Code of Business Conduct and Ethics
Governance > Annual Corporate Governance Report > Code of Business Conduct and Ethics
1) Discuss briefly the company’s policies on the following business conduct or ethics affecting directors, senior management and employees:
|Business Conduct & Ethics||Directors||Senior Management||Employees|
|(a) Conflict of Interest||All the Corporation’s directors, officers and employees are expected to avoid situations of conflicts of interest or impropriety. Directors, officers and employees who have personal or pecuniary interest on any enterprise with which the Corporation has an existing or intended transaction shall fully disclose the relevant facts of the situation.|
|(b) Conduct of Business and Fair Dealings||All directors, officers, and employees shall:
1. Deal fairly with the Corporation’s customers, suppliers and business partners, and with the government, competitors and colleagues;
2. Not take undue advantage through misrepresentation of material facts, concealment, manipulation, or any other form of unfair dealing practice; and
3. Treat everyone with respect and act in good faith and with integrity and sense of professionalism at all times.
|(c) Receipt of gifts from third parties||
Directors, officers and employees shall not accept gifts or invitations of any form from any supplier, customer or business partner of the Corporation, or from any third person or entity with existing or intended business dealings with the Corporation, except when the gift or invitation is:
▪ only of nominal value;
▪ a simple promotional item or is part of the supplier’s public relations program; or
▪ part of business meetings or discussions.
However, when the gift does not fall under any of the above-mentioned conditions, the Company encourages the employee to turn over the gift to Strategic Human Resources and Organization Development for inclusion in the Company Christmas party raffle.
|(d) Compliance with Laws and Regulations||
Ayala expects its directors, officers and employees to conduct business in accordance with Philippine laws and regulations. Employees are encouraged to consult with Corporate Governance Group and the Office of General Counsel whenever there is any doubt concerning the legality of any matter.
Any suspected criminal violations will be reported to the appropriate authorities. Non-criminal violations will be investigated and addressed as appropriate.
|(e) Respect for Trade Secrets/Use of Nonpublic Information||The directors, officers and employees shall strictly observe company rules that provide for restrictions to access to classified information and controls on the release of such information to other companies, agencies, parties or to the general public. The directors, officers and employees shall not release classified information unless authorized by Management. They should shall maintain the integrity of all company documents and records and protect them against unauthorized or improper alteration, forgery, concealment or destruction|
|(f) Use of Company Funds, Assets and Information||All directors, officers and employees shall be responsible for the proper use of all company assets and resources, which include, but are not limited to, information, facilities, equipment, software, vehicles and supplies owned or leased by the Corporation or are otherwise in its possession, They shall use company assets and resources efficiently, responsibly and for legitimate business purposes only.|
|(g) Employment & Labor Laws & Policies||The Company is consistently compliant with the Philippine labor laws, its implementing rules & regulations, DOLE department orders and circulars. The Ayala Group (AG) networks on Labor and Employee Relations, with oversight provided by the AG Human Resource Council, meet regularly to, among other functions, monitor and share current trends in, including strict observance of, legislation and jurisprudence on laws, proclamations and orders involving employee and labor relations .|
|(h) Disciplinary action||
The Company, in the spirit of its shared and corporate values, holds all its employees in esteem and believes in protecting their rights, implementing discipline with firm but fair actions. At the same time, it expects each of its employees to respect the rights of fellow employees at all times and strive to live out these shared values in conducting personal and business affairs with: integrity; long-term vision; empowering leadership; commitment to national development.
All offenses or violations of Company policies and rules shall be dealt with accordingly
|(i) Whistle Blower||
As expressly provided in its Code of Conduct and Ethics and the Whistleblower Policy, the Company encourages directors, officers, and employees, and all suppliers, business partners, contractors and sub-contractors to come forward and raise serious concerns about a perceived wrongdoing, malpractice or risk involving the Corporation. The whistleblower may send or communicate a report, formally or anonymously, through a face-to-face meeting with the members of the Disclosure Committee, or email to email@example.com.
The Disclosure Committee will forthwith conduct investigations and, applying the rules of due process, make the appropriate recommendations on personnel actions.
Should it be determined by the Committee that a whistleblower knowingly (a) submitted a report containing false allegations or (b) presented fabricated evidence, the whistleblower shall be subject to disciplinary or legal action pursuant to the policies and procedures of the Corporation, and any applicable laws
|(j) Conflict Resolution||
The Company adheres to the ideals of justice and fairness in its business and in all its dealings with its Employees. The Company provides for an Investigation Committee to look into serious violations of Company policies, rules and regulations.
