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For 1 January 2020 until 31 December 2020, the Board committees and their members were as follows: |
GOVERNANCE AND LEADERSHIP TEAM. |
Directors Audit Committee. |
Board Risk Management & Related Party Transactions Committee. |
Corporate Governance & Nomination Committee. |
Executive Committee. |
Personnel & Compensation Committee. |
Fernando M. Zobel de Ayala C. |
Jaime Augusto M. Zobel de Ayala M. |
John Eric T. Francia M. |
Gerardo C. Ablaza, Jr. M. |
Jose Rene Gregory G. Almendras. |
John Philip S. Orbeta C. |
Ma. Aurora Geotina-Garcia (Independent) |
C M. |
Consuelo D. Garcia (Independent) M C. |
Sherisa P. Nuesa (Independent) C M. |
Melinda L. Ocampo (Independent) M M. |
Mario Antonio V. Paner (Independent) M M. |
C: Chairman | M: Member *effective 20 April 2020. |
Directors 18-Mar-20 20-Apr-20 20-Apr-20 11-Jun-20 18-Aug-20 11-Nov-20 17-Dec-20 No. of meetings attended. |
Percent present Regular 1 ASM 2 Organizational 1 Regular 1 Regular 1 Regular 1 Special 1. |
Fernando M. Zobel de Ayala o o o o o o o 7/7 100% |
Jaime Augusto M. Zobel de Ayala o o o o o o o 7/7 100% |
Gerardo C. Ablaza, Jr. o o o o o o o 7/7 100% |
Jose Rene Gregory G. Almendras o o o o o o x 6/7 68% |
John Eric T. Francia o o o o o o o 7/7 100% |
John Philip S. Orbeta o o o o o o o 7/7 100% |
Consuelo D. Garcia (Independent) o o o o o o o 7/7 100% |
Ma. Aurora Geotina-Garcia (Independent) o o o o o o o 7/7 100% |
Sherisa P. Nuesa (Independent) o o o o o o o 7/7 100% |
Melinda L. Ocampo (Independent) o o o o o o o 7/7 100% |
Mario Antonio V. Paner (Independent) o o o o o o 6/6 100% o - Present | x - Absent | 1via video conference | via livestream at https://asm.ayala.com/ACEPH2020. |
The attendance of the directors at the meetings of the Board and of stockholders held in 2020 is as follows: |
Audit Committee The Audit Committee has three (3) independent members including the chairman, and all its members have background and expertise in accounting. The Committee assists the Board by overseeing matters relating to the financial statements and financial reporting process, external and internal auditors, internal control, and compliance with applicable legal and regulatory requirements. |
During the year, the Committee reviewed the Company’s parent and consolidated financial statements, and the work performed by both internal and external auditors through reports provided. Based on the assurance provided by the auditors from their reviews, the Committee assessed the Company’s systems of internal controls, compliance and governance processes as adequate. Please refer to the annual report of the Committee to the Board on the discharge of their duties and responsibilities on pages 88-89. |
The Committee had four (4) regular meetings and two (2) special meetings in 2020, during which the Chairman and members were all present. |
AC ENERGY CORPORATION 2020 INTEGRATED REPORT Enabling Sustainable Recovery 54 53. |
MESSAGE INTRODUCTION GOVERNANCE ANNEXES CREATING VALUE 2020 HIGHLIGHTS |
Personnel and Compensation Committee The Personnel and Compensation Committee has three (3) members including an independent director. The Committee’s role is to establish a transparent policy and procedure for the fixing of the remuneration packages of corporate officers and directors. The Committee ascertains that compensation is aligned with the Company’s culture, strategy, and control environment and competitive against the market, and ensures that it is reasonable for the work required, the Company’s size, and scope. |
Mich: The Committee had one (1) meeting in 2020 where it approved for endorsement to the Board the pay-out of entitlements under the Company's 2016 Stock Purchase Plan to the eligible officers who have retired from the Company and approved for endorsement to the Board the revised Charter of the Personnel and Compensation Committee. |
Board Risk Management and Related Party Transactions Committee The Board Risk Management and RPT Committee is a board level Committee with three (3) members who are independent directors, including the chairman. The Committee is responsible for the oversight of the Company’s enterprise risk management system and for the review of all material related party transactions of the Company. |
The Committee had six (6) meetings in 2020, during which the Chairman and members were all present. |
The Committee had six (6) meetings in 2020, during which the Chairman and members were all present. |
The Committee had one (1) meeting in 2020, during which the Chairman and members were all present. |
