MANILA, Philippines - Philippine companies have much room to improve in terms of good corporate governance compared with its peers in the Southeast Asian region, an industry expert said.
There are local firms’ moves that are not at par with regional best practices, said Jamie Allen, secretary general of the Asian Corporate Governance Association (ACGA), in a forum organized by the Institute of Corporate Directors (ICD).
He noted the removal of the rights of minority shareholders to buy newly-issued stocks.
“Ideally, companies should sell the shares to existing shareholders first...From global investor perspective, eliminating pre-emptive rights from your company’s articles of incorporation is a big no no. It is just really bad corporate governance,†Allen said.
He said private share sales tend to dilute the ownership of the minority stockholders.
The low public float level is also an issue for Philippine firms.
“The 10-percent minimum public float is very small. In Hong Kong, we are at 25 percent. If public float is too small, you have a limited number of public investors to balance the controlling shareholder,†Allen said.
Pursuing good corporate governance initiatives will result in higher stock price valuations while tempering a price decline when the stock market’s bull run ends, he said.
The Corporate Governance Watch 2012 report of investment house CLSA Asia-Pacific Markets increased the corporate governance score of the Philippines by four percentage points to 41 percent, allowing it to overtake Indonesia, which landed at the bottom of the list.