The CG Ranking of ASEANPLCs & the CG SCORECARD

1 The CG Ranking of ASEAN PLCs & the CG SCORECARD . Working Group D -Progress Update and Issues 17th ACMF Meeting 26 September 2012. 1. Recap: Objectives and Approach Raise CG standards and practices of ASEAN PLCs Showcase and enhance visibility and investability of well-governed ASEAN PLCs Objectives Complement other ACMF initiatives and promote ASEAN as an asset class SCORECARD is a diagnostic tool to improve CG standards of ASEAN PLCs Create a universal CG SCORECARD containing key elements of good CG. Devise a scoring methodology Approach Validate and publish ASEAN CG SCORECARD Assess ASEAN PLCs identifying top 50 PLCs in each jurisdiction and top 50 PLCs regionally ASEAN CG SCORECARD released to public in March 2012. Final deliverables of pilot year submitted to regulators in May 2012.

2 Progress Commencement of 2nd year (May 2012 Mar 2013). Enhancements of the SCORECARD Quality assurance and peer review Validation of the SCORECARD 2. Recap : Progress from the last ACMF meeting At the 16th ACMF meeting in Singapore (7 March 2012), ACMF granted its endorsement to : 1. Release of the ASEAN CG SCORECARD to the 3 DRBs (TIOD, MSWG and IICD). 2. Pursue funding under ADB's RETA for the 2nd Year 3. Commencement of the 2nd year by the CG experts Update as at September 2012: 1. Two additional CG experts came on board Dr. Jesus Estanislao Chairman, Institute of Corporate Directors Philippines Dr. Hien Thu Nguyen Vice Dean, Finance Department, School of Industrial Management, University of Technology, Vietnam National University of Ho Chi Minh City.

3 2. Funding under ADB's RETA of approximately USD500k was secured for the 2nd year 3. Second year has commenced and currently on Phase III. 3. Second Year Timeline : May - November 2012. Deliverable: Domestic Top 50 Ranked List Phase 1 Phase 2 Phase 3 Phase 4. May June July Aug Sept Oct Nov Dec Domestic Peer Review Enhance SCORECARD Validation Ranking Exercise (2-29 Oct). Discussion on the (2 days) Discussion on Enhancement of the plans for Regional 9 & 10 July Stock taking discussion Ranking Exercise SCORECARD Update: on the Domestic (2 days). (3 days) Ranking Exercise Peer Review 6 & 7 December 27 April, 15 & 16 May Beta (1 day) 27 August 2 Oct Update: Result meeting Update: Testing 31 Oct & 1 Nov Submission of Discussion results (25 Sep)* Release of the after the - Engagement with regulators, PLCs and DRBs to: Domestic Beta Testing - Educate and train DRBs (2 days).

4 Ranking - Promote and secure buy-in from stakeholders 21 & 22 June - Manage political and market expectations - Showcase top CG companies in each ASEAN country assessed ACMF working group * Except for Vietnam and 31 May 1 June 2012 meeting (6 Sept) Philippines who will submit ACMF Working Group 17th ACMF meeting results on the 15 Oct meeting (26 Sept) 4. Second Year Timeline: December March 2013. Deliverable : Regional Top 50 List ASEAN PLCs Phase 4. Dec Jan Feb March Peer Review Release Regional Regional Ranking exercise (2 days) Top 50. to Regulators 5. Promotional and engagement efforts in 2012 . Date Events 1 June ACMF working group meeting - Detailed briefing by CG experts to regulators on the CG SCORECARD and its Ranking methodology.

5 5 June Presentation of the ASEAN CG SCORECARD at the ICPAS/CPA Australia Dinner Talk by Prof. Mak 10 July Validation exercise with OECD and ICGN. 12 July National Directors' Conference organised by Thai IOD and attended by Thailand's PLCs 13 July Meeting and discussion with officials of the State Securities Commission of Vietnam 7 August Meeting between Dr Estanislao with Securities and Exchange Commission, and Stock Exchanges of the Philippines 10 August Briefing session to Fellows of Philippines' ICD on the ASEAN CG SCORECARD 24 August Conference in Ho Chi Minh City ASEAN CG SCORECARD , Opportunities and Challenges for Vietnamese PLCs, organised by SSC with support from ADB. 29 August Engagement with members of the Philippines GGAPP (Good Governance Advocates and Practitioners of the Philippines ).

