Ayala Corporation

I. BOARD OF DIRECTORS

COMPOSITION OF THE BOARD

The following are the directors of the Corporation, classified in accordance with the Revised Code of Corporate Governance for publicly listed companies and SEC Memorandum Circular No. 16, series of 2002:

Director’s Name	Type [Executive (ED), Non-Executive (NED) or Independent Director (ID)]	If nominee, identify the principal	Nominator in the last election (if ID, state the relationship with the nominator)	Date first elected	Date last elected (if ID, state the number of years served as ID)*	Elected when (Annual /Special Meeting)	No. of years served as director
Jaime Augusto Zobel de Ayala	ED	Mermac, Inc.	Ma. Angelica B. Rapadas	May 1987	April 20, 2018	Annual Meeting	31
Fernando Zobel de Ayala	ED	Mermac, Inc.	Ma. Angelica B. Rapadas	May 1994	April 20, 2018	Annual Meeting	24
Delfin L. Lazaro	NED	N.A.	Ma. Angelica B. Rapadas	January 2007	April 20, 2018	Annual Meeting	11
Keiichi Matsunaga	NED	Mitsubishi Corporation (MC)	Ma. Angelica B. Rapadas	April 2017	April 20, 2018	Annual Meeting	1
Ramon R. Del Rosario, Jr.	ID	N.A	Ma. Angelica B. Rapadas (not related to Mr. Del Rosario)	April 2010	April 20, 2018 (Served as ID for 6 years from April 2012)	Annual Meeting	8
Xavier P. Loinaz	Lead ID**	N.A	Ma. Angelica B. Rapadas (not related to Mr. Loinaz	April 2009	April 20, 2018 (Served as ID for 6 years from April 2012)	Annual Meeting	9
Antonio Jose U. Periquet	ID	N.A	Ma. Angelica B. Rapadas (not related to Mr. Periquet)	September 2010	April 20, 2018 (Served as ID for 6 years from April 2012)	Annual Meeting	7

*Reckoning of the cumulative terms is from 2012, in connnection with the SEC Memorandum Circular No. 9, series of 2011.

**Lead ID since April 2017

Ms. Ma. Angelica B. Rapadas  is a minority stockholder of the Company.

Profiles of our Board of Directors:

Jaime Augusto Zobel de Ayala, Filipino, 59, Director of Ayala Corporation since May 1987. He is the Chairman and CEO of Ayala Corporation since April 2006. He holds the following positions in publicly listed companies: Chairman of Globe Telecom, Inc.,   Integrated Micro-Electronics, Inc. and Bank of the Philippine Islands; and Vice Chairman of Ayala Land, Inc. and Manila Water Company, Inc.  He is also the Chairman of AC Education, Inc., Ayala Retirement Fund Holdings, Inc., AC Industrial Technology Holdings, Inc., AC Ventures Holding Corp., AC Infrastructure Holdings Corporation and Asiacom Philippines, Inc.; Co-Chairman of Ayala Foundation, Inc. and Ayala Group Club, Inc.; Director of Alabang Commercial Corporation, Ayala International Pte. Ltd., AC Energy, Inc., Ayala Healthcare Holdings, Inc., Light Rail Manila Holdings, Inc.  and AG Holdings Limited; Chairman of Harvard Business School Asia-Pacific Advisory Board and Endeavor Philippines; and member of the Harvard Global Advisory Council, Mitsubishi Corporation International Advisory Committee, JP Morgan International Council, Global Board of Advisors of the Council on Foreign Relations, Asia Society International Council, University of Tokyo Global Advisory Board, Singapore Management University Board of Trustees, and Eisenhower Fellowships Board of Trustees. He was the Philippine Representative to the Asia Pacific Economic Cooperation (APEC) Business Advisory Council from 2010 to December 2015. In 2007, he received the Harvard Business School Alumni Achievement Award, the school’s highest recognition. He was a recipient of the Presidential Medal of Merit in 2009 for enhancing the prestige and honor of the Philippines both at home and abroad.  In 2010, he was bestowed the Philippine Legion of Honor, with rank of Grand Commander, by the President of the Philippines in recognition of his outstanding public service. In 2015, he received the Order of Mabini, with rank of Commander, for his vital contributions during the Philippines’ hosting of the Asia Pacific Economic Cooperation (APEC) Summit.  In 2017, he was recognized as a United Nations SDG Pioneer for his work in sustainable business strategy and operations.  He graduated with B.A. in Economics (Cum Laude) at Harvard College in 1981 and obtained an MBA at the Harvard Graduate School of Business Administration in 1987.

Fernando Zobel de Ayala, Filipino, 58, Director of Ayala Corporation since May 1994. He is the President and Chief Operating Officer of Ayala Corporation since April 2006. He holds the following positions in publicly listed companies: Chairman of Ayala Land, Inc. and Manila Water Company, Inc.; and Director of Bank of The Philippine Islands, Globe Telecom, Inc. and Integrated Micro-Electronics, Inc.; and Independent Director of Pilipinas Shell Petroleum Corporation. He is the Chairman of AC International Finance Ltd., Liontide Holdings, Inc., AC Energy, Inc., Ayala Healthcare Holdings, Inc.,  Automobile Central Enterprise, Inc., Alabang Commercial Corporation, Accendo Commercial Corp. and Hero Foundation, Inc.; Co-Chairman of Ayala Foundation, Inc. and Ayala Group Club, Inc.; Vice-Chairman of ALI Eton Property Development Corporation, Aurora Properties Incorporated, Vesta Property Holdings, Inc., Ceci Realty Inc., Fort Bonifacio Development Corporation, Bonifacio Land Corporation, Emerging City Holdings, Inc., Columbus Holdings, Inc., Berkshires Holdings, Inc. and Bonifacio Art Foundation, Inc.; Director of LiveIt Investments, Ltd., AG Holdings Ltd., AC Infrastructure Holdings Corporation, Asiacom Philippines, Inc., Ayala Retirement Fund Holdings, Inc., AC Education, Inc. and AC Ventures Holding Corp., Honda Cars Philippines, Inc., Isuzu Philippines Corporation, and Manila Peninsula; Member of the Philippine-Singapore Business Council, INSEAD East Asia Council, World Presidents’ Organization; and Chief Executives Organization; Chairman of Habitat for Humanity’s Asia-Pacific Capital Campaign Steering Committee; and Member of the Board of Trustees of Caritas Manila, Pilipinas Shell Foundation, and the National Museum.   He graduated with B.A. Liberal Arts at Harvard College in 1982 and holds a CIM from INSEAD, France.

Keiichi Matsunaga, Japanese, 54, Non-Executive Director of Ayala Corporation starting April 2017. He is the General Manager of Mitsubishi Corporation Manila Branch. Currently, he is also the Chairman of International Elevator & Equipment Inc.; President of MC Diamond Realty Investment Phils., MC Oranbo Investment, MC Cavite Holdings, Inc., FMT Kalayaan, Inc.; and Director of Century City Development II Corporation (CCDC II), Isuzu Philippines Corporation, Kepco Ilijan Corporation, Trans World Agro-Products Corp., Japanese Chamber of Commerce & Industry of the Philippines (JCCIPI) and The Japanese Association Manila, Inc. (JAMI). He is not a director of any publicly listed company in the Philippines other than Ayala Corporation.  He entered Mitsubishi Corporation after graduating from the Faculty of Law at Waseda University in 1988 and has since held various leadership positions.

Ramon R. del Rosario, Jr., Filipino, 74, Independent Director of Ayala Corporation since April 2010. He holds the following positions in publicly listed companies: President and Chief Executive Officer of Phinma Corporation; Chairman of PHINMA Energy Corp. and PHINMA Petroleum and Geothermal, Inc. He is the President and Chief Executive Officer of Philippine Investment Management, Inc.; Chairman of Araullo University, University of Iloilo, University of Pangasinan, Cagayan de Oro College, Southwestern University, United Pulp and Paper Co., Inc.,  PHINMA Power Generation Corporation, PHINMA Renewable Energy Corp., One Subic Power Generation Corp., PHINMA Microtel Hotels, Inc. and PHINMA Hospitality, Inc.  He is Vice-Chairman of Phinma Foundation, Inc. and Phinma Property Holdings Corp., Director of Union Galvasteel Corp. and other PHINMA managed companies; Chairman of The National Museum of the Philippines and Philippine Business for Education; and Vice-Chairman of Caritas Manila and Philippine Business for Social Progress (PBSP). He is a former chairman of the Ramon Magsaysay Award Foundation and Makati Business Club, where he remains a Trustee. Mr. del Rosario graduated from De La Salle College in 1967 with degrees in BSC-Accounting and AB Social Sciences Magna cum Laude and from Harvard Business School in 1969 for a Master in Business Administration degree. He has managed Phinma since 2002 and brings with him a wealth of experience in leading a diversified conglomerate.

Delfin L. Lazaro, Filipino, 72, Non-Executive Director of Ayala Corporation since January 2007. He holds the following positions in publicly listed companies: Director of Ayala Land, Inc., Integrated Micro-Electronics, Inc., Manila Water Company, Inc., and Globe Telecom, Inc. His other significant positions include: Chairman of Atlas Fertilizer & Chemicals Inc., Chairman and President of A.C.S.T. Business Holdings, Inc.; Vice Chairman and President of Asiacom Philippines, Inc.; Director of AC Industrial Technology Holdings, Inc., AYC Holdings, Ltd.., Purefoods International Limited and Probe Productions, Inc. He graduated with BS Metallurgical Engineering at the University of the Philippines in 1967 and took his MBA (with Distinction) at Harvard Graduate School of Business in 1971.

Xavier P. Loinaz, Filipino, 75, Independent Director of Ayala Corporation since April 2009 and Lead Independent Director since April 21, 2017. He is also an Independent Director of the Bank of the Philippine Islands, a publicly listed company. He also holds the following positions: Independent Director of BPI Family Savings Bank, Inc., and BPI/MS Insurance Corporation; Trustee of E. Zobel Foundation; Chairman of Alay Kapwa Kilusan Pangkalusugan and XPL Manitou Properties, Inc.; and Vice Chairman of XPL MTJL Properties, Inc. He was formerly the President of the Bank of the Philippine Islands (BPI) from 1982 to 2004.  He was also the President of Bankers Association of the Philippines from 1989 to 1991.   He graduated with an AB Economics degree at Ateneo de Manila University in 1963 and took his MBA-Finance at Wharton School, University of Pennsylvania in 1965.

Antonio Jose U. Periquet, Filipino, 57, Independent Director of Ayala Corporation since September 2010. He is the chairman of BPI Asset Management and Trust Corporation, the Campden Hill Group and Campden Hill Advisors, Inc.  He also sits as an independent director of the Bank of the Philippine Islands, ABS-CBN Corporation, DMCI Holdings, The Max's Group of Companies, The Philippine Seven Corporation and the Albizia ASEAN Tenggara Fund.  Mr. Periquet is a trustee of Lyceum of the Philippines University and a member of the Dean's Global Advisory Council at the University of Virginia's Darden School of Business.  He graduated with an AB Economics degree at Ateneo de Manila University in 1982 and took his Masters of Science in Economics at the Oxford University, UK in 1988 and Masters in Business Administration at University of Virginia, USA in 1990.

 

CORPORATE GOVERNANCE POLICY THAT THE BOARD HAS ADOPTED 

It is the duty of the directors to promote shareholders rights, remove impediments to the exercise of shareholders rights and provide effective redress for violation of those rights. The directors shall encourage the exercise of shareholders’ voting rights and the resolution of collective action problems through appropriate mechanisms. They shall be instrumental in reducing or eliminating 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 shareholders information necessary to make informed decisions subject to legal constraints.

As mandated by the Board Charter, the Board of Directors establishes the vision, strategies, key policies, and procedures of the company, and the mechanisms to monitor, evaluate, and improve management performance. The Board leads the review of the company’s vision and mission every year, revisits the group's corporate strategy and monitors its implementation. In 2015, the Board reviewed a refreshed vision statement of the company. As a result, the company adopted a new vision statement that is available in the company website.

The Board also reviews and ensures the adequacy of internal control mechanisms and risk management process for good governance, and the proper implementation of the company’s Code of Conduct and Ethics. The Board also promotes and enhances shareholders’ rights.

 

FREQUENCY OF REVIEW AND APPROVAL OF THE COMPANY'S VISION AND MISSION STATEMENTS

The Board reviews and approves the vision and mission at least once a year, as part of the review and approval of the Company’s strategy as recommended by Management. The Board and Management also revisit the Company’s vision and mission as part of the budget review process.

