Corporate Governance
Rizal Memorial College – School of Law
Atty. Kelvin Lester King Lee
Outline Revised on July 18, 2022
Course Days, Time and Location
Days and Time:
Wednesdays, 7:30 to 9:30 pm
From 20 July 2022 to 16 November 2022
18 sessions
Location:
Via Zoom
Instructor:
Kelvin Lester K. Lee, Commissioner, Securities and Exchange Commission
Email: oclee@sec.gov.ph
Twitter: www.twitter.com/attykelvinlee
Linkedin: https://www.linkedin.com/in/attykelvinlee/
Consultation Hours: by appointment
Course Evaluation
Participation
Attendance
Mid-terms –Board Simulations
Finals - Seminar Organization
15
10
35
40
Course Materials: No required textbook. The instructor shall inform students what materials
are required to be read for class discussion. However, students are encouraged to review the
optional materials, videos, etc. that will be contained in this outline. Please note that this
outline is intended as a current and future resource for you as you learn and apply corporate
governance in your career.
Medium of Instruction: Lectures, discussion, simulations.
Corporate Governance Course Outline
I.
Introduction: What is corporate governance?
A. Why is there a need for Corporate Governance?
B. Corporate governance through history
C. Definitions of corporate governance
D. The Agency problem
E. Fiduciary duty
F. The stakeholder approach to governance
G. Governance distinguished from management
Reference Materials:
Case method
Harvard Business School
https://www.hbs.edu/mba/academic-experience/Pages/the-hbs-case-method.aspx
IESE
https://www.iese.edu/the-casemethod/?utm_source=linkedin&utm_medium=social&utm_campaign=contentteam
Harvard Business School Corporate Governance Resource Guide
https://www.library.hbs.edu/find/guides/corporate-governance
Corporate Governance – Harvard Business Review
https://hbr.org/2019/10/a-guide-to-the-big-ideas-and-debates-in-corporate-governance
What is Corporate Governance? Corporate Governance with Prof. Jesse Field, Harvard Law
https://www.youtube.com/watch?v=YlvuCWGPzOI&list=PLmX0T2tPp1IvnlwVsLY70EI4xgRitY
YF4&index=5&t=189s
Corporate Governance – What it is and Why is it important
https://www.youtube.com/watch?v=goZ6-_OopU&list=PLmX0T2tPp1IvnlwVsLY70EI4xgRitYYF4&index=3
Corporate Governance: Why Investors Should Care – London Business School
https://www.youtube.com/watch?v=wpG8Wthe6kU&list=PLmX0T2tPp1IvnlwVsLY70EI4xgRi
tYYF4&index=6&t=160s
History of Corporate Governance
https://insights.diligent.com/corporate-governance/what-is-the-history-of-corporategovernance-and-how-has-itchanged/#:~:text=In%201976%2C%20the%20term%20%E2%80%9Ccorporate,journal%20of
%20the%20federal%20government.&text=In%201976%2C%20the%20SEC%20prompted,bo
ard%20directors%2C%20and%20they%20complied.
Different corporate governance structures in other countries
https://insights.diligent.com/white-paper/corporate-governance-structures-unique-toeach-country/
Fiduciary duty of the Board of Directors
https://www.oecd.org/daf/ca/corporategovernanceprinciples/1872746.pdf
The Stakeholder Theory Issue in the Philippines
https://www.bworldonline.com/revisiting-fiduciary-duties-board-directors-management-3/
Stakeholder Issues by Professor Ed Freeman
https://blogs.darden.virginia.edu/ibis/2017/12/01/professor-ed-freeman-it-is-time-toreplace-the-old-story-with-a-new-narrative/
Stakeholder v. Shareholder debate by London Business School (Prof. Alex Edmans v. Prof.
Lucian Bebchuk)
https://www.youtube.com/watch?v=3tMYfLLzoi4
Ayala Land Corporate Governance Website
https://ir.ayalaland.com.ph/corporate-governance/
Distinguishing Governance from Management
https://cacnc.org/wp-content/uploads/2016/06/Great-Boards-distinguishing-governanceand-management.pdf
II.
Overview of Philippine Corporate Governance
A.
Revised Corporation Code
B.
Securities Regulation Code
C.
SEC Issuances
a. CG Blueprint
b. Codes of Corporate Governance
i. 2002 Code of Corporate Governance (SEC MC, 2. Series of
2002)
ii. 2009 Revised Code of Corporate Governance
iii. MC No. 9, series of 2014, Amending definition of Corporate
Governance (expanded to stakeholders)
iv. Code of Corporate Governance for PLCs (2016)
v. Code of Corporate Governance for Public Companies and
Registered Issuers (2019)
c. Memorandum-Circulars
d. Coming CG issuances (Stewardship Code, etc)
D.