2) Has the code of ethics or conduct been disseminated to all directors, senior management and employees?
Yes. All employees have copies of the Code of Conduct and Ethics. Part of the on-boarding program of all newly hired employees is the orientation on the Code of Conduct and Ethics to keep them informed in the same manner that the existing employees, as well as the directors, chairman, and senior management, are aware and informed. They are provided with the Code of Conduct and Ethics handbook.
3) Discuss how the company implements and monitors compliance with the code of ethics or conduct.
The Strategic Human Resources has the specific task of implementing and monitoring compliance with the provisions of the Code. It is responsible for:
- ensuring that the contents of the Code are communicated to all existing and new directors, officers and employees, and requiring each to sign an acknowledgment receipt that he/she has read and understood the same and agrees to abide with the standards and norms set forth therein;
- making the Code available on the company intranet for ease of access;
- requiring all directors, officers and employees to declare annually that they have complied with the Code, specifically on the provisions of conflict of interest and insider trading;
- investigating reported violations of the Code and impose sanctions for violations determined after investigation;
- reviewing and continuously updating the Code; and
- drafting and promulgating the Implementing Rules for the effective implementation of the Code, subject to the approval of the President and CEO.
Management is also responsible for enforcing and monitoring compliance with the Code within their respective area of jurisdiction and taking or implementing disciplinary action after proper investigation.
All directors, officers and employees have the duty to report non-compliance with the Code and its Implementing Rules that may come to their knowledge and attention, in accordance with the relevant company rules and procedures.
Any violation shall be dealt with in accordance with the procedures provided in the Implementing Rules, the Corporation’s Human Resources Manual of Policies and Procedures, the Employee Handbook and other existing company policies and proper observance of the requirements of due process. This shall be without prejudice to the filing of any legal action against the party concerned under existing laws.
4) Related Party Transactions
(a) Policies and Procedures
Describe the company’s policies and procedures for the review, approval or ratification, monitoring and recording of related party transactions between and among the company and its parent, joint ventures, subsidiaries, associates, affiliates, substantial stockholders, officers and directors, including their spouses, children and dependent siblings and parents and of interlocking director relationships of members of the Board.
The Company’s Related Party Transactions (RPT) policy was revised, approved and was in effect in December 2014. It was further improved and strengthen on June 24, 2016.
It is the policy of Ayala Corporation that related party transactions between the Corporation and related parties shall be subject to review and approval to ensure that they are at arm’s length, the terms are fair, and they will inure to the best interest of the Corporation and its shareholders.
Related party transactions shall be disclosed, reviewed and approved in accordance with the policy consistent with the principles of transparency and fairness.
The policy also defines related party as a person or entity that is related to the entity that is preparing its financial statements, also referred to as the reporting entity.
- A person or a close member of that person’s family is related to a reporting entity if that person has control or joint control over the reporting entity; has significant influence over the reporting entity; or is a member of the key management personnel of the reporting entity or of a parent of the reporting entity.
- An entity is related to a reporting entity if any of the following conditions applies:
- The entity and the reporting entity are members of the same group (which means that each parent, subsidiary and fellow subsidiary is related to the others)
- One entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a group of which the other entity is a member)
- Both entities are joint ventures of the same third party.
- One entity is a joint venture of a third entity and the other entity is an associate of the third party
- The entity is a post-employment benefit plan for the benefit of employees of either the reporting entity or an entity related to the reporting entity. If the reporting entity is itself such a plan, the sponsoring employers are also related to the reporting entity.
- The entity is controlled or jointly controlled by a person of the reporting entity
- A person of the reporting entity has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity).
- The entity, or any member of a group of which it is a part, provides key management personnel service to the reporting entity or to the parent of the reporting entity.
Material/significant related party transactions shall be reviewed by the Risk Management and Related Party Transactions Committee, endorsed to the Board of Directors for approval and presented to the stockholders for ratification, the threshold of which is set to whichever is lower of PhP50,000,000.000 or 5% of total assets of either party.
The Board shall approve a material/significant RPT before its commencement. If not identified beforehand, the material/significant RPT must be subsequently reviewed by the Committee and ratified by the Board or the same may be discontinued, rescinded or modified to make it acceptable for ratification.
