KGI MBA Corporate Manual

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KGI-MBA Corporate Governance Manual

KGI-MUTUAL BENEFITS ASSOCIATION, INC.

CORPORATE GOVERNANCE MANUAL

(Version: June 9, 2015)

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.

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TABLE OF CONTENTS

PART I - INTRODUCTION

1.1 Brief History of the Organization 1

1.2 Vision, Mission, Goals, Core Values 2

1.3 Organizational Structure 3

1.4 Overview of Programs 4

1.5 Commitment to Good Corporate Governance 4

1.6 Objective of the Manual 4

1.7 Definition of Terms 4

PART II- GOVERNANCE STRUCTURE

2.1 The Board of Trustee 5

2.1.1 Composition 5

2.1.2 Multiple Board Seats 5

2.1.3 Qualifications of Trustee 5

2.1.4 Disqualifications of Trustees 6

2.1.5 Duties, Functions & Responsibilities of the Board 6

2.1.5.1 General Responsibility 6

2.1.5.2 Powers, Duties and Functions 6

2.1.5.3 Term of Office 7

2.1.5.4 Internal Control Responsibilities of the Board 7

2.1.5.5 Disclosure of Third Party Transactions and Other Conflict of Interest 8

2.1.5.6 Vacancy in the Board 8

2.2 Board Meetings 8

2.2.1 Quorum Requirements 8

2.2.2 Regular and Special Meetings 8

2.2.3 Orientation of New Directors 8

2.3 Board Appointments and Re-elections 9

2.4 Code of Ethics and Conduct 9

2.4.1 Code of Conduct and Ethics for Trustees 9

2.5 Remuneration of the Members of the Board and Officers 9

2.6 The Board Committees 9

2.6.1 Oversight & Audit Committee 9

2.6.2 Other Board Committees 10

2.6.2.1 Executive Committee 10

2.6.2.2 Nomination Committee 10

2.6.2.3 Other Special Committee 10

2.7 Officers of the Board 10

2.7.1 President 11

2.7.2 Vice President 11

2.7.3 Board/Corporate Secretary 11

2.7.4 Treasurer 12

2.8 The Board of Advisers 12

2.9 The Management 12

2.9.1 The General Manager 13

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2.10 Compliance System 13

2.10.1 The Compliance Officer 13

2.11 The External Auditor 13

PART III – MEMBERS

3.1 Rights of Members 14

3.2 Annual General Meeting 14

PART IV – STAKEHOLDERS

4.1 The Stakeholders 15

4.1.1 Members 15

4.1.2 Board 15

4.1.3 Employees 15

4.1.4 MFI Partner 16

4.1.5 Regulatory Agencies 16

4.1.6 Suppliers/Contractors 17

4.1.7 Community Operations 17

4.1.8 Environment 17

4.2 The Role of Stakeholders 17

4.3 Feedback and Grievance Policy for Stakeholders 18

4.3.1 Mechanism for Redress of Grievances 18

PART V – DISCLOSURE AND TRANSPARENCY

5.1 Disclosure and Transparency Policy 18

PART VI– PERFORMANCE EVALUATION

6.1 Board and Committee Performance Evaluation 19

6.2 Performance Evaluation Tools 19

PART VII – POLICY REVIEW AND UPDATING

7.1 General Policy on the Review and Updating of Existing Policies 19

7.2 Monitoring and Evaluation 19

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PART I - INTRODUCTION

1.1 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.

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1.2 Vision, Mission, Goals, Core Values

1.2.1 Association’s Vision:

“A God-centered institution dedicated to poverty alleviation in the community”

1.2.2 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.

1.2.3 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:

1.2.3.1 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;

1.2.3.2 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

1.2.4 Core Values

1.2.4.1 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.

1.2.4.2 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.

1.2.4.3 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.

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1.2.4.4 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.

1.2.4.5 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.

1.2.4.6 Competence

Employees must continuously strive to improve their work, knowledge and skills.

