Opinion No. 24-11Re: Annual Meeting via Remote Communication and Voting in Absentia

Exchange Commission Securities and iPPIE

BAGONG PILIPINAS

OFFICE OF tHE GENERAL COUNSEL

26_ April 2024 SEC OGC Opinion No.4-t+ Re: Annual Meeting via Remote Communication and Voting in Absentia

Bonifacio Global City, Taguig gm@pacificplazatowers.com Pacific Plaza Towers Condominium Corporation MR. ENRIQUE M. AGUS General Manager 4th Avenue, West Crescent Park,

Sir:

connection with the conduct of membership meetings via remote communication and allowing voting in tation and application of Sections 10 and 12 in relation to Section 16 of SEC Memorandum Circular No. 6, Series of 20202 ("SEC MC No. 6, s. 2020"), particularly on the requirement of amendment of By-Laws in absentia. This refers to your letter sent through e-mail, requesting the Commission's opinion on the interpre-

Act of the Philippines. For its 2020 Annual General Membership Meeting ("2020 AGMM"), which was during the time of Covid-19 pandemic, PPTCC intended to conduct the meeting through remote communication, and to allow its members to vote in absentia. However, the amended By-Laws of PPTCC3 does not provide for the conduct of membership meetings via remote communication and does not allow voting in absentia, a non-stock, non-profit corporation formed pursuant to Republic Act (RA) No. 4726 or the Condominium to wit: In your letter, you mentioned that Pacific Plaza Towers Condominium Corporation ("PPTCC") is

quorum. The vote of the members representing a majority of the votes in a meeting at which there is a ative vote of a greater proportion. rights in the Corporation and who are not delinquent in their dues and assessments shall constitute a quorum shall be sufficient to approve any matter in the meeting of transact the business of the Corpora tion, except in matters or cases in which the Corporation Code or Condominium Act requires the affirm "Section 2.6. Quorum -- The presence of members representing a majority of the total number of voting XXX

bers to participate in membership meetings via remote communication and to vote in absentia. You also noted Section 16 thereof which provides a transitory provision. In relation thereto, you discussed Sections 10 and 12 of SEC MC No. 6, s. of 2020, which allow mem-

ter and without having to amend its by-laws, provided that the approval of at least majority of the board of directors is obtained; and 2) whether PPTCC, under Section 16, can only conduct a membership meeting via remote communication and allow voting in absentia for the sole purpose of approving the amendiment to its By-Laws to allow remote communication and voting in absentia. remote communication and allow voting in absentia notwithstanding the silence of its By-Laws on the mat. Given the foregoing, you seek opinion on: 1) whether PPTCC can conduct its annual meeting via

1 Letter dated 9 October 2020 z SEC MC No. 6, s. of 2020 or Guidelines on the Attendance and Participation of Directors, Trustees, Stockholders, Members, and Other Persons of Corporations in Regular and Special Meetings through Teleconferencing, Video Conferencing and other Remote or Electronic Means of Communication. 3 Amended By-Laws of PPTCC dated 29 July 2011.

Page 2 of 4

Code (RCC) on attendance and voting in meetings via remote communication. As regards your first query, it is worthy to note the pertinent provisions of the Revised Corporation

Section 49 of the RCC provides:

Section 49. Regular and Special Meeting of Stockholders or Members. -- Xxx

ing into account the company's scale, number of shareholders or members, structure, and other factors con- authorized in the bylaws, through remote communication or in absentia. The Commission shall issue the sistent with the protection and promotion ofshareholders' or member's meetings." Xxx rules and regulations governing participation and voting through remote communication or in absentia, tak- The right to vote of stockholders or members may be exercised in person, through a proxy, or when so

Meanwhile, Section 57 of the RCC on the manner of voting provides:

Section 57. Manner of Voting; Proxies.-- Stockholders and members may vote in person or by proxy in all meetings of stockholders or members

When so authorized in the bylaws or by a majority of the board of directors, the stockholders or members of corporations may also vote through remote commumication or in absentia: Provided, That the votes are received before the corporation finishes the tally of votes.

