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The Board of Directors and Management of Health Pion Philippines, Inc. hereby commit to adhere to the highest principles of good corporate governance. We are guided by the core values of Professionalism. Responsibility, Competence, Dedication, Sense of Urgency, Excellence. and Entrepreneurship.
The essential points of reference of this Manual are the principles enunciated in the Insurance Commission Circular Letter No. 2020-71 dated 13 June 2020 entitled, Revised Code of Corporate Governance for Insurance Commission Regulated Entities.
The Board of Directors, management and staff hereby acknowledge that this Manual will be their guide to principled actions and responsible conduct in fulfilling their respective duties and responsibilities to stockholders and other stakeholders which include, among others, members, employees, suppliers, partner hospitals, doctors, clinics and laboratories.
The Board of Directors is principally responsible for the compliance to the highest standard of good governance.The Board shall be responsible in approving and overseeing the implementation of the
corporate plans and strategy. The Board shall provide an independent check on Management to ensure accomplishment of the corporateobjectives.
The Board shall be composed of qualified directors with an appropriate mix of competence, expertise anddiverse skills to enable it to perform its roles and responsibilities effectively. The Board ofDirectors shall be elected during each regular meeting of the stockholders and shall hold office for one (1) year and until successors are elected and qualified.
The Board of Directors of the Company shall have members not exceeding fifteen (15) composed of executive and non-executive directors, the latter including independent directors. The non-executive directors shall constitute at least majority of the Board to promote the Independent oversight of management by the board of directors, and who shall be owners of at least one (1) share of the common stock of the Company.
The Board shall have independent directors consisting at least twenty percent (20%) of the board.
Company recognizes that diversity among its directors will foster critical discussion and promote balanced decision by the Board by the Board utilizing the differences in perspectives of its directors. It shall be the policy of the Company to have a board that is diverse in age, gender, ethnicity, culture, skills. competence and knowledge.
The Board, with the assistance of the Corporate Secretary, shall ensure that first-time directors are given the necessary orientation program. Orientation program shall cover Insurance Commission-mandated topics on corporate governance and an introduction to the Company’s business. Articles of Incorporation. By-Laws. the Code of Conduct and other relevant policies. All directors shall be provided with annual continuing training to promote effective board performance and continuing qualification of the directors in carrying-out their duties and responsibilities. The annual training is aimed at providing the Board with continuous information of the developments in the business and regulatory environment, including emerging risks relevant to the company. The training program should include Insurance Commission (IC)-mandated topics on corporate governance, specifically: (a]Code of Corporate Governance: (b)IC Annual Corporate Governance Report; (c)Board Responsibilities; (d) illegal activities of corporations/directors/officers; (e)Protection of minority shareholders; (f)Liabilities of directors; (g)Confidentialities: (h)Conflict of interest: (i) Related Party Transactions:(j)Enterprise Risk Management; and (k)Case studies and Financial Reporting and Audit. The orientation program for first time directors shall be for at least 8 hours, while the annual continuing training shall be at least 4 hours
A highly effective Board requires Directors to hove the integrity, competencies, and capabilities to carry out their fiduciary duties in the best interest of the Company and its shareholders. For directors to effectively execute their duties, they should have the requisite experience, skill. time, and commitment as befits the Director of the business. The following characteristics and qualifications are necessary for new candidates being considered for nomination as well as existing Directors:
The Board of Directors may consider of her qualifications which are now or may hereafter be provided in the relevant existing laws or any amendments thereto or new law applicable to the Corporation.
The following are the grounds for the disqualification of a director:
This disqualification should be in effect as long as the delinquency persists.
The Board shall be composed of at least twenty percent (20%) Independent Directors. The Board should ensure that its independent directors possess the necessary qualifications and none of the disqualifications for on independent director to hold the position.
An Independent Director refers to a person who:
Related company refers to (a) the covered entity’s holding/parent company; (b) its subsidiary or affiliate; (c) subsidiaries of its holding/parent company, or (d) a corporation where a covered entity or its majority stockholder own such number of shores that will allow/enable such person or group to elect at least one ( l) member of the board of directors or a partnership where such majority stockholder is a partner.
An Independent Director shall have the following minimum qualification: (a)He shall be at least a college graduate or he shall have been engaged or exposed to the business of the corporation for at least five 15) years; and (b}He shall possess proven integrity, probity and independence.
The Chairman of the Board of Directors shall preside at all meetings of the Board of Directors and Shareholders. The Chairman shall also assist in ensuring compliance with and performance of the Corporate Governance policies and practices.
