CORPORATE GOOD GOVERNANCE MANUAL - … Goveranance Manual.pdfPaglaum MBA,Inc. : Corporate Governance Manual Version 1. June 3,2015

CORPORATE GOOD GOVERNANCE

MANUAL (Version 1.June 3, 2015)

PAGLAUM

MUTUAL BENEFIT ASSOCIATION, INC. 1F PMPC Bldg., Eastern Looc, Plaridel, Misamis Occidental

Telephone Number (088) 344-8587 | e-mail address: [email protected] www.mba.paglaumcoop.org.ph

___________________________________________________________________ This Manual is a property of Paglaum MBA Inc. All rights reserved.

Paglaum MBA,Inc. : Corporate Governance Manual Version 1. June 3,2015 ----------------------------------------------------------------------------------------------------------------------------------------------------------

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PART 1. INTRODUCTION 1.1) Brief History of Paglaum MBA

Paglaum Mutual Benefit Association, Incorporated (Paglaum MBA) was organized last 2009. It was born out of the initiative of the officers and management of Paglaum Mutli-Purpose Cooperative under the leadership of Mrs. Virginia S. Rosal, Chairperson and Mr. Gadwin E. Handumon, General Manager. Its main objective is to have a legal and legitimate identity that can cater the mutual services of Paglaum MPC.

A careful and deliberate process went through in the set-up of Paglaum MBA. There was a consultation meeting with the identified and reliable partner in mutual insurance services. With proper evaluation of PMPC’s microfinance program, the challenge was the manner of collection on the Mutual Benefit Association whether or not to integrate the collection practices with the existing microfinance program. It came to final point when the PMPC’s Board of Directors resolved and approved to eliminate the Php 5.00 weekly contributions of Members Mortuary Fund (MMF) and implement the MBA weekly contribution amounting to Php 20.00 wherein breakdown into Php 5.00 for Retirement Savings Fund and Php 15.00 for Life insurance.

The PMPC Board of Directors and Management forged partnership with CARD-MBA thru its Build-Operate-And-Transfer (BOAT) Program. The important signing on the Memorandum of Agreement took place last January 24, 2009 at Asian Institute of Management (AIM), Makati City in Manila Mr. Gadwin E. Handumon, General Manager of Paglaum MPC, BOD Chairman Mrs. Virginia S. Rosal, BOD Vice-Chairman Mrs. Rosario B. Bation, Director Luz G. Moneva with the presence of Ms. Mila N. Barcelona, Finance Officer, Carmen C. Alegrado, MIS/Insurance Officer and Jefferson L. Magsalay, Internal Auditor.

In February 2009, a series of Branch Orientation was conducted across Paglaum MPC. Aided by CARD MBA, PMPC was guided in the whole cycle of implementation. Paglaum MBA went through many challenges and made wise interventions in the implementation of the program. One main challenge was the mushroomed Microfinance players in the area. But then, PAglaum MBA withstood with the unique innovation as Paglaum MBA was channelled in the existing Microfinance program of Paglaum.

In a span of a year, CARD MBA assessed the capability of PMPC and recommended to take off and ready to set-up its own Mutual Benefit Association. It was a touching moment when PMPC finally bid goodbye to the Build-Operate-And-Transfer (BOAT) Program but has kept its institutional partnership with CARD MBA.

As agreed and approved by the Insurance Commission for a BOAT partner CARD MBA, there was a fair calculation on both parties on Sharing of Revenues Over Expenses Scheme or profit sharing with Paglaum MPC amounting to Php 7,354,205.26. The turn-over ceremony happened last February 21, 2011 held at Paglaum Livelihood Training Center. The turn-over ceremony was witnessed by the key management personnel and officers of Paglaum MPC. The fund became the seed capital of Paglaum MPC to run its own mutual benefit association and for provision for reserved on life insurance and retirement savings fund.

Paglaum MPC signed-up the consultancy services of RIMANSI Organization for Asia and the Pacific,Inc., a non-government organization to assist Paglaum MPC establish its own Mutual Benefit Association and to facilitate application, registration to Securities & Exchange Commission and licensing to Insurance Commission. The signing of the Memorandum of Agreement was done last July 9, 2010 represented by PMPC BOD Chairman Mrs. Luz G. Moneva and Mr. Gadwin E. Handumon, General Manager of Paglaum MPC. RIMANSI conducted the needs assessment, market research, business planning, operations training and planning, member mobilization, governance set-up wherein interim board was set, operational start-up


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and facilitate the registration and licensing with the Securities & Exchange Commission and Insurance Commission.

For the Governance Set-up, the interim board of trustees of Paglaum Mutual Benefit Association, Incorporated is headed by Delia Dagayloan BOT Chairman, Vice chairman Mrs. Jeccil Tuastumban, Treasurer Mrs.Evelyn Salcepuedes, Secretary Mrs. Milamel Marco, Member Julie Lanticse, Independent Board Mrs. Nita Morequio and Atty Oscar Abuzo. Ex-officio /Advisor Mr. Gadwin E. Handumon. And the Interim Nomination Committee of Paglaum Mutual Benefit Association, Inc. who drafted the board of trustees election guidelines; the professional team from Paglaum MPC Mr. Mark Anthony Liboon, Compliance Manager; Ms. Lysette D. Asombrado, Special Project Officer and Ms. Carmen C. Alegrado, MBA/CAC Manager.

Paglaum Mutual Benefit is owned entirely by the members who have paid their weekly contributions. It is shown in the organizational structure seeing that General Membership as its highest level. Next to general membership is the board of trustees and below it is the Nomination Committee and Oversight & Audit Committee and bottom part is the Management Team. The management team of Paglaum MBA is the main implementers of the MBA programs aided with the support of the management team of Paglaum MPC.

A wary weighing of decision was made on bearing the official name of the association not to create confusions and irregularities. It has been settled to officially name PAGLAUM MUTUAL BENEFIT ASSOCIATION, INCORPORATED. It sets the perfect tone that the association is regulate by SEC and not by the Cooperative Development Authority.

