REPORT LAW

TITLE VI
MEETINGS

STOCKHOLDERS OR MEMBERS MEETING(SECTION 48,49,50,51 AND 53)

REGULAR SPECIAL
WHEN 1. Annually on a date fixed in the 1. Any time deemed necessary.
by-laws. 2. As provided in the by-laws.
2. If not so fixed, on any date after
April 15 as determined by the board

WHERE 1. Principal office of the 1. Principal office of the

Corporation Corporation
2. If not practicable, in the city or 2. If not practicable, in the city or
municipality where the principal municipality where the principal
office of the corporation is located. office of the corporation is located.
3. Subject to the provision of 3. Subject to the provision of
Section 92. Section 92.

NOTICE 1. Within the period provided in the 1. Within the period fixed in the
by-laws. bylaws.
2. If there is no such provision, at 2. If there is no such provision, at
least 21 days prior to the meeting. least one week prior to the meeting.
PRESIDING 1. Person designated in the by-laws. 1. Person designated in the by-laws.
OFFICER 2. If none, chairman, or in his 2. If none, chairman, or in his
absence, the President absence, the President
3. Without prejudice to the 3. Without prejudice to the
provision of Section 49. provision of Section 49.

NECESSITY OF MEETINGS OF STOCKHOLDERS OR MEMBER

“It is a fundamental rule of corporation law that unless the statute otherwise provides,
stockholders or members can act only in meetings properly convened and assembled. The written
asset of a majority of the shareholder or members without a meeting to a matter requiring action
by them is not sufficient”.
EXCEPTIONS TO THE RULE
A. Under Section 15,any corporation may amend it’s article on Incorporation “by a majority vote
of the board of directors or trustees and the vote or written assent of the stockholders
representing at least 2/3 of the outstanding capital stock. The articles of Incorporation of a no-
stock corporation may be amended by the vote or written assent of majority of the trustees and at
least 2/3 of the members”. Thus, a meeting of stockholders or member is not necessary.
B. It is evident that the corporation will be bound by the unanimous act or agreement of it’s
stockholders or members although expressed elsewhere than at a format meeting.

C. In any of the cases mentioned in Section 100,any action taken by the directors of a close
corporation without a meeting shall nevertheless be deemed valid, unless otherwise provided in
the by-laws.
D. Meetings in one person corporations are not necessary(Section 128).

REQUISITES FOR A VALID MEETING OF STOCKHOLDERS OR MEMBERS

1. It must be held at the proper place.

2. It must be held at the stated date and at the appointed time or at a reasonable time thereafter.
3. It must be called by the proper person.
4. There must be a previous notice.
5. There must be a quorum.

PROPER PERSON TO CALL A MEETING

A. The person or persons designated in the by-laws have authority to call stockholders’ or
members’ meeting.
B. In the absence of such provision in the by-laws, the meeting may be called by a director or
trustee or by an officer entrusted with the management of the corporation unless otherwise
provided by law.
C. Whenever for any cause, there is no person authorized or the person authorized unjustly
refuses to call a meeting, the SEC, upon petition of stockholder or member on a showing of good
cause therefore, may issue an order directing the petitioning stockholder or member to call a
meeting of the corporation by giving proper notice required by this Code or the by-laws. The
petitioning stockholder or member shall preside threat until at least a majority of the stockholders
or members present have chosen from among themselves, a presiding officer(Section 49).
D. The special meeting for the removal of directors or trustees may 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 majority of the members entitled to vote as
provided by Section 27.

PROPER NOTICE(SECTION 49)

-Written notice of meetings shall be sent to all stockholders or members or record within such
period as provided by law. Such written notice of meetings may be sent to all stockholders or
members of record through electronic mail or such other manner as the SEC shall allow under
it’s guidelines.

NOTICE OF EVERY MEETING REQUIRED(SECTION 50)

-Notice of meetings shall be sent through the means of communication provided in the by-laws,
which notice shall state the time, place and purpose of the meetings. The corporate by-laws
govern the procedure of sending notices of meetings. If the by-laws is silent, the manner
prescribed in Section 50(now Section 49,RCCP)shall be followed(SEC Opinion, June 1994).