On September 22, 2015, the Board reviewed the mission and vision statements of the Company. As the result of that review, the Company adopted the following new vision statement that has been published in the Company website.

 

VISION STATEMENT:

We will be the most relevant, innovative, and enduring Philippine-based business group, enabling shared value and prosperity for the many markets and stakeholders we serve

 

The following is the Company’s mission statement:

Ayala Corporation, a holding company with a diverse business portfolio, has a legacy of pioneering the future. Founded in 1834, it has achieved its position of leadership by being values driven, goals oriented, and stakeholder focused. Anchored on values of integrity, long-term vision, empowering leadership, and commitment to national development, we fulfill our mission to ensure long-term profitability, increase shareholder value, provide career opportunities, and create synergies as we build mutually beneficial partnerships and alliances with those who share our philosophy and values. With entrepreneurial strength, we continue to create a future that nurtures to fruition our business endeavors and personal aspirations.

 

In 2017, the Board has reviewed and affirmed the appropriateness of the vision and mission statement of the company.

 

DIRECTORSHIPS IN OTHER COMPANIES 

WITHIN THE GROUP

Director’s Name	Corporate Name of the Group Company	Type of Directorship (Executive, Non-Executive, Independent). Indicate if director is also the Chairman.
Jaime Augusto Zobel de Ayala	Bank of the Philippine Islands	Chairman, Non-Executive Director
	Integrated Micro-Electronics, Inc.	Chairman, Non- Executive Director
	Globe Telecom, Inc.	Chairman, Non-Executive Director
	Ayala Land, Inc	Vice Chairman, Non-Executive Director
	Manila Water Company, Inc.	Vice Chairman, Non-Executive Director
	Alabang Commercial Corporation	Non-Executive Director
	Ayala International Pte Ltd.	Non-Executive Director
	AC Energy, Inc.	Non-Executive Director
	Ayala Group Club, Inc.	Co-Chairman, Non-Executive Director
	AC Education, Inc.	Chairman, Non-Executive Director
	Ayala Retirement Fund Holdings, Inc.	Chairman, Non-Executive Director
	Asiacom Philippines, Inc.	Chairman, Non-Executive Director
	LiveIt Investments Limited	Non-Executive Director
	AG Holdings Limited	Non-Executive Director
	Ayala Healthcare Holdings, Inc.	Non-Executive Director
	AC Industrial Technology Holdings, Inc.	Non-Executive Director
	AC Venture Holdings Corp.	Chairman, Non-Executive Director
	AC Infrastructure Holdings Corporation	Chairman, Non-Executive Director
	Ayala Foundation, Inc.	Co-Chairman of the Board of Trustees
Fernando Zobel de Ayala	AC International Finance Limited	Chairman, Non-Executive Director
	Ayala International Holdings Limited	Chairman, Non-Executive Director
	Ayala Land, Inc.	Chairman, Non-Executive Director
	Bank of the Philippine Islands	Vice Chairman, Non-Executive Director
	LiveIt Investments, Ltd.	Vice Chairman, Non-Executive Director
	Globe Telecom, Inc.	Non-Executive Director
	Integrated Micro-Electronics, Inc.	Non-Executive Director
	Manila Water Company, Inc.	Non-Executive Director
	Asiacom Philippines, Inc.	Non-Executive Director
	AG Holdings Limited	Non-Executive Director
	Ayala International Pte. Ltd.	Non-Executive Director
	Accendo Commercial Corporation	Chairman, Non-Executive Director
	Ceci Realty, Inc.	Vice Chairman, Non-Executive Director
	Vesta Property Holdings, Inc.	Vice Chairman, Non-Executive Director
	Columbus Holdings, Inc.	Vice Chairman, Non-Executive Director
	Emerging City Holdings, Inc.	Vice Chairman, Non-Executive Director
	Fort Bonifacio Development Corporation	Vice Chairman, Non-Executive Director
	Bonifacio Land Corporation	Vice Chairman, Non-Executive Director
	AC Energy, Inc.	Chairman, Non-Executive Director
	AC Infrastructure Holdings Corporation	Non-Executive Director
	Alabang Commercial Corporation	Chairman, Non-Executive Director
	Aurora Properties, Inc.	Vice Chairman, Non-Executive Director
	Automobile Central Enterprises, Inc.	Chairman, Non-Executive Director
	AC Industrial Technology Holdings, Inc.	Chairman, Non-Executive Director
	Liontide Holdings, Inc.	Chairman, Non-Executive Director
	Ayala Group Club, Inc.	Co-Chairman, Non-Executive Director
	Ayala Retirement Fund Holdings, Inc.	Non-Executive Director
	Ayala Healthcare Holdings, Inc.	Chairman, Non-Executive Directors
	Ayala Foundation, Inc.	Co-Chairman of the Board of Trustees
	AC Education, Inc.	Non-Executive Director
	AC Venture Holdings Corp.	Non-Executive Director
	ALI ETON Property Development Corp.	Vice-Chairman, Non-Executive Directors
	BPI Asset Management and Trust Corporation	Non-Executive Director
	BPI Foundation, Inc.	Chairman of the Board of Trustees
	Hero Foundation, Inc.	Chairman of the Board of Trustees
	Bonifacio Art Foundation, Inc.	Vice Chairman of the Board of Trustees
	Berkshire Holdings, Inc.	Vice Chairman, Non-Executive Director
Delfin L. Lazaro	AYC Holdings, Ltd.	Chairman, Non-Executive Director
	Purefoods International, Ltd.	Chairman, Non-Executive Director
	A.C.S.T. Business Holdings, Inc.	Chairman, Non-Executive Director
	Globe Telecom, Inc.	Non-Executive Director
	Ayala Land, Inc.	Non-Executive Director
	Integrated Micro-Electronics, Inc.	Non-Executive Director
	Manila Water Company, Inc.	Non-Executive Director
	AC Industrial Technology Holdings, Inc.	Non-Executive Director
	Asiacom Philippines, Inc.	Non-Executive Director
Xavier P. Loinaz	Bank of the Philippine Islands	Independent Director
	BPI Family Savings Bank	Independent Director
	BPI M/S Insurance Corporation	Independent Director
Antonio Jose U. Periquet	Bank of the Philippine Islands	Independent Director
	BPI Capital Corporation	Independent Director
	BPI Family Savings Bank, Inc.	Independent Director
	BPI Asset Management Corporation	Independent Director

 

IN OTHER PUBLICLY-LISTED COMPANIES OUTSIDE THE GROUP

Director’s Name	Name of Listed Company	Type of Directorship (Executive, Non-Executive, Independent). Indicate if director is also the Chairman.​
Antonio Jose U. Periquet	ABS-CBN Corporation	Independent Director
	ABS-CBN Holdings Corporation	Independent Director
	DMCI Holdings, Inc.	Independent Director
	Philippine Seven Corporation	Independent Director
	Max’s Group of Companies, Inc.	Independent Director
Ramon R. del Rosario, Jr	Phinma Corporation	Executive Director
	Trans-Asia Petroleum Corporation	Executive Director
	PHINMA Energy Corp. (formerly Trans-Asia Oil & Energy Dev’t. Corp.)	Executive Director
Fernando Zobel de Ayala	Pilipinas Shell Petroleum Corporation	Independent Director

 

RELATIONSHIP WITH SIGNIFICANT SHAREHOLDERS OF THE COMPANY

Director’s Name	Name of the Significant Shareholder	Description of the relationship
Jaime Agusto Zobel de Ayala	Mermac, Inc.	Mr. Zobel is an officer and a stockholder of Mermac, Inc.
Fernando Zobel de Ayala	Mermac, Inc.	Mr. Zobel is an officer and a stockholder of Mermac, Inc.
Keiichi Matsunaga	Mitsubishi Corporation	Mr. Matsunaga is the General Manager of Mitsubishi Corporation-Manila Branch

 

DIRECTORSHIP LIMIT

To ensure that our Directors devote adequate time and attention to their duties, we encourage our Independent Directors and Non-Executive Directors to hold no more than five (5) board seats in publicly listed companies (PLCs), and our Executive Directors to hold no more than two (2) board seats in PLCs outside our group. These limits may be waived by the Board at its discretion provided the interests of our stockholders and stakeholders are not prejudiced. The Board may also allow Executive Directors to hold directorships that are necessary or desirable in the pursuit of the Corporation's business.

SHAREHOLDINGS IN THE COMPANY

Name of Director	Number of Direct shares*	Number of Indirect shares / Through (name of record owner)*	% of Capital Stock
Jaime Augusto Zobel de Ayala	Common-39,731 Voting Preferred-543,802	Common (through ESOWN subscription)- 260,456 Preferred B (through PCD) – 20,000	0.09845%
Fernando Zobel de Ayala	Common- 53,189 Voting Preferred-554,983	Common (through ESOWN subscription)- 253,128	0.09814%
Delfin L. Lazaro	Common - 1 Voting Preferred-258,297	Common (through ESOWN subscription)- 32,091 Common (through PCD Nominee)-1,683	0.03328%
Keiichi Matsunaga	Common-1	None	0.0000%
Xavier P. Loinaz	Common-126,614  Voting Preferred-65,517	None	0.02189%
Ramon R. Del Rosario, Jr.	Common-1	None	0.0000%
Antonio Jose U. Periquet	Common-1,200	Preferred B (through PCD) – 400,000	0.04571%
TOTAL	1,643,336	967,358	0.29747%

 

 

II. CHAIRMAN AND CEO

Chairman of the Board	Jaime Augusto Zobel de Ayala
CEO/President	Jamie Augusto Zobel de Ayala (CEO)/ Fernando Zobel de Ayala (President)

 

Among the checks and balances laid down to ensure that the Board gets the benefit of independent views are:

(1) the powers and responsibilities of the Chairman and of the CEO are specified and separate in the By-laws;

(2) only two of the seven directors are executive directors and the powers and responsibilities of directors are clearly delineated from the powers and responsibilities of management; and

(3) three of the seven directors are independent directors.

 

 ROLES, ACCOUNTABILITIES AND DELIVERABLES OF THE CHAIRMAN AND CEO

	Chairman	Chief Executive Officer
Role	Schedule meetings to enable the Board to perform its duties responsibly while not interfering with the flow of the Corporation’s operations; Prepare the meeting agenda; Exercise control over quality, quantity and timeliness of the flow of information between Management and the Board; and Assist in ensuring compliance with the Corporation’s guidelines on corporate governance.	Have general supervision of the business, affairs, and property of the Corporation, and over its employees and officers; See that all orders and resolutions of the Board of Directors are carried into effect; Submit to the Board as soon as possible after the close of each fiscal year, and to the stockholders at the annual meeting, a complete report of the operations of the Corporation for the preceding year, and the state of its affairs; and Report to the Board from time to time all matters within its knowledge which the interest of the Corporation may require to be brought to their notice.
Accountabilities
Deliverables

 

BOARD OF DIRECTORS' PLAN FOR THE SUCCESSION OF THE CEO/MANAGING DIRECTOR/PRESIDENT AND THE TOP KEY MANAGEMENT POSITIONS

The Corporate Governance and Nomination Committee of the Board conducts a review and evaluation of the qualifications of all persons nominated to positions in the Corporation which require appointment by the Board. In conducting its review, the Committee considers the following factors:

a) Duties and responsibilities of the position/s under consideration;

b) For the nominees:

(i) level of knowledge on the Corporation’s business;

(ii) potential to assume greater responsibility in the organization;

(iii) ability, integrity and expertise; and

(iv) results of previous performance assessments.

The Committee’s review of the management succession plan shall also take into account relevant human resource policies of the Corporation and its vision, mission and overall corporate strategy. (Charter of the Nomination Committee, Section 4)

The Board approves the succession plans for the CEO/Managing Director/President and the top key management positions based on the recommendations of the Committee and other factors that the Board may deem proper and relevant. (Charter of the Board of Directors, Section 6.1 (t), and Annex B)

 

III. OTHER EXECUTIVE, NON-EXECUTIVE AND INDEPENDENT DIRECTORS 

 

COMPANY POLICY FOR ENSUREING DIVERSITY OF EXPERIENCE AND BACKGROUND OF DIRECTORS IN THE BOARD

The Board shall be composed of members who possess the necessary knowledge, skills and experience required to properly perform the duties of the Board.

The Board shall encourage the selection of a mix of competent directors, each of whom can add value and independent judgment in the formulation of sound corporate strategies and policies. Careful attention must be given to ensure that there is independence and diversity, and appropriate representation of women in the Board to the greatest extent possible. (Charter of the Board of Directors, Section 2.2)

Mr. Keiichi Matsunaga, a Non-Executive Director of the Corporation, is the General Manager of Mitsubishi Corporation-Manila Branch. Mitsubishi Corporation is also a holding company. Mr. del Rosario, an Independent Director of the Corporation, has been the President and CEO of Phinma, Corporation, a holding company, for at least ten years.

