Masaganang Sakahan Inc. · 2017. 3. 21. · Manual on Corporate Governance Page 1 Masaganang Sakahan Inc. MANUAL ON CORPORATE GOVERNANCE (As last amended on September 23, 2014) We,

Manual on Corporate Governance Page 1

Masaganang Sakahan Inc.

MANUAL ON CORPORATE GOVERNANCE(As last amended on September 23, 2014)

We, the members of the Board of Directors, the Management and Employees of Masaganang Sakahan Inc. (MSI) hereby commit ourselves to the principles and best practices contained in this Manual, and acknowledge that the same may guide the attainment of its corporate goals.

We believe that corporate governance is a necessary component of what constitutes sound strategic business management and will therefore undertake every effort necessary to create its awareness within the organization as soon as possible.

We also belive that the essence of corporate governance is transparency; the more transparent the internal workings of MSI are, the more difficult it will be for the Board and/or Management to mismanage it or to misappropriate its assets. It, therefore, becomes imperative that MSI disclose all material information to the national government and the public, its ultimate stakeholder, in a timely and accurate manner at all times.

1. OBJECTIVES

1.1 To institutionalize the principles of good corporate governance in the entire organization.

1.2 To provide the bases for measurement of the performance of the Board of Directors and the Management in the attainment of corporate goals.

2. DEFINITIONS AND INTERPRETATION

2.1 Definition of Terms

Act

Board

refers to Republic Act No. 10149, and officially named the "GOCC Govemance Act of 2011."

refers to Board of Directors of MSI, the collegial body that exercises the corporate powers and conducts all business and controls or holds all property of MSI.

Board Officers refer to the Officers whose primary task is to serve the Board or to pursue the immediate functions of the Board.

By-Laws refers to the by-laws of MSI for its internal government in reference to the management of its


affairs, duly registered with the SEC.CEO refers to the Chief Exectuive Officer, the highest

ranking corporate executive who heads the Management who, at present is the President and General Manager.

COA refers to the Commission on Audit.

Code refers to the Code of Corporate Governance for GOCCs issued by the GCG under Memorandum Circular 2012-07.

Commission refers to the Securities and Exchange Commission.

Corporate Governance refers to a system whereby shareholders, creditors and other stakeholders of MSI ensure that management enhances the value of the Company as it competes in an increasingly global market place.

Director

DOLI

refers to a member of the Board of Directors of MSI.

refers to Directors’ and Officers’ liability insurance, an indemnity coverage for GOCCs which, and their Directors/Trustees and Officers who, are sued or included as parties to any action or proceeding brought against the GOCC pursuant to a provision of law, executive order or regulation by reason of their being Directors or Officers.

Executive Officer refers to the CEO and such other corporate officer of MSI as expressly provided in its By-laws such as the Treasurer. As distinguished from the Board Officers, Executive Officers primiarily form part of the Management.

Extraordinary Diligence refers to the measure of care and diligence that must be exercised by Directors and Officers in discharging their functions, in conducting the

business and dealing with the properties and monies of MSI, which is deemed met when Directors and Officers act using the utmost diligence of a very cautious person taking into serious consideration all the prevailing

circumstances and Material Facts, giving due regard to the legitimate interests of all affected


Stakeholders.

Fit and Proper Rule refers to a set of standards for determining whether a member of the or the CEO is qualified to hold a position in MSI, which shall include, but not be limited to, standards on integrity, experience, education, training and competence as such standards are set forth under GCG Memorandum Circular No. 2012-05 and this Manual.

Government Agency refers to any of the various units of the Government of the Republic of the Philippines, including a department, bureau, office, instrumentaiity or GOCC, or a local government or a distinct unit therein.

GCG refers to the Governance Commission for GOCCs.

GOCC refers to any agency organized as a stock or non-stock corporation, vested with functions relating to public needs, whether governmental or proprietary in nature and owned by the Government of the Republic of the Philippines, directly or through its instrumentalities, either wholly or, where applicable, as in the case of stock corporalions, to the extent of at least a majority of its outstanding capital stock.

Management refers to the body given the authority to implement the policies determined by the Board in directing the course/business activities of MSI.

Material Information refers to information which a reasonable investor, stakeholder or a Government Agency would consider important in determing whether: (1) to buy, sell, hold or otherwise transact with the securities issued by a GOCC; or (2) to the exercise with reasonable prudence voting rights related to securities held with such GOCC, or relating to corporate acts, conlracts and transactions which would adversely affect the operations of the GOCC.

President refers to a director elected by the Board of Directors who have the general active management of the business and property of MSI.

Stakeholder refers to the Land Bank of the Philippines, as direct stockholder of MSI, the Management, its employees, creditors and the the community in


which the MSI operates for whose benefit MSI has been constituted, or whose life, occupation, business or well- being is directly affected, whether favorably or adversely, by the regular transactions, operations, or pursuit of the business or social enterprise for which MSI has been instituted.

State refers to the Republic of the Philippines.

2.2 Singular Tems lnclude the Plural

Unless otherwise indicated in this Manual, any reference to a singular shall apply as well to the plural, and vice versa.

3. THE BOARD OF DIRECTORS

The Board is primarily responsible for the governance of MSI. Compliance with the principlesof good governance shall start with it.

It shall be the Board’s responsibility to foster the long-term success of MSI and secure its sustained competitiveness in a manner consistent with its fiduciary responsibility, which it shall exercise in the best interest of MSI, LBP and the State. The Board shall conduct itself with utmost honesty and integrity in the discharge of its duties, functions and responsibilities.

3.1 Mandated Functions and Responsibilities

3.1.1 Provide the corporate leadership of MSI subject to the rule of law, and the objectives set by the National Government through the Supervising Agencies and the GCG;

3.1.2 Establish the MSI’s vision and mission, strategic objectives, policies and procedures, as well as defining the MSI’s values and standards through Charter Statements, Strategy Maps and other control mechanism mandated by best business practices.

3.1.3 Determine important policies that bear on the character of MSI to foster its long-term success, ensure its long{erm viability and strength, and secure its sustained competitiveness;

3.1.4 Determine the organizational struciure of MSI, defining the duties and responsibilities of its Officers and employees and adopting a compensation and benefit scheme that is consistent with the GOCC Compensation and Position Classiflcation System (CPCS) developed by GCG and formally approved by the President of the Philippines;

3.1.5 Ensure that personnel selection and promotion shall be on the basis of merit and fitness and that all personnel action shall be in pursuit of the applicable laws, rules


and regulations;

3.1.6 Provide sound written policies and strategic guidelines on MSI’s operating budget and major capital expenditures, and prepare the annual and supplemental budgets of MSI;

3.1.7 Comply with all reportorial requirements, as required in the Articles of lncorporation and By-laws, as well as applicable laws, rules and regulations;

3.1.8 Formally adopt and conduct annually the mandated Performance Evaluation System (PES) and the Performance Scorecard and timely and accurate report the results to the GCG; and

3.1.9 Ensure the fair and equitable treatment of all Stakeholders and enhancing MSI's relations with its Stakeholders.

3.2 Specific Functions of the Board

3.2.1 Meet regularly, ideally at least once every month, to properly discharge its responsibilities, with independent views expressed during such meetings being given due consideration, and that all such meetings shall be properly documented or minuted;

3.2.2 Determine MSI’s purpose and value, as well as adopt strategies and policies, including risk management policies and programs, in order ro ensure that MSI survives and thrives despite financial crises and that its assets and reputation are adequately protected;

3.2.3 Monitor and evaluate on a regular basis the implementation of corporate strategies and policies, business plans and operating budgets, as well as Management’s over-all performance to ensure optimum results;

