Board of Directors
The Company prides itself with its Board of Directors (the "Board"), composed of highly competent individuals who are well-recognized in their respective fields and in the business community. The Board provides a clear vision towards the formulation of sound corporate strategies, and oversees the systemization, improvement and upholding of transparency in governance. The Board provides guidance in achieving fairness and accountability in all major dealings of the Company, with the objective of protecting the interests of its stakeholders.
In this connection, the Board fulfills certain key functions, including: reviewing and guiding corporate strategy, major plans of action, risk policy, annual budgets and business plans, setting performance objectives, monitoring implementation and corporate performance, and overseeing and approving major capital expenditures, acquisitions and divestitures, monitoring the effectiveness of our governance practices and making changes as needed, selecting, compensating, monitoring and, when necessary, replacing key executives and overseeing succession planning, aligning key executive and board remuneration with the longer term interests of the Company and its stakeholders, ensuring a formal and transparent board nomination and election process, and monitoring and managing potential conflicts of interest of management, board members, shareholders and stakeholders, including misuse of corporate assets and abuse in related party transactions.
The Board has eleven (11) members who are elected by the stockholders during the annual stockholders' meeting ("ASM").
The Board should have at least three (3) independent directors, or such number as to constitute at least one-third of the member of the Board, whichever is higher.1
1 Ms. Sherisa P. Nuesa, Mr. Cesar A. Buenaventura, Mr. Octavio Victor R. Espiritu, and Mr. Eric Ramon O. Recto are the incumbent independent directors of the Company.
All nominations to the Board are undertaken in accordance with the Manual of Corporate Governance (the "Manual"), By-laws, the Charter of the Board, and the existing rules and regulations. Upon receipt of all nominations, the Nomination Committee convenes to evaluate the qualifications of nominees for election to the Board. In evaluating the nominations, the Nomination Committee adheres to the criteria for selection and the qualifications and disqualifications of directors set forth in the Manual, the Charter of the Board, the Charter of the Board Committees, the Securities Regulations Code (SRC), and those under existing laws, rules, and regulations. After deliberation, the Nomination Committee and the Board issue a resolution endorsing the election of the qualified nominees at the Annual Stockholders' Meeting (ASM). The members of the Board so elected at the ASM hold office for one year, and until their successors have been elected and qualified in accordance with the By-laws. The elected members of the Board are mandated to oversee the management of the Company, and, in the performance of their duties, must exercise their best and unbiased judgment to protect and promote the interest of the Company and its stakeholders.
The inputs and opinions of each Director are valued, it is ensured that a Director shall not be discriminated upon by reason of gender, age, ethnicity, political, religious, or cultural beliefs. Towards this end, the Board has adopted a policy of diversity in gender, age, and ethnicity, as well as religious, political, or cultural background. Through this policy, the Board encourages the shareholders to nominate and select individuals who will promote diversity in the membership of the Board.
Moreover, the Board ensures a formal and transparent board nomination and election process.
Principles and Procedures for Submission and Evaluation of Nominations and Endorsement for Election of Candidates to the Board of Directors
Manila Water encourages the selection of a mix of competent directors, each of whom can add value and contribute independent judgment to the formulation of sound corporate strategies and policies.
Moreover, the Board ensures a formal and transparent board nomination and election process. Towards this end, the following procedure and principles are observed in the nomination of candidates for election to the Board:
Qualifications and Disqualifications of Directors
General Qualifications of Directors
A nominee to the Board must have the following General Qualifications:
Specific Qualifications of Directors
In addition to the General Qualifications, the following specific qualifications shall be required, if applicable:
A nominee to the Board with the following disqualifications shall never be nominated, or if nominated and elected, shall be removed from office:
The following shall constitute grounds for temporary disqualifications of directors:
A finding of existence of temporary disqualification shall be at the discretion of the Board and shall require a resolution of a majority of the Board. A director shall have sixty (60) days upon the occurrence of any ground for temporary disqualification to remedy or correct the same otherwise, the disqualification shall become permanent.
Roles and Responsibilities of the Board
The Corporate Governance Manual provides that “The Board should have a Board Charter that formalizes and clearly states its roles, responsibilities and accountabilities in carrying out its fiduciary duties. The Board Charter should serve as a guide to the directors in the performance of their functions and should be publicly available and posted on the Company's website.” The Charter of the Board implements the aforesaid provision of the Manual.
The Board's Governance Responsibilities:
Article I, Section 1.4 of the Company's Corporate Governance Manual outlines the governance responsibilities of the Board.
Aside from these, Section 3.1. of the Charter of the Board also lists the following powers of the Board:
In compliance with the requirements of the law, the Company's Manual, and the rules and regulations of the SEC, the Company has four (4) independent directors as members of the Board.
Under the Charter of the Board, Independence is defined as, “with respect to any person, the absence of any restrictions or limitations or freedom from any interests or relationships that would interfere with the exercise of impartial and objective judgment in carrying out the responsibilities of that person”.
Under the Manual, a director is considered independent if he holds no interests or relationships with the Company that may hinder his independence from the Company or its management which would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. More importantly, the Company also subscribes to the requirements of independence under existing laws, rules and regulations the SEC Memorandum Circular No. 16, Series of 2002. Hence, the Company ensures that its independent directors have all the qualifications and none of the disqualifications specified in the said SEC Memorandum Circular.
The Board is supported by several committees, namely: Executive Committee, Audit Committee, Operations Committee, Corporate Governance Committee, Board Risk Oversight Committee, Related Party Transactions Committee, Nomination Committee, Talent and Remuneration Committee, and the Committee of Inspectors of Ballots and Proxies. These Board Committees are required to report to the Board a summary of the actions taken on matters submitted to them for consideration at the next meeting of the Board. Each of the Board Committees has its own charter that provides guidance on the manner by which its members and the committees should exercise their functions and mandates.
The Executive Committee
The Executive Committee is composed of five (5) directors, with 1 member as Chairman of the Executive Committee. The Executive Committee acts by majority vote of all its members and is authorized to act and shall act on matters within the competence of the Board, except those with respect to:
|Executive Committee||Audit Committee||Board Risk Oversight Committee||Corporate Governance Committee||Related Party Transactions Committee||Nomination Committee||Talent and Remuneration Committee||Operations Committee*|
|Enrique K. Razon, Jr. (Chairman)|
|Jose Rene Gregory D. Almendras (Member)||Jose Rene Gregory D. Almendras (Member)|
|Antonio T. Aquino (Member)||Antonio T. Aquino (Chairman)|
|Sherisa P. Nuesa (Chairperson)||Sherisa P. Nuesa (Member)||Sherisa P. Nuesa (Member)||Sherisa P. Nuesa (Member)||Sherisa P. Nuesa (Member)|
|Cesar A. Buenaventura (Member)||Cesar A. Buenaventura (Chairman)||Cesar A. Buenaventura (Member)||Cesar A. Buenaventura (Member)||Cesar A. Buenaventura (Member)|
|Octavio Victor R. Espiritu (Member)||Octavio Victor R. Espiritu (Member)||Octavio Victor R. Espiritu (Member)||Octavio Victor R. Espiritu (Chairman)||Octavio Victor R. Espiritu (Member)|
|Eric Ramon O. Recto (Member)||Eric Ramon O. Recto (Member)||Eric Ramon O. Recto (Chairman)||Eric Ramon O. Recto (Member)|
|Rafael D. Consing. Jr. (Member)||Rafael D. Consing. Jr. (Member)||Rafael D. Consing. Jr. (Member)|
|Donato C. Almeda (Member)||Donato C. Almeda (Member)||Donato C. Almeda (Member)|
|Jose Victor Emmanuel A. de Dios, Jr. (Member)||Jose Victor Emmanuel A. de Dios, Jr. (Member)|
*The Operations Committee was established on April 16, 2021 and dissolved on August 11, 2021.
The Executive Committee meets as needed and performs such other functions as may be properly delegated to it by the Board. The Executive Committee held four (4) meetings in 2021.
|Executive Committee||Meetings Attended/Held|
|Fernando Zobel de Ayala2||1/1|
|Jose Rene Greogory D. Almendras||3/4|
|Antonino T. Aquino3||1/1|
|John Eric T. Francia4||1/1|
|Sherisa P. Nuesa5||1/1|
|Enrique K. Razon, Jr.6||1/1|
|Rafael D. Consing, Jr.7||3/3|
|Donato C. Almeda8||3/3|
|Jose Victor Emmanuel A. de Dios9||3/3|
2 Mr. Zobel de Ayala served as the Chairman of the Executive Committee from January 1, 2021 until June 3, 2021.
3 Mr. Aquino served as a member of the Executive Committee from January 1, 2021 until June 3, 2021.
4 Mr. Francia served as the Vice-Chairman of the Executive Committee from January 1, 2021 until June 3, 2021.
5 Ms. Nuesa served as a member of the Executive Committee from January 1, 2021 until June 3, 2021.
6 Mr. Razon was elected as the Chairman of the Executive Committee on June 3, 2021 and serves the unexpired term of Mr. Ayala.