The Committee’s accomplishments in 2020 are as follows: 1. Approved and endorsed to the Board the amendment of the Power Administration and Management Agreement (PAMA) with One Subic Power Generation Corporation, on terms as presented. |
2. Approved and endorsed to the Board the terms of the assignment to the Company of the Lease Contract between AC Energy, Inc. and Tabangao Realty, Inc. |
3. Approved and endorsed to the Board the proposed Development Management Agreement (DMA) between AC Energy Corporation and its project companies. |
4. Approved and endorsed to the Board the amendments to the Administration and Management Agreement (AMA) between AC Energy Corporation and SLTEC. |
5. Approved and endorsed to the Board the engagement of BPI Capital Corporation as Sole Global Coordinator, Joint bookrunner, and Joint underwriter in connection with AC Energy Corporation’s Follow-On Offering (FOO) 6. Approved and endorsed to the Board the Related Party and Conflict of Interest Disclosure Form and its implementation. |
7. Approved and endorsed to the Board the proposed financing for the Arayat solar project through a secured a loan for 100% of the total project cost of the Arayat solar project of up to ₱3.33 billion, on terms as presented to the Committee 8. Approved and endorsed to the Board the proposed financing for the Balaoi Project on terms are presented, the use of the Company’s credit lines to Bayog Wind Power Corporation for the requirements of the project; the issuance of a corporate guarantee to the EPC contractor in accordance with the Investment Framework Agreement. |
1. Approved and endorsed to the Board the pay-out of entitlements under the Company’s 2016 Stock Purchase Plan to the officers who have retired from the Company but are eligible to receive benefits under the Plan. |
2. Approved and endorsed to the Board the revised Charter of the Personnel and Compensation Committee. |
Management Roles and Responsibilities Management is primarily responsible for the execution of the Board-approved strategies and monitoring of performance. Management also designs and implements adequate and effective system of internal controls and risk management processes to ensure achievement of objectives while maintaining compliance with laws, rules, and regulations. |
To facilitate the flow of strategic and operational information among the internal decision-makers, the Company has created specific management committees for strategic management, investment, finance, procurement, organizational development, and compensation and benefits. These Committees are composed of key executives who meet regularly to discuss significant matters relevant to the achievement of targets and continuous growth of the Company. Initiatives which are reviewed and endorsed by the Management Committees are discussed with the corresponding Board Committees for approval and endorsement to the Board of Directors for ratification. |
Internal Governance Mechanisms Strategy Formulation and Execution AC Energy Corporation utilizes an inclusive and iterative approach in crafting and executing a long-term strategic plan. It ensures that risks are managed appropriately using a risk management process as these plans are finalized. |
GOVERNANCE AND LEADERSHIP TEAM. |
AC ENERGY CORPORATION 2020 INTEGRATED REPORT Enabling Sustainable Recovery 56 55. |
MESSAGE INTRODUCTION GOVERNANCE ANNEXES CREATING VALUE 2020 HIGHLIGHTS |
Chief Compliance Officer As AC Energy Corporation’s Chief Compliance Officer, Ms. Maria Corazon G. Dizon: ● ensures proper onboarding of new Directors (i.e. orientation on the Corporation's business, Charter, Articles of Incorporation and By-laws, among others); ● monitors, reviews, evaluates and ensures the compliance by the Company as well as its Officers and Directors with the relevant laws, the Corporate Governance Code for PLCs rules and regulations, and all governance issuances of regulatory agencies; ● ensures the integrity and accuracy of all documentary submissions to regulators, among others; ● identifies and manages compliance risks; ● ensures that the Company adheres to sound corporate governance and best practices; ● issues an Integrated Annual Corporate Governance Report that is duly signed under oath by the Chairman, Chief Executive Officer or President, all independent directors, the Chief Compliance Officer, and the Corporate Secretary; ● strives to conduct a yearly performance assessment of the Board, Board Committees, and individual members of the Board using a formal self-rating system; and ● performs such other duties and responsibilities as may be provided by the SEC. |
