TITLE VI MEETINGS SEC. 48. Kinds of meetings. — Meetings of directors, trustees, stockholders, or members may be regular or special. SEC. 49. Regular and Special Meetings of Stockholders or Members. — Regular meetings of stockholders or members shall be held annually on a date fixed in the bylaws, or if not so fixed, on any date after April 15 of every year as determined by the board of directors or trustees: Provided, That written notice of regular meetings shall be sent to all stockholders or members of record at least twenty-one (21) days prior to the meeting, unless a different period is required in the bylaws, law, or regulation: Provided, further, That written notice of regular meetings may be sent to all stockholders or members of record through electronic mail or such other manner as the Commission shall allow under its guidelines. At each regular meeting of stockholders or members, the board of directors or trustees shall endeavor to present to stockholders or members the following: (a) The minutes of the most recent regular meeting which shall include, among others: (1) Adescription of the voting and vote tabulation procedures used in the previous meeting; 543 Scanned with CamScannerAND JURISPRI DENCE ON MMENTAR ET ORPORATION CODE He PHILIPPINES the opportunity given to 9 f ‘ (2) A description ©) ey questions and a record nbers to stockholders gaked and answers Olen (3) The matters discussed and resolutions reached. (4) A record of the voting results for each agenda item rectors or trustees, officers and di £0) 8 et of Th es who attended the meeting; stockholders or memb: and her items that the Commission may erest of good corporate governance stockholders; (6) Such ot! require in the int g and the protection of minority (b) A members’ list for nonstock corporations and, for stock corporations, material information on the current stockholders, and their voting rights; (c) A detailed, descriptive, balanced and comprehensible assessment of the corporation’s performance, which shall include information on any material change in the corporation’s business, strategy, and other affairs; (d) A financial report for the preceding year, which shall include financial statements duly signed and certified in accordance with this Code and the rules the Commission may prescribe, a statement on the adequacy of the corporation’s internal controls or risk management systems, and a statem audit and non-audit fees; iota (e) An explanation of the dividend policy and the fact of payment of divid nonpeynenttey lends or the reasons for (f) Director or trustee postu eer others, their cidalitcation enauan lence, length of se trainings and continuing ee corner board representations in other coe a. Scanned with CamScannerTITLE ‘ VI — MEETINGS 645 A ineteatea a or trustee attendance report, gach of the manndance of each director or trustee at pra INgS of the board and its committees ‘gular or special stockholder meetings; (h) Appraisals and performance reports for the board and the criteria and procedure for assessment; (i) A director or tru: istee compensation report prepared in accordance with this Commission may Prescribe; eee () Director disclosures on self-dealings and related party transactions; and/or e (k) The profiles of directors nominated or seeking election or reelection. A director, trustee, stockholder, or member may propose any other matter for inclusion in the agenda at any regular meeting of stockholders or members. Special meetings of stockholders or members shall be held at any time deemed necessary or as provided in the bylaws: Provided, however, That at least one (1) week written notice shall be sent to all stockholders or members, unless a different period is provided in the bylaws, law or regulation. Astockholder or member may propose the holding of a special meeting and items to be included in the agenda. Notice of any meeting may be waived, expressly or impliedly, by any stockholder or member: Provided, That general waivers of notice in the articles of incorporation or the ws shall not be allowed: rovided, further, byla’ iH lowed: Pi i, hi meeting shall constitute a waiver of at attendance at a ig , except wi notice of such meeting ‘ose of objecting to the a meeting for the express purp fanizacun of any business because the meeting is not lawfully called or convened. Scanned with CamScanner546 sRISPRUDENCE ON eNTARIES AND Jt RISPRUD| COMMENT pp CORPORAT! (ON CODE THE RET HE PHILIPPINES ause, there is no person oe thorized unjustly refuses issit upon petition of a stockho! mi ing of good cause tockholder or membe how" ig ; a therefor, may issue an order, directing he petition herefor, call a meeting of the stockholder sn eat Notice required by this member shall preside thereat until at least nated of the stockholders or members present have chosen from among themselves, @ presiding officer. i iod, the Unless the bylaws provide for a longer period, stock and transfer book or membership book shall be closed at least twenty (20) days for regular meetings and seven (7) days for special meetings before the scheduled date of the meeting. Whenever for authorized or the pel to call a meeting, the In case of postponement of stockholders’ or members’ regular meetings, written notice thereof and the reason therefor shall be sent to all stockholders or members of record at least two (2) weeks prior to the date of the meeting, unless a different period is required under the bylaws, law or regulation. The right to vote of stockholders or members may be exercised in person, through a proxy, or when so authorized in the bylaws, through remote communication or in absentia. The Commission shall issue the rules and regulations governing parti lion and voting through remote communication or in absentia, taking into account the company’s scale, number of shareholders or members, structure, and other factors consistent with the protection and promoti u ay ee pl lion of shareholders’ or SEC. 50. Place and Time Stockholders or Members. — Sicanaenaae vesting iether, regular or special, shall be held in ipal office of the coy io forth the articles of incorporation, rae a ; the city or municipality where the ine office ot Scanned with CamScanner, for purposes of this Noti mee Re Shall be sent through the means cate aa Provided in the bylaws, which notice 'e, place and purpose of the meetings. of col shall Each notice of; i by the following: Meeting shallfurther be accompanied (a) The agenda for the meeting; (b) A proxy form which shall be submitted to the corporate secretary within a reasonable time prior to the meeting; (c) When attendance, participation, and voting are allowed by remote communication or in absentia, the requirements and procedures to be followed when a stockholder or member elects either option; and (d) When the meeting is for the election of directors or trustees, the requirements and procedure for nomination and election. All proceedings and any business transacted at a meeting of the stockholders or members, if within the powers or authority of the corporation, shall be valid even ifthe meeting is improperly held or: called: Provided, That all the stockholders or members of the corporation are present or duly represented at the meeting and not one of them expressly states at the beginning of the meeting that the purpose of their attendance is to object to the transaction of any business because the meeting is not lawfully called or convened. NOTES 1. Requisites. The following requisites pansy i et oe a i » or members’ meeting: (1) it must be the validity of a stockholder® Ot re gate fixed in the By-Laws or in held on the proper date which Scanned with CamScannerND JURISPRUDENCE ON RIES Al os COMMENT 1SBD CORPORATION CODE OF THE PI HILIPPINES on the date specified in § 50, now Section 49 of the RCCP; (2) there a be pe i (3) it must be called by the proper persons ¢ ie held in, proper place; and (5) there must be @ quota i now all attendance, participation, and voting by stockholders or members ‘ ication or in absentia. The Skq;, their meetings by remote communi i mandated under the law to issue the rules and regulations participation and voting through remote communicati absentia. The rules and regulations by the SEC are now emb in SEC Memorandum Circular No. 6, Series of 2020, dated 12, 2020. 2. Date and Notice. Section 49 of the RCCP pro for the following rules on the date and the required notice for th regular and special meetings of the stockholders or members: Required Notice the absence of a provision therein, Kind of Meeting Regular Meeting Date of Meeting 1. The date fixed in | 1. Within the perio required in the By-Laws; or By-Laws; or _ If there is no date | 2. in the By-Laws — on any date after April. 