7 Mr. Consing was elected as a member of the Executive Committee on June 3, 2021 and serves the unexpired term of Mr. Aquino.
8 Mr. Almeda was elected as a member of the Executive Committee on June 3, 2021 and serves the unexpired term of Mr. Francia.
9 Mr. De Dios was elected as a member of the Executive Committee on August 27, 2021. He serves the unexpired term of Mr. Gonzalez, who was elected on June 3, 2021 and served the unexpired term of Ms. Nuesa from June 3, 2021 until August 27, 2021.
The Audit Committee
The Audit Committee is composed of four (4) non-executive directors as members, majority of whom are independent directors, and is chaired by an independent director. The Audit Committee is expected to support the corporate governance process through the provision of checks and balances, which are expected to bring positive results in supervising and supporting the management of the Company. It is responsible for ensuring the development of, compliance with, and periodic review of financial reporting policies and practices of the Company. The Audit Committee also oversees the activities of the Internal Audit. Moreover, the Audit Committee also recommends and/ or concurs to the appointment, replacement, re-assignment and removal or dismissal of the Company's external auditors, including the rotation or change of external auditors and key engagement partners in accordance with applicable laws and regulations. Finally, the Audit Committee recommends and/or concurs to the appointment, replacement, re-assignment and removal or dismissal of the Chief Audit Executive to ensure that the external and internal auditors will function and operate independently of the management as required of their function.
All members of the Audit Committee are required to possess adequate understanding of accounting and auditing principles in general and of the Company's financial management systems and environment, in particular. Ms. Sherisa P. Nuesa, the Lead Independent Director and Chairperson of the Audit Committee, is a Certified Public Accountant. The Audit Committee meets at least every quarter and before the quarterly Board meetings and when needed.
On June 3, 2021, the Charter of the Audit Committee was amended to reduce the minimum number of non-executive directors who may be elected as members of the Committee. On November 9, 2021, the Audit Committee approved and the revision to their charter to include the Audit Committee's responsibility in assessing the independence, adequacy of resources, professional qualifications, and competence of the external auditor and ensuring that the rotation or change of external auditors and key engagement partners is in accordance with the requirements prescribed by applicable laws and regulations and that the required disclosure will be made in case of resignation, dismissal, or cessation from service of the external auditor. Moreover, the rules and procedures governing the Audit Committee in the conduct of its meetings and the Audit Committee remuneration is also included in this revision. These changes were ratified by the Board of Directors on November 18, 2021.
The Committee held four (4) regular meetings and two (2) special meetings in 2021.
|Audit Committee||Meetings Attended/Held|
|Oscar S. Reyes10||1/1|
|Gerardo C. Ablaza, Jr.11||3/4|
|Sherisa P. Nuesa12||1/1|
|Jaime C. Laya13||1/1|
|Jose L. Cuisia, Jr.14||1/1|
|Cesar A. Buenaventura15||1/1|
|Octavio Victor R. Espiritu16||3/3|
|Rafael D. Consing, Jr.17||3/3|
10 Mr. Oscar S. Reyes served as the Chairman of the Audit Committee from January 1, 2021 until April 16, 2021.
11 Mr. Ablaza served as a member of the Audit Committee from January 1, 2021 until June 3, 2021.
12 Ms. Nuesa was elected as the Chairperson of the Audit Committee on April 16, 2021.
13 Dr. Laya served as a member of the Audit Committee from January 1, 2021 until April 16, 2021.
14 Amb. Jose L. Cuisia, Jr. served as a member of the Audit Committee from January 1, 2021 until April 16, 2021.
15 Mr. Buenaventura was elected as a member of the Audit Committee on April 16, 2021.
16 Mr. Espiritu was elected as a member of the Audit Committee on April 16, 2021.
17 Mr. Consing was elected as a member of the Audit Committee on June 3, 2021 and serves the unexpired term of Mr. Ablaza.
The Operations Committee
The Operations Committee was established on April 16, 2021 for the purpose of discharging the responsibilities of the Board in overseeing the operations of the Company. These responsibilities included the review of environmental policy, planning, and compliance issues, safety policies and related issues, review and monitoring of issues of importance and strategic significance relating to the operations of the Company, and advising the Board on matters relating to Company operations and responsibilities assigned to it by the Board. The Committee was composed of three directors including the Chairman.
The Committee met two (2) times in 2021. On August 11, 2021, the Committee was formally dissolved by the Board of Directors.
|Operations Committee||Meetings Attended/Held|
|Antonino T. Aquino||2/2/td>|
|Jose Rene Gregory D. Almendras||2/2/td>|
|Sherisa P. Nuesa||2/2/td>|
The Corporate Governance Committee
The Corporate Governance (CG) Committee is composed of four (4) independent directors including the Chairman. The CG Committee is tasked with ensuring compliance with and proper observance of corporate governance principles and practices, and has the following duties and functions, among other functions as may be delegated by the Board from time to time:
On June 3, 2021, the Board of Directors approved the proposal to amend the required number of directors from three (3) to at least three (3) members, all of whom shall be independent directors.
The Compliance Officer, in coordination with the Corporate Secretary, shall support the Committee in the performance of its functions. The Corporate Governance Committee held two (2) meetings in 2021.
|Corporate Governance Committee||Meetings Attended/Held|
|Sherisa P. Nuesa 18||1/1|
|Jaime C. Laya 19||1/1|
|Jose L. Cuisia, Jr. 20||1/1|
|Octavio Victor R. Espiritu 21||1/1|
|Cesar A. Buenaventura 22||1/1|
|Eric Ramon O. Recto 23||1/1|
19 Dr. Laya served as a member of the Corporate Governance Committee until April 16, 2021.
20 Amb. Cuisia served as a member of the Corporate Governance until April 16, 2021.
21 Mr. Espiritu was elected as the Chairman of the Corporate Governance Committee on April 16, 2021.
22 Mr. Buenaventura was elected as the Chairman of the Corporate Governance Committee on April 16, 2021.
23 Mr. Recto was elected as the Chairman of the Corporate Governance Committee on April 16, 2021.
The Board Risk Oversight Committee
The Board Risk Oversight Committee (BROC) is composed of four (4) members, majority of whom are independent directors, and is chaired by an independent director. In accordance with the BROC charter, Mr. Buenaventura, who chairs the Committee, does not sit as the chairman of the Board or of any other committee. The Board Risk Oversight Committee was established separately from the Audit Committee in order to further enhance governance on risk matters and align with the best practices in risk management and supported by the Enterprise Risk Management Department in the performance of its functions.
This committee is tasked to provide assistance in fulfilling the Board's oversight responsibilities in relation to risk governance in Manila Water, which includes ensuring that the Management maintains a sound and responsive risk management system across the organization; promote an open discussion regarding risks faced by the Company, as well as risks faced by its subsidiaries that may have potential impact on the Company's operations, and ensure that risk awareness culture is pervasive throughout the organization.
This committee is also responsible for ensuring that an overall set of risk management policies and procedures exist for the Company; reviews the Company's risk governance structure and the adequacy of the Company's risk management framework/ process; reviews and endorses to the Board changes or amendments to the Enterprise Risk Management (ERM) Policy; performs oversight functions specifically in the areas of managing strategic, financial, compliance, regulatory, operational and other risks of the Company, and crisis management. In coordination with the Audit Committee, ensures that the Company's internal audit work plan is aligned with risk management activities and that the internal control system considers all risks identified in the risk assessment process.
On February 11, 2021, the Charter of the Board Risk Oversight Committee was amended to add additional roles and responsibilities and further define its governance and oversight function. The amendment was ratified by the Board of Directors during their meeting on February 24, 2021.
On June 3, 2021, the Board of Directors approved the proposal to amend the required number of members of the Committee from four (4) to at least three (3), majority of whom shall be independent directors of the Company.
The Board Risk Oversight Committee held four (4) meetings in 2021. From the year 2020, the BROC meets every quarter as compared to the semiannual frequency in previous years.
|Board Risk Oversight Committee||Meetings Attended/Held|
|Jaime C. Laya 24||1/1|
|Gerardo C. Ablaza, Jr. 25||2/2|
|Jose L. Cuisia, Jr. 26||1/1|
|Oscar S. Reyes 27||1/1|
|Cesar A. Buenaventura 28||3/3|
|Sherisa P. Nuesa 29||3/3|
|Eric Ramon O. Recto 30||3/3|
|Donato C. Almeda 31||2/2|
24 Dr. Laya served as the Chairman of the Board Risk Oversight Committee from January 1, 2021 until April 16, 2021.
25 Mr. Ablaza served as a member of the Board Risk Oversight Committee from January 1, 2021 until June 3, 2021
26 Amb. Cuisia served as a member of the Board Risk Oversight Committee from January 1, 2021 until April 16, 2021.
27 Mr. Reyes served as a member of the Board Risk Oversight Committee from January 1, 2021 until April 16, 2021.
28 Mr. Buenaventura was elected as the Chairman of the Board Risk Oversight Committee on April 16, 2021.
29 Ms. Nuesa was elected as a member of the Board Risk Oversight Committee on April 16, 2021.
30 Mr. Recto was elected as a member of the Board Risk Oversight Committee on April 16, 2021.
31 Mr. Almeda was elected as a member of the Board Risk Oversight Committee on June 3, 2021. He serves the unexpired term of Mr. Ablaza.