The duties and responsibilities of the chairman in relation to the Board may include. among others. the following:
The CEO has the following roles and responsibilities, among others:
The Board should ensure that it is assisted in its duties by a Corporate Secretary, who should be a separate individual from the Compliance Officer. The Corporate Secretary should not be a member of the Board of Directors and should annually attend a training on corporate governance.
The Corporate Secretary is primarily responsible to the corporation and its shareholders, and not to the Chairman or President of the Company and has, among others, the following duties and responsibilities:
The Board shall ensure that it is assisted in its duties by a Compliance Officer. The Board may consider appointing a Compliance Officer with a rank of Vice President or an equivalent position with adequate stature and authority in the Corporation. The Compliance Officer should not be a member of the Board of Directors and shall have direct reporting responsibilities to the Chairman of the Board. The Compliance Officer shall annually a1tend a training on Corporate Governance.
He/she has, among others, the following duties and responsibilities:
It is the Board’s responsibility to foster the long-term success of the corporation, and to sustain its competitiveness and profitability in a manner consistent with its corporate objectives and the best interests of its stockholders. The Board should formulate the corporation’s vision, mission, strategic objectives, policies and procedures that shall guide its activities, including the means to effectively monitor Management’s performance
To ensure a high standard for the Corporation, its Shareholders and other Stakeholders, the Board shall conduct itself with honesty and integrity in the performance of, among others, the following duties and functions:
HPPl’s Board of Directors consists of seven members with three (3) executive directors, four (4) non-executive directors including two (2) independent directors.
The Board carries out the functions of relevant board committees as the need arise.
A director’s office is one of trust and confidence. A director should act in the best interest of the corporation in a manner characterized by transparency, accountability and fairness. A director should observe the following norms of conduct:
The Board, in coordination with the Corporate Governance Committee, shall ensure that the Company has in place an appropriate succession planning for key executives to address emergency in the event of extraordinary circumstances and ensure continuity of operations.
On the retirement age of directors, however, the Board recognizes the fact that chronological age is not the main factor in determining effectiveness of the director in discharging its duties and responsibilities. Rather. the Board will lose valuable wisdom from the senior directors. By law, once directors are elected by shareholders. they could not be removed because of age. Hence, the Board decided to hold in abeyance the implementation of the retirement age policy of the directors.
The levels of remuneration of the Company shall be sufficient to attract and retain experienced and professional directors and officers needed to run the Company successfully. The Board of Directors shall approve a remuneration that is appropriate and consistent with the Company’s operating and risk culture.
The Company shall consider the following in the design of the remuneration policy:
The Corporate Governance Committee is tasked to undertake the process of identifying the qualifications of directors aligned with the company’s strategic direction. In evaluating the suitability of individual board member and promoting diversity in the composition of the Board. the Corporate Governance Committee should take into account the relevant qualifications of every candidate nominated for election such as among others, physical/mental fitness, relevant educational and professional background, experience/training. commitment to contribute, willingness to serve and interest to remain engaged and involved without undue prejudice to age, gender, ethnicity, culture, skills, competence and knowledge. At least one of the non-executive directors should have prior working experience in the health maintenance organization or a relevant sector. For the reelection of incumbent directors, the Corporate Governance Committee should also consider the results of the most recent self-assessment of the Board and peer evaluation, director’s attendance record in meetings, participation in Board activities and overall contribution to the functioning of the Board. A former employee of the Company’s current external auditor will not be qualified for nomination as member of the Board. The Corporate Governance Committee will use to the extent possible. external search firm or external data bases in selecting the pool of candidates for the members of the Board. Any stockholder, whether majority or minority has the right to nominate candidates for seats in the Board of Directors who possess all the qualifications and none of the disqualifications of Directors as prescribed in the Company’s By-Lows and the rules of the Insurance Commission.
The company has established policies and procedures on related party transactions. These include definition of related parties, coverage of RPT policy, guidelines in ensuring arm’s length terms, identification and prevention of management potential or actual conflicts of interest which arise, adoption of materiality thresholds, internal limits for individual and aggregate exposures, whistle-blowing mechanisms, and restitution of losses and other remedies for abusive RPTs.
The Related Party Transactions policy is intended to ensure that every related party transaction is conducted in a manner that will protect the Company from conflict of interest which may arise between the Company and its Related Parties; and proper review, approval ratification and disclosure of transactions between the Bank and any of its related party/ies as required in compliance with legal and regulatory requirements. The policy also requires that any member of the RPT Committee who has a potential interest in any related party transaction shall abstain from the discussion and endorsement of the related party transaction and any member of the Board who has an interest in the transaction must abstain from the deliberation and approval of any related party transaction.