3.2.4 Adopt a competitive selection and promotion process, a professional development program, as well as succession plan, to ensure that the offices of MSI have the necessary motivation, integrity, competence and professionalism;

3.2.5 Monitor and manage potential conflicts of interest of Directors, Management, and any of its Shareholder, including misuse of corporate assets and abuse in related party transactions;

3.2.6 Implement a system of internal checks and balances which may be applied in the first instance to the Board and ensure that such systems are reviewed and updated on a regular basis;

3.2.7 Ensure the integrity of MSI’s accounting and financial reporting systems, including independent audit, and that appropriate systems of control are in place, in particular, systems for risk management, financial and operational control, and compliance with the law and relevant standards;

3.2.8 Identify and monitor and provide appropriate technology and systems for the identification and monitoring of key risks and performance areas;


3.2.9 Adopt, implement and oversee the process of disclosure and communications;

3.2.10 Constitute and maintain the Board Committees and such other specialized committees as may be necessary, or required by applicable regulations, to assist the Board in discharging its functions;

3.2.11 Enter into a performance agreement with the GCG for each fiscal year whose components shall include the charter statement and strategy map of MSI, the performance criteria, performance targets, performance weights, commitments/assistance from the government and others;

3.2.12 Conduct and maintain the affairs of MSI within the scope of its authority, as prescribed in its Articles of Incorporation, By-Laws, and applicable laws, rules and regulations.

3.3 Composition of the Board

Pursuant to MSI’s Articles of Incorporation, the Board shall be composed of eleven (11) members.

3.4 Board Meetings and Quorum Requirement

Members of the Board shall attend regular and special meetings of the Board. In view of modern technology, however, attendance at Board meetings though teleconference may be allowed.

3.5 Appointment of Directors

Each Director shall be appointed by the President of the Philippines from a shortlist prepared by the GCG.

3.6 Term of Office

The term of office of each Director shall be for one (1) year beginning on 01 July of each year and ending on 30 June of the following year, unless sooner removed for cause or replaced by the President of the Philippines.

3.7 Hold-over

Each Director shall continue to hold office until the successor is appointed and qualified.

3.8 Eligibility for Reappointment

A Director is eligible for reappointment as such by the President of the Philippines only when so nominated by the GCG and provided that he has obtained a performance score of above average or its equivalent or higher in the immediately preceding year of tenure as Director based on the performance criteria for Directors of GOCCs;


3.9 Vacancy Occuring in the Board During An Unexpired Term

Any vacancy occurring in the Board on an unexpired term may be filled up but only be for such unexpired term of the predecessor. The appointment of a Director to fill such vacancy shall be in accordance wiih the manner provided for regular nomination, shortlisting and appointment of Directors.

3.10 Prohibition on Multiple Board Seats

The capacity of Directors to serve with diligence shall not be compromised. As such, a Director of MSI may not hold more than one (1) other Board seat in another GOCC, subsidiary and/or affiliate thereof.

4. THE BOARD OFFICERS

4.1 The Chairman

The Chairman shall be elected by the Board from its own numbers. He shall preside at all meetings of the stockholders and the Board of Directors.

4.1.1 Specific Duties and Responsibilities

4.1.1.1 Call meetings to enable the Board to perform its duties and responsibilitie and preside thereon;

4.1.1.2 Prepare meeting agenda in consultation with the CEO and the Corporate Secretary;

4.1.1.3 Exercise control over quality, quantity and timeliness of the flow of information between Management and the Board;

4.1.1.4 Assist in ensuring compliance with MSI’s guidelines on corporate governance.

4.1.1.5 Perform all such other duties as are incident to his office or are properly required of him by the Board and the By-Laws.

4.2 Vice-Chairman

ln the absence of the Chairman of the Board, the Vice-Chairman shall preside at the meetings of the Board.

4.3 Corporate Secretary

4.3.1 Duties and Responsibilities

4.3.1.1 Serve as an adviser to the Board Members on their responsibilities and obligations;


4.3.1.2 Keep the minutes of meetings of the shareholders, the Board, the Executive Committee, and all other committees in a book or books kept for that purpose, and furnish copies thereof to the Chairman, the CEO and other members of the Board as appropriate;

4.3.1.3 Keep in safe custody the seal of MSI and affix it to any instrument requiring the same;

4.3.1.4 Have charge of the stock certificate book and such other booksand papers as the Board may direct;

4.3.1.5 Attend to the giving and serving of notices of Board and shareholdermeetings, if applicable;

4.3.1.6 Be fully informed and be part of the scheduling process of otheractivities of the Board;

4.3.1.7 Receive instructions from the Chairman on the preparationof an annual schedule, the calling of Board meetings, the preparation of regular agenda for meetings, and notifying the Board of such agenda at every meeting;

4.3.1.8 Oversee the adequate flow of information to the Board prior tomeetings;

4.3.1.9 Ensure fulfillment of disclosure requirements to regulatory bodies; and


4.4 Compliance Officer

The Board shall appoint a Compliance Officer who shall report directly to the Chairman. ln the absence of such office or appointment, the Corporate Secretary, who is preferably a lawyer, shall act as Compliance Officer. Nevertheless, the appointment of a Compliance Officer shall not relieve the Board of its primary responsibility vis-à-visthe State, acting through the GCG, to ensure that the GOCC has complied with all its reportorial, monitoring and compliance obligations.

4.4.1 Duties and Responsilities

4.4.1.1 Monitor compliance by MSI of the requirements under the Act, the Code, the rules and regulations of the appropriate Government Agencies and, if any violations are found, report the matter to the Board and remmmend the imposition of appropriate disciplinary action on the responsible parties and the adoption of measures to prevent a repetition of the violation;

4.4.1.2 Appear before the GCG when summoned in relation to compliance with this Code or other compliance issues;


4.4.1.3 Provide the GCG the sworn certifications submitted by each of the Directors and CEO that he/she possesses all the qualifications and none of the disqualifications pertaining to their positions as found in the charter or by-laws, the provisions of laws, rules and regulations applicable to MSI, and provided for in the Fit and Proper Rule within thirty (30) days after the assumption into ofiice of the Directors and CEO for each new term of office.

4.4.1.4 lssue a certification every 30 May of the year on the extent of MSI’scompliance with the government corporale standards governing GOCCs for the period beginning 01 July of the immedialely preceding

calendar year and, if there are any deviations, explain the reason for such deviation; and


5. BOARD COMMITTEES

To assist in complying with the principles of good corporate governance, the Board shall constitute the following Committees, in addition to such other committees as may be requird required under the corresponding and applicable rules and regulations issued by a Government Agency. The Committees shall report to the entire Board as a collegial body and the minutes of their meetings shall be circulated to all members of the Board. The existence of the Committees shall not excuse the Board of its collective responsibility for all matters that are within its primary responsibility and accountability.

5.1 Executive Committee

The Board of Directors shall appoint on an Executive Committee having the powers conferred upon the Board if not in session, except the power to make radical changes and departures from policies heretofore followed by the directorate; it is further understood that the power to sell, mortgage, or in any manner alienate or encumber real holdings or properties of the corporation is not within its powers.

