft, estafa,
counterfeiting,
misappropriation, forgery,
bribery, false affirmation,
perjury or other fraudulent
acts;
Any person who has been
adjudged by final judgment or
order of the Commission, court,
or competent administrative
body to have willfully violated,
or willfully aided, abetted,
counseled, induced or procured
the violation of any provision of
the Corporation Code,
Securities Regulation Code or
any other law administered by
the Commission or the BSP, or
any of its rule, regulation or
order;
Any person earlier elected as
independent director who
becomes an officer, employee,
or consultant of the same
corporation;
Macay Holdings, Inc. 2015 Annual Corporate Governance Report 26
Any person judicially declared
to be insolvent;
Any person finally found guilty
by final judgment or order of a
foreign court or equivalent
financial regulatory authority of
acts, violations or misconduct
similar to any of the acts,
violations or misconduct
enumerated in the foregoing
paragraphs; and
Conviction by final judgment of
an offense punishable by
imprisonment for more than six
(6) years, or a violation of the
Corporation Code, committed
within five (5) years prior to the
date of his election or
appointment.
Possession of disqualifications
under the By-laws.
(Section 3.2.1.2, Revised Manual
on Corporate Governance)
d. Temporary Disqualification
Executive Directors The Board shall provide for the temporary disqualification of a
director for any of the following reasons:
Refusal to comply with the disclosure requirements of the Securities Regulation Code and its implementing rules and regulations. This disqualification shall be in effect as long as the refusal persists; and
Absence in more than fifty percent (50%) of all regular and special meetings of the Board of Directors during his
Non-Executive
Directors
Independent
Directors
Macay Holdings, Inc. 2015 Annual Corporate Governance Report 27
incumbency, or any twelve (12) month period during said incumbency, unless the absence is due to illness, death in the immediate family or serious accident. This disqualification applies for purposes of the succeeding election.
In addition, the Board may provide for the temporary
disqualification of a director for any of the following reasons:
Dismissal or termination for cause as director of any corporation covered by Code. The disqualification shall be in effect until he has cleared himself of any involvement in the cause that gave rise to his dismissal or termination.
If the beneficial equity ownership of an independent director in the corporation or its subsidiaries and affiliates exceeds two percent (2%) of its subscribed capital stock. The disqualification shall be lifted if the limit is later complied with.
If any of the judgments or orders cited in the grounds for permanent disqualification has not yet become final.
A temporary disqualified director shall, within 60 business days from such disqualification, take appropriate action to remedy such disqualification. If, after 60 days, the director refuses to take action, he may be permanently disqualified.
(Section 3.2.1.2, Revised Manual on Corporate Governance)
e. Re-instatement
Executive Directors Same criteria as stated in the
selection/appointment of
both regular and
independent directors.
Same criteria as stated in the selection/appointment of both regular and independent directors. Non-Executive
Directors
Independent
Directors
Macay Holdings, Inc. 2015 Annual Corporate Governance Report 28
6) Orientation and Education Program
(a) Disclose details of the company’s orientation program for new directors, if any. A director shall, before assuming as such, be required to attend a seminar on corporate governance which shall be conducted by a duly recognized private or government institution (Sec. 5.2, Revised Manual on Corporate Governance).
(b) State any in-house training and external courses attended by Directors and Senior Management3 for the past three (3) years Seminar on Corporate Governance 2014 to 2015
(c) Continuing education programs for directors: programs and seminars and roundtables attended during the year.
None
B. CODE OF BUSINESS CONDUCT & ETHICS
1) Policies
Discuss briefly the company’s policies on the following business conduct or ethics affecting
directors, senior management and employees.
The Company began its activities to formalize its policies on ethical conduct and fair dealings
for directors, senior management, and employees, including procedures and principles to be
adopted in the event of conflicts of interest, related party transactions, use of nonpublic
information, use of company funds, assets, and information, and similar matters. The
Whistle-Blower policy was approved by the Board of Directors last September 3, 2014 and is
intended to provide effective protection for whistle-blowers so that officers or employees
and other stakeholders are made aware of how to report any possible violation of a law,
rule, or regulation or unethical or fraudulent conduct. Thus, this Policy shall define who may
qualify as a whistle-blower, provide a procedure for whistle-blowers to raise such concerns
that he or she may reasonably believe in good faith may constitute a possible violation of a
law, rule, or regulation or unethical or fraudulent conduct or other improprieties, and
institute safeguards to protect Whistleblowers from retaliation or retribution.
2) Dissemination of Cost of Ethics or Conduct
Has the code of ethics or conduct been disseminated to all directors, senior management
and employees?
Not applicable at this time.
3 Senior Management refers to the CEO and other persons having authority and responsibility for planning, directing and controlling the activities of the company.
Macay Holdings, Inc. 2015 Annual Corporate Governance Report 29
3) Implementation of and Compliance with Code
Discuss how the company implements and monitors compliance with the code of ethics or
conduct.
Not applicable at this time. The Corporation shall establish procedures for implementing and monitoring compliance with the code of ethics/conduct as part of the overall establishment of written policies and procedures.
4) Related Party Transactions
(a) Policies and Procedures Describe the company’s policies and procedures for the review, approval or ratification, monitoring and recording of related party transactions between and among the company and its parent, joint ventures, subsidiaries, associates, affiliates, substantial stockholders, officers and directors, including their spouses, children and dependent siblings and parents and of interlocking director relationships of members of the Board. The Board is tasked under Sec. 3.1.3 of the Revised Manual on Corporate Governance to formulate and implement policies and procedures that would ensure the integrity and transparency of related party transactions between and among the Company and its subsidiaries, associates, affiliates, join ventures, major shareholders, directors and officers, including their spouses, children and dependent siblings, parents and interlocking director relationships by members of the Board. The Company will formalize its policies and procedures on related party transactions once the corporate structure is finalized.
(b) Conflict of Interest
(i) Directors/Officers and 5% or more Shareholders Identify any actual or probable conflict of interest to which directors/officers/5% of more shareholders may be involved. The Corporation has had no instance of actual conflict of interest because in compliance with the Manual on Corporate Governance, if an actual or potential conflict of interest arises on the part of a director, he fully and immediately discloses it.
Name of Director Details of Probable Conflict of
Interest
Alfredo Yao Chairman, ARC Refreshments Corp.,
Mega Asia Bottling Corp., Asiawide
Refreshments Corp.
Armando M. Yao Director, ARC Refreshments Corp.,
Macay Holdings, Inc. 2015 Annual Corporate Governance Report 30
Mega Asia Bottling Corp., Asiawide
Refreshments Corp.
Jeffrey S. Yao Director, ARC Refreshments Corp.,
Mega Asia Bottling Corp., Asiawide
Refreshments Corp.
Carolyn S. Yao Director, ARC Refreshments Corp.,
Mega Asia Bottling Corp., Asiawide
Refreshments Corp.
Mary Grace S. Yao Director, ARC Refreshments Corp.,
Mega Asia Bottling Corp.,
Antonio I. Panajon Director, ARC Refreshments Corp.,
Asiawide Refreshments Corp.
Albert S. Toribio Director, ARC Refreshments Corp.,
Asiawide Refreshments Corp.
Gerardo T. Garcia Director, ARC Refreshments Corp.,
Asiawide Refreshments Corp.
Rinaldi C. Aves Director, ARC Refreshments Corp.,
Asiawide Refreshments Corp.
(ii) Mechanism
Directors/Officers/Significant Shareholders
Company It is among the duties of a director “to conduct fair
business transactions with the Corporation and
ensure that his personal interest does not conflict
with the interests of the Corporation.”
The basic principle to be observed is that a director
should not use his position to profit or gain some
benefit or advantage for himself and/or his related
interests. He should avoid situations that may
compromise his impartiality. If an actual or potential
conflict of interest may arise on the part of a
director, he should fully and immediately disclose it
and should not participate in the decision-making
process. A director who has a continuing material
conflict of interest should seriously consider
resigning from his position.
Group
Macay Holdings, Inc. 2015 Annual Corporate Governance Report 31
A conflict of interest shall be considered material if
the director’s personal or business interest is
antagonistic to that of the Corporation, or stands to
acquire or gain financial advantage at the expense
of the Corporation.
(Section 3.1.4, Revised Manual on Corporate
Governance)
5) Family, Commercial and Contractual Relations
(a) Indicate, if applicable, any relation of a family4, commercial, contractual or business nature that exists between the holders of significant equity (5% or more), to the extent that they are known to the company:
Names of Related
Significant Shareholders
Type of Relationship Brief Description of the
Relationship
Mazy’s Capital, Inc. Family/Commercial Mazy’s Capital, Inc. is the
majority shareholder of
the Company, the
stockholders of which are
majority-owned by the
Yao family.
(b) Indicate, if applicable, any relation of a commercial, contractual or business nature
that exists between the holders of significant equity (5% or more) and the company: Aside from the abovementioned relationship, there is no relation of commercial, contractual or business nature that exists between holders of significant equity and the Corporation.
Names of Related
Significant Shareholders
Type of Relationship Brief Description
Not applicable Not applicable Not applicable
(c) Indicate any shareholder agreements that may impact on the control, ownership and
strategic direction of the company: There are currently no shareholder agreements that may impact on the control,
ownership and strategic direction of the Company.