REQUISITES OF NOTICE OF MEETING(SECTION 49 & 50)

1. It must be issued by one who has authority to issue it.
2. It must be in writing.
3. It must state the date, time, and place for meeting, unless otherwise provided in the by-laws.
4. It must be sent at a certain time before the scheduled meeting as fixed by law, unless a
different period is required by the by-laws.
5. It must state the agenda for the meeting of the business to be transacted thereat.
6. It must be accompanied by the following:
A. A proxy form which shall be submitted to the corporate secretary within a reasonable time
prior to the meeting.
B. When attendance, participation and voting are allowed by remote communications or in
absentia the requirements and procedures to be followed when a stockholder or member elects
either option.
C. When the meeting is for the election of directors or trustees, the requirements and procedure
for nomination and election.
7. Further, the notice must comply with any other requirements prescribed by the law or by the
by-laws of the corporation.

RULES ON WAIVER OR NOTICE TO STOCKHOLDERS(SECTION 49)

A. General Waivers of notice in the articles of incorporation or the by-laws shall not be allowed.
B. Notice of any meeting may be waived, expressly or impliedly, by any stockholder or member.
C. Attendance at a meeting shall constitute a waiver of notice if such meeting, except when the
person attends a meeting for the express purpose of objecting to the transaction of any business
because the meeting is not lawfully called or convened.

EFFECT IF FAILURE TO COMPLY WITH REQUISITES FOR MEETING(SECTION 50)

-Under Section 50,all proceedings hand and any business transacted at any meeting of
stockholders or members shall be valid even if the meeting be improperly held or called,
provided the following two requisites are present:
A. That the proceedings had and the business transacted are within the power or authority of the
corporation, that is, they are not ultra vires.
B. 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 on convened.

MATTERS TO BE PRESENTED BY THE BOARD DURING THE REGULAR

MEETING OF STOCKHOLDERS OR MEMNERS(SECTION 49)
A. The minutes of the most recent regular meeting which shall include, among others:
1. A description of the voting and vote tabulation procedures used in the previous meeting.
2. A description of the opportunity given to stockholders or members to ask questions and a
record of the questions asked and answers given.
3. The matters discussed and resolutions reached.
4. A record of the voting results for each agenda item.
5. A list of the directors or trustees, officers and stockholders or members who attended the
meeting.
6. Such other items that the SEC may require in the interest of good corporate governance and
the protection of minority stockholders.
B. A members’ list for non-stock 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 statement duly signed
and certified in accordance with this code and the rules the SEC may prescribed, a statement on
the adequacy of the corporation’s internal controls or risk management systems, and a statement
of all external audit and non-audit fees.
E. An explanation of the dividend policy and the fact of payment of dividends or the reasons for
non-payment thereof.
F. Director or trustee profiles which shall include, among others, their qualifications and
relevant experience, length of service in the corporation, trainings and continuing education
attended, and their board representations in other corporations.
G. A director or trustee attendance report, indicating the attendance of each director or trustee at
each of the meetings of the board and it’s committees and in regular or special stockholder
meetings.
H. Appraisals and performance reports for the board and the criteria procedure for assessment.
I. A director or trustee compensation report prepared in accordance with this code and rules the
SEC may prescribe.
J. Director disclosures on self-dealings and related party transactions.
K. The profiles of directors nominated ir seeking election or re-election.
AGENDA (SECTION 49)
-In addition to the matters enumerated in the provision, a director, trustee, stockholder, or
member may propose any other matter for inclusion in the agenda at any regular meeting of
stockholders or members.
-A stockholder or member may propose the holding of a special meeting and items to be
included in the agenda.

POSTPONEMENT OF MEETINGS OR STOCKHOLDERS OR MEMBERS (SECTION

49)
-In case of postponement of stockholders’ or members’ regular meetings, written notice thereof
and the reason therefore shall be sent to all stockholders or members of record at least two weeks
prior to the date of the meeting, unless a different period is required under the by-laws, law or
regulation.