The Committee considers the following factors in the review of the RPTs:
- The terms of the transaction;
- The aggregate value of the transaction;
- Whether the terms of the transaction are no less favorable than those generally available to nonrelated parties under the same or similar circumstances;
- The extent of Related Party’s interest in the transaction;
- Purpose and timing of the transaction;
- Whether the transaction would present an improper conflict of interest or special risks or contingencies for the Corporation, or the related party taking into account the size of the transaction and the overall financial position of the Related Party; and
- Any material information or other factors the Committee deems relevant.
The Group Risk Management Unit monitors RPTs for approval of the Risk Management and Related Party Transactions Committee while the Controllership Unit ensures that RPTs are properly disclosed in the Corporation’s financial statements, and other applicable fillings in accordance with the relevant rules and issuances of the Securities and Exchange Commission and other regulatory bodies.
|Related Party Transactions||Policies and Procedures|
|(1) Parent Company||
All transactions with related parties are made on terms equivalent to those that prevail in arm’s length transactions. There have been no guarantees provided or received for any related party receivables or payables. An assessment is undertaken each financial year through examining the financial position of the related parties and the markets in which the related parties operate.
|(2) Joint Ventures|
|(4) Entities Under Common Control|
(5) Substantial Stockholders
(6) Officers including spouse/children/siblings/parents
Annual disclosure of business interests and adherence to AC’s Insider Trading Policy to uphold transparency and practice corporate governance.
(7) Directors including spouse/children/siblings/parents
(8) Interlocking director relationship of Board of Directors
(b) Conflict of Interest
(i) Directors/Officers and 5% or more Shareholders
Identify any actual or probable conflict of interest to which directors/officers/5% or more shareholders may be involved.
|Details of Conflict of Interest (Actual or Probable)|
|Name of Director/s||N.A.|
|Name of Officer/s||N.A.|
|Name of Significant Shareholders||N.A.|
Describe the mechanism laid down to detect, determine and resolve any possible conflict of interest between the company and/or its group and their directors, officers and significant shareholders.
The Company’s Human Resources Manual of Policies and Procedures, the Employee Handbook, and the Code of Conduct and Ethics apply to directors, officers and employees. They provide principles, guidelines and standards by which officers are expected to conduct themselves.
Directors, employees and officers are required to submit Annual Disclosure of business interests and adherence to the company’s Insider Trading Policy to uphold transparency and practice corporate governance.
If a director has an interest in a matter under consideration by the board, then the director is not allowed to participate in those discussions and the board should follow any further appropriate processes. Individual directors should be conscious of shareholder and public perceptions and seek to avoid situations where there might be an appearance of a conflict of interest.
Independent directors are aware of the shareholders’ and public’s perceptions and they are guided to avoid situations where there could be an appearance of conflict of interest.
Each company in the Group has its Manual of Policies and Procedures and Code of Conduct which apply to directors, officers and employees.
5) Family, Commercial and Contractual Relations
(a) Indicate, if applicable, any relation of a family,4 commercial, contractual or business nature that exists between the holders of significant equity (5% or more), to the extent that they are known to the company:
|Names of Related Significant Shareholders||Type of Relationship||Brief Description of the Relationship|
(b) Indicate, if applicable, any relation of a commercial, contractual or business nature that exists between the holders of significant equity (5% or more) and the company:
|Names of Related Significant Shareholders||Type of Relationship||Brief Description|
(c) Indicate any shareholder agreements that may impact on the control, ownership and strategic direction of the company:
|Names of Related Significant Shareholders||Type of Relationship||Brief Description Transaction|
|None that the Company is aware of.|
6) Alternative Dispute Resolution
Describe the alternative dispute resolution system adopted by the company for the last three (3) years in amicably settling conflicts or differences between the corporation and its stockholders, and the corporation and third parties, including regulatory authorities.
|Alternative Dispute Resolution System|
|Corporation & Stockholders||
The Company has no record of conflicts or differences with its stockholders, regulatory authorities and other third parties.
However, it is the policy of the Company to resolve disputes or differences with stockholders, regulatory authorities and other third parties, if and when such disputes or differences arise, through mutual consultation or negotiation, mediation or arbitration.
|Corporation & Third Parties|
Corporation & Regulatory Authorities