BOARD MEETINGS THROUGH TELECONFERENCING AND OTHER REMOTE OR ELECTRONIC MEANS OF COMMUNICATION

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Published — June 1, 2022

The following post does not create a lawyer-client relationship between Alburo Alburo and Associates Law Offices (or any of its lawyers) and the reader. It is still best for you to engage the services of your own lawyer to address your legal concerns, if any.

Also, the matters contained in the following were written in accordance with the law, rules, and jurisprudence prevailing at the time of writing and posting, and do not include any future developments on the subject matter under discussion.

• Directors who cannot physically attend or vote at board meetings can participate and vote through remote communication.

• Remote Communication means the transfer of data between two or more devices not located at the same site.

• For the convenience of their stockholders and members, corporations shall issue their own internal procedures embodying the mechanisms for participation in meetings and voting through remote communication or in absentia.

In case the Directors or trustees cannot physically attend or vote at board meetings will he or she still be able to participate and vote through other means? Yes! Despite the Director’s or trustee’s physical absence, he or she may still be allowed to participate in a meeting or voting through the use of remote communication.

Revised Corporation Code provides that:

Directors or trustees who cannot physically attend or vote at board meetings can participate and vote through remote communication such as videoconferencing, teleconferencing, or other alternative modes of communication that allow them reasonable opportunities to participate. Directors or trustees cannot attend or vote by proxy at board meetings.

SEC memorandum Circular No.6 Series of 2020 further defines the following:

1. Remote Communication means the transfer of data between two or more devices not located at the same site.
2. Teleconferencing is the holding of a conference among people remote from one another by means of telecommunication devices such as telephone or computer terminals. It refers to an interactive group communication (three or more people in two or more locations) through an electronic medium. In general terms, teleconferencing can bring people together under one roof even though they are separated by hundred miles.
3. Videoconferencing is defined as the holding of a conference among people in remote locations by means of transmitted audio and video signals.

• Participation in Stockholders’ or Members’ Meetings Through Remote Communication.

Directors or trustees who cannot physically attend or vote at board meetings can participate and vote through remote communication such as videoconferencing, teleconferencing, or other alternative modes of communication that allow them reasonable opportunities to participate.

However, directors or trustees cannot attend or vote by proxy at board meetings. If a director or trustee intends to participate in a meeting through remote communication, he/she shall notify in advance the Presiding Officer and the Corporate Secretary of his/her intention. The Corporate Secretary shall note such fact in the Minutes of the meeting. Corporations may issue their own internal procedures for the conduct of board meetings through remote communication or other alternative modes of communication to address administrative, technical and logistical issues.

• Quorum in Meetings.

Unless otherwise provided in the Revised Corporation Code or in the bylaws, a quorum shall consist of the stockholders representing a majority of the outstanding capital stock or a majority of the members in the case of nonstock corporations.

A stockholder or member who participates through remote communication or in absentia shall be deemed present for purposes of quorum.

• Voting in the Election of Directors, Trustees and Officer Through Remote Communication.

The right to vote of stockholders or members may be exercised in person, through a proxy, or when so authorized in the bylaws, through remote communication or in absentia.

The right to vote of stockholders or members may be exercised also through remote communication or in absentia when authorized by a resolution of the majority of the board of directors; Provided, That the resolution shall only be applicable for a particular meeting.

In the election of directors, trustees and officers of corporations vested with public interest, stockholders and members may vote through remote communication or in absentia, notwithstanding the absence of a provision in the bylaws of such corporations.

• Internal Procedures

For the convenience of their stockholders and members, corporations shall issue their own internal procedures embodying the mechanisms for participation in meetings and voting through remote communication or in absentia.

The internal procedures may take into account the corporation’s number of stockholders or and members, location of stockholders or members, importance of the matters to be discussed and voted upon in the meeting, promotion of minority rights and other factors consistent with the protection and promotion of stockholders’ or member’s rights.

The internal procedures may provide for the following:

1. Mechanism to verify the identity of the stockholders or members and who among them have the right to vote during the meeting;
2. Measures to ensure that all stockholders or members have the opportunity to participate in the meeting including an opportunity to read or hear the discussion substantially;
3. Mechanism to enable stockholders or members to vote during the meeting including ensuring that the integrity and secrecy of the votes are protected;
4. Procedures for documenting the meeting and any process/motion which may be done afterwards; and
5. Mechanism in making the record of the meeting, either video or audio recording, available to the stockholders or members.
6. Other matters to address administrative, technical and logistical issues.

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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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