6 11 September Roll out/ Launch of ASEAN CG SCORECARD in the Philippines 19 September The Effective Board organised by Indonesian Institute for Corporate Directorship 24-25 October OECD Roundtable on Corporate Governance End Oct/Early Nov MSWG's CG Conference 6. Issues for deliberation . Options on project sustainability Legal ownership of the SCORECARD Methodology and format for the release of the results from domestic Ranking exercise 7. Options on project sustainability The following sustainability options may be explored: a. Option 1: Rotation of the project amongst ACMF Members. Issues pertaining to operationalisation and funding would be addressed by respective regulator who will chair the project for that specific year. b. Option 2: Establishment of a CG taskforce consisting of ACMF Members to decide on the types of activities to lift CG standards in ASEAN and to promote/create awareness on the ASEAN CG SCORECARD .

7 Cost sharing amongst members of the taskforce. c. Option 3: Ownership and management of the product to be passed on to a private or commercial entity. Domestic Ranking bodies from ASEAN countries could establish a network and jointly own and operationalise the CG SCORECARD . An ASEAN CG Award event could be organised to award top ASEAN PLCs. 8. Sustainability of the initiative Option 1. OPTION 1 Advantages Rotation of project amongst ASEAN regulators Inclusiveness and sharing of hosting opportunity amongst ASEAN regulators. A signal of good co- operative effort ACMF CG Project Leader Strong messaging and endorsement by ASEAN. (rotating Chairman) regulators on the need for good CG practice in ASEAN. PLCs. Decide on funding & activities Rotational chairman provides different experiences, value add and perspectives to the committee Regional Oversight Committee -Regulators, CG Experts, CG champions Disadvantages Domestic Ranking Bodies Different operational system and experiences of the IOD, ICD, MSWG SAICSA host regulator may lead to inconsistency in timelines and may compromise deliverables There is also no formal structure to the effort.

8 Domestic Ranking Exercise conducted by the DRBs Regional Oversight Committee to oversee DRBs and conduct regional Ranking exercise 9. Sustainability of the initiative Option 2. OPTION 2. Advantages Taskforce of ACMF Regulators The taskforce would be impartial as it consist of ACMF. member countries ensuring independence and credibility of the SCORECARD . Taskforce serves as an effective platform for regulators to collaborate, network and share ideas. ASEAN CG TASKFORCE. (reps. of ACMF Members) Regulators have the capacity to push specific CG agenda esp. in relation to regulatory framework towards Decide on funding and activities enhancing CG standards. Signals good collaborative and shared effort amongst regulators Working Committee CG experts Disadvantages Representatives from ACMF Decision making process may be slower given large number of members Domestic Ranking Bodies (DRBs).

9 CG Taskforce consisting of regulators may signal greater Working Committee will undertake both domestic and regional emphasize on regulatory discipline. Ranking . 10. Sustainability of the initiative Option 3. OPTION 3 Advantages Project to be operationalised by private or DRBs are already familiar with the SCORECARD and 3 our of 6. commercial entity: experts are from the DRBs 1) DRBs forming an ASEAN CG Network DRBs could extend their business model to advisory /consultancy for the PLCs 2) S&P, MSCI, the Governance Metrics CG Ranking /assessment process seen to be free from any International (GMI). regulator's intervention A dedicated entity allow greater focus in driving coherent and structured initiatives ASEAN CG Network Members: Thai Institute of Directors Indonesia Institute of Corporate Directors Disadvantages Philippines Institute of Corporate Directors ACMF Members would have to give up control and the Minority Shareholder Watchdog Group operationalisation of the SCORECARD .

10 Singapore Association of the Institute of Chartered Secretaries and Administrators No guarantee on how long the initiative will run as funding may be limited. Pace of development will also depend on strength and drive of the private entity. Different agenda of each DRB making it difficult to pull everyone together and may compromise intended objectives. There may be potential conflict of interest in running the assessment 11. Business plan moving forward Year 5. a) Consider the establishment of a Year 3 and 4 permanent entity or structure to continue undertaking the roles Year 2 a) Domestic and regional assessment of PLCs and functions. a) Enhancement, review, b) Ongoing review and enhancement validation of SCORECARD of the SCORECARD b) Promotion, creation of c) Stakeholder engagements Year 1.