15 of every year as determined by the Board. Any time deemed necessary, or As provided in the | 2, i By-Laws. Laws provides for the tim Scanned with CamScannerTITLE yy MEETINGS 549 provide for a fixed date for the meeti shall be on any date afte, pe meetin Board of Direeturaantee ri 15 ofeach year as determined by the ‘ i ees," The phrase “ ” 2 month as the date of annual meeting is no lo east Anas eee stated in the By-Laws,* 8 is no longer allowed to be #, oF if not so fixed, the meeting a. As a rule, the The rule prohibiting post exceptions as when the appointed time for some annual meeting cannot be postponed. Ponements, however, admits of certain annual meeting cannot be held on the valid reasons. It is the duty of the Board ) to determine the date and time to hold it earlier or postpone it taking j i i ing into consi i tone ideration the surrounding i oa If . annual meeting of stockholders is postponed for a valid reason, the adjournment of the meeting for purposes of electing the new directors must be from day to day and not sine die.® c. In case of postponement of stockholders’ or members’ regular meetings, written notice thereof, with the reason for such postponement is required to be sent to all stockholders or members of record at least two (2) weeks before the date of the meeting, unless the By-Laws, or a law or regulation provides for a different period.’ 4. Notice. The provisions of the corporate By-Laws govern the procedure of sending notices of meetings. If there is no provision in the By-Laws, the manner prescribed in Section 49 and 50 of the RCCP shall be followed. The rule is that, where the law expressly requires notice of meeting of a particular transaction, no meeting can be validly held unless the notice of such meeting specifies the corporate transaction to be resolved, except if all the stockholders are present or duly represented during the meeting and do not object.* a. The last paragraph of Sec that all proceedings and business ction 50 of the RCCP provides transacted at stockholders’ or Section 49, RCCP; SEC Resolution No. 366, Series of 2003; SEC OGC Opinion No. 07-01 dated January 26, 2007. ‘Ibid. 5SEC Opinion dated July 13, ae SIT Record, p. 1629, December 5, 1979. "Section 49, RCCP. §SEC Opinion dated June 9, 1894: sao Scanned with CamScanner{URISPRUDENCE ON 2 wg AND JI COMMENT TSE CORPORATION CODE or THE PHILIPPINES i i ting is improp id even if the mee s imy Hon a the business transacted is withi the corporations (ii) all stockholders/mey esented at the meeting; (iii) not one 6 stockholders/members expressly states at i ace a that the purpose of his/her attendance is ot vaulty eldte a of any business because the meeting 18 not la e is mandatory and therefore essential ders’ meeting.” Accordingly, notice j holders of record cannot be dis tion from the stockholders con of the transfer of their post office address, the corporation is u bound to send them written notices of all meetings to their lag known post office address as shown. in the Stock and Transfer B of the Corporation.” c. The corporation cannot close its eyes to the fact th stockholder or member is no longer residing or holding office in th address appearing in the Stock and Transfer Book. Bad faith ascribed if it continues sending notices to the address of record if the corporation is already aware of the real address." d. The SEC likewise opined that if a stockholder is ae all available means of identifying the stockholder and givi latter notice should be resorted to including notice by pul This is part of the fiduciary duty of the corporation who share in trust for the unknown shareholder. f 4.01, How Notice is Given. Notice of meeting m through personal service. Published notice is insufficie the law requires written notice to each stockholder.*§ a. Under the Corporation Code, generally, and a rule, written notice of the meeting aa throug! mail must be given to stockholders or m: ried Dee 550 members’ meetings sh held or called, provided powers or authority of are present or duly repr’ b. Written notic the validity of the stockhol writing to each of the stock! with, In the absence of informat Scanned with CamScannerTITLE vy — MEETINGS 651 trustees) in relation to the hold 49 of the RCCP now bea meet meetings to be sent through isi lows the SEC shall allow under its ddan in tings.” However, Section written notice of regular mail or such other manner as C8, b. The By-Laws may giving notice of meetings, notice of meetings shall be g provided in the By-Laws, *. Provide for the mode or manner of ‘S provided in Section 50 of the RCCP, ent through the means of communication 5. Wai yl a ver of Notice. Section 49 provides that notice of any a ate expressly ot impliedly, by any stockholder tice of Buck : ‘¢ meeting is considered a waiver of notice meeting. The exception is when the stockholder or member attends the meeting for the express purpose of objecting to the transaction of any business due to the improper holding or calling of the meeting. Thus, there is waiver of notice if all the stockholders or members are present or duly represented during a meeting and do not object to the absence of notice.” Any stockholder or member of the corporation who attends a meeting may, however, expressly state at the beginning of such meeting that the purpose of his/her attendance is to question the validity of the proceedings or transaction of any business at the meeting because it was improperly held or called."* a. The mode of sending the notice may also be waived. For instance, if notice through e-mail is not provided for in the By-Laws, the stockholders may be deemed to have waived the right to question the sending of such notice if the stockholder does not object.'® 6. Call of Meeting. The person authorized to call a stockholders’ or members’ meeting may be fixed in the By-Laws. In the absence of a provision in the By-Laws, the power to call the meeting rests with the Board of Directors or Trustees.” a. Section 49 provides that whenever for any cause, there is no person authorized to call a meeting or the person authorized unjustly refuses to call a meeting, the SEC, upon petition of a TESEO.OGC Opinion No, 13-10 dated October 25, 2018- °6Section 46(b) and (g), RCCP- "Section 50, RCCP. 18]bid.; SEC Opinion dated ‘September 9, 120 pine ISBC-OGC Opinion No. 13-10 dated poh a 20SEC Opinion No. 06-09 dated February 5. Scanned with CamScannerot) JURISPRUDENCE ON opaRtES AND JURIS! mak NTARIES A ORATION CODE COMM THE REVE PHILIPPINES T + f ge pause tl mer on 0 showin 2! oon member deal woekhold * pr to the petitioning sto LE giving “propeaaal ieee an oT a meeting of the corporal! Oy giving proper nog 0 ca a mee' B aws. The pet IC] him te oy fhe RCCP ot the By-Laws The pe aad 7 hol required by ll preside at the meeting until at least a majo or member shall pre t have chosen from among ors presen sekholders or members presen’ ave fcr he res of the s officer. The powe themselves, a presiding vag) ial Decree No. 909. provided for in Section 6(c) of Presidential De 902-4 ag amended. b. Note that under calling of the meeting if there the event the person authorize i meeting on the date fixed in the By-Laws. c. There are also instances when specific persons are tasked under the law to call a meeting. Thus, under Section 27 of the RCCP, a special meeting for the removal of directors or trustees “must be called by the secretary on order of the president, or upon written demand of the stockholders representing or holding at least a majority of the outstanding capital stock or a majority of the members entitled to vote.” A meeting that is called by an unauthorized person is void and such substantive infirmity cannot be ratified in a subsequent stockholders’/members’ meeting.” Section 49, the SEC may only direct the j is no person authorized to do so or jy d in the By-Laws refuses to call for g 7. Agenda. The notice must indicate the matters to be taken up during the stockholders’ or members’ meeting, or it must be accompanied by the agenda for the meeting. The meeting is irregular if there are particular transactions to be resolved but the same are not stated in the agenda.” In addition to the agenda, Section 50 also requires the notice of meeting to be accompanied by the following: G) Aproxy form that is required to be submitted to the corporate secretary within a reasonable time before the meeting; (ii) In case