 

ROLES, ACCOUNTABILITIES, AND DELIVERABLES OF THE EXECUTIVE, NON-EXECUTIVE AND INDEPENDENT DIRECTORS

 

	Executive Directors	Non-Executive Directors	Independent Directors
Role	Conduct fair business transaction with the corporation and ensure that personal interest does not bias Board decisions. Devote time and attention necessary to properly discharge his duties and responsibilities. Before deciding on any matter brought before the Board, every director should carefully study the issue. The director should view each company issues objectively and support plans and ideas which he believes are beneficial to the Company The director should be knowledgeable of the statutory and regulatory requirements affecting the corporation. The director should not disclose any non-public information of the Company to any person without the authority of the Board. Each director is responsible for assuring that actions taken by the Board maintain the adequacy of the control environment within the Corporation. Prior to assuming office, the director is expected to attend a seminar on corporate governance conducted by a duly recognized private or government institution.		Perform the same roles and deliverables as those given to the executive and non-executive directors. In addition, independent directors serve as chairs of the Audit Committee, Risk Management and Related Party Transactions Committee, Compensation Committee and Corporate Governance and Nomination Committee of the Company.
Deliverables
Accountabilities	Directors who willfully and knowingly vote for or assent to patently unlawful acts of the Corporation or who are guilty of gross negligence or bad faith in directing the affairs of the Corporation or acquire any personal or pecuniary interest in conflict with their duty as such directors, shall be liable jointly and severally for all damages resulting therefrom suffered by the Corporation, its stockholders and other persons. When a director attempts to acquire or acquires, in violation of his duty, any interest adverse to the Corporation in respect of any matter which has been reposed in him in confidence, as to which equity imposes a disability upon him to deal in his own behalf, he shall be liable as a trustee for the Corporation and must account for the profits which otherwise would have accrued to the Corporation.

 

The Board has established an effective performance management framework that ensures that Management’s performance is at par with the standards set by the Board and Senior Management.

	Process	Criteria
CEO/President/Senior Management Group	The performance of the Senior Management Group, including the Chairman and the President, are regularly evaluated. The Company uses an Evaluation System which includes self-assessment and discussions.	The company’s Performance Evaluation System includes metrics, deliverables, accomplishments and development plan.
Managers & Staff	1. The performance review of all managers are regularly evaluated and is supported by an online evaluation system. 2. Deliverables are set at the start of every performance year,  discussed and agreed upon as a collaborative effort between Immediate Supervisors and employees. 3. Regular Feedback and mid-year review is set and observed. 4. Evaluations are done based on defined and agreed upon metrics. 5. Performance Dialogue is an important part of the evaluation system.	The company’s Performance Evaluation System includes metrics, deliverables, accomplishments and development plan

 

INDEPENDENT DIRECTOR

The Corporation adheres to both Philippine law and the rules of the Securities and Exchange Commission and of the Philippine Stock Exchange. (the “Philippine Requirements”) and the standards set by the Association of Southeast Asian Nations (ASEAN) for the strengthening of the ASEAN capital market development and integration for the establishment of an ASEAN Economic Community (the “ASEAN Standards”) in the determination of independent directors. In line with this, the Corporation has adopted the following definition of independent directors:

Independent directors under the Philippine Requirements shall, apart from their fees and shareholdings, hold no interests or relationships with the Corporation that may hinder their independence from the Corporation, Management or shareholders which could or could reasonably be perceived to, materially interfere with the exercise of independent judgment in carrying out the responsibilities of a director. For this purpose, each independent director submits to the Corporate Secretary a letter of confirmation stating that he holds no interest affiliated with the Corporation, the Management or controlling stockholder at the time of his election or re-election.

On the other hand, independent directors under the ASEAN standards shall also possess the qualifications and none of the disqualifications for independent directors under the Philippine Requirements provided and except that, when relevant in the application of the qualifications and disqualifications, a “substantial stockholder” shall mean a stockholder who possesses the power to direct or govern, directly or indirectly, the financial and operating policies of the Corporation so as to obtain benefits from its activities. (Charter of the Board of Directors, Section 2.4 and Annex A).

 

OFFICERS ATTESTATION TO THE COMPANY'S FULL COMPLIANCE WITH THE SEC CODE OF CORPORATE GOVERNANCE

On January 9, 2015, the Company submitted to the SEC the Consolidated Changes in the Annual Corporate Governance Report for 2014 that was reviewed and approved by the Board of Directors of the Company at their meeting on December 4, 2014.

On January 7, 2016, the Company submitted to the SEC the Consolidated Changes in the Annual Corporate Governance Report for 2015 that was reviewed and approved by the Board of Directors of the Company at their meeting on December 3, 2015.

On May 12, 2017 , the Company submitted to the SEC the Annual Corporate Governance Report for 2016 that was reviewed and approved by the Board of Directors of the Company at their meeting on April 21, 2017.

The Chairman of the Board, Compliance Officer and Chief Audit Executive attest to the adequacy of the Corporation’s systems for internal control and risk management and processes for compliance and governance. Please click the link below:

2017 Attestation of Internal Controls

 

TERM LIMIT FOR INDEPENDENT DIRECTORS

In accordance with SEC Memorandum Circular No. 4, Series of 2017, an Independent Director, after serving for nine (9) years, shall be perpetually barred from being elected as such in the Corporation, without prejudice to being elected as a non-Independent Director in the Corporation and as an Independent Director in other companies outside of the business conglomerate, where applicable, under the same conditions provided for in the rules and regulations of the SEC. In case the Corporation wants to retain an Independent Director who has served for nine (9) years already, the Board should provide meritorious justifications and seek shareholders' approval during the annual shareholders' meeting.

 

IV. CHANGES IN THE BOARD OF DIRECTORS 

 

SELECTION/APPOINTMENT, RE-ELECTION, DISQUALIFICATION, REMOVAL, REINSTATEMENT AND SUSPENSION

Directors shall hold office for a term of one (1) year, more or less, immediately upon their election and until their successors shall have been elected and qualified in accordance with the Company By-Laws and applicable rules.In case any vacancy or vacancies should occur on the Board of Directors other than removal or expiration of term, due to death, resignation or other causes, the remaining Directors, if still consisting a quorum, may fill said vacancies by election from among the stockholders and the stockholders so elected shall act as members of said Board until the new Board of Directors is elected.

Procedure	Process Adopted	Criteria
a. Selection/Appointment
(i) Executive Directors	The stockholders of the Company may submit written nominations to the Board at least 30 business days before the next annual meeting of the stockholders. The Corporate Governance and Nomination Committee evaluates the nominees and approves a list of nominees eligible to be elected as members of the Board. The Corporate Governance and Nomination Committee may consider and recommend to the Board other qualifications for directors, including independence criteria/standards for independent directors, which are aligned with the Corporation’s vision, mission and corporate strategy that are now or may hereafter be provided in relevant laws or any amendments thereto. The Corporate Governance and Nomination Committee likewise identifies and recommends qualified individuals for nomination and election to the Board through the use of professional search firms and other external sources of candidates.	A director of the Company shall have the following qualifications: Ownership of at least one (1) share of the capital stock of the Company; College degree or its equivalent or adequate competence and understanding of the fundamentals of doing business or sufficient experience and competence in managing a business; Relevant qualifications, such as previous business experience, membership in good standing in relevant industry and membership in business or professional organizations; Integrity, probity, diligence and assiduousness in the performance of his functions; Directorships in other companies, taking into account the following factors: i) the nature of the business of the Corporation ii) the number of directors in other companies; iii) any possible conflict of interest; and iv) the age of the director; and For independent directors, beneficial equity ownership in the Corporation or in its related companies, which must not exceed two percent (2%).
(ii) Non-Executive Directors
(iii) Independent Directors
b. Re-appointment
(i) Executive Directors	The stockholders of the Company may submit written nominations to the Board at least 30 business days before the next annual meeting of the stockholders. The Corporate Governance and Nomination Committee evaluates the nominees and approves a list of nominees eligible to be elected as members of the Board. The Corporate Governance and Nomination Committee may consider and recommend to the Board other qualifications for directors, including independence criteria/standards for independent directors, which are aligned with the Corporation’s vision, mission and corporate strategy that are now or may hereafter be provided in relevant laws or any amendments thereto. The Corporate Governance and Nomination Committee likewise identifies and recommends qualified individuals for nomination and election to the Board through the use of professional search firms and other external sources of candidates.	A director of the Company shall have the following qualifications: Ownership of at least one (1) share of the capital stock of the Company; College degree or its equivalent or adequate competence and understanding of the fundamentals of doing business or sufficient experience and competence in managing a business; Relevant qualifications, such as previous business experience, membership in good standing in relevant industry and membership in business or professional organizations; . Integrity, probity, diligence and assiduousness in the performance of his functions; Directorships in other companies, taking into account the following factors:         i) the nature of the business of the Corporation                ii) the number of directors in other companies;               iii) any possible conflict of interest; and iv) the age of the director; For independent directors, beneficial equity ownership in the Corporation or in its related companies, which must not exceed two percent (2%); and The term limit set for independent directors under applicable laws, rules and regulations.
(ii) Non-Executive Directors
(iii) Independent Directors
c. Permanent Disqualification
(i) Executive Directors	The Company abides with the rules set forth in its  Corporate Governance Manual, the SEC Code of Corporate Governance and existing laws.	The following persons are disqualified from being a director of the Corporation: Any person who has been finally convicted by a competent judicial or administrative body of any crime involving the purchase or sale securities, arising out of the person’s conduct as an underwriter, broker, dealer, and arising out of his relationship with a bank, quasi-bank and investment house. Any person finally convicted judicially of an offense involving moral turpitude or fraudulent acts or transgressions; Any person finally found by the SEC or a court or other administrative body to have willfully violated or willfully aided any provision of the Securities Regulation Code; Any person judicially declared to be insolvent; Any person finally found guilty by a foreign court or equivalent financial regulatory authority of acts, violation or misconduct listed above; Any person convicted by final and executory judgment of an offense punishable by imprisonment for a period exceeding six (6) years, or a violation of the Corporation Code, committed within five (5) years prior to the date of his election of appointment; Any person engaged in any business which competes with or is antagonistic to that of the Corporation; and After serving as independent director for nine years, the independent director shall be perpetually barred from being elected as such in the Corporation, without prejudice to being elected as independent director in other companies outside of the business conglomerate, where applicable, under the same conditions provided for in the rules and regulations of the SEC.
(ii) Non-Executive Directors
(iii) Independent Directors
d. Temporary Disqualification
(i) Executive Directors	The Company abides with the rules set forth in its Corporate Governance Manual, the SEC Code of Corporate Governance and existing laws. The temporary disqualification of the director requires a resolution of a majority of the Board.	The following are the grounds for temporary disqualification of incumbent directors: Refusal to fully disclose the extent of his business interest as required under the Securities Regulation Code and Implementing Rules and Regulations. Absence or nonparticipation for whatever reason/s other than illness, death of immediate family or serious accident in at least 75% of all board meetings during his incumbency, or any twelve month period during his incumbency. Dismissal or termination from directorship in another listed corporation; Being under preventive suspension by the Corporation for any reason; and 5. Conviction that has not yet become final referred to in the grounds for disqualification of directors
(ii) Non-Executive Directors
(iii) Independent Directors
e. Removal
(i) Executive Directors	The removal of directors requires an affirmative vote of 2/3 of the outstanding capital stock of the Company.	A director may be removed with or without cause with the affirmative vote of shareholders owning 2/3 of outstanding capital stock. However, a director may not be removed without cause if it will deny minority shareholders representation in the Board.
(ii) Non-Executive Directors
(iii) Independent Directors
f. Re-instatement
(i) Executive Directors	A temporary disqualified director shall, within 60 business days from such disqualification, take the appropriate action to remedy or correct the disqualification. If the beneficial security ownership of an independent director in the Corporation or in its related companies exceeds 2%, the Corporation shall cease to consider him as an independent director until his beneficial security ownership is reduced to 2% or lower.
(ii) Non-Executive Directors
(iii) Independent Directors
g. Suspension
(i) Executive Directors	After due notice and hearing, a director who violates the Corporate Governance Manual will be subjected to the penalties as set forth in the said Manual.
(ii) Non-Executive Directors
(iii) Independent Directors

 

VOTES FOR DIECTORS DURING THE LAST ANNUAL STOCKHOLDERS' MEETING

 

Name of Director	Votes Received (in favor based on total outstanding shares)
Jaime Augusto Zobel de Ayala	647,093,265 (78.79%)
Fernando Zobel de Ayala	642,434,149 (78.22%)
Delfin L. Lazaro	644,748,351 (78.50%)
Keiichi Matsunaga	648,097,609 (78.91%)
Xavier P. Loinaz	652,400,681 (79.44%)
Ramon R. Del Rosario, Jr.	644,936,051 (78.53%)
Antonio Jose U. Periquet	641,507,101 (78.11%)

                                                               

V. ORIENATION AND EDUCATION PROGRAM

 

ORIENTATION PROGRAM FOR NEW DIRECTORS

All new Directors of the Corporation shall undergo at the minimum an eight-hour orientation program on the Corporation's business and corporate structure, vision and mission, corporate strategy, Governance Codes and Policies, Articles, By-Laws, this Manual, the Charters, the SEC-mandated topics on governance matters and other matters essential for the effective performance of their duties and responsibilities.