The Related Party Transactions Committee
The Related Party Transactions Committee (RPT) Committee is composed of four (4) nonexecutive directors, majority of whom are independent directors. In accordance with the RPT Committee Charter, Mr. Recto, who is an independent director, is the Chairman of the Committee.
This committee is primarily tasked with the duty of enforcing and implementing the Related Party Transactions Policy of the Company. The Committee also ensures that material RPT shall have terms and conditions that are fair and equitable to the Company; the approval, award, processing and payment of RPT shall follow the same procedures as the other transactions and contracts of the Company, and therefore, no unusual privilege or special treatment shall be afforded a Related Party; and in case of doubt on the nature of a transaction subject of investigation or review pursuant to the RPT Policy, the Office of the Compliance Officer, in consultation with the RPT Committee, shall determine whether the transaction or relationship constitutes a RPT, and whether the same shall be pursued taking into consideration the cost and benefit to the Company.
On October 28, 2019, the Related Party Transactions Committee approved the amendments to the Company's Policy on Related Party Transactions in order to comply with the provisions of the Rules on Material Party Transactions for Publicly Listed Companies of the SEC. The amendments to the Company's Policy were ratified by the Board of Directors during its Regular Meeting on November 26, 2019.
On June 3, 2021, the Charter of the RPT Committee was amended reduce the minimum number of committee members from four (4) to at least three (3), and at least two (2) members shall be independent directors of the Company.
The RPT Committee met four (4) times in 2021.
|Related Party Transactions Committee||Meetings Attended/Held|
|Sherisa P. Nuesa 32||1/1|
|Jaime C. Laya 33||1/1|
|Jose L. Cuisia, Jr. 34||1/1|
|Eric Ramon O. Recto 35||3/3|
|Octavio Victor R. Espiritu 36||3/3|
|Cesar A. Buenaventura 37||3/3|
|Rafael D. Consing 38||3/3|
32 Ms. Nuesa served as the Chairperson of the RPT Committee from January 1, 2021 until April 16, 2021.
33 Dr. Laya served as a member of the RPT Committee from January 1, 2021 until April 16, 2021.
34 Amb. Cuisia served as a member of the RPT Committee from January 1, 2021 until April 16, 2021.
35 Mr. Recto was elected as the Chairman of the RPT Committee on April 16, 2021.
36 Mr. Espiritu was elected as a member of the RPT Committee on April 16, 2021.
37 Mr. Buenaventura was elected as a member of the RPT Committee on April 16, 2021.
38 Mr. Consing was elected as the fourth member of the RPT Committee on June 3, 2021.
The Nomination Committee
The Nomination Committee is composed of at least three (3) directors, majority of whom are independent directors, and under its Charter is required to be chaired by an independent director.
This committee is tasked to install and maintain an evaluation process to ensure that all directors to be nominated to the Board during the annual stockholders' meeting have all the qualifications and none of the disqualifications stated in the Manual, the Charter of the Board and the Committees, and under existing laws and regulations undertakes the process of identifying the quality of directors consistent with the Company's strategic directions, and to ensure that the directors have the competence and professional background that will enable them to perform their duties as directors of Manila Water. For this reason, the Committee shall not endorse a nominee for appointment by the Board unless it has determined that all nominees have all the qualifications and none of the disqualifications for the position.
The Nomination Committee is also responsible for evaluating the qualifications of all officers nominated to positions in the Company which are appointed, or required to be appointed, by the Board and provides guidance and advice as necessary for the appointment of persons nominated to other positions. It also reviews and revises, if necessary, the succession plans for members of the Board and officers with ranks from Group Directors to the President and CEO.
The Nomination Committee also provides an assessment of the Board's effectiveness in directing the process of renewing and replacing Board members and in appointing officers or advisors. It also develops, and updates as necessary and recommend to the Board policies for considering nominees for directors, officers, or advisors.
The Nomination Committee met seven (7) times in 2021.
|Nomination Committee||Meetings Attended/Held|
|Jose L. Cuisia, Jr. 39||1/1|
|Oscar S. Reyes 40||1/1|
|Jaime C. Laya 41||1/1|
|Octavio Victor R. Espiritu 42||3/3|
|Sherisa P. Nuesa 43||3/3|
|Cesar A. Buenaventura 44||3/3|
|Donato C. Almeda 45||3/3|
39 Amb. Cuisia served as the Chairman of the Nomination Committee from January 1, 2021 until April 16, 2021.
40 Mr. Reyes served as a member of the Nomination Committee from January 1, 2021 until April 16, 2021.
41 Dr. Laya served as a member of the Nomination Committee from January 1, 2021 until April 16, 2021.
42 Mr. Espiritu was elected as the Chairman of the Nomination Committee on April 16, 2021.
43 Ms. Nuesa was elected as a member of the Nomination Committee on April 16, 2021.
44 Mr. Buenaventura was elected as a member of the Nomination Committee on April 16, 2021. 45 Mr. Almeda was elected as a member of the Nomination Committee on June 3, 2021.
The Committee of Inspectors of Ballots and Proxies
Membership consists of the Chief Audit Executive as Chairman, and the Head of the Legal and Corporate Governance Department and a representative of the external auditor of the Company as members. This committee is mandated to validate proxies issued by the stockholders and to determine if the same are in accordance with existing laws, rules, and regulations prior to the annual stockholders' meeting.
This committee also serves as the default inspector of ballots and tabulator of votes during the annual stockholders' meeting, and as such, is required to coordinate closely with the Office of the Corporate Secretary and the independent validator of votes appointed for the purpose.
The Committee met twice in 2021.
|Committee of Inspectors of Ballots and Proxies||Meetings Attended/Held|
|Rolando V. Caraig||2/2|
|Romelyn A. Obligacion (representing Gerardo M. Lobo II)||2/2|
|Representative from the External Auditor||2/2|
Corporate Orientation and Corporate Governance Trainings for Directors
The members of the Board are required to regularly attend seminars and conferences to continuously update themselves on the developments in policy, regulations, and standards on good corporate governance. Under the Company's Manual, the members of the Board are also provided with such resources, trainings, and continuing education to enable each member to actively, independently, and judiciously participate in Board and Committee meetings.
Newly elected members of the Board undergo orientation programs for them to have a working knowledge of the statutory and regulatory requirements affecting the Company. They are also required to keep abreast with industry developments and business trends in order that they may promote the Company's competitiveness and sustainability. Attendance in a corporate governance seminar conducted by a duly recognized private or governmental institution is also a mandatory requirement prior to their assumption of office and during their term of office.
The Company also provides general access to training courses to its directors as a matter of continuous professional education as well as to enhance their skills as directors and keep them updated in their knowledge and understanding of the Company's business. The Board and Board Committees are also allowed to hire independent legal counsel, accountants, or other consultants to advise them when necessary.
At every board meeting, directors are provided with a management update on the operational and financial status of, and other relevant matters, about the Company to ensure that the directors are continuously informed of new developments and the performance of the Company.
Upon assumption of office, a director appointed for the first time undergoes a corporate orientation program conducted by the Office of the Corporate Secretary. The corporate orientation program includes modules on the operations of the Company, as well as relevant contracts of the Company. The orientation also covers existing policies, rules and regulations of the Company. The curriculum of the orientation program may be revised as often as necessary to include other relevant subjects and matters relating to the Company. In addition to the corporate orientation program for new directors, the Office of the Corporate Secretary informs the Board of any updates on the matters covered by the orientation program. The corporate orientation program and updates are usually given during the regular meetings of the Board.
These programs notwithstanding, Manila Water encourages its directors to attend external trainings, courses or continuing professional education programs on corporate governance. The Directors are required to inform the Office of the Corporate Secretary of the trainings or courses attended for record and disclosure purposes.