attendance, participati ii endance, pation, and voting are allowed by remote communication or in absentia, the ee and a f preseisam to be followed when a stockholder/member elects either (iii) When the meeting is for th i ) e election of directors/trustees, the requirements and procedure for ath atta an election. “SEC Opinion dated July 18, 1995, 3 Bernas v, Cinco, G.R, Nos. 1633 SEC Opinion dated June 9, 1994, 4 169968-68, duly 1, ae Scanned with CamScanner | :TITLE vr — MEETINGS 553 a. There are varioy Code that require the py notice/s, because these meetings are including the: (1) approval of st directors;* (8) filling up of vaeane of contract with director: term? (6) increase or deo US provisions of the ; Revised Corporation rpose of the mee ie ting/s to be stated in the duly called for specific purposes, tock dividends; (2) removal of Scancies in the board;” (4) ratification ae extension or shortening of corporate inurting of bonded indebtednese™ @) aul ef all © cant all of the assets of the corporation's! (G) investmant other than the primary purpose; (10) approval of management contract;® (11) amendment or repeal of By-Laws; (12) fixing the issued value of no-par value shares;* (13) approval of merger or consolidation;* and (14) voluntary dissolution.” ; 8. Place of Meeting. Section 50 provides that stockholders’ or members’ meetings, whether regular or special, shall be held in the principal office of the corporation, or, if not practicable, in the city or municipality where the principal office of the corporation is located. This requirement can be traced to common law where the rule is that meetings can be conducted only in the State where it was created because a corporation has no existence beyond said State. a. The RCCP does not provide that the place of stockholders’ or members’ meetings can be fixed in the By-Laws, unlike the place for directors’ or trustees’ meetings that can be so stipulated in the By-Laws under Section 46 of the RCCP." It follows that the By- Laws cannot also provide for a venue for the conduct of stockholders’ *4Section 42, RCCP. °Section 27, RCCP. *Section 28, RCCP. “Section 31, RCCP. Section 36, RCCP. Section 37, RCCP. “Ibid. *!Section 39, RCCP. Section 41, RCCP. “Section 43, RCCP. “Section 47, RCCP. Section 61, RCCP. ®6Section 76, RCCP. 5'Section 134, RCCP. %8Clark on Corporations, p. 585. See SEC Opinion No. 16-01 dated January 19, 2016. Scanned with CamScanner"ARIES AND JURISPRUDENCE ON % OME REVISED CORPORATION CODE OF THE PHILIPPINES Meetings outside of the municipality or city of its Principal op By way of exception, meetings outside the city or muni ality Principal office is allowed if the following Tequirements con’ the principal office is any of the cities in Metro Manila; 2) the of the actual meeting is in another city but also in Metro Notice of meeting was timely given; and (4) the By-Laws i the place of stockholders’ meetings or does not designate a venue," b. The RCCP now provides in Section 50 yUnicipality in Metro Manila, Metro Cebu, Metro letropolitan areas shall, for purposes of thi: a city or municipality,” that “any city Davao, and os. 8 section, be © sven if a meeting is conducted in an impro Section 50 likewise provides that the meeting shall not be invalida if all the shareholders/members are present or duly reese during the 4 2 meeting. Stockholders and Members, have the right to attend the spec of the corporation. With respect to stoc] in determining who among the stockhol All the stockholders cial and regular me holders, the best e ders can attend the m ‘ever, the Stoc evidence of the fact that a person is a stockholder. Other like the stock certificate and deed of transfer — may be pre in an appropriate Proceeding to prove that the Stock Book does not reflect the accurate list of stockholders, meeting.“ Similarly, Suspended or who is oth validly declared delinquent or not in 800d standing “°SEC-OGC Opinion No, 15.02 dated July 2, 2015, “Tid. “Lao v. Lao, G.R, No, 170585, October 6, 2008. “Ibid. “SEC Opinion dated May 23, 1993. “Section 70, RCCP, Scanned with CamScannerTITLE a VI ~ MEETINGS 556 attend the Meeting of Incorporation or By-Law, that delinquent member, the me: 8 of the '8 are no bers, However, the Articles of hon-stock corporation must provide : fs entitled to attend and vote. c or purposes of dete: notice and/or to vote at stockholten nn, tuose who are entitled to 19 provides that "EH OiKy ockholders’ or members’ meetings, Section chall be closed at Teast twenty (rater book oF membership book seven (7) days for special matty 20) days for regular meetings and meeting” The By-Laws of tues before the scheduled date ofthe for a longer period, © corporation may, however, provide a. For publi hs the SRC, the pag companies and stock corporations governed by srovided by the by Iman i28 Rules provide that “unless, otherwise provided by the by-laws, the stock and transfer book shal be closed at least 20 days before the schedule date of the annual stockholders’ meeting to enable the con orati r . at entitled to vote.""" Poration to prepare the list of stockholders 9.01. Right to Vote. In the absence of an express charter or statutory provision to the contrary, the general rule is that every member of a non-stock corporation, and every legal owner of shares in a stock corporation, has a right to be present and to vote in all corporate meetings. Conversely, those who are not stockholders or members have noright to vote. Voting may be exercised personally, or through proxies who vote in their representative capacities, or when authorized in the By-Laws and subject to SEC rules and regulations, through remote communication or in absentia. Generally, the right to be present and to vote in a meeting is determined by the time in which the meeting is held.* a. The right to vote is inherent in and incidental to the ownership of corporate stocks. It is settled that unissued stocks may not be voted or considered in determining whether a quorum is present in a stockholders’ meeting, or whether a requisite proportion of the stock of the corporation is voted to adopt a certain measure or act. Only stock actually issued and outstanding may be voted. Under Section 6 of the Revised Corporation Code, each share of stock is entitled to vote, unless otherwise provided in the Articles of Incorporation or declared delinquent under Section 66 of the Code.” “°SEC Opinion dated June 16, 1998. *"Section 11(viii), SRC Rule 20. “pan v. Sycip, GR. No. 153468, August 17, 2006, 499 SCRA 216, 229. “Tan v. Sycip, ibid. Scanned with CamScannerES [SPRUDENCE ON COMMENTARIES AND JURIS! E ae ; On E REVISED CORPORATION CODE OF THE PHILIPPINES b. Neither the stockholders nor the corporation can y or represent shares that have never passed to the ownergh: Stockholders; or, having so passed, have again been Purchased Corporation, These shares are not to be taken into considera; determining majorities. When the law speaks of a given Propo of the stock, it must be construed to mean the shares that Passed from the corporation, and that may be voted, ¢. Section 70 of the RCCP expressly provides that of delinquent shares are not entitled to vote an at any stockholders’ meeting. Hence: Siven to a delinquent shareholder,®! id to be Tepresen| e, notice of meeting neeq Not remote com: absentia. While the Section 50 of the RCCP seemingly presupposes th: stockholders’/members’ meetings must be the Meeting, provisions elsewhere in the Paragraph of Section 49 and the third Paragraph of Section 50 it indicate otherwise. Thus, when so authorized in the By-Laws a j € guidelines that the SEC is mandated to issue, into consideration the () company’s scale: Gi) number of stockholderg) members; (iii) corpor; i the protection and pi Participation and voting j in absentia is now allowed. However, the Provisions of the Ri that allow meetings by remote communication or in absentia are not self-executory as the Provisions require the issuance by the SE of. implementing rules and regulations, The present regulati Memorandum Circular No. 6, Series of 2029 dated March 12, first Paragraph at the attendees ¢ in the same Place dur} RCCP, such as in the which states: Ibid. ®SEC-OGC Opinion No. 10-27 dated August 97, 2010. SEC-OGC Opinion fovember No. 19-56 dated Ne Scanned with CamScannerTITLE Vi — Meg MEETINGS 567 remote communi ica communtoaliony tions or other alternative modes of Ifa stockhot atin RnrouHeere Member intends to participate in mote communication, he/she shall Sectio 11, Quorum in Meetings. Unless otherwise rovided ji ‘ byiait Swi neceed Corporation