4 Family relationship up to the fourth civil degree either by consanguinity or affinity
Macay Holdings, Inc. 2015 Annual Corporate Governance Report 32
6) Alternative Dispute Resolution
Describe the alternative dispute resolution system adopted by the company for the last three (3) years in amicably settling conflicts or differences between the corporation and its stockholders, and the corporation and third parties, including regulatory authorities. The Corporation has not had any disputes with its stockholders, third parties, or regulatory authorities.
C. BOARD MEETINGS & ATTENDANCE
1) Schedule of Meetings
Are Board of Directors’ meetings scheduled before or at the beginning of the year?
The Board of Directors meetings are set at the beginning of the year.
2) Attendance of Directors
Board Name Date of Election No. of Meetings
Held During the Year
No. of Meetings Attended
%
Chairman Alfredo M. Yao 25 July 2014; 30 July 2015 7 6 86%
Director Armando M. Yao 25 July 2014; 30 July 2015 7 4 57%
Director Jeffrey S. Yao 25 July 2014; 30 July 2015 7 6 86%
Director Carolyn S. Yao 25 July 2014; 30 July 2015 7 4 57%
Director Mary Grace S. Yao 25 July 2014; 30 July 2015 7 4 57%
Director Roberto A. Atendido 25 July 2014; 30 July 2015 7 7 100%
Director Fernando R. Balatbat 25 July 2014; 30 July 2015 7 7 100%
Director Antonio I. Panajon 25 July 2014; 30 July 2015 7 7 100%
Director Albert S. Toribio 25 July 2014; 30 July 2015 7 6 86%
Director Gerardo T. Garcia 25 July 2014; 30 July 2015 7 5 71%
Director Rinaldi C. Aves 25 July 2014; 30 July 2015 7 5 71%
Independent Director
Jesus G. Gallegos, Jr. 25 July 2014; 30 July 2015 7 7 100%
Independent Director
Roberto F. Anonas, Jr. 25 July 2014; 30 July 2015 7 7 100%
3) Separate Meetings of Non-Executive Directors
Do non-executive directors have a separate meeting during the year without the presence
of any executive? If yes, how many times?
In the event of issues to be discussed in an executive session, the non-executive directors may request the executive directors and senior management present during the meeting to be excused from the board room. This may be done as often as needed. However, the meetings conducted by the present board members did not require such executive session.
4) Quorum Requirement
Is the minimum quorum requirement for Board decisions set at two-thirds of board
members?
Macay Holdings, Inc. 2015 Annual Corporate Governance Report 33
Art. II, Sec. 2 of the Amended By-laws of the Corporation provided that “A majority of the board of directors at a meeting duly assembled shall be necessary to constitute a quorum for the transaction of business, and the act of a majority of a quorum so present shall be valid as a corporate act.”
5) Access to Information
(a) How many days in advance are board papers5 for board of directors meetings provided to the board?
The Corporate Secretary is tasked to “inform all members of the Board, in accordance with the By-Laws, of the agenda of their meetings and ensure that the members have before them accurate information that will enable them to arrive at intelligent decisions on matters that require their approval” (Sec. 3.3.6(g), Revised Manual on Corporate Governance). Notices to meetings shall be delivered to the directors at least two days prior to the date fixed for the meeting (Article II, Sec. 4 of the Corporation’s By-laws).
(b) Do board members have independent access to Management and the Corporate
Secretary? Yes.
(c) State the policy on the role of the company secretary. Does such role include assisting the Chairman in preparing the board agenda, facilitating training of directors, keeping directors updated regarding any relevant statutory regulatory changes, etc.?
The duties and responsibilities of the Corporate Secretary, who should be a Filipino citizen and a resident of the Philippines, are set forth under Sec. 3.3.6 of the Manual, as follows – 3.3.6 Duties and Responsibilities
(a) Be responsible for the safekeeping and preservation of the integrity of the minutes of the Board and its committees, as well as other official records of the Corporation;
(b) Be loyal to the mission, vision, and objectives of the Corporation.
(c) Work fairly and objectively with the Board, Management, stockholders and stakeholders;
(d) Have appropriate administrative and interpersonal skills;
(e) If he is not at the same time the Corporation’s general counsel, be aware of the laws, rules, and regulations necessary in the performance of his duties and responsibilities.
(f) Have a working knowledge of the operations of the Corporation.
5 Board papers consist of complete and adequate information about the matters to be taken in the board meetings. Information includes the background or explanation on matters brought before the Board, disclosures, budgets, forecasts and internal financial documents.
Macay Holdings, Inc. 2015 Annual Corporate Governance Report 34
(g) Inform the members of the Board, in accordance with the Corporation’s By-laws, of the agenda of their meetings and ensure that the members have before them accurate information that will enable them to arrive at intelligent decisions on matters that require their approval.
(h) Attend all Board meetings, except when justifiable causes, such as illness, death in the immediate family, and serious accidents prevent him from doing so;
(i) Ensure that all Board procedures, rules, and regulations are strictly followed by the members;
(j) If he is also the Compliance Officer, perform all the duties and responsibilities of said office as provide in the Code and in this Manual.
(d) Is the company secretary trained in legal, accountancy or company secretarial
practices? Please explain should the answer be in the negative. Yes.
(e) Committee Procedures Disclose whether there is a procedure that Directors can avail of to enable them to get information necessary to be able to prepare in advance for the meetings of different committees:
Yes ☑ No ☐
Committee Details of the procedures
Audit Please see below.
Nomination Please see below.
Compensation and Remuneration Please see below.
Corporate Governance Please see below.
As a matter of practice, materials for the committee meetings are sent to the members of the committee at least two (2) days before the scheduled meeting.
6) External Advice
Indicate whether or not a procedure exists whereby directors can receive external advice and, if so, provide details:
Procedures Details
Please see below. Please see below.
A director may, upon request, obtain external advice as may be justified on a case-to-case basis.
Macay Holdings, Inc. 2015 Annual Corporate Governance Report 35
7) Change/s in existing policies
Indicate, if applicable, any change/s introduced by the Board of Directors (during its most recent term) on existing policies that may have an effect on the business of the company and the reason/s for the change:
Existing Policies Changes Reason
n/a n/a n/a
D. REMUNERATION MATTERS
1) Remuneration Process
Disclose the process used for determining the remuneration for the CEO and the four (4) most highly compensated management officers. No formal policy has been established at this time regarding remuneration for the CEO and top 4 highly compensated management officers. The Corporation, through its Compensation Committee is in the process of establishing such policies.
Process CEO Top 4 Highest Paid
Management Officers
Fixed remuneration
Board establishes KPI and Compensation and
Remuneration Committee evaluates performance and
makes recommendation
President establishes KPIs and evaluates performance and
decides on remuneration
Variable remuneration n/a n/a
Per diem allowance n/a n/a
Bonus
Board establishes KPI and Compensation and
Remuneration Committee evaluates performance and
makes recommendation
President establishes KPIs and evaluates performance and
decides on remuneration
Stock Options and other financial instruments
Board establishes KPI and Compensation and
Remuneration Committee evaluates performance and
makes recommendation
n/a
2) Remuneration Policy and Structure for Executive and Non-Executive Directors
Disclose the company’s policy on remuneration and the structure of its compensation package. Explain how the compensation of Executives and Non-Executive Directors is calculated.
Macay Holdings, Inc. 2015 Annual Corporate Governance Report 36
Each director shall receive a reasonable per diem for attendance in every meeting. Each director receives a per diem allowance of Thirty Thousand Pesos [Php30,000.00] for attending board meetings, which amount shall be inclusive of attendance in committee meetings. There is no distinction for a committee chairman and member. Do stockholders have the opportunity to approve the decision on total remuneration (fees, allowances, benefits-in-kind and other emoluments) of the board of directors? Provide details for the last three (3) years.
Remuneration Scheme Date of
Stockholders’ Approval
Ratification of the acts of the Board of Directors, its Committees, officers and Management on
remuneration 30 July 2015
Ratification of the acts of the Board of Directors, its Committees, officers and Management on
remuneration
25 July 2014
n/a 2013
3) Aggregate Remuneration
Complete the following table on the aggregate remuneration accrued during the most recent year:
Remuneration Item Executive
Directors
Non-Executive Directors
(other than Independent
Directors)
Independent
Directors
(a) Fixed Remuneration 4,550,000.00 2,500,000.00
(b) Variable Remuneration
(c) Per diem Allowance 660,000.00 1,080,000.00 360,000.00
(d) Bonuses
(e) Stock Options and/or other financial instruments
(f) Others (Discretionary Allowance/Consultancy Fees)
141,176.47 141,176.47 282,352.94
Total 5,351,176.47 3,721,176.47 642,352.94
Macay Holdings, Inc. 2015 Annual Corporate Governance Report 37
4) Stock Rights, Options and Warrants
(a) Board of Directors Complete the following table, on the members of the company’s Board of Directors who own or are entitled to stock rights, options or warrants over the company’s shares:
Director’s
Name
Number of Direct
Options/Rights/Warrants
Number of Indirect
Options/Rights/Warrants
Number of
Equivalent
Shares
Total %
from
Capital
Stock
Please see below.