Corporate Governance Programs Attended by the Board of Directors in 2021
|Name of Director||Date of Training||Title of Training|
|Enrique K. Razon Jr.||December 14, 2021||2021 Corporate Governance Training: Reframe the Future|
|Fernando Zobel de Ayala||October 21, 2021||The Board's Agenda 2021: The Pathway to Recovery Through ESG|
|Jose Victor Emmanuel A. de Dios||December 14, 2021||2021 Corporate Governance Training: Reframe the Future|
|Jose Rene Gregory D. Almendras||October 21, 2021||The Board's Agenda 2021: The Pathway to Recovery Through ESG|
|Antonino T. Aquino||October 21, 2021||The Board's Agenda 2021: The Pathway to Recovery Through ESG|
|Rafael D. Consing, Jr.||December 14, 2021||2021 Corporate Governance Training: Reframe the Future|
|Donato C. Almeda||December 14, 2021||2021 Corporate Governance Training: Reframe the Future|
|Sherisa P. Nuesa||March 18, 2021
March 25, 2021
|Distinguished Corporate Governance Speaker Series|
|October 21, 2021||The Board's Agenda 2021: The Pathway to Recovery Through ESG|
|Cesar A. Buenaventura||November 24-25, 2021||Pilipinas Shell Petroleum Corporation 2021 In-house Corporate Governance Training|
|Octavio Victor R. Espiritu||November 9-10, 2021||Corporate Governance Orientation Program|
|Eric Ramon O. Recto||September 8, 2021||Aboitiz Group of Companies 2021 In-house Corporate Governance Training|
Under the Charter of the Board, the Board institutionalized a policy of holding at least six (6) meetings in a year. These include the organizational meeting of the Board which is held immediately after the annual stockholders' meeting. Under the By-laws, special meetings may be called by the Chairman, Vice Chairman, President or at the instance of a majority of the members of the Board.
To promote transparency, the Board has a policy of requiring the presence of at least one independent director in all its meetings. In the past years, the Board has not conducted a meeting without the presence of at least one independent director.
Under the Manual, a director's absence, or non-participation, for whatever reason in more than fifty percent (50%) of all Board meetings, both regular and special, in a year is a ground for temporary disqualification in the succeeding election.
Attendance of Directors in Board Meetings
In 2021, a total of fifteen (15) meetings were held by the Board (exclusive of the Annual Stockholders' Meeting), as follows:
Mr. Jose Victor Emmanuel A. de Dios, the Company's President and Chief Executive Director, and Mr. Donato C. Almeda, the Company's Chief Regulatory Officer, are Executive Directors and were not a party to the meeting of the Non-Executive Directors held on November 26, 2021.
During the 2021 Annual Stockholders' Meeting held on April 16, 2021, and conducted virtually via http://www.ayalagroupshareholders.com, the Chairman of the Board of Directors, President and CEO of the Company, and the Chairman of the Audit Committee along with the other directors and executive officers of the Company, were in attendance. Their attendance was duly recorded in the minutes of the said meeting.
|ATTENDANCE IN 2021 BOARD MEETINGS|
|Name||Board Meetings Attended||Percentage Present|
|Enrique K. Razon, Jr. 46||10/10||100%|
|Fernando Zobel de Ayala||13/14||93.33%|
|Jaime Augusto Zobel de Ayala 47||3/5||60.00%|
|Jose Rene Gregory D. Almendras||14/14||100.00%|
|Antonino T. Aquino||14/14||100.00%|
|Gerardo C. Ablaza, Jr. 48||5/5||100.00%|
|Delfin L. Lazaro 49||5/5||100.00%|
|John Eric T. Francia 50||5/5||100.00%|
|Oscar S. Reyes 51||1/1||100.00%|
|Sherisa P. Nuesa||14/14||100.00%|
|Jaime C. Laya 52||1/1||100.00%|
|Jose L. Cuisia, Jr. 53||1/1||100.00%|
|Cesar A. Buenaventura 54||13/13||100.00%|
|Octavio Victor R. Espiritu 55||13/13||100.00%|
|Eric Ramon O. Recto 56||13/13||100.00%|
|Rafael D. Consing, Jr. 57||10/10||100.00%|
|Donato C. Almeda 58||9/10||90.91%|
|Christian Martin R. Gonzalez 59||6/6||100.00%|
|Jose Victor Emmanuel A. de Dios 60||4/4||100.00%|
39 Amb. Cuisia served as the Chairman of the Nomination Committee from January 1, 2021 until April 16, 2021.
40 Mr. Reyes served as a member of the Nomination Committee from January 1, 2021 until April 16, 2021.
41 Dr. Laya served as a member of the Nomination Committee from January 1, 2021 until April 16, 2021.
42 Mr. Espiritu was elected as the Chairman of the Nomination Committee on April 16, 2021.
43 Ms. Nuesa was elected as a member of the Nomination Committee on April 16, 2021.
44 Mr. Buenaventura was elected as a member of the Nomination Committee on April 16, 2021.
45 Mr. Almeda was elected as a member of the Nomination Committee on June 3, 2021.
46 Mr. Razon was elected as a Director on June 3, 2021 and serves the unexpired term of Mr. Jaime Augusto Zobel de Ayala.
47 Mr. Zobel de Ayala served as a Director from January 1, 2021 until June 3, 2021.
48 Mr. Ablaza served as a Director from January 1, 2021 until June 3, 2021.
49 Mr. Lazaro served as a Director from January 1, 2021 until June 3, 2021.
50 Mr. Francia served as a Director from January 1, 2021 until June 3, 2021.
51 The term of Mr. Reyes ended on April 16, 2021.
52 The term of Dr. Laya ended on April 16, 2021.
53 The term of Amb. Cuisia ended on April 16, 2021.
54 Mr. Buenaventura was elected as a Director during the Annual Stockholders' Meeting on April 16, 2021.
55 Mr. Espiritu was elected as a Director during the Annual Stockholders' Meeting on April 16, 2021.
56 Mr. Recto was elected as a Director during the Annual Stockholders' Meeting on April 16, 2021.
57 Mr. Consing was elected as a Director on June 3, 2021 and serves the unexpired term of Mr. Ablaza.
58 Mr. Almeda was elected as a Director and June 3, 2021 and serves the unexpired term of Mr. Lazaro. As the Company's Chief Regulatory Officer, he was not a party to the meeting of the Non-Executive Directors held on November 26, 2021.
59 Mr. Gonzalez was elected as a Director on June 3, 2021 and served the unexpired term of Mr. Francia. He resigned on August 31, 2021.
60 Mr. de Dios was elected as a Director effective September 1, 2021 and serves the unexpired term of Mr. Gonzalez. As President and Chief Executive Officer, he was not a party to the meeting of the Non-Executive Directors held on November 26, 2021
Quorum in Board Meetings
Under the By-Laws of the Company, at least two-thirds (2/3) of the members of Board (as fixed in the Articles of Incorporation) shall constitute a quorum for the transaction of corporate business, and every decision of at least a majority of the directors present at a meeting at which there is a quorum shall be valid as a corporate act, except when a higher quorum is required in contracts binding on the Company.
In the absence of a quorum, a majority of the directors present may adjourn any meeting from time to time until a quorum is obtained.
The Board determines a level of remuneration for directors that shall be sufficient to attract and retain directors and compensate them for attendance at meetings of the Board and Board Committees and their performance of numerous responsibilities of a Board member. The Talent and Remuneration Committee is responsible for recommending to the Board the fees and other compensation for directors. In fulfilling this duty, the Talent and Remuneration Committee is guided by the objective of ensuring that the proposed fees should fairly compensate the directors for the work required consistent with the Company's size and industry.
In a special meeting held on April 11, 2011, the Board approved an increase in the Board remuneration. The approved remuneration for each member of the Board consists of ₱500,000.00 as a fixed annual retainer fee, ₱200,000.00 for each meeting of the Board actually attended, and ₱50,000.00 for each Committee meeting actually attended. This Board remuneration structure was approved by the stockholders in its annual stockholders' meeting held on April 11, 2011. In the same annual meeting, the stockholders approved the amendment of the By- laws, giving the Board of Directors the authority to determine the amount, form, and structure of the fees and other compensation of the directors.
On November 18, 2021, the Board resolved that Executive Directors shall not receive per diem remuneration for his participation and attendance in the meetings of the Board and Board Committees.
On February 24, 2022, the Board approved to discontinue the payment of per diems of directors for their attendance and participation in asynchronous meetings of the Board and Board Committees.