Code or in the representing a um shall consist of the stockholders es majority of the outstanding capital stock or a majority of the m * corporations. embers in the case of nonstock ‘eanads stockholder or member who participates through ‘© communication or in absentia shall be deemed present for purposes of quorum. Section 12. Voting in the Election of Directors, Trustees and Officer Through Remote Communication. The right to vote of stockholders or members may be exercised in person, through a proxy, or when so authorized in the bylaws, through remote communication or in absentia. The right to vote of stockholders or members may be exercised also through remote communication or in absentia when authorized by a resolution of the majority of the board of directors; Provided, That the resolution shall only be applicable for a particular meeting. In the election of directors, trustees and officers of corporations vested with public interest, stockholders and members may vote through remote communication or in absentia, notwithstanding the absence of a provision in the bylaws of such corporations. Fortheconvenience ic y al Procedures. Section 13. Intern: corporations ‘strall of their stockholders and members, Scanned with CamScannerAND JURISPRUDENCE ON ) CORPORATION CODE, E PHILIPPINES dures emby i issue their own internal proce: ing nechanisms for participation in meetings and tin through remote communication or in absentia, internal procedures may take into Account comorston's number of stockholders or ang member’ location of stockholders or members, importance f the Matters to be discussed and voted upon in the Promotion of minority rights and other factors ¢, with the Protection and promotion of Stockh Member's rights, Onsistae, olderg? or The internal Procedures may Provide for ‘the following: chanism to verify the identity of or members and who among them have te during the meeting; a Me Stockholders the right to vot Meeting including an Opportunity to read or hear the discussion Substantially; ©. Mechanism members to vote during to enable stockholders or that the integrity and se the Meeting including ensuring ‘crecy of the votes are protected; ‘ocumenting the Meeting and tion which may be d ‘one afterwards; and d. Procedures for di any process/moy &. Mechanism in making the record of the meeting, either video or audi the stockholders or members; qed f. Other Matters to address administrative, technical and logistical issues, Section 14, ni the notices of the ‘oF members in acc, ‘ordance with the manner of giving Notice as stated in the bylaws. Scanned with CamScannerTITLE Vi — NGS, Written all stockholders Sg lular meetings may be sent to or such other similar mP2"® through electronic mail bylaws. manner as may be stated in the Notice of regular me date, time and place o tienen should state the tockhol peek : m the echoes at least twenty-one (21) days provided tne bye! unless a longer time is on wpe cls Special meetings which should state the oa ae Place of the meeting must be sent to ‘olders or members at least one (1) week prior to the scheduled meeti: ‘ime i: provided in the bylaws, ling, unless a longer time is In cas Of postponement of stockholders’ or members’ regular meetings, written notice shall be sent to all stockholders or members of record at least two (2) weeks prior to the date of the meeting. The notice shall further be accompanied by other relevant matters such as the following: a. The agenda of the meeting; b. When attendance, participation, and voting by remote communication or in absentia are authorized, the requirements and procedures to be followed when a stockholder or member elects either option; c. Manner of casting of votes and the period during which vote by remote communication or in absentia will be accepted; ffice d. Contact information of the Secretary or of staff whom the stockholder or member may notify about his or her option; ing is for the election of e. When the meeting Is directors or trustees, the requirements and procedure for nomination and election; and Scanned with CamScannerUDENCE ON ENTARIES AND JURISPR = OE REVISED CORPORATION CODE "OF THE PHILIPPINES f. The fact that there will be visual ang audig recording of the meetings (for future reference), 2 ase the election or meeting was cond Abrough wlsvontaiailig or any similar means, a vou and audio recording of the election or meeting Shouig ba Secured. The Secretary is duty-bound to Safe-keg, nd Perpetuate in updated data other storage equipment o, facility the visual and audio recordings. All pertinent materials for discussion Shall be numbered and marked by the Secretary in such Man; that the stockholder or member Participating throu, Femote communication can easily follow and Participate, Section 15. Place of Meetings of Stockhoy or Members. The Presiding officer shall Preside the stockholders’ or members’ whether regular or special, at Corporation as Provided in the or, if not Practicable, in the cit the Principal office of the corp call ang Meetin, the principal office of the articles of incorp 4 ity or municipality oration is located, FINAL PROVISIONS 16. Transitory Provision, to immediately Operationalize Corporations, upon approval of this c! conduct their board Meetings and - In order these guidelines, ‘ircular, may a. In this connect is given the power under Sec; recommend new modes by which ac or trustee may attend meetin, may allow, taking into a Scanned with CamScannerTITLE VI— MERTING (h) Board appraisal criter’ and performance reports, with the and procedure for assessment; (i) Director or trustee compensation report; G) _ Director disclosures 0) n self-deali transactions; and/or self-dealings and related party (&) The profiles of direc ; : veclection, Ones of directors nominated or seeking election! 14.01, Mi i , Minutes of Meetings. Section 49 further provides for the contents of minutes of re i gular st , which shall include the following: le ol aaa (a) A description of the voting and vote tabulation procedures used in the previous meeting: () That stockholders/members were given the chance to ask questions and a record of the questions raised and answers given; (©) The matters discussed and resolutions reached; (d) A record of the voting results for each agenda item; (e) Attendance report for the meeting — for directors/trustees, officers and stockholders/members; (Such other items as may be required by the SEC in the interest of good corporate governance and for the protection of minority stockholders. SEC. 51. Quorum in Meetings. - Unless otherwise provided in this Code or in the bylaws, a quorum shall consist of the stockholders representing a majority of the outstanding capital stock or a majority of the members in the case of nonstock corporations. NOTES Quorum means the number of stockholders/ board, or committee who must be 87 The meeting is void if there is no 1. Concept. 1 members of the corporation, present in order to take action. quorum.®* oT Corporations, p. 588. ini “alingasa ‘Castillo, G.R. No. 185664, April 18, 2015; SEC Opinion No. 06-09 dated February 8, 2006. Scanned with CamScannerCE ON ND JURISPRUDEN' 562 CON Ee CORPORATION CODE THE RES eTHe PHILIPPINES i ice of the cl than that fixed in the By-Laws provided notice hange of ders." is given to the members or stockhol ing. There i rovision of 13, Joint Meeting. There is no express p ruling prohibiting the holding of a joint nectne oa directors of different corporations. bi und Bratt home prepare separate minutes of meetings for t io sitereni “ae Hence, it cannot be sad that holding of ajoint ‘ wofet and directors of different corporations is a red espe there is no allegation that such joint meeting adversely affected interests of the individual corporations and their stockholders 14. Matters to be presented to Stockholders/M, at Regular Meetings. The RCCP embodies new Prov specific information and/or documents that the Board of D: Trustees of corporations shall “endeavor to present” to stockho] members at regular meetings. The new provisions are in line Congress’ thrust to strengthen good corporate governance in 9 to protect stockholders and prevent abuses of the Board. Th under Section 49, the following are required to be presented to stockholders/members at each regular meeting: (a) The minutes of the most recent regular meeting: (b) A members list (for non-stock corporations), or data on the current stockholders (for stock corporations), a voting rights; (©) Anassessment of the corporation’s performance, in information on material changes, if any, in the corpo