The Bell Awards: Giving value to excellent corporate governance

THE success and sustainability of a corporation truly involves a lot of facets. But the most fundamental of these is simply having a structure that keeps all levels of constituents interrelated. This structure is only obtained through sound corporate governance.

Corporate governance isn’t just one structure, though. It consists of the various duties, obligations and rights that control and direct a corporation. The essence of this governance is to properly dispense the responsibilities to all participants of a corporation. In addition to explicating responsibilities, corporate governance also lays down the workers’ rights within the company.

Good corporate governance ensures that the business environment is fair and transparent and that companies can be held accountable for their actions. Conversely, weak corporate governance leads to wastes, mismanagement and corruption.

Moreover, with globalization vastly increasing the scale of trade and the size and complexity of corporations, the
importance of corporate governance has been amplified as it becomes increasingly difficult to regulate companies’ internal and external relations.

Meanwhile, investors have also been putting a lot of emphasis on corporate governance as they want to put their money in a company or a market where they can be sure that their rights and interests as shareholders will be looked after and will grow together with the company.  The trust that good corporate governance brings for investors reciprocally creates long-term value for a company.

The Philippine Stock Exchange (PSE), the national stock exchange of the Philippines and one of the oldest stock exchanges in Southeast Asia, is one body that continually puts emphasis on corporate governance for its listed companies.

The PSE commissioned a study a few years ago that shows a positive correlation between a firm’s valuation and its corporate-governance practices. According to the study, companies with excellent corporate governance attract long-term capital more easily, reduce their cost of capital and have more stable sources of financing, develop enhanced relationships with regulators, the investing public, the community and other stakeholders.  In times of financial crises, companies with good corporate governance were found to be more resilient.

Corporate governance takes center stage

INDUCED by the importance of corporate governance for companies, the PSE first initiated the Bell Awards in 2011.  Since then, awards are given to select PSE-listed companies and trading participants found to have outstanding corporate-governance practices.

These companies are recognized to become role models that can inspire the rest of the market to aspire for higher corporate-governance standards.

“The Bell Awards is a recognition of excellence in corporate governance. I think, listed companies and trading participants would want to be identified as Bell Awards winners as this serves as a showcase not only of good housekeeping, but of being the best among their peers in the field of corporate governance,” PSE President and CEO Hans B. Sicat said.

In identifying the awardees, a panel of judges uses publicly available information and other submissions, including the annual self-assessment disclosure survey on the PSE corporate governance Guidelines for Listed Companies. The PSE validates these submissions and rates these companies under an
established scoring system.  The companies that rank high will be short-listed and potentially could be included in the roster finalists and winners of the Bell Awards.

The awards’ segment for trading participants is also subject to the same process. Trading partners are rated according to risk-rating criteria used by the Capital Markets Integrity Corp. (CMIC), which serves as the market-monitoring arm of the PSE, as well as the results of CMIC’s regular and special audits of these trading participants.

Ultimately, the PSE requires that its awardees not only adopt many of the best practices provided in the PSE corporate-governance guidelines, but also do not hold back in publishing all their corporate-governance programs, practices and activities in their website for the investing public and other interested parties.  Also, the awardees should not have any violation of rules mandated by the PSE, the Securities and Exchange Commission (SEC) and other regulatory bodies.

The Bell Awards 2014

THE Bell Awards truly imparts a high degree of prestige to the winners and even the finalists. The awardees get to be recognized by investors and other stakeholders as among the best-run companies in the Philippines. As British Ambassador Asif Ahmad mentioned in his keynote speech during this year’s Bell Awards ceremony, if he were to be asked by anyone from Britain who in the Philippines would be the best people to do business with, he can say “Start with the winners of the Bell Awards.”

This year, six trading participants and five listed companies have been given the privilege to hold the distinction of being 2014 Bell Awards recipients during the gala night on November 10.

The awardees in the large trading participants category were Deutsche Regis Partners Inc., First Metro Securities Brokerage Corp. and Maybank ATR Kim Eng Securities Inc., while the recipients of the Bell Awards in the small trading participants division were I. B. Gimenez Securities Inc., JSG Securities Inc. and R. S. Lim and Co. Inc. The listed companies that received the Bell Awards were Aboitiz Power Corp., Ayala Land, Cebu Holdings Inc., China Banking Corp. and Manila Water Corp.

Finalists in the trading participants and listed companies categories were also recognized. The finalists in the trading participants category were Credit Suisse Securities (Philippines) Inc., Macquarie Capital Securities (Philippines) Inc. and UBS Securities Philippines Inc. Meanwhile, the finalists in the listed companies category were Aboitiz Equity Ventures, BDO Unibank Inc., Globe Telecom Inc., Philippine Savings Bank and San Miguel Purefoods Co. Inc.

The 2014 PSE Bell Awards Panel of Judges was headed by SEC Chairman Teresita Herbosa. The panel is comprised of Ahmad, Capital Markets Integrity Corp. President Cornelio Gison, De La Salle—College of Saint Benilde President and Chancellor Brother Dennis Magbanua, FSC, and Representative Maria Leonor Gerona-Robredo of the Third District of Camarines Sur.