Participation, Quorum And Voting Via Remote Communication And/Or In Absentia

The Securities and Exchange Commission (“SEC”) clarified in its SEC Opinion No. 21-09 that the members’ participation, quorum and voting in an annual meeting via remote communication and/or in absentia is allowed under the Revised Corporation Code (”RCC”), provided that certain requisites are met.

In the said SEC Opinion, a non-stock corporation requested for the legal requirements on the valid conduct by the Corporation of an annual meeting through remote communication considering that its by-laws do not contain any provision that recognizes and/or allows remote communication as a valid means of conducting an annual members’ meeting.

According to the SEC, several provisions in the RCC allows stockholders and members of a corporation to vote in person, through a proxy, or when authorized by the by-laws or when authorized by a majority of the board of directors, through remote communication or in absentia. Pursuant to the RCC provisions, the SEC in SEC Memorandum Circular (“MC”) No. 6, series of 2020 provided guidance in formulating their internal procedures and by-laws which will allow their directors, trustees, stockholders, members and other persons to participate and vote in absentia or through remote or electronic means of communication in regular or special meetings of the corporation.

Based on these, when the by-laws of the corporation do not have a provision which allows voting through remote communication, the members may still validly vote through remote communication on the basis of a resolution issued by the majority of the board of trustees authorizing such mode of voting as recognized and allowed under the RCC. However, it should be noted that, in this case, voting through remote communication is only applicable for the particular meeting stated in the said resolution, as clarified by Section 12 of MC No. 6, series of 2020. Hence, corporations are highly encouraged to amend their by-laws, if attendance and voting via remote communication is not yet specifically provided therein, to allow corporations to be more adaptive to technological changes, and more importantly, to ensure that the right of stockholders/members to participate in meetings and to vote on matters presented therein are recognized and protected.