September 23, 2011, SEC approved the registration of Paglaum Mutual Benefit Association, Incorporated. Six months after SEC Registration, the Insurance Commission approved license to operate microinsurance last March 19, 2012 while the Implementing Rules & Regulations of Basic Life Insurance Product was approved by IC last November 16, 2012.

In January – February 2013 Paglaum Mutual Benefit Association, Inc., implemented the approved implementing rules & regulations that is tailored fit to the association’s needs with the conduct of series of branch orientation. Amending the implementation was new IRR on the increase of Php 5.00 weekly contributions highlighting the Php 20.00 to 25.00.


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1.2) VISION, MISSION and CORPORATE VALUES

Paglaum MBA Vision: “A trusted and sustainable member-owned & member-governed association that

provides quality microinsurance products and services to members”

Paglaum MBA Mission: To provide comprehensive insurance products and services to members of PMPC and other organized groups for the protection against uncertainties.

Corporate Values Paglaum MBA adopted the core values from its mother organization the Paglaum Multi Purpose Cooperative, to wit;

Excellence -We work with competence towards a viable and sustainable organization

Commitment -We work hard with minimal supervision and teamwork to deliver the best services.

Honesty -We work with sincerity, transparency and God fearing Openness -We deliver our services adopting new approaches towards positive change.

1.3) ORGANIZATIONAL STRUCTURE

The General Assembly is the highest governing body of the Association. It has the power to elect, suspend expel and terminate any officials of the association who violated the policies and regulation. Under the General Assembly, the executive and the non-executive officers of the association which is shown below.


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1.4) OVERVIEW OF THE PROGRAMS The association has approved products and services with the Insurance Commission, to wit; 1.4.1. Basic Life Insurance Product (BLIP).

The principal member shall pay Php 20.00 per week for the life insurance

coverage and Php 5.00 for retirement savings fund. This covers the life benefits of the Paglaum MBA member and its immediate family members is define in accordance with the length of membership with the association for a minimum of Ph 2,000.00 for death due to pre-existing condition and maximum of Php 100,000.00 for accidental death of a member who are already 3 years and above with the association. Along with this life insurance, an additional scope on one-time coverage for members and its spouse who encountered Motor-vehicle accidents for a maximum hospitalization benefits of Php 10,000.00; detailed description of the Basic Life Insurance Product is well-define in the approved implementing rules and regulations of the association as reference. 1.4.2. Members’ Equity Value.

A member shall be entitled to an equity value equivalent to at least fifty percent (50%) of the total life contribution of Php 20.00 collected from the member, excluding contribution or retirement savings fund. This is payable to member upon termination of his/her membership with Paglaum MBA including death or total and permanent disability. The member shall be entitled to payment of the member’s equity value upon reaching the termination age of sixty-five (65) years old.

1.5) COMMITMENT TO CORPORATE GOOD GOVERNANCE The Board of Trustees of Paglaum Mutual Benefit Association, Incorporated commits to serve and promote the corporate good governance within its organization and among the members of the association. They shall owe their duty and responsibility to Paglaum Mutual Benefit Association, Inc. and in the process to promote the long-term sustainability and success of the association in a manner consistent with the international corporate governance best practices. Together with the management of Paglaum Mutual Benefit Association, Incorporated will remain steadfast in monitoring the performance of the association, strive to make good and sound decisions, and will hold its governing board accountable for its execution in achieving our corporate goals. 1.6) OBJECTIVES OF THE MANUAL

The Corporate Governance Manual shall serve as its guide in ensuring the organizations practice of good governance, sustainability and its continuous commitment to its members in providing efficient and innovative programs and services for the growth of the community in which we operate.

The manual laid down the roles and functions of executive and non-executive officers

and articulate the important practices to observe in order to ensure transparency and accountability in running the affairs of Paglaum Mutual Benefit Association, Inc. It also aimed at establishing the proper guidance in complying the government regulation for the protection of all the members of the institution.


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1.7) DEFINITON OF TERMS

Corporate Governance – the framework of rules, systems and processes in the corporation that governs the performance of the Board of Directors and Management of their respective duties and responsibilities to stockholders. Association - as referred to in this Manual is Paglaum Mutual Benefit Association Inc.

Board of Trustees- The governing body elected by the member’s that exercises the corporate powers of the Paglaum MBA, conducts all its business and controls its properties;

Management -The body given the authority by the Board of Trustees to implement the policies it has laid down in the conduct of the business of the association;

Independent Trustee – is independent of management and free from any business or other relationship which could, or could reasonably be perceived to, materially interfere with his exercise of independent judgment in carrying out his responsibilities as a trustee;

Internal control – the system established by the Board of Trustees and Management for the accomplishment of the association’s objectives, the efficient operation of its business, the reliability of its financial reporting, and faithful compliance with applicable laws, regulations and internal rules;

Internal control system – the framework under which internal controls are developed and implemented (alone or in concert with other policies or procedures) to manage and control a particular risk or business activity, or combination of risks or business activities, to which the corporation is exposed;

Internal audit – an independent and objective assurance activity designed to add value to and improve the corporation’s operations, and help it accomplish its objectives by providing a systematic and disciplined approach in the evaluation and improvement of the effectiveness of risk management, control and governance processes;

Internal Auditor – the highest position in the corporation responsible for internal audit activities. If internal audit activities are performed by outside service providers, he is the person responsible for overseeing the service contract, the overall quality of these activities, and follow-up of engagement results. External Auditor- a periodic audit conducted by external independent qualified accountants or auditors. Its main objective is to determine the accuracy and completeness of financial records as the results of operations.


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PART II. GOVERNANCE STRUCTURE

2.1) Board Composition and Officers

The Board of Trustees of Paglaum Mutual Benefit Association, Inc., shall consist of five (5) members namely the following: Chairman, Vice-Chairman, Secretary, Treasurer, and Board Member shall be elected by the active members of Paglaum MBA and Paglaum Multi-Purpose Cooperative; two (2) independent trustees, to be appointed by the Board of Paglaum Mutual Benefit Association, Inc..