The directors of the Board received the following gross per diem remuneration for attending eleven (11) Board meetings, the meeting of the Non-Executive Directors, the annual stockholders' meeting, and their respective Committee Meetings in 2021:
|Name||2021 Retainer Fee||Attendance in the Meetings of the Board and Stockholders||Attendance in the Meetings of Board Committees||Total|
|Enrique K. Razon, Jr.||₱375,000||₱1,800,000||₱150,000||₱2,325,000|
|Fernando Zobel de Ayala||₱500,000||₱3,000,000||₱150,000||₱3,650,000|
|Jaime Augusto Zobel de Ayala||₱125,000||₱800,000||-||₱925,000|
|Jose Rene Gregory D. Almendras||₱500,000||₱3,200,000||₱250,000||₱3,950,000|
|Antonino T. Aquino||₱500,000||₱3,200,000||₱150,000||₱3,850,000|
|Gerardo C. Ablaza, Jr.||₱250,000||₱1,200,000||₱300,000||₱1,750,000|
|Delfin L. Lazaro||₱250,000||₱1,200,000||-||₱1,450,000|
|John Eric T. Francia||₱250,000||₱1,200,000||₱50,000||₱1,500,000|
|Oscar S. Reyes||-||₱400,000||₱350,000||₱750,000|
|Sherisa P. Nuesa||₱500,000||₱3,200,000||₱1,000,000||₱4,700,000|
|Jaime C. Laya||-||₱400,000||₱350,000||₱750,000|
|Jose L. Cuisia, Jr.||-||₱400,000||₱450,000||₱850,000|
|Cesar A. Buenaventura||₱500,000||₱2,800,000||₱800,000||₱4,100,000|
|Octavio Victor R. Espiritu||₱500,000||₱2,800,000||₱700,000||₱4,000,000|
|Eric Ramon O. Recto||₱500,000||₱2,800,000||₱400,000||₱3,700,000|
|Rafael D. Consing||₱375,000||₱2,000,000||₱400,000||₱2,775,000|
|Donato C. Almeda||₱250,000||₱1,600,000||₱400,000||₱2,250,000|
|Christian Martin R. Gonzalez||₱125,000||₱1,200,000||₱50,000||₱1,375,000|
|Jose Victor Emmanuel A. de Dios||₱125,000||₱600,000||₱100,000||₱825,000|
Purpose, Vision, Mission and Core Values
To ensure good governance of the Company, the Board is mandated under the Manual to formulate strategic objectives, key policies, and procedures for the management of the Company. Furthermore, the Board has established the mechanism for monitoring and evaluating the performance of the Management, especially that of the President and CEO. Under its Charter, the Board is enjoined to periodically review the vision, mission, corporate strategic objectives, and key policies of the Company to sustain the Company's market competitiveness and enhance shareholder value. During a special meeting held on August 25, 2021, the Board approved the new mission and vision statements of the Company. In addition, the Board approved the Company's purposes statement and core values, as representative of its strategic and corporate objectives:
|Purpose:||Better lives and resilient economies throughout critical infrastructure.|
|Vision:||A global leader in providing quality water & environmental services supportive of sustainable development.|
|Mission:||Deliver world-class services tailored to the needs of the communities we serve, through sustainable solutions and purpose-driven, empowered, innovative teams.|
We demonstrate our innate Filipino value of genuine compassion and ownership to fulfill our mission to our employees, customers, environment, and our nation.
We create meaningful value and deliver high returns for all our stakeholders by delivering the highest quality products and services, investing in projects that improve quality of life while upholding the welfare of our employees.
We bravely face challenges head-on with a 'can do, must do' attitude and we follow through on our promises with maximum effort and persistence. We quickly embrace change and ensure competent completion of every job we commit to.
We live and breathe the work that we do, and we seek out colleagues and partners that share the same commitment to utilize our diverse strengths and work together in synergy towards our purpose.
We are ethical, fair, and transparent in our business practices at every level of our organization. We always choose to do what's right and take accountability for our actions.
We apply new approaches, explore new methods and ideas, in order to create innovative solutions and deliver lasting impact for the communities in which we operate.
Annual Board Evaluation
The Board has an annual evaluation process that is required to be accomplished by the directors, which enables an informed and objective assessment of the following:
This evaluation enables the Board and the Management to determine areas that need improvement on the very scope and criteria of the evaluation process. It also allows the Board to explain their respective ratings and to provide their own comments on the matters discussed in the evaluation. The scope and criteria for the Board Evaluation Process is contained in the Charter of the Board of Directors. The Charter of the Board is available for download at the Company's website.
In addition to the annual Board evaluation process, the Audit Committee adopted SEC Memorandum Circular No. 4 Series of 2012 on the Guidelines for the Assessment of the Performance of Audit Committees of Companies Listed on the Philippine Stock Exchange which took effect on June 30, 2012. Pursuant to this, an annual evaluation is also being conducted to assess the performance of the Audit Committee.
These annual evaluation processes are facilitated by the Office of the Corporate Secretary in coordination with the Corporate Governance Committee.
Office of the Corporate Secretary
The Corporate Secretary ensures that the Board and the Management follow internal and external rules and regulations and facilitates clear communications between the Board and Management. More importantly, the Company recognizes the mandate of the Office in championing the compliance of the Board and the Company with good corporate governance practices and policies. For this purpose, the Office of the Corporate Secretary, under its Charter, is mandated to coordinate with the Office of the Compliance Officer with regard to the formulation and implementation of the corporate governance practices of the Company, especially those relevant to and affecting the Board. This is to ensure that sound corporate governance practices are embedded across the entire organization.
The Management is primarily responsible for the operations of the Company. As part of its accountability, the Management is required to provide the Board with adequate, regular, and timely information on the operations and affairs of the Company.
The roles of the Chairman, and the President and CEO were made separate to ensure an appropriate balance of authority, increased accountability, and greater capacity of the Board for independent decision-making.
The Manual requires the Company to disclose the relationship between the Chairman, and the President and CEO, if any, in its annual report to the SEC. The Chairman of the Board, Mr. Enrique K. Razon, Jr., and the President and CEO of the Company, Mr. Jose Victor Emmanuel A. de Dios, are not related to each other.
The Board, with the assistance of the Remuneration Committee, the Nomination Committee, and the Company's Corporate Human Resources Group, has adopted a professional development program for employees, officers, and senior management. Through its robust succession management, the Company has put in place a process to determine the competencies, potential for growth, knowledge and experience necessary for particular roles and positions. This enables the company to identify key talents for purposes of succession in both leadership and technical roles.
The development of a leadership and technical talent pool is crucial to the success of Manila Water in the future. Hence, it is one of the top strategic priorities of the Company. For the succession of the top key management and technical positions, the Company has formed an Acceleration Pool composed of selected high potential key talents within the organization. Given the highly technical nature of the business, the succession of technical talent pool is given equal emphasis as the leadership roles to ensure that we build the right talents to sustain our operations and support our growth.
Talents identified to be part of the Acceleration Pool undergo the following:
The Company's Corporate Human Resources Group, with strong sponsorship from our CEO and our senior leaders in the company, manages the succession process but it is ultimately driven by the CEO and business leaders who work with HR and devote their time and energy to spot, develop and retain high performing and high potential talents who eventually become part of the leadership team of the organization.
The Compliance Officer
In accordance with the Manual, and in order to ensure adherence to the principles and best practices in corporate governance, the Board appoints a Compliance Officer whose primary role is to operationalize the Manual and monitor overall compliance with its provisions and requirements.
Moreover, the Compliance Officer is tasked with the duty to communicate with the SEC on matters relating to the Company's compliance with the Manual and the clarification of matters required by the said Commission. Together with his primary function, the Compliance Officer is also tasked to oversee the implementation of the Company's Code of Business Conduct and Ethics and the Related Party Transactions Policy.
The Corporate Governance Office
The Enterprise Corporate and Contract Advisory Services Department, (the “Department”) which is under the Legal and Corporate Governance Group is the unit tasked to formulate and implement the initiatives and policies on good corporate governance. The Department, on matters of corporate governance, reports directly to the Compliance Officer under the supervision of the Corporate Governance Committee. The Department has been active in the continuous conduct of orientation to all Manila Water employees and business partners on the Company's governance policies, particularly on matters contained in the Manual and the Code of Business Conduct and Ethics, such as transparency, whistle blower policy, honesty and fair dealing, and prompt and adequate disclosure of material information, among other policies.
Among the mandates of the Department is the continuous identification of gaps and challenges on corporate governance practices across the organization. This allows the Department to propose improvements on the Company's policies based on international corporate governance standards.
Finally, the Department, in coordination with the Office of the Corporate Secretary, also provides timely updates to the Board and the Management on the current and best practices on corporate governance in the industry and globally.
The Internal Audit
The Internal Audit (IA) Department conducts an independent, objective assurance and consulting activity designed to add value and improve the organization's operations. It helps the organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes. The activities of IA are governed by a separate Internal Audit Charter approved by the Audit Committee and the Board.
The IA reports to and supports the Audit Committee in the effective discharge of the Committee's oversight roles and responsibilities. The IA consists of talents and professionals who are either a Certified Public Accountant, Certified Internal Auditor, Certified Information Systems Auditor, Certified Internal Control Auditor, Certified Forensic Accountant, Electronics and Communication Engineer, Electrical Engineer, or a mix thereof.
A risk-based internal audit plan is prepared and approved by the Audit Committee annually, which is reassessed quarterly to consider emerging risks. The Audit Committee reviews and approves the annual work plan and all deviations therefrom and ensures that internal audit examinations cover the evaluation of adequacy and effectiveness of controls encompassing the company's governance, operations, and information systems; reliability and integrity of financial and operational information; safeguarding of assets; and compliance with laws, rules, and regulations.
The IA conducts its activities guided by the Institute of Internal Auditors' (IIA) Professional Practices Framework (IPPF) and its mandatory elements namely: (1) Core Principles for the Professional Practice of Internal Auditing; (2) Definition of Internal Auditing; (3) Code of Ethics; and (4) International Standards for the Professional Practice of Internal Auditing. In December 2017, the external auditing firm Punongbayan & Araullo conducted an independent validation of the internal audit function's Quality Assessment Review and concurred that the internal audit activity "Generally Conforms" to IPPF. The Standards require that the external assessment be conducted at least once every five (5) years, thus the next one will be performed in 2022.