Please refer to Annex A for the Related Party Transaction Policy.
It is the responsibility of the Board to approve the selection and appointment of a competent Management Team led by the President/CEO including the Compliance Officer. Fit and proper standards must be applied in the selection process of key officers and due consideration must be given to their integrity expertise and health maintenance services experience. The Board, through the Corporate Governance Committee, shall undertake the evaluation of the Executive Management team performance including the President/CEO based on established performance management framework and standards that are consistent with the Companies strategic objectives.
It is the responsibility of the Board to oversee that a sound and effective enterprise-wide risk management framework and appropriate internal control systems are in place to manage the risks and to provide reasonable assurance against material misstatement or loss. It is also responsible to review and approve the nature and extent of the key business risks that the Company is taking in pursuing its strategic objectives and providing oversight over its risk management policies and procedures.
The control environment of the corporation consists of: (a) the Board which ensures that the corporation is properly and effectively managed and supervised; {b) 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) 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 lows. rules. regulations and contracts.
The Charter of the Board of Directors of the Company serves as guide to its directors in the performance of their functions. It clearly states the roles, responsibilities, structure, and powers of the Board of Directors, subject to the provisions of the Corporation code of the Philippines, the Company’s Articles of Incorporation and By-Laws, other applicable laws or regulations, corporate governance best practices and policies of the Board.
The Manual on Corporate Governance of Health Pion Philippines, Inc. already incorporates in great detail the Board Charter. The Manual formally sets out and clearly specifies the roles, responsibilities, structure and powers of the Board, as well as embodies other relevant matters consistent with and in the light the Insurance Commission Code of Corporate Governance for insurance related companies.
The Company’s Board of Directors acknowledges that this Manual as it incorporates the Board Charter. is their over-all guide to principled actions and responsible conduct in carrying out their fiduciary duties.
The Board as a whole carries out the functions of relevant board committees as the need arises.
In terms of the size, risk profile and manageability of the operations of the company, the Board can still achieve optimal performance of its roles and responsibilities combined with carrying out the functions of relevant board committees particularly with respect to audit, risk management, related party transactions, and other key corporate governance concerns. such as nomination and remuneration.
The Board as a whole carries out the functions of the Audit Committee which is responsible for the appointment, reappointment. removal and fees of the External Auditor based on approved criteria such as but not limited to technical and industry expertise, skills, resources. reputation. and quality of service delivery. The appointment, reappointment, removal and fees of the External Auditor should be approved by the Board. Removal or change of the External Auditor should be disclosed to regulators and the public through the Company’s website ad proper disclosures.
As part of its assurance process, the Board, acting as Audit Committee is mandated to monitor the independence of the External Auditor to ensure the true objectivity of the financial statements. All services provided by the External Auditor are required to be approved by the Board. Prior to the commencement of audit work. the Board should receive a written confirmation from the External Auditor of its independence and objectivity. The policy of rotating the lead engagement partner of the External Auditor every 5 years should be strictly enforced. The Board is also responsible to review and monitor the External Auditor’s suitability and effectiveness on an annual basis.
To avoid conflict of interest and impairment of independence, the Board shall limit the engagement of the External Auditor to audit services only.
The Board as a whole carries out the functions of the Risk Management Committee which is responsible for overseeing risk-taking activities of the Company. The function entails defining a risk management strategy, identifying and analyzing key risk exposures, evaluating each identified risk using the predefined risk categories and parameters, establishing a risk register, developing a risk mitigation plan, communicating and reporting significant risk exposures including business risks. and monitoring and evaluating the effectiveness of the Company’s risks management processes.
The Board as a whole carries out the functions of the Corporate Governance Committee particularly the overseeing compliance with and proper observance of corporate governance principles and practices. The function includes among others: (a) adoption of corporate governance policies; (b) determination of the nomination and election process for the company’s directors and defining the general profile of the board members to ensure appropriate knowledge, competencies and expertise that complement the existing skills of the Board; (c) establishment of a formal and transparent procedure to develop a policy for determining the remuneration of directors and officers that is consistent with the corporation’s culture and strategy as well as the business environment in which it operates.
The Board as a whole carries out the functions of the Related Party Transaction Committee tasked with reviewing all material related party transactions of the company.
To ensure safe and sound opera1ions, the Company has in place an adequate and effective internal control system that provides reasonable assurance that it will not be adversely affected by any event that could be reasonably foreseen as it strives to achieve its business objectives.
