KGI MBA Corporate Manual

KGI-MBA_CORPORATE_MANUAL

KGI-MBA_CORPORATE_MANUAL

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CORPORATE GOVERNANCE
MANUAL
(2016 Revised Edition)

KGI-MBA OFFICE
Lot 25 Block 12, Sta. Monica Subdivision
Subic, Zambales 2209
Telefax: (047)-232-1871
This Manual is a property of KGI-MBA Inc.

TABLE OF CONTENTS
PART I - INTRODUCTION
1.1
1.2
1.3
1.4
1.5
1.6
1.7

Brief History of the Organization
Vision, Mission, Goals, Core Values
Organizational Structure
Overview of Programs
Commitment to Good Corporate Governance
Objective of the Manual
Definition of Terms

PART 2- GOVERNANCE STRUCTURE
2.1 The Board of Trustee
2.1.1 Composition
2.1.2 Multiple Board Seats
2.1.3 Qualifications of Trustee
2.1.4 Disqualifications of Trustees
2.1.5 Duties, Functions & Responsibilities of the Board
2.1.5.1 General Responsibility
2.1.5.2 Powers, Duties and Functions
2.1.5.3 Term of Office
2.1.5.4 Internal Control Responsibilities of the Board
2.1.5.5 Disclosure of Third Party Transactions and Other Conflict of Interest
2.1.5.6 Vacancy in the Board
2.2 Board Meetings
2.2.1 Quorum Requirements
2.2.2 Regular and Special Meetings
2.2.3 Orientation of New Trustees
2.3 Board Appointments and Re-elections
2.4 Code of Ethics and Conduct
2.4.1 Code of Conduct and Ethics for Trustees
2.5 Remuneration of the Members of the Board and Officers
2.6 The Board Committees
2.6.1 Oversight & Audit Committee
2.6.2 Nomination Committee
2.6.3 Remuneration Commitee
2.6.4 Other Board Committees
2.6.2.1 Executive Committee
2.6.2.2 Other Special Committee
2.7 Officers of the Board
2.7.1 President
2.7.2 Vice President
2.7.3 Board/Corporate Secretary
2.7.4 Treasurer
2.8 The Board of Advisers
2.9 The Management
2.9.1 The General Manager
2.10 Compliance System
2.10.1 The Compliance Officer

2.11 The External Auditor
PART 3 – MEMBERS
3.1 Rights of Members
3.2 Voting Rights
3.3 Power of Inspection
3.4 Right to Information
3.5 Other Member’s Benefits
3.6 Annual General Meeting
PART IV – STAKEHOLDERS
4.1
4.2
4.3
4.4

The Role of Stakeholders
Identification and Definition of Stakeholders
Right to Training & Development
Feedback and Grievance Policy for Stakeholders

PART V – DISCLOSURE AND TRANSPARENCY
5.1 Disclosure and Transparency Policy
PART VI – PERFORMANCE EVALUATION
6.1 Board and Committee Performance Evaluation
6.2 Performance Evaluation Tools
PART VII – POLICY REVIEW AND UPDATING
7.1 General Policy on the Review and Updating of Existing Policies
7.2 Monitoring and Evaluation

PART I - INTRODUCTION
4.1 Brief History of the Organization
KGI started in Kalookan, Zambales and Malate by lending only to families wishing to improve
their lives by building their business to source their daily needs. While multiplying the
members, one of the problems facing the institution is the death of the member while it still
has a loan. The management then started to seek on how to provide risk protection to its
members and their dependents. Thus, the KGI implemented MMF or the Members Mutual
Fund. The MMF became the response to cover the remaining loan balance of the members
and no need to pay more by his family.
Over the years, KGI continually enhanced and increased the benefits of the members in
MMF. Until not only the debt left by members of the MMF were answered but also a small
amount were given to his family members to bury him/her properly. Further, a portion of
their hospitalization were also covered by their contribution to MMF.
In 2008, KGI began to study about Mutual Benefit Association, a more stable institution that
can provide the members and their legal dependents a benefit in case an unforeseen event
come to their lives. An institution that is guided by the Insurance Commission (IC) and the
Securities and Exchange Commission (SEC) and ensures that the institution meets the
benefits promised to its members.
Due to Joint IC-CDA-SEC Memorandum Circular No. 01-2011 of the Insurance Commission,
the management and Board of Trustees of KGI decided to establish its own MBA through the
help of RIMANSI, a Non—Government Organization who helps microfinance institutions to
have their own MBA, in preparing the documents and doing assessment for KGI to be able to
register KGI’s MBA to SEC and have the license to operate to the Insurance Commission. In
2010, RIMANSI and KGI had the Memorandum of Agreement and completed the required
documents to become a full MBA.
In September 23, 2011, KGI Mutual Benefit Association, Inc. was registered to the Securities
and Exchange Commission with certification number CN201117039, and also received its
license from the Insurance Commission granted on the 14th of February, 2012 with license
number 2012-2-0.
With the help of a thorough study of the actuary for providing proper benefits for members
and staff, the management is searching for other benefits to increase service and to meet
their other insurance needs that will match in times of crisis.
At this time, KGI and KGI MBA is committed to its mission and its true concern for the poor
family. The program continues to grow and continuing serving the poor people through
micro-financing and micro-insurance program.

1

4.2 Vision, Mission, Goals, Core Values
4.2.1

Association’s Vision:
“A God-centered institution dedicated to poverty alleviation in the community”

4.2.2

Association’s Mission:
To bring financial security and peace of mind to poor households by providing them
quality and affordable micro-insurance products and services.