On November 9, 2021, the Audit Committee approved the amendments to the Charter of the Internal Audit to include the mission and vision statement and the revision of the reporting and working relationships, and reporting lines of the Internal Audit. The changes were ratified by the Board of Directors during their regular meeting on November 18, 2021.
The Chief Risk Officer
The Chief Risk Officer (CRO) oversees the entire risk management function and leads the development, implementation, maintenance, and continuous improvement of Enterprise Risk Management (ERM) program, processes, and tools. The CRO is the Vice Chairman of the Enterprise Risk Management Executive Committee (ERMEC). He also leads the Enterprise Risk Management (ERM) Department in facilitating the ERM process and in collecting and analyzing key business risk information for reporting to the risk management committees (ERMEC and RMEC) and to the Board Risk Oversight Committee (BROC).
Enterprise Risk Management Department
The Enterprise Risk Management (ERM) Department is responsible for the sustained implementation of the Enterprise Risk Management Program across the Manila Water Enterprise, acts as the primary driver of developing a risk-aware culture, and ensures that key risks are identified and managed by the respective risk owners.
Investor Relations Team
The Investor Relations Team (IR) keeps the Company's investors and other relevant stakeholders regularly informed of developments in the Company's business. For this purpose, IR conducts briefings on quarterly business results, supported as necessary by meetings/calls with shareholders, fund managers, and analysts. These activities are aimed to keep investors updated on the financial and operating performance of the Company, along with other material information and developments. Furthermore, in collaboration with the Company's Corporate Communications team, a press briefing is held each year immediately following the annual stockholders' meeting to engage other stakeholders, specifically the media.
The IR Team may be reached through:
Manila Water Company, Inc.
2F MWSS Administration Building
489 Katipunan Road, 1105 Balara
Quezon City, Philippines
Mark S. Orbos
Head of Investor Relations
The Sustainability Officer
The Sustainability Officer monitors and reports on the environmental, sustainability and social impacts of the Company's business operations and communicates sustainability concerns, risks, and initiatives from the management to the Board of Directors through the Committee. The Sustainability Officer has, among others, the following duties and responsibilities:
Take the lead in developing and nurturing an environmental and sustainability ethic and competencies of all employees through sharing of leading-edge sustainability knowledge and providing training.
As of January 1, 2022, Ms. Sarah Bergado, was appointed as the Company's Sustainability Head.
The Corporate Governance Manual
Manila Water is dedicated to observing the highest standards of corporate governance in order to serve the best interests of it is stakeholders, including the investing public. The Board, the Management, the employees, and shareholders of the Company believe that sound and effective leadership is fundamental to its continued success and stability. These principles and practices enable the company to create and sustain increased value for all the shareholders.
The corporate governance policy of Manila Water is primarily contained in its Manual of Corporate Governance (the "Manual"). The Company's corporate governance framework is based on the principles of accountability, fairness and transparency, and sustainability. The Manual is available for download at the Company's website.
The Manual contains the governance principles that the Company applies in all its undertakings and supplements Manila Water's Articles of Incorporation and By-laws, Code of Business Conduct and Ethics and other related Company policies. The Manual instituted the policies on:
Manila Water is in full compliance with the code of corporate governance and all disclosure rules of the Philippines Stock Exchange and the Securities and Exchange Commission.
As a key policy, the members of the Board and key executives of the Company are required to disclose to the Board any material interest, whether direct or indirect, that they may have in any transaction or matter that directly affects the Company. The Company commits, at all times, to adequately and timely disclose all material information that could potentially affect Manila Water's share price and such other information that are required to be disclosed pursuant to the Securities Regulations Code (SRC) and its and its Implementing Rules and Regulations (IRR) and other relevant laws. This information includes, but is not limited to, results of earnings, acquisition or disposal of significant assets, off-balance sheet transactions, changes in Board membership, as well as changes in shareholdings of majority shareholders, directors and officers, and related party transactions. The Company also discloses its corporate governance practices, corporate events calendar, and other material information on its website in a timely manner.
The directors are required to comply with all disclosure requirements of the Manual and the SRC and its IRR, and to voluntarily disclose any conflict of interest, whether actual or potential, upon its occurrence. The disclosure of any conflict of interest, including related party transactions, is required to be made fully and immediately. In cases where related party transactions exist, it is the Company's policy that complete information on such transaction be immediately disclosed, and, if a director or officer is involved, the director or officer concerned shall not be allowed to participate in the decision-making process. The policy also mandates that a director who has a continuing conflict of interest of a material nature shall be required to resign, or if the Board deems appropriate, be removed as a member of the Board.
The Company's Manual is continuously being revised in accordance with the directives and issuances of the SEC and to comply with the highest standards of corporate governance. For the year 2021, the Manual was amended on June 3, 2021, August 11, 2021, and November 18. 2021. 61
Related Party Transactions
To further instill the Company's policies on related party transactions, the Board adopted the Policy on Related Party Transactions (the "RPT Policy"). The RPT Policy confirms that the Company and its subsidiaries shall enter into any related party transactions solely in the ordinary course of business, on ordinary commercial terms, and on the basis of arm's length arrangements, which shall be subject to appropriate corporate approvals and actions of the Company or the related parties, as the case may be.
Any related party transactions entered into by the Company or its affiliates shall be in accordance with applicable law, rules and regulations, and the RPT Policy. Related party transactions entered into by the Company with one or more of its directors or officers are voidable at the option of the Company, unless the transaction is deemed fair and reasonable under the circumstances and at arm's length, and the procedure for the procurement and approval for similar transactions was strictly complied with.
The RPT Policy provides for the process of approving related party transactions, as well as the implications for violations. In addition, the RPT Policy prohibits related party transactions involving loans and/ or financial assistance to a director and loans and or financial assistance to members of the Management, except when allowed pursuant to an established Company benefit or plan.
Under the RPT Policy, the approval of the Related Party Transactions Committee is required for material related party transactions.
On November 26, 2019, the Board approved the amendments Company's Policy on Related Party Transactions in order to comply with the provisions of the Rules on Material Related Party Transactions for Publicly Listed Companies of the SEC. The amendments updated the definition of Company-Recognized Material Related Party Transactions, SEC-Defined Materiality Threshold, Related Party Registry, Related Party Transactions, Related Parties, Affiliate, Associate, Substantial Shareholder, and Significant Influence.
The Code of Business Conduct and Ethics
The Company's commitment to the highest standards of ethics, good governance, competence and integrity was institutionalized through the Code of Business Conduct and Ethics (the "Code"). The Code sets forth the standards for professional and ethical behavior, as well as articulate acceptable and unacceptable conduct and practices in internal and external dealings of the Company. The Code should be properly disseminated to the Board, senior management and employees, and should also be disclosed and made available to the public through the company website.
The Code addresses the issues and relationships between and among the Company's directors, officers and employees, and its customers, suppliers, business partners, government offices and other stakeholders. The Code includes policies on: Honesty and Fair Dealing; Conflict of Interest; Corporate Entertainment and Gifts; Insider Trading; Disclosure; Creditor Rights; Anti-Corruption; and Anti-Sexual Harassment.
Honesty and Fair Dealing
The core principle of the Company is to conduct business honestly and fairly with its investors, suppliers, contractors, service providers, customers and employees and other third parties. Directors, Officers and employees shall act honestly, ethically and in comply with all applicable laws, rules and regulations and protect the name and reputation of the Company. Directors, Officers and employees shall not engage in any unfair dealing practices, such as taking advantage of anyone through abuse of confidential information, manipulation, concealment, or misrepresentation or other similar acts. Officers and employees involved in the procurement process for services, materials, supplies, and equipment shall strictly comply with the Company's Procurement Policy. The Procurement Policy is an integral part of this Code.
Directors, Officers and employees are required to immediately report all suspected or actual fraudulent or dishonest acts to the Board, in case of directors, and to the immediate supervisor or to the Office of the Compliance Officer in case of officers and employees. The Company shall promptly identify and investigate any suspected fraudulent or dishonest acts. Without prejudice to applicable administrative sanctions, the Company may pursue civil and/or criminal actions against directors, officers and employees as may be warranted.
61 The amendments on June 3, 2021 included the amendment of the Charter of the Audit Committee, the Charter of the Board Risk Oversight Committee, the Charter of the Corporate Governance Committee, the Charter of the Related Party Transactions Committee, and the Charter of the Talent and Remuneration Committee. The amendment on August 11, 2021 was the removal of the Charter of the Operations Committee after its dissolution. The amendments on November 18, 2021 included the amendment of the Audit Committee and the amendment of the Charter of the Internal Audit.
The Implementing Guidelines on the Reporting of Fraudulent or Dishonest Acts are contained in the Whistle Blower Policy of the Company.