2.2) Multiple Board Seats

The Board may consider the adoption of guidelines on the number of trusteeships / directorships at maximum of three (3) positions that its members can hold in stock and non-stock corporations. The Board shall take into consideration the capacity of a director to diligently and efficiently perform his duties and responsibilities and the limitations on concurrent directorship of the organization.

The Chairman and other directors may be covered by a lower indicative limit for membership in other boards. A similar limit may apply to independent or non-executive board of trustees who, at the same time, serve as full-time executives in other corporations. In any case, the capacity of the directors to diligently and efficiently perform their duties and responsibilities of the boards they serve shall not be compromised.

2.3) Qualifications of Board of Trustees

2.4.1. Of legal age or 18 years to 65 years old

2.4.2. Recognized Active member of Paglaum MBA, preferably has an experience as MBA Coordinator and has diligently paying her/his weekly contributions and at the same time an active member of PMPC

2.4.3. Has consistently performed very satisfactorily for at least the last three (3) years in her membership and has ongoing businesses funded by loan from Paglaum Multi-Purpose Cooperative

2.4.4. No member convicted by final judgment of an offense punishable by imprisonment for period exceeding six (6) years, or a violation of the Corporation Code of the Philippines committed within five (5) years prior to the date of her election or appointment

2.4) Disqualification of Board

2.4.1. Must not have a more than 3 concurrent directorship or officership positions with PMPC and its affiliates

2.4.2. Must not be an employee of PMPC and its affiliates

2.5) Duties, Functions of Responsibilities of the Board

2.5.1. General Responsibility-A Trustees’ office is a position of trust and confidence. He/she shall act in a manner characterized by transparency, accountability and fairness. Trustees are primarily responsible for establishment, approving and overseeing the implementation of the Associations’ vision and mission, policies and procedures, action plans corporate governance and corporate values. They are also responsible in overseeing the performance of senior management towards attainment of the Association’s short and long-term strategic objectives


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2.5.2. Duties and Functions- the Board of Trustees should perform the following functions to insure a high standard of best practice for the Paglaum Mutual Benefit Association Incorporated and its members:

2.5.3. Chairman - The Chairman shall be the Chief Executive Officer of the association and shall exercise the following functions:

a.) to preside in all meetings of the members of the association. b.) to execute all resolutions of the Board of Trustees. c.) to be charged with directing and overseeing the activities of the association. d.) to submit to the Board as soon as possible after the close of each fiscal year, and to the members of each annual meeting, a complete report of the activities and operations of the association for the fiscal year under her term. e.) to represent Paglaum Mutual Benefit Association, Inc. in all functions and proceedings;

d.) to execute in behalf of Paglaum Mutual Benefit Association, Inc. all contracts, agreements and other instruments affecting the interest of Paglaum Mutual

Benefit Association, Inc. which may require approval of the Board of Trustees unless otherwise directed by the Board;

e.) to perform such other duties as are incident to his office or are entrusted to him by the Board of Trustees.

2.5.4. Vice Chairman - The Vice-Chairman in the absence or disability of the chairman shall perform the duties of the chairman; provided, however, that in the case of death, resignation or removal of the chairman, the board of directors may decide to elect successor.

2.5.5. Corporate Secretary - The Secretary shall have the following duties:

a.) To give all notices required by these by-laws and keep the minutes of all meetings of the members and of the Board of Trustees in a book kept for the purpose.

b.) To keep the seal of the association and affix such seal to any paper or instrument requiring the same.

c.) To have custody of the members’ register and the correspondence files of the association.

d.) To certify to such corporate acts, countersign corporate documents or certificates, and make reports or statements as may be required of him/ her by law or by government rules and regulations;

e.) Also perform all such other duties and work as the Board of Trustees may from time to time assign to her/him.

2.5.6. Treasurer - The Treasurer shall have the following duties:

a.) To keep full and accurate accounts/records of the receipts and disbursements of Paglaum Mutual Benefit Association, Inc.

b.) To take and have custody of, and be responsible for, all the funds, securities, bonds, and certificates of titles of Paglaum Mutual Benefit Association, Inc.

c.) To deposit in the name of Paglaum Mutual Benefit Association, Inc. in such banks as may designed from time to time by the Board of Trustees, all the money, funds, securities, bonds and similar valuables belonging to Paglaum Mutual Benefit Association, Inc. which may come under his control.

d.) To prepare an annual statement showing the financial condition of Paglaum Mutual Benefit Association, Inc. and such other financial reports as the Board of Trustees or the Chairman may from time to time require.

e.) To prepare such financial reports, statements, certifications and other documents that may, from time to time, are required by government rules and regulations and to submit the same to the proper government


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agencies. f.) To pay all authorized expenses by check and effect petty cash payments

in accordance with policies and procedures approved by the Board of Trustees.

g.) To assist management in retrieval of all receivables of Paglaum Mutual Benefit Association, Inc. from whoever they maybe due.

h.) To prepare and submit to the Board of Trustees for consideration and approval the annual budget on or before its regular meeting and furnish a copy of the approved annual budget.

i.) To ensure that all expenditures are duly authorized and are for the best interest of Paglaum Mutual Benefit Association, Inc.

j.) To post a bond in such amount as may be required by the Board of Trustees;

k.) To suspend or withhold payments of accounts incurred not in accordance with the policies of the Board of Trustees or which are otherwise irregular or improperly authorized; and

l.) To perform such other duties as may be assigned by the Chairman, the General Manager and the Board of Trustees.