5.1.1 Composition and Voting

The Executive Committee shall consist of five (5) members of the Board. It shall act by a vote of at least two-thirds (2/3) of its members on suchspecific matters within the competence of the Board as may from timeto time be delegated to it in accordance with MSI’s By-Laws


5.1.2.1 Approval of any action for which shareholders’ approval is alsorequired;

5.1.2.2 Filling of vacancies on the Board or in the Executive Committee;


5.1.2.3 Amendment or repeal of By-Laws or the adoption of new By-Laws;

5.1.2.4 Amendment or repeal of any resolution of the Board which by its express terms cannot be amended or subject to repeal;

5.1.2.5 Distribution of dividends;

5.1.2.6Perform the responsibilities of the GCG-required Nominations and Renumerations Committee under GCG Memorandum Circular No. 2012-07, namely:

5.1.2.6.1 Install and maintain a process to ensure that Officers to be nominated or appointed shall have the qualifications and none of the disqualifications mandated under the law,rules and regulations;

5.1.2.6.2 Review and evaluate the qualifications of all persons nominated to positions in the GOCC whichrequire appointment by the Board;

5.1.2.6.3 Recommend to the GCG nominees for the shortlist inline with the GOCC’s and its subsidiaries’ Board composition and succession plan; and

5.1.2.6.4 Develop recommendations to the GCG for updating the CPCS and ensuring that the same continues to be consistent with the GOCC’s culture, strategy, control environment, as well as the pertinent laws, rules and regulations.

5.2 Governance and Risk Committee

The Governance Committee shall assist the Board of Directors in fulfilling itscorporate governance and risk management responsibilities.

5.2.1 Composition and Chairmanship

The Committee shall be composed of three (3) members of t he Board andchaired by the Chairman of the Board.


5.2.2.1 Oversee the periodic performance evaluation of the Board and its committees and Management; and shall also conduct an annualself-evaluation of their performance;

5.2.2.2 Decide whether or not a Director is able to and has been adequatelycarrying out his/her duties as director bearing in mind the director’s


contribution and performance (e.g., competence, candor, attendance,preparedness and participation).

5.2.2.3 Recommend to the Board regarding the continuing education of Directors, assignment to Board Committees, succession plan for theExecutive Officers, and their remuneration commensurate withcorporate and individual performance;

5.2.2.4 Recommend by which the manner by which the Board’s performance may be evaluated and propose an objective performance criteriaapproved by the Board. Such performance indicators shall addresshow the Board will enhance long-term shareholder’s value;

5.2.2.5 Perform oversight risk management functions specifically in theareas of managing credit, market, liquidity, operational, legal,reputational and other risks of MSI, and crisis management, whichshall include receiving from Management periodic information on risk exposures and risk management activities;

5.2.2.6 Develop the Risk Management Policy of MSI, ensuringcompliance with the same and ensure that the risk managementprocess and compliance are embedded throughout the operations ofMSI, especially at the Board and Management level; and

5.2.2.7 Provide quarterly reporting and update the Board on key risk management issues as well as ad hoc reporting and evaluation oninvestment proposals.

5.3 Audit Committee

5.3.1 Composition and Chairmanship

The Audit Committee shall consist of three (3) Directors, whose Chairmanshould have audit, accounting or finance background.


5.3.2.1 Oversee, monitor and evaluate the adequacy and effectiveness of MSI's internal control system, engage andprovide oversight of MSI’s internal and external auditors, and coordinate with COA;

5.3.2.2 Review and approve audit scope and frequency, and the annual internal audit plan, quarterly, semi-annual and annual financial statements before submission to the Board, focusing on changesin accounting policies and practices, major judgmental areas,significant adjustments resulting from the audit, going concernassumptions, compliance with accounting standards, and compliance with tax, legal, regulatory and COA requirements;


5.3.2.3 Receive and review reports of internal and external auditors andregulatory agencies, and ensure that Management is takingappropriate corrective actions, in a timely manner in addressing control and compliance functions with regulatory agencies;

5.3.2.4 Ensure that internal auditors have free and full access to all of MSI’srecords, properties and personnel relevant to and required by its function and that the internal audit activity shall be free from interference in determining its scope, performing its work andcommunicating its results; and

5.3.2.5 Develop a transparent financial management system that will ensurethe integrity of internal control activities throughout the MSI through a procedures and policies handbook that will be used by the entireorganization.

6. MANAGEMENT

The operations of MSI shall be run by a professional and competent Management. Subject to law and regulations, a Director may be appointed to regular management functions.

6.1 The CEO

The President, who shall be elected/appointed annually by the Board of Directors from among its ranks, is the CEO of MSI, and shall exercise the powers and perform the duties usually pertaining to the office of the chief executive of a corporation. The CEO shall be subject to the disciplinary powers of the Board and may be removed for cause.

He shall have general supervision of the affairs of MSI.


6.1.1.1 Execute, administer and implement the policies and decisions approved by the Board;

6.1.1.2 Direct and manage the affairs of MSI;

6.1.1.3 Submit within a specified number of days after the close of the calendar year an annual report to the Board and such other reports as may be required;

6.1.1.4 Submit to the Board an annual budget and such supplemental budgets as maybe necessary for its consideration and approval;

6.1.1.5 Represent MSI in all dealing with other offices, agencies and instrumentalities of the State and with all persons and entities, both public and private, domestic or foreign; Appoint or promote, with the approval of the Board, the subordinate officers and personnel of MSI;


6.1.1.6 Discipline for cause, or remove, with the approval of the Board, officers and employees of MSI;

6.1.1.7 Transfer officers and employees as the exigencies of the service may require without the need of prior approval of the Board in accordance with existing rules and regulations;

6.1.1.8 Delegate authority, in whole or in part, to subordinate officers and personnel of MSI;

6.1.1.9 Together with the Corporate Secretary, all its stock certificates; and

6.1.1.10 Perform such other duties as maybe assigned to him by the Board or in the By-Laws.

6.2 Treasurer


6.2.1.1 Except as otherwise provided for by the Board or the By-Laws, shall have the custody of all moneys, securities and values of MSI which come into his possession. He shall deposit said moneys, securities and values in such banking institutions as maybe designated from time to time by the Board, subject to withdrawal there from on the signature of such officers of MSI or other individuals as the Board may, by resolution, designate;

6.2.1.2 Deposit or cause to be deposited all monies and other valuableeffects in the name and to the credit of MSI in compliance with applicable laws, rules and regulations:

6.2.1.3 Furnish a bond with sufficient sureties for the performance of his duties if and when required to do so by the Board, the amount of which bond is to be determined by the said Board;

6.2.1.4 Regularly and at least quartedy render to the CEO or to the Board an account of the condition of funds of MSI and all of his transactions as such;

6.2.1.5 Provide relevant and timely financial market information;

6.2.1.6 He shall perform all other duties incident to his office and shall have such other powers and duties as the CEO, the Board or the By-Laws may confer on him.

6.2.1.7 Ensure the fund availability on a timely basis and at the most economical terms;


6.2.1.8 Optimize yields in temporary excess funds, but at the same time ensure the implementation of appropriate risk management measures over resources.

6.3 Other Officers

6.3.1 The Board may appoint other Officers as are necessary or desirable in the conduct of the business.

6.3.2 Each such Officer shall perform such duties as the CEO, the Board of Directors or the By-Laws may prescribe.

7. FIT AND PROPER RULE FOR DIRECTORS AND THE CEO

Each director and the CEO shall, during their tenure an d/or term of office, possess and maintain the qualifications and none of the disqualifications under the Fit and Proper Rule, specifically as to integrity, experience, education, training and competence.

7.1 Qualifications

Without prejudice to the qualifications set out in the By-laws of MSI, every Director and CEO of MSI must possess the following minimum qualifications:

7.1.1 Be a Filipino citizen;

7.1.2 Be at least thirty (30) years of age at the time of appointment to the Governing Board, except when the By-Laws requires a higher minimum age, which requiremenl shall prevail;

7.1.3 Be of good moral character, of unquestionable integrity, and of known probity;

7.1.4 Have a college degree, with at least five (5) years relevant work experience, except for a sectoral representative who only needs to be a bona member of the indicated sector or the association being represented as provided, if any, in the By-laws;

7.1.5 Possess management skills and competence preferably relating to the operations of MSI; and

7.1.6 Have attended, or will attend within three (3) months from the date of appointment, a special seminar on public corporate governance for Directors conducted by the GCG or any individual or entity accredited by the GCG.

