The Chief 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 Chief Risk Officer

The Chief Risk Officer (CRO) oversees the entire risk management function and leads the development, implementation, maintenance, and continuous improvement of ERM program, processes, and tools. The CRO is the Vice Chairman of the ERMEC. She 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 ERMEC and to the BROC.

The Vice Presidents

The Company shall have such number of Vice Presidents as may be required by the operational requirements of the Company. The Vice Presidents shall assist the President and CEO and exercise such other functions as may be provided in the By- Laws or delegated by the Board.

In Manila Water Company, Inc., the Vice Presidents are referred to as “Group Directors.”

Enterprise Risk Management

The ERM is responsible for developing risk management tools, methodologies and processes, as well as sustained implementation of the ERM Program across the Company. It 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. With the ERM mindset continuously being assimilated into the Company’s culture and practices, ERM has been embedded in key decision-making processes.

The Legal Services Group

The Legal Services Group (LSG) is the unit tasked to formulate and implement the initiatives and policies on good corporate governance. It reports on matters of corporate governance directly to the Chief Compliance Officer under the supervision of the Corporate Governance Committee. The LSG 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 of Corporate Governance.

Among the mandates of the LSG is the continuous identification of gaps and challenges on corporate governance practices across the organization. This allows the LSG to propose improvements on the Company’s policies based on international corporate governance standards.

Finally, the LSG, 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.

Internal Audit

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. IA consists of talents and professionals who are either a Certified Public Accountant, Electronics and Communication Engineer, and Civil Engineer.

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 November 2022, 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 2027.

On November 10, 2022, the Audit Committee approved the changes and updates made to the Internal Audit Charter and Manual. These changes and updates were made to continuously improve Manila Water’s Internal Audit and its operations. The changes were ratified by the Board of Directors during their regular meeting on November 17, 2022.

Investor Relations

The Investor Relations Department (IR) keeps the Company’s investors and other relevant stakeholders regularly informed of developments in the 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 aim 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, press briefings are held as necessary to engage other stakeholders, specifically the media.

The Sustainability Officer

The Company’s 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 Management to the Board of Directors through the ESG Committee.

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 stockholders 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 stockholders.

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.

Manila Water is in full compliance with the code of corporate governance and all disclosure rules of the Philippine Stock Exchange (PSE) and the SEC.

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 stockholders, 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 decisionmaking 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. The Manual was last amended on November 30, 20228.

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 Stockholder, 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 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, contractors, subcontractors, consultants, service providers, suppliers, business partners, government offices, other stakeholders, and any other parties (including individuals, partnerships, and bodies corporate) associated with the Group. 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, employees, and other third parties. Directors, officers, and employees shall act honestly and ethically. They shall 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, 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. 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 the 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, officer, or employee appears to have a direct or indirect personal or financial interest in any transaction, which may deter or influence him or her 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 and arrangements by directors, officers, and employees, as well as their relatives that violate 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 regarding Corporate Entertainment and/or Gifts prohibits all officers and employees from accepting corporate entertainment and 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 or her duties.

Insider Trading

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:

• Not trade in the Company’s securities directly or indirectly; and
• Not communicate, directly or indirectly, such material non-public information to any person until the material non-public information is disseminated to the public and two (2) trading days have lapsed from the disclosure thereof to allow the market to absorb such information.

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 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 15 days from the end of the quarter.

In alignment with the law, the definition of material nonpublic information has been amended.

Disclosure

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.

Creditor Rights

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.ights.

Anti-Corruption

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.

Anti-Sexual Harassment

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.

Procurement Policies

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 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 stockholder value and enhance its competitive advantage.

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:

• Continuously assess, implement, and improve its processes and business conduct by adopting best practices and keeping abreast with the latest innovations to ensure reliability and efficiency of its operations;
• Ensure full compliance with relevant laws and standards in pollution prevention and environmental sustainability, safety, and health protection, as well as applicable regulatory standards and customer requirements related to the quality of its products and services;
• Build a strong culture committed to customer satisfaction, environmental protection, health, and safety through education, training, and awareness at all levels of the organization that will empower its employees, contractors, suppliers, and stakeholders;
• Actively promote the conservation and optimal use of precious resources by constantly creating and improving existing programs aimed at pollution prevention, waste minimization, resource conservation and environmental sustainability;
• Systematically manage and control its health and safety risks through effective risk assessment processes; and
• Regularly revisit, improve, develop, and maintain its Quality, Environment, Health, and Safety management system to ensure its effectiveness and relevance to the changing needs of the company to drive continuous improvement in operations, quality, environmental, health and safety performance and services.

