An Act to Promote Financial Viability and Fiscal Discipline In Government-Owned Or -Controlled Corporations and to Strengthen the Role of the State In Its Governance and Management to Make Them More Responsive to the Needs of Public Interest and For Other Purposes
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An Act to Promote Financial Viability and Fiscal Discipline In Government-Owned Or -Controlled Corporations and to Strengthen the Role of the State In Its Governance and Management to Make Them More Responsive to the Needs of Public Interest and For Other Purposes
Republic Act No. 10149
June 6, 2011
Case Overview and Summary
Summary of the GOCC Governance Act of 2011Declaration of Policy (Section 2)
• The State recognizes the potential of GOCCs as tools for economic development.
• The State shall ensure:
- Judicious use of the corporate form for government activities.
- Rationalization and central monitoring of GOCC operations.
- Transparent, responsible, and accountable governance of GOCCs.
- Periodic disclosure and examination of GOCC operations and management.
- Competent and accountable governing boards acting in the State's best interest.
- Reasonable and justifiable remuneration schemes for directors, officers, and employees.
- Clear separation between regulatory and proprietary activities of GOCCs.
Definition of Terms (Section 3)
• Defines various terms related to GOCCs, such as "Affiliate", "Appointive Director", "Board of Directors/Trustees", "Breakthrough Results", "Charter Statement", "Chartered GOCC", "Chief Executive Officer (CEO)", "Department", "Ex Officio Board Member", "Fit and Proper Rule", "Government Agency", "Government Corporate Governance Standards", "Government Financial Institutions (GFIs)", "Government Instrumentalities with Corporate Powers (GICP)/Government Corporate Entities (GCE)", "Government-Owned or -Controlled Corporation (GOCC)", "Nonchartered GOCC", "Officers", "Ownership Manuals", "Per Diems", "Performance Evaluation System", "Performance Scorecard", "President", "Related Corporation", "Secretary", "Strategy Map", and "Subsidiary".
Coverage (Section 4)
• The Act applies to all GOCCs, GICPs/GCEs, and government financial institutions, including their subsidiaries, but excludes the Bangko Sentral ng Pilipinas, state universities and colleges, cooperatives, local water districts, economic zone authorities, and research institutions.
• For economic zone authorities and research institutions, the President shall appoint one-third (1/3) of the board members from the list submitted by the GCG.
Governance Commission for GOCCs (GCG) (Sections 5-7)
• Creation of the GCG as a central advisory, monitoring, and oversight body for GOCCs, attached to the Office of the President.
• Powers and functions of the GCG:
- Evaluate the performance and relevance of GOCCs, and determine if they should be reorganized, merged, streamlined, abolished, or privatized. (Section 5(a))
- Classify GOCCs into different categories. (Section 5(b))
- Adopt an ownership and operations manual and government corporate standards for GOCCs within 180 days. (Section 5(c))
- Recommend suspension of board members who participated in violations. (Section 5(d))
- Identify necessary skills and qualifications for Appointive Directors and recommend a shortlist to the President. (Section 5(e))
- Establish performance evaluation systems and scorecards for GOCCs. (Section 5(f))
- Conduct periodic studies, examinations, and evaluations of GOCC performance. (Section 5(g))
- Conduct compensation studies and recommend a competitive compensation system. (Section 5(h))
- Provide technical advice and assistance to agencies overseeing GOCCs. (Section 5(i))
- Coordinate and monitor GOCC operations to ensure alignment with national policies and programs. (Section 5(j))
- Prepare semi-annual and annual reports on GOCC performance for the President and Congress. (Section 5(k))
- Review and recommend actions to address conflicts between regulatory and commercial functions of GOCCs. (Section 5(l))
• Composition of the GCG: Five members, including a Chairman with the rank of Cabinet Secretary, two members with the rank of Undersecretary, and the Secretaries of the Department of Budget and Management and the Department of Finance as ex officio members. (Section 6)
• Powers and functions of the GCG Chairman. (Section 7)
Compensation and Position Classification System for GOCCs (Sections 8-11)
• The GCG shall develop a Compensation and Position Classification System for all officers and employees of GOCCs, subject to the President's approval. (Section 8)
• Principles governing the Compensation and Position Classification System:
- Equal pay for work of equal value, with differences based on verifiable factors and the GOCC's financial capability. (Section 9(a))
- Basic compensation for GOCC personnel shall be comparable to the private sector and in accordance with minimum wage laws. (Section 9(b))
- Periodic review of compensation rates, considering GOCC performance, contribution to the economy, and inflation. (Section 9(c))
• The GCG may recommend additional incentives for certain position titles based on the GOCC's good performance, provided that the GOCC has paid all taxes and dividends. (Section 10)
• No diminution in the authorized salaries of incumbent GOCC employees as of December 31, 2010, upon implementation of the Compensation and Position Classification System. (Section 11)
Board of Directors/Trustees/Officers of GOCCs (Sections 12-24)
• Duties, obligations, responsibilities, and standards of care apply to all members of the Board of Directors/Trustees and Officers of GOCCs and subsidiaries. (Section 12)