7.1.7 Possess all other qualifications as required under the By-Laws and other applicable law, rules and regulations.


7.2 Disqualifications

Without prejudice to specilic provisions of law. rules and regulations of a Government Agency prescribing disqualifications for Directors, the following are the disqualification rules for Directors and the CEO:

7.2.1 Pemanent Disqualifications

7.2.1.1 Conviction by final judgment of a court or tribunal of:

7.2.1.1.1 a crime or offense involving dishonesty or breach of trust such as, but not limited to, estafa, embezzlement, extortion, forgery, malversation, swindling, theft, robbery, falsification, or bribery; violation of the Bouncing Checks Law, or the Anti-Graft and Corrupt Practices Act, prohibited acts and transactions under Section 7 of the Code of Conduct and Ethical Standards for Public Officials and Employees, violation of banking laws, rules and regulations; Provided, howeyer, that when the penalty imposed in the final judgment of conviction is censure or repimand, the determination by GCG whether whether it shall constitute a ground for permanent or temporary disqualilication, from the terms of the judgment.

7.2.1.1.2 a crime or offense where the sentence imposed is a term of imprisonment of at least six (6) years and one (1) day, or

7.2.1.1.3 a violation of the laws, rules and regulations particularly applicable to the seclor under which the MSI is classified, and in other related sectors;

7.2.1.2 Judicial declaration of insolvency, of obtaining status of being spendthrift or incapacity to contract;

7.2.1.3 Administrative liability under any of the following circumstances:

7.2.1.3.1 found by a competent administrative body as administratively liable for violation of laws, rules and regulations particularly applicable to the sector to which MSI belongs, as well as those covered by relaied sectors, and where a penalty of removal from office is imposed, which finding of the administrative body has become final and executory;

7.2.1.3.2 determined by the COA pursuant to a Notice of Disallowance which has become final and executory, to have, by virtue of their office, acquired or received a benefit or profit, of whatever kind or nature including, but not limited to, the acquisition of shares in corporations where a GOCC has an interest, using the rights, options or properties of the GOCC for their own benefit, receiving commission on contracts from the GOCC’s assets, or taking advantage of corporate opportunities of the GOCC; or


7.2.1.3.3 found to be culpable for a GOCC'S insolvency, closure, or ceasure of operations, as determined by the GCG in consultation with the appropriate Government Agency;

7.2.1.4 Directors and officers of private corporataons, or any person found by the GCG in consultation with the appropriate Governmenl Agency, to be unfitfor the position of Director because they were found administratively liable by such Government Agency for:

7.2.1.4.1 a violation of laws, rules and regulations relevant to the sector of which MSI belongs, as well as in related sectors; or

7.2.1.4.2 any offense/violation involving dishonesty or breach of trust; and which finding of such Government Agency has become final and executory.

7.2.2 Temporary Disqualifications

7.2.2.1 Refusal or failure to fully disclose the extent of their business interest or any Material lnformation to the GCG, the appropriate Government Agency or the GOCC concerned, when required pursuanl to the requirements of the Securities Regulation Code, the Corporation Code of the Philippines, or any other relevant provision of law, as well as when required by a circular, memorandum, rule or regulation, applicable to such institutions; and such disqualification shall be in effect as long as the refusal or failure persists;

7.2.2.2 For Directors, absence or failure to participate for whatever reason in more than fifty percent (50%) of all meetings, both regular and special, of the Board during the immediately preceding semester, or who failed to attend for whatever reason at least twenty-flve percent (25%) of all board meetings in any year, Provided, however, that such temporary disqualification applies only for purposes of the immediately succeeding appointment process for a new term of offlce;

7.2.2.3 Delinquency in the payment of their obligations as defined hereunder:

7.2.2.3.1 Delinquency in the payment of obligations means the failure to pay according to the terms of the contracted obligation with a GOCC, Subsidiary or Affiliate or with a private corporation, within at least sixty (60) days from formal demand;

7.2.2.3.2 Obligations shall include all borrowings obtained by:

a. the Director or CEO on his/her own account or as therepresentative or agent of others or where he/she acts as a guarantor, endorser or surety for loans from such institutions;

b. the spouse or child under the parental authority of theDirector or CEO;


c. any person whose borrowings or loan proceeds were credited to the account of. or used for the benefit of a Director or the CEO;

d. A partnership in which a Director or the CEO, or his/herspouse, is the managing partner or a general partner owning a controlling interest in the partnership; and

e. A corporation, association or firm wholly-owned or majority of the capital of which is owned, by any or a group of persons mentioned in the foregoing ltems (a),(c) and (d) of this subsection; and

7.2.2.3.3 Such temporary disqualification shall be in effect as long as the delinquency persists.

7.2.2.4 Conviction in the first instance by a court for any of the following, but whose conviction has not yet become final and executory; Provided, however, that such temporary disqualification shall automatically cease upon receipt by the GCG of a certifled true copy of a judgment amounting to an acquittal:

7.2.2.4.1 any ofiense involving dishonesty or breach of trust such as, but not limited to, estafa, embezzlement, extortion, forgery,malversation, swindling, theft, robbery, falsification, or bribery; a violation of the Bouncing Checks Law, the Anti-Graft and Corrupt Practices Act, prohibited acts and transactions under Section 7 of the Code of Conduct and Ethical Standards for Public Officials and Employees;

7.2.2.4.2 a violation of banking laws, rules and regulations; or

7.2.2.4.3 an offense where the penalty imposed is to serve a maximum term of imprisonment of more than six (6) years;

7.2.2.5 Being Directors or CEOs of private corporations which have been officially declared insolvent, dissolved or closed, pending their clearance by the GCG in consultation with the appropriate Government Agency;

7.2.2.6 For Directors, becoming disqualified for failure to observe/discharge their duties and responsibilities prescribed under the Ownership and Operations Manual Governing the GOCC Sector, the Code, the respective manual ofcorporate governance adopted by the GOCC concerned, or existing rulesand regulations of the GCG; and such temporary disqualification applies until the lapse of the specific period of disqualification or upon approval by the GCG of such Directors' appointment/reappointment;

7.2.2.7 For Directors, failure to attend within three (3) months from theirappointment and assumption of ofllce the public corporate governance seminar for Directors conducted by the GCG or any individual/entity


accredited by the GCG; Provided, however, that such disqualification shall cease when the Director concerned has submitted to the GOCC an offlcial certiflcation that he/she has attended such seminar:

7.2.2.8 Being dismissed/terminated from employment for just cause; Provided, however, that such temporary disqualification will cease when they have cleared themselves of involvement in the alleged irregularity;

7.2.2.9 Being under preventive suspension, whether it be in the government service or in private sector service; Provided, however, that GCG shall determine from the cause for the preventive suspension whether it shall constitute a ground for temporary disqualification

7.2.2.10Having derogatory records as certified by, or on the official files of, the Judiciary, the National Bureau of lnvestigation (NBl), the Philippine National Police (PNP), the Ombudsman, guasi-judicial bodies, other government agencies, international police, monetary authorities and similar agencies or authorities of foreign countries, for irregularities or violations of any law, rules and regulations that would adversely affect the integrity of the Director or CEO, or the ability to effectively discharge his/her duties; and this disqualification applies until they have clearedthemselves of the alleged irregularities/violations, or after a lapse of five (5) years from the time the complaint, which was the basis of the derogatory record, was initiated;" Provided, however, thal GCG shall determine from the nature of the derogatory record whether it shall constitute a ground for temporary disqualification;

7.2.2.11Being a Director or CEO of private corporalions or GOCCS found by the appropriate Government Agency as administratively liable for violation of laws, rules and regulations relevant to the sector of MSI, as well as in relaled sectors, where a penalty of suspension from office or fine is imposed, regardless whether the finding of the appropriate Government Agency is flnal and executory or pending appeal before the appellate court, unless execution or enforc€menl thereof is reslrained by the court; and such disqualification shall be in effect during the period ofsuspension or so long as the fine is not fully paid; or

7.2.2.12Becoming confronted with conflict of interest as defined under the Code of Conduct and Ethical Standards for Public Officials and Employees' and its lmplementing Rules and Regulations; and this disqualification applies until the conflict of interest is resolved.