Reporting of Fraudulent or Dishonest Acts (Whistle Blower Policy)
The Whistle Blower Policy provides for procedures to be followed to encourage all covered persons to report fraudulent or dishonest acts in order to protect the good name and reputation of the Company, and in the process, discourage the commitment of such acts.
Directors, officers, employees and third parties are required to immediately report all suspected or actual fraudulent or dishonest acts to the Board in case of directors, and to the immediate supervisor or to the Office of the Compliance Officer in case of officers, employees and third parties. The Company shall promptly identify and investigate any suspected fraudulent or dishonest acts.
Without prejudice to applicable administrative sanctions, the Company may pursue civil and/or criminal actions against directors, officers, employees and third parties as may be warranted.
To ensure protection of the reporter from any form of retaliation or discrimination, the identity of the person making the report and the contents of the report shall be kept confidential to the extent legally permissible.
Conflict of Interest
The policy prohibits conflict of interest situations involving all directors, officers, employees and their relatives up to the fourth degree of consanguinity and/or affinity, including common law relationships.
Under the policy, a conflict of interest arises when a director, an officer or employee appears to have a direct or indirect personal or financial interest in any transaction, which may deter or influence him from acting in the best interest of the Company. It is not required that there be an actual conflict; it is only required that there could be perceived conflict by an impartial observer.
All contracts/arrangements by directors, officers and employees, and their relatives that violates this policy on conflict of interest shall be terminated immediately and correspondingly reported to the Office of the Compliance Officer, for appropriate action under the Code.
Corporate Entertainment and/or Gifts
The Company's policy on regarding Corporate Entertainment and/or Gifts Prohibits all officers and employees from accepting corporate entertainment/gifts from suppliers, contractors and other business partners, which can be viewed as influencing the manner by which an officer or employee may discharge his duties.
The Company's Insider Trading Policy prohibits directors, officers and confidential employees from trading in Manila Water shares five (5) days before and two (2) days after the release of quarterly and annual financial statements; and two (2) days after the disclosure of any material information other than those disclosed through quarterly and annual financial results.
All Directors, Key Officers, employees, consultants, advisers of the Company, and members of the immediate families of directors and key officers (the “Covered Persons”) who are living in the same household as the directors and key officers who have direct or indirect knowledge, from time to time, of material facts or changes in the affairs of the Company, which have not been disclosed to the public, including any information likely to affect the market price of the Company's shares, shall:
Directors and officers who may be covered by the reporting requirements of the SEC and the Philippine Stock Exchange (PSE) in respect of their shareholding in the Company or any changes thereof, are required to report their dealings in Company shares within three (3) business days after the transaction. Likewise, all other Covered Persons shall likewise report to the Office of the Compliance Officer within ten (10) calendar days from the end of each quarter their trades with Company's securities during such quarter. All Directors, Officers, and employees are required to report their trades on a quarterly basis to the Office of the Compliance Officer within fifteen (15) days from the end of the quarter.
In alignment with the law, the definition of material non-public information has been amended.
The disclosure policy encourages prompt and adequate disclosure of all material facts or changes in the affairs of the Company, including any information likely to affect the market price of the Company's shares.
The policy regarding Creditor Rights institutionalizes the Company's adherence to its loan covenants and agreements for the protection of the rights of the creditors of the Company. No distribution or disposal of assets of the Company shall be made except: when allowed by the law; or by decrease of capital stock; or upon lawful dissolution and after payment of all its debts and liabilities; when allowed by the material agreements of the Company, but without prejudice to vested rights.
The Anti-Corruption Policy strictly prohibits giving and facilitating of payments to any private or government officials or employees, their agents or intermediaries, in order to expedite or secure performance of any governmental action, or to gain any perceived or actual favor or advantage from any private or government entities. The Company must ensure that it and its directors, officers and employees fully comply with the laws governing bribes, unlawful payments and other corrupt practices.
This policy is included in the Code of Conduct and Discipline. Said policy recognizes the Company's protection of the dignity of its human resources, stakeholders, and customers. All forms of sexual harassment shall be dealt with appropriately and in accordance with the applicable and all relevant laws, rules and regulations.
Diversity in Board Membership
Promotes equality among the members of the Board regardless of gender, age, ethnicity, or political, religious or cultural beliefs.
The objectives of the Procurement Policies are to promote transparency in the procurement process, and to afford vendors equal access to business opportunity with Manila Water, with the end view of enhancing vendor participation and protecting the interest of Manila Water. Officers and employees of the Company involved in the procurement process for services, materials, supplies and equipment for Manila Water are required to strictly comply with its Procurement Policies.
The Vendors' Code of Conduct
The Vendors' Code of Conduct sets out the rules that will guide Manila Water's vendors in the performance of their obligations and/ or transacting business with Manila Water, thus avoiding acts contrary to standards, policies, laws and morals. As business partners of Manila Water, its vendors are expected to act with utmost integrity, efficiency, and competence in performing awarded contracts and/or delivering ordered products. Moreover, they should demonstrate a strong sense of responsibility for public safety and interest that will ultimately promote and protect the good name of Manila Water. The Vendors' Code of Conduct is deemed incorporated in the contracts of Manila Water with its suppliers, vendors and contractors.
A copy of the Vendor's Code of Conduct is downloadable at the Company website.
The Enterprise Risk Management Policy
Manila Water has established an Enterprise Risk Management (ERM) Program which aims to use a globally accepted approach in managing imminent and emerging risks in its internal and external operating environments. Under the ERM Program, Manila Water shall appropriately respond to risks and manage them in order to increase shareholder value and enhance its competitive advantage.
In order to bolster the risk oversight and management functions relating to strategic, financial, operational, compliance, legal and other risks of the Company, the Board, on August 11, 2015, approved the establishment of a separate Board Risk Oversight Committee (BROC). Subsequently, on November 26, 2015, the Board approved the Charter of the BROC, which transferred the risk oversight and management functions to the BROC from the Audit Committee.
Safety, Health and Welfare Policy
Manila Water is committed to achieving customer satisfaction, upholding environmental sustainability, and ensuring safety, preservation of life and health of its employees and all stakeholders. To achieve these objectives, it is the policy of Manila Water to:
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 their rights.
Right to Notice of Meetings and Right to Attend Meetings
To promote transparency and goodwill, it is a Company policy to encourage the attendance of all its stockholders, including minority and non-controlling, and institutional investors, at the stockholders' meeting of the Company. The Board should encourage active shareholder participation by sending the Notice of Annual and Special Shareholders' Meeting with sufficient and relevant information at least twenty-eight (28) days before the scheduled meeting.
Unless otherwise provided by law or the By-laws, stockholders as of Record Date constituting at least a majority of the outstanding voting capital stock of the Company is necessary to constitute a quorum. The stockholders may be present in person or represented by proxy.
Right to Appoint a Proxy
The stockholders shall be apprised ahead of time of their right to appoint a proxy if they cannot attend their meetings in person. Subject to the requirements of the By-laws, the exercise of that right shall not be unduly restricted and any reasonable doubt about the validity of a proxy should be resolved in the stockholders' favor.
Right to Propose the Holding of and to Attend Meetings
The Manual provides that the minority shareholders shall have the right to propose the holding of a meeting as well as the right to propose items in the agenda of the meeting, provided that the items proposed are for legitimate business purposes.
Furthermore, the Company adheres to Memorandum Circular No. 7-2021 of the Securities and Exchange Commission which allows stockholders holding at least 10% of the outstanding capital stock to request to hold a physical meeting.
Right to Make Nominations to the Board of Directors
Every stockholder, including noncontrolling, has a right to submit a nomination for election to the Board. The stockholders, in making their nominations, or the Company, are encouraged to make use of professional search firms or external sources of candidates when searching for candidates to the Board.
Voting Right and Right to Participate at Stockholders Meetings
In addition, the Company is compliant with Memorandum Circular No. 14-2020 of the Securities and Exchange Commission which allows stockholders holding at least 5% of the outstanding capital stock to request to submit proposals on items for inclusion in the agenda of the meetings of stockholders.
The Company continues its practice of offering its shareholders an equitable share of the Company's profits. In 2013, the Board of Directors confirmed its dividend payout policy which entitles holders of common shares and participating preferred shares to annual cash dividends equivalent to 35 percent of the prior year's net income payable at least semiannually, on such dates as may be determined by the Board of Directors, subject to applicable rules and regulations on record dates and payment dates. The participating preferred shares participate in the earnings at a rate of 1/10 of the dividends paid to a common share. As a matter of policy, payment dates of dividends declared are fixed within thirty (30) days from date of declaration.
All stockholders have pre-emptive rights or the right to subscribe to new shares of the Company, unless there is a specific denial of this right in the Articles of Incorporation or an amendment thereto. They shall have the right to subscribe to the capital stock of the Company. The Articles of Incorporation may provide the specific rights and powers of shareholders with respect to the particular shares they hold, all of which are protected by law so long as they are not in conflict with the Revised Corporation Code.