CLOSING OF STOCK AND TRANSFER BOOK TO DETERMINED STOCKHOLDERS

OR MEMBERS RECORD (SECTION 49)
-Unless the by-laws provide for a longer period, the stock and transfer book shall be closed at
least 20 days for regular meetings and seven days for special meetings before the scheduled date
of the meeting.
-Only stockholder or members of record can attend and vote at the stockholders’ or members’
meeting.

MANNER OF EXERCISING THE RIGHT TO VOTE OF STOCKHOLDERS OR MEMBERS

(SECTION 49)
A. In person.
B. Through a proxy
C. Through remote communication or in absentia

QUORUM REQUIRED IN STOCKHOLDER’S AND MEMBER’S MEETINGS

(SECTION 51)
-Section 46 permits corporations to determine in their by-laws “the required quorum in meetings
of stockholders’ or members” for the transaction of business at such meetings. In the absence of
quorum, no action can be taken except to adjourn.
-For stock corporations, the quorum referred to in Section 51 is based on the number of
outstanding voting stocks meaning the total shares of stock issued under binding subscription
contracts to subscribers or stockholders, whether fully paid or partially paid, except treasury
shares (Section 173).
-In case of non-stock corporations, a majority of the members shall constitute a quorum “unless
otherwise provided in this code or in the by-laws”. For non-stock corporations, the basis for
determining the quorum is the total number of registered members.

PLACE OF MEETING OF STOCKHOLDERS OR MEMBERS (SECTION 50)

-Stockholder’s or member’s meeting, whether regular or special, shall be held in the principal
office of the corporation as set forth in the articles of incorporation, or, if not practicable, in the
city or municipality where the principal office of the corporation is located.
-This mandatory. Consequently, the by-laws cannot provide otherwise, except as allowed by
Section 92 with respect to meetings of members of a non-stock corporation. The rule as to the
place of meetings of members of a non-stock corporation, the rule as to the place pf meetings of
stockholders or members is subject to exception provided in the fourth paragraph of Section 50.

DIRECTORS OR TRUSTEES MEETINGS (SECTION 48,52 AND 53)

 REGULAR SPECIAL
WHEN 1. On the date fixed in the by- At any time upon the call of
laws. the president or ass provided in
2. If there is not date in the by- the by-laws.
laws, monthly.
WHERE 1. As fixed in the by-laws. 1. As fixed in the by-laws.
2. If there is no provision in the 2. If there is no provision in the
by-laws, anywhere in or outside of by-laws, anywhere in or
the Philippines. outside of the Philippines.
NOTICE 1. Within the period (but should 1. Within the period (but
be at least two days prior to the should be at least two days
meeting) provided in the by-laws. prior to the meeting) provided
2. In the absence of a provision in in the by-laws.
the by-laws, at least two days prior 2. In the absence of a provision
to the scheduled meeting. in the by-laws, at least two
days prior to the scheduled
meeting.
PRESIDING OFFICE 1. Person designated in the by- 1. Person designated in the by-
laws. laws.
2. If none chairman or in his 2. If none chairman or in his
absence, the president. absence, the president.

NECESSITY OF MEETINGS OF DIRECTORS OR TRUSTEES

-Similarly, as agents of the corporation managing it’s affairs, the directors or trustees can only
exercise their powers as a board, not individually or separately.

REQUISITES FOR A VALID BOARD MEETING

A. Meeting of the directors or trustees duly assembled as a board,.ie..as a body in a lawful
meeting.
B. Presence of the required quorum
C. Decision of the majority of the quorum or, in other cases, a majority of the entire board.
D. Meeting at the place, time and manner provided in the by-laws.

RULES REGARDING QUORUM(SECTION 52)

A. NUMBER REQUIRED FOR PRESENCE OF QUORUM AT MEETING OF DIRECTORS
OR TRUSTEES
- Unless the articles of incorporation or the by-laws provide for a greater majority, a majority of
the number of directors or trustees as fixed in the articles of incorporation shall constitute a
quorum for the transaction of corporate business.
B. NUMBER REQUIRED FOR APPROVAL OF CORPORATE ACTS
- As a general rule, majority of the quorum of the board (as distinguished from majority of the
full board) will be sufficient to adopt a proposal where the RCCP requires approval of certain
corporate acts.