The Office of Corporate Strategy and the Chief Finance Officer give each new director a briefing of existing and planned investments, current strategic directions, budgets and internal controls and processes.

Prior to assuming office, each director is required to attend a seminar on corporate governance conducted by a duly recognized private or government institution.

Mr. Keiichi Matsunaga, being a newly elected director of the Company in 2017, had his orientation programs on May 9, 2017 for Audit Committee related matters and on June 21, 2017 for governance and board matters. 

 

IN-HOUSE TRAINING AND EXTERNAL COURSES ATTENDED BY DIRECTORS AND SENIOR MANAGEMENT FOR THE PAST THREE (3) YEARS:

• Ayala-LEAP (Ayala Leadership Acceleration Program)
• EAGLE (Emerging Ayala Group Leaders Program)
• The Leadership Circle (integrated within Ayala-LEAP and EAGLE)
• LEAP Alumni Learning Series (presentations by visiting professors and practitioners in the fields of customer centricity, strategy, leadership, etc.)  
• Executive Coaching
• Ayala Group Corporate Governance Summit
• Corporate Governance and Risk Management for Banks
• Ayala Group Corporate Governance Summit held on 18 February 2015
• Corporate Governance Seminar by SGV on December 8, 2015
• Ayala Corporation Corporate Governance and Risk Management Summit held on 8 March 2016
• CFA Phils Financial Modeling & Valuation, March 14-15, 2016
• Corporate Governance Seminar by SGV on April 11, 2016
• ECOP BOSH Certificate, May & August 2016
• Strategic Risk Forum, May 17, 2016, Singapore
• Project Management Institute – Project Management Fundamentals, June 20-24, 2016
• Certified Knowledge Manager, June 20 – 24, 2016, Virginia USA
• BSI Audit Training, June 20-24,2016, Singapore
• CINO Summit, June 28-July 1, 2016
• IIA International Conference, July 17-20, 2016, NYC, USA
• CIO Summit, July 24-27, 2016, Bhutan
• ECC International HR Metrics & Analytics, August 2-3, 2016
• SEC Corporate Governance Forum on August 3, 2016
• Harvard Comparative Tax Policy on August 15-26, 2016 at Boston MA, USA
• Tourism Security Conference, August 24-25, 2016, Singapore
• ECC International Crisis Communication Planner, September 1-2, 2016
• Customer Experience Management Summit, September 6-7, 2016, Singapore
• Distinguished Corporate Governance Speaker Series on October 7, 2016 by the ICD
• Corporate Governance Seminar by SGV on December 9, 2016
• Strategic Negotiations Program on January 9 to 13, 2017
• Corporate Governance Seminar by SGV on February 27, 2017
• Financial Modeling and Valuation on March 13 to 14, 2017
• Distinguished Corporate Governance Speaker Series on May 10, 2017 by the ICD
• Risk Financing & Transfer Solutions on May 18, 2017 by Asia Risk Management Institute
• Employee Benefits Asia on May 18-19, 2017, Singapore
• Rapid Earthquake Damage Assessment System Training on June 5-10, 2017
• Integrated Learning on Innovation on  June 21-22, 2017 by IXL Center
• HPE Philippines Executive Summit on July 5-7, 2017
• Understanding Corporate University on July 7, 2017
• Risk Based Auditing: A Value Add Proposition on July 21-22, 2017
• IIA International Conference on July 23-26, 2017, Australia
• Flexible Work Arrangements in PH on July 26, 2017 by PMAP
• Corporate Governance Seminar by SGV on July 26, 2017
• Level-Up Leadership on July 27-28, 2017 by Francis Kong
• BCM5000 ISO 22301 BCMS Expert Implementer on July 31 – August 4, 2017, Singapore
• Ayala Corporate Governance and Risk Management Summit on August 11, 2017
• The Accidental Project Manager on August 11-12, 18-19, 2017
• Moody's Analytics Intro to Derivatives on August 16-17, 2017
• Strategic Leadership Communication on August 30 – September 1, 2017
• Aon Risk Symposium on September 4-6, 2017
• Data Privacy Learning Session on September 5, 2017
• Cultivating a Thriving Workforce in an Era of Disruption on September 21-22, 2017
• UN Global Compact Leaders Summit on September 23-24, 2017, USA
• Microsoft Envision: Digital Transformation on September 25-27, 2017
• Corporate Governance Conference on September 26, 2017
• Leadership for Social and Economic Renewal on September 29-30, 2017 by the Center of Asia Leadership
• People Management Association of the Philippines Conference on October 11-12, 2017
• Innovations in Library Tech, Communications Resources and Services on October 11-13, 2017
• Advance Cash Flow Management and Working Capital Optimization on October 16-17, 207
• Moody's Advanced Financial Statement Analysis on October 16-18, 2017, Hong Kong
• Adversity Quotient/GRIT Workshop on October 20, 2017
• Formulating and Manualizing Policies and Procedures on October 23, 2017
• Certificate in the Foundations of Organization Development on October 23-27, 2017
• Risk LEADERS Masterclass on October 30 – November 1, 2017
• Simplified Strategic Planning on November 2-3, 2017
• Ayala HR Summit on November 7, 2017
• Transformation in an Era of Disruption on November 9, 2017
• Pan-Asia Risk and Insurance Management Association on November 14-15, 2017
• Knowledge Management Asia Conference on November 15-16, Hong Kong
• Advanced Certificate for Executive Personal Assistants on November 20-24, 2017, Singapore
• Ayala Innovation Conference on November 22, 2017
• SEC 2017 Annual Disclosure Seminar on November 27, 2017
• Corporate Governance Seminar by SGV on December 6, 2017
• Conference on Intellectual Capital and Knowledge Management on December 7-8, 2017, Hong Kong
• Treasury Operations Certificate Program on December 7-9, 14-16, 2017
• Distinguished Corporate Governance Speaker Series on February 13, 2018 by the ICD
• Corporate Governance Seminar by SGV on August 15, 2018
• Ayala Group Corporate Governance and Risk Management Summit on September 10, 2018
• Advanced Corporate Governance Training on 5 October 2018

Continuing education programs for directors: programs and seminars and roundtables attended during the years 2017 and 2018.

Name of Director/Officer	Date of Training	Program*	Name of Training Institution
Jaime Augusto Zobel de Ayala	August 11, 2017  and September 10, 2018	Ayala Group Corporate Governance and Risk Management Summit	Institute of Corporate Directors, Inc.
Fernando Zobel de Ayala
Keiichi Matsunaga (NED)
Xavier P. Loinaz (Lead ID)
Ramon R. del Rosario (ID)	July 26, 2017 and August 15, 2018	Corporate Governance Seminar	SyCip Gorres Velayo & Co.
Delfin L. Lazaro (NED)	May 10, 2017 and September 10, 2018	Distinguished Corporate Governance Speaker Series and  Ayala Group Corporate Governance and Risk Management Summit	Institute of Corporate Directors
Antonio Jose U. Periquet (ID)	February 27, 2017	Corporate Governance Seminar	SyCip Gorres Velayo & Co.
	February 13, 2018	Distinguished Corporate Governance Speaker Series	Institute of Corporate Directors
*each program lasted for four (4) hours

 

The directors of the Corporation, in their own capacity or as sponsored by the Corporation, attend education programs, seminars, and roundtable discussions on corporate governance with service providers that are duly accredited by the SEC. 

CODE OF CONDUCT AND ETHICS

COMPANY POLICIES ON THE FOLLOWING BUSINESS CONDUCT AND ETHICS AFFECTING DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

 

DISSEMINATION OF THE CODE OF CONDUCT AND ETHICE TO ALL DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

All employees have copies of the Code of Conduct and Ethics. Part of the on-boarding program of all newly hired employees is the orientation on the Code of Conduct and Ethics to keep them informed in the same manner that the existing employees, as well as the directors, chairman, and senior management, are aware and informed. They are provided with the Code of Conduct and Ethics handbook.

 

IMPLEMENTATION AND MONITORING OF COMPLIANCE WITH THE CODE OF CONDUCT AND ETHICS

The Strategic Human Resources has the specific task of implementing and monitoring compliance with the provisions of the Code. It is responsible for:

• ensuring that the contents of the Code are communicated to all existing and new directors, officers and employees, and requiring each to sign an acknowledgment receipt that he/she has read and understood the same and agrees to abide with the standards and norms set forth therein;
• making the Code available on the company intranet for ease of access;
• requiring all directors, officers and employees to declare annually that they have complied with the Code, specifically on the provisions of conflict of interest and insider trading;
• investigating reported violations of the Code and impose sanctions for violations determined after investigation;
• reviewing and continuously updating the Code; and
• drafting and promulgating the Implementing Rules for the effective implementation of the Code, subject to the approval of the President and CEO.

Management is also responsible for enforcing and monitoring compliance with the Code within their respective area of jurisdiction and taking or implementing disciplinary action after proper investigation.

All directors, officers and employees have the duty to report non-compliance with the Code and its Implementing Rules that may come to their knowledge and attention, in accordance with the relevant company rules and procedures.

Any violation shall be dealt with in accordance with the procedures provided in the Implementing Rules, the Corporation’s Human Resources Manual of Policies and Procedures, the Employee Handbook and other existing company policies and proper observance of the requirements of due process. This shall be without prejudice to the filing of any legal action against the party concerned under existing laws.

 

RELATED PARTY TRANSACTIONS

 

POLICIES AND PROCEDURES

The Company’s Related Party Transactions (RPT) policy was revised, approved and was in effect in December 2014. It was further improved and strengthened on March 5, 2018.

It is the policy of Ayala Corporation that related party transactions between the Corporation and related parties shall be subject to review and approval to ensure that they are at arm’s length, the terms are fair, and they will inure to the best interest of the Corporation and its shareholders.

Related party transactions shall be disclosed, reviewed and approved in accordance with the policy consistent with the principles of transparency and fairness.

The policy covers RPTs between the Corporation and a Related Party or between a subsidiary or an affiliate of the Corporation and a Related Partry if the subsidiary or affiliate has not adopted its own RPT policy. It  also defines related party as a person or entity that is related to the entity that is preparing its financial statements, also referred to as the reporting entity.

• A person or a close member of that person’s family is related to a reporting entity if that person has control or joint control over the reporting entity; has significant influence over the reporting entity; or is a member of the key management personnel of the reporting entity or of a parent of the reporting entity.
• An entity is related to a reporting entity if any of the following conditions applies:
  • The entity and the reporting entity are members of the same group (which means that each parent, subsidiary and fellow subsidiary is related to the others);
  • One entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a group of which the other entity is a member);
  • Both entities are joint ventures of the same third party;
  • One entity is a joint venture of a third entity and the other entity is an associate of the third party;
  • The entity is a post-employment benefit plan for the benefit of employees of either the reporting entity or an entity related to the reporting entity. If the reporting entity is itself such a plan, the sponsoring employers are also related to the reporting entity;
  • The entity is controlled or jointly controlled by a person of the reporting entity;
  • A person of the reporting entity has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity); or, 
  • The entity, or any member of a group of which it is a part, provides key management personnel service to the reporting entity or to the parent of the reporting entity.

Material/significant RPTs shall be reviewed by the Risk Management and Related Party Transactions Committee and endorsed to the Board of Directors for approval.  The threshold of which is set to whichever is lower of PhP50,000,000.000 or 5% of total assets of either party.

The Board shall approve a material/significant RPT before its commencement. If not identified beforehand, the material RPT must be subsequently reviewed by the Committee and ratified by the Board or the same may be discontinued, rescinded or modified to make it acceptable for ratification.