business, strategy, and other affairs; (@) A financial report for the preceding year, includi signed and certified financial statements, and statemer adequacy of internal controls and of all external audit and fees; (e) Dividend policy of the corporation and th of dividends or the reaso1 i a ns for nonpayment; (f) Director or trustee Profiles; (g) Attendance report of directors or tru: meetings, Board Committee meetings, and stockhol °®SEC Opinion No. 05-13 dated October “*SEC Opinion No. 06. Dees 09 dated February 8, 2006. Scanned with CamScannersPRUDENCE ON 8g AND JURISPRUDE! VISED CORPORATION CODE ‘THE PHILIPPINES 564 re a. The quorum for stockholders oe ee generally consists of the stockholders re pr Hoey 8 majo the outstanding capital stock entitled eee 8 stock cmp or a majority of the members entitled to tae Ae of ; stock corporations.” A different quorum may bride in the By-Laws. For instance, the By-Laws may provide that quorum is 2/3 of the outstanding capital. In this case, a majoriy the outstanding capital would be insufficient to establish a quory Tee SEGacinl hat a corporation could state in its By-Laws a quorum shall be less than the majority or greater than what w, provided for in the Corporation Code unless the Code specific, provides otherwise.” For example, the quorum may be only 309%, all members in good standing." It is submitted that the same opinion would still be applicable under the RCCP. b. It is noted that the RCCP provides for certain corpor actions/resolutions that must be approved by at least 2/3 of th outstanding capital. If the meeting is specifically called to on matters requiring 2/3 vote of the outstanding capital then the presence of stockholders representing a majority of the outstanding capital is insufficient to act on the pro resolution. The presence of stockholders representing at least the outstanding capital is necessary for such purpose. If a maj of the members or stockholders representing the majority outstanding capital is necessary for the approval of the act, th majority is necessary to be present or represented at the even if the By-Laws provide only for 30% as the quorum. ¢. _ In other words, the provision in the By-Laws relat quorum will not necessarily hold true in those instances RCCP or applicable special law explicitly prescribes the of stockholders or members necessary to resolve or Particular corporate proposal. Where the only matter s agenda is a matter that can, by law, be decided only by representing 2/3 of the outstanding capital stock, the such stockholders is necessary to vote on the matter. In a quorum shall effectively consist of such ratio of sto GSEC-OGC Opinion No. 13-11 dated November 20, 201 ), 2013. ‘“°SEC Opinion No, 06-37 dated November 9, 2006. S'SEC-OGC Opinion No. 11-28 dated April 13, 2011 S*SEC-OGC Opinion No. 11-31 dated July 18, 2011 (cleeti members under Section 24); SEC-OGC Opinion ee eee E Opinion No. 06-37 dated November 9, 2006, are Scanned with CamScannerTITLE VI ~ Merrie: 1 — MEETINGS 565 members as may be declared by ys to approve the resolution atutory provision that is necessary a. Where the number to constitute a quor of stockholders or members necessary ‘um j or manner, a By-Laws HOGER Ere by statute in a mandatory required by . n requiring less than the proportion required by the particular legislation is subordinate to the. statute 2 Fee nie ao abeL § not Precondition, All stockholders have the right attending ie eee olders’ meeting. They cannot be barred from is nothin gin teavanes by imposing restrictions. For example, there — resale ” the eeana Code, now the RCCP that authorizes, Stender eae edly, the payment of registration fees for the ane recndtiae eeat meeting. Imposition of registration fees as a precondition for the exercise of the right to attend the meeting unduly restricts such right. 3. Bases of Quorum. In stock corporations, the presence of a quorum is ascertained and counted on the basis of the outstanding capital stock. If the intention of the lawmakers was to base the quorum in the meetings of stockholders or members on their absolute number as fixed in the articles of incorporation, it would have expressly specified so. Otherwise, the only logical conclusion is that the legislature did not have that intention. Taken in conjunction with Section 137 (now Section 173 of the RCCP), the last paragraph of Section 6 (now the fourth paragraph of Section 6 of the RCCP) shows that the intention of the lawmakers was to base the quorum mentioned in Section 52 (now Section 51, RCCP) on the number of outstanding voting stocks.” a. In non-stock corporations, the voting rights attach to membership. Members vote as persons, in accordance with the law and the By-Laws of the corporation. Each member shall be entitled to one vote unless so limited, broadened, or denied in the Articles of Incorporation or By-Laws. The Supreme Court held that when the principle for determining the quorum for stock corporations is applied by analogy to non-stock corporations, only those who are actual members with voting rights should be counted.” SEC Opinion No. 05-18 dated December 5, 2005. “SEC Opinion dated August 10, 1988. Tan vy, Sycip, G.R. No. 153468, ‘August 17, 2006, 499 SCRA 216, 229. “Ibid. "Ibid. Scanned with CamScannerJURISPRUDENCE ON ND ‘ aah PORATION CODE “ conn gED CORPO! ie NPT PHILIPPINES 2 of the Corporation Code (Se mbers: representing the actual ber or numerical constant thar rticles of incorporation, cong: b. Under Section 5 RCCP), the majority of the me! of voting rights, not the num! originally be specified in the a the quorum." ©. Consistently, delinquent shareholders or members gh d not be included in determining the existence of the required quory The rule is that no stock delinquent for unpaid subscription voted or entitled to vote or represented at any stockholders’ m or for any corporate purpose.” d. Similarly, non-voting shares shall not be includ the determination of a quorum.” It is submitted that, by y exception, the non-voting shares shall be included in the quory the matter to be taken up is one of the matters provided for y d Section 6 of the Corporation Code and the RCCP. 7 e. Likewise, Section 48 of the Corporation Code (S RCCP) refers to the number of registered members of the as: mentioned therein plus one. The best evidence of who are the members of the corporation is the “membership book”; in thee stock corporations, it is the stock and transfer book.” le da. Q& Triple A Corporation (Triple founders’ shares and 78, subscription. However, Tri book only in 1978, and req corporation's issued and ow g Special stockholders’ mg ti ii meeting, have constituted a quorum? Eaten thie eas “Ibid. “*SEC Opinion No. 05.05 aj "Tan v. 8ycip, supra, °474RB, 2005, y r Minh base 2A Sika "Bia Tan v. Sycip, supra, "*SEC-OGC No. 19.66 dated ny ae Scanned with CamScannerA TITLE VI — MEETINGS g ‘The presence of etoe! during ne holding 290 shares constitutes a quorum now Section 61 ohhehCce et Section 62 of the Corporation Code, quoruin in en RUE P, provides that unless otherwise provided, representing a rej e ai lers’ meeting shall consist of the stockholders in the problem thet iyi tne capital stock. Since there is nothing Satatahdihg ex indicates that there are non voting shares, the ehareh ohbye ana a total of the founding shares and the common of ahaces (OER oe the quorum is 50% plus one of such number of Incorporation is controlling red bia serine the Articles shareholders, The conttelling and binding on the corporation and its © recorded 33 shares are not the only outstanding shares. (Lanuza v, Ci : f 2005). (2009 Bar) ‘ourt of Appeals, G.R. No. 131394, March 28, SEC. 52. Regular and Special Meetings of Directors or Trustees; Quorum. ¢ Unless the erie of incorporation or the bylaws provides for a greater majority, a majority of the directors or trustees as stated in the articles of incorporation shall constitute a quorum to transact corporate business, and every decision reached by at least a majority of the directors or trustees constituting a quorum, except for the election of officers which shall require the vote of a majority of all the members of the board, shall be valid as a corporate act. Regular meetings of the board of directors or trustees of every corporation shall be held monthly, unless the bylaws provide otherwise. Special meetings of the board of directors or trustees may be held at any time upon the call of the president or as provided in the bylaws. Meetings of directors or trustees of corporations may be held anywhere in or outside of