Right to Information and Inspection
In addition to regular posting and disclosure of material information at the Company website, a shareholder shall be provided with periodic reports regarding the performance of the Company upon written request for a legitimate purpose. Shareholders shall be allowed to inspect corporate books and records including minutes of Board meetings and stock registries in accordance with the Revised Corporation Code and shall be provided an annual report, including financial statements, without cost or restrictions.
In accordance with the Corporation Code, shareholders may exercise appraisal right under the following circumstances:
Quorum and Voting Procedures at the Stockholders Meetings
Unless otherwise provided by law or the By-laws, stockholders as of Record Date constituting over one-half of the stock present or represented is necessary to constitute a quorum. The stockholders participating in person, by proxy, through remote communication, or in absentia electronically or otherwise shall be counted in determining the existence of a quorum. The affirmative vote of stockholders constituting over one-half of the stock present or represented is required to approve matters requiring stockholders' action, except in cases where the applicable law requires a greater number.
In all items for approval, each share of stock entitles its registered owner as of the record date to one vote.
For the election for directors, every stockholder shall have the right to vote the number of shares owned by him for as many persons as there are directors to be elected, or to cumulate his votes by giving one candidate as many votes as the number of such directors multiplied by the number of his shares shall equal, or to distribute such votes on the same principle among as many candidates as he shall see fit.
Voting will be by poll. Stockholders may opt for manual or electronic voting either in person, through remote communication, in absentia, or be represented by proxy at any regular or special meeting of the stockholders. For manual voting, each stockholder will be given a ballot upon registration to enable the stockholder to vote in writing per item in the agenda. For electronic voting, there will be computer stations placed outside the Ballroom where stockholders may cast their votes electronically. Both the paper ballot and computer platform for electronic voting will contain the proposed resolutions for consideration by the stockholders and each proposed resolution will be shown on screens in front of stockholders as the same is taken up at the meeting. Stockholders may cast their vote anytime during the meeting.
In addition, a stockholder may vote electronically in absentia using the online web address provided by the Company subject to validation purposes. A stockholder voting electronically in absentia shall be deemed present for purposes of quorum.
All votes will be counted and tabulated by the Office of the Corporate Secretary and the Committee of Inspectors of Ballots and Proxies. The results of voting will be validated by SGV & Co., the independent party appointed for the purpose.
For the election of the eleven (11) members of the Board of Directors, the eleven (11) nominees receiving the highest number of votes will be declared elected as directors of the Company. However, if there are only eleven (11) nominees, all nominees shall be declared elected upon approval of motion.
The Company is compliant with the requirement of the PSE on minimum public ownership with 37.28% of its shares subscribed and owned by the public as of December 31, 2021. In compliance with the requirements of the PSE, the Company regularly and timely discloses its public ownership report and immediately makes a public disclosure of any change thereon.
Summary of Legal and Beneficial Ownership of the Board, Key Officers and Major Shareholders
|Name||December 31, 2021||Class of Shares||December 31, 2020||Class of Shares|
|Enrique K. Razon, Jr.||900,052,260||Common||N.A.||N.A.|
|Fernando Zobel de Ayala||1||Common||1||Common|
|Jose Victor Emmanuel A. de Dios||10||Common||N.A.||N.A.|
|Antonino T. Aquino||12,749,543||Common||12,749,543||Common|
|Jose Rene Gregory D. Almendras||5,000||Common||5,000||Common|
|Donato C. Almeda||1,000||Common||N.A.||N.A.|
|Rafael D. Consing||100||Common||N.A.||N.A.|
|Sherisa P. Nuesa||5,093,607||Common||5,093,607||Common|
|Cesar A. Buenaventura||570,001||Common||N.A.||N.A.|
|Octavio Victor R. Espiritu||188,300||Common||N.A.||N.A.|
|Eric Ramon O. Recto||10,000||Common||N.A.||N.A.|
|Silverio Benny J. Tan||74,500||Common||N.A.||N.A.|
|Roberto Jose R. Locsin||23,500||Common||N.A.||N.A.|
|Gigi Iluminada T. Miguel||18,000||Common||N.A.||N.A.|
|Abelardo P. Basilio||1,069,700||Common||1,069,700||Common|
|Melvin John M. Tan||29,970||Common||N.A.||Common|
|Esmeralda R. Quines||707,590||Common||707,590||Common|
|Janine T. Carreon||514,800||Common||514,800||Common|
|Liwayway T. Sevalla||63,000||Common||63,000||Common|
|Maidy Lynne B. Quinto||175,000||Common||175,000||Common|
|Arnold Jether A. Mortera||342,900||Common||342,900||Common|
|Robert Michael N. Baffrey||470,723||Common||470,723||Common|
|Evangeline M. Clemente||309,400||Common||309,400||Common|
|Gerardo M. Lobo II||184,600||Common||184,600||Common|
|Rolando V. Caraig||N.A.||N.A.||N.A.||N.A.|
|Mark Tom Q. Mulingbayan*||144,100||Common||144,100||Common|
* As of January 1, 2022, Ms. Sarah Bergado, was appointed as the Company’s Sustainability Head and leads the duties and responsibilities of the CSO.
|December 31, 2021||Class of Shares||December 31, 2020||Class of Shares|
|Trident Water Company, Inc.||900,052,160||Common||N.A.||N.A.|
|Trident Water Company, Inc.||2,691,268,205||Participating Preferred||N.A.||N.A.|
|Philwater Holdings Corporation||1,308,731,793||Participating Preferred||3,999,999,998||Preferred|
* Includes shares held through PCD Nominee Corporation (21,409,000 shares) and Michigan Holdings, Inc. (1,00,000), a wholly owned subsidiary of Ayala Corporation
In the pursuit of the Company's thrust to continuously improve awareness of best practices in the conduct of its business and operations especially in corporate governance across the organization, including dealings with its business partners and customers, Manila Water constantly updates its website, www.manilawater.com with a section dedicated to corporate governance and investor relations. The Corporate Governance section of the website contains all disclosures made by the Company to the PSE and SEC, as well as its Manual, the Code, the Charters of the Board and its Committees, the various corporate governance policies and other matters and information of relevance to the stockholders and all stakeholders. The Company discloses its corporate governance practices, corporate events calendar, and other material information on its website in a timely manner. The Investor Relations section houses all information that may be required by the investors, shareholders and stakeholders. The site has been enhanced to be userfriendly and is accessible to the public at all times.
Corporate Governance Recognition and Awards
The Company's commitment to uphold the highest standards of good corporate governance has again been confirmed and recognized through the prestigious awards it has received. On February 19, 2021, the Company received a 3-star arrow recognition from the Institute of Corporate Directors for its performance rating against the 2019 ASEAN Corporate Governance Scorecard. The Company also received the same recognition for its rating against the 2018 ASEAN Corporate Governance Scorecard. In 2018, it was also named as one of ASEAN's Top 50 Publicly Listed Companies on Corporate Governance at the 2018 ASEAN Corporate Governance Awards, Top 10 Philippine Publicly Listed Companies, and Top 5 Industry Sector by the Institute of Corporate Directors, and Platinum Awardee for Excellence in Environmental, Social and Governance Practices by the Asset.
Independent Public Accountants
The principal accountants and external auditors of the Company is SyCip Gorres Velayo & Co. (SGV), a member practice of Ernst & Young Global (EY). SGV is the leading and largest professional services firm in the Philippines that offers integrated solutions drawn from diverse and deep competencies in assurance, tax, consulting, and strategy and advisory services. SGV provides independent assurance on financial and nonfinancial information to meet regulatory and other stakeholder requirements utilizing worldclass business-process-based methodologies and supporting tools. SGV utilizes an audit methodology and documentation approach which is risk-based and focuses on the drivers of the business, the associated risks, and the potential effects on financial statements accounts.
The same accounting firm is being recommended for re-election at the meeting for a remuneration of ₱2.89 Million, exclusive of VAT and out-ofpocket expenses. The agreement with SGV covers the annual audit of the Company.
Representatives of SGV for the current year and for the most recently completed fiscal year are expected to be present at the annual stockholders' meeting. They will have the opportunity to make a statement if they desire to do so and are expected to be available to respond to appropriate questions.
Pursuant to Revised Securities Regulation Code (SRC) Rule 68, Part I (3) (B) (iv), the Company has engaged SGV as its external auditor. Ms. Djole S. Garcia has been the partner-in-charge since 2018.
The aggregate fees billed by SGV are shown below with the comparative figures for 2021:
|External Audit Fees||Audit and Audit-Related Fees of the Company|
|Non-Audit Fees 63||₱431,000.00||₱89,000.00|
62 The Audit Committee is composed of the following: Sherisa P. Nuesa (Chairman and Lead Independent Director), Cesar A. Buenaventura (Independent Director), Octavio Victor R. Espiritu (Independent Director), and Rafael D. Consing, Jr.
63 Includes proxy validation, validation of ASM votes and hedge accounting advisory services.
64 Audit fees are exclusive of VAT and out-of-pocket expenses.