Entities involved in CG in the Philippines
a. Securities and Exchange Commission – Corporate Governance and
Finance Department (CGFD)
b. Institute of Corporate Directors (ICD)
c. Good Governance Practitioners of the Philippines (GGAP)
d. Asian Development Bank
Reference Materials:
SEC on Corporate Governance
https://www.sec.gov.ph/corporate-governance/
MAP Insights by Dean Cesar L. Villanueva
https://www.bworldonline.com/the-criminalized-corporate-governance-reform-under-therevised-corporation-code/
ICD
https://www.icd.ph/
Joint PWC and GGAP Corporate Governance Survey results:
https://www.pwc.com/ph/en/publications/ceo-insights-surveys/finding-true-northadvancing-corporate-governance-philippines.html
III.
Overview of International Corporate Governance
A. International standards – OECD, Financial Stability Board, Basel
Committee on Banking Supervision, etc.
B. Western Models (Anglo-American, EU)
C. ASEAN – ASEAN Capital Market Forum
a. ASEAN Corporate Governance Scorecard (ACGS)
b. IESE Study re ACGS
Reference Materials:
ADB Re: Scorecards
https://www.adb.org/sites/default/files/publication/549336/corporate-governance-firmprofitabilty-philippines.pdf
ASEAN Capital Markets Forum
https://www.theacmf.org/
G20/OECD Principles of Corporate Governance
https://www.oecd.org/corporate/principles-corporate-governance/
International Organization of Securities Regulators (IOSCO)
Report on Corporate Governance
https://www.iosco.org/library/pubdocs/pdf/IOSCOPD544.pdf
IV.
Principles, Standards and Outcomes in CG
A. Principles of Good Corporate Governance
B. Success Indicators for CG
C. Business Benefits of Good CG
a. High share price.
b. Good reputation.
Reference Materials:
Boosting International Investment: The Role of Expert Assessments of Corporate
Governance
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3858572
Corporate Governance and Equity Prices – Quarterly Journal of Economics
https://www.jstor.org/stable/25053900
Good Governance Driving Corporate Performance? – Joint Paper by Deloitte and Nyenrode
Research Program
https://www2.deloitte.com/content/dam/Deloitte/nl/Documents/risk/deloitte-nl-riskgood-governance-driving-corporate-performance.pdf
Corporate governance: how does it affect the value of a company? George Wernicke,
Assistant Professor – Strategic Management at HEC Paris, June 17, 2021, available at
https://ideas4development.org/en/corporate-governance-how-does-it-affect-the-value-ofa-company/
Corporate Governance and its Impact in Company’s Stock Price (Case Study):
DOI: https://doi.org/10.5281/zenodo.4155459
available at https://www.redalyc.org/jatsRepo/279/27964799021/html/
Harvard Law School Forum on Corporate Governance, Subodh Mishra, ESG Matters
(Institutional Shareholder Services) dated January 14, 2020, available
at https://corpgov.law.harvard.edu/2020/01/14/esg-matters/.
V.
The Board of Directors: The Legal Aspects
A. The Corporation and its Powers
a. The Revised Corporation Code
b. Importance of the by-laws and Articles of Incorporation
B. Directors’ Three Fold Duty
a. Diligence
b. Obedience
c. Loyalty
C. Challenges and Issues being dealt with in the Philippines
1. The Business Judgment Rule
2. Conflicts of Interest
3. Insider Trading
4. Short swing Transactions
5. Related Party Transactions
Reference Materials:
The Revised Corporation Code of the Philippines (Its Theories and Applications),
by Teresita J. Herbosa (former SEC Chair) and Eric Recalde
Non-executive and independent directors
By PNB Chair Flor G. Tarriela
https://www.bworldonline.com/non-executive-and-independent-directors/
VI.
The Board of Directors: Implementing Corporate Governance (The Tone at the
Top)
A. The Board and its Committees –executive committee, audit committee,
compensation committee, etc.