the Philippines, unless the bylaws provide otherwise. Notice of regular or special meetings stating the date, time and place of the meeting must be sent to every director or trustee at least two (2) days prior to the scheduled meeting, unless a longer time is provided in the bylaws. A director or trustee may waive this requirement, either expressly or impliedly. Scanned with CamScannerRUDENCE ON pS AND JURISPI “ con EVISED CORPORATION CODE THE Rp THE PHILIPPINES t physica, trustees who cannot’ joard meetings can partic; remote communication g, ing, teleconferencing, or , ication that allow odes of communica’ ate ee, opportunities to participate. Dire, cestruetees cannot attend or vote by proxy at bo meetings. Directors he i attend or vote al and vote through as videoconferenci i r or trustee who has a potential i in ay raised party transaction must recuse from voting on the approval of the related party transaction without prejudice to compliance with the requirements of Section 31 of this Code. NOTES 1. Compliance with Rules. A corporation, its Board of Directors, should act in the manner and with formalities, prescribed by law, its charter and its By-Laws Board must comply with the required quorum, notice and of! similar formalities. The directors must act as a body in a. called pursuant to law, or the corporation’s By-Laws, of objecting director or shareholder may question any action therein.” The directors are generally required to meet n However, the RCCP allow: i i \ 's corporations to specify the freq e the regular meetings of their directors as they may deem “Lopez Realty, 183, 191, Mareh 10, 2009, January 26, 2007 Scanned with CamScannerTITLE V1— Meetings a shareholders or mem) ers, stn with the basic right of conpongn cates and othe Corporate suffrage,” ll. One Share-One Vi Code incorporates a r factors consistent ote Policy, ‘Th : A 4 py. The Revised Corpora herby Y. The Revised Corporation appears in Memorandum (ip, policy. This policy also March 17, 2004 by the Shoe No. 4, Series of 2004 issued on prevailing law, which stateg nt {Re Corporation Code was still the are-one vote” a. Purs . Section 23 of the RCGPY et 24 of the Corporation Code (now shall alvraya eens ?, One share is entitled to one vote. Voting sia’ aways be on the basis Orthe miumber of sitstes aad'nul on ihe number of stockholders present in the stockholders’ mecting, b. Common share shall have complete voting rights and ot shares cannot be deprived of stich rights except as provided by a c. Each common share shall be equal in all respects to every other common share. Corporations are hereby prohibited from issuing multiple voting and non-voting common shares nor can they limit the maximum number of votes per stockholder irrespective of the number of shares he holds. 11.01. Non-Stock Corporation. The general rule with respect. tonon-stock corporations is “one member-one vote.” However, Section 88 of the RCCP allows non-stock corporations to limit, broaden or deny in its Articles and By-Laws the right of the members to vote. 12, Effect of Failure to Call. Officers of the corporation, whose duty is to call the stockholders’ meeting for purposes of holding an election, but who shall deliberately avoid or cause the failure of holding such stockholders’ meeting shall be punishable as officers of the corporation.” a. The officers may justify their failure . ot the el is s id and meritorious reasons. For example, the postponemen' ae stockholders’ meeting for the year 2005 was pests if “every last Thursday of October of every year” was the fre Lae the date of annual meeting of the stockholders in hey eoseal by Laws and the date was moved to “last pesca rice) ae eevesy year” by virtue of an amendment in the By-Laws i ter September 16, 2005. The meeting can be postponed to a date la "—~SSEC Opinion dated May 9, 2000. : as wee March 12, 1980; See also Section 170, R _—__———— Scanned with CamScannerTITLE Vt aE MEETINGS 569 total number of direc t ’ notwithstanding the eng o xed in the existence Articles of the Incorporation t of vacancies in the Board.” a Owever, the By. higher than the maj y Laws ma an Nority of the By of Section 52 of the RCCP fale etd members. The first pra CoMSELS ‘ " which provision was SABMtG ws Becton the directors oe ton Code) specifically provides that « majority of Shall constitute qe 48 fixed in the Articles of Incorporation quorum for the transaction of corporate busi 65 unless the Articles of I neory i greater majority. Poration or the By-Laws provides for a Y require a quorum that is b. Whil in the-Artiolsb ie noua number than simple majority can be fixed can provide for a me ws, neither the Articles nor the By-Laws of directors as es orum that is less than majority of the number ghee Gee the Articles of Incorporation. For example, Ce eee of the Board, it cannot be provided in the : y-Laws that the quorum consists of three members only.” 8 fe 7a quorum is the same even if there is a vacancy in the Board: the required quorum cannot be satisfied because of the vacancy, the remedy is for the stockholders to fill the vacancy. da. If there is a quorum at the start of the meeting, the meeting can still continue even if some of the directors will leave thereafter.” 3. Proxy Not Allowed. A director cannot participate in a meeting by proxy or any representative or alternate. While voting by proxy is allowed in all meetings of stockholders/members, the same is explicitly prohibited under Section 52 with respect to directors/ trustees. 4, Notice. Section 52 provides that notice of regular or special meetings stating the date, time, and place of the meeting must be sent to every director or trustee at least two (2) days before the scheduled meeting, unless a longer time is provided in the By- Laws. A special meeting, conducted without notice, is invalid.” 7$EC-OGC Opinion No. 16-07 dated April 4, 2016. oid. SEC Opinions dated November 6, 1987, March 13, 1987, and February 20, 1987. ©SEC Opinion dated July 21, JP Bier ir Mb 81gEC Opinions dated January Scanned with CamScanner1B ON pRUDENCE p 3g AND JURIS) ae COMM EVE D CORPORATION col THE Ri THE PHILIPPINPS tor or trustee may walve the. notcg rector OF UTnpliedly.” For instance, thy esent and nobody objected 570 However, a di ae ither ressly © either express 1 the directors are pre a. requirement, meeting is valid if al to the absence of notice. 4 } b. Simil an action of the Board cue meeting which Similarly, ate re} Tat for lack of notice, may be ratified either expressly, by Sees ofie dis ubsequent legal meeting or impliedly, the action of the directors in as by the corporation's subsequent course 0 5. Agenda, Unless an extraordinary measure Beet be passed during the regular meeting, the notice need not fe icate the “agenda” or the matters to be taken up during the regular meeting However, the agenda should be included in the notice of special meeting.“ 6. Place. Unlike the meetings of stockholders/members, meetings of directors or trustees of corporations may be held anywhere in or outside the Philippines, unless the By-Laws provides otherwise. Thus, in the absence of a provision in the By-Laws fixing the place of the Board meeting, a Board meeting in another country is valid. 7. Participation through Remote Communication. By express provision of Section 52 of the RCCP, directors or trustees, while still prohibited from attending and voting by proxy in Board meetings, can now participate and vote at Board meetings through remote communication such as teleconferencing, videoconferencing, or some other mode of communication. It is provided, however, that the mode of communication chosen should allow the Board members “reasonable opportunities to participate.” f conduct.” a. Teleconference or Videoconference. Teleconferencing and videoconferencing of members of the Board of Directors of, private corporations has long been a reality in this jurisdiction even before the enactment of the RCCP, in light of Republic Act No. 8792. After the RCCP took effect, the SIC issued SEC Memorandum Circular No. 6, Series of 2020 providing for the guidelines to be complied with ®SEC-SGC Opinion No. Settion 62, ROGP, "N°. 