7.3 Effect of Non-Possession of Qualifications and/or Possession of Disqualifidation

A prospective appointee who does not possess all the qualifications and/or has any of the disqualifications provided for hereof or in the Code shall not be included in the shortlist to be submitted to the President. ln the same manner, an incumbent Director who no longer has all the qualifications and/or has incurred any of the disqualifications provided hereof shall not be qualified for re-appointment.


7.3.1 Sworn Certification by a Director

A Director, prior to assuming the position to which he/she was appointed, shall submit to the Compliance Officer, a sworn certification that he/she possesses all the qualifications and none of the disqualifications pertaining to the position as found in the By-laws, the provisions of laws, rules and regulations applicable to

MSI, and as provided for in this Manual.

7.3.2 Removal For Lack of Qualifications or Possession of Disqualification Upon Appointment or Election

When recommended by the GCG for removal from office for cause to the President, in case of the Director, and to the Board, in the case of the CEO, for failure to possess all the requisite qualifications and/or has any of the disqualifications at the time of his/her appointment or election, a Director or

CEO may, subject to the requirements of due process, be removed from office.

7.3.3 Removal For Lack of Qualifications or Possession of Disqualification During Tenure

When recommended by the GCG for removal from office for cause to the President, in case of the Director, and to the Board, in the case of the CEO, forfailure to possess all the requisite qualifications and/or has any of the disqualifications during his/her tenure, a Director or CEO may, subject to the requirements of due process, be removed from office.

8. ACCOUNTABILITY OF DIRECTORS AND OFFICERS

8.1 As fiduciaries of the State

Directors and Officers are fiduciaries of the State in that: (a) they have the legalobligation and duty to always act in the best interest of MSI, with utmost good faith in all dealings with the properties, interests and monies of MSI, and (b) theyare constituted as trustees in relation to the properties, interests and monies of MSI. This fiduciary duty includes the following:

8.1.1 Duty of Diligence

Every Director or Olficer, by the act of accepting such position in MSI, afflrms and agrees to have a working knowledge of the statutory and regulatory requirements affecting MSI, including the contents of its Articles of lncorporation and By-Laws, the requirements of the GCG, and where applicable, the requirements of the appropriate Government Agency; and to always keep himself informed of industry developments and business trends in order to safeguard the interests of MSI and preserve its competitiveness. This duty of diligence includes the following obligation:


8.1.1.1 To exercise Extraordinary Diligence, skill and utmost good faith in the conduct of the business and in dealing with the propertiesof MSI, using the utmost diligence of a very cautious person with dueregard to all the circumstances;

8.1.1.2 To apply sound business principles to ensure the financial soundness of MSI, and

8.1.1.3 To elect and/or employ only Officers who are fit and proper to hold such office with due regard to the qualifications, competence,experience and integrity.

8.1.2 Duty of Loyalty

The fiduciary duty of loyalty of Directors and Officers to always act in thebest interest of MSI, with utmost good faith in all its dealings with theproperty and monies of MSI, includes the obligation to:

8.1.2.1 Act with utmost and undivided loyalty to MSI.

8.1.2.2 Avoid conflicts of interest, whether actual or potential, with MSI anddeclare any interest they may have in any particular matter beforethe Board. Each shall also avoid any conduct, or situation, which could reasonably be construed as creating an appearance of a conflict of interest. Any question about a Director’s or Officer’s actual or potential conflict of interest with MSI shall be broughtpromptly to the attention of the Chairman, who will review thequestion and determine an appropriate course of action; and

8.1.2.3 In accordance with the trustee relation to GOCC properties, interests and monies, hold in trust any and all realized and unrealized profits and/or benefits including, but not limited to, the share in the profits, incentives of Directors or Officers in excess of that authorized by the GCG, stock options, dividends and other similar offers or grants from corporations where MSI is a stockholder or investor, and any benefit from the performance of Directors or Officers acting for and in behalf of MSI in dealing with its properties, investments in other corporations, and other interests, are to be held in trust by such Director or Officer for the exclusive benefit of MSI without prejudice to any administrative, civil or criminal action against members of the such Director or Officer, except for the per diem received for actual attendance in meetings of the Board or any of its committees and the reimbursement for actual and reasonable expenses and incentives as authorized by the GCG.The remedy of restitution shall apply notwithstanding the fact that such Director or Officer risked his/her own funds in the venture.

8.1.2.3.1 Limits to Compensation, Per Diems, Allowances andIncentives


a. The compensation, per diems, allowances andincentives of the Directors shall be as determined by the GCG, using as a reference, among others,Executive Order No. 24, dated February 10, 2011; and

b. Directors shall not be entitled to retirement benefits as such directors.

8.1.2.4 In accordance with the rule against taking of corporate opporlunities, account for all benefit or profit of whatever kind or nature, including but not limited to, the acquisition of shares in corporations where MSI has an interest, the use the properties of MSI, the receipt of commission(s) on contract(s) with MSI or its assets obtained by reason of his being a member of the Board or an Officer of MSI, all such profits or benefits shall be subject to restitution pursuant to Section 24 of the Act, without prejudice to any administrative, civil or criminal action against such Director or Officer. The remedy of restitution shall apply notwithstanding the fact that such Director or Officer risked his/her own funds in the venture.

8.1.2.4.1 Restitution

Upon the determination and report of the COA pursuant to a Notice of Disallowance which has become final and executory, that properties or monies belonging to MSI are in the possession of a Director or Officer without authority, or that profits are earned by the Director or Officer in violation of his/her fiduciary duty, or the aggregate per diems, allowances and incentives received in a particular year are in excess of the limits provided under the Act, the Director or Officer receiving such properties or monies shall immediately return the same to MSI. Failure by a Director or Officer to make the restitution within thirty (30) days after a written demand has been served shall, after trial and final judgment, subject such Director or Officer to the

punishment of imprisonment for one (1) year and a fine equivalent to twice the amount to be restituted and, in the discretion of the court of competent jurisdiction, disqualification to hold public office.

8.1 As Public Officials

Directors and Officers are also public officials as defined by, and are therefore covered by the provisions of the “Code of Conduct and Ethical Standards for PublicOfficials and Employees,” with its declared policies to promote a high standard ofethics in public service, and f o r p u b l i c o f f i c i a s and employees to be at alltimes accountable to the people and discharge their duties with utmost responsibility, integrity, competence, and loyalty, act with patriotism and justice, leadmodest lives, and uphold public interest over personal interest.


8.2 Respect for and Obedience to the Constitution and the Law

As public officials, a Director or Officer shall respect and obey the Constitution, and shall comply, and cause MSI to faithfully and timely comply, with all legal provisions, rules and regulations, and corporate governance standards, applicable to themand to MSI in which they serve, and to act within the bounds of the Articles ofIncorporation and By-Laws.