The Board of Directors is not covered under any Employee Stock Option Program. Other than per diem allowances, the directors do not receive any share options.
(b) Amendments of Incentive Programs
Indicate any amendments and discontinuation of any incentive programs introduces, including the criteria used in the creation of the program. Disclose whether these are subject to approval during the Annual Stockholders’ Meeting:
Incentive Program Amendments Date of
Stockholders’ Approval
None None None
5) Remuneration of Management
Identify the five (5) members of management who are not at the same time executive directors and indicate the total remuneration received during the financial year.
Name of Officer/Position Total Remuneration
n/a
n/a
E. BOARD COMMITTEES
1) Number of Members, Functions and Responsibilities
Provide details on the number of members of each committee, its functions, key responsibilities and the power/authority delegated to it by the Board.
Committee
No. of Members
Committee
Charter Functions
Key
Responsibilities Power
Exec.
Director
(ED)
Non-Exec.
Director
(NED)
Independent
Director
(ID)
Audit n.a. 1 2 Please see Please see
Please see below. Please see
Macay Holdings, Inc. 2015 Annual Corporate Governance Report 38
below below. below.
Nomination 1 1 1 Please see
below.
Please see
below. Please see below.
Please see
below.
Compensation
and
Remuneration
1 n.a. 2 Please see
below.
Please see
below. Please see below.
Please see
below.
Corporate
Governance n.a. 1 2
Please see
below
Please see
below. Please see below.
Please see
below.
The Board Committees to aid in complying with the principles of good corporate governance under the Manual are as follows –
3.2 Board Committees
3.2.1 Nomination Committee
3.2.1.1. Composition
The Board shall create a Nomination Committee which shall have at
least three (3) members, at least one of whom should be an
independent director.
The Corporate Governance Manual, particularly section 3.2.1 shall
serve as the written charter of the Nomination Committee.
3.2.1.2. Functions
The following shall be the duties and responsibilities of the
Nomination Committee:
a) Review and evaluate the qualifications of all persons nominated to the Board and other appointments that require Board approval and make the appropriate recommendation therefor to the Board, for its approval;
b) Assess the effectiveness of the Board’s processes and procedures in the election or replacement of directors;
c) Pre-screen and shortlist all candidates nominated to become members of the Board of Directors in accordance with the qualifications and disqualifications provided for hereunder.
d) In consultation with the Board, re-define the role, duties
and responsibilities of the Chief Executive Officer by integrating the dynamic requirements of the business as a
Macay Holdings, Inc. 2015 Annual Corporate Governance Report 39
going concern and future expansionary prospects within the realm of good corporate governance at all times.
e) Consider the following guidelines in the determination of the number of directorships for the Board:
The nature of the business of the Corporation of which he is a director;
Age of the director;
Number of directorships/active memberships and officerships in other corporations or organizations; and
Possible conflict of interest.
The Chief Executive Officer and other executive directors
shall submit themselves to a low indicative limit on
membership in other corporate boards. The same low limit
shall apply to independent, non-executive directors who
serve as full-time executives in other corporations. In any
case, the capacity of directors to serve with diligence shall
not be compromised.
The optimum number shall be related to the capacity of a
director to perform his duties diligently in general.
3.2.2 Compensation and Remuneration Committee
3.2.2.1. Composition
The Compensation and Remuneration Committee shall be
composed of at least three (3) members from the Board of
Directors, at least one of whom shall be an independent director.
The Corporate Governance Manual, particularly section 3.2.2 shall
serve as the written charter for the Compensation and
Remuneration Committee.
3.2.2.2. Functions
The duties and responsibilities of the Compensation and
Remuneration Committee are as follows:
a) Establish a formal and transparent procedure for developing a policy on executive remuneration and for fixing the
Macay Holdings, Inc. 2015 Annual Corporate Governance Report 40
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 the Corporation’s culture, strategy and control environment.
b) Designate the amount of remuneration, which shall be in a sufficient level to attract and retain directors and officers who are needed to run the Corporation successfully.
c) 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.
d) Disallow any director to decide his or her own remuneration.
e) Provide in the Corporation’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 ensuing year.
f) Develop or adopt policies to strengthen provisions on conflict of interest, salaries and benefits, promotion and career advancement directives and compliance with statutory requirements and compliance of personnel concerned with all statutory requirements that must be periodically met in their respective posts.
g) Review and assess, at least annually, the adequacy of its charter and recommend changes for the approval of the Board.
3.2.3 Audit Committee
3.2.3.1. Composition
The Audit Committee shall be composed of members of the Board
of Directors, at least two (2) of whom shall be independent
directors, including the Chairman, preferably with Accounting,
Auditing, or related financial management expertise or experience.
Each member shall have adequate understanding at least or
competence at most of the Corporation’s financial management
systems and environment.
Macay Holdings, Inc. 2015 Annual Corporate Governance Report 41
3.2.3.2. Functions
The Audit Committee shall have the following duties and
responsibilities:
a) Assist the Board in the performance of its oversight responsibility for the financial reporting process, system of internal control, audit process, and monitoring of compliance with applicable laws, rules, and regulations.
b) Provide oversight over the Management’s activities in managing investments, credit, market, liquidity, operational, legal and other risks of the Corporation. This function includes regular receipt from Management of information on risk exposures and risk management activities.
c) Perform oversight functions over the Corporation’s internal and external auditors. 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 perform their respective audit functions.
d) Review the annual internal audit plan to ensure its conformity with the objectives of the Corporation. The plan shall include audit scope, resources, and budget necessary to implement it.
e) Prior to the commencement of the audit, discuss with the external auditor the nature, scope, and expenses of the audit, and ensure proper coordination if more than one audit firm is involved in the activity to secure proper coverage and minimize duplication of efforts.
f) Organize an internal audit department and consider the appointment of an independent internal auditor and the terms and conditions of its engagement and removal;
g) Monitor and evaluate the adequacy and effectiveness of the Corporation’s internal control system, including financial reporting control and information technology security;
h) Review the reports submitted by the internal and external auditors and regulatory agencies, where applicable, and ensure that Management is taking appropriate measures and corrective actions in a timely manner in addressing control and compliance functions with regulatory agencies.
i) Review the quarterly, half year and annual financial statements before submission to the Board, focusing particularly on:
Macay Holdings, Inc. 2015 Annual Corporate Governance Report 42
1. Any changes in accounting policies and practices 2. Major judgmental areas 3. Significant adjustments resulting from the audit 4. Going concern assumption 5. Compliance with accounting standards 6. Compliance with tax, legal and other regulatory
requirements
j) Be responsible for coordinating, monitoring and facilitating compliance with existing laws, rules and regulations.
k) Evaluate and determine non-audit work, if any, of the external auditor and review periodically the non-audit fees paid to the external auditor, if any, both in relation to their significant to the total annual income of the auditor and the Corporation’s overall consultancy expenses. The Committee shall disallow any non-audit work that will conflict with the auditor’s duties or may pose a threat to independence. The non-audit work, if allowed, should be disclosed in the Corporation’s annual report.
l) Establish and identify the reporting line of the internal auditor to enable him to properly fulfill his duties and responsibilities. The internal auditor shall report to the audit committee functionally and to the President/Chief Executive Officer administratively. The Committee shall ensure that the internal auditor/s shall have free and full access to all the Corporation’s records, properties and personnel relevant to the Internal Audit activity and that the Internal Audit activity should be free from interference in determining the scope of internal auditing examinations, performing work, and communicating results.
m) Have explicit authority to investigate any matter within its terms of reference, full access to and cooperation by Management and full discretion to invite directors or executive officers to attend its meetings and adequate resources to enable it to effectively discharge its functions.
n) Review and assess the adequacy of the Committee Charter periodically, requesting Board approval for proposed changes.
o) Address all issues and concerns from the external auditor expeditiously and effectively to avoid the possibility of their having to render a qualified or adverse opinion, including substantive and significant disclaimers.
Macay Holdings, Inc. 2015 Annual Corporate Governance Report 43
p) Ensure that the external auditor is credible, competent, and should have the ability to understand complex related party transactions, its counterparties, and valuations of such transactions.
q) Ensure that the external audit firm is selected on the basis of a fair and transparent tender process.
r) Conduct regular meetings and dialogues with the external audit team without anyone from management present.
s) Ensure that, should the external auditor not be rotated, the lead audit partner is rotated every five years.
3.2.4 Corporate Governance Committee
3.2.4.1. Composition
The Corporate Governance Committee shall be composed of at least
three (3) members, two (2) of whom shall be independent directors.
The Corporate Governance Manual, particularly section 3.2.4 shall
serve as its charter.
3.2.4.2. Functions
The Committee shall have the following duties and responsibilities:
(a) Be responsible for ensuring the Board’s effectiveness and due observance of corporate governance principles and guidelines.
(b) Oversee the periodic performance evaluation of the Board and its committees and executive management.
(c) Conduct a periodic self-evaluation of its performance.
(d) Decide whether or not a director is able to and has been adequately carrying out his/her duties as director bearing in mind the director’s contribution and performance (e.g., competence, candor, attendance, preparedness and participation).