Disclosure and Transparency In line with the Company’s policies on disclosure and transparency and the disclosure requirements of the Securities and Exchange Commission (SEC), Philippine Stock Exchange (PSE), all material and market-sensitive information about the Company as well as other relevant information were publicly and timely disclosed to the investing public, stakeholders, and other interested users through media a nd analysts’ briefings or other means. Such information includes key results of operations, execution of contracts, declaration of dividends and investment, among others. |
GOVERNANCE AND LEADERSHIP TEAM. |
Accountability and Audit. |
External Auditors On April 20, 2020, the stockholders, upon recommendation of the Audit Committee and endorsement by the Board of Directors, approved the re-appointment of Sycip Gorres Velayo and Co. (SGV & Co.) as the independent external auditor of AC Energy Corporation. The lead engagement partner of SGV & Co. is Mr. Benjamin N. Villacorte, a Securities and Exchange Commission (SEC)-accredited audit partner. |
The responsibilities of SGV & Co. include providing an opinion on the conformity of the Company’s parent and consolidated financial statements with Philippine Financial Reporting Standards and assessing the quality of the Company’s financial reporting process. SGV & Co.’s overall plan, which includes the objectives, scope and timing of the audit, was reviewed and approved by the Audit Committee on its August 3, 2020 meeting. |
To ensure that the external auditor maintains the highest level of independence from the Company, both in fact and appearance, the Audit Committee had pre-approved all audit, audit-related, and permitted non-audit services rendered by the External Auditor. |
The total external auditors fees of SGV & Co. in 2020 amounted to ₱9.64, exclusive of VAT and out-of-pocket expenses. The Audit Committee reviewed the nature of these non-audit services and concluded that these are not in conflict with SGV & Co.’s function as the Company’s external auditor, both in relation to their significance to the audit and the Company’s total expenditure on consultancy. |
The audit and audit-related fees include the audit of AC Energy Corporation’s annual financial statements, quarterly reviews and other assurance services related to performance of the audit or review of the Company’s financial statements pursuant to the regulatory requirements. Non-audit fees include training and a special project/consulting. |
The audit results were presented to the Audit Committee on its March 1, 2021 meeting. There were no disagreements between the Management and SGV & Co. on any matters of accounting principles or practices, financial statement disclosures, or auditing scope or procedures. |
Internal Auditors Internal Audit, headed by the Chief Audit Executive (CAE), Henry T. Gomez, Jr., maintains organizational independence by functionally reporting to the Audit Committee and administratively to the Group Chief Financial Officer. The Audit Committee is responsible in advising the Board of Directors regarding the qualifications and recruitment, appointment, and removal of the CAE and evaluating Internal Audit’s performance at least annually. |
The audit team is composed of professionals, certified as follows: certified public accountants, certified internal auditors, and certified lead auditors in ISO 9001, ISO 45001, ISO 14000, and ISO 27001. All the internal auditors are members of The Institute of Internal AuditorsPhilippines and adopt the International Professional Practices Framework promulgated by The Institute of Internal Auditors, Inc. |
The activities of Internal Audit are governed by a separate Internal Audit Charter approved by the Audit Committee. Internal Audit adopts a risk-based approach in developing its annual work plan, subject to the review and approval of the Committee. The Committee likewise ensures that audit resources are appropriate, sufficient, and effectively allocated to accomplish the approved plan. |
Quarterly, Internal Audit presents to the Audit Committee the results of its reviews as well as the status of Management’s corrective action plans to address control or compliance issues. |
For the year 2020, the Internal Audit attests, that AC Energy Corporation’s system of internal controls, risk management, compliance, and governance processes are designed adequately and continue to operate effectively. |
2020 External Auditor Fees Amount in Million Pesos. |
Audit and Audit-Related Fees ₱ 9.26. |
Non-Audit Fees .38. |
Grand Total ₱ 9.64. |
The Board of Directors has a responsibility to the shareholders to ensure the integrity of the Company’s consolidated financial statements and non-financial information disclosed in the Integrated Report. The financial statements comply with the Philippine Financial Reporting Standards, with significant accounting judgments and estimates disclosed. |
In dealing with Related Party Transactions (RPTs), the Board of Directors, with the assistance of the Board Risk Management and Related Party Transactions Committee composed of independent Directors, reviews and approves the material RPTs of the Company in accordance with the RPT policy, ensuring that the transactions are at arm’s length, fair, and inure to the best interest of the Company and its subsidiaries or affiliates and the shareholders. Based on the policy, the related party or any of its subsidiaries or affiliates, shall disclose any material RPT to the Board Risk Management and RPT Committee for review and approval prior to entering the transaction, unless covered under any of the exceptions under the policy. |
Furthermore, there were no cases of noncompliance with the laws, rules, and regulations pertaining to significant or material RPTs in the past three years. The summary of the material RPTs of the Company is presented in the Notes to the Consolidated Financial Statements under Related Party Transactions. |
Ownership Structure As of December 31, 2021, 53.23% of AC Energy Corporation’s outstanding common shares were held by PCD Nominee Corporation (Filipino and Non-Filipino) (“PCD”). AC Energy and Infrastructure Corporation (formerly AC Energy, Inc.) owned 81.62% of AC Energy Corporation’s outstanding common shares, with 36.45% lodged with the PCD. |
AC ENERGY CORPORATION 2020 INTEGRATED REPORT Enabling Sustainable Recovery 58 57. |
MESSAGE INTRODUCTION GOVERNANCE ANNEXES CREATING VALUE 2020 HIGHLIGHTS |
2020 Disclosures In 2020, the Company filed, among others, unstructured disclosures involving the following: |
Unstructured Disclosures ● Appointment of directors and officers ● Notice and Agenda of the 2020 Annual Stockholders’ Meeting ● Results of 2020 Annual Stockholders’ Meeting and Organizational Board of Directors’ Meeting ● Acquisition and sale of Company shares by the directors, officers, and 10% owners ● Public Ownership Reports ● Top 100 Stockholders Reports ● Report by Owners of More Than Five Percent ● Share buy-back transactions ● Change in Corporate Name and/or Stock Symbol ● Press Releases ● Notice of Analysts' Briefing ● Approval by the Executive Committee meeting of the Audited Financial Statements for the year ended December 31, 2019 ● Approval of the Company’s budget for calendar year 2021 ● Annual Report for the fiscal year ended December 31, 2020 ● Submission of the Company’s 2019 Integrated Annual Corporate Governance Report, in compliance with SEC Memorandum Circular No.15 Series of 2017 ● Quarterly Reports for 2020 ● Approval by the Board and announcement of availability of the amended Board Risk and Related Party Transactions Committee, Corporate Governance and Nomination Committee, and Personnel and Compensation Committee Charters ● Approval by the Board and announcement of availability of the amended Charter of Board of Directors and Code of Conduct and Ethics ● Approval by the Board of the amendments to the Charter of the Executive Committee, Whistleblower and Non-Retaliation Policy, and Corporate Governance Manual ● Amendments to the Articles of Incorporation and By-laws ● Approval of the Company’s hedging policy, additional hedging counterparties, and guarantee fee arrangement with ACEI ● Executive Committee's approval of fuel hedge instruments of the Company ● Matters taken up at the regular board meetings ● Approval of renewal and additional credit lines with local and foreign banks ● Approval of the increase of the Company’ authorized capital stock to ₱48.4 billion pesos, divided into 48.4 billion common shares ● Board approval of the consolidation of ACEI’s international business and assets into the Company via a n assets-for-shares swap ● Signing of subscription agreements with subsidiaries that are special purpose vehicles for development projects used by the AC Energy group ● Philippine Competition Commission (“PCC”) approval of and transaction completion of the purchase of the entire shares of PINAI in PhilWind resulting to direct and indirect 67% ownership of North Luzon Renewables ● PCC approval of and transaction completion of the acquisition of the PINAI Investors’ ownership interest in San Carlos Solar Energy, Inc. (Sacasol) and Negros Island Solar Power Inc. (Islasol) ● Filing