8.3 No Gift Policy

8.3.1 Prohibition to Accept Gifts

A Director or Officer shall not solicit, nor accept, directly or indirectly, anygift, gratuity, favor, entertainment, loan or anything of monetary value fromany person where such Gift:

8.3.1.1 Would be illegal or in violation of law;

8.3.1.2 Is part of an attempt or agreement to do anything in return;

8.3.1.3 Has a value beyond what is normal and customary in thebusiness of MSI;

8.3.1.4 Is being made to influence the member of Board’s, orOfficer’s, actions as such; or

8.3.1.5 Could create the appearance of a conflict of interest.

8.3.2 Full Advertisement of No Gift Policy

MSI shall ensure the full advertisement of i ts exis t ing No Gif t Pol icy as provided in I tem 11.5 of th is Manual within its premises and its strict implementation by particular set of rules.

8.4 Duty of Confidentiality

Pursuant to their duties of diligence and loyalty, a Director or an Offlcer shall not use or divulge confidential or classified information officially made known to him by reason of his office and not made available to the public, either to further his private interests, or give undue advantage to anyone; or which may preiudice the public interest.

9. OBLIGATIONS OF MSI TO DIRECTORS AND OFFICERS

9.1 Staff Support to Directors

MSI shall provide the members of the Board with reasonable support staff and office facilities to allow them to properly discharge their duties and responsibilities.


9.2 DOLI

Having imposed the highest level of responsibility and accountability on the members of the Board and Officers, that is, that of extraordinary diligence, it is equitable that when MSI itself and/or the members of the Board and Management are sued before tribunals on matters that are within the official functions and capacity and on matters where business judgment has been exercised in good faith, that there be proper recovery of the costs of litigation and the judgment liability imposed. lt is prudent measure therefore for MSI to obtain DOLI coverage for itself and the members of the Board and Officers against contingent claims and liabilities that may arise from, as well as the expenses that may be incurred in prosecuting, the actions that may be filed against MSI arising from the actions of the Board and/or Management that may cause loss or damage to third parties in accordance with GCG Memorandum Circular No. 2012-10. Nothing herein shall be construed as to authorize the reimbursement or the incurring of costs, such as the payment of premiums on DOLI coverage, by MSI on the litigation expenses incurred and the judgment liability decreed against a Director or Officer for breach of any of his fiduciary duties or for fraud committed in the performance of his or her duties to MSI and/or its stakeholders.

10. CORPORATE SOCIAL RESPONSIBILITY

10.1 Duty to Be Responsive to Stakeholders

Every Director and Officer accepts the position fully aware that he assumescertain responsibilities not only to MSI and its stockholder, but also with differentconstituencies or Stakeholders, who have the right to expect that MSI is being run in a prudent manner and with due regard to the interests of all Stakeholders.Consequently, members of the Board and Officers shall deal fairly with MSI’semployees, customers, suppliers and other Stakeholders. No member of the Boardor Officer may take unfair advantage of MSI’s employees, customers, suppliers and other Stakeholders through manipulation, concealment, abuse of confidential or privileged information, misrepresentation of material facts, or any other unfair-dealing practice.

10.2 CSR Principles

As an integral part of the State, MSI, as with any other GOCC, is inherentlymandated to be socially responsible, to act and operate as good corporatecitizens. The Board shall recognize and perform the obligations MSI has towards the State, its stockholder LBP, together with the employees, suppliers, customersand other Stakeholders, and the communities in which it operates.

The Directors, Officers and all its employees are required to abide by ethicalpolicies as mandated by MSI. The protection of the reputation and goodwill of MSI isof fundamental importance, and Directors, Officers and employees should be awareof the disciplinary implications of breaches of policy.

Every officer and employee of MSI is encouraged to promptly report any potentially illegal, improper and/or unethical conduct that they become aware of at their workplace or in connection with their work. MSI should have an environment that


enables its people to raise genuine and legitimate concerns internally. However, inthe event that the people of MSI, and/or the stockholders believe their reporting to management may result in harassment, or undue distress, they may contact theGCG support to report such matters. The GCG provides for an opportunity forconcerns to be investigated and ensures appropriate action is taken to resolve thematter effectively.

10.3 Encouragement to EmployeesMSI strives to, and shall adopt measures, through employee development discussions and structured training programs for continuing personal and professional development for employees to, encourage employee toward the following:

10.4.1 Remember that the biggest stakeholder is the Government;10.4.2 Share the vision of MSI;10.4.3 Be accountable to the public;10.4.4 Listen and learn from his/her co-employees;10.4.5 Think and act as a team;10.4.6 Focus on the customers and strive for customer satisfaction;10.4.7 Respect others;10.4.8 Communicate with stockholders and customers;10.4.9 Deliver results and celebrate success; and10.4.10 Protect the reputation of MSI.

10.4 Customers

lntegrity and honesty in dealings with customers is necessary for a successful and sustained business relationship. MSI strives to operate a highly effective and efficient organization, focused on meeting customer objectives with the aim of providing services which give fair value and consistent quality, reliability and safety in return for the price paid for the same. MSI aims to operate policies of continuous improvement, of both processes and the skills of the staff, to take best advantage of advances in all aspect of society in order to ensure that it continues to add value to its customers' businesses.

MSI endeavours to have clear and strong lines of communication which allow it to respond quickly and efficiently to customer and markel requirements, as well as the public needs, and for the customers to receive consistent service in order to successfully and consistently deliver its mandate.

10.5 Suppliers

As with other relationships with its Stakeholders, MSI aims to develop relationships and improve networking with business partners and suppliers based on mutual trust. MSI aims to offer, through partnership with its suppliers, the best combination of state-of-the- art technology and world class service, strong customer relations and deep industry knowledge and experience, together with the capacity to implement and deliver value-added solutions on time and within budget.


10.5.1 Recognition of Cooperatives of Either Farmers and Fisherfolk as Stakeholders

MSI recognizes that sustainable business and quality service involves solid partnerships between MSI and its primary supplier/partner, the cooperatives of either farmers and fisherfolk. In support therefor, MSI shall provide price incentives for their respective produce through payment-in kind programs.

MSI is in continuous pursuit of identifying projects and opportunities intended to improve the productivity and income of cooperatives of farmers and fisherfolk. Furthermore, MSI also aims to provide developmental support aimed at enhancing their capability, technology and competitiveness

The cooperatives of farmers and fisherfolk, through active participation in MSI’s projects and undertaking, shall be encouraged to enhance the quality and quantity of their respective products/produced. MSI shall provide venue for these cooperatives to access corporate clienteles and end-users through market linkaging. Consequently, by its market support, MSI shall enable the cooperatives to benefit financially and building up their income level/capacity.

10.6 Conflicts of Interest Among Stakeholders

MSI aims to resolve conflicts of interest among its stakeholders with the end in view of finding a common ground consistent with the best interest of the respective stakeholders. In cases where the same is not attainable, conflicts of interest shall be resolved in favor of the following order:

10.6.1 Cooperatives of Farmers and Fisherfolk, as partner/suppliers);10.6.2 Land Bank of the Philippines;10.6.3 Employees and 10.6.4 Other partner-suppliers.

10.7 Heath and Safety

MSI aims to ensure a safe and healthy working environment for all its employees, outside contractors and visitors. MSI shall comply with all relevant local legislation or regulations, and best practice guidelines recommended by national health and safety authorities. MSI endeavours to inform its staff regarding its policies and practices in order to maintain a healthy, safe and enjoyable environment.