The Committee considers the following factors in the review of the RPTs:

• The terms of the transaction;
• The aggregate value of the transaction;
• Whether the terms of the transaction are no less favorable than those generally available to nonrelated parties under the same or similar circumstances;
• The extent of Related Party’s interest in the transaction;
• Purpose and timing of the transaction;
• Whether the transaction would present an improper conflict of interest or special risks or contingencies for the Corporation, or the related party taking into account the size of the transaction and the overall financial position of the Related Party; and
• Any material information or other factors the Committee deems relevant.

The Group Risk Management  and Sustainability Unit monitors RPTs for approval of the Risk Management and Related Party Transactions Committee while the Controllership Unit ensures that RPTs are properly disclosed in the Corporation’s financial statements, and other applicable filings in accordance with the relevant rules and issuances of the Securities and Exchange Commission and other regulatory bodies.

 

CONFLICT OF INTEREST

There has been no actual or probable conflict of interest to which directors/officers/5% or more shareholders may be involved.

 

FAMILY, COMMERCIAL AND CONTRACTUAL RELATIONS

 

 

ALTERNATE DISPUTE RESOLUTION 

The alternative dispute resolution system that the Company has adopted or the last three (3) years to settle conflicts or differences between the corporation and its stockholders, and the corporation and third parties, including regulatory authorities.

 

I. SCHEDULE OF MEETINGS 

At the beginning of the year, the Office of the Corporate Secretary sends to the directors, though email, the schedule of board meetings for the year as follows:

January 19, 2018

March 9, 2018

April 20, 2018 (Organizational Board Meeting)

 

The members of the Board of Directors, upon their election on the April 20, 2018 Annual Stockholders’ Meeting, set the dates of the Board meetings for the for the rest of 2018, as follows:

June 22, 2018

September 11, 2018

December 6, 2018

 

II. ATTENDANCE OF DIRECTORS 

The Board meets at least (6) times each calendar year. A director who fails, wihout any justifiable cause, to attend at least 75% of the total number of Board meetings during any term shall not be eligible for re-election.

The directors are encouraged to attend all board and committee meetings, either in person or via teleconferencing facility. The Corporate Secretary provides dial-in numbers to the directors who wish to join the meetings via teleconferencing facility.

The following is the record of attenance of the our directors in the board meetings held in 2017. 

*Meetings in 2017 and during the incumbency of the director.
**Replaced by Mr. Keiichi Matsunaga on April 21, 2017.

The Non-Executive and Independent Directors of the Company held a meeting without the presence of any Executive on April 21, 2017.

 

Non-Executive Directors Meeting

The Non-Executive and Independent Directors of the Company held a meeting without the presence of any Executive, except for the Corporate Secretary and Compliance Officer, on April 21, 2017. They also had a meeting on March 9, 2018 where the Corporate Secretary and Compliance Officer and the Chief Audit.

 

III. QUORUM REQUIREMENT

 Two-thirds (2/3) of the number of directors as fixed in the articles of incorporation constitute a quorum for the transaction of corporate business.

 

IV. ACCESS TO INFORMATION

The board materials for the board of directors’ meetings are being distributed to the directors at least five business days before the meeting.

The board members are free to contact the Chief Legal Officer and Corporate Secretary, and any of the management team to discuss issues or matters that need clarification in the discharge of their duties as members of the Corporation’s board of directors.

The following are the 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:

The General Counsel and Corporate Secretary of the Company attends to the directors’ concerns. When necessary, the General Counsel and Corporate Secretary may recommend to the directors to seek for an advice from third parties.

The Board of Directors has not introduced and any change on existing policies that may have an effect on the business of the company.

 

External Advice

The Chief Legal Officer and Corporate Secretary of the Company attends to the directors’ concerns. When necessary, the Chief Legal Officer and Corporate Secretary may recommend to the directors to seek for an advice from third parties.

 

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
none

 

V. CORPORATE SECRETARY

The Corporate Secretary of the Corporation has the following functions:

(a) Serve as an adviser to the directors on their responsibilities and obligations;

(b) Keep the minutes of meetings of the stockholders, the Board of Directors, the Executive Committee, and all other committees in a book or books kept for that purpose, and shall furnish copies thereof to the Chairman, the President and other members of the Board as appropriate;

(c) Keep in safe custody the seal of the Corporation and affix it to any instrument requiring the same;

(d) Have charge of the stock certificate book and such other books and papers as the Board may direct;

(e) Attend to the giving and serving of notices of Board and shareholder meetings;

(f) Be fully informed and be part of the scheduling process of other activities of the Board;

(g) Prepare an annual schedule of board meetings and the regular agendas of meetings, and put the Board on notice of such agenda at every meeting;

(h) Oversee the adequate flow of information to the Board prior to meetings;

The Corporate Secretary also assists the Chairman of the Board in preparing the board agenda, facilitating training of directors, keeping directors updated regarding any relevant statutory and regulatory changes, among others.

The Corporate Secretary of the Company is Atty. Solomon M. Hermosura. He possesses organizational and interpersonal skills, and the legal skills of a chief legal officer. He also has financial and accounting knowledge. 

Solomon M. Hermosura, Filipino, 55, has served as Managing Director of Ayala Corporation since 1999 and a member of the Ayala Corporation Management Committee since 2009 and the Ayala Group Management Committee since 2010. He is also the Group Head of Corporate Governance, and the Chief Legal Counsel, Chief Compliance Officer, Corporate Secretary and Data Protection Officer of Ayala Corporation.  He is the CEO of Ayala Group Legal. He serves as the Corporate Secretary and Group General Counsel of Ayala Land, Inc., and Corporate Secretary of Globe Telecom, Inc., Manila Water Company, Inc., Integrated Micro-Electronics, Inc. and Ayala Foundation, Inc.  He also serves as a Corporate Secretary and a member of the Board of Directors of a number of companies in the Ayala group.  He served as a Director of the Bank of the Philippine Islands from April 18, 2013 to April 9, 2014. He graduated valedictorian with Bachelor of Laws degree from San Beda College in 1986 and placed third in the 1986 Bar Examinations.

I. REMUNERATION OF CEO AND FOUR (4) MOST HIGHLY COMPENSATED MANAGEMENT OFFICERS

 

PROCESS USED IN DETERMINING THE REMUNERATION OF THE CEO AND FOUR (4) MOST HIGHLY COMPENSATED MANAGEMENT OFFICERS

 

 

REMUNERATION OF MANAGEMENT

Remuneration received of the top five (5) members of management who are not at the same time executive directors during the financial year:

 

 

II. REMUNERATION OF EXECUTIVE AND NON-EXECUTIVE DIRECTORS 

 

COMPANY POLICY ON REMUNERATION AND STRUCTURE OF COMPENSATION PACKAGE OF THE EXECUTIVE AND NON-EXECUTIVE DIRECTORS 

 

 

STOCKHOLDERS' APPROVAL 

At its Annual Stockholders’ Meeting on April 18, 2011, the stockholders of the Corporation approved the increase in the compensation of the non-executive directors of the Company. On the same meeting, the stockholders granted the sole authority to determine the amount, form and structure of the fees and other compensation of the directors to the Board of Directors.

In the exercise of the delegated power and authority, the Board of Directors, at its meeting on April 21, 2017, approved the new directors’ fees, as follows:

 The rationale for such increase in compensation is to recognize the invaluable services rendered by the directors of the Corporation in successfully governing the business of the Corporation.

AGGREGATE REMUNERATION OF THE DIRECTORS DURING THE MOST RECENT YEAR 

 

 

STOCK RIGHTS, OPTIONS AND WARRANTS GRANTED TO THE DIRECTORS

*Grants given during his employment in the Company.

No rights and warrants were given to directors with their position as director of the company. Non-executive and Independent Directors do not receive any compensation as director other than the retainer fee and per diem as set forth above.

 

AMENDMENT OF INCENTIVE PROGRAMS

 

NUMBER OF MEMBERS, FUNCTIONS AND RESPOSIBILITIES

* Officers of the company who are not members of the company’s Board of Directors.

II. COMMITTEE MEMBERS 

EXECUTIVE COMMITTEE 

                *The was no actual meeting held in 2017. The actions of the Executive Committee were taken by written consent (electronic or digital format) by majority of the members of the Committee.

    **Mr. Amano was replaced by Keiichi Matsunaga on April 21, 1017.

 

AUDIT COMMITTEE 

Office	Name	Date of Appointment	No. of Meetings Held*	No. of Meetings Attended*	%	Length of Service in the Committee
Chairman (Lead ID)	Xavier P. Loinaz	April 3, 2009	4	4	100%	8
Member (NED)	Yoshio Amano**	April 20, 2012	2	2	75%	5
Member (ID)	Ramon R. Del Rosario, Jr.	April 16, 2010	4	4	100%	7
Member (NED)	Keiichi Matsunaga**	April 21, 2017	2	1	50%	1

         * In 2017 and during incumbency of the directors. 

         **Mr. Amano was replaced by Keiichi Matsunaga on April 21, 2017.

Xavier P. Loinaz, Filipino, 74, Independent Director since April 2009 and Lead Independent Director since April 2017.  He is also an Independent Director of the Bank of the Philippine Islands, a publicly listed company. He also holds the following positions: Independent Director of BPI Family Savings Bank, Inc., and BPI/MS Insurance Corporation; Trustee of E. Zobel Foundation; Chairman of Alay Kapwa Kilusan Pangkalusugan and XPL Manitou Properties, Inc.; and Vice Chairman of XPL MTJL Properties, Inc. He was formerly the President of the Bank of the Philippine Islands (BPI) from 1982 to 2004.  He was also the President of Bankers Association of the Philippines from 1989 to 1991.   He graduated with an AB Economics degree at Ateneo de Manila University in 1963 and took his MBA-Finance at Wharton School, University of Pennsylvania in 1965.

Keiichi Matsunaga, Japanese, 54, has been a Director of Ayala Corporation since April 2017. He is the General Manager of Mitsubishi Corporation Manila Branch. Currently, he is also the Chairman of International Elevator & Equipment Inc.; President of MC Diamond Realty Investment Phils., MC Oranbo Investment, MC Cavite Holdings, Inc., FMT Kalayaan, Inc.; and Director of Century City Development II Corporation (CCDC II), Isuzu Philippines Corporation, Kepco Ilijan Corporation, Trans World Agro-Products Corp., Japanese Chamber of Commerce & Industry of the Philippines (JCCIPI) and The Japanese Association Manila, Inc. (JAMI). He is not a director of any publicly listed company in the Philippines other than Ayala Corporation.  He entered Mitsubishi Corporation after graduating from the Faculty of Law at Waseda University in 1988 and has since held various leadership positions.

Ramon R. del Rosario, Jr., Filipino, 74, Independent Director of Ayala since April 2010. He holds the following positions in publicly listed companies: President and Chief Executive Officer of Phinma Corporation; Chairman of PHINMA Energy Corp. and PHINMA Petroleum and Geothermal, Inc. He is the President and Chief Executive Officer of Philippine Investment Management, Inc.; Chairman of Araullo University, University of Iloilo, University of Pangasinan, Cagayan de Oro College, Southwestern University, United Pulp and Paper Co., Inc.,  PHINMA Power Generation Corporation, PHINMA Renewable Energy Corp., One Subic Power Generation Corp., PHINMA Microtel Hotels, Inc. and PHINMA Hospitality, Inc.  He is Vice-Chairman of Phinma Foundation, Inc. and Phinma Property Holdings Corp., Director of Union Galvasteel Corp. and other PHINMA managed companies; Chairman of The National Museum of the Philippines and Philippine Business for Education; and Vice-Chairman of Caritas Manila and Philippine Business for Social Progress (PBSP). He is a former chairman of the Ramon Magsaysay Award Foundation and Makati Business Club, where he remains a Trustee. Mr. del Rosario graduated from De La Salle College in 1967 with degrees in BSC-Accounting and AB Social Sciences Magna cum Laude and from Harvard Business School in 1969 for a Master in Business Administration degree. He has managed Phinma since 2002 and brings with him a wealth of experience in leading a diversified conglomerate.