(e) Make continuing recommendations to the Board regarding the continuing education of directors, assignment to board committees, succession plan for the board members and senior officers and their remuneration commensurate with corporate and individual performance.
Macay Holdings, Inc. 2015 Annual Corporate Governance Report 44
(f) Decide the manner by which the Board’s performance may be evaluated and propose an objective performance criteria to be approved by the Board. Such performance indicators shall address how the Board has enhanced long term shareholder’s value.
(g) Conduct an annual review of this Manual and the governance and any related scorecards.
2) Committee Members
(a) Nominations Committee
Office Name Date of
Appointment
No. of
Meetings
Held
No. of
Meetings
Attended
%
Length of
Service in
the
Committee
Chairman (ID) Jesus G. Gallegos, Jr. 30-July-2015 1 1 100% 1 year 8 months
Member (ED) Antonio I. Panajon 30-July-2015 1 1 100% 1 year 8 months
Member (ED) Fernando R. Balatbat 30-July-2015 1 1 100% 1 year 8 months
(b) Audit Committee
Office Name Date of
Appointment
No. of
Meetings
Held
No. of
Meetings
Attended
%
Length of
Service in
the
Committee
Chairman (ID) Roberto F. Anonas, Jr. 30-July-2015 3 3 100% 1 year 8 months
Member (ID) Jesus G. Gallegos, Jr. 30-July-2015 3 3 100% 1 year 8 months
Member (NED) Albert S. Toribio 30-July-2015 3 2 67% 1 year 8 months
(c) Compensation Committee
Office Name Date of
Appointment
No. of
Meetings
Held
No. of
Meetings
Attended
%
Length of
Service in
the
Committee
Chairman (ID) Roberto F. Anonas, Jr. 30-July-2015 1 1 100% 1 year 5 months
Member (ID) Jesus G. Gallegos, Jr. 30-July-2015 1 1 100% 1 year 5 months
Member (ED) Gerardo T. Garcia 30-July-2015 1 1 100% 1 year 5 months
Macay Holdings, Inc. 2015 Annual Corporate Governance Report 45
(d) Corporate Governance Committee
Office Name Date of
Appointment
No. of
Meetings
Held
No. of
Meetings
Attended
%
Length of
Service in
the
Committee
Chairman (ID) Jesus G. Gallegos, Jr. 30-July-2015 2 2 100% 1 year 8 months
Member (ID) Roberto F. Anonas, Jr. 30-July-2015 2 2 100% 1 year 8 months
Member (NED) Roberto A. Atendido 30-July-2015 2 1 67% 1 year 8 months
3) Changes in Committee Members Indicate any changes in committee membership that occurred during the year and the reason for the changes. There were no changes in committee membership during the previous year.
4) Work Done and Issues Addressed Describe the work done by each committee and the significant issues addressed during the year 2015.
Name of Committee Work Done Issues Addressed
Audit Approved the annual and quarterly
reports of the Corporation as well as
the appointment of the external
auditor
To ensure compliance with
accounting and reporting standards.
Nomination Evaluated the profiles of the
candidates for membership with the
Corporation’s Board of Directors
prior to the annual stockholders
meeting held on 30 July 2015.
To elect members of the Board for
2015 and to comply with the
required number of independent
directors by the Philippine Stock
Exchange.
Compensation and
Remuneration
Currently reviewing the Company’s
compensation policy.
To comply with the compensation
policy of the Corporation.
Corporate Governance Reviewed and approved the
Corporations’ Annual Corporate
Governance Report
To regularly check effectiveness of
the Board and determine areas for
improvement. To comply with the
regulations of the SEC.
Macay Holdings, Inc. 2015 Annual Corporate Governance Report 46
5) Committee Program
Provide a list of programs that each committee plans to undertake to address relevant issues in the improvement or enforcement of effective governance for the coming year.
Name of Committee Planned Programs Issues to be Addressed
Audit - Create a Risk Management Committee
- Manual for Audit Control Policies and Procedures
- Internal Audit plan for the coming fiscal year
No significant issues that would put the Company at major risk
Nomination Pre-screen qualifications of nominees for independent directors
No significant issues that would put the Company at major risk
Compensation and Remuneration
Review the Company’s compensation policy
No significant issues that would put the Company at major risk
Corporate Governance Review policies
No significant issues that would put the Company at major risk
F. RISK MANAGEMENT SYSTEM
1) Overall risk management philosophy of the company.
The Company aims to identify, measure, analyze, monitor, and control all forms of risks that would affect the company. At present, the Company’s Audit Committee functions as its Risk Management Committee. Under the Audit Committee Charter, The Audit Committee shall assist the Board of Directors in the performance of its oversight function over the Corporation’s financial reporting process, systems of internal control, internal and external audit processes, compliance monitoring procedures, and risk management. The Audit Committee will report its activities to the Board on a regular basis and make recommendations thereon as it may deem appropriate.
(a) A statement that the directors have reviewed the effectiveness of the risk
management system and commenting on the adequacy thereof. There is no statement issued. The Audit Committee will review the effectiveness of risk management systems employed by the Company.
(b) Period covered by the review. The Audit Committee will periodically review the risk
management system of the company through its meetings and review of required reports.
(c) How often is the risk management system reviewed and the directors’ criteria for assessing its effectiveness. The adequacy of the risk management system will be reviewed annually by the Audit Committee. On a quarterly basis, specific risk management processes and findings well be reviewed and evaluated.
(d) Where no review was conducted during the year, an explanation why not. Where no review was conducted during the year, an explanation why not. n/a
Macay Holdings, Inc. 2015 Annual Corporate Governance Report 47
2) Risk Policy
The Company’s Risk Management Policy is currently under review. The Audit Committee shall draft the risk management policy and thereafter, the same shall be reviewed and approved by the Board. Its effectiveness shall be reviewed periodically by Internal Audit, once established. (a) Company
Give a general description of the company’s risk management policy, setting out and assessing the risk/s covered by the system (ranked according to priority), along with the objective behind the policy for each kind of risk:
Risk Exposure Risk Management Policy Objective
The Corporation is still in process of establishing its policies regarding risk and risk management.
(b) Group
Give a general description of the Group’s risk management policy, setting out and assessing the risk/s covered by the system (ranked according to priority) along with the objective behind the policy for each kind of risk:
Risk Exposure Risk Management Policy Objective
The Corporation is currently assessing the risks affecting the group and is in the process of establishing a risk framework.
(c) Minority Shareholders
Indicate the principal risk of the exercise of controlling shareholders’ voting power.
Risk to Minority Shareholders
The Company is committed to practice good governance and to respect the rights of the
shareholders as provided in the Corporation Code.
3) Control System Set Up
(a) Company
Briefly describe the control systems set up to assess, manage and control the main issue/s faced by the company:
Risk Exposure Risk Assessment
(Monitoring and
Measurement Process)
Risk Management and
Control (Structures,
Procedures, Actions
Taken)
Macay Holdings, Inc. 2015 Annual Corporate Governance Report 48
The Audit Committee will work on creating a Risk Management Committee that shall
establish the control systems to assess, manage and control the main issue/s faced
by the Company.
(b) Group Briefly describe the control systems set up to assess, manage and control the main issue/s faced by the company:
Risk Exposure Risk Assessment
(Monitoring and
Measurement Process)
Risk Management and
Control (Structures,
Procedures, Actions
Taken)
The Audit Committee will work on creating a Risk Management Committee that shall
establish the control systems to assess, manage and control the main issue/s faced
by the Company.
(c) Committee
Identify the committee or any other body of corporate governance in charge of laying down and supervising these control mechanisms, and give details of its functions.
Committee/Unit Control Mechanism Details of its Functions
The Audit Committee is tasked to provide oversight over the Company’s risk
management under the Manual. The Audit Committee will work on creating a Risk
Management Committee that shall establish the control systems to assess, manage
and control the main issue/s faced by the Company.
G. INTERNAL AUDIT AND CONTROL
Sec. 3.3.8 (a)(b) and (c) of the Manual provides that –
a. The Corporation shall have in place an independent internal audit function which shall be performed by an internal auditor or a group of internal auditors, or a service provider engaged to perform internal audit functions through which its Board, senior management, and stockholders shall be provided with reasonable assurance that its key organizational and procedural controls are effective, appropriate, and complied with. As a holding company, the Corporation’s internal audit function may operate at the level of its operating subsidiary/ies.
Macay Holdings, Inc. 2015 Annual Corporate Governance Report 49
b. The internal auditor shall have a direct reporting line to the Audit
Committee.
c. The appointment or removal of the head of the internal audit office shall be subject to the approval of the Audit Committee.
d. The minimum internal control mechanisms for management's
operational responsibility shall center on the CEO, being ultimately accountable for the Corporation's organizational and procedural controls.
e. The scope and particulars of a system of effective organizational and
procedural controls shall be based on the following factors: the nature and complexity of business and the business culture; the volume, size and complexity of transactions; the degree of risk; the degree of centralization and delegation of authority; the extent and effectiveness of information technology; and the extent of regulatory compliance.
f. The internal audit function may be outsourced to an external service
provider.