10.8 Environment

MSI recognizes that there are inevitable environmental impacts associated with its daily operations. lt is the goal of MSI to minimize harmful etfects and consider the development and implementation of environmental standards to achieve this to be of great importance. As such, MSI strongly encourages the 3 R's: "Reduce", “Re-use”

and "Recycle", striving to re-use and recycle where possible and dispose of non-recyclable items responsibly, thereby minimizing its impact on the environment. ln the course of its operations, MSI seeks to identify opportunities to reduce consumption of


energy, water and other natural resources. By adopting simple, environmentaily friendly initiatives, MSI shall raise awareness among the members of the communities it affects.

10.9 Communication Plans

1.9.1 The Manual shall be made available for inspection by any stakeholder of the Corporation at reasonable hours on business days.

1.9.2 Plans, programs, initiatives and other pertinent information shall also be posted at MSI’s website.

1.9.3 Conduct of annual survey of customer feedback to assess the adequacy of service provided and/or room or opportunities for improvement.

11. COMMITMENTS AND DISCLOSURES

Consistent with transparency as the essence of Corporate Governance, MSI discloses its adoption of the following documents, through the Directors or the Management, as the case may be, which are attached and made as integral parts of this Manual:

11.1 Formal Charter of Expectations to be signed by each Director (Annex “A”);

11.2 Statement of Directors’ Responsibility confirming the truth and fairness of MSI's financial statements (Annex “B”);

11.3 Statement of Management Responsibility confirming the truth and fairness of MSI's financial statements (Annex “C”);

11.4 Corporate Social Responsibility to Customers, Partner-Suppliers and the Environment (Annex “D”)

11.5 No Gift Policy, as approved per Board Resolut ion No. 2013-34 (Annex “E”)

11.6 Disclosures by Directors

Each Director undertakes to provide timely disclosures on matters considered material under this Manual.

11.7 Penalties for Non-Compliance with the Manual (Annex “F”)

Save when the Manual expressly provides for the specific penalty for violation or non-compliance and without prejudice to any other penatlies that may be imposed by the appropriate Government Agency pursuant to law, rule or regulation, MSI adopts a set of penalties for non-compliance with the Manual. In accordance with the requirements of due process, the Board and the Management shall come up with procedural and substantive guidelines for the application of the appropriate penalties.

READ AND APPROVED BY THE BOARDOn December 18, 2013


ANNEX A

FORMAL CHARTER OF EXPECTATIONS (MASAGANANG SAKAHAN, INC.

BOARD EXPECTATIONS

Managing the business and affairs of the MASAGANANG SAKAHAN, INC (MSI). The Board delegates authority to the Pres. & General Manager to provide MSI with day-to-day leadership and management.

The Board has established three committees to provide more detailed review and oversight of important areas of responsibility. These committees are the Executive and Compensation and Remunerations Committee, Governance and Risk Management Committee and Audit Committee. The Board is responsible for appointing directors to these committees, and establishing and periodically reviewing their terms of reference.

The Board has implemented a process to evaluate its performance in fulfilling its responsibilities.

Other responsibilities of the Board include:

Periodic review of the composition of the Board Appointing the Chairman, Vice-Chairman, Treasurer and Secretary of the Board Establishing and enforcing a Board and Corporate confidentiality policy Implementing corporate governance policies to fulfil the Board's responsibilities for

oversight and control

The Charter stipulates the personal and professional characteristics expected of directors, including:

High ethical standards and integrity in their personal and professional dealings Willingness to act upon and remain accountable for their boardroom decisions Wise and thoughtful counsel to the Board and management on a broad range of issues Depth of knowledge to understand and question the assumptions upon which the

strategic and business plans are based Reasonable level of financial literacy (know how to read financial statements and

understand the use of financial ratios) Respect for confidentiality Willingness to be available as a resource to management and the Board Respect for others

Individual directors are also expected to:

Prepare for each Board and committee meeting Maintain an excellent Board and committee meeting attendance record Participate fully and frankly in Board deliberations and discussions Demonstrate willingness to listen to others’ opinions and consider them


Be willing to raise tough questions in a manner that encourages open discussion Establish an effective, independent and respected presence on the Board and a collegial

relationship with other directors Focus inquiries on issues related to strategy, policy and results rather than day to day

issues of corporate management Think, speak and act independently Be willing to risk rapport with the Chair and other directors in taking a reasoned,

independent position Participate on committees and become knowledgeable about the duties, purpose and

goals of each committee Become knowledgeable about MSI's business and the industry it operates in Maintain a current understanding of the regulatory, legislative, business, social and

political environments in which MSI operates Become acquainted with MSI's Officers/Staff Visit MSI's offices when appropriate


ANNEX BSTATEMENT OF BOARD OF DIRECTOR’S RESPONSIBILITY

FOR FINANCIAL STATEMENTS

The Board of Directors of Masaganang Sakahan, Inc. (MSI) is responsible for all information and representations contained in the financial statements for the year ended December 31, _____. The Financial Statements have been prepared in conformity with the generally accepted accounting principles and reflect amounts that are based on the best estimates and informed judgment of management with an appropriate consideration to materiality.

In this regard, management maintains a system if accounting and reporting which provides for the necessary internal controls to ensure that transactions are properly authorized and recorded, assets are safeguarded against unauthorized use or disposition and liabilities are recognized.

The Board of Directors reviews the financial statements before such statements are approved and submitted to the stockholders of the company.

The Commission on Audit (COA), the state auditors has examined the financial statements of the company in accordance with generally accepted auditing standards and has expressed its opinion on the fairness of presentation upon completion of such examination, in its report to stockholders.

President

MSI BOARD OF DIRECTORS

Chairman

Vice –Chairman

MemberS


ANNEX C

STATEMENT OF MANAGEMENT’S RESPONSIBILITYFOR FINANCIAL STATEMENTS

The management of Masaganang Sakahan, Inc. (MSI) is responsible for all information and representations contained in the financial statements for the year ended December 31, _____. The Financial Statements have been prepared in conformity with the generally accepted accounting principles and reflect amounts that are based on the best estimates and informed judgment of management with an appropriate consideration to materiality.

In this regard, management maintains a system if accounting and reporting which provides for the necessary internal controls to ensure that transactions are properly authorized and recorded, assets are safeguarded against unauthorized use or disposition and liabilities are recognized.

The Board of Directors reviews the financial statements before such statements are approved and submitted to the stockholders of the company.

The Commission on Audit (COA), the state auditors has examined the financial statements of the company in accordance with generally accepted auditing standards and has expressed its opinion on the fairness of presentation upon completion of such examination, in its report to stockholders.

Signature __________________________Name of the Chairman of the Board :

Signature __________________________Name of the Chairman of the Executive Committe :

Signature __________________________Name of the Treasurer :


ANNEX D

MASAGANANG SAKAHAN, INC.CORPORATE SOCIAL RESPONSIBILITY

A. CUSTOMERS

MSI believes that integrity in dealings with customers is a prerequisite for a successful and sustained business relationship.

MSI operation is focused on meeting customer demands and requirements. MSI goal is to provide products and services which give fair value and consistent quality and reliability in return for fair reward.

MSI operate policies of continual improvement, of both processes and the skills of our staff, to take best advantage of advances in technology.

MSI has established lines of communication which allow us to respond quickly and efficiently to customer feedbacks and requirements.

Our sales effort and delivery capability are aligned in order to ensure that we can successfully and consistently deliver what we promise.