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

The corporation shall establish the appropriate requirements and procedures for voting through shareholders or members, structure and other factors consistent with the basic right of corporate suffrage. remote communication and in absentia, taking into account the company's scale, number of x x x" {Emphasis supplied)

More specifically for election of directors or trustees, Section 23 provides:

"SECTION 23. Election of Directors or Trustees.

absentia: Provided, That the right to vote through such modes may be exercised in corporations vested with public board of directors, the stockholders or members may also vote through remote communication or in interest, notwithstanding the absence of a provision in the bylaws of such corporations. "x x x...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

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

Moreover, Section 88 on the right to vote of members states:

"Section 88. Right to Vote. - "x x x...Unless otherwise provided in the articles of incorporation or the bylaws, a member may vote by proxy, in accordance with the provisions of this Code. The bylaws may likewise authorize voting through remote communication and/or in absentia." (Emphasis supplied)

16 of which provide: To implement the foregoing, the Commission issued SEC MC No. 6, s. of 2020, Sections 10, 12 and XXX

who cannot physically attend at stockholders' or members' meetings may participate in such meetings "Section 10. Participation in Stockholders' or Members" Meetings Through Remote Communica- through remote communications or other alternative modes of communication. tion. When so provided in the bylaws or by majority of the board of directors, stockholders or members

cation. 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. [Rcc-49, last par.] Section 12. Voting in the Election of Directors, Trustees and Officer Through Remote Communi-

] The SEC Headquarters,7907 Makati Avenue INVESTORS M Fc

(+63 2) 5322 7696 www,sec.gov.ph | imessagemo@sec.gov.ph Salcedo Village, Bel-air, Makati City IN PEOPLE Wa invest in peopie T Ov hetn an H Sa 9001-20 O

Page 3 of 4

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

the limited purpose of approving the provisions in their bylaws or internal procedures which will govern participation in board meetings and stockholders' and members' meetings by means of remote commu- "Section 16. Transitory Provision. - In order to immediately operationalize these guidelines, corpora tions, upon approval of this circular, may already conduct their board meetings and stockholders' and members' meetings through remote communication or other alternative modes of communication for nication or other alternative modes of communication.

XXX

should be noted that, in this case, voting through remote communication is oniy applicable for the corporations are highly encouraged to amend their By-Laws, if attendance and voting via remote commu 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.: via remote communication or in absentia, the same can be done without limitations. On the other hand, issued by the majority of the board of trustees of PPTCC authorizing such mode of voting. 4 However, it particular meeting stated in the said resolution, as clarified by Section 12 of the Circular.5 Hence, nication is not yet specifically provided therein, to allow corporations to be more adaptive to technological when the By-Laws of the corporation does not have a provision which allows voting through remote com- munication, the members may still validly vote through remote communication on the basis of a resolution Based on the foregoing, when the By-Laws expressly provides or allows meeting and/ or voting

tained through a Resolution, which shall only be applicable for the purpose of conducting such meeting. voting in absentia notwithstanding the silence of the PPTCC By-Laws on the matter, and without having to amend the By-Laws, provided that the approval of at least a majority of the board of directors is ob- Thus, we confirm that PPTCC can conduct its annual meeting via remote communication and allow

SEC MC No. 6, s. of 2020. As such, you argue that directors of corporations whose By-Laws does not provide for a provision for remote communication and voting in absentia, may now do so 1) for purposes of amen- meetings via remote communication. You posit that said provision should not be construed to mean thrat directors/trustees and/or stockholders/members can only conduct meetings via remote communication ding their By-Laws, or 2) for purposes of formulating internal procedures to serve as guideline in holding for purposes of amending the By-Laws. As to your second query, you believe that the purpose of Section 16 is to immediately operationalize

the tackling of other agenda in meetings conducted during normal times. To be sure Section 16 is merely a Transitory Provision and does not in any way prohibit or restrict

tion could already be institutionalized and regularly practiced during the pandemic and beyond. found it necessary to provide an immediate recourse for corporations to conduct meetings for purposes of amending their By-Laws and adopting their internal procedures so that meetings via remote communica- its height and conduct of face-face meetings were prohibited. Given such restrictions, the Commission It must be noted that when SEC MC No. 6, s. of 2020 was formulated, the Covid 19 pandemic was at

following the existