Measures the strength of minority shareholder protections against directors’ misuse of corporate assets for personal gain. The indicators distinguish three dimensions of investor protection: transparency of related-party transactions (extent of disclosure index, 0-10), liability for self-dealing (extent of director liability index, 0-10) and shareholders’ ability to sue officers and directors for misconduct (ease of shareholder suits index. 0-10).

The case used for scoring involves a related-party transaction between two companies of which "Mr. James" is both a controlling shareholder and member of the board of directors. Higher scores indicate greater disclosure, greater liability of directors, greater powers of shareholders, and consequently, more investor protection.

Improved scores on Shareholder Rights Index and Shareholder Governance Index through:

Protecting Minority Investors

REFORMS:

1. Creation of Securities and Exchange Commission (SEC) taskforce to review regulations affecting the internal governance of corporations, regulations of related-party transactions, disclosure obligations, liability of company executives and access to evidence in civil litigations.
2. Issuance of SEC Memorandum Circular Nos. 11 and 18 on the posting of pertinent company information on websites of Publicly Listed companies (e.g. Corporate Profile, Board of Directors, Management Team and Executive Officers, etc.)

Reference Links:

DB 2016 Questionnaire on PMI

SEC Memorandum Circular No. 11 Series of 2014

SEC Memorandum Circular No. 18 Series of 2014

Agencies

ACCRALAW

Securities and Exchange Commission

Department of Justice

Philippine Stock Exchange