1.3 Organizational Structure

--

BOARD OF

TRUSTEES

BOARD OF

ADVISERS

FINANCE

FUNCTIONS

GENERAL

MANAGER

OPERATIONS

OFFICER

ADMINISTRATIVE and

FINANCE OFFICER

BOOKKEEPER

ADMINISTRATIVE

FUNCTIONS

UNDERWRITING

AND CLAIMS

FUNCTIONS

UTILITY

OFFICER

MBA

COORDINATORS

AUDIT

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1.4 Overview of Programs

The KGI-MBA provides a micro-insurance program for the poor. It has the following products:

1.4.1 Life insurance program with disability and health benefits

1.4.2 Refund of member’s Savings or Equity Value

1.5 Commitment to Good Corporate Governance

The Board of Trustees and Management of KGI-Mutual Benefits Association hereby commit

themselves to the principles and best practices contained in this Manual, and acknowledge that

the same may guide the attainment of its corporate goals.

1.6 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.

1.7 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;

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;

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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 II - 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 consider the adoption of guidelines on the number of

trusteeships/directorships that its members can hold in stock and non-stock

corporations. The optimum number should take into consideration the capacity of a

trustee/director to diligently and efficiently perform his duties and responsibilities.

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.

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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 Inc. - Mutual Benefit Association, Inc. (KGI-MBA) 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 To promulgate rules and regulations consistent with these by-laws,

and to review, revise or amend the same when it deems necessary

for the management of the association’s business and affairs;

2.1.5.2.2 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;

2.1.5.2.3 To invest the funds of KGI-MBA in other corporations or for purposes

other than those for which the association was organized, subject to

such approval of the members as may be required by law;

2.1.5.2.4 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;

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2.1.5.2.5 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 information, the

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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

Members of the Board ensures proper disclosure of all approved RPTs in

accordance with applicable legal and regulatory requirements and confirmation

by majority vote on the Annual General Meeting the Association’s significant

transactions with related parties.

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.

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.

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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

The members of the Board have adopted the Code of Conduct and Ethics for Trustees. It

describes the behavioral standards expected from a trustee so that he/she can better

understand and meet the expectations and requirements of the organization and

regulators.

Included in the Code are the standards of conduct for ensuring the proper discharge of

the duties and responsibilities, basic principle that a trustee should not use his position

to make profit or to acquire benefit or advantage for himself and/or his related interests,

avoiding situations that would compromise his impartiality; maintaining professional

integrity; enhancement of skills, knowledge and understanding of association activities,

etc.

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:

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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 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 A Nomination Committee which hall be composed of at least three (3) members

of the Board of Trustees, one of whom must be independent. The committee

Shall 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; conduct and supervise the elections for the members of the Board of

Trustees and other officers and proclaim the winners; deputize such personnel of

the head office of the KGI-MBA which it may deem necessary to enable it to

perform its function.

2.6.2.3 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.

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

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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 To preside in all meetings of the members of the association.

2.7.1.2 To execute all resolutions of the Board of Trustees.

2.7.1.3 To be charged with directing and overseeing the activities of the association.

2.7.1.4 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.

2.7.1.5 To represent KGI-MBA in all functions and proceedings;

2.7.1.6 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;

2.7.1.7 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;

2.7.1.8 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;

2.7.1.9 To perform such other duties as are incident to his office or are entrusted to him

by the Board of Trustees.

2.7.2 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 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;

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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 accounts of the

corporation;

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 Trustees

in matters related to investment, the use of facilities and development projects

including the examinations of contracts entered into by KGI-MBA

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2.9.1.7 To attend and render a report in the monthly meeting of the Board of Trustees

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;

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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.

2.11.6 The external shall be appointed by the Board of Trustees during the Annual General

Meeting

PART III – 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 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.

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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 Stakeholders

4.1.1 Members

A member is a person who meets the eligibility requirements and comply with the policies

of the MBA and entitles to all the rights and privileges sets forth in the by-laws of the

association. She/he shall embody the promotion of all purposes and goals of the

association.

The MBA shall provide training and education before their membership. In ensuring the

continuing education of the members, the MBA shall provide education through annual

assembly, center meetings, ownership meetings and other educational initiatives.

The MBA shall allocate funds for the training and education of its members.

4.1.2 Board

The Board is the governing body of the association primarily responsible for ensuring good

governance. The Board formulates the strategic direction of the association and monitors

the performance of the management and ensures that 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.

4.1.3 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.