4.2.3

Goals & Objectives:
That the purpose for which such association is formed is to advance the interests
and promote the welfare of the poor in particular and the interest and welfare of
the Philippines in general. Specifically the association shall seek:

4.2.3.1 To extend financial assistance to its members, spouse, children and parents in
the form of death benefits, sickness benefits, provident savings and loan
redemption assistance;
4.2.3.2 To ensure continued access to benefits/ resources by actively involving the
members in the management of the association that will include
implementation of policies and procedures geared towards sustainability and
improved services
4.2.4

Core Values

4.2.4.1 Service
Employees of KGI Mutual Benefit Association Inc. must serve at all times with
sincerity and humility for the upliftment of every member. Sharing the skills and
knowledge they possess to the fullest and not for the sake of their own vested
interest is essential.
4.2.4.2 Poverty Alleviation
Employees must guide and direct the members at all times to improve their
social status. They must be a vital partner in giving strength and hope in
changing the lives of every member, moving them out of poverty and
strengthening their critical consciousness.
4.2.4.3 Dignity and Worth of a Person
Service with respect to people is a prestigious work and profession for every
employee. They must be responsible with determination and dignity at all
times; broaden the capacity to address the needs of every member in changing
their lives and respecting the indifferences of every individual, ethnic and
culture.

2

4.2.4.4 Importance of Human Relationship
Employees must understand that a good relationship is an instrument of
Change. They must strengthen the good relationship in the quest to improve the
social status of every member, their family, their center, and the community
where they belong and as well as the institution.
4.2.4.5 Integrity
Employees must always bear in mind the vision & mission, code of conduct,
values, policies & procedures and work ethics of the institution and they must
continue to serve with sincerity and confidence to the institution.
4.2.4.6 Competence
Employees must continuously strive to improve their work, knowledge and skills.

4.3 Organizational Structure
Organizational Structure

BOARD OF
TRUSTEES

BOARD OF
ADVISERS

--

AUDIT

GENERAL
MANAGER

ADMINISTRATIVE and
FINANCE OFFICER

OPERATIONS
OFFICER

UNDERWRITING
AND CLAIMS
FUNCTIONS

ADMINISTRATIVE
FUNCTIONS

FINANCE
FUNCTIONS

MBA
COORDINATORS

UTILITY
OFFICER

BOOKKEEPER

3

4.4 Overview of Programs
The KGI-MBA provides a micro-insurance program for the poor. It has the following
products:
4.4.1.1 Life insurance program with disability and health benefits
4.4.1.2 Refund of member’s Savings or Equity Value
4.5 Commitment to Good Corporate Governance
KGI MBA, Inc. is committed in the promotion of corporate good governance within
its organization and among its stakeholders. Together with the Board of Trustees
and Management, KGI MBA will remain steadfast in monitoring the performance of
the organization, strive to make good and sound decisions, and will hold its
governing board accountable for its execution in achieving our corporate goals.
The Corporate Governance Manual shall serve as its guide in ensuring the
organizations practice of good governance, sustainability and its continuous
commitment to its stakeholders in providing efficient and innovative programs and
services for the growth of the community in which we operate.
4.6 Objective of the Manual
This Manual is primarily intended to implement the objectives of the Code of
Corporate Governance issued by the Insurance Commission (IC) for the
enhancement of the corporate accountability of Association's Trustees,
management and employees and promote the interests of the stakeholders
specifically those of the policyholders, claimants and clients.
This Manual also institutionalizes the principles of good corporate governance in the
entire organization. It provides general guidelines that would ensure that the
Association’s Management continues to enhance the value of the KGI-MBA as it
competes in an increasingly global market place.
The Association’s Board of Trustees and Management, employees, and
policyholders, believe that corporate governance is a necessary component of what
constitutes sound strategic business management, and will therefore undertake
every effort necessary to create awareness within the organization of the
importance of good corporate governance.
4.7 Definition of Terms
Corporate Governance – the framework of rules, systems and processes in the
association that governs the performance by the Board of Trustees and
Management of their respective duties and responsibilities to the stakeholders;

Association - as referred to in this Manual is KGI-Mutual Benefit Association Inc.
Board of Trustees– the governing body elected by the member’s that exercises the
corporate powers of the KGI-MBA, conducts all its business and controls its
properties;
4

Management – the body given the authority by the Board of Trustees to implement
the policies it has laid down in the conduct of the business of the association;
Independent Trustee – is independent of management and free from any business
or other relationship which could, or could reasonably be perceived to, materially
interfere with his exercise of independent judgment in carrying out his
responsibilities as a trustee;
Internal control – the system established by the Board of Trustees and Management
for the accomplishment of the association’s objectives, the efficient operation of its
business, the reliability of its financial reporting, and faithful compliance with
applicable laws, regulations and internal rules;
Internal control system – the framework under which internal controls are
developed and implemented (alone or in concert with other policies or procedures)
to manage and control a particular risk or business activity, or combination of risks
or business activities, to which the corporation is exposed;
Internal audit – an independent and objective assurance activity designed to add
value to and improve the corporation’s operations, and help it accomplish its
objectives by providing a systematic and disciplined approach in the evaluation and
improvement of the effectiveness of risk management, control and governance
processes;
Internal Auditor – the highest position in the corporation responsible for internal
audit activities. If internal audit activities are performed by outside service
providers, he is the person responsible for overseeing the service contract, the
overall quality of these activities, and follow-up of engagement results.
PART 2- GOVERNANCE STRUCTURE
2.1 The Board of Trustee
2.1.1

Composition
The Board of Trustees of KAZAMA Grameen (KGI) - Mutual Benefit Association
(KGI-MBA) Inc. shall consist of seven (7) members namely the following: five (5)
trustees shall be elected by the active members with existing loans funded by
KAZAMA Grameen, Inc. (KGI); (2) independent trustees, to be elected by the
active members with existing loans funded by KAZAMA Grameen, Inc. (KGI).