2.5.7. Specific Duties and Responsibilities of a Trustee – the board shall execute the following specific duties with the association;

a) Devote time and attention necessary to properly discharge his duties and responsibilities. He/She should attend and actively participate in Board and committee meetings, request and review meeting materials, ask questions, and request explanation; b) Ensure that the Association complies with all the relevant laws, regulations and endeavor to adopt best business practices; c) Ensure fair treatment and judgment to policyholders and employees; d) Conduct fair business transactions with the Association and to ensure that personal interest does not compromise his/her impartiality and does not bias Board decisions. He/She should address and fully disclosed to the Board any conflicts of interest that may arise and should not participate in the decision making that can involves his/her personal interest; e) Ensure and observe confidentiality of non-public information acquired by the reason of his/her position as Trustee; f) Ensure that enough and appropriate controls are placed to ascertain soundness, effectiveness and adequacy of the Association’s control environment, and; g) Formulate and implement policies and procedures that would ensure the integrity and transparency of related party transactions (RPTs) between and among the corporation and its parent company

2.5.8. Term of Office

The Board of Trustees shall be elected by majority of its members during its annual meeting and shall hold office for a term of two years unless earlier removed for a cause, or have resigned or become incapacitated due to illness or death, and until their successors have been elected, qualified and have discharge the duties of the officer provided, that during the election at the first annual meeting after registration, THAT THE FIRST THREE (3) HIGHEST VOTES SHALL SERVE FOR TWO YEARS AND THE REMAINING TWO (2) WINNERS SHALL SERVE FOR ONE (1) YEAR AND ARE SUBJECT FOR REELECTION FOR THE NEXT YEAR.


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The two (2) independent trustees shall be appointed by the majority of the board and shall serve for TWO years. Notwithstanding the foregoing, for the duration that the Association is under a conservatorship of the Insurance Commissioner, the independent trustees shall be appointed by, and shall serve at the pleasure of the Insurance Commission.

2.5.9. Internal Control Responsibilities of the Board

The control environment of the association consists of (a) the Board which ensures that the association is properly and effectively managed and supervised; (b) a Management that actively manages and operates the corporation in a sound and prudent manner; (c) the organizational and procedural controls supported by effective management information and risk management reporting systems; and (d) an independent audit mechanism to monitor the adequacy and effectiveness of the corporation’s governance, operations, and information systems, including the reliability and integrity of financial and operational information, the effectiveness and efficiency of operations, the safeguarding of assets, and compliance with laws, rules, regulations and contracts.

2.5.10. Disclosure of third party transactions and other conflict of interests

The members of the board ensures proper disclosure of all approved RPTs in accordance with applicable legal and regulatory requirements and confirmation by majority vote on the Annual General meeting the Association significant transactions with related parties.

2.5.11. Vacancy in the Board

Any vacancies occurring in the Board may be filled by the vote of at least a majority of the remaining trustees, if still constituting a quorum, provided, that any vacancy occurring by reason of removal by member, by expiration of term or increase in the number of trustees shall be filled by the members in a regular or special meeting called for the purpose.

2.5.12. Board Assessment

The Board shall undertake an evaluation and assessment of its performance as a collective body, its Committees and senior management to determine whether they are functioning effectively, pinpoint areas for improvement and ensure that the Chairman is providing effective leadership to the Group. The Board shall report the results of the self-assessment to its stakeholders. The conduct of board assessment shall be once in every year and or every first quarter of the year.

2.5.13. Management Succession Planning.

The Board, in coordination with the Management, shall ensure that the Association has in place an appropriate and updated succession planning for key executives to address emergency in the event of extraordinary circumstances and ensure continuity of operations


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2.6. Board Meetings

2.6.1. Quorum Requirements

A majority of the members of the Board that is 50% plus one (1) attendance shall constitute a quorum at meetings of the Board and no action of the Board shall be valid unless approved by majority of the incumbent members of the Board en banc at duly constituted meeting.

2.6.2. Orientation of New Board of Trustees

All new trustees joining the Board are required to undergo an orientation program within 3 months from date of election or appointment. This is intended to familiarize the new directors on their roles and responsibilities in the Board and Committees, the organization’s strategic plans, organizational structures, business activities, compliance programs, Code of Conduct and Business Ethics, and Corporate Governance Manual. All trustees are also encouraged to participate in continuing education programs at the organization’s expense to maintain a current and effective Board.

2.6.3. Access to Information

a. The Board members shall have independent access to Management and the Corporate Secretary for all information to enable them to properly perform their duties and responsibilities.

b. Management shall provide the Board members with complete, adequate and timely information about matters to be taken up during their meetings.

c. The agenda and information package for each board and committee meeting should be sent to each Board director in hard or electronic copy at least 5 business days in advance, whenever possible and appropriate.

2.7. Board Appointments and Re-election

The Board shall be elected by the majority of its members and MBA Coordinators of Paglaum Mutual Benefit Association, Incorporated in every year during the conduct of Annual Membership Meeting and shall hold office for a term of two years unless earlier removed for a cause, or have resigned or become incapacitated due to illness or death.

The two (2) independent boards shall be appointed by the majority of the board of trustees of Paglaum Mutual Benefit Association, Inc.

2.8. Code of Conduct and Ethics for Board of Trustees

2.8.1. Code of Conduct for Board of Trustees

The members of the Board have adopted the Code of Conduct and Ethics for Trustees. It describes the behavioral standards expected from a trustee so that he/she can better understand and meet the expectations and requirements of the organization and regulators. Included in the Code are the standards of conduct for ensuring the proper discharge of the duties and responsibilities, basic principle that a


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trustee should not use his/her position to make profit or to acquire benefit or advantage for himself/herself and/or his/her related interests, avoiding situations that would compromise his/her impartiality; maintaining professional integrity; enhancement of skills, knowledge and understanding the association activities, etc. 2.8.2. Code of Conduct for Employees

Paglaum Mutual Benefit Association, Incorporated Code of Conduct

This Governance Manual is a property of Paglaum Mutual Benefit Association,

Inc. Reproduction is strictly prohibited Indispensable to the association’s attainment of its objectives is the quality of the employees who carry out its day-to-day operations. Exemplary conduct, discipline, and total commitment to doing business with integrity are the cornerstones by which Paglaum Mutual Benefit Association, Inc., can live out its vision to be the trusted and sustainable association.