The Company prudently manages the risks associated with its business and operations. II has in place an enterprise risk management framework designed to enhance risk management through a holistic and integra1ed framework so 1hat all material risks faced by the Company are identified, measured. evaluated, mitigated, moni1ored and appropriately managed.
An effective and efficient internal audit function constitutes the third line of defense in the system of internal control. As such, the Company has in place an independent audit function through which the Company’s Board. Senior Management, and Stockholders may be provided with reasonable assurance of the efficacy of the risk management. control and governance processes, in accordance with the international internal audit principles and standards. The functions of Internal Auditor area as follows, among others:
The Board recognizes the importance and benefits of conducting annual self-assessment to determine its effectiveness. The Board shall undertake the evaluation of its performance as a collective body including the performance of the Chairperson to determine whether they are functioning effectively, pinpoint areas for improvement and assess whether it possesses the right mix of backgrounds and competencies.
In addition, the Director Peer Evaluation shall also be conducted annually. This is intended to encourage improved performance and effectiveness or directors by identifying areas that need improvement. Each director is requested to rate his/her colleagues on the Board using the prescribed rating scale and questions.
The criteria for self-assessment of the Board performance and peer evaluation have been in place based on functions, roles and responsibilities provided in the Board Charter.
Directors are required to disclose any conflicts of interest and to abstain from participating in any discussion or voting on any matter in which they have a material personal interest except with the prior approval of the Board. Conflicts of interest exist in the following situations, among others: (a) Self-dealing, in which o Director causes the Company to enter into a transaction with another organization that benefits such Director; (b) Outside employment in other HMO company or insurance company that are viewed as competitor of the Company; (c) Family interests, in which a relative up to the third degree of affinity or consanguinity is employed (or applies for employment) or where goods or services are purchased from such a relative or a Firm controlled by a relative; (d) Receiving high-value gifts from entities that do business with the Company and in this regard, high value is defined as worth more than PHP 5,000: (e) Interest in stocks and other investments, in which the Company is invested in or is contemplating investing in.
The essence of good corporate governance is transparency. The Board commits to meet all disclosure requirements particularly those involving material information as mandated by regulators within the prescribed period.
All material information, both financial and non-financial, about the Company that may adversely affect its viability or the interests of the stockholders and other stakeholders shall be publicly and timely disclosed such as. among others earnings results, material acquisition or disposition of assets, off balance sheet transactions, company’s ownership structure, beneficial ownership whether direct or indirect of at least 5% of the company shares including that of the directors and senior officers. and the remuneration of members of the Board and Management.
Biographical details on individual board members and key officers to evaluate their experience and qualifications. and assess any potential conflict of interest that might affect their judgment.
All such information shall be disclosed through the appropriate disclosure mechanisms of the Insurance Commission for the interest of the Company’s stockholders and other stakeholders.
The Company shall continue to maintain and use a website to ensure a comprehensive, cost efficient, transparent, and timely manner of disseminating relevant information to the public.
The Board is committed to treat all Shareholders fairly and equitably, and shall recognize, protect and facilitate the exercise of their rights. These rights relate to the following among others:
The Alternative Dispute Resolution System shall cover disputes between the Company and its stockholders, and the Company and third parties, including the regulatory authorities, as herein provided. A dispute shall mean conflict of claims or rights, or an assertion of clam or demand by a stockholder or a third party, including regulatory authorities, met by contrary claims or assertions on the part of the company and vice versa. (Hereinafter, “Dispute”). The System shall not cover mere complaints. A complaint shall mean a statement of some grievance or dissatisfaction by a stockholder or a third party.
The following procedures shall apply:
All Disputes between the Company and stockholders shall be monitored by the Office of the Corporate Secretary: disputes between the Company and third parties not involving regulatory authorities shall be monitored by the Legal affairs; and disputes between the Company and regulatory authorities shall be monitored by the Compliance Office. All Disputes referred to the ADR process shall be reported to the Board of Directors.
Any settlement during negotiation or mediation shall be submitted by Management to the Board of Directors for approval or other appropriate action.
The Board is primarily accountable to the stockholders. It should provide them with a balanced and comprehensible assessment of the corporation’s performance, position and prospects on a quarterly basis, including interim and other reports that could adversely affect its business, as well as reports to regulators that are required by law.
Thus. it is essential that Management provide all members of the Board with accurate and timely information that would enable the Board to comply with its responsibilities to the stockholders.
The Company shall establish on evaluation system to determine and measure compliance with this Manual and violation of any of its provision shall be subject to penalty in accordance with the rules and regulations of the Company.