2.1.2

Multiple Board Seats
The Board may adopt guidelines on the number of directorships that its
members can hold in other corporations. The Board shall take into consideration
the capacity of a director to diligently and efficiently perform his duties and
responsibilities and the limitations on concurrent directorship of the
organization. The President and other directors may be covered by a lower
indicative limit for membership in other boards.

5

A similar limit may apply to independent or non-executive directors who, at the
same time, serve as full-time executives in other corporations. In any case, the
capacity of the directors to diligently and efficiently perform their duties and
responsibilities of the boards they serve shall not be compromised.
2.1.3

Qualifications of Trustee
The trustees to be elected must be of legal age, recognized active beneficiary
member of the KGI-MBA or any of its affiliates, has consistently performed very
satisfactorily for at least the last three (3) years of his/her membership and has
an on-going business funded by loan from KAZAMA Grameen, Inc. (KGI) or any
of its affiliates and is willing to perform the functions of a trustee without any
remuneration.

2.1.4

Disqualifications of Trustees
No member convicted by final judgment of an offense punishable by
imprisonment for a period exceeding six (6) years, or a violation of the
Corporation Code of the Philippines committed within five (5) years prior to the
date of his/her election or appointment, shall qualify as a Trustee or Officer. In
addition, a member whose membership has been terminated due to various
reasons, and/or has resigned from membership with KAZAMA Grameen, Inc.
(KGI) or any of its affiliates, shall also be disqualified from being a Trustee or
Officer.

2.1.5

Duties, Functions & Responsibilities of the Board
2.1.5.1 General Responsibility
Unless otherwise provided by law, the corporate powers of KAZAMA
Grameen (KGI) Mutual Benefit Association (KGI-MBA) Inc. shall be
exercised, all business conducted and all properties of the corporation
controlled and held by the Board of Trustees subject to approval of the
majority of its members.
2.1.5.2 Powers, Duties and Functions
Without prejudice to such powers as may be granted by law, the Board of
Trustees shall have the following powers:
2.1.5.2.1

2.1.5.2.2

2.1.5.2.3

To promulgate rules and regulations consistent with these bylaws, and to review, revise or amend the same when it deems
necessary for the management of the association’s business and
affairs;
To purchase, receive, take or otherwise acquire for and in the
name of KGI-MBA, any and all properties, rights, or privileges,
including securities and bonds of other corporations, for such
consideration and upon such terms and conditions as the Board
may deem proper or convenient;
To invest the funds of KGI-MBA in other corporations or for
purposes other than those for which the association was
6

2.1.5.2.4

2.1.5.2.5

organized, subject to such approval of the members as may be
required by law;
To incur indebtedness as the Board may deem necessary, to
issue evidence of indebtedness including notes, deeds of trust,
bonds, debentures, or securities, subject to such approval of the
members as may be required by law, and/or pledge, mortgage,
or otherwise encumber part of the properties of KGI-MBA;
To establish pension, retirement, bonus, or other types of
incentives or compensation plans for the members, employees,
including officers and Trustees of KGI-MBA;

2.1.5.2.6

To prosecute, maintain, defend, compromise, submit arbitration
or abandon any lawsuit in which KGI-MBA or its officers are
either plaintiffs or defendants in connection with the affairs of
KGI-MBA;
2.1.5.2.7 To implement these by-laws and to act on any other matter not
covered by these By-laws provided such matter does not require
the approval or consent of the members of KGI-MBA under the
Corporation Code;
2.1.5.2.8 To appoint and dismiss any employee of KGI-MBA whether
regular, probationary, casual, or contractual, fix or adjust their
salaries and all other personnel movements;
2.1.5.2.9 To delegate any of its powers or function to an executive
committee or to any officer of KGI-MBA to any standing or
special committee or to any officer or agent and to appoint any
person to be an agent of KGI-MBA;
2.1.5.2.10 To approve all contracts for construction and major repairs or
maintenance work, and other contracts involving significant
amounts;
2.1.5.2.11 To approve all contracts involving the sale of non-current assets.
2.1.5.3 Term of Office
The elected members of the Board of Trustees shall serve beginning
immediately following their election for the term of three (3) years until
their successors have been elected. Provide that no other member shall
serve as member of the Board of Trustees for more than two (2) consecutive
terms.
2.1.5.4 Internal Control Responsibilities of the Board
The control environment of the association consists of:
(a) the Board which ensures that the corporation is properly and effectively
managed and supervised;
(b) a 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) an 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
7

information, the effectiveness and efficiency of operations, the safeguarding
of assets, and compliance with laws, rules, regulations and contracts.
The minimum internal control mechanisms for the Board is to ensure the
separation of duties are perform in accordance to the defined control
environment of the association.
2.1.5.5 Disclosure of Third Party Transactions and Other Conflict of Interest
Board members and officers shall at all times avoid any actual or potential
conflict of interest with the organization. Each shall also avoid any conduct,
or situation, which could reasonably be construed as creating an appearance
of a conflict of interest.
If a conflict of interest situation arises, or a situation arises which may give
reason to assume that a conflict may arise, the relevant member of the
board or committee, as the case may be, has a duty to report the matter
forthwith to the president of the board, who will review the question and
determine an appropriate course of action.
2.1.5.6 Vacancy in the Board
In case an office becomes vacant due to death, resignation, retirement,
disqualification, incapacity or any other cause, of the incumbent, the Board
of Trustees, a majority vote, may elect/appoint a successor, who shall hold
office for the unexpired term
2.2 Board Meetings
2.2.1

Quorum Requirements
In all regular or special meeting of members, at least fifty percent (50%) of all
members of good standing plus one (1) must be present or represented by proxy in
order to constitute a quorum. A member may be represented by a proxy, through a
written notice to the Secretary. The authorization shall be valid only on the date of
the meeting indicated thereon. If no quorum is constituted, the meeting shall be
adjourned until the requisite number of members shall be present.