 

AUDIT COMMITTEE'S RESPONSIBILITIES RELATIVE TO EXTERNAL AUDITOR

1. Review the performance and recommend the appointment, retention or discharge of the Independent Auditors, including the fixing of their remuneration to the Board of Directors. In case of resignation or cessation from service of an independent auditor, ensure that there is a process for reporting in the annual and current reports the reason for cessation from service, and the date thereof, of an independent auditor. A preliminary copy of the said report shall be given by the corporation to the independent auditor before its submission.
2. Ensure the rotation of the lead engagement partner at least once every five (5) years and consider whether there should be a regular rotation of the audit firm itself.
3. Review and pre-approve the Independent Auditor's plans and ascertain the basis for their risk assessment and financial statement materiality, including the scope and frequency of the audit. In this regard, the Committee shall discuss with the Independent Auditors, before the audit commences, the nature and scope of the audit, and ensure cooperation when more than one professional service firm is needed.
4. Monitor the coordination of efforts between the external and internal auditors. The Committee shall ensure that the internal and external auditors act independently from each other.
5. Review of the reports of the Independent Auditors, where applicable, and ensure that management is taking appropriate corrective actions in a timely manner, including addressing control, governance, and compliance issues.
6. Conduct a separate meeting in executive session, with the external auditors to discuss any matter that the committee or auditors believe should be discussed privately, including the results of the audit, year-end financial statements, the quality of management, financial and accounting controls.
7. Review and approve the proportion of audit versus non-audit work both in relation to their significance to the auditor and in relation to the Corporation's year-end financial statements, and total expenditure on consultancy, to ensure that non-audit work will not be in conflict with the audit functions of the independent auditor. The amount of both audit and non-audit work of independent auditors shall be disclosed in the annual report.
8. Ensure that the independent auditor has unrestricted access to all records, properties and personnel to enable performance of the required audit.
9. Review with the independent auditor any problems or difficulties, including any restrictions on the scope of the independent auditor's activities or on access to requested information and any significant disagreements with management. The review may also include discussion of any proposed accounting adjustments that were "passed' or not recorded.
10. Review of the independent auditor's evaluation of internal accounting controls. Independent auditors shall provide feedback to the Audit Committee on their observations of internal control weaknesses arising from statutory financial audits. Independent auditors should highlight findings which are disputed by Management or where Management has not agreed to implement remedial actions that would rectify the identified weaknesses.

 

CORPORATE GOVERNANCE AND NOMINATION COMMITTEE 

           *In 2017

                                   

PERSONNEL AND COMPENSATION COMMITTEE

             * In 2017 and during incumbency of the directors. 

             **Mr. Amano was replaced by Keiichi Matsunaga on April 21, 2017.

 

FINANCE COMMITTEE 

  * In 2017

 

COMMITTEE OF INSPECTORS OF PROXIES AND BALLOTS

     * In 2017

RISK MANAGEMENT AND RELATED PARTY TRANSACTION COMMITEE 

           * In 2017 and during incumbency of the directors. 

           **Mr. Amano was replaced by Keiichi Matsunaga on April 21, 1017.

 

CHANGE IN COMMITTEE MEMBERS OCCURRED DURINGTHE YEAR 

Name of Committee	Name	Reason
Executive	Mr. Yoshio Amano was replaced with Mr. Keiichi Matsunaga on April 21, 2017.	The term of Mr. Amano expired on April 21, 2017.  He did not stand for election during the 2017 Annual Stockholders' Meeting.
Audit	Mr. Yoshio Amano was replaced with Mr. Keiichi Matsunaga on April 21, 2017.	The term of Mr. Amano expired on April 21, 2017.  He did not stand for election during the 2017 Annual Stockholders' Meeting.
Corporate Governance and Nomination	None
Remuneration	Mr. Yoshio Amano was replaced with Mr. Keiichi Matsunaga on April 21, 2017.	The term of Mr. Amano expired on April 21, 2017.  He did not stand for election during the 2017 Annual Stockholders' Meeting.
Finance Committee	None
Risk Management and Related Party Transactions Committee	Mr. Yoshio Amano was replaced with Mr. Keiichi Matsunaga on April 21, 2017.	The term of Mr. Amano expired on April 21, 2017.  He did not stand for election during the 2017 Annual Stockholders' Meeting.
Committee of Inspectors of Proxies and Ballots	None

 

WORK DONE AND ISSUES ADDRESS BY THE COMMITEES DURING THE YEAR 

 

OVERALL RISK MANAGEMENT PHILOSOPHY OF THE COMPANY

Risk Management at Ayala: From Avoidance and Mitigation to Value Creation

Risk Management has become an increasingly important business driver and part of successful corporate governance. At Ayala, an effective corporate governance entails risk intelligence – a philosophy that encourages risk-taking, and embeds appropriate risk management into the whole organization – so that risk-taking for value creation becomes as significant as risk mitigation for value protection. We ensure that our risk management system has the right architecture, strategy, and protocols to support the risk management process.. We revisit these three key factors yearly, as we believe that with the right approach, risks can be turned into opportunities.

Institutionalized in 2002, the Company has adopted an enterprise risk management (ERM) framework that is continuously being enhanced and improved. Under the supervision of the Chief Risk Officer (CRO), the Group Risk Management & Sustainability Unit continues to align Ayala’s risk governance with that of global risk consultant Deloitte, which espouses a best practice that goes beyond risk avoidance and mitigation to utilize calculated risk-taking as a means to create value.

Similar to a risk intelligent enterprise, Ayala’s risk governance is at the apex of the system. The Board of Directors is provided appropriate transparency and visibility into the organization’s and the group’s risk management practices. Through the Risk Management and Related Party Transactions Committee, the Board of Directors ensures that an effective risk management process is in place and that its risk appetite remains relevant to achieve its set goals. The CRO, being the advocate for the company and the group, has the primary responsibility of designing, implementing and maintaining an effective risk program. The Group Risk Management & Sustainability Unit supports the CRO by designing activities that enhance the organization and the group’s risk intelligent culture, formulating risk management strategies, evaluating tools and techniques for risk assessment, and monitoring and reporting on key principal and emerging risks. It also convenes the ERM Council, a group comprising the risk officers of Ayala business units, for risk framework alignment, continuous risk process improvement, and other groupwide projects. On a semi-annual basis, the ERM Council provides the top risks of their respective organization to the Group Risk Management & Sustainability Unit for reporting to both the CRO and the Risk Management and Related Party Transactions Committee.

Management committees also provide support to the CRO by ensuring the existence of a structure at the operating level that will communicate and monitor key principal and emerging risks. They also ensure that risks are discussed during project and investment meetings. As risk owners, the business unit leaders are responsible for managing the risks they face in the day-to-day operations within the established risk framework. They have the responsibility to identify, measure, monitor, control and report on risks to the management. Finally, the Internal Audit Unit provides an independent assurance on the adequacy, effectiveness, and efficiency of the risk management process.

 

 Board Review of the effectiveness of the risk management system

As set forth in its Charter approved by the Board of Directors, the Risk Management and Related Party Transactions Committee has reviewed and assessed the adequacy and the effectiveness of the Corporation's enterprise risk management process:

• The Committee has reviewed the following policies: enterprise risk management policy, related party transactions policy, and the business continuity management policy.
• Thru the Chief Risk Officer, as supported by the Group Risk Management and Sustainability Unit, the Committee has ascertained that an effective risk management process was in place. Aside from the black swan approach and bowtie analysis, risk sensing, a tool that employs human insights and advanced analytics capabilities to identify, analyze and monitor emerging risks, was utilized in the annual risk assessment. This allowed the Management to assess how emerging risks can affect the Corporation’s business model, long-term viability and ability to create value. Furthermore, the Management gained a better understanding of the risk/reward tradeoffs inherent in value creation, which can help improve their funding decisions and resource allocation.
• With the view of integrating the disciplines of risk management and sustainability, the Management mapped the identified sustainability megatrends for the year to the fourteen risk categories of Ayala, and discussed how these trends can translate or contribute to a risk for the Corporation.
• The Committee has also noted management support as the Managing Directors made themselves available to discuss their risk strategies and respond to queries raised by the Committee.

Period covered by the review: For the year ended December 31, 2018

In addition to the regular reports of the CRO thru the Group Risk Management and Sustainability Unit, the Corporation has engaged Aon Risk Solutions to execute a group-wide risk management maturity assessment, the first round of which was completed in 2015. According to best practice, the assessment of the maturity of the risk management process should be performed every two to three years.

The Aon Risk Maturity Index (RMI) is designed to capture and assess an organization’s risk management practices and provide participants with immediate feedback in the form of a Risk Maturity Rating and actionable steps for improvement. Aon has partnered with the Wharton School of the University of Pennsylvania to develop the Index and conduct joint research on the relationships between risk management practices and actual performance. The Aon Risk Maturity Index contains questions on risk management processes, corporate governance and risk understanding. The questions are based upon the ten characteristics of an advanced risk management maturity:

• Board-level understanding of and commitment to risk management as a critical factor for decision-making and for driving value;
• A senior-level executive who drives and facilitates key risk management processes and development;
• Transparency of risk communication;
• A risk culture that encourages full engagement and accountability at all levels of the organization;
• Identification of existing and emerging risks using internal and external data and information;
• Participation of key stakeholders in risk management strategy development and policy setting;
• Formal collection and incorporation of operational and financial risk information into decision-making and governance processes;
• Integration of risk management insights into human capital processes to drive sustainable business performance;
• Use of sophisticated quantification methods to understand risk and demonstrate added value through risk management; and,
• A move from focusing on risk avoidance and mitigation to leveraging risk and risk management options that extract value.

Through this study, the Corporation and the Group evaluated the effectiveness of the improvements implemented since 2015. Similarly, the Corporation’s ERM roadmap was revised to address other potential areas for improvement.

 

RISK POLICY

 For the Company

For the Group

 

For Minority Shareholders

 

CONTROL SYSTEM SET UP 

 For the Company

For the Group

(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:

 

I.  INTERNAL CONTROL SYSTEM 

Internal Control System is the framework under which internal controls are developed and implemented (alone or in concert with other policies or procedures) to manage and control a particular risk or business activity, or combination of risks or business activities, to which the corporation is exposed. To be effective, the internal control system needs to adapt to changing business and operating environments, mitigate risks to acceptable levels, and support sound decision-making and governance of the organization. Internal control effected by the company’s board of directors, management, and all employees, is designed to provide reasonable assurance regarding the achievement of the company’s objectives.

Everyone in the organization has responsibility for internal control. Management owns the internal control system and is responsible for establishing sound internal control policies and procedures. Management is accountable to the Board of Directors who provides governance, guidance, and oversight. Internal auditors play an important role in evaluating the effectiveness of control systems, and contribute to ongoing effectiveness by providing recommendations.

 

Directors review of tthe effectiveness of the internal control system

The Board of Directors, through the Audit Committee and the Risk Management and Related Party Transactions Committee, has reviewed the internal control system of the Company based on the assessments completed and reported by the internal and external auditors. The Board found the internal control system to be effective.

The statement of the directors on the effectiveness of the company’s internal control system is embodied in the Report of the Audit Committee to the Board of Directors which is will be part of the company’s 2016 Annual Report which will be distributed during the 2017 Annual Stockholders’ Meeting of the Company.

Period covered by the review: For the year ended December 31, 2017

Management reviews the adequacy and effectiveness of internal controls continuously throughout the year as part of its day-to-day function. Internal Audit assists management to attain company goals through independent risk-based planned reviews and evaluation of the effectiveness of controls.

The directors’ criteria for assessing the effectiveness of the internal control system include:

1. Control Environment-the tone of the top and ethical behavior culture in the company
2. Risk Assessment-the identification and analysis of relevant risks to the achievement of objectives, forming a basis for how the risks should be managed and provide reasonable assurance that risks are reduced to an acceptable level.
3. Information and Communication-systems or processes that support the identification, capture, and exchange of accurate and complete information.
4. Control Activities- policies and procedures, international standards and industry best practices to ensure compliance with laws, regulations, supervisory requirements, and relevant internal policies.
5. Monitoring-processes used to regularly assess the continuing quality of internal control and risk management activities.

 

II. INTERNAL AUDIT 

 

Role, Scope and Internal Audit Function

The Internal Audit Group governs its work in adherence to The Institute of Internal Auditors’ “Code of Ethics” and the Company’s Code of Conduct. The Internal Audit also conducts its activities in conformance with the International Standards for the Professional Practice of Internal Auditing (ISPPIA) of The Institute of Internal Auditors and guided by the COSO framework on internal control. Internal Audit Charter 2017

As provided in the Audit Committee Charter and the Internal Audit Charter, the Audit Committee is responsible for the setting up of the Internal Audit Department, including the qualification criteria and appointment of the Chief Audit Executive. The Committee evaluates the performance of the Chief Audit Executive and the Internal Auditors taken as a whole. Moreover, the Committee having appointed the Chief Audit Executive, also approves his/her replacement, re-assignment, or dismissal. The Committee also reviews and approves any outsourcing of the internal audit function.

The Chief Audit Executive reports directly to the Board of Directors through the Audit Committee and has direct access to all members of the Audit Committee. The internal audit function as empowered by the Audit Committee Charter and the Internal Audit Charter has free access to all records, properties and personnel.

 

Resignation, Re-assignment and Reasons

None in 2017. 