Paglaum Mutual Benefit Association, Inc., long-term interests, and interests of

everyone who has a stake in the association, depend on its employees and officers embracing the standards outlined here and in full support of the Association’s principles as follows:

a. That appropriate good conduct and good corporate discipline can be enhanced by promoting a corporate culture of professionalism and maturity characterized by appropriate work ethics, socially-acceptable behavior and moral standards;

b. That an employee who belongs to the Paglaum Mutual Benefit Association, Inc., is entitled to pursue his/her career and advancement, personal goals, and other activities;

c. That as a member of the Paglaum Mutual Benefit Association, Inc., each employee is expected to challenge business practices or behaviors that may undermine the principles and guidelines adhered to by the Association, thereby, protecting its interests, image, reputation, and integrity in all dealings.

These Codes of Conduct aim to instill a commitment and dedication to the

virtues of honesty and integrity, commitment, excellence and openness, together with a high sense of prudence, responsibility and efficiency in the conduct of duties. The Association is a non-stock and non-profit institution and each member belongs to this Paglaum Mutual Benefit Association, Inc., where the action of one affects and reflects on the others. It is imperative that trustees, officers and employees live by the values that the Association stands for and reflect these values in their behaviors.

2.9. Remuneration of the Members of the Board and Officers

2.9.1. Development Program

The Management will conduct an orientation to all Board of Trustees on the content of this manual. Moreover, during the assembly it will be reviewed prior to the conduct of the election.

All BOT and key officers of the Association are required to attend

Governance Training Workshop and Seminar on Anti Money Laundering Act to be conducted by IC or accredited provider.


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2.9.2. Allowances/Remunerations

The members of the Board shall not receive any salary but shall be entitled to gratuity, per diem and reimbursement of all necessary expenses incurred on account of attendance in committee and board of meetings provided that all entitlement benefit, emoluments received shall be subject to the approval by majority vote of the general membership of Paglaum Mutual Benefit Association, Inc.

2.9.3. Benefits

1. To compensate trustees for their services rendered to the Association, they shall entitled to a life insurance premium allowance of one Thousand Five Hundred Pesos (Php 1,500.00) per year and a meeting allowance of not less than three hundred pesos (Php 300.00) to be given after every Board of Trustees meeting.

2. Trustees who are absent during the Board meeting shall not be entitled to any meeting allowance.

2.10. BOARD COMMITTEES

2.10.1. Oversight and Audit Committee

The Oversight and Audit Committee is established in line with the principles of good corporate governance, where the Board takes an active role in the audit policies of the organization. The Committee is expected, through the provision of checks and balances, to bring positive results in supervising and supporting the management of the Fund. Generally, this committee will assist the Board in the oversight of the Fund’s financial reporting, internal controls, and risk management process, and evaluate the performance of Internal Audit and external auditors. Secretariat support shall be provided by the Internal Audit Department.

2.10.2. Nomination Committee

The Nomination Committee shall be composed of at least three (3) members of the board of directors, one of whom must be independent. The Nomination Committee leads the process for identifying and makes recommendations to the Board on, candidates for election as Board of Trustees of the association as well as those other positions requiring appointment by the Board of Trustees. It should prepare a description of the roles and capabilities required of a particular appointment.

The committee is authorized to conduct and supervise the elections for the members of the Board of Trustees and other officers and proclaim the winners. And also may represent personnel of the Paglaum Mutual Benefit Association, Inc. to enable them to perform its function.

2.10.3. Executive Committee

The Executive Committee of the Board of Trustees which shall consist of not less than three (3) and not more than five (5) to be chosen by the Board of Trustees from among themselves to monitor the operations and finances of Paglaum Mutual Benefit Association, Inc. to ensure that decisions of the Board are executed by management; and, where urgent circumstances require, to act for and in behalf of the Board on such matters subject to such guidelines and limitations duly approved by the Board. The concurrence of at least a majority of


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the members of the Executive Committee shall be necessary to make an Executive Committee decision valid. All business transactions by the Executive Committee shall be subject to confirmation by the Board of Trustees at its next scheduled meeting.

2.10.4. Remuneration Committee

The Remuneration Committee composed of three (members), on of which is an independent. The committee is responsible to:

a. design and recommend to the Board for approval the salary, financial

benefits/allowances (retirement, medical, etc) and remuneration package for the officers and employees of the association;

b. oversee /supervise that the salary packaged is in compliance with the labor code of the government of the Philippines

c. recommend salary increases of the employees based on performance

2.10.5. Other Committee

The Board may create other committees it may deem necessary, with not less than three (3) nor more than five (5) members each with such specific duties as it may deem proper. Ad hoc committees may be created by the Board as the need arises.

2.11. BOARD ADVISOR

The board advisor is the Chief Executive Officer from mother organization whose main task is to ensure policy and operating coordination between Paglaum Multi Purpose Cooperative and Paglaum Mutual Benefit Association, Inc.. This board advisor has informed yet important on the day-to-day contact with PMPC and PMBA management, and frequent interaction with the MBA Chairperson and General Manager. The Board Advisor also provides significant formal oversight of the MBA and the Trustees in terms of management, policies, regulatory compliance and governance.

2.12. ORGANIZATIONAL MANAGEMENT

The Management stands as the center of decision-making for the day-to-day affairs of the organization. It determines the organization’s activities by putting the targets set by the Board in concrete terms and by implementing basic strategies for achieving these targets.

Management is also responsible to the Board for implementing the infrastructure for the

organization’s success through the following mechanisms in its organization as set by the Board: organizational structures that work effectively and efficiently in attaining the goals of the organization; useful planning, control, and risk management systems that asses risks on an integrated crossfunctional approach; information systems that are defined and aligned with an information technology strategy and the business goals of the organization; and a plan of succession that formalizes the process of identifying, training and selection of successors in key positions within the organization.