2.2.2

Regular and Special Meetings
The Board of Trustees shall meet regularly once every three months at the main
office of KGI-MBA unless otherwise previously agreed upon by the members of the
Board of Trustees. A special or emergency meeting of the Board of Trustees may be
called by the President or the Secretary upon request of a majority of the incumbent
members of the board and at least three (3) days’ notice to all members of the
board. Notice of any meeting of the board is in writing.

8

2.2.3

Orientation of New Trustees
That the initial organizational meeting of a newly elected Board of Trustees shall be
held immediately after the conclusion of the General Assembly at which they are
elected.

2.3 Board Appointments and Re-elections
The Board of Trustees shall be elected every three years by majority of its members during
its annual meeting.
The independent trustee shall be elected by the majority of its members upon the
nomination of the Nomination Committee of the Board of Trustees. Notwithstanding the
foregoing, for the duration that the Association is under conservatorship of the Insurance
Commissioner, the independent trustee shall be appointed by, and shall serve at the
pleasure of the Insurance Commissioner.
2.4 Code of Ethics and Conduct
2.4.1

Code of Conduct and Ethics for Trustees

Members of the board, management, officers and employees are committed to
adhere to ethical business conduct/corporate governance rules and principles as
follows:
a) Dealings of the Association with any of its trustees, officers, and their related
interests shall be in the regular course of business and upon terms not less
favourable to the Association than those offered to others to avoid insider abuses
and unfair competitive advantage.
b) The Board of Trustees and the created committees must be able to perform their
duties with a high degree of independence; Board of Trustees, officers and
employees shall not engage in any act or omission which may be considered as
conducting business in an unsafe and unsound manner;
c) Every member of the organization should promote the good reputation of the
Association in dealing with members and other parties that transact business with
the institution (e.g. ensuring payment of claims within the 1-3-5 day target);
d) The Board of Trustees and the management shall at all times fully disclose
material information dealings such as acquisition or disposition of asset, board
changes, related party transactions, corporate strategy and off balance sheet
transactions;
e) The Association office’s facilities shall not be used in the furtherance of any
criminal activity;
f) Members of the board and senior management shall disclose material interest in
transactions affecting or which may affect the Association;

9

g) The board shall review all material transactions that are not done in the ordinary
course of business; h) Board of Trustees, officers and employees shall not enter into
business transactions where conflict of interest may arise;
i) Board of Trustees, officers and employees shall not accept material benefits from
someone doing business with the Association; and
j) The board shall put in place a system for imposition of sanctions and/or penalties
for violation of the code/standards.
2.5 Remuneration of the Members of the Board and Officers
The General Manager, Administrative Officer, Chief Accountant and Auditor shall receive
such salary and/or benefits as may be fixed by the Board. The President, Vice President,
Secretary and Treasurer shall receive no salary, but may receive allowances, in addition to
per diems and other emoluments authorized for members of the Board of Trustees.
2.6 The Board Committees
The Board shall constitute the proper committees to assist it in good corporate governance.
2.6.1

Oversight & Audit Committee
The Oversight & Audit Committee shall consist of at least three (3) trustees, who
shall preferably have accounting and finance experiences and shall serve for three
years, or co terminus with the Board of Trustees. The committee shall meet at least
quarterly and shall not be entitled to any salary but shall be entitled to per diem and
reimbursement of actual expenses for attendance of official meetings equal to those
received by members of the Board of Trustees. The chair of the Audit Committee
should be an independent trustee. The committee shall have the following
functions:

2.6.1.1 Provides oversight of the institution’s internal and external auditors.
2.6.1.2 It shall be responsible for the setting-up of internal audit department, and
the appointment of the internal auditors as well as of independent external
auditors.
2.6.1.3 It shall monitor and evaluate the adequacy and effectiveness of the internal
control system of the company
2.6.2 Nomination Committee
The Nomination Committee shall be composed of at least three (3) members of the
Board of Trustees, one of them must be an independent.
The members of the Nomination Committee in accordance with the election code of
the association should perform the following functions:

10

2.6.2.1 Review and evaluate the qualifications of all persons nominated to the Board
as well as those nominated to other positions requiring appointment by the Board of
Trustees.
2.6.2.2 Prepare a description of the roles and capabilities required of a particular
appointment.
3. Conduct and supervise the elections for the members of the Board of Trustees
and other officers and proclaim the winners
4. Act as judge of all electoral contests, including questions on the qualification of
candidates
2.6.3 Remuneration Committee
The Remuneration Committee composed of three (members), one of which is an
independent board. The committee is responsible to:
2.6.3.1 Design and recommend to the Board for approval the salary, financial
benefits/allowances (retirement, medical, etc) and remuneration package for the
officers and employees of the association;
2.6.3.2 Oversee /supervise that the salary packaged is in compliance with the labor
code of the government of the Philippines
2.6.3.3 Recommend salary increases of the employees based on performance
2.6.3.4 Perform other functions as assigned by the Board.
2.6.4

Other Board Committees
The Board may also organize the following committees:
2.6.2.1 An Executive Committee which shall consist of not less than three (3) and
not more than five (5) to be chosen by the Board of Trustees from among
themselves to monitor the operations and finances of KGI-MBA to ensure
that decisions of the Board are executed by management; and, where
urgent circumstances require, to act for and in behalf of the Board on such
matters subject to such guidelines and limitations duly approved by the
Board. The concurrence of at least a majority of the members of the
Executive Committee shall be necessary to make an Executive Committee
decision valid. All business transactions by the Executive Committee shall be
subject to confirmation by the Board of Trustees at its next scheduled
meeting;
2.6.2.2 Other Special Committees such as Finance, Personnel Committee and other
committees it may deem necessary, with not less than three (3) nor more
than five (5) members each with such specific duties as it may deem proper.
Ad hoc committees may be created by the Board as the need arises.

