Definition of Government-Owned or Controlled Corporation
- Government-owned or controlled corporations include stock or non-stock entities directly chartered by special law or organized under the general corporation law but majority-owned or controlled by the government.
- Includes corporations owned indirectly through parent or subsidiary government corporations.
- Exceptions exist for corporations organized to dispose assets to private ownership within a specified time, and those required to register with the Securities and Exchange Commission but not yet having juridical personality.
- Corporations explicitly created for transfer to private ownership remain government corporations until such transfer is effected.
Classification of Government Corporations
- Parent Corporations: Created by special law.
- Subsidiary Corporations: Majority-owned by parent or other government-owned subsidiaries.
- Acquired Asset Corporations: Formed from private entities whose shares were transferred to government corporations to settle debts with government financial institutions; intended for eventual privatization.
- Affiliate Corporations: Government ownership is less than majority.
Exclusions from Coverage
- Acquired asset corporations and affiliate corporations are excluded from coverage.
- Chartered universities, colleges, schools, and municipal corporations, though government corporations, are also excluded.
- Exclusions do not exempt such entities from reportorial requirements; financial reports may be consolidated with parent corporations.
Criteria for Using the Corporate Form
- Justified when greater operational flexibility is needed and cannot be achieved through regular government agencies.
- Financial viability expected; the corporation should operate without losses or special government aid.
- Exceptions to financial viability for subsidized programs or cultural/civic corporations not competing with private sector.
Ministry Representation on Governing Boards
- Ministers or equivalents designated by law as board members may appoint senior ministry officials as their representatives.
- Deputies must represent ministers serving as ex-officio chairmen.
- Central Bank charter provisions on alternates remain applicable.
Provision of Adequate Operational Flexibility
- Government corporations are given sufficient autonomy to act promptly without prior external approval, within their charter and budget constraints.
- Flexibility must be consistent with public accountability requirements.
Differential Treatment for Government Corporations
- Government corporations receive treatment aligned more closely with private corporate practices rather than regular government agencies.
- Service-wide agencies (Civil Service Commission, Commission on Audit, Office of Budget and Management) must adopt industry standards.
- Commission on Audit to promulgate uniform accounting and auditing standards, withdraw resident auditors, and allow private audits while maintaining audit oversight.
- Civil Service Commission to tailor personnel policies; OBM to formulate competitive compensation and classification policies.
- Responsibilities and accountability of government corporations remain intact despite differential treatment.
Government Corporations with Significant Minority Private Equity
- Corporations with at least 20% private voting stock enjoy maximal regulatory flexibility.
- Employment issues referred to Ministry of Labor and Employment.
- May engage private external auditors; Commission on Audit may review externally produced audits.
- Not subject to OBM's position classification and compensation rules.
Transitory Provisions
- President to create a committee including key government bodies to review and adjust policies/regulations within two years.
- Status quo maintained for two years for previously excluded corporations regarding audit and employment policies.
- All chartered government corporations are immediately subject to Commission on Audit jurisdiction.
- Collective bargaining agreements in excluded corporations remain effective until expiration.
Separability Clause
- Invalidity of any provision does not affect the validity of the remainder of the Decree.
Repealing Clause
- Laws and rules inconsistent with this Decree are repealed or modified accordingly.
Effectivity Clause
- The Decree takes effect immediately upon issuance.