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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.
AT A GLANCE:
Directors shall be elected for a term of one (1) year from among the holders of stocks registered in the corporation’s book. The general rule is that, there must be an annual election of directors on the date fixed in the by-laws. However, in case of failure of the corporation to hold an election due to some valid and justifiable reasons, the incumbent members of the board may holdover their office until their successors are duly elected and qualified.
(Section 22, Revised Corporation Code, SEC Opinion dated May 18, 1993)
The law says –
Section 23. Election of Directors or Trustees. – Except when the exclusive right is reserved for holders of founders’ shares under Section 7 of this Code, each stockholder or member shall have the right to nominate any director or trustee who possesses all of the qualifications and none of the disqualifications and none of the disqualifications set forth in this Code.
At all elections of directors or trustees, there must be present, either in person or through a representative authorized to act by written proxy, the owners of majority of the outstanding capital stock, or if there be no capital stock, a majority of the members entitled to vote. When so authorized in the bylaws or by a majority of the board of directors, the stockholders or members may also vote through remote communication or in absentia: Provided, That the right to vote through such modes may be exercised in corporations vested with public interest, notwithstanding the absence of a provision in the bylaws of such corporations.
A stockholder or member who participates through remote communication or in absentia, shall be deemed present for purposes of quorum.
The election must be by ballot if requested by any voting stockholder or member.
In stock corporations, stockholders entitled to vote shall have the right to vote the number of shares of stock standing in their own names in the stock books of the corporation at the time fixed in the bylaws or where the bylaws are silent at the time of the election. The said stockholder may: (a) vote such number of shares for as many persons as there are directors to be elected; (b) cumulate said shares and give one (1) candidate as many votes as the number of directors to be elected multiplied by the number of shares owned; or (c) distribute them on the same principle among as many candidates as may be seen fit: Provided, That the total number of votes cast shall not exceed the number of shares owned by the stockholders as shown in the books of the corporation multiplied by the whole number of directors to be elected: Provided, however, That no delinquent stock shall be voted. Unless otherwise provided in the articles of incorporation or in the bylaws, members of nonstock corporations may cast as many votes as there are trustees to be elected by may not cast more than one (1) vote for one (1) candidate. Nominees for directors or trustees receiving the highest number of votes shall be declared elected.
If no election is held, or the owners of majority of the outstanding capital stock or majority of the members entitled to vote are not present in person, by proxy, or through remote communication or not voting in absentia at the meeting, such meeting may be adjourned and the corporation shall proceed in accordance with Section 25 of this Code.
The directors or trustees elected shall perform their duties as prescribed by law, rules of good corporate governance, and bylaws of the corporation.
Section 25. Report of Election of Directors, Trustees and Officers, Non-holding of Election and Cessation from Office. – Within thirty (30) days after the election of the directors, trustees and officers of the corporation, the secretary, or any other officer of the corporation, the secretary, or any other officer of the corporation, shall submit to the Commission, the names, nationalities, shareholdings, and residence addresses of the directors, trustees and officers elected.
The non-holding of elections and the reasons therefor shall be reported to the Commission within thirty (30) days from the date of the scheduled election. The report shall specify a new date for the election, which shall not be later than sixty (60) days from the scheduled date.
If no new date has been designated, or if the rescheduled election is likewise not held, the Commission may, upon the application of a stockholder, member, director or trustee, and after verification of the unjustifiable non-holding of the election, summarily order that an election be held. The Commission shall have the power to issue such orders as may be appropriate, including other directing the issuance of a notice stating the time and place of the election, designated presiding officer, and the record date or dates for the determination of stockholders or members entitled to vote.
Notwithstanding any provision of the articles of incorporation or by laws to the contrary, the shares of stock or membership represented at such meeting and entitled to vote shall constitute a quorum for purposes of conducting an election under this section.
Should a director, trustee or officer die, resign or in any manner case to hold office, the secretary or the director, trustee or officer of the corporation, shall, within seven (7) days form knowledge thereof, report in writing such fact to the Commission.
(Revised Corporation Code)
Jurisprudence says –
Section 5.2 of Republic Act No. 8799 (R.A. No. 8799) effectively transferred to the appropriate RTCs jurisdiction over all cases enumerated under Section 5 of Presidential Decree No. 902-A (P.D. No. 902-A), to wit:
a) Devices or schemes employed by or any acts, of the board of directors, business associates, its officers or partnership, amounting to fraud and misrepresentation which may be detrimental to the interest of the public and/or of the stockholder, partners, members of associations or organizations registered with the Commission;
b) Controversies arising out of intra-corporate or partnership relations, between and among stockholders, members, or associates; between any or all of them and the corporation, partnership or association of which they are stockholders, members or associates, respectively; and between such corporation, partnership or association and the state insofar as it concerns their individual franchise or right to exist as such entity; and
c) Controversies in the election or appointments of directors, trustees, officers or managers of such corporations, partnerships or associations.
MARY E. LIM VS. MOLDEX LAND, INC. et. al., G.R. No. 206038. January 25, 2017
Read also: How does the board exercise its grant of corporate powers?
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