Corporation Law: The Revised Corporation Code of the Philippines - Secs 48, 49 & 50

THE REVISED CORPORATION CODE  OF THE PHILIPPINES

Republic Act No. 11232 

TITLE VI - MEETINGS

Section 48. Amendment to Bylaws.

Meeting of the directors, trustees, stockholders, or members may be regular or special.

Section 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 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, 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) A description of the voting and the vote tabulation procedures used in the previous meetings;

(2) A description of the opportunity given to stockholders or members to ask questions and record of the question s 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 director or trustees, officers and stockholders or members who attended the meeting; and

(6) Such other items that the Commission may require in the interest of good corporate governance and protection of minority stockholders;

(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 wit this Code and the rules and the Commission may prescribe, 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 nonpayment 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 representation in other corporations;

(g) A director or trustee attendance report, indicating the attendance of each of the meetings of the board and its committees and in regular or special stockholder meetings;

(h) Appraisals and performance reports for the board and the criteria and procedure for assessment;

(i) A director or trustee compensation report prepared in accordance with this Code and the rules the Commission may prescribe;

(j) Director disclosures on self-dealings and related party transactions; and/or

(k) The profiles of directors nominated ir seeking election or reelection.

A director, trustee, stockholder, or member may propose any other matter for inclusion in the agenda at may 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.

A stockholder 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 bylaws shall not be allowed: Provided, further, That attendance at a meeting shall constitute a waiver of notice of 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.

Whenever for any cause, there is no person authorized or the person authorized unjustly refuses to call a meeting, the Commission, upon petition of a stockholder or member on a showing of good cause therefor, may issue an order, directing the petitioning stockholder or member to call a meeting of he corporation by giving proper notice required by this Code or the bylaws. The petitioning stockholder or member shall preside thereat until at least a majority of the stockholders or members present have chosen from among themselves, a presiding officer.

Unless the bylaws provide for a longer period, the 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 sate of the meeting.

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 remote communication or in absentia. The Commission shall issue the rules and regulations governing participation and voting through remote communication or in absentia, taking into account the company’s scale, number of stockholders or members, structure, and other factors consistent with the protection and promotion of shareholders' or members' meetings.

Section 50. Place and Time of Meetings of Stockholders or Members.

Stockholders' or members' meetings, 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: Provided, That any city of municipality in Metro Manila, Metro Cebu, Metro Davao, and other Metropolitan areas shall, for purposes of this section, be considered a city or municipality.

Notice of meetings shall be sent through the means of communication provided in the bylaws, which notice shall state the time, place and purpose of the meetings.

Each notice of meeting shall further be accompanied by the following:

(a) The agenda for the meeting;

(b) A proxy 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 if the 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.

1. Requisites.

• The following requisites must be present for the validity of a stockholders' or members' meeting:
1. it must be held on the proper date which is the date fixed in the By-Laws or in the absence of a provision therein, on the date specified in Section 50, now Section 49 of the RCCP; 
2. there must be previous notice; 
3. it must be called by the proper person; 
4. it must be held in the proper place; and
5. there must be a quorum.
• The RCCP now allows attendance, participation, and voting by stockholders or members in their meetings by remote communication or in absentia. 
• The SEC is mandated under the law to issue the rules and regulations governing participation and voting through remote communication or in absentia
• The rules and regulations by the SEC are now embodied in SEC Memorandum Circular No .. 6, Series of 2020, dated March 12, 2020.

2. Date and Notice. 

• Section 49 of the RCCP provides for the following rules on the date and the required notice for the regular and special meetings of the stockholders or members:

Regular Meeting 

• Date of Meeting
1. The date fixed in the By-Laws; or
2. If there is no date in the By-Laws — on any date after April 15 of every year as determined by the Board.
• Required Notice
1. Within the period required in the By-Laws; or
2. In the absence of provision in the By-Laws  — at least twenty-one (21) days prior to the meeting.