The following key positions state their organizational functions:


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2.12.1. Compliance Officer – to ensure the association’s adherence to the guidelines on

corporate governance set herein, the Chairperson of the Board of Trustees shall designate a Compliance Officer. He/she shall have direct reporting responsibilities to the Board of Trustees and shall task to perform the following duties:

a) Monitor compliance with the provisions and requirements of this Manual;

b) Determine violations of the Manual and recommend appropriates sanctions and/or penalties for violation thereof, for further review and approval of the Corporation’s Board of Trustees;

c) Identify, monitor, and control compliance risks; d) Appear before government agencies, if necessary; and e) Annually prepare and submit to the Office of the Insurance Commission (IC) a Corporate Governance Scorecard as required by the Code of Corporate Governance before deadline set by IC.

2.12.2. General Manager – is responsible and accountable on the day to day operations of Paglaum Mutual Benefit Association, Inc., and exercise the following functions:

a.) to supervise and manage the business affairs and activities of Paglaum Mutual Benefit Association, Inc. under the direction of the Chairman and the Board of Trustees;

b.) to implement the administrative and operational policies of Paglaum Mutual Benefit Association, Inc.

c.) to oversee the preparation of the budgets and the statements of accounts of the corporation;

d.) to coordinate the work of the various operating divisions and services, maximize the productive inputs of their personnel and continually work to upgrade the quality of service to members;

e.) to coordinate with the different standing committees of Paglaum Mutual Benefit Association, Inc.

f.) to conduct such studies and submit recommendations to the Board of Trustees in matters related to investment, the use of facilities and development projects including the examinations of contracts entered into by Paglaum Mutual Benefit Association, Inc.

g.) to perform other duties and responsibilities assigned by the Chairman and the Board of Trustees;

h.) to attend and render a report in the monthly meeting of the Board of Trustees

2.13. External Auditor

The Association is in compliance with Insurance Commission Circular No. 29-2009 dated November 10, 2009 in the selection of external auditors.

1. Only external auditors accredited by Insurance Commission are being engaged;

2. The external auditor shall be changed or the lead and concurring partner shall be rotated every five years or earlier.

3. No external auditor may be engaged if he or any member of his immediate family had or has committed to acquire any direct or indirect financial interest;


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4. The external auditor and the members of the audit team do not have any claim with the Association;

5. The external auditor is not currently engaged nor was engaged during the preceding year in providing the following services to the Association:

a. Internal audit functions; b. Information systems design, implementation and assessment; c. Other services which could affect his independence.

6. The external auditor, auditor-in-charge and members of the audit team adhere to the highest standards of professional conduct and shall carry out services in accordance with relevant ethical and technical standards, such as the Generally Accepted Auditing Standards (GAAS) and the Code of Professional Ethics for certified public accountants

2. 14. Internal Auditor

While developing the internal capability, the association will tapped the services of the internal audit unit of the mother institution. The scope of the audit to be conducted twice (2) a year will be the following:

1. Financial audit – ascertains the validity, accuracy and integrity of the financial data.

2. Compliance audit – reviews compliance with external regulatory bodies, business best practices and internal policies.

3. Operation audit – reviews the efficiency of the business processes 4. Management audit – reviews the management effectiveness in meeting its set

objectives

5. Information systems audit – reviews the control of the information systems to ensure accuracy and integrity of the data or information processed.


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Part III. MEMBERS

3.1. Qualification for Membership:

1.) Applicants must be at least 18 years old but not more than 65 years old as of the enrollment date.

2.) He/she must be an active member of PAGLAUM MULTI-PURPOSE COOPERATIVE; FARM LEVEL GRAIN CENTER; PLARIDEL SERVICE COOPERATIVE; PAGLAUM COMMUNITY DEVELOPMENT FOUNDATION, INC.; personnel and staff of Mutual Benefit Association and other organized groups accredited.

3.) Only those applicants who can meet all of the requirements stated in the prescribed application form shall be eligible for membership.

3.2. Duties and Responsibilities – A member shall have the following duties and responsibilities:

1. To obey and comply with the by-laws, rules and regulations that may be promulgated by the association from time to time; 2. To attend all meetings that may be called by the Board of Trustees; 3. To pay membership dues and other assessments of the association. 4. To participate in the governance and to protect the fund of the association. 5. Continuously give suggestions and comments on how to better run the association. 6. To patronize and promote the coop business. 7. To receive reports and information

3.3. Members Rights – a member shall have the following rights:

3.3.1. To exercise the rights to vote on all matter relating to the affairs of the association; 3.3.2. To be eligible to any elective or appointive office of the association; 3.3.3. To participate in all deliberations/meetings of the association; 3.4.4. To avail of all the services and facilities without discrimination; 3.3.5 To inspect and examine all the records or books of the association during

business hours and to exercise other rights and privileges of membership.

3.4. Voting Rights

The members shall be entitled to one vote, and they may vote whether in person or by representation which shall be in writing and filed with the Secretary of Paglaum Mutual Benefit Association, Inc. before the scheduled meeting. Member is entitled to vote when: a) His/her payment of premium is up to date; and b) His/her documents are complete i.e. marriage certificate, birth certificate and death certificate.

3.5. Power of Inspection

All members shall be allowed to inspect corporate books and records including minutes of Board meetings and performance reports in accordance with the Corporation Code, and shall be furnished with annual reports, financial statements, without costs or restrictions.

3.6. Right to Information

The members of Paglaum MBA shall be provided, upon request, with information about the organization’s governance board members and partnerships made with other organization.

The members shall have access to any information relating to matters for which the management is accountable. They shall also be allowed to propose items in the agenda of


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meetings, provided that the suggested item is valid, legitimate and related to the organization’s business.

3.7. Other members’ benefits

The Paglaum Mutual Benefit Association, Inc. shall align unassigned surplus to the following: a) enhancing equity value; b) developing operating systems; c) research and development; d) member education and training; e) community development services, and f) product development. Community development may include.

3.8. Annual General Meetings (AGM)

The Board of Directors of Paglaum Mutual Benefit Association, Inc. shall be transparent and fair in the conduct of the annual general meetings.

3.8.1. The members shall be encouraged to attend personally or by proxy such meetings of the members in a place easily accessible to all investors. They shall be given the opportunity to ask and receive answers to their questions relating to the association. A summary of the questions asked and answers given will be included in the Minutes of the Annual General Meeting and posted on the MBA website.

3.8.2. The rights of the members shall be promoted and impediments to the exercise of

those rights shall be removed. An adequate avenue shall be provided for the members to seek timely redress for breach of such rights.

3.8.3. Appropriate steps shall be taken to remove excessive or unnecessary costs

and other administrative impediments to the stockholders’ participation in meetings whether in person or by proxy.

3.9. Notice of Annual General Meeting (AGM)

Accurate and timely information shall be made available to the members of Paglaum Mutual Benefit Association, Inc., to enable them to make sound judgment on all matters brought to their attention for consideration or approval. The Corporate Secretary will issue the Notice of the Annual General Meeting by personal deliver or by mail at least two(2) weeks prior to the date of the meeting to each member at his last known post office address. The notice of meeting shall state the place, date, hour and proposed agenda of the meeting and the purpose or purposes for which the meeting is called.

Notices for special meetings may be made by written notice at least five (5) days before

the meeting. The written notice shall contain the particular matters to be discussed. Only matters specified in the notice of special meeting can be the subject of motions or deliberations at such meetings.

3.10. Related party transactions by directors and key executives

The trustees and key executives shall be required to disclose their interest in transactions and any other conflict of interest in the Paglaum MBA.

The Paglaum Mutual Benefit Association shall seek the assistance of a committee of independent directors to review the materials and significant RPTs to determine whether they are in the best interest of the MBA and their members.

The MBA shall either/or forbid or ensure that loans to directors are being conducted at arm’s length and at market rates.


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PART IV. STAKEHOLDERS

4.1. Identification and Definition of Stakeholders

4.1.1. Customers/Members

The members of Paglaum Mutual Benefit Association, Inc., have the significant roles and commitment to the association, to wit;

1.) The MBA exists primarily for the benefits of its members 2.) The sustainability of the MBA relies on the active involvement and participation of the members in the affairs of the association 3.) A member is a person who meets the eligibility requirements and complies with the policies of the MBA and entitles to all the rights and privileges sets forth in the by-laws of the association. She/he shall embody the promotion of all purposes and goals of the association. 4.) The MBA shall provide training and education before their membership. In ensuring the continuing education of the members, the MBA shall provide education through annual assembly, center meetings, ownership meetings and other educational initiatives. 5.) The MBA shall allocate funds for the training and education of its members

4.1.2. Board of Trustees

The Board is the governing body of the association primarily responsible for ensuring good governance, formulates the strategic direction of the association, monitors the performance of the management and ensures that systems of operations are in place for transparency and accountability. The Paglaum Mutual Benefit Association, Inc. is committed to strengthening its Board by providing continuing education through participation in local and international conferences.

The Board of Trustees of this association, commit to ensure that its policies as an entity and those of the association as a whole rise to the standard expected by, and owing to, those members and policy holders.

The Board of Trustees also committed that its employees, partners, regulators, and other stakeholders are confident in association’s ethics and professionalism appropriate to the organization’s mission. The association is committed to;

a. To operate with high standards of ethical behavior. b. To seek transparency and dialogue for better understanding of their

needs. c. To provide accurate and timely report d. To provide continuous training and development e. To implement all approved resolutions and policies

4.1.3. Employees

The progress and success of the MBA depends on its human resources and that only through carefully selected, well-trained, results-oriented, and dedicated employees can the association achieve its objectives.


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a. Individuals hired by the Paglaum Mutual Benefit Association, Inc., to work as either full-time or part-time worker under a contract of employment duly notarized upon signing, has recognized rights and duties as stated in the MBA’s Personnel Manual. The MBA shall address to the State’s Labor Laws that will protect the well-being of the employees. b. The Paglaum Mutual Benefit Association, Inc., shall continue to make planned efforts to facilitate the learning of job related behaviour of its stakeholders current and future roles and responsibilities aligned with the Association’s goals and direction. c. The employees shall be given trainings in the form of (i) Formal –undergraduate course and/ or masters degree; (ii) On the job training or coaching; (iii) In house lectures; and, (iv)Local or international courses, seminars, study tours, workshop and conference.

4.1.4. Partner-Agent MFI/s

Paglaum Multi Purpose Cooperative and other partner agents are the primary source of MBA membership, and maintain good relationship to members. They are the fund mobilization partners of the MBA and play the important role especially in collecting premiums and contributions.

Paglaum Mutual Benefit Association, Inc, is committed to render the following

commitment to Paglaum Multi Purpose Cooperative and other partner agents, to wit;

1. The MBA shall ensure fast service and continued access to microinsurance benefits and other services of the MBA.

2. The MBA shall establish and implement approve guidelines pertaining to MFI and other related parties.

3. The MBA shall conduct products and services orientation and technical to partner organizations.

4. The MBA shall conduct a fair business transaction and ensure that the interest does not conflict with the interest of MFI Partners.

5. The MBA shall provide incentives through service fee

6. The MBA and the partner agent should execute a service agreement/management contract defining the roles and responsibilities of the contracting parties

4.1.5. Regulatory Bodies (IC, SEC, BIR)

Regulatory agencies are essential in any industry as they provide the framework to which an association should legally operate. These policies, guidelines and circulars issued by the regulatory agencies promote fairness and increase the level of confidence of the members, implementers and other stakeholders.

The Paglaum Mutual Benefit Association,Inc. shall ensure full compliance

to the requirements, policies, circulars, memoranda, and guidelines issued by regulatory agencies such as the Insurance Commission, Securities and Exchange Commission, Bureau of Internal Revenue, Local Government Units and other government agencies.


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The association shall appoint/designate a person who will act as Compliance Officer to ensure compliance to the above-mentioned agencies.