1) Internal Control System
Disclose the following information pertaining to the internal control system of the company:
(a) Explain how the internal control system is defined for the company. Sec. 3.3.8(e) of
the Manual states that the scope and particulars of a system of effective organizational and procedural controls shall be based on the following factors: the nature and complexity of business and the business culture; the volume, size, and complexity of transactions; the degree of risk; the degree of centralization and delegation of authority; the extent and effectiveness of information technology; and the extent of regulatory compliance.
(b) A statement that the directors have reviewed the effectiveness of the internal control system and whether they consider them effective and adequate. Sec. 3.3.8(d) of the Manual provides that “The minimum internal control mechanisms for management's operational responsibility shall center on the CEO, being ultimately accountable for the Corporation's organizational and procedural controls.”
(c) Period covered by the review. The review of the effectiveness of the internal control system shall begin when an Internal Auditor is selected.
(d) How often internal controls are reviewed and the directors’ criteria for assessing the effectiveness of the internal control system. Sec. 3.1.3(f) of the Manual states that it is the duty of the Board to “adopt a system of check and balance within the Board. A regular review of the effectiveness of such system should be conducted to ensure the integrity of the decision-making and reporting processes at all times.
Macay Holdings, Inc. 2015 Annual Corporate Governance Report 50
There should be a continuing review of the Corporation’s internal control system in order to maintain its adequacy and effectiveness.”
(e) Where no review was conducted during the year, an explanation why not. The Company will need to select an Internal Auditor.
2) Internal Audit
(a) Role, Scope and Internal Audit Function
Give a general description of the role, scope of internal audit work and other details of the internal audit function.
Role Scope Indicate
whether In-
house or
outsource
Internal Audit
Function
Name of
Chief
Internal
Auditor/
Auditing
Firm
Reporting
Process
Provide the
Board, senior
management,
and
stockholders
reasonable
assurance that
its key
organizational
and procedural
controls are
effective,
appropriate,
and complied
with.
(Section 3.3.8
(a), Revised
Manual on
Corporate
Governance)
The scope and
particulars of a
system of
effective
organizational
and procedural
controls shall be
based on the
following
factors: the
nature and
complexity of
business and the
business culture;
the volume, size,
and complexity
of transactions;
the degree of
risk; the degree
of centralization
and delegation
of authority; the
extent and
effectiveness of
information
technology; and
The Manual
provides that
the Internal
Audit Function
may be
performed by
an Internal
Auditor or a
group of
Internal
Auditors or a
service
provider
engaged to
perform
internal audit
functions
(Section
3.3.8(a),
Revised
Manual on
Corporate
Governance)
The
Company
intends to
hire an
internal
auditor for
the
operating
subsidiary,
who will
report
directly to
the Audit
Committee
of the
Company.
The Internal
Auditor shall
have a direct
reporting line
to the Audit
Committee.
(Section
3.3.8(b),
Revised
Manual on
Corporate
Governance)
Macay Holdings, Inc. 2015 Annual Corporate Governance Report 51
the extent of
regulatory
compliance.
(Section 3.3.8(e),
Revised Manual
on Corporate
Governance)
(b) Do the appointment and/or removal of the External Auditor or the
accounting/auditing firm or corporation to which the internal audit function is outsources require the approval of the audit committee?
An external auditor shall be selected and appointed by the stockholders upon the recommendation of the Audit Committee. (Section 3.3.9(a), Revised Manual on Corporate Governance).
(c) Discuss the internal auditor’s reporting relationship with the audit committee. Does
the internal auditor have direct and unfettered access to the board of directors and the audit committee and to all records, properties and personnel?
Yes. The Internal Auditor shall report to the Audit Committee (Section 3.3.8(b), Revised Manual on Corporate Governance). The Audit Committee shall ensure that the internal and external auditors are given unrestricted access to all records, properties and personnel to enable them to perform their respective audit functions (Sec. 3.2.3.2(c), Revised Manual on Corporate Governance).
(d) Disclose any resignation/s or re-assignment of the internal audit staff (including those
employed by the third-party auditing firm) and the reason/s for them.
Name of Audit Staff Reason
None. None.
(e) Progress against Plans, Issues, Findings and Examination Trends
State the internal audit’s progress against plans, significant issues, significant findings and examination trends.
Not applicable. There have been no significant findings made by the Corporation’s external auditor, Sycip Gorres Velayo & Co. (“SGV”) in the 2014 Audited Financial Statements (“AFS”). Likewise, the AFS of the Corporation’s component companies do not mention any significant findings.
Macay Holdings, Inc. 2015 Annual Corporate Governance Report 52
(f) Audit Control Policies and Procedures
The Audit Committee Charter was approved by the Board of Directors on September 3, 2014. The Manual for Audit Control Policies and Procedures will be prepared by the Audit Committee and will be subject to approval by the Board of Directors.
(g) Mechanism and Safeguards
State the mechanism established by the company to safeguard the independence of the auditors, financial analysts, investment banks and rating agencies (example, restrictions on trading in the company’s shares and imposition of internal approval procedures for these transactions, limitation on the non-audit services that an external auditor may provide to the company):
Auditors
(Internal and External)
Financial
Analysts
Investment
Banks
Rating
Agencies
The Audit 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.
(Section 3.2.3.2(k), Revised Manual on
Corporate Governance)
None
None
None
(h) State the officers (preferably the Chairman and the CEO) who will have to attest to the
company’s full compliance with the SEC Code of Corporate Governance. Such confirmation must state that all directors, officers and employees of the company have been given proper instruction on their respective duties as mandated by the Code and that internal mechanisms are in place to ensure that compliance.
Chairman, President, and two (2) Independent Directors.
H. ROLE OF STAKEHOLDERS
1) Policies and Activities
Disclose the company’s policy and activities relative to the following:
Policy Activities
Customers’ Welfare Not applicable.
Supplier/contractor selection practice None.
Macay Holdings, Inc. 2015 Annual Corporate Governance Report 53
Environmentally friendly value chain Not applicable.
Community interaction Yes, through the ARC Young Leaders Camp
(ARCYLC) pioneered by the Company’s
subsidiary ARC Refreshments Corporation.
Anti-corruption programmes and
procedures?
The Company instituted a whistle-blowing
policy.
Safeguarding creditors’ rights None.
2) Corporate Social Responsibility
Does the company have a separate corporate responsibility (CR) report/section or
sustainability report/section?
Macay supports its subsidiary’s corporate social responsibility program. ARC Young Leaders
Camp (ARCYLC), is ARC’s flagship corporate social responsibility program which , began in
2011 with the aim to uphold the very same values of hard work, dedication and leadership
that forged its foundation.
Up to 40 underprivileged but deserving Filipino students from public universities, as well as
scholars from private colleges, are selected to participate in a three-day workshop that
inspires them to create, inspire, and lead in their own communities and eventually, in
society and the nation. The camp invites modern heroes from various fields to serve as
guest speakers and role models for the youth participants, such as 2009 CNN Hero of the
Year Efren Peñaflorida, environmentalist Anna Oposa, and Rags2Riches founder Reese
Fernandez, among many others.
3) Performance-Enhancing Mechanisms for Employee Participation
(a) What are the company’s policies for its employees’ safety, health and welfare?
The Company abides by safety, health, and welfare standards and policies set by the Department of Labor and Employment. Likewise, the Company’s subsidiary, ARC Refreshments Corporation, has Security and Safety Manuals that are implemented and regularly reviewed to ensure the security, safety, health, and welfare of the employees in the work place.
(b) Show data relating to health, safety and welfare of its employees. The Company has no set policies for the safety, health and welfare of its employees, however, it provides benefits such as: allowances, leave benefits, bonuses, travel allowances, emergency loan, company assigned car and employee medical and dental benefits.
(c) State the company’s training and development programmes for its employees. Show the data. None.
Macay Holdings, Inc. 2015 Annual Corporate Governance Report 54
(d) State the company’s reward/compensation policy that accounts for the performance of the company beyond short-term financial measures The Company’s reward and compensation policy currently accounts for the short-term financial measures only.
4) Procedures for Handling Employee Complaint
What are the company’s procedures for handling complaints by employees concerning
illegal (including corruption) and unethical behavior? Explain how employees are protected
from retaliation.
The Company instituted a whistle-blowing policy which was approved by the Board of
Directors last September 3, 2014
I. DISCLOSURE AND TRANSPARENCY
1) Ownership Structure
(a) Holding 5% shareholding or more (As of December 31, 2015)
Shareholder Number of Shares Percent Beneficial
Owner
Mazy’s Capital, Inc. 958,941,660 89.76% Same
Name of Senior Management Number of Direct
Shares
Number of Indirect
shares/through
name of record
owner)
% of Capital
Stock
No member of Senior Management has shareholdings in the Company amounting to 5% or more of
its outstanding capital stock.
2) Does the Annual Report disclose the following:
5. Key risks Yes, in the Audited Financial Statements.
6. Corporate Objectives 7. Yes
8. Financial performance indicators 9. Yes, in the Annual Report.
10. Non-financial performance indicators 11. No.
12. Dividend policy 13. Yes, in the Annual Report.
14. Details of whistle-blowing policy The Whistle-Blowing Policy was approved
by the Board on 03 September 2015.