11

2.7 Officers of the Board
The officers of the KGI-MBA shall be composed of a President, Vice President, Board
Secretary, and Treasurer. They shall be elected by the Board of Trustees from among
themselves. The term of office of the officers shall be co-terminus with the Board which
elected/appointed them, unless sooner removed from office by a majority vote of all the
members of the Board of Trustees. The officers of KGI-MBA may be removed from office for
a cause, including nonfeasance or misfeasance of duties, violation of these By-laws, conduct
detrimental to the interest of the Association, incompetence and/or loss of confidence.
2.7.1

President
The President shall be the Chief Executive Officer of the association and shall
exercise the following functions:
2.7.1.1
2.7.1.2
2.7.1.3
2.7.1.4

2.7.1.5
2.7.1.6

2.7.1.7

2.7.1.8

2.7.1.9

2.7.2

To preside in all meetings of the members of the association.
To execute all resolutions of the Board of Trustees.
To be charged with directing and overseeing the activities of the association.
To submit to the Board as soon as possible after the close of each fiscal year,
and to the members of each annual meeting, a complete report of the
activities and operations of the association for the fiscal year under her
term.
To represent KGI-MBA in all functions and proceedings;
To appoint, remove, suspend or discipline employees of KGI-MBA prescribe
their duties and determine their salaries subject to confirmation by the
Board of Trustees;
To execute in behalf of KGI-MBA all contracts, agreements and other
instruments affecting the interest of KGI-MBA which may require approval
of the Board of Trustees unless otherwise directed by the Board;
Inform the members of the Board, in accordance with the bylaws, of the
agenda of their meetings and ensure that the members have before them
accurate information that will enable them to arrive at intelligent decisions
on matters that require their approval;
To perform such other duties as are incident to his office or are entrusted to
him by the Board of Trustees.

Vice President
The Vice President, if qualified, shall exercise all powers and perform all duties of the
president during the absence or incapacity of the latter and shall perform duties that
maybe assigned by the Board of Trustees.

2.7.3

Board/Corporate Secretary
The Board/Corporate Secretary shall have the following specific powers and duties:
2.7.3.1 To give all notices required by these by-laws and keep the minutes of all
meetings of the members and of the Board of Trustees in a book kept for
the purpose.
2.7.3.2 To keep the seal of the association and affix such seal to any paper or
instrument requiring the same.
2.7.3.3 To have custody of the members’ register and the correspondence files of
12

the association.
2.7.3.4 To certify to such corporate acts, countersign corporate documents or
certificates, and make reports or statements as may be required of him by
law or by government rules and regulations;
2.7.3.5 To perform all such other duties and work as the Board of Trustees may
from time to time assign to him/her.
2.7.4

Treasurer
The Treasurer shall have the following duties:
2.7.4.1 To keep full and accurate accounts/records of the receipts and
disbursements of KGI-MBA
2.7.4.2 To take and have custody of, and be responsible for, all the funds, securities,
bonds, and certificates of titles of KGI-MBA
2.7.4.3 To deposit in the name of KGI-MBA in such banks as may designed from
time to time by the Board of Trustees, all the money, funds, securities,
bonds and similar valuables belonging to KGI-MBA which may come under
his/her control.
2.7.4.4 To perform such other duties as may be assigned by the President, the
General Manager and the Board of Trustees.

2.8

The Board of Advisers
The Board of Advisers is a five-member body whose main task is to assure policy and
operating coordination between KGI MBA and KGI. This board has informal yet important
day-to-day contact with KGI MBA management, and frequent interaction with the MBA
President. The Board of Advisors also provides significant formal oversight of the MBA and
the Trustees in terms of management, policies, regulatory compliance and governance.

2.9

The Management
The Management is headed by the General Manager. All principal policies and directions
governing the organization, management and operation of the Association shall be
formulated and implemented by the Management, subject to Board approval when required
by existing laws.
2.9.1 The General Manager
The General Manager shall have the charge of the day to day operations of KGI-MBA
and exercise the following functions:
2.9.1.1 To supervise and manage the business affairs and activities of KGI-MBA
under the direction of the President and the Board of Trustees;
2.9.1.2 To implement the administrative and operational policies of KGI-MBA;
2.9.1.3 To oversee the preparation of the budgets and the statements of account of
the association;
2.9.1.4 To coordinate the work of the various operating divisions and services,
maximize the productive inputs of their personnel and continually work to
upgrade the quality of service to members;
2.9.1.5 To coordinate with the different standing committees of KGI-MBA;
2.9.1.6 To conduct such studies and submit recommendations to the Board of
13