4.2. Suppliers/ Contractors

The Paglaum Mutual Benefit Association Inc. engages the assistance of suppliers and/or contractors to provide services that the association will need for its daily operations. As part of its value chain, the Paglaum Mutual Benefit Association, Inc. will monitor its engagements with suppliers and contractors to make sure that they practice good governance and protect the environment. The Association will only engage suppliers/contractors that meet these standards.

To ensure that engagements with suppliers/contractors will be impartial and transparent; the Association will conduct a bidding process for projects with contracts where a minimum of three (3) suppliers shall submit their proposal and business profile to the management for background check and validation of proposal. Selected supplier/contractor shall be issued a legal contract/agreement which will be duly notarized to make the engagement binding.

The association shall appoint the General Manager/Finance Officer to lead the bidding and selection process. All decisions/selections shall be approved by the board.

4.3. Community of Operations

In any business, there is a need for the support of the community where it operates. The Association acknowledges the significant role of the community in achieving its vision mission particularly in helping people become less vulnerable.

The Paglaum Mutual Benefit Association will strengthen its relationship with the community by sharing information about its programs and services. The association is giving a financial & Insurance literacy training to its partner-agents MFI.

4.4. Environmental Sustainability

The Paglaum Mutual Benefit Association’s business operation does not directly affect the environment. However, it is still committed to do its part in promoting environmental sustainability through various initiatives within the office, among its board of trustees and employees and with its stakeholders.

4.5. FEEDBACK AND GRIEVANCE POLICY FOR STAKEHOLDERS

The Paglaum Mutual Benefit Association, Inc., protects the rights of its stakeholders including employee and their representative bodies. The stakeholders are free to communicate their concerns about illegal and/or unethical practices to the board. Their rights shall not be compromised after communicating such concern.

All stakeholders are encouraged to play their part in improving the overall effectiveness

and success of Paglaum Mutual Benefit Association, Inc., particularly in strengthening its integrity. The Paglaum Mutual Benefit Association, Inc., shall ensure the protection of an employee or other stakeholder that reveals illegal/ unethical behavior from retaliation.

4.5.1. Mechanism for Redress of Grievances:

1.) Have a policy that requires customer complaints to be taken seriously and outlines the steps to their investigation and resolution 2.) Consider implementing a call hotline, text message system for customer


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complaints

3.) Staff receiving customer complaints should be trained to handle complaints, i.e. document calls and follow institutional process to resolve the issue

4.) Flow chart – develop a process that outlines who is supposed to handle what and how complaints are elevated (e.g. step-by-step processes for time frame of resolution)

5.) Use information from complaints to inform and improve products and services and prevent future complaints

4.6. Right to Training and Development

The Board commits to support initiatives on training and development for each stakeholder. Moreover, during the annual general meeting all trainings will be presented under the Chairperson’s Report.

Part V. Disclosure and Transparency

One of the core values of corporate good governance is transparency. The Board together with the management and employees commits to promote and ensure full disclosure, transparency and shall remain accountable to this Manual. This is a commitment and a policy of the Board.

The Board commits at all times to comply with all disclosure requirements specifically

those that will include material information as mandated by regulators within the prescribe period of time. The following material information that will be publicly made available are: financial and non-financial reports such as (and not limited to) earnings, material acquisition, related third party transactions, board remuneration, audited financial statements, Board Structure (Bio-Data) and Remunerations. The audited FS shall be publicly disclosed not later than 60 days after the financial year clearly stating that the management is responsible for its preparation, impartial presentation in accordance to the financial reporting standards of the Insurance Commission for MBAs.

Other disclosure policies particularly for the board shall be presented in the Code of Conduct and Ethics of the Association. 5.1. Transparency Policies on:

1. Ownership Structure (members)

The members of Paglaum Mutual Benefit Association shall have a membership certificates specifying the benefits to which the members are entitled.

2. Board Structure and Remunerations

The organization’s annual reports and information statements shall include a clear, concise and understandable disclosure of all plan and non-plan compensation awarded to, earned by, paid to, or estimated to be paid to, directly or indirectly to all individuals serving as Board or acting in a similar capacity during the last completed fiscal year.

3. Publication of timely corporate information (e.g. website, annual report, sustainability report)


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All material information, both financial and non-financial, about the Paglaum Mutual Benefit Association, Inc. that may adversely affect its viability or the interests of the members and other stakeholders shall be publicly and timely disclosed through the official website, annual report and or sustainability report.

Part VI. Performance Evaluation

6.1. Board and Committee Performance Evaluation

Under the SEC Corporate Code and as espouse in the ACGS, the Board shall conduct a performance evaluation to measure its compliance to the governance manual.

The evaluation shall be conducted annually preferably in January where the result of the evaluation shall be presented to the Board and the management. The Board, each of its respective oversight and other committees shall conduct an annual performance evaluation /assessment to check their compliance with manual and determine areas for improvements.

The Board of Directors shall designate the General Manager and the Compliance Officer to establish an evaluation system to determine and measure compliance of the board, management and employees with this Manual.

6.2. Performance Evaluation tools

The Board shall accomplish annually the Corporate Governance Scorecard of the SEC as well as other performance evaluation tools (e.g. ASEAN Corporate Governance Scorecard) to ensure that it is meeting its corporate goals effectively while practicing good corporate governance.

a. ACGS b. SEGURADO Performance Indicators c. Other/s

Part VII. Policy Review and Updating

7.1. General Policy on the review and updating of existing policies

This Corporate Governance Manual may be amended anytime, subject to the approval of the Board: The Board may decide on the review of existing policies, guidelines and procedures to ensure its timeliness and effectivity. The management of the organization shall submit their recommendations to the Board for consideration. The following may be reviewed and updated by the Board:

a) Organizational Manuals b) Review of Corporate Vision, Mission and Values c) Board Structure and Composition

Partnerships and Linkages

Annexes

Documents

CORPORATE GOOD GOVERNANCE MANUAL - … Goveranance Manual.pdfPaglaum MBA,Inc. : Corporate Governance Manual Version 1. June 3,2015