 

Internal audit’s progress against plans, significant issues, significant findings and examination trends

The relationship among progress, plans, issues and findings should be viewed as an internal control review cycle which involves the following step-by-step activities:

1. Preparation of an audit plan inclusive of a timeline and milestones;
2. Conduct of examination based on the plan;
3. Evaluation of the progress in the implementation of the plan;
4. Documentation of issues and findings as a result of the examination;
5. Determination of the pervasive issues and findings (“examination trends”) based on single

 

Audit Control Policies and Procedures

Internal audit controls, policies and procedures that have been established by the company and the result of an assessment as to whether the established controls, policies and procedures have been implemented under the column “Implementation.”

 

Mechanism and Safeguards

Mechanism established by the company to safeguard the independence of the auditors, financial analysts, investment banks and rating agencies:

 

Attestations to Company’s full compliance with the SEC Code of Corporate Governance:

On January 9, 2015, the Company submitted to the SEC the Consolidated Changes in the Annual Corporate Governance Report for 2014 that was reviewed and approved by the Board of Directors of the Company at their meeting on December 4, 2014.

On January 7, 2016, the Company submitted to the SEC the Consolidated Changes in the Annual Corporate Governance Report for 2015 that was reviewed and approved by the Board of Directors of the Company at their meeting on December 3, 2015.

On May 12, 2017 , the Company submitted to the SEC the Annual Corporate Governance Report for 2016 that was reviewed and approved by the Board of Directors of the Company at their meeting on April 21, 2017.

The Chairman of the Board, Compliance Officer and Chief Audit Executive attest to the adequacy of the Corporation’s systems for internal control and risk management and processes for compliance and governance. Please click the link below:

2017 Attestation of Internal Controls

 

I . OWNERSHIP STRUCTURE

Holding 5% shareholding or more as of March 31, 2018

 

Shareholder	Number of Shares	Percent*	Beneficial Owner
Mermac, Inc.	Common-296,625,706 Voting Preferred- 159,577,460	55.56%	Mermac, Inc.
PCD Nominee Corporation (Non-Filipino)	Common- 186,367,305	22.69%	PCD Participants acting for themselves or for their customers
PCD Nominee Corporation (Filipino)	Common- 78,561,325	9.57%	PCD Participants acting for themselves or for their customers
Mitsubishi Corporation	Common- 54,577,540 Voting Preferred- 32,640,492	10.62%	Mitsubishi Corporation

RIGHT TO PARTICIPATE EFFECTIVEY IN AND VOTE IN ANNUAL/SPECIAL STOCKHOLDERS' MEETINGS

 

Quorum Requirement : One-half of the outstanding stock is present or represented except in cases where the Corporation Law requires a greater number.

 

STOCKHOLDERS' PARTICIPATION DURING ANNUAL STOCKHOLDERS' MEETING

The agenda for the Annual Stockholders’ Meeting, the detailed Definitive Information Statement and the unbundled proxy form are distributed to the stockholders on record 15 business days prior to the meeting to enable the stockholders to study and understand every agenda item of the meeting. During the annual stockholders’ meeting, the Chairman of the Board encourages the stockholders to ask questions for each agenda or matters for approval during the meeting. The question and answer portion is documented in the minutes of the meeting.

The Company calls for a regular or special stockholders’ meeting to propose to the stockholders the actions listed above. The details of the proposed actions are presented in the Definitive Information Statement which is made available to the stockholders. During the meeting, the Company’s board and/or management present the proposed actions and encourage stockholders to ask questions. The affirmative vote of stockholders representing at least 2/3 of the issued and outstanding capital stock of the Company is required for the approval of the above items.

In cases of amendment of the Articles of Incorporation where written assent is allowed, a stockholder may deliver, in person or by mail, his vote directly to the Corporation.

 

Date of sending out notices for April 21, 2017 Annual Stockholders’ Meeting:

On March 15, 2017 or  25 business days from date of meeting, the Company distributed copies of detailed agenda of the Annual Stockholders’ Meeting to stockholders on record.

On March 24, 2017 or 28 days from the date of meeting, the Company posted on its website the copy of the Definitive Information Statement and the unbundled proxy form of the Annual Stockholders’ Meeting to stockholders on record. And on March 29, 2017, 15 business days from date of meeting, the Company distributed the same to the stockholders on record.

 

Date of sending out notices for April 20, 2018 Annual Stockholders’ Meeting:

On March 14, 2018 or 24 business days from date of meeting, the Company distributed copies of detailed agenda of the Annual Stockholders’ Meeting to stockholders on record.

On March 16, 2018 or 35 days from the date of meeting, the Company posted on its website the copy of the Definitive Information Statement and the unbundled proxy form of the Annual Stockholders’ Meeting to stockholders on record. Also on March 16, 2018, 22 business days from date of meeting, the Company distributed electronic copies of the same to the stockholders on record.

 

 Questions and answers during the 2017 Annual Stockholders’ Meeting

Q & A No. 1

Question: Referring to a particular investment made by BPI in a company which appeared to have performed badly, a stockholder asked what can be done for the Corporation to avoid similar situations.

Answer: The Chairman answered that there is always a component of risk in all investments, and failures will always be part and parcel of any portfolio but that the Corporation has consistently striven to have its successes exceed its failures to a significant degree, thereby providing a regular return on its capital. The Corporation’s Chief Financial Officer, Mr. Jose Teodoro K. Limcaoco, further explained that the Group has employed a policy of reviewing the value of its investments often and testing such investments for impairment. He assured Mr. Turner that BPI must have strategic reasons for holding on to the subject investment.​

Q & A No. 2

Question: The stockholder further asked about the Group’s risk management procedures.

Answer: The Chairman confirmed that while the Corporation has sound risk management processes in place, there will be instances when the investments do not work out. In such cases, there will be escape clauses in one form or another. What is important though is that the Corporation and the Group account for such investments and make the necessary adjustments.​

Q & A No. 3

Question: A stockholder asked if the Corporation has any plans to enter into the logistics business.

Answer: The Chairman responded that the Corporation is very interested in the logistics field and that the Zalora business could be a platform for the Corporation to build on in the logistics space.​

Q & A No. 4

Question: As a follow on Question No. 3, the stockholder inquired on when the Corporation expects Zalora to be profitable.

Answer: Mr. Limcaoco informed the stockholders that Zalora Philippines hopes to turn a profit by 2019, based on its business plan.​

Q& A No. 5

Question: As The same stockholder who asked questions 3 and 4 also asked if the Corporation has other ideas to bring production into the Philippines.

Answer: The Chairman answered in the affirmative and explained that it was the transformation taking place in the automotive industry where vehicle components are increasingly becoming electronic in nature as well as IMI’s status as a global player that instigated the Corporation’s decision to bring together its automotive and manufacturing interests and take on a more pro-active stance. The Chairman mentioned the Corporation’s belief that the Philippines has the potential to build up the manufacturing space in a robust way and KTM was just the first step. Mr. Arthur Tan confirmed that the Philippines has the potential to be a manufacturing hub because of regionalization and the transition toward hybrid manufacturing. This is why KTM decided to use IMI and Ayala as its base to serve the emerging market in ASEAN.​

Q& A No. 6

Question: As a follow up for question no. 5, the stockholder asked about the Corporation’s outlook on numbers for the first quarter of 2017.

Answer: The Chairman responded that the year is looking relatively positive if the BPI numbers for the first quarter of 2017 were to be used as a proxy for the numbers of the Corporation.

Q& A No. 7

Question: After making some initial comments on the annual report, including the weight thereof and the paper used, a stockholder posed a query concerning IMI and Tesla

Answer: Mr Tan disclosed that IMI has worked on projects with Tesla. He also clarified that Tesla is a car company that uses different components from different suppliers as a system and IMI works directly with the system supplier for Tesla, not directly with Tesla.

Q& A No. 8

Question: A stockholder inquired why there’s no female representation in the Company’s Board of Directors.

Answer: The Chairman partly attributed the absence of any female representation in the Board to the Board’s relatively small size.​

Q& A No. 9

Question: A stockholder requested for clarification on the Corporation’s Project Kasibulan.

Answer: Ms. Ma. Victoria A. Tan then addressed Mr. Go’s questions about Project Kasibulan – explaining that it is a comprehensive forest protection and rehabilitation program and assuring him that the trees being planted are native trees, specifically Dita trees.​

Q& A No. 10

Question: A stockholder asked for the reason behind the non-inclusion of “ratification of the acts of the Board and Management” in the agenda of the meeting.

Answer: Upon the Chairman’s request, the Corporate Secretary, explained that the decision to exclude such item was reached after the Securities and Exchange Commission demanded a complete list of all the acts and access to all the minutes of the meetings of the Board, its committees and management. In any event, the previous inclusion of such an item was not intended for legal compliance but was only meant to give the shareholders​ greater participation in the Corporation.​

Q& A No. 11

Question: A stockholder asked about the possibility of Ayala Corporation taking over Phinma Energy.

Answer: The President good-naturedly responded that the Corporation has been good friends and partners with the owner of Phinma Energy, Mr. Ramon R. Del Rosario, Jr. for many years and that they will continue to work together in that manner.​

Q& A No. 12

Question: A stockholder inquired on why the Ayala Group of companies have different external auditors and if it is possible to have only on external auditor for the entire group. He also inquired who audits the external auditor of the Corporation.

Answer: The Chairman explained that the other subsidiaries are doing a joint ventures with other groups and that they follow through the corporate governance principle. He further explained that the SGV is the primary auditor across the group. He also added that the Audit Committee reviews and assesses the performance of the external auditors.​

Q& A No. 13

Question: A stockholder inquired on the paper used for the production of annual reports.

Answer: The Chairman confirmed that the papers used for the production of the annual reports are completely recycled papers.​

Q& A No. 14

Question: A stockholder inquired about the presence franchise stores of Generika drugstores nationwide specifically in Makati City.

Answer: Mr. Paolo Maximo F. Borromeo explained that out of 670 Generika drugstores nationwide, 85% to 90% are franchise stores and that there is one franchise store in Makati City, specifically in Makati Cinema Square.​

Q& A No. 15

Question: A stockholder asked about recreation of some areas in Ayala Avenue.

Answer: The President confirmed that there is a great deal of re-development in Makati City which is being done gradually. The biggest development currently underway is One Ayala, which will be a transportation hub. The President informed Mr. Rivera that the Corporation is a major participant in constantly looking for ways of improving Makati.​

Q& A No. 16

Question: A stockholder inquired if the Corporation will have a project involving Philippine National Railways.

Answer: The Chairman explained that the government has not made any decision yet about the Philippine National Railway (PNR) project but that the Corporation would consider it when the parameters are in place.​

Q& A No. 17

Question: A stockholder asked about the Corporation’s involvement in the drug rehabilitation program of the Philippine government.

Answer: Mr. Ruel T. Maranan, President of Ayala Foundation, Inc. disclosed that there is an existing partnership with the local government of Marawi City and the Department of Interior and Local Government for the establishment of a community-based rehabilitation center in Marawi City (Project Siapen). Turn-over is targeted for the 2nd quarter of 2017. The Chairman added that the Group is looking for other potential projects, with announcements to be made in due time.​

 Questions and answers during the 2018 Annual Stockholders’ Meeting

Q&A No. 1

Question: A stockholder suggested that in line with the merger with Mapua Univesity, the Corporation also consider acquiring University of Perpetual Help. 

Answer: The Chairman clarified the merger has not been completed and discussions with iPeople are still ongoing.

Q&A No. 2

 

Question: A stockholder raised concerns about Boracay.

Answer:  The Chairman confirmed that Manila Water has water supply and wastewater treatment operations in the island.  The President explained that the problem of the island is the number of illegal settlers who have no permits and who have refused to hook up to the sewerage system. He added Manila Water has built an adequate capacity in the island to handle all its needs but the local government has to make sure that the local business establishments properly connect to the system. Mr. Ferdinand M. Dela Cruz, the President of Manila Water, added that there are two operators in Boracay, one of which is Boracay Water (being run by Manila Water), which is the only one with compete Sewage Treatment Plant and sewerage system. Boracay Water has the capacity and network to treat the sewage of its own customers.

Q&A No. 3

Question: A stockholder asked if the Corporation has any plans in taking over the operations and maintenance of MRT3 in order to make it comparable to LRT1.

Answer: The Chairman thanked the stockholder for recognizing the efforts made towards improving LRT1 and then explained that there is no ongoing discussion for the privatization of MRT3 at this time but should the Government decide pursue such, the Corporation is willing to participate. 

Q&A No. 4

Question: Referring to a news that alluded Manila Water getting unfair share of water coming from Angat Dam, a stockholder asked if there is a possibility that this may lead to regulatory issues which could eventually affect water supply.