Trustees in matters related to investment, the use of facilities and
development projects including the examinations of contracts entered into
by KGI-MBA;
2.9.1.7 To attend and render a report in the monthly meeting of the Board of
Trustees and
2.9.1.8 To perform other duties and responsibilities assigned by the President and
the Board of Trustees
2.10 Compliance System
KGI-Mutual Benefit Association Inc. (KGI-MBA) is committed to comply with the Philippine
government and the Insurance Commission rules and regulations governing all licensed
Mutual Benefits Associations and Insurance Companies. Hence, pursuant to IC Circular Letter
No. 10-2002 dated June 27, 2002 a Compliance System has been developed.
2.10.1 The Compliance Officer
To ensure the Association’s adherence to the guidelines on corporate governance
set herein, the President of the Board shall designate a Compliance Officer. He shall
have direct reporting responsibilities to the President of the Board/Governance
Committee, and shall be tasked to perform the following duties:
2.10.1.1 Monitor compliance with the provisions and requirements of this Manual;
2.10.1.2 Determine violations of the Manual and recommend appropriate sanctions
and/or penalties for violation thereof, for further review and approval of
the Corporation’s Board of Trustees;
2.10.1.3 Identify, monitor, and control compliance risks;
2.10.1.4 Appear before government agencies, if necessary; and
2.10.1.5 Annually prepare and submit to the Office of the Insurance Commission (IC)
a Corporate Governance Scorecard as required by the Code of Corporate
Governance before deadline set by IC.
2.11 The External Auditor
The Association is in compliance with Insurance Commission Circular No. 29-2009 dated
November 10, 2009 in the selection of external auditors.
2.11.1 Only external auditors accredited by Insurance Commission are being engaged;
2.11.2 The external auditor shall be changed or the lead and concurring partner shall be
rotated every five years or earlier.
2.11.3 No external auditor may be engaged if he or any member of his immediate family
had or has committed to acquire any direct or indirect financial interest;
2.11.4 The external auditor and the members of the audit team do not have any claim with
the Association;
2.11.5 The external auditor is not currently engaged nor was engaged during the preceding
year in providing the following services to the Association:
2.11.5.1 Internal audit functions;
2.11.5.2 Information systems design, implementation and assessment;
2.11.5.3 Other services which could affect his independence.

14

2.11.6 The external shall be appointed by the Board of Trustees during the Annual General
Meeting
PART 3 – MEMBERS
3.1 Rights of Members
The Board shall respect the rights of the members as provided for in the Corporation
Code and Constitution and By-Laws of the KGI-MBA, namely:
3.1.1 To exercise the rights to vote on all matter relating to the affairs of the
association (Voting Right);
3.1.2 To be eligible to any elective or appointive office of the association;
3.1.3 To participate in all deliberations/meetings of the association;
3.1.4 To avail of all the facilities of the association;
3.1.5 To examine all the records or books of the association during business hours
(Power of Inspection)
3.2 Voting Rights
All members shall have the right to participate and vote in the Annual General
Meeting including the right to elect, remove and replace directors, vote on certain
corporate acts in accordance with the Corporation Code such as changes or
amendments to the organization’s ByLaws and Articles of Incorporation, lease,
exchange, transfer, mortgage, pledge or other disposition of all or substantially all of
the corporate property and assets as provided in the Corporation Code , issuance of
additional shares and appointment of the external auditor.
Members shall be entitled to one vote, and they may vote whether in person or by
proxy, which shall be in writing and filed with the Secretary of the association before
the scheduled meeting.

3.3 Power of Inspection
All members shall be allowed to inspect corporate books and records including
minutes of Board meetings and performance reports in accordance with the
Corporation Code, and shall be furnished with annual reports, financial statements,
without costs or restrictions.
3.4 Right to Information
The members shall be provided, upon request, with information about the
organization’s governance board members and partnerships made with other
organization.
The members shall have access to any information relating to matters for which the
management is accountable. They shall also be allowed to propose items in the
agenda of meetings, provided that the suggested item is valid, legitimate and related
to the organization’s business.

15

The association will regularly publish annual reports, periodicals and other related
information materials. All announcements, revision of policies and procedures
approved by the Board should be disseminated through issuance of circulars or
memorandums or advisories and will be posted in conspicuous places in all branches
of partner institution or affiliates. The same should also be uploaded to the
association’s website.
3.5 Other Member’s Benefits
The MBA shall align unassigned surplus to the following: a) enhancing equity value;
b) developing operating systems; c) research and development; d) member
education and training; e) community development services, and f) product
development. Community development may include medical mission activity,
environmental protection programs, community-based learning system and support
to other related activities identified by the community.
3.6 Annual General Meeting
The Board should be transparent and fair in the conduct of the annual and special
stockholders’ meetings of the corporation. The members should be encouraged to
personally attend such meetings. If they cannot attend, they should be apprised
ahead of time of their right to appoint a proxy. Subject to the requirements of the
bylaws, the exercise of that right shall not be unduly restricted and any doubt about
the validity of a proxy should be resolved in the member’s favor.
It is the duty of the Board to promote the rights of the members, remove
impediments to the exercise of those rights and provide an adequate avenue for
them to seek timely redress for breach of their rights.
The Board should take the appropriate steps to remove excessive or unnecessary
costs and other administrative impediments to the members’ meaningful
participation in meetings, whether in person or by proxy. Accurate and timely
information should be made available to the stockholders to enable them to make a
sound judgment on all matters brought to their attention for consideration or
approval.
Although all members should be treated equally or without discrimination, the
Board should give members the right to propose the holding of meetings and the
items for discussion in the agenda that relate directly to the business of the
association.
PART IV – STAKEHOLDERS
4.1

The Role of Stakeholders
The corporate governance framework should recognize the rights of stakeholders
established by law or through mutual agreements and encourage active cooperation between corporations and stakeholders in creating wealth, jobs, and the
sustainability of financially sound enterprises.