C. NUMBER REQUIRED FOR THE ELECTION OF OFFICERS

- The election of officers shall require the vote of a majority of all the members of the board.

D. NUMBER PROVIDED GREATER THAN MAJORITY

- The RCCP gives corporations the power to require a number greater than the majority of the
board members to constitute the quorum necessary to transact business.

PROXY AND CONSTRUCTIVE PRESENCE IN MEETINGS OF THE BOARD (Section

52)
A. On account of their responsibility to the corporation and their being voted into office
presumably because of their personal qualifications, directors or trustees cannot validly act by
proxy. They must attend the meetings of the board of directors or trustees and act in person and
as a body. Each director or trustee is required by law to exercise his personal judgment and
discretion in running the affairs of the corporation and he cannot delegate his powers or assign
his duties to another director, or to a corporate officer, or to any person.

B. Directors or trustee who cannot physically attend or vote at board meeting they can participate
and vote through remote communication such as videoconferencing, teleconferencing, or other
alternative modes of communication that allow them reasonable opportunities to participate. The
corporate secretary must include in the notice of meeting an inquiry if the director or trustee will
attend physically or through remote communication. A director or trustee must choose and give
notice that he intends to resort to remote communication five days prior to such meeting. All
proceedings must be recorded and the recording shall be stored by the corporate secretary (SEC
Memorandum Circular No. 15, Series of 2001, Board Meeting Through Teleconferencing or
Videoconferencing (Tele/Video) Conferencing, November 11, 2001)

NOTICE OF EVERY MEETING REQUIRED

- A meeting held in the absence of some of the directors or trustees and without any notice to
them is illegal, and the action at such meeting although by a majority of the directors, is invalid
unless subsequently ratified or waived, expressly or impliedly, by the absent directors or unless
rights have been acquired by innocent third persons, as against whom the corporation must be
held estopped to set up the failure to observe formalities. Of course, should a meeting without
any notice or without a quorum take place, whether notice thereof has been given or not, all the
resolutions and acts approved in said meeting cannot be considered valid and may be questioned
by any objecting director or stockholder unless subsequently ratified expressly by the board of
directors or trustees in a duly convened meeting or impliedly by the corporation’s subsequent
course of conduct.

WAIVER OF NOTICE OF MEETING

- A director or trustee may waive the notice requirement, either expressly or impliedly.

RECUSAL OF A DIRECTOR OR TRUSTEE (Section 52)

- A director or trustee who has a potential interest in any related party transaction must recuse
from voting on the approval of the related party transaction without prejudice to compliance with
the requirements of Section 31.

PRESIDING OFFICER
PRESIDING OFFICER AT MEETINGS (Section 53)
A. PERSON DESIGNATED IN THE BY– LAWS
- The person designated in the by-laws shall preside in the meetings of directors or trustees and
of the stockholders or members.

B. CHAIRMAN OR PRESIDENT
- The chairman shall preside at all meetings of directors or trustees and of the stockholders or
members, and in his absence, the president shall preside.

C. STOCKHOLDER OR MEMBER IN A TEMPORARY CAPACITY

- Where the officer entitled to preside is not present at the time for a meeting to convene, it has
been recognized that a stockholder or member who takes the floor may temporarily preside at the
meeting of stockholders or members pending the selection of the presiding officer. Unless the
contrary is provided by the by-laws, the presiding officer may be selected by viva voce vote of
the stockholders or members present.
D. STOCKHOLDER OR MEMBER CHOSEN
- Where for any cause no person is authorized to call a meeting, the petitioning stockholder or
member authorized by the SEC to call a meeting of the corporation “shall preside thereat until at
least a majority of the stockholders or members present have chosen one of their number as
presiding officer (Section 49).”