Answer: Mr. Dela Cruz explained that Manila Water and Maynilad run a common purpose facility which manages the allocation of Angat Dam. The proper protocols have now been observed and the matter has been resolved. He assured that there is no water interruption being experienced by Manila Water customers.

Q&A No. 5

Question: A stockholder asked what the Corporation’s plans are to address the country’s increasing population.

Answer: The Chairman responded that the Corporation has made it a mandate across the group to try and spread the change in business models to become relevant to broader range. He highlighted the various initiatives of Ayala Land, Globe Telecom, BPI and Manila Water geared toward economic inclusivity.

Q&A No. 6

Question: A stockholder asked what the Corporation’s plans are to address the country’s increasing population.

Answer: The Chairman is not aware of the particular project mentioned but pointed out that the Corporation, through AC Infrastructure is actively participating in the government’s Build, Build, Build program and has submitted several unsolicited proposals to this end.

Q&A No. 7

Question: A stockholder inquired about the possibility of putting up of APEC Schools in Mindanao, increasing the number of BanKo branches, increasing the number of FamilyDoc clinics, and plans of putting up more solar and renewable energy plants in the country.

Answer: The Chairman answered that since APEC Schools and FamilyDoc are relative new businesses of the group, the build up of their facilities is focused mainly in the urban areas and in Luzon. While the Corporation aims to take the business nationwide, it will do so on a step-by-step basis. As for BanKo, the Chairman explained that BPI is a more established institution and its platform is moving more rapidly.  Mr. John Eric T. Francia confirmed that AC Energy has plans to expand in its renewable energy business, both in the solar and wind sectors not only in the region but alo in the country for the next five to seven years.

Q&A No. 8

Question: The same stockholder commented on the slow LTE connection of Globe.

Answer: The Chairman gave assurance that the Corporation is very committed in continuing to increase the quality, capacity and speed of the network, as evidenced by the USD800M capital expenditures of Globe.

Q&A No. 9

Question: A stockholder inquired about venturing into seawater current generation. 

Answer:  The Chairman responded that AC Energy’s focus remains to be on geothermal, wind and solar.

Q&A No. 10

Question: A stockholder asked about Changi Airport’s involvement in the NAIA consortium and the reported take-over by AC Infrastructure of the operations of the telecommunication towers of Globe.

Answer:  The Chairman confirmed that Changi Airport will be contributing its technical expertise to the NAIA Consortium, and he clarified that Globe will create a separate subsidiary and asset-based company that will manage the operations of the towers.

Q&A No. 11

Question: A stockholder asked about AC Health’s strategy.

Answer:  The Chairman stated that it continues to be on the lookout for hospitals that may be acquired, it just hasn’t found a suitable one yet.

Q&A No. 12

Question: A stockholder asked by the 2017 Audited Financial Statement of the Company would not be presented to and approved by the stockholders.

Answer:  The Chairman and the President pointed out the Audited Financial Statement has been included in the definitive information statement distributed to the stockholders prior to the meeting and that the President highlighted the key numbers during his report. The Chairman also added that he will be requesting for a motion on the approval of the AFS.

Q&A No. 13

Question: A stockholder proposed the Corporation purchase a parcel of land in Singapore.

Answer:  The Chairman noted the proposal and highlighted that Ayala Land’s acquisition of control of Malaysian realty company is geared towards similar investment opportunities.

Q&A No. 14

Question: A stockholder requested to receive paper bills from Globe Telecom.

Answer: Ms. Rosemarie Maniego-Eala, CFO of Globe Telecom, noted the request of the stockholder.

Q&A No. 15

Question: A stockholder inquired if it’s possible for majority stockholders not to sell their shares in big chunks so as not the affect the stock price of the Corporation.

Answer: The Chairman responded that stockholders have various reasons for selling their shares and this is something beyond the Corporation’s control.

Q&A No. 16

Question: A stockholder inquired if the stockholder has any plans to invest in artificial intelligence.

Answer: The Chairman responded that the Corporation, through AC Ventures, is considering potential investments in this area.

Q&A No. 17

Question: A stockholder asked if the Corporation is involved in the development of Clark Green City. 

Answer: The Chairman replied that given that the land being made available in Clark Green City is only for lease, the Corporation, through Ayala Land, has decided to allocate instead its capital in buying and developing the surrounding areas to further create value for the community.

Q &A No. 18

Question: A stockholder commented on the types of tokens being distributed to the stockholders and bought to the attention of the Chairman her experience when she was given only four-month lease contract for her business in BGC Stop Over Pavilion.

Answer: The Chairman assured her that someone from Ayala Land will reach out to her to address her concern.

 

Result of 2017 Annual Stockholders’ Meeting’s Resolutions

 

Result of 2018 Annual Stockholders’ Meeting’s Resolutions

Resolution	Approving	Dissenting	Abstaining
Resolution No. S-01-18: “RESOLVED, to approve the minutes of the annual stockholders’ meeting held on April 21, 2017”	652,739,816 shares or 99,99% of the total represented shares	0	54,000 shares or 0.01% of the total represented shares
Resolution No. S-02-18: “RESOLVED, to note the Corporation’s Annual Report, which consists of the Chairman’s Message, the President’s Report, and the audio-visual presentation to the stockholders, and to approve the consolidated audited financial statements of the Corporation and its subsidiaries as of December 31, 2017, as audited by the Corporation’s external auditor, SyCip Gorres Velayo & Co.”	652,563,946 shares or 99.96% of the total represented shares​	33,240 shares or 0.005% of the total represented shares	196,630 shares or 0.03% of the total represented shares
Resolution No. S-03-18: “RESOLVED, to elect the following as directors of the Corporation to serve as such beginning today until their successors are elected and qualified:   Jaime Augusto Zobel de Ayala​     Fernando Zobel de Ayala​     Delfin L. Lazaro     Xavier P. Loinaz     Ramon R. Del Rosario, Jr.     Keiichi Matsunaga     Antonio Jose U. Periquet”	647,093,265 shares or 78.79% of the total outstanding shares   642,434,149 shares or 78.22% of the total outstanding shares   644,748,351 shares or 78.50% of the total outstanding shares   652,400,681 shares or 79.44% of the total outstanding shares   644,936,051 shares or 78.53% of the total outstanding shares   648,097,609 shares or 78.91% of the total outstanding shares   641,507,101 shares or 78.11% of the total outstanding shares	4,625,932 shares or 0.56% of the total outstanding shares   10,327,677 shares or 1.26% of the total outstanding shares   8,013,475 shares or 0.98% of the total outstanding shares   361,145 shares or 0.04% of the total outstanding shares   7,825,775 shares or 0.95% of the total outstanding shares   4,664,217 shares or 0.57% of the total outstanding shares   11,254,795 shares or 1.37% of the total outstanding shares	1,042,700 shares or 0.13% of the total outstanding shares   0     0     0       0     0     0
Resolution No. S-04-18: “RESOLVED, as endorsed by the Board of Directors, to approve the re-election of SyCip Gorres Velayo & Co. as the external auditor of the Corporation for the year 2018 for an audit fee of PhP6 million, inclusive of value-added tax.”	651,921,527 shares or 99.87% of the total represented shares	864,510 shares or 0.13% of the total represented shares	7,779 shares or 0.001% of the total represented shares

Date of publishing of the result of the votes taken during the most recent AGM for all resolutions:

The voting results of 2017 ASM, as validated by SGV, was published on the Company Website on April 24, 2017.

The voting results of 2018 ASM, as validated by SGV, was published on the Company Website on April 23, 2018.

 

Stockholders’ Attendance

 

Independent Validators

The company has engaged SyCip Gorres Velayo & Co. to validate the voting results of the company’s annual stockholders’ meeting since 2014.

 

Number of Votes per Share

One vote per share for common and voting preferred shares. One vote per share for preferred “B” on matters where holders of non-voting shares are entitled to vote under Section 6 of the Corporation Code.

 

Policies on Proxy Voting 

 

Policies on Sending of Notices

 

Definitive Information Statements and Management Report

 

Contents of the Notice of Annual/Special Stockholders’ Meeting

• Each resolution to be taken up deals with only one item.
• Profiles of directors (at least age, qualification, date of first appointment, experience, and directorships in other listed companies) nominated for election/re-election
• An explanation of the dividend policy, if any dividend is to be declared
• The auditors to be appointed or re-appointed.
• The amount payable for final dividends
• Documents required for proxy vote

 

Treatment of Minority Stockholders

The company’s Board Charter and the Charter of the Nomination Committee allows any stockholder, including minority stockholders, to nominate candidates for board of directors.

 

II. DIVIDEND DECLARATIONS 

Cash Dividend on Common Shares

 

Cash Dividend on Preferred B Series 1 Shares

Cash Dividend on Preferred B Series 2 Shares

Cash Dividend on Voting Preferred Shares

 

 

INTERNAL AND EXTERNAL COMMUNICATIONS POLICIES

Ayala’s external and internal communications programs are handled by both the Corporate Communications and Investor Relations units. Major company announcements are reviewed and approved by the Chairman and Chief Executive Officer, President and Chief Operating Officer, Audit Committee, Chief Finance Officer and Group Head of Corporate Strategy and Development, as applicable.

The company’s communication policies are reviewed in conjunction with enterprise risk management reviews or as needed or required.

INVESTOR RELATIONS PROGRAM

 

RULES AND PROCEDURES FOR MERGERS AND ACQUISITIONS

1.  Starts with Strategy and Planning where a potential transaction is assessed in the context of strategic goals of the Company, its subsidiaries and affiliates;
2. Once this is pre-cleared through the Investment Committee (IC), the transaction then goes to the second stage of evaluation and screening for a more detailed due diligence procedure. In this stage, a project lead, team members (from financial, technical, legal, commercial, environmental, etc.), steering committee members (preferably composed of business unit, finance and legal representatives) and external advisors are formed and engaged;
3. An inventory of risks with various risk levels / probability of occurrence and suggested risk mitigants are reported to the Steering Committee for evaluation, recommendation and discussion of risk levels, tolerance and mitigation strategies;
4. The key transaction risks and mitigation strategies identified along with the proposed offer, structure and authorized signatories are then subject to IC approval;
5. \When necessary, the proposal will also pass through the Finance Committee, Executive Committee and the Board of Directors;
6. Once approved, the final bid or offer is prepared and the binding terms of the definitive agreements are negotiated and discussed.
7. After signing, the transaction is then disclosed to the public.

RULES AND PROCEDURES FOR DIVESTMENTS

1. Starts with strategy and planning on the account of the portfolio review or business unit initiative in the context of strategic goals of Company, its subsidiaries and affiliates;
2. Approval of the Investment Committee is needed in order to determine initial position of whether to hold or sell;
3. Once pre-cleared, a project lead, team members (from financial, technical, legal, commercial, environmental, etc.), steering committee members (preferably composed of business unit, finance and legal representatives) and external advisors are formed and engaged;
4. Divestment plans (with identification of potential buyers and target selling price) are prepared;
5. Investment teaser is provided to the interested buyers and they are asked to sign an Non-Disclosure Agreement (NDA);
6. After signing the NDA/exclusivity agreement, buyers can then perform its own due diligence;
7. Offers are evaluated by the team and steering committee and presented to the IC (then Finance Committee/Executive Committee/Board of Directors, if necessary) for approval;
8. Once approved, the final bid or offer is prepared and the binding terms of the definitive agreements are negotiated and discussed;
9. After signing, the transaction is then disclosed to the public.

The company engaged various accredited independent parties to issue fairness opinion reports for the Company’s mergers, acquisitions of assets and divestment transactions.

There are no transactions in 2017 that required fairness opinion report from an independent party.  

The Group’s Corporate Social Responsibility is evolving. Just like any other corporation or organization, it all started in philanthropy and realized that the impact was not significant. Then it evolved to Corporate Social Responsibility where employees were encouraged to volunteer and reach more communities. However, the impact is still not significant. To create a material and relevant impact, the Group has embraced the creation of shared value process, two years ago. The Group use its resources and capabilities to innovate products, services and processes to address a societal challenges and create a socially-relevant business model and bring it to a scale. The Group has recently invested in education and healthcare, two areas where we can introduce innovative solutions in addressing the broader communities’ social challenges.

Below are some of the group’s initiatives:

 

 

CRITERIA USED IN ASSESSING THE ANNUAL PERFORMANCE OF THE BOARD, COMMITTEES, INDIVIDUAL DIRECTOR, AND CEO/PRESIDENT

 

Internal policies on sanctions imposed for any violation or breach of the corporate governance manual involving directors, officers, management and employees