B. PARTNER/SUPPLIERS

MSI recognizes that sustainable business and quality service involves solid partnerships between MSI and its primary supplier/partner, the farmers and their cooperatives. Thus, MSI in support to their partner farmer-cooperatives is in continuous pursuit of identifying projects and opportunities intended to improve the productivity and income of its farmers-cooperatives:

Currently, MSI is into: Provision of marketing support/assistance through ensuring ready market for farmers

cooperatives produced and/or market linkaging services Improving farmers-cooperative income through provision of price incentives for quality

produce via Payment In Kind Program Makings available MSI solar drying facilities for free for cooperatives drying needs Recognition/Award for Cooperatives active participation to MSI Program

MSI in the future is looking into: Provision of capability and training needs of partner farmer-cooperatives

C. ENVIRONMENT

MSI acknowledges that there are inevitable environmental impacts associated with daily operations. Thus, MSI aim to minimize any harmful effects and consider the development and implementation of environmental standards to achieve this to be of great importance. As such, MSI strongly encourage the internationally established 3 Rs:


reduce re-use recycle

In the course of MSI operations, MSI seek to identify opportunities to reduce consumption of energy, water and other natural resources. We also strive to re-use and recycle where possible like paper and dispose of non-recyclable items responsibly, thereby minimizing our impact on the environment.

In addition, this year, MSI management initiated a tree-planting program and intends to continue the said activity to ensure MSI support for keeping the nature at its better condition.

It is anticipated that by adopting simple, environmentally friendly initiatives, MSI will raise awareness amongst stakeholders and the wider community.


ANNEX E

MASAGANANG SAKAHAN INC.NO GIFT POLICY

(As Amended)

To show Masaganang Sakahan, Inc. (MSI) commitment to the highest standard of ethics and conduct of public officers and to dealing impartially with all individual and/or organizations (public and private), to whom we come into contact or conduct business with MSI, its members of the Board of Directors, Corporate Officers and Rank and File Employees are directed to observe and comply with GCG Memorandum Circular No. 2012-12, series of 2012 on “NO GIFT POLICY” of the Governance Commission for GOCC’s, as well as comply with the specific provisions of Republic Act No. 6713 (An Act Establishing a Code of Conduct and Ethical Standards for Public Officials and Employees, to Uphold the Time-Honored Principle of Public Office Being a Public Trust, Granting Incentives and Rewards for Exemplary Service, Enumerating Prohibited Acts and Transactions and Providing Penalties for Violations Thereof and for Other Purposes) and RA No. 3019 (Anti-Graft and Corrupt Practices Act).

I. NO GIFT POLICY

MSI, its members of the Board of Directors, Corporate Officers and Rank and File Employees, shall NOT SOLICIT OR ACCEPT, directly or indirectly, any gift, gratuity, favor, entertainment, loan, or use, anything of monetary value from a person, groups, associations, or juridical entities, whether from the public or private sectors, at any time, on or off work premises, in the course of their official duties or in connection with any operation being regulated by, or any transaction which may be affected by the functions of their office.

II. PROHIBITIONS, but not limited to: Soliciting or accepting, directly or indirectly, any gift, gratuity, favor, and entertainment,

anything of monetary value in the course of performance of official duties or in connection with any operation being regulated by or any transaction which may be affected by the functions of his/her office.

Advertisement in the publication of MSI. Discounts, rebates, waivers and other forms of monetary incentives or benefits given to

MSI, its members of the Board of Directors, Corporate Officers and Rank and File Employees, in availing of the services and/or facilities of persons or entities under the jurisdiction of the MSI.

Any offer of gift or entertainment which might be seen as excessive, or put the recipient under an obligation, or influence a procurement decision, or be in doubtful taste or be liable to bring the name of MSI into dispute should be declined or returned to the giver. “Excessive” would include offers of gift or entertainment that are over-frequent; or part of a pattern of invitations that, taken together, appears inappropriate; or disproportionately lavish considering the relationship between or the position of the giver and the recipient.


III. NO GIFT POLICY EXCEPTIONS Unsolicited gifts or presents of small/nominal or insignificant value offered or given as a

mere ordinary token of gratitude or friendship according to local customs or usage, not given in anticipation of, or in exchange for, a favor from MSI or given after the transaction is completed, or service is rendered.

A gift from a member of the family, relative or friends on the occasion of a family celebration, and without any expectation of pecuniary gain or benefit;

Nominal gifts or grants from persons with no regular, pending, or expected transactions with the department or unit with which MSI, its members of the Board of Directors, Corporate Officers and Rank and File Employees is connected, and without any expectation of pecuniary gain or benefit.

Acceptance and retention of certificates, plaques, cards, thank you notes, or other written forms of souvenir or mark of courtesy.

Acceptance of seminar bags and contents, and partaking of moderately priced meals and beverages that officers and employees obtain at events, such as conferences and seminars, and which are offered equally to all members of the public attending the event.

Acceptance of books, pamphlets, publications, and date and other information or reading materials that are directly useful to MSI in the performance of its mandates, objectives and which books and other materials are given by individuals or organization that have no pending business with MSI as to create an actual or potential conflict of interest.

Acceptance of MSI Officers and employees of a scholarship or fellowship grant, travel grants or expense for travel taking place within or outside of the Philippines (such as allowances, transportation, food and lodging) or more than nominal value, if such acceptance is appropriate and consistent with the interests of the Government and permitted by the Chairman of MSI.

Acceptance or availment by MSI of grants from local or foreign institutions in the pursuit of the mandates, projects and activities, such as those coming from ADB, WorldBank, USAID, etc., provided that the availment thereof shall be strictly in compliance with the applicable procurement laws, rules and regulations.

IV. REQUIREMENT TO INFORM

All MSI Board of Directors, Officers and employees are required to professionally inform any individual, organization or institution with any actual or potential business dealings with the corporation of this “No Gift Policy”, the reason for its adoption and request for all parties concerned to respect the policy. Likewise, formal notices concerning the policy to inform walk-in clients and visitors shall be posted in the conspicuous areas within the premises of MSI offices�.

V. RETURN AND ACKNOWLEDGEMENT OF GIFT If MSI, any of its its members of the Board of Directors, Corporate Officers and Rank and

File Employees, received a gift covered by this policy:a. If feasible, the gift shall immediately and politely be declined.


b. If not feasible, or it is inappropriate or impractical, to return the gift, e.g. a perishable item, the gift shall be donated to an appropriate charitable or social welfare institution.

c. An acknowledgment letter shall be sent to the donor informing them of the “NO GIFT POLICY” and inform the giver of the intended disposition.

d. Queries relating to the implementation of these guidelines shall be directed to the Finance and Administrative Unit.

VI. EFFECTIVITY DATE – Immediately

____________�Adopted from Section 7, GCG Memorandum Circular No. 2012-12


ANNEX F

LIST OF FINE AND OTHER CONSEQUENCES WHEN DIRECTORS VIOLATE, OR OMIT TO CARRY OUT THEIR DUTIES, UNDER APPLICABLE LAW.

PENALTIES FOR NON-COMPLIANCE WITH THE MANUALTo strictly observe and implement the provisions of this manual, the following penalties shall be imposed, after notice and hearing, on MSI’s directors, officers and staff, in case of violation of any of the provision of this Manual:

In case of first violation, the subject person shall be reprimanded. Suspension from office shall be imposed in case of second violation. The duration of

the suspension shall depend on the gravity of the violation. For third violation, the maximum penalty of removal from office shall be imposed.

The Board may delegate to the President & General Manager the responsibility for determining violation/s through notice and hearing and shall recommend to the Audit Committee the imposable penalty for such violation, for further review and approval of the Board.

Documents

Masaganang Sakahan Inc. · 2017. 3. 21. · Manual on Corporate Governance Page 1 Masaganang Sakahan Inc. MANUAL ON CORPORATE GOVERNANCE (As last amended on September 23, 2014) We,