06-09 dated February 8, 2006; see aleo 4th Paragrapb, “Lopez Realty, Inc. v. Fe nt . Development Corp., 222 NW. 2d 847° SUPT citing Johnson v. C “SEC Opinion dated July 31, 1994, Scanned with CamScannerTITLE VI — MEETINGS wu in meetings by teleconference or videoconference and other remote or electronic means of communication." b. Justice Callejo observed in Expertravel & Tours, Inc. v. Court of Appeals that in this age of modern technology, the courts may take judicial notice that business transactions may be made by individuals through teleconferencing. Teleconferencing is an interactive group communication (three or more people in two or more locations) through an electronic medium. In general terms, teleconferencing can bring people together under one roof even though they are separated by hundreds of miles. This type of group communication may be used in a number of ways, and have three basic types: (1) video conferencing — television-like communication augmented with sound; (2) computer conferencing — printed communication through keyboard terminals; and (3) audio- conferencing-verbal communication via the telephone with optional capacity for telewriting or telecopying. c. A teleconference represents a unique alternative to face- to-face (FTF) meetings. It was first introduced in the 1960's with American Telephone and Telegraph’s Picturephone. At that time, however, no demand existed for the new technology. Travel costs were reasonable and consumers were unwilling to pay the monthly service charge for using the picturephone, which was regarded as more of a novelty than as an actual means for everyday communication. In time, people found it advantageous to hold teleconferencing in the course of business and corporate governance, because of the money saved. The advantages include: (1) People (including outside guest speakers) who would not normally attend a distant FTF meeting can participate. (2) Follow-up to earlier meetings can be done with relative ease and little expense. (3) Socializing is minimal compared to an FTF meeting; therefore, meetings are shorter and more oriented to the primary purpose of the meeting. ‘Note that the previous regulation was SEC Memorandum Circular No. 15 dated November 20, 2001; Expertravel & Tours, Inc. v. Court of Appeals, GR. No. 152393, May 26, 2005. “Supra. ®7Expertravel & Tours, Inc. v. Court of Appeals, supra. Scanned with CamScannerEON 4 . SPRUDENC vr ES AND JUR) CODE 572 CE seo CORPORATION THE RE THE PHILIPPINES meetings are more effectiys Singg (4) Some routine from any location equipped With ¢ one can audio-conference telephone. (5) Communication between the home office ang uy staffs is maximized. 6) Severe climate and/or unreliable transportat; ( . may necessitate teleconferencing. tion (7) Participants are generally better prepared han fo FTF meetings. (8) It is particularly satisfactory for simple Problem, solving, information exchange, and procedural tasks, (9) Group members participate more equally in moderated teleconferences than an FTF meeting. Well. d. On the other hand, other private corporations opt not to hold teleconferences because of the following disadvantages: (1) Technical failures with equipment, including connections that are not made. (2) Unsatisfactory for complex inti erpersonal commu- nication, such as negotiati ‘ion or bargaining. (3) Impersonal, less easy to create an atmosphere of group rapport, (4) Lack of partici pant familiarit the medium its ‘Y with the equipment, elf, and Meeting skills, (5) Acoustical Problems withi tl i ae in the teleconferencing ©) Difficulty in a termining partic; ant speaking order; frequently one person Monopolizes the mean " 3 () Greater Participant Preparation time needed. (8) Informal, One-to., ©. Memoran Passed by the SEC one, social interaction not possible. dum Circular No. 6, i aiaies on March 12, 2020 sta “Ibid. "Ibid. Scanned with CamScannerTITLE VI — MEE MEETINGS 573 Secti defined conn a nition of Terms. Except as otherwise meaning as these wees used shall have the same Corporation Gor ie badiid aa are defined in the Revised issuances by the Otihnlueean laws, as well as in a Re ‘emote Communication means the transfer of data between tw: camenies ‘© oF More devices not located at the b. Teleconferencin 9 is the holding of a conference among People remote from one another by means of telecommunicati i ion devi or computer terminals, ices such as telephone It refers to an interactive group communication (three or more people in two or more feature through an electronic medium. In general terms, teleconferencing can bring people together under one roof even though they are separated by hundred miles. c. Videoconferencing is the holding of a conference among people in remote locations by means of transmitted audio and video signals. d. Computer Conferencing is teleconferencing supported by one or more computers. e. Audio Conferencing is a conference in which people at different locations speak to each other via telephone or Internet connections BOARD MEETINGS OF DIRECTORS OR TRUSTEES Section 4. Participation in Board Meetings Through Remote Communication; Internal Procedures. Directors or trustees who cannot physically attend or vote at board meetings can participate and vote through remote communication such as videoconferencing, teleconferencing, or other alternative modes of communication thatallowthem reasonable opportunities to participate. However, directors or trustees cannot attend or vote by proxy at board meetings. Scanned with CamScanner[SPRUDENCE ON AAO oR CODE me CON on ds to participate jn trustee intends © nraftaratl a if a director oF © munication, shde i ugh remote Go''Gsficer and the Corporate meeting renet the Presiding O orate Sec; notify in advance intention. The oor eae retary onan woke Shen fact in the Minutes 0! ig. hall _ ¢ may issue their own Interna hoc eee tne conduct of board meetings through “ ee bedhrel or other alternative Modes of renmerdostion {© address administrative, technica comm and logistical issues. Section 5. Quorum. Unless the Revised Corporation Code or the articles of incorporation or bylaws of a corporation provide for a greater majority, a majority of the directors or trustees as stated in the articles of incorporation shall constitute a quorum. A director or trustee who participates through remote communication, shall be deemed present for the Purpose of at ing quorum. Section 6. Notice of the Meeting. The Corporate Secretary shall send the notice of the meeting to all directors or trustees in accordance with the manner of giving notice as provided in the byl: savas ylaws or by board Notice of meetings may be s. ‘ent to all direc or trustees through electronic mail, messaging wong or ani Such other m; ner a: A by board resolution, $ may be provided in the bylaws or Scanned with CamScannerTITLE eR’ ITLE VI — MEETINGS iy a. Thi e date, time and Place of the meeting; . q The agenda of the meeting; c. All pertinent mate: rials for discussion which shall be numbered and marked In such manner that the director or trust the meeting; lee can easily follow and participate in d. That a Director o1 rt remote communication; rustee may participate via e. Contact information of the Corporate Secretary or office staff whom th may communicate; bat sa di f. When the meeting is for the election of irectors or trustees or officers, the requirements and procedure for nomination and election; g. The fact that there will be a visual and/or audio recording of the meeting; and h. Other instructions to facilitate participation in the meeting through remote communications. Section 7. Roll Call. At the start of the meeting, the Presiding Officer shall instruct the Corporate Secretary to make a roll call. Every attendee shall state for the record the following: 4. Full name and position; 2. Location; 3. Confirmation that he/she can clearly hear and/ or see the other attendees; 4. Confirmation that he/she received the Notice of the Meeting including the agenda and materials; and 5. Specify the device being used (i.e., smartphone, tablet, laptop, desktop, television, etc.) te Secretary shall confirm oral Thereafter, the Corp d certify the existence of and note the participants an quorum. Scanned with CamScannerspRUDENCE ON ag AND JURISPRUDENCE CO ENA RPORATION COPE H pPINES THE Re eTHE PHILL te in any e of a need to vo! 5 the presiding Officer shall to note the vote of each 8. Voting. In ca section 8. Voting. it int item or matter oeietary direct the Corporate S' director or trustee. articipating in the meeting The director or trustee P! ( via remote communication may cast ae vate, hee lect mail, messaging service or S' or pspohat y | procedures. The vote s may be provided in the interna’ shall be sant to the Presiding Officer and the Corporate Secretary for notation. ie je ite Secreta Section 9. Other Duties of the Corpora’ ry. The Corporate Secretary shall also assume the following responsibilities: 1. Ensure that suitable equipment and