In the business milieu, social responsibility is becoming an important investment factor. Better access to capital is often granted to corporations with a strong social responsibility performance. It also puts these fi rms in a position to attract strategic partners, paving the way to gaining higher investment returns. Investors worldwide put a premium on social responsibility as a strategic business component.

Corporate governance and social responsibility directions have dovetailed in recent years. More shareholders view how corporations manage social responsibility concerns with growing confidence. This stresses the vital role of the Board of Directors and management in effectively institutionalizing social responsibility.

There is a visible manifestation of social responsibility in the corporate governance policies and practices of San Miguel Corporation. All publicly listed companies of the San Miguel Group are in full compliance with the Securities and Exchange Commission’s rules and regulations. SMC was the fi rst company to submit a Corporate Governance Manual to the SEC with the intention of institutionalizing the principles of good corporate governance throughout its organization.

Compliance System

In adherence to corporate principles and best practices, the Chairman of the Board designated a Compliance Officer reporting directly to him. As the position denotes, he is responsible for seeing to it that the organization complies with the provisions in the manual.

The Board of Directors is responsible for the long-term success of the Corporation and its sustained competitiveness, consistent with its trusted role exercised in the best interest of the Corporation, its shareholders and other stakeholders.

Forming working committees within the Board fosters open discussion, keeping Board members informed, and allowing them to become more sensitive to shareholders’ interests.

Audit Committee - This committee ensures that the accounting and auditing processes, practices and methodologies meet international standards. It develops a defi nitive timetable within which the accounting system of the Corporation is 100% compliant with the International Accounting Standards (IAS). It includes an accountability statement to identify specific officers and personnel who are directly responsible for accomplishing such task.

Financial records conform to accounting principles generally accepted in the Philippines. Upon its approval, the Corporation will adopt the IAS as its main accounting and financial reporting platform for international acceptability. The Audit Committee promotes a transparent financial management system which strengthens the integrity of internal controls within the Corporation.

An External Auditor is selected and appointed by the stockholders upon the recommendation of the Audit Committee. To ensure an environment of good corporate governance, the External Auditor or the handling partner is changed every five years or earlier.

The Corporation has in place an independent internal audit function performed by an Internal Auditor, who ensures that its key organizational and procedural controls are effective, appropriate and complied with.

Disclosure System

All material information are publicly disclosed. These include earning results, Board changes, and shareholdings of directors.

The Corporation established an Investor Relations Unit to disseminate timely information to shareholders. SMC practices consistency, accuracy and timeliness in the delivery and communication of information and data. The Unit coordinates with the Compliance Officer and other SMC divisions in effectively communicating with stakeholders.

Monitoring and Assessment

Each committee reports to the Board of Directors. The Compliance Officer established an evaluation system to determine and measure compliance against the manual’s guidelines.