B. Board Processes
a. Board Policies
b. Meeting management
c. Conflict resolution
d. Board Performance evaluation
e. Management Oversight
f. Disclosures
g. Content of Board meetings
h. Agenda
C. Types of Directors
a. Executive Director
b. Independent Directors
c. Non-executive and non-independent Director
D. Chairing a meeting – Being Chairperson
C. How to run a Board
How to Run an Effective Board Meeting
https://www.youtube.com/watch?v=M6DBIV8XwG0&t=33s
Forming and Managing a Board of Directors
https://www.youtube.com/watch?v=CBCw89w6fEg
Effective Board Meetings
https://www.youtube.com/watch?v=y_5JOof9o3Y
VII.
Corporate Governance in the Modern Era
A. Reforming Corporate Governance?
B. Corporate Governance and technology
a. Cybersecurity/Technology Governance
b. Fintech and Cryptocurrency
C. Current and Coming Corporate Governance issues:
a. Dual Class Shares: Is it coming to the Philippines?
b. Gender/Board Diversity
c. Activist Shareholders
d. ESG/Sustainability Investment and Reporting
e. Executive Pay/Compensation
f. CEO Selection and Succession Planning
g. Stockholder v. Stakeholder perspective
Reference Materials:
Cybersecurity: An Evolving Governance Challenge
https://corpgov.law.harvard.edu/2020/03/15/cybersecurity-an-evolving-governancechallenge/
Corporate Governance and Cybersecurity
https://www.manilatimes.net/2019/09/04/business/columnists-business/corporategovernance-and-cybersecurity/611019
The Changing Face of Corporate Governance in the World – Insead Business School
https://www.youtube.com/watch?v=NSAcSnG9nW4&t=1598s
Reforming Corporate Governance – Alex Edmans, Gresham College
https://www.youtube.com/watch?v=5uP9WaK4npU&t=2357s
Corporate Governance and Innovation - Osgood Hall Law School
https://www.youtube.com/watch?v=-jmRAvi4rS0&t=892s
The Modernization of Corporate Governance: Blockchain as a Solution
https://www.youtube.com/watch?v=kqfd_pSblYE&list=PLmX0T2tPp1IvnlwVsLY70EI4xgRitYY
F4&index=9&t=2082s
Global Reporting Initiative:
https://www.globalreporting.org/
ESG and Investor Interest
https://home.kpmg/xx/en/home/insights/2020/08/shift-towards-esg.html
https://www.forbes.com/sites/chukaumunna/2020/12/18/esg-investing-came-of-age-in2020millennials-will-continue-to-drive-it-in-2021/?sh=149d011b409a
https://fortune.com/2020/11/20/best-investments-for-2021-esg-companiessustainability-stocksfunds/?utm_source=Iterable&utm_medium=email&utm_campaign=campaign_17428
88
https://www.investors.com/news/esg-investing-puts-sustainable-spin-2020-esg-funds-bestesg-stocks-show/
ESG history and current issues
https://www.strategy-business.com/article/How-environmental-social-and-governancereporting-grew-up
Sustainability and Corporate Stakeholders
https://ecgi.global/news/sustainability-and-corporate-stakeholders
VIII.
Case Studies
(To be assigned and distributed in class)
IX.
Practice Sessions/Board Simulations
X.
Organizing a Colloquium on Corporate Governance
About the Instructor:
Atty. Kelvin Lester K. Lee is a Commissioner of the Securities and Exchange Commission (SEC),
a Business Columnist of the Manila Times, a MCLE Lecturer and a Corporate and Securities
Law Professor of the Rizal Memorial Colleges School of Law in Davao. He has also lectured at
the law schools of Ateneo de Manila, UST-Legazpi, New Era University, Bicol University and
the University of the East, among others.
He is the Supervising Commissioner of the Market & Securities Regulation Department
(MSRD) and the Information and Communications Technology Department (ICTD). He played
a pivotal role in establishing and organizing the International Affairs Unit (IAU) and the
PhiliFintech Innovation Office of the Commission, both units of which are also under his
supervision.
Prior to joining the Commission, he was an Assistant Secretary in the Office of the Executive
Secretary (OES) in Malacanang where, among other duties, he was designated to sit on the
Board of the Subic Bay Metropolitan Authority (SBMA) and was Acting Chair of the Fertilizer
and Pesticide Authority (FPA).
Before entering government service, Atty. Lee was a Legal Columnist of the Sunstar Davao
newspaper, and practiced law in Davao and Metro Manila, where he started out as an
Associate of the Siguion Reyna Montecillo and Ongsiako Law Office.
Atty. Lee is an alumni of the Ateneo de Manila University and its School of Law, and has
earned, on scholarship, Certificates on Securities Regulation from the Toronto Centre, and on
Fintech Regulation from Judge Business School, University of Cambridge.