Special Meeting 

• Date of Meeting
1. Any time deemed necessary, or 
2. As provided in the By-Laws.
• Required Notice
1. Within the period provided in the By-Laws; or
2. If there is no provision in the By-Laws — at least one (1) week prior to the meeting

3. Date and Time.

• When the By-Laws provides for the time of holding an annual meeting, the same should be held at such regular appointed time. 
• The By-Laws may provide for fixed date for the meeting, or if not so fixed, the meeting hall be on any date after April 15 of each year as determined by the Board of Directors or Trustees. 
• The phrase "any day" of a particular month as the date of annual meeting is no longer allowed to be stated in the By-Laws. 
• General Rule: The annual meeting cannot be postponed. 
• Exception: when the annual meeting cannot be held on the appointed time for some valid reasons. 
• It is the duty of the Board of Directors (or Trustees) to determine the date and time to hold it earlier or postpone it taking into consideration the surrounding circumstances.
• If the 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. 
• 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.

• Governing Rule:
• 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.
• The last paragraph of Section 50 of the RCCP provides that all proceedings and business transacted at stockholders' or members' meetings shall be valid even if the meeting is improperly held or called, provided that:
1. the business transacted is within the powers or authority of the corporation;
2. all stockholders/members are present or duly represented at the meeting;
3. not one of the stockholders/members expressly states at the start of the meeting that the purpose of his/her attendance is to object to the transaction of any business because the meeting is not lawfully held or called.
• Written notice is mandatory and therefore essential for the validity of the stockholders' meeting.
• Accordingly, notice in writing to each of the stockholders of record cannot be dispensed with.
• In the absence of information from the stockholders concerned of the transfer of their post office address, the corporation is duty bound to send them written notices of all meetings to their last known post office address as shown in the Stock and Transfer Book of the Corporation. 
• The corporation cannot close its eyes to the fact the stockholder or member is no longer residing or holding office in the address appearing in the Stock and Transfer Book. 
• Bad faith will be ascribed if it continues sending notices to the address of record even if the corporation is already aware of the real address. 
• The SEC likewise opined that if a stockholder is unknown, all available means of identifying the stockholder and giving the latter notice should be resorted to including notice by publication. 
•  This is part of the fiduciary duty of the corporation who holds the share in trust for the unknown shareholder.

4.01. How Notice is Given. 

• Notice of meeting may be given through personal service.
• Published notice is insufficient because the law requires written notice to each stockholder. 
• Under the Corporation Code, generally, and as a default rule, written notice of the meeting sent through regular postal mail must be given to stockholders or members (also to directors or trustees) in relation to the holding of meetings.
• However, Section 49 of the RCCP now expressly allows written notice of regular meetings to be sent through electronic mail or such other manner as the SEC shall allow under its guidelines.
• The By-Laws may provide for the mode or manner of giving notice of meetings.
• As provided in Section 50 of the RCCP, notice of meetings shall be sent through the means of communication provided in the By-Laws. 

5. Waiver of Notice. 

• Section 49 provides that notice of any meeting may be waived, expressly or impliedly, by any stockholder or member. 
• Attendance at the meeting is considered a waiver of notice of such 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.
• 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. 

• Rule:
1. The person authorized to call a stockholders' or members' meeting may be fixed in the By-Laws.
2. In the absence of a provision in the By-Laws, the power to call the meeting rests with the Board of Directors or Trustees.
3. 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 stockholder or member on a showing of good cause therefor, may issue an order to the petitioning stockholder or member directing him to call a meeting of the corporation by giving proper notice required by the RCCP or the By-Laws. 
• The petitioning stockholder or member shall preside at the meeting until at least a majority of the stockholders or members present have chosen from among themselves, a presiding officer. 
• The power of the SEC is likewise provided for in Section 6(c) of Presidential Decree No. 902-A as amended.
• Note that under Section 49, the SEC may only direct the calling of the meeting if there is no person authorized to do so or in the event the person authorized in the By-Laws refuses to call for a meeting on the date fixed in the By-Laws.21 
4.  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.

