NEW MEETING RULES UNDER RCC
By: Richelle Dianne R. Patawaran on April 4, 2019
The Revised Corporation Code (RCC), which took effect on Feb. 23, 2019, recently introduced significant changes to the conduct of corporate meetings and in effect imposed additional obligations on the corporate secretary in the conduct of such meetings. One such change is contained in Sec. 49 of the RCC, which mandates that regular meetings of the stockholders or members shall be held annually on a date fixed in the by-laws, or if not so fixed, on any date after April 15 of every year.
Also, under Section 49 of the RCC, written notice of regular meetings shall be sent to all stockholders or members of the corporation at least 21 days prior to the meeting, unless a different period is required in the by-laws, law or regulation. This raises the question whether the by-laws may provide for a notice period shorter than the 21-day period set out in the law, given that a 21-day notice period seems to be the minimum.
In recognition of the technological developments in our modes of communication, written notice may now be sent through email or such other manner as the Securities and Exchange Commission (SEC) shall allow under its guidelines. As of the date of this article, however, the SEC has yet to issue guidelines on the sending of written notices through email or other modes.
The RCC has prescribed that the corporate secretary should ensure that the written notice of the stockholders’ or members’ meeting is accompanied by 1) an agenda for the meeting, 2) a proxy form which shall be submitted to the corporate secretary within a reasonable time prior to the meeting, 3) the requirements and procedure to be followed, should attendance, participation and voting in the meeting be conducted by remote communication or in absentia, and 4) the requirements and procedure for nomination and election, if the meeting is for the election of directors or trustees.
In case of postponement of the stockholders’ or members’ regular meetings, the corporate secretary is also now required to send written notice thereof and the reason therefor to the stockholders or members at least two weeks prior to the date of the meeting, unless a different period is required under the by-laws, law or regulation.
Section 25 of the RCC also now provides that the non-holding of elections of directors, trustees and officer, and the reasons therefor shall be reported to the SEC within 30 days from the date of the scheduled election, and a new date not later than 60 days from the scheduled date must be specified in the report. Election of directors, trustees and officers is ordinarily conducted during the annual meeting of the stockholders or members.
What if no annual meeting and thus, no election of directors, is held on the date fixed in the by-laws? Is notice to the SEC required then? In this instance, we believe that the corporate secretary is required to send written notice to the SEC of the non-holding of elections on such date, and the reasons therefor, within 30 days therefrom.
Section 28 of the RCC also says that if there is vacancy in the office of director or trustee due to term expiration, an election shall be held no later than the day of such expiration at a meeting called for that purpose. So what happens if no election is held before expiration of the term? However, Section 22 of the RCC still states that directors and officers continue to hold office until their successors shall have been elected and qualified. Thus, it is apparent that if no election is held, the directors, trustees and officers shall continue to occupy their positions in a hold-over capacity until such time elections for their successors are held.
Pursuant to Sec. 52 of the RCC, the corporate secretary is obliged to send written notice of meetings of the directors or trustees of corporations to every director or trustee at least two days prior to the scheduled meeting, unless a longer time is provided in the by-laws. And should a director, trustee or officer dies, resigns or in any manner ceases to hold office, the corporate secretary, or a director, trustee or officer of the corporation shall, within seven days from knowledge thereof, report in writing such fact to the SEC.
The RCC has introduced several changes to the meeting and notice requirements of stockholders’ meetings. Every corporate secretary should be mindful of these changes.
From the The Manila Times website on April 4, 2019