Conflict of Interest
Conflict of Interest Policy sets requirements for all directors, officers and employees to observe the highest degree of transparency, selflessness and integrity in the performance of their duties, free from any form of conflict with personal interest.The Revised Conflict of Interest Policy was approved by the Board on July 30, 2012 and took effect on August 15, 2012. It supersedes the previous Conflict of Interest Policy adopted by the Company on August 23, 2004.
Policy on Disclosure of Relatives aims to ensure fairness, transparency and objectivity in decision making and avoidance of situations that may give rise to conflict of interest. This was approved and implemented on February 1, 2010.
Related Party Transactions (RPT) Policy ensures that transaction of the Company with its related parties are conducted in fair and at arms' length terms. It requires review of material/significant RPTs by the RPT Committee and RPT Review Team to determine whether these RPTs are in the best interest of the Company.
On September 30, 2019, a Revised RPT Policy was approved by the Board which incorporates the requirements of SEC Memorandum Circular No. 10 Series of 2019 on material RPTs amounting to at least 10% of the Company’s assets. The revised policy provides for the establishment of a Related Party Registry, appointment of external independent party to evaluate material RPTs, setting up of an effective price discovery mechanism, separate approval requirements by the Board, independent directors and stockholders, assessment by internal audit, provision of whistleblowing mechanism and treatment of abusive material RPTs, among others.
Internal Disclosure Rules
Internal Policy on Unstructured Disclosures Meralco, as a publicly listed company, is required under the law to promptly disclose the occurrence of any material transaction or event that could reasonably affect its share price. Events mandating prompt disclosure should be disclosed within 10 minutes from the receipt of material information or the happening or occurrence of said act, development or event.
Insider Trading Policy regulates trading of shares by Company executives, officers and employees with direct access to unpublished information relating to the Company’s financial and operating results, in the interest of CG and transparency. This policy took effect on July 16, 2010.
In the event that they are required to trade shares within the blackout period (10 trading days before and 2 trading days after the release or announcement of Meralco 's quarterly and annual financial and operating results), they must notify and seek approval of the President of Meralco, or in the case of the Meralco President, the Chairman of the Board of Directors of Meralco, prior to trading.
The Company requires all its directors and officers to disclose to the Philippine Stock Exchange (PSE) the details of any acquisition, disposal, or change in their beneficial ownership of Meralco (MER) shares, within two trading days after the transaction.
Communication Programs and Guidelines
The “Be Right” Communication Policy promotes open lines of communication between Management and employees, enabling Management to relay directions and for employees to express their ideas and concerns to Management. This policy also provides a framework and guidance for good faith reports on violations of governance principles, policies, codes of conduct, misstatement of financial transactions and accounts, fraud, and other potential whistleblowing type of incidents without exposure to retaliation. The “Be Right” policy was approved on August 10, 2010.
The policy consists of two programs/implementing rules:
E-suggest Mo (Employee Suggestions)
E-suggest Mo harnesses employees' bright ideas and suggestions that will save on operating costs, increase revenues, improve work and service quality, workplace efficiency and service to customers and other stakeholders. Recognitions and rewards are given to the viable and qualified ideas and suggestions.
E-Report Mo (Whistleblowing Policy)
The E-Report Mo encourages the reporting of any violation of corporate governance rules or policies, questionable accounting or auditing matters, and other malfeasance. Every stakeholder is allowed to freely communicate with the Company in good faith, and expect corresponding resolution based on merit of report. E-Report Mo procedures were developed to maintain confidentiality and fairness in the handling of reports.
Retaliation is prohibited and is dealt with in accordance with the pertinent Company policies, rules and applicable laws. Through E-Report Mo, the Company provides appropriate protection from retaliation. In the event of retaliation, the reporting person or witness shall report to Corporate Governance Office (CGO) by filling out a Retaliation Protection Report Form.
Protection from retaliation will be granted, upon endorsement of CGO, reviewed by the Management Disciplinary Committee or the relevant Board Committee for approval of the CEO, his designated representative or the Chairman of the Board. These requests shall be processed expeditiously.
Social Media Policy. The Company’s Social Media Policy, which was approved on May 31, 2016, prescribes the standards of the Company in relation to the use of online platforms of communications or social media so as to safeguard the Company’s interest and that of its stakeholders.
Supplier and Contractor Relations
Suppliers' Business Conduct Policy states that Meralco engages the services of Suppliers that advocate the same corporate governance standards and business ethics. This policy was approved on September 24, 2012 and amended on June 15, 2016.