• The present number of Directors/Trustees provided in the GOCC charters shall be maintained. (Section 13)
• Ex officio members may designate alternates who shall be the officials next-in-rank to them. (Section 14)
• Appointment of Appointive Directors by the President from a shortlist prepared by the GCG, based on the Fit and Proper Rule and other qualifications. (Section 15)
• Fit and Proper Rule to be determined by the GCG in consultation with relevant agencies and approved by the President. (Section 16)
• Term of office for Appointive Directors is one (1) year, unless sooner removed for cause, and may be reappointed if they obtain an above-average performance score. (Section 17)
• The CEO shall be elected annually by the Board from among its ranks and may be removed by the Board for cause. (Section 18)
• Fiduciary duties of the Board and Officers, including acting in the best interest of the GOCC, exercising due care and diligence, avoiding conflicts of interest, applying sound business principles, and electing fit and proper Officers. (Section 19)
• Trustee relation to the properties, interests, and monies of the GOCC, and the requirement to hold profits and benefits in trust for the GOCC. (Section 20)
• Care, diligence, and skill required in the conduct of the GOCC's business. (Section 21)
• Power of the Board to discipline or remove Officers of the GOCC. (Section 22)
• Limits to compensation, per diems, allowances, and incentives of the Board of Directors/Trustees, determined by the GCG and subject to the President's approval. (Section 23)
• Restitution of properties, monies, or profits earned in violation of fiduciary duty or in excess of limits, with penalties for failure to make restitution. (Section 24)
Disclosure Requirements (Sections 25-26)
• GOCCs shall maintain a website and post various information for unrestricted public access, including financial reports, compensation packages, borrowings, performance scorecards, and other information required by the GCG. (Section 25)
• The thirty (30) GOCCs with the highest total assets shall be subject to periodic special audits by the Commission on Audit (COA). (Section 26(a))
• The GCG Chairman may direct a special COA audit of any other GOCC as necessary or convenient for the performance of the GCG's functions. (Section 26(b))
Creation and Acquisition of a GOCC or Related Corporation (Sections 27-28)
• Requisites for the creation of a new GOCC or Related Corporation under the Corporation Code, including submission of a proposal to the GCG for review and recommendation to the President for approval before registration with the Securities and Exchange Commission (SEC). (Section 27)
• Requisites for the acquisition of controlling interest in another corporation, including submission of a proposal to the GCG for review and approval by the President. (Section 28)
Miscellaneous Provisions (Sections 29-34)
• Appropriations for the initial operation of the GCG (₱10,000,000.00) and subsequent funding requirements. (Section 29)
• Suppletory application of The Corporation Code and charters of the GOCCs, insofar as they are not inconsistent with this Act. (Section 30)
• Transitory provision for the Privatization Council and the Privatization and Management Office to continue implementing and finishing the privatization of GOCCs identified and approved for privatization prior to the effectivity of this Act, with unfinished privatizations to be transferred to the GCG after two (2) years. (Section 31)
• Repealing clause for inconsistent laws, executive orders, administrative orders, rules, regulations, decrees, and other issuances. (Section 32)
• Separability clause. (Section 33)
• Effectivity clause, taking effect fifteen (15) days after publication in the Official Gazette or in two (2) newspapers of general circulation. (Section 34)
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Republic Acts
GOCC
Government-Owned or -Controlled Corporations
Governance Commission for GOCCs
Compensation and Position Classification System
Board of Directors/Trustees
Fiduciary Duties
Disclosure Requirements
Creation and Acquisition of GOCCs
Privatization
Corporate Governance
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An Act to Promote Financial Viability and Fiscal Discipline In Government-Owned Or -Controlled Corporations and to Strengthen the Role of the State In Its Governance and Management to Make Them More Responsive to the Needs of Public Interest and For Other Purposes
Republic Act No. 10149
•June 6, 2011
Republic of the PhilippinesCONGRESS OF THE PHILIPPINESMetro Manila
Fifteenth CongressFirst Regular Session
Begun and held in Metro Manila, on Monday, the twenty-sixth day of July, two thousand ten.
REPUBLIC ACT No. 10149
AN ACT TO PROMOTE FINANCIAL VIABILITY AND FISCAL DISCIPLINE IN GOVERNMENT-OWNED OR -CONTROLLED CORPORATIONS AND TO STRENGTHEN THE ROLE OF THE STATE IN ITS GOVERNANCE AND MANAGEMENT TO MAKE THEM MORE RESPONSIVE TO THE NEEDS OF PUBLIC INTEREST AND FOR OTHER PURPOSES
Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled:
CHAPTER I
GENERAL PROVISIONS
Section 1. Short Title. - This Act shall be known as the "GOCC Governance Act of 2011l".
Section 2. Declaration of Policy. - The State recognizes the potential of government-owned or -controlled corporations (GOCCs) as significant tools for economic development. It is thus the policy of the State to actively exercise its ownership rights in GOCCs and to promote growth by ensuring that operations are consistent with national development policies and programs.
Towards this end, the State shall ensure that:
(a)...
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