15. Biographical details (at least age, qualifications, date of first appointment, relevant experience, and any other directorships of listed companies) of directors/commissioners
16. Yes, in the Annual Report.
Macay Holdings, Inc. 2015 Annual Corporate Governance Report 55
17. Training and/or continuing education programme attended by each director/commissioner
Yes.
18. Number of board of directors/commissioners meetings held during the year
19. No.
20. Attendance details of each director/commissioner in respect of meetings held
21. No.
22. Details of remuneration of the CEO and each member of the board of directors/commissioners
23. Yes, in the Annual Report. The Corporation does not provide compensation to its executive officers at the moment.
Should the Annual Report not disclose any of the above, please indicate the reason for the non-disclosure.
3) External Auditor’s Fee
Name of auditor Audit Fee Non-Audit Fee
Sycip, Gorres, Velayo &
Company
PHP350,000.00 (Estimated)
4) Medium of Communication
List down the mode/s of communication that the company is using for disseminating information. Disclosures are made through the PSE, the Company website, and through submissions made with the SEC.
5) Date of Release of Audited Financial: April 15, 2015
6) Company Website
Does the company have a website disclosing up-to-date information about the following?
Website
24. Business operations 25. Yes
26. Financial statements/reports (current and prior years)
27. Yes
28. Materials provided in briefings to analysts and media
29. A section is available on the website but no materials have been provided to analysts and media.
30. Shareholding structure 31. Yes
32. Group corporate structure 33. No.
34. Downloadable Annual Report 35. Yes
36. Notice of AGM and/or EGM 37. Yes
Macay Holdings, Inc. 2015 Annual Corporate Governance Report 56
38. Company’s constitution (company’s by-laws; memorandum and articles of association)
39. Yes
7) Disclosure of RPT
RPT Relationship Nature Value
Related Party Transactions were duly disclosed in the Consolidated Financial Statements, in the Corporation’s Annual Report (SEC Form 17-A).
J. RIGHTS OF STOCKHOLDERS
1) Right to participate effectively in and vote in Annual/Special Stockholders’ Meetings
(a) Quorum
Give details on the quorum required to convene in the Annual/Special Stockholders’ Meeting as set forth in its By-laws
Quorum Required Under Article I, Sec. 3 of the Amended By-
laws, it is stated that “[a]t any meeting of
stockholders, the holders as of record date,
of a majority of the stock of the company
then issued and outstanding, and
represented in person or by proxy, shall
constitute a quorum for the transaction of
business.”
(b) System Used to Approve Corporate Acts
Explain the system used to approve corporate acts.
System Used “At every meeting of the stockholders of
the Company, every stockholder shall be
entitled to one vote for each share of
stock standing in his name on the books
of the company; provided, however, that
in the case of the election of directors,
every stockholders may so vote by proxy,
provided that the proxy shall have been
appointed in writing by the stockholders
himself, or by his duly authorized
attorney” (Art. I, Sec. 3 of the Amended
By-laws).
Description “The stockholders may, at each annual
meeting, appoint two persons (who need
Macay Holdings, Inc. 2015 Annual Corporate Governance Report 57
not be stockholders), to act as inspectors
of election at all meetings of the
stockholders until the close of the next
annual meeting. If any inspector shall
refuse to serve, or neglect to attend, at
any meeting of the stockholders, or his
office shall become vacant, the meeting
may appoint an inspector in his place”
(Art. I, Sec. 5 of the Amended By-laws).
(c) Stockholders’ Rights
List any Stockholders’ Rights concerning Annual/Special Stockholders’ Meeting that differ from those laid down in the Corporation Code
Stockholders’ Rights under
The Corporation Code
Stockholders’ Rights not in
The Corporation Code
Shareholders shall have the right to elect,
remove and replace directors and vote on
certain corporate acts in accordance with
the Corporation Cod. (Sec. 7.1.1(a) of the
Revised Manual on Corporate
Governance).
At every meeting of the stockholders of the
Company, every stockholder shall be
entitled to one vote for each share of stock
standing in his name on the books of the
company; provided, however, that in the
case of the election of directors, every
stockholders may so vote by proxy,
provided that the proxy shall have been
appointed in writing by the stockholders
himself, or by his duly authorized attorney
(Art. I, Sec. 3 of the Corporation’s Amended
By-laws).
Right to attend and participate in the
Annual Stockholders’ Meeting and to
receive written notice thereof under
Section 50 of the Corporation Code (Art. I,
Secs. 3 and 4 of the Amended By-laws).
It shall be the duty of the directors to
promote, and remove the impediments to,
the exercise of shareholder’s rights and
allow possibilities to seek redress for
violation of their rights. They shall
encourage the exercise of shareholders’
voting rights and the solution of collective
action problems through appropriate
mechanisms. They shall be instrumental in
Macay Holdings, Inc. 2015 Annual Corporate Governance Report 58
removing excessive costs and other
administrative or practical impediments to
shareholders participating in meetings
and/or voting in person. The directors shall
pave the way for the electronic filing and
distribution of shareholder information
necessary to make informed decisions
subject to legal constraints (Sec. 7.1.4 of
the Revised Manual on Corporate
Governance).
All shareholders shall be allowed to
inspect corporate books and records
including minutes of Board meetings and
stock registries in accordance with the
Corporation Code and shall be furnished
with annual reports, including financial
statements, without cost or restrictions
(Sec. 7.1.2 of the Revised Manual on
Corporate Governance).
The minority shareholders shall be granted
the right to propose the holding of a
meeting, and the right to propose items in
the agenda of the meeting; provided the
items are for legitimate business purposes.
The minority shareholders shall have
access to any and all information relating
to matters for which the Management is
accountable, except for matters covered
by confidentiality agreements (Sec.
7.1.3(b)(c) of the Revised Manual on
Corporate Governance).
Right to information - The shareholders
shall be provided, upon request, with
periodic reports which disclose personal
and professional information about the
directors and officers and certain other
matters such as their holdings with the
Corporation’s shares, dealings with the
Corporation, relationship among directors
and key officers, and the aggregate
compensation of directors and officers
(Sec. 7.1.3(a) of the Revised Manual on
Corporate Governance).
Macay Holdings, Inc. 2015 Annual Corporate Governance Report 59
Right to dividends - Shareholders shall
have the right to receive dividends subject
to the discretion of the Board.
The Corporation shall be compelled to
declare dividends when its retained
earnings is in excess of 100% of its paid-in
capital stock, except: a) when justified by
definite corporate expansion projects or
programs approved by the Board or b)
when the Corporation is prohibited under
any loan agreement with any financial
institution or creditor, whether local or
foreign, from declaring dividends without
its consent, and such consent has not been
secured; or c) when it can be clearly shown
that such retention is necessary under
special circumstances obtaining in the
Corporation, such as when there is a need
for special reserve for probable
contingencies (Sec. 7.1.4(a)(b) of the
Revised Manual on Corporate
Governance).
The shareholders shall have appraisal right
or the right to dissent and demand
payment of the fair value of their shares in
the manner provided for under Sec. 82 of
the Corporation Code of the Philippines,
(Sec. 7.1.5 of the Revised Manual on
Corporate Governance).
Dividends - On April 8, 2015, the Board of Directors of the Corporation approved the declaration of cash dividends equivalent to ₱1.45 per common share, applicable to all stockholders of record as of April 27, 2015 with payment made on May 15, 2015.
Declaration Date Record Date Payment Date
8 April 2015 27 April 2015 15 May 2015
Macay Holdings, Inc. 2015 Annual Corporate Governance Report 60
On September 8, 2015, the Board of Directors of the Corporation approved the
adoption of a dividend policy, under which the Company intends to maintain a dividend payment ratio, in the form of cash and stock dividends, of up to 30% of its consolidated net income for the preceding fiscal year, subject to compliance with the requirements of applicable laws and regulations and the absence of circumstances that may restrict the payment of such dividends, such as, but not limited to the Company’s need to finance new capital expenditures, projects and developments. The Board of Directors may modify the dividend policy at any time.
(d) Stockholders’ Participation
1. State, if any, the measures adopted to promote stockholder participation in the
Annual/Special Stockholders’ Meeting, including the procedure on how stockholders and other parties interested may communicate directly with the Chairman of the Board, individual directors or board committees. Include in the discussion the steps the Board has taken to solicit and understand the views of the stockholders as well as procedures for putting forward proposals at stockholders’ meetings
Measures Adopted Communication Procedure
At every meeting of the stockholders of
the Company, every stockholder shall be
entitled to one vote for each share of
stock standing in his name on the books of
the company; provided, however, that in
the case of the election of directors, every
stockholders may so vote by proxy,
provided that the proxy shall have been
appointed in writing by the stockholders
himself, or by his duly authorized attorney
(Art. I, Sec. 3 of the Corporation’s
Amended By-laws).
Stockholders can, if they so choose,
communicate directly with the Board or
its individual members or board
committees during stockholders’
meetings.
It shall be the duty of the directors to
The Board shall commit at all times to full
disclosure of material information dealings.