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Employees are Individuals hired by the association to work as either full-time or part-time

worker under a contract of employment duly notarized upon signing, has recognized

rights and duties as stated in the MBA’s Personnel Manual. The MBA shall address to the

State’s Labor Laws that will protect the well-being of the employees.

The association shall continue to make planned efforts to facilitate the learning of job

related behaviour 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 of (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, workshop and conference.

4.1.4 MFI Partner

MFI partners are the primary source of the Association’s membership, and maintain good

relationship to members. They are the fund mobilization partners of the MBA and play

the important role especially in collecting premiums and contributions.

The association is committed to provide the following support to its partner MFI and its

affiliates:

4.1.4.1 Ensure fast service and continued access to micro insurance benefits and other

services of the MBA.

4.1.4.2 Establish and implement approve guidelines pertaining to MFI and other related

parties.

4.1.4.3 Conduct products and services orientation and technical services to partner

organizations

4.1.4.4 Conduct a fair business transactions and ensure that the interest does not conflict

with the interest of MFI Partners.

4.1.4.5 Provide incentives through service fee

4.1.4.6 Execute a service agreement/management contract defining the roles and

responsibilities of the contracting parties.

4.1.5 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.

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The association shall appoint/designate a person who will act as Compliance Officer to

ensure compliance to the above-mentioned agencies.

4.1.6 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 where a minimum of three (3)

suppliers shall submit their proposal and business profile to the management for

background check and validation of proposal. Selected supplier/contractor shall be issued

a legal contract/agreement which will be duly notarized to make the engagement binding.

The association shall appoint the General Manager/Finance Officer to lead the bidding

and selection process. All decisions/selections shall be approved by the board.

4.1.7 Community Operations

In any business, there is a need for the support of the community where it operates. The

Association acknowledge 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

Disaster Relief Assistance Program, Livelihood training program and other projects

identified by the community where the association is operating. Further, the association

shall participate in the implementation of development project undertaken by its partner

MFI.

4.1.8 Environment

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.

4.2 The Role of Stakeholders

The corporate governance framework should recognize the rights of stakeholders established by

law or through mutual agreements and encourage active co-operation between corporations and

stakeholders in creating wealth, jobs, and the sustainability of financially sound enterprises.

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4.2.1 The rights of stakeholders that are established by law or through mutual agreements are

to be respected.

4.2.2 Where stakeholder interests are protected by law, stakeholders should have the

opportunity to obtain effective redress for violation of their rights.

4.2.3 Performance-enhancing mechanisms for employee participation should be permitted to

develop.

4.2.4 Where stakeholders participate in the corporate governance process, they should have

access to relevant, sufficient and reliable information on a timely and regular basis.

4.2.5 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.

4.3 Feedback and Grievance Policy for Stakeholders

4.3.1 Mechanism for Redress of Grievances

4.3.1.1 Have a policy that requires customer complaints to be taken seriously and outlines

the steps to their investigation and resolution

4.3.1.2 Consider implementing a call hotline, text message system for customer complaints

4.3.1.3 Staff receiving customer complaints should be trained to handle complaints, i.e.

document calls and follow institutional process to resolve the issue

4.3.1.4 Flow chart – develop a process that outlines who is supposed to handle what and how

complaints are elevated (e.g. step-by-step processes for time frame of resolution)

4.3.1.5 Use information from complaints to inform and improve products and services and

prevent future complaints

PART V – DISCLOSURE AND TRANSPARENCY

5.1 Disclosure and Transparency Policy

The essence of good corporate governance is transparency. The Board commits at all times to

meet all disclosure requirements particularly those involving material information as mandated

by regulators within the prescribed period.

It is therefore essential that all material information about the corporation which could adversely

affect its viability or the interests of the members should be publicly and timely disclosed. Such

information should include, among others, earnings results, acquisition or disposition of assets,

off balance sheet transactions, related party transactions, and direct and indirect remuneration

of members of the Board and Management. All such information should be disclosed through the

appropriate Exchange mechanisms and submissions to the Commission.

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PART VI – PERFORMANCE EVALUATION

6.1 Board and Committee Performance Evaluation

The Board of Trustees conducts an annual evaluation of its performance through self-assessment

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.

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 Manual including the Association’s VMG may be amended and updated anytime, subject to

the approval of the Board. An Ad Hoc Committee shall be created to lead the review and

updating of this manual together with the management.

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.