MAY A SHAREHOLDER PUT AN ITEM ON THE AGENDA FOR STOCKHOLDERS’ MEETINGS?

Attending online meetings as a shareholder? Read here: BOARD MEETINGS THROUGH TELECONFERENCING AND OTHER REMOTE OR ELECTRONIC MEANS OF COMMUNICATION

• Stockholders’ meetings are either regular or special

• A Shareholder may put an item on the agenda for stockholders’ meetings

• Any officer of the corporation may not unjustly refuse to allow a shareholder to exercise his or her right to put items on the agenda

Memorandum Circular No. 14 (MC No. 14) of the Securities and Exchange Commission (SEC), Series of 2020 talks about the shareholder’s right to put an item on the agenda for regular or special stockholder’s meetings.

Accordingly, to promote good corporate governance and the protection of minority investors, the Securities and Exchange Commission, pursuant to its regulatory powers under the Revised Corporation Code of the Philippines (RCC), resolved to issue the following rules:

1. Shareholders, who, alone or together with other shareholders, hold at least five percent (5%) of the outstanding capital stock of a publicly-listed company (PLC) shall have the right to include items on the agenda prior to the regular or special stockholder’s meeting.
2. All items added on the agenda by qualified shareholder(s) pursuant to the above-mentioned Memorandum Circular after the Definitive Information Sheet (DIS) has been filed the Commission shall be filed under “Other Matters.” In this regard, the reporting PLC shall no longer be required to amend its DIS.
3. Any officer or agent of the corporation who shall unjustly refuse to allow a shareholder or group of shareholders, duly qualified and holding the required percentage of outstanding shares of the corporation, to exercise his or her right to put items on the agenda shall be liable under Section 158 of the RCC.

If the refusal is made pursuant to a resolution or order of the board of directors, the liability under Section 158 shall be imposed upon the directors who have voted for such refusal. However, it shall be a defense to any action under the afore-mentioned Memorandum Circular that the shareholder exercising said right was not acting in good faith or for a legitimate purpose.

What if any of the above-mentioned rules, after due notice and hearing, was found to have been violated?

SEC MC No. 14 says that:

If, after due notice and hearing, the Securities and Exchange Commission finds that any of the above-mentioned rules has been abused or violated, the SEC may impose any or all of the sanctions provided under Section 158 of the RCC.

What does Section 158 of the RCC say?

Section 158 of the RCC says:

“SEC. 158. Administrative Sanctions. – If, after due notice and hearing, the Commission finds that any provision of this Code, rules or regulations, or any of the Commission’s orders has been violated, the Commission may impose any or all of the following sanctions, taking into consideration the extent of participation, nature, effects, frequency and seriousness of the violation:

1. Imposition of a fine ranging from Five thousand pesos (P5,000.00) to Two million pesos (P2,000,000.00), and not more than One thousand pesos (P1,000.00) for each day of continuing violation but in no case to exceed Two million pesos (P2,000,000.00);
2. Issuance of a permanent cease and desist order;
3. Suspension or revocation of the certificate of incorporation; and
4. Dissolution of the corporation and forfeiture of its assets under the conditions in Title XIV of this Code”

 

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Alburo Alburo and Associates Law Offices specializes in business law and labor law consulting. For inquiries, you may reach us at info@alburolaw.com, or dial us at (02)7745-4391/0917-5772207.

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