16

4.1.1 The rights of stakeholders that are established by law or through mutual
agreements are to be respected.
4.1.2 Where stakeholder interests are protected by law, stakeholders should have
the opportunity to obtain effective redress for violation of their rights.
4.1.3 Performance-enhancing mechanisms for employee participation should be
permitted to develop.
4.1.4 Where stakeholders participate in the corporate governance process, they
should have access to relevant, sufficient and reliable information on a timely and
regular basis.
4.1.5 Stakeholders, including individual employees and their representative
bodies, should be able to freely communicate their concerns about illegal or
unethical practices to the board and their rights should not be compromised for
doing this.
4.2 Identification and Definition of Stakeholders
4.2.1

Members

The members play a vital role in the success of the association and the reason for
being of the association. The sustainability of the association also relies on their
active participations in all the affairs of the institution from the planning and
implementation of its program and services.
The association commits to provide services to all members at its best. It will
continue to pursue the implementation of activities that will contribute to
development of its individual members such as continuing education. It will provide
necessary support or allocate resources to education program before and during
their membership.
The association will also create an environment that will encourage members to err
out their concerns. It will establish a suggestions box situated in each branch of
partner MFI for the member to bring out their concerns.
4.2.2

Employees

The progress and success of the association depends on its human resources and
that only through carefully selected, well-trained, results-oriented, and dedicated
employees can the association achieve its objectives.
Individuals hired by the association to work as either full-time or parttime worker
under a contract of employment duly notarized upon signing, has recognized rights
and duties as stated in the MBA’s Personnel Manual. The Association shall address
to the State’s Labor Laws that will protect the well-being of the employees. Specific
policies on the protection and promotion of employees well-being is presented in
the employee’s manual.

17

The MBA shall continue to make planned efforts to facilitate the learning of job
related behavior of its stakeholders current and future roles and responsibilities
aligned with the Association’s goals and direction.
The employees shall be given trainings in the form but not limited to (i) Formal –
undergraduate course and/ or masters degree; (ii) On the job training or coaching;
(iii) In house lectures; and, (iv)Local or international courses, seminars, study tours,
workshops and conferences.
4.2.3

Board

The Board is the governing body and primarily responsible for ensuring good
governance in association. The Board formulates the strategic direction and
monitors the performance of the management. It also ensures that the systems are
in place for transparency and accountability.
The association is committed to strengthening its Board by providing continuing
education through participation in conferences and seminars.
4.2.4 MFI Partners
MFI partners are the primary source of the Association’s membership, and in the
establishment of good relationship to members. They are the fund mobilization
partners of the association and play the important role especially in the collection of
premiums and contributions.
The association is committed to provide the following support to its partner MFI
and its affiliates:
1) Ensure fast service and continued access to micro insurance benefits and
other services of the MBA.
2) Establish and implement approved guidelines pertaining to MFI and other
related parties.
3) Conduct products and services orientation and technical services to
partner organizations.
4) Conduct fair business transactions and ensure that the interest does not
conflict with the interest of MFI Partners.
5) Provide incentives through service fee
6) With partner MFI/affiliates execute a service agreement/management
contract defining the roles and responsibilities of the contracting parties
4.2.5 Suppliers/Contractors
The Association engages the assistance of suppliers and/or contractors to provide
services that the association will need for its daily operations. As part of its value
chain, the Association will monitor its engagements with suppliers and contractors
to make sure that they practice good governance and protects the environment. The
Association will only engage suppliers/contractors that meet these standards.
To ensure that engagements with suppliers/contractors will be impartial and
transparent; the Association will conduct a bidding process for projects with
contracts amounting to more One Hundred Thousand Pesos (PhP 100,000) where
18

minimum of three (3) suppliers shall submit their proposal and business profile to
the management for background check and validation of proposal.
The association shall appoint the General Manager/Finance Officer to lead the
bidding and selection process. All decisions on the selection of suppliers shall be
presented and approved by the board.
Selected supplier/contractor shall be issued a legal contract/agreement that will be
notarized to make the engagement binding. The procurement process to be
followed are the following:
1) Project Specification. The association through the appointed officer should
define the specific description of the project/materials to be procured. The
specified
project or materials should be presented to the Board for approval.
2) Request for Bids. The approved project specification should be posted in the
association website. In addition the association will also send out invitation to
Bid.
3) Bidding. The invited bidders should submit sealed Bid to the office of the
association
4) Reviewing the Bid. On the designated date, the association through the
designated officer will conduct a review and come up with recommendation.
5) Awarding of the Contract. The contract will be awarded to the lowest bidder.
For procurement of projects/materials below One Hundred Thousand Pesos, the
association through its Administrative Officer, will conduct canvass to at least three
(3) suppliers by request for quote as per specification.
4.2.6 Community of Operations
In any business, there is a need for the support of the community where it operates.
The Association acknowledged the significant role of the community in achieving its
vision mission particularly in helping people become less vulnerable.
The Association will strengthen its relationship with the community by sharing
information about its programs and services. Such services will include but not
limited to Calamity Assistance Program, Education Assistance, Livelihood Training
Program and other project identified by the community where the association is
operating. Moreover, the association should participate in the implementation of
development project undertaken by its partner MFI and its affiliates.
4.2.7

Environmental Sustainability

The Association’s business operation does not directly affect the environment.
However, it is still committed to do its part in promoting environmental
sustainability through various initiatives within the office, among its directors and
employees and with its stakeholders.