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: 
1. A proxy form that is required to be submitted to the corporate secretary within a reasonable time before the meeting; 
2. In case attendance, participation, and voting are allowed by remote communication or in absentia, the requirements and procedures to be followed when a stockholder/member elects either option; and
3. When the meeting is for the election of directors/trustees, the requirements and procedure for nomination and election. 
• There are various provisions of the Revised Corporation Code that require the purpose of the meeting/s to be stated in the notice/s, because these meetings are duly called for specific purposes, including the: 
1. approval of stock dividends;
2. removal of directors;
3. filling up of vacancies in the board;
4. ratification of contract with directors;
5. extension or shortening of corporate term;
6. increase or decrease of capital stock;
7. creating and incurring of bonded indebtedness;
8. sale of all or substantially all of the assets of the corporation;
9. investment 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. 
• 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 stockholder meetings outside of the municipality or city of its principal office.
• Exceptions, meetings outside the city or municipality of its principal office is allowed if the following requirements concur: 
1. the principal office is any of the cities in Metro Manila; 
2. the venue of the actual meeting is in another city but also in Metro Manila;
3. notice of meeting was timely given; and 
4. the By-Laws is silent on the place of stockholders' meetings or does not designate a specific venue.
• The RCCP now provides in Section 50 that "any city or municipality in Metro Manila, Metro Cebu, Metro Davao, and other Metropolitan areas shall, for purposes of this section be considered a city or municipality."
• Even if a meeting is conducted in an improper place, Section 50 likewise provides that the meeting shall not be invalidated if all the shareholders/members are present or duly represented during the meeting. 

9. Stockholders and Members.

• All the stockholders and members have the right to attend the special and regular meetings of the corporation. 
• With respect to stockholders, the best evidence in determining who among the stockholders can attend the meeting is the Stock and Transfer Book. 
• Mere inclusion of a person in the General Information Sheet (GIS) submitted to the SEC is insufficient proof that the same person is a shareholder. 
• As between the GIS and the Stock and Transfer Book, the latter is controlling.
• However, the Stock and Transfer Book is not the exclusive evidence of the fact that a person is a stockholder. 
• Other evidence like the stock certificate and deed of transfer — may be presented in an appropriate proceeding to prove that the Stock and Transfer Book does not reflect the accurate list of stockholders.
• A delinquent stockholder within the purview of Section 67 of  the Revised Corporation Code cannot attend a stockholders' meeting. 
• Similarly, a member who is suspended or who is otherwise validly declared delinquent or not in good standing cannot likewise attend the meeting of the members. 
• However, the Articles of Incorporation or By-Laws of the non-stock corporation must provide that delinquent members are not entitled to attend and vote.
• For purposes of determining those who are entitled to notice and/or to vote at stockholders' or members' meetings, Section 49 provides that "the 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." 
• The By-Laws of the corporation may, however, provide for a longer period.
• For public companies and stock corporations governed by the SRC, the Implementing Rules provide that "unless, otherwise provided by the by-laws, the stock and transfer book shall be closed at least 20 days before the schedule date of the annual stockholders' meeting to enable the corporation to prepare the list of stockholders entitled to vote."

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 no right 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.
• 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.
• Neither the stockholders nor the corporation can vote or represent shares that have never passed to the ownership of stockholders; or, having so passed, have again been purchased by the corporation. 
• These shares are not to be taken into consideration in determining majorities. 
• When the law speaks of a given proportion of the stock, it must be construed to mean the shares that have passed from the corporation, and that may be voted.
• Section 70 of the RCCP expressly provides that holders of delinquent shares are not entitled to vote and to be represented at any stockholders' meeting. 
• Hence,- notice of meeting need not be given to a delinquent shareholder

10. Participation by Remote Communication/In Absentia. 

• The RCCP now recognizes attendance, participation, and voting by stockholders or members in meetings through remote communication or in absentia. 
• While the first paragraph of Section 50 of the RCCP seemingly presupposes that the attendees of stockholders'/members' meetings must be in the same place during the meeting, provisions elsewhere in the RCCP, such as in the last paragraph of Section 49 and the third paragraph of Section 50 itself, indicate otherwise. 
• Thus, participation and voting in meetings by remote communication or in absentia is now allowed when so authorized in the By-Laws and subject to the guidelines that the SEC is mandated to issue, taking into consideration the:
1. company's scale; 
2. number of stockholders/ members; 
3. corporate structure;
4. other factors relevant to the protection and promotion of stockholders' /members' meetings.
• However, the provisions of the RCCP that allow meetings by remote communication or in absentia are not self-executory as the provisions require the issuance by the SEC of implementing rules and regulations. 
• The present regulation is Memorandum Circular No. 6, Series of 2020 dated March 12, 2020.
• Read pertinent provisions of Memorandum Circular No. 6, Series of 2020 here.
• In this connection, it should also be noted that the SEC is given the power under Section 179(n) of the RCCP to "impose or recommend new modes by which a stockholder, member, director, or trustee may attend meetings or cast their votes, as technology may allow, taking into account the company's scale, number of shar hold r or members, structure, and other factors consistent with the basic right of corporate suffrage.