Stockholder Rights

It is the duty of the directors to promote stockholder rights, remove impediments to the exercise of stockholder rights and provide effective redress for violation of their rights. The Board shall be instrumental in removing excessive costs and other administrative or practical impediments to stockholders participating in meetings and/or voting in person. The directors shall pave the way for the electronic filing and distribution of stockholder information necessary to make informed decisions subject to legal constraints.

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 stockholder participation by sending the Notice of Annual and Special Stockholders’ 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 Meetings and to Propose Agenda Items

The Manual provides that all stockholders, including minority and non-controlling, 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, all in accordance with the By-Laws and the existing laws.

With regard to the right of stockholders to propose agenda items, the Company shall ensure the exercise of the right is included in the notice and agenda of the stockholders’ meeting as an item for the consideration of such other business as may properly come before the meeting.

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 non-controlling and minority, 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 all items for approval, each share of voting stock entitles its registered owner as of the Record Date to one (1) vote.

Voting shall be by poll and the Company shall provide the mechanism to implement the same at every stockholders’ meeting. Any stockholder entitled to vote may vote in person, through remote communication, in absentia, or be represented by proxy at any regular or special stockholders’ meetings.

Pursuant to Sections 23 and 57 of the Revised Corporation Code which allow voting through remote communication or in absentia by the stockholders, stockholders may vote electronically or in absentia on the matters for resolution at the meeting using the online web address that will be provided in the Definitive Information Statement, subject to validation procedures.

Stockholders who will not participate in the virtual meeting may vote in absentia by sending an absentee ballot obtained from the Corporate Secretary, duly filled up and signed and returned to the Corporate Secretary before the date of the ASM. An absentee ballot shall be sent to a stockholder who requests the same after complying with the requirement prescribed by the Corporate Secretary to verify the identity and number of shares in the name of the stockholder as of record date of the meeting. Valid absentee ballots received by the Corporate Secretary prior to the date of the meeting shall be counted as part of the quorum and in the voting of agenda items.

The stockholders shall also have an opportunity during the stockholders’ meeting to ask questions and raise their issues relevant to the agenda items. The minutes of the meeting records the stockholders’ questions and corresponding answers given by the directors and officers of the Company.

The Board should encourage active stockholder participation by making the result of the votes taken during the most recent Annual or Special Stockholders’ Meeting publicly available the next working day. In addition, the Minutes of the Annual and Special Stockholders’ Meeting should be made available to the public through the Company website within five (5) business days from the end of the meeting. The draft minutes of the 2024 Annual Stockholders Meeting was posted on the Company’s website on May 3, 2024.

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.

Dividend Rights

The Company continues its practice of offering its stockholders 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.

Pre-Emptive Right

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 stockholders 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 stockholder shall be provided with periodic reports regarding the performance of the Company upon written request for a legitimate purpose. Stockholders shall be allowed to inspect corporate books and records in accordance with the Revised Corporation Code and shall be provided an annual report, including the financial statements, without cost or restrictions.

Appraisal Right

In accordance with the Revised Corporation Code, stockholders may exercise appraisal right under the following circumstances:

• a. In case any amendment to the Articles of Incorporation has the effect of changing or restricting the rights of any stockholders or class of shares, or of authorizing preferences in any respect superior to those of outstanding shares of any class, or of extending or shortening the term of corporate existence;
• b. In case of sale, lease, exchange, transfer, mortgage, pledge, or other disposition of all or substantially all of the corporate property and assets as provided in the Revised Corporation Code; and
• c. In case of merger or consolidation.

Remedies for Infringement of Stockholder Rights

The Board can establish and maintain an alternative dispute resolution system in the Company that can amicably settle intra-corporate disputes such as arbitration, mediation, and conciliation. This is without prejudice to the legal remedies of the parties under existing laws and the parties’ ability to avail of their legal rights to address or resolve conflicts or differences in the proper venue as may be appropriate or warranted.