MANILA, Philippines - The Philippine Stock Exchange (PSE) is planning to create a fourth board which will be reserved for companies adhering to stricter principles of corporate governance. If established, the PSE will be the first in Southeast Asia to create what it temporarily calls the “corporate governance board," which is expected to be the “blue chips of the blue chips," Francis Lim, PSE president and chief executive officer said. Companies in the fourth board will “set the benchmark on how enterprises should manage their businesses," Lim said. Corporations belonging to the first and second board may choose to migrate to the corporate governance board since “investors will feel more safe with their investments in a company which has better set of rules for transparency and accountability," he said. However, the initiative “will still take time…we’re still studying what criteria to include," he added. “Valuation will be higher for a company which will be in the corporate governance board," he added. The Sao Paolo Stock Exchange of Brazil has been the most successful in coming up with a board for corporate governance of its companies, Lim said. The bourse is studying other countries’ corporate governance practices which it may include in the PSE’s plan for the fourth board. Currently, the PSE has three boards – the first board, whose member-companies are required to have a pre-tax profit of at least P50 million and a minimum pre-tax profit of P10 million for three previous years before listing. Meanwhile, companies subsumed under the second board “must demonstrate a potential for superior growth," the PSE said in its website. For those applying to list at the bourse’s small and medium enterprises (SME) board, firms must at least be operational for at least one year and must report positive net operating income during the last financial year.
Next: Shareholders urged to take active role in asserting their rights 
Shareholders urged to take active role in asserting their rights Listed companies have been urged to institute needed corporate governance reforms in light of the global financial turmoil, which has weakened companies’ incomes, a PSE official said. Shareholders have also been urged to take an active role in asserting their rights and privileges as companies hold their annual stockholders' meetings season from April to July, Jonathan Juan DC Moreno, PSE vice president for corporate governance office, said. Shareholder activism generally refers to stakeholders’ vigilance over how companies conduct their affairs. It is widely practiced in other markets like the United States, the United Kingdom, Japan, and South Korea, among others. “Shareholders have rights under the law to allow them to participate in the affairs of their company. These rights include the right to information, right to dividends, pre-emptive right, tender offer right, appraisal right, right to choose directors who would direct the affairs of the company, and equally important, the right to demand good governance from their company," Lim said. In most cases, shareholders are forced into action only after their rights are trampled upon. The PSE is thus encouraging shareholders to be more proactive in how companies, where they have a stake in, conduct their affairs. The creation of minority shareholder groups can also serve as an important tool to make directors and management accountable for their decisions. Minority shareholders may also directly engage companies regarding actions that they may deem questionable, Moreno said. “This is so that they may be enlightened on the reasons behind the exercise of the directors' business judgment on such matters," Moreno said. - GMANews.TV 
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