Checks and Balances
Management Control Policy, which describes Management's responsibility for a system of checks and balances and emphasizes the importance of internal control processes as an integral part of MERALCO's governance system and risk management. Effective management control is necessary to ensure that behavior and decisions of people in the organization are consistent with the company's objectives and strategies.
Policy on Board of Directors' Orientation and Continuing Education states that the Board of Directors shall be provided with appropriate orientation, continuing education and training programs in support of their oversight role of the Company.
This policy encourages directors to attend annual continuing training programs. The Company believes that its Directors must keep abreast with the latest developments in business, corporate governance best practices, laws and regulations, and other relevant matters that help them function effectively in the Board and in their respective committees in order to direct the Company to achieve its mission, vision and goals.
Selection of Directors
Nomination and Election Policy. The Company’s Nomination and Election policy is established to set forth the procedures in the director selection process. Approved on September 25, 2017, it sets forth the procedures in the director selection process, including the acceptance of nominations from minority shareholders and the evaluation and screening of nominees vis-à-vis the applicable qualifications and disqualifications set forth in the Company’s Revised Manual of Corporate Governance, By-laws and other applicable law, policy or regulation.
Board Diversity Policy. In line with Meralco’s commitment to the principles of good corporate governance, the Board Diversity Policy was approved on December 18, 2017 to ensure that the Board has an appropriate mix of expertise, experience, independence, and skills that would encourage critical discussion and promote a balanced decision in the attainment of the Company’s strategic objectives and sustainable development. In order to achieve a diverse board, varied aspects are to be considered, including, but not limited to: academic, professional and business background, age, gender, and other regulatory requirements. The final composition of the board shall be grounded on merit and potential contribution of the selected directors to the Company.
The Company’s Anti-Bribery and Corruption Policy is embodied in its Revised Code of Ethics which prohibits the commission of any act that may be construed as direct or indirect bribery and corruption, as defined by law, of government officials to facilitate any transaction or gain any perceived or actual favor or advantage. This is reinforced by the following policies:
Conflict of Interest Policy which requires all Directors, Officers and Employees to observe at all times the highest degree of fairness, accountability, transparency and integrity in the performance of their duties and responsibilities to the Company, free from any form of conflict or contradiction with their own personal interest.
Policy on Solicitation and Acceptance of Gifts which requires Directors, Officers, and Employees to refrain from putting themselves in situations or acting in a manner that could significantly affect the fair, objective, independent, and/or effective performance of their duties and responsibilities in the Company while transacting with third parties. As such, solicitation and acceptance of gifts from Third Party entities are prohibited.
Amended Suppliers Business Conduct which prohibits corruption, extortion and embezzlement. Suppliers shall comply, at all times, will all applicable anti-bribery and corruption laws. Suppliers shall not offer, accept, promise, pay, permit, or authorize bribes and kickbacks, which include giving of gifts to the Company’s Directors, Officers or Employees or other means to obtain an undue or improper advantage.
The Board approved an Anti-Bribery and Corruption Policy which formalizes its stand against corrupt practices and specifies in detail the prohibition against corporate gift-giving to public and private individuals or entities that constitutes bribery or corruption. Under this Policy, bribery and corruption is committed by offering or receiving an undue reward by, or to, any government office, officer or employee or to any director, officer or employee of a private entity with which the Company has potential or existing business transaction, designed to influence him/her in the exercise of his/her duty, or to induce him/her to act contrary to law or to accepted standards of fairness, integrity and honesty, or to secure any improper business advantage. Any director, officer or employee who fails to comply with this Policy shall be subject to applicable penalties and sanctions under the Company’s Code of Right Employee Conduct (COREC) while any erring consultant shall be subject to applicable penalties and sanctions as may be stated in his/her corresponding contract.
The Board adopts and makes available at the option of a shareholder, an established alternative dispute resolution (ADR) mechanism to resolve intra-corporate disputes in an amicable and effective manner as provided in the Revised Manual of Corporate Governance. Accordingly, in resolving intra-corporate disputes between the Company and its stockholders, the Company may resort to alternative modes of dispute resolution as may be agreed upon with the adverse party, such as but not limited to arbitration, mediation, conciliation, early neutral evaluation and mini-trial.
These policies are available at the Corporate Governance Intranet Portal of Meralco. Copies of the Corporate Governance Handbook, which compiles the above-mentioned policies, were distributed to all offices.