19

4.2.8

Regulatory Agencies

Regulatory agencies are essential in any industry as they provide the framework to
which an association should legally operate. These policies, guidelines and circulars
issued by the regulatory agencies promote fairness and increase the level of
confidence of the members, implementers and other stakeholders.
The Association shall ensure full compliance to the requirements, policies, circulars,
memoranda, and guidelines issued by regulatory agencies such as the Insurance
Commission, Securities and Exchange Commission, Bureau of Internal Revenue,
Local Government Units and other government agencies.
The association shall appoint/designate a person who will act as Compliance Officer
to ensure compliance to the above-mentioned agencies.
4.3 Right to Training and Development
The Association shall promote and facilitate necessary training to all stakeholders.
The Management will conduct an orientation to all BOTs on the content of this manual.
Moreover, during the assembly it will be reviewed prior to the conduct of the election.
All BOT and key officers of the Association are required to attend Governance Training
Workshop and Seminar on Anti Money Laundering Act to be conducted by IC accredited
provider.
4.4 Feedback and Grievance Policy for Stakeholders
The Association protects the rights of its stakeholders including employee and their
representative bodies. The stakeholders are free to communicate their concerns about
illegal and/or unethical practices to the board. Their rights shall not be compromised after
communicating such concern.
All stakeholders are encouraged to play their part in improving the overall effectiveness and
success of the association particularly in strengthening its integrity. The association shall
ensure the protection of an employee or other stakeholder that reveals illegal/ unethical
behavior from retaliation.
The following shall be the procedure in filing for illegal and unethical behavior:
1. Filing of complaint to the grievance committee
2. Investigation as to the extent and reality of the complaint
3. Conduct of conference with the party involve
4. Coming up of the resolution on the complain.
The association shall also adopt the mechanism prescribed by the Insurance Commission in
dealing with disputes related to complaints of policy holder. This mechanism known as
Alternative Dispute Resolution for Micro Insurance (ADReM) wherein the member-policy
holder can access mediation and conciliation at the lower cost and at the following levels:

20

a. MI-MBA Level - The policy holder may file their complaint with the Head Office
of the Association through the nearest branch of MFI partner or visit the
association websitewww.qpimba.org. The association should act on the
complaints within 24-hours and initiate conference with the complainant within
three days from the receipt of the complaint. If no settlement derived, the
member could alleviate their complaint at the 2nd level.
b. Association of MI-MBA Levels. This level involves the resolution of complaints
through RIMANSI as mediator.
c. IC Level. This level involves the resolution of unsettled complaints at the second
level through IC legal division.
PART V – DISCLOSURE AND TRANSPARENCY
5.1 Disclosure and Transparency Policy
One of the core values of corporate good governance is transparency. The Board together
with the management and employees commits to promote and ensure full disclosure,
transparency and shall remain accountable to this Manual. This is a commitment and a
policy of the Board.
The Board commits at all times to comply with all disclosure requirements specifically those
that will include material information as mandated by regulators within the prescribe period
of time. The following material information that will be publicly made available are: financial
and non-financial reports such as (and not limited to) surplus, material acquisition, related
third party transactions, board remuneration, audited financial statements, Board Structure
(Bio-Data) and Remunerations. The audited FS shall be publicly disclosed not later than 60
days after the financial year clearly stating that the management is responsible for its
preparation, impartial presentation in accordance to the financial reporting standards of the
Insurance Commission for MBAs.

PART VI – PERFORMANCE EVALUATION
6.1 Board and Committee Performance Evaluation
The Board of Trustees conducts an annual evaluation of its performance through selfassessment by the individual Trustees of their respective individual performance, the
performance of the Board Committee to which they belong and the Board as a whole
through the accomplishment of Self- Assessment Forms (SAF).
6.1.1

The SAFs are based on the Company By-Laws, IC Code of Corporate Governance
Principles and Leading Practices, and other criteria that the IC may prescribe.

6.1.2

The self-assessment shall be done at the end of the year. The accomplished SAFs
shall be submitted to the Corporate Secretary on or before the first Board meeting
of the ensuing year.

6.1.3

All performance evaluation results shall be disclosed in the Annual Report.

21

6.2 Performance Evaluation Tools
To monitor and evaluate the performance of the association, the association shall conduct
periodical assessment using performance evaluation and rating tool appropriate to
association like ASEAN Corporate Governance Scorecard, SEGURADO Rating and etc.
PART VII – POLICY REVIEW AND UPDATING
7.1 General Policy on the Review and Updating of Existing Policies
This Governance Manual shall be available for inspection by any members and other
stakeholders of the association at all times. The Board tasked the management to conduct
orientation to all officers and employees on the content of this manual. Moreover, the
management should reproduce this manual for distribution to all key officers of the
association and related parties.
The manual shall be reviewed by the Compliance Officer/ or Review Committee at least
annually and as soon as necessary to incorporate relevant regulatory updates and industry
best practices. Any further changes to effected herein in line with the said review or
updating shall be subject to the review and endorsement and approval of the board.
The General Manager who also acts as the compliance officer is responsible for the
implementation of this manual. Any violation by officers and employees on any provision of
this manual will be subjected to appropriate disciplinary action as stipulated in the personnel
manual.
7.2 Monitoring and Evaluation
7.2.1

The Compliance Officer shall be specifically tasked with the responsibility of ensuring
compliance with this Manual. Any violation against the content of this Manual shall
subject the responsible officer or employee to appropriate sanction in accordance to
the Personnel Manual.

7.2.2

This Manual shall be subject to an annual review unless the same frequency is
amended by the Board.

7.2.3

All business processes and practices being performed within any department or
business Unit of the Association that is not consistent with any portion of this
Manual shall be revoked unless upgraded to the compliant extent.

22



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