facilities are available for the conduct of meeting by remote communication (i.e. reliable internet connection, high bandwidth availability capable of supporting numerous simultaneous connections, etc.); 2. Ensure that the attendees are able to hear and see the other participants clearly during the course of the meeting and that attendees should be able to communicate and understood by the other Party; 3. Ensure that the visual and of the meeting are secured; ane: ae sual and audio recordings 9 are current and on-going and 6. Require through remote comm: Scanned with CamScannerTITLE VI E VI ~ MEETINGS oT the meeting whene ver the act of si on a reasonable time after the ae aati f. Note that under the Cireular No. 15, electronic or ta mandatory. In this connection, previous regulation, Memorandum pe recording of the proceedings was ran th Ant ef ee hs because all the parties to the board meeting are aware that all the communications are recorded. Hence, there is feopt lad consent on the part of the participants who do not object.” Moreover, if the recording is in existence, it can be produced and can serve asa prima facie evidence of the events that transpired. Mere reliance on the minutes may give room to abuse, manipulation and/or alteration of the electronic data. Thus, electronic or tape recording of the proceedings enhances the transparency, authenticity and reliability of the video/teleconferencing.*' g. The electronic meeting allowed under SEC rules contemplates a meeting where the directors still participate or are capable of participating in the deliberations. Under previous rules (Memorandum Circular No. 15, Series issued on November 20, 2001) voting by e-mail was not allowed.” However, under SEC Memorandum Circular No. 6, Series of 2020 issued on March 12, 2020, it is expressly provided in Section 8 that “the director or trustee participating in the meeting via remote communication may cast his vote through electronic mail, messaging service or such other manner as may be provided in the internal procedures.” PROBLEM: i i ila Industrial Corporation, Q Under the Articles of Incorporation of Manila Ir oration, sts principal place of business shall be in Pasig, Metro Manila. The principal corporate offices are at the Ortigas Center, Pasig, Metro Manila while its factory processing Jeather products, is in Manila. The i ’ meeting at the Manila Hotel jon holds its annual stockholders’ meeting attl a e wenn el ne tanila, The By-Laws are silent as to the place of meetings of the stockholders and directors. %&C Opinion dated May 23, 2002, citing Republic Act No. 8792. bid. SFC Opinion dated May 29, 2003. Scanned with CamScannereNCE ON sPRUDENCE O RISEN CODE J TES AND FAT COMMENTAR TT CORPORATIC on ue a PHILIPPINES of the directors? aside at the meetin reside attend the stockholder, Who shall pr¢ a did no ; stockholder, who dit mr y of the co; meeting In Mam eh mectine resolutions t igor question the validity ofthe resolution, Can the same stockhold ors at the meeting held in Makati of Di adopted by the Board os his absence, the President shall Preside e meeting ¢ ACP} bein (Section 63, RCCP). : » RCCP (previously Section 51 of b. Yes, Section 50 of tee oy ctockiolties incetinge Corporation Code), Provie™ be held in the principal office of whether regular or special, shal in the city or miuifeipay the corporation, or, if not practicable, in the ¢ locAtediena Where the principal office of the corporation is located. The Articles of Incorporation in the present case 1s specific that the principal place of business of Manila Industrial Corporation ig in Pasig, Metro Manila. Hence, the meeting should be held in the principal office or if not practicable, in the city where the principal office is located, which is in Pasig. However, if the corporation shows that it is not practicable to hold the meeting in the principal office or in Pasig, then the holding of the meeting in Manila, which is a city in Metro Manila like Pasig, is valid also under Section 50.” No. Section 52 of the RCCP (previously Section 53 of the Corporation Code) allows the Board of Directors to hold its meetings anywhere in or outside the Philippines. ‘The holding of the Board meeting in Makati was therefore proper and the validity of the resolutions adopted by the Board in that meeting cannot be questioned. (1993 Bar) SEC. 53. Who Shall Preside at Meeti1 ings. — The chairman or, in his absence, the President Sn preside NOTES 1. Presiding Officer, airman is . The offi i Paar 38 not expressly provided for ne ra noch rever, Section 53 of the RCCP ‘oneal presiding officer at nail the office of the Chairm; a officer of stockholders’ aa Scanned with CamScannerTITLE vy MEETINGS 579 Presidin, _ & Officer also member of the Board: Hence if ote, The Presiding fcr is uaws or in a Board re: . ®, it cannot be i i b ; rant manne n solution that he can vote ena ane Oecd i a t cau a Ne resolution is not deemed ay ees a tie because the required Humber of votes iene fies in case of is not met, SEC, 54, Right to Vote of Secured Creditors and Administ * ae orett TE sa Case a stockholder grants security stead er shares in Stock corporations, the “grantor shall have the right to attend and Executors, administrators, receivers, and other legal representatives duly appoii ppointed by the court may attend and vote in behalf of the stockholders or members without need of any written proxy. NOTES 1. When Shares are Pledged or Mortgaged. The stockholders whose stock certificates are used as collaterals for a loan have the right to vote unless said stockholders authorizes the bank in writing to vote the pledged or mortgaged shares.* a. A stockholder whose shares are the subject of security interest under Personal Property Act (R.A. No. 11057) shall be entitled to vote such shares until the shares have been transferred in the name of the transferee in a sale to enforce the security interest. In the meantime, the stockholder retains the right to vote because he retains ownership of the property. However, the security agreement may provide that that the security holder may attend and vote at meetings. 2. Administrators and Executors. The second paragraph of Section 54 allows executors, administrators, receivers, and other legal representatives to attend and vote in behalf of the stockholders/ ®°SEC Opinions dated August 4, 1995 and January 25, 1990, Pe, 2a sign 55, Corporation Code; SEC Opinion dated Apri 7, 1987 Scanned with CamScannerISPRUDENCE ON BN’ AND JUR DENCE : On EI CORPORATION © ODE m OF THE PHILIPPINES » ‘The reason for this is that such .d with legal title over the shares Upon However, it is indispensable that y the court, otherwise, a Proxy jg members even without a proxy become veste » court.” inted b: representatives their appointment by the the representative 18 appot necessary.” a : Recrow Shares. Where a stock certificate is depositey a promissory note with instructions to the ate to the payee of the note and the stock is so delivered and transferred to the payee in the books of the corporation, the payee-transferee has the right to vote the same. The rule is that stocks deposited in trust or in escrow can vote as other whenever a title and ownership vest in the designated in escrow as security for holder to deliver the certific trust sto persons. SEC. 55. Voting in Case of Joint Ownership of Stock. ~The consent of all the co-owners shall be necessary in voting shares of stock owned jointly by two (2) or more persons, unless there is a written proxy, signed by all the co-owners, authorizing one (1) or some of them or any other person to vote such share or shares: Provided, That when the shares are owned in an “and/or” capacity by the holders thereof, any one of the joint owners can vote said shares or appoint a proxy therefor. NOTES 1. Unanimity. In civil law, acts of ownership require unanimity among the co-owners. The general rule under Section 55 of the RCCP follows this rule by requiring the consent of all the co-owners in order to vote a share that is owned jointly by two oF more persons. For example, a share in the name of “Mr. A and Mr. B” requires the consent of both of them in order to vote. , 2. When Unanimity is not Requi d ia equired. Even if the shares are co-owned, unanimity is not required in the following instances: * See Loper Real aoa, et Lome Healy Ine. v. Spouses Tanjanco, GR, No "SEC Opinion dated Jul ly 22, 1987, aed Note 5 under Section 63, EC Opinion dated January 2 9, See Article 491, Now Civil Coder Vol. II, 1992 Ed., p. 193. ‘il Code; Tolentino, Civit Scanned with CamScanner