MANILA, Philippines—Advocacy group Shareholders’ Association of the Philippines (SharePHIL) has urged the Securities and Exchange Commission (SEC) to reinstate a “stakeholder-oriented” corporate governance regime in the country, a laggard among Southeast Asian peers in various corporate governance metrics.

SharePHIL, through its president Francis Lim, a former Philippine Stock Exchange president, and its chair Evelyn Singson, recently wrote to SEC Chair Teresita Herbosa to propose the issuance of a circular that would formally reinstate the “stakeholder concept.”

“The restoration of the principle will help put the country at par with other countries noted for corporate governance. It will also encourage other stakeholders like employees, creditors and suppliers to support the company,” Lim explained in a text message.

Apart from the employees, creditors and suppliers who have a stake in a corporation even if they do not necessarily own shares, the notion of “stakeholder” these days has been expanded to include the community where a business operates in, the government and trade associations.

In the 2002 version of the SEC’s code of corporate governance, the term “corporate governance” was defined as a “system whereby shareholders, creditors and other stakeholders of a corporation ensure that management enhances the value of the corporation as it competes in an increasingly global marketplace.”

But in the 2009 code, the “stakeholder” principle had been deleted, SharePHIL lamented.

Pending the SEC’s amendment of the corporation code, SharePHIL said the reinstatement of the stakeholder principle through a circular would immediately improve the ratings of the Philippines in the Association of Southeast Asian Nations (Asean) scorecard.

In its March 19 letter to the SEC, SharePHIL said that corporations should also give attention to stakeholders of the corporation in addition to its shareholders. The organization said it believed that corporations’ attention to this principle could “better promote the spreading of the benefits of capitalism to more Filipinos, as envisioned by the Constitution.”

The group said that embedding the stakeholder principle in the country’s corporate governance code would also boost the country’s standing as a promoter of good corporate governance in the region.

Based on the Asean Corporate Governance Scorecard Country Reports and Assessments 2012–2013 prepared by the Asean Capital Markets Forum and the multilateral lending agency Asian Development Bank, Thailand scored 67.7 percent and Malaysia 62.3 percent on the corporate governance scorecard while the Philippines obtained a score of only 48.9 percent.

The corporate governance initiative of the Asean is one of several regional capital market integration initiatives of the Asean Capital Markets Forum (ACMF).

Significantly, Philippine publicly listed companies were rated the lowest on “Role of Stakeholders” with an average score of 28 percent. On the other hand, Indonesia garnered a score of more than 52 percent. SharePHIL noted that this score was the biggest drag on the average score for corporate Philippines.