11. One Share-One Vote Policy.

• The Revised Corporation Code incorporates a "one share-one vote" policy. 
• This policy also appears in Memorandum Circular No. 4, Series of 2004 issued on March 17, 2004 by the SEC when the Corporation Code was still the prevailing law, which states: 
• Pursuant to Section 24 of the Corporation Code (now Section 23 of the RCCP), one share is entitled to one vote. Voting shall always be on the basis of the number of shares and not on the number of stockholders present in the stockholders' meeting. 
• Common share shall have complete voting rights and such shares cannot be deprived of such rights except as provided by law. 
• 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 to non-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.
• The officers may justify their failure to call the meeting for some valid and meritorious reasons. 
• For example, the postponement of the annual stockholders' meeting for the year 2005 was justified if "every last Thursday of October of every year" was the fixed as the date of annual meeting of the stockholders in the original By-Laws and the date was moved to "last Thursday of April of every year" by virtue of an amendment in the By-Laws that took effect on September 16, 2005. 
• The meeting can be postponed to a date later than that fixed in the By-Laws provided notice of the change of date is given to the members or stockholders. 

13. Joint Meeting.

• There is no express provision of law or ruling prohibiting the holding of a joint meeting of stockholders and directors of different corporations. 
• It is sound practice, however, to prepare separate minutes of meetings for the different corporations. 
• Hence, it cannot be said that holding of a joint meeting of stockholders and directors of different corporations is disallowed especially if there is no allegation that such joint meeting adversely affected the interests of the individual corporations and their stockholders.

14. Matters to be presented to Stockholders/Members at Regular Meetings. 

• The RCCP embodies new provisions on specific information and/or documents that the Board of Directors or Trustees of corporations shall "endeavor to present" to stockholders/ members at regular meetings. 
• The new provisions are in line with Congress' thrust to strengthen good corporate governance in order to protect stockholders and prevent abuses of the Board. 
• Thus, under Section 49, the following are required to be presented to the stockholders/members at each regular meeting: 
1. The minutes of the most recent regular meeting; 
2. A members' list (for non-stock corporations), or material data on the current stockholders (for stock corporations), and their voting rights;
3. An assessment of the corporation's performance, including information on material changes, if any, in the corporation's business, strategy, and other affairs;'
4. A financial report for the preceding year, including duly signed and certified financial statements, and statements on the adequacy of internal controls and of all external audit and non-audit fees; 
5. Dividend policy of the corporation and the fact of payment of dividends or the reasons for nonpayment;
6. Director or trustee profiles;
7. Attendance report of directors or trustees, in Board meetings, Board Committee meetings, and stockholders' meetings;
8. Board appraisal and performance reports, with the criteria and procedure for assessment;
9. Director or trustee compensation report; 
10. Director disclosures on self-dealings and related party transactions; and/or
11. The profiles of directors nominated or seeking election/ reelection. 

14.01. Minutes of Meetings. 

• Section 49 further provides for the contents of minutes of regular stockholders' /members' meetings, which shall include the following:
1. A description of the voting and vote tabulation procedures used in the previous meeting;
2. That stockholders/members were given the chance to ask questions and a record of the questions raised and answers given;
3. The matters discussed and resolutions reached;
4. A record of the voting results for each agenda item; 
5. Attendance report for the meeting - for directors/trustees, officers and stockholders/members;
6. Such other items as may be required by the SEC in the interest of good corporate governance and for the protection of minority stockholders.