of Current Report Under Section 17 of the Securities Regulations Code Amid COVID-19 Pandemic ● Executive Committee’s approval of the Company’s issuance of 16,685,800,533 additional primary shares to AC Energy, Inc. at an issue price of ₱2.97 per share in exchange for property consisting of 100% of ACEI’s shares in Presage Corporation ● Request for an extension to submit the Company's Annual Report in view of the imposition of an Enhanced Community Quarantine and Stringent Distancing Measures over Luzon and across other provinces in the country to prevent the spread of the 2019 Coronavirus Disease (COVID 19) ● Signing of a credit facility with AC Energy, Inc. for up to ₱5.0 billion for the Company's various development projects ● Subscription by ThomasLloyd CTI Asia Holdings Pte Ltd. to shares in Islasol ● Signing of a Shareholders' Agreement among AC Energy Philippines, Inc., ACE Endevor, Inc., and Axia Power Holdings Philippines Corp ● Joint Venture via a Shareholders’ Agreement among AC Energy Philippines, Inc., ACE Endevor, Inc., and Axia Power Holdings Philippines Corp. for the development, construction and operation of the 150MW diesel power plant project in Pililla, Rizal, with PCC approval on December 2, 2020 ● Resolution of the DENR-EMB dated 27 July 2020 on Notice of Violation No. 20-NOVW0630-164 issued to Power Barge 102, owned by the Company, in relation to the oil spill incident of July 3, 2020 ● Approval of the Company’s dividend policy to declare and pay dividends on an annual basis using a payout ratio of 25% to 50% of the previous year’s core net income, excluding significant non-recurring gains (including value realization proceeds) or losses, to be effective on January 1, 2021 ● Approval of the Company’s Board of Directors of the declaration of cash dividends of ₱0.04 per share on the 13,692,457,210 issued and outstanding shares of the Company, or a total dividend amount of ₱547,698,288.00, to be paid on September 17, 2020 to the shareholders on record as of September 3, 2020 ● Change in number of issued and/or outstanding shares for the issuance of 6,185,182,288 new shares of AC Energy Philippines, Inc. to AC Energy, Inc. ● Participation of the Company’s directors and officers in the Advanced Corporate Governance Training administered by the Institute of Corporate Directors during the Ayala Group Integrated Corporate Governance, Risk Management, and Suitability Summit held on August 9, 2019 at the New World Hotel, Makati City ● Report on the Company’s receipt of the Bureau of Internal Revenue’s Certification Ruling SN027-2020 dated 30 October 2020, as update on the Property-for-Share Swap between ACEN and AC Energy, Inc. ● GIC Private Limited potential investment of approximately ₱20Bn in ACEN ● Board of Directors’ approval of the pricing for, and volume, of the shares to be issued as update to the Company’s Stock Rights Offering ● Company’s receipt of the Confirmation Letter issued by the Markets and Securities Regulation Department of the Securities and Exchange Commission as update on the Company’s Stock Rights Offering ● Disclosure/details on the Company’s Stock Rights Offering: The terms of the Company’s stock rights offering for the issuance of 2,267,580,434 shares at an offer price of ₱2.37 per share, and at an entitlement ratio of 1.11 shares:1 offer share, subject to applicable SEC and other regulatory approvals of the offer, including the offer price. |
GOVERNANCE AND LEADERSHIP TEAM. |
AC ENERGY CORPORATION 2020 INTEGRATED REPORT Enabling Sustainable Recovery 60 59. |
MESSAGE INTRODUCTION GOVERNANCE ANNEXES CREATING VALUE 2020 HIGHLIGHTS |
Clarification of News Articles ● AC Energy to Consolidate its Internationaland Philippine Platforms ● AC Energy expects to post profit this year ● 321 residents evacuated amid power barge oil spill in Iloilo City ● Company’s first half net income of ₱1.96 billion following the completion of its onshore assets restructuring ● AC Energy expects to hit half of 5,000MW RE goal in 2021 ● SEC approves AC Energy’s stock rights offering. |
Financial and Non-Financial Reports The Board ensures the integrity of the Company’s consolidated financial statements and non-financial information as disclosed in the company’s Integrated Report. |
The financial statements including significant judgments and estimates disclosed thereto comply with the requirements of the Philippine Financial Reporting Standards. Non-financial performance was prepared using the guiding principles and content elements of the Integrated Reporting framework. |
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