It shall cause the filing of all required
information through the appropriate
Exchange mechanisms for listed companies
and submissions to the Commission for the
interest of its stockholders and other
stakeholders (Sec. 6, Revised Manual on
Corporate Governance).
Right to information - The shareholders
shall be provided, upon request, with
periodic reports which disclose personal
and professional information about the
directors and officers and certain other
matters such as their holdings with the
Corporation’s shares, dealings with the
Corporation, relationship among directors
and key officers, and the aggregate
compensation of directors and officers
(Sec. 7.1.3(a) of the Revised Manual on
Macay Holdings, Inc. 2015 Annual Corporate Governance Report 61
promote, and remove the impediments
to, the exercise of shareholder’s rights and
allow possibilities to seek redress for
violation of their rights. They shall
encourage the exercise of shareholders’
voting rights and the solution of collective
action problems through appropriate
mechanisms. They shall be instrumental in
removing excessive costs and other
administrative or practical impediments to
shareholders participating in meetings
and/or voting in person. The directors
shall pave the way for the electronic filing
and distribution of shareholder
information necessary to make informed
decisions subject to legal constraints (Sec.
7.1.4 of the Revised Manual on Corporate
Governance).
Corporate Governance).
Notice of the time and place of holding any
annual meeting, or any special meeting of
the stockholders, shall be given to the
stockholders at least fifteen (15) business
days before the date set for such meeting
(Art. I, Sec. 4 of the Amended By-laws).
The Chairman, who act as the presiding
officer at stockholders’ meetings, can open
the floor for any questions and comments
of stockholders.
The minority shareholders shall be granted
the right to propose the holding of a
meeting, and the right to propose items in
the agenda of the meeting; provided the
items are for legitimate business purposes.
The minority shareholders shall have
access to any and all information relating
to matters for which the Management is
accountable, except for matters covered by
confidentiality agreements (Sec. 7.1.3(b)(c)
of the Revised Manual on Corporate
Governance).
2. State the company policy of asking shareholders to actively participate in corporate decisions regarding:
a. Amendment to the company’s constitution
The Corporation complies with the procedures under the Corporation Code in cases of amendments to its Articles of Incorporation or By-laws.
Macay Holdings, Inc. 2015 Annual Corporate Governance Report 62
b. Authorization of additional shares The Corporation complies with the procedures under the Corporation Code in cases of authorization of additional shares.
c. Transfer of all or substantially all assets, which in effect results in the sale of the company The Corporation complies with the procedure under the Corporation Code in cases of transfer of all or substantially all assets, which in effect results in the sale of the company.
3. Does the company observe a minimum of 21 business days for giving out of
notices of the AGM where items to be resolved by shareholders are taken up?
Notice of the time and place of holding any annual meeting, or any special meeting of the stockholders, shall be given either by posting the same enclosed in a postage prepaid envelope, addressed to each stockholder of record, at the address left by such stockholder with the secretary of the company or at his last known post office address or by delivering the same to him in person at least fifteen (15) business days before the date set for such meeting (Art. I, Sec. 4 of the Amended By-laws).
a. Date of sending out notices: 09 July 2015 b. Date of Annual/Special Stockholders’ Meeting: 30 July 2015
4. State, if any, questions and answers during the Annual/Special Stockholders’ Meeting
None.
5. Results of Annual/Special Stockholders’ Meeting’s Resolutions
Appointment of inspectors of election to serve until the close of the next annual meeting - On motion made, duly seconded, and unanimously carried, the stockholders approved the appointment of Gabriel A. Dee and Katherine Y. Pura as election inspectors until the close of the next annual meeting.
Reading and approval of the Minutes of the Annual Stockholders Meeting held on 25 July 2014 - There being a motion duly seconded with no objection raised thereon, the minutes of the annual meeting of the stockholders of the Corporation held on 25 July 2014 was approved.
Presentation of the Annual Report – Antonio I. Panajon, President of the Corporation, rendered his annual report for the year 2014. As chair, he opened up the floor to entertain questions or comments. There being no question or comments raised thereon, the meeting proceeded with the next item on the agenda.
Action on acts and proceedings of the Board of Directors and Management in 2014 - On motion made and duly seconded, there being no objection
Macay Holdings, Inc. 2015 Annual Corporate Governance Report 63
thereto, the stockholders ratified the acts and proceedings of the Board of Directors and Management for the year 2014.
Election of Directors, including Independent Directors, for 2015-2016 - The following nominees were duly elected by the stockholders, without objection, to serve until their successors are elected:
1. Alfredo M. Yao
2. Antonio I. Panajon
3. Armando M. Yao
4. Jeffrey S. Yao
5. Carolyn S. Yao
6. Mary Grace S. Yao
7. Roberto A. Atendido
8. Albert S. Toribio
9. Fernando R. Balatbat
10. Gerardo T. Garcia
11. Rinaldi C. Aves
12. Jesus G. Gallegos, Jr. - Independent Director
13. Roberto F. Anonas, Jr. - Independent Director
Appointment of External Auditor - There being a motion made, duly seconded, and unanimously carried, the stockholders resolved to appoint SGV & Co. as the Corporation’s independent external auditors for 2015.
Amendment of Article II Section 1 of the By-Laws of the Corporation to conform to the number of directors in the Amended Articles of Incorporation - thirteen (13) – as approved by the vote of at least a majority of the members of the Board of Directors of the Corporation at a special meeting duly called for the purpose held on 25 June 2014 and ratified by the affirmative vote of stockholders owning or representing at least two thirds (2/3) of the outstanding capital stock of the Corporation at their meeting held on July 25, 2014 and as subsequently approved by the SEC on 12 September 2014.
6. Date of publishing of the result of the votes taken during the most recent AGM for
all resolutions: The results of the Annual Stockholders Meeting were duly reported to the Philippine Stock Exchange on 30 July 2015 and the Securities and Exchange Commission on 4 August 2015.
(e) Modifications State, if any, the modifications made in the Annual/Special Stockholders’ Meeting regulations during the most recent year and the reason for such modification: None.
Macay Holdings, Inc. 2015 Annual Corporate Governance Report 64
(f) Stockholders’ Attendance
(i) Details of Attendance in the Annual/Special Stockholders’ Meeting Held:
Type of Meeting Names of Board members/
Officers present
Date of
Meeting
Voting
Procedure
(by poll,
show of
hands, etc.)
% of SH
Attending
in Person
% of SH in
Proxy
Total % of
SH
attendance
Annual
Stockholders
Meeting
Alfredo M. Yao, Chairman
Armando M. Yao
Carolyn S. Yao
Mary Grace S. Yao
Roberto A. Atendido
Fernando R. Balatbat,
Director/Treasurer
Antonio I. Panajon,
Director/President
Gerardo T. Garcia Director
Rinaldi C. Aves Director
Jesus G. Gallegos, Jr.,
Independent Director
Roberto F. Anonas, Jr.,
Independent Director
Gabriel A. Dee, Corporate Secretary
30 July
2015
By proxy and
show of
hands
89.76% 89.76% 89.76%
(ii) Does the company appoint an independent party (inspectors) to count and/or validate the votes at the ASM/SSMs? Yes. The stockholders may, at each annual meeting, appoint two persons (who need not be stockholders), to act as inspectors of election at all meetings of the stockholders until the close of the next annual meeting. If any inspector shall refuse to serve, or neglect to attend, at any meeting of the stockholders, or his office shall become vacant, the meeting may appoint an inspector in his place (Art. I, Sec. 5 of the Amended By-laws).
Macay Holdings, Inc. 2015 Annual Corporate Governance Report 65
(iii) Do the company’s common shares carry one vote for one share? If not, disclose and give reasons for any divergence to this standard. Where the company has more than one class of shares, describe the voting rights attached to each class of shares. The Corporation abides by the basic principle of “one common share, one vote” (Art. I, Sec. 3 of the Amended By-laws).
(g) Proxy Voting Policies
State the policies followed by the company regarding proxy voting in the Annual/Special Stockholders’ Meeting
Company Policies
Execution and acceptance of proxies Every stockholder is entitled to vote by
proxy (Art. I, Sec. 3 of the Amended By-
laws).
Notary Notarization is not required.
Submission of Proxy The instrument authorizing a proxy to act
shall be exhibited to the secretary and to
the inspectors of election and shall be
lodged with the secretary at least ten (10)
days before the scheduled time of the
meeting (Art. I, Sec. 3 of the Amended By-
laws).
Several Proxies There is no prohibition on the appointment
of several proxies.
Validity of Proxy The determination of the validity of proxy
is based on the list of stockholders as of
record date. Any doubt about the validity
of a proxy should be resolved in the
shareholders’ proxy (Sec. 6.2 of the Revised
Manual on Corporate Governance).
Proxies executed abroad There is no prohibition on the execution of
proxies abroad.
Invalidated proxy Invalidated proxies shall not be counted.
Validation of proxy Validation of proxy is done by the
inspectors of election.
Violation of proxy None.
Macay Holdings, Inc. 2015 Annual Corporate Governance Report 66
(h) Sending of Notices State the company’s policies and procedure on the sending of notices of Annual/Special Stockholders’ Meeting
Policies Procedure
The Board should be transparent and fair
in the conduct of the annual and special
stockholders’ meetings of the Company.
The shareholders should be encouraged to
personally attend such meetings. If they
cannot attend, they should be apprised
ahead of time of their right to appoint a
proxy.
Notice of the time and place of holding any
annual meeting, or any special meeting of
the stockholders, shall be given to each
stockholder of record at least fifteen (15)
business days before the date set for such
meeting.
The notice of every meeting shall state
briefly the objects of the meeting, and no
other business shall be transacted at such
meeting except by consent of all the
stockholders of the Company.
No notice of any meeting need be
published in any newspaper.
The stockholders of the company may, by
unanimous consent, in writing, waive
notice of the time, place and purpose of
any meeting of stockholders and any
action taken at a meeting held pursuant to
such waiver shall be valid and building (Art.
I, Sec. 4 of the Amended By-laws).
Macay Holdings, Inc. 2015 Annual Corporate Governance Report 67
(i) Definitive Information Statements and Management Report
Number of Stockholders entitled to receive
the Definitive Information Statements and
Management Report and Other Materials
The stockholders as of record date, as
provided by the Corporation’s stock and
transfer agent, are entitled to receive the
Definitive Information Statements and
Management Report and other materials.
Date of Actual Distribution of Definitive
Information Statement and Management
Report and Other Materials held by market
participants/certain beneficial owners
The Corporation shall, as far as
practicable, issue the call for the ASM to
all shareholders within a reasonable time
before the date set for the ASM or Special
Meeting.
The call for the ASM includes the notice,
agenda, and the Information Statement.
Date of Actual Distribution of Definitive
Information Statement and Management
Report and Other Materials held by
stockholders
State whether CD format or hard copies
were distributed
Hard copies of the Definitive Information
Statements were distributed to the
stockholders.
If yes, indicate whether requesting
stockholders were provided hard copies
All stockholders were provided hard
copies of the Definitive Information
Statement.
(j) Does the Notice of Annual/Special Stockholders’ Meeting include the following:
Each resolution to be taken up deals with only
one item
Yes.
Profiles of directors (at least age, qualification,
date of first appointment, experience, and
directorships in other listed companies)
nominated for election/re-election.
Yes.
The auditors to be appointed or re-appointed Yes.
An explanation of the dividend policy, if any
dividend is to be declared
Yes.
The amount payable for final dividends Yes.
Documents required for proxy vote Yes.
Macay Holdings, Inc. 2015 Annual Corporate Governance Report 68
2) Treatment of Minority Stockholders
(a) State the company’s policies with respect to the treatment of minority
stockholders.
Policies Implementation
Please see below Please see below
The minority shareholders shall be granted the right to propose the holding of a meeting, and the right to propose items in the agenda of the meeting; provided the items are for legitimate business purposes. The minority shareholders shall have access to any and all information relating to matters for which the Management is accountable, except for matters covered by confidentiality agreements (Sec. 7.1.3(b)(c) of the Revised Manual on Corporate Governance).
(b) Do minority stockholders have a right to nominate candidates for board of directors? Yes. Candidates nominated are pre-screened and shortlisted by the Nomination Committee in accordance with the qualifications as provided in the Manual (Sec. 3.2.1.2(c) of the Revised Manual on Corporate Governance).
K. INVESTOR RELATIONS PROGRAM
1) Discuss the company’s external and internal communications policies and how frequently they are reviewed. Disclose who reviews and approves major company announcements. Identify the committee with this responsibility, if it has been assigned to a committee.
Reports or disclosures required under the Manual shall be prepared and submitted by the responsible Committee or officer through the Corporation’s Compliance Officer (Sec. 5.1 of the Revised Manual on Corporate Governance).
2) Describe the company’s investor relations program including its communications strategy to promote effective communication with its stockholders, other stakeholders and the public in general. Disclose the contact details (e.g. telephone, fax and e-mail) of the officer responsible for investor relations.
Details
(a) Objectives Investor Relations compiles and reports
documents and requirements to meet the needs
of the investing public and shareholders, Investor
Relations compiles, reports, documents all
requirements and disclosures through the
(b) Principles
(c) Modes of Communications
Macay Holdings, Inc. 2015 Annual Corporate Governance Report 69
Philippine Stock Exchange, e-mail
correspondences or telephone queries, annual
reports, and the company website.
(d) Investor Relations Officer Nicole Christine R. Jayme Tel. No. (632) 893 0733 Email address: investor.relations@macayholdings.com.ph
3) What are the company’s rules and procedures governing the acquisition of corporate
control in the capital markets, and extraordinary transactions such as mergers, and sales of substantial portions of corporate assets?
The Corporation shall comply with requirements of the Corporation Code and other applicable rules and regulations in cases of mergers, and sales of substantial portions of the Corporation’s assets.
4) Name of the independent party the board of directors of the company appointed to
evaluate the fairness of the transaction price. n/a.
L. CORPORATE SOCIAL RESPONSIBILITY INITIATIVES
Discuss any initiative undertaken or proposed to be undertaken by the company.
Macay supports its subsidiary’s corporate social responsibility program. ARC Young Leaders Camp (ARCYLC), is ARC’s flagship corporate social responsibility program which , began in 2011 with the aim to uphold the very same values of hard work, dedication and leadership that forged its foundation. Up to 40 underprivileged but deserving Filipino students from public universities, as well as scholars from private colleges, are selected to participate in a three-day workshop that inspires them to create, inspire, and lead in their own communities and eventually, in society and the nation. The camp invites modern heroes from various fields to serve as guest speakers and role models for the youth participants, such as 2009 CNN Hero of the Year Efren Peñaflorida, environmentalist Anna Oposa, and Rags2Riches founder Reese Fernandez, among many others.
Macay Holdings, Inc. 2015 Annual Corporate Governance Report 70
M. BOARD, DIRECTOR, COMMITTEE AND CEO APPRAISAL
Disclose the process followed and criteria used in assessing the annual performance of the
board and its committees, individual director, and the CEO/President.
At present, the Corporation is working on finalizing its written policies used in the assessment of the annual performance of the Board and its committees, individual directors and the President. The following presents the initial guidelines used to formulate the policy.
1. Process Criteria
Board of Directors
To evaluate the
performance of the
Board of Directors as a
body as well as those of
its committees, the
individual directors and
the chief executive, the
Self-Evaluation Form
shall be used. The self-
evaluation shall be
conducted every year,
the result of which shall
be submitted to the
Compliance Officer for
consolidation thirty (30)
days prior to the date of
yearly Stockholders’
Meeting.
Rating Description
Five (5) -
Highest
Leading practice or principle is
adopted in the Manual and full
compliance with the same
Four (4)
Leading practice or principle is
adopted in the Manual and
compliance has been made but with
minor deviation(s) or
incompleteness
Two (2) to
Three (3)
Leading practice or principle is
adopted in the Manual and
compliance has been made but with
major deviation(s) or
incompleteness
One (1) -
Lowest
Leading practice or principle is
adopted in the Manual but
compliance has not yet been made.
Board Committees
Individual Directors
CEO/President
Macay Holdings, Inc. 2015 Annual Corporate Governance Report 71
N. INTERNAL BREACHES AND SANCTIONS
Discuss the internal policies on sanctions imposed for any violation or breach of the corporate governance manual involving directors, officers, management and employees Sec. 9.1 of the Revised Manual on Corporate Governance imposes the following penalties, after notice and hearing, on the company’s directors, officers, staff, subsidiaries and affiliates and their respective directors, officers and staff in case of violation of any of the provision of the Manual:
Violations Sanctions
First Violation The subject person shall be reprimanded.
Second Violation Suspension of office shall be imposed. The
duration of suspension shall depend on the
gravity of the violation.
Third Violation Removal
The Compliance Officer shall be responsible in identifying and reporting violations of the Manual to the Corporate Governance Committee, which shall conduct hearings and shall recommend to the Chairman of the Board the imposable penalty for such violation, for further review and approval of the Board (Section 9.3, Revised Manual on Corporate Governance).
Macay Holdings, Inc. 2015 Annual Corporate Governance Report
Pursuant to the requirement of the Securities and Exchange Commission, this Annual Corporate Governance Report is signed on behalf of the registrant by the undersigned, thereunto duly authorized, in the City of ___________ on ________, 2016.
Signatures
ALFREDO M. YAO
Chairman of the Board
ANTONIO I. PANAJON
President
JESUS G. GALLEGOS, JR.
Independent Director
ROBERTO F. ANONAS, JR.
Independent Director
SUBSCRIBED AND SWORN to before me this _____ day of __________________ 2016, affiant/s exhibiting to me his/their passports as follows:
NAME PROOF OF IDENTITY DATE OF ISSUE PLACE OF ISSUE
Alfredo M. Yao Passport No. EC1806774 05 August 2014 DFA-Manila
Antonio I. Panajon Passport No. EB6199264 24 August 2012 DFA – Manila
Roberto F. Anonas, Jr. Passport No. EC510911 28 August 2015 DFA – NCR South
Jesus G. Gallegos, Jr. Passport No. EB7847350 11 April 2013 DFA – Manila
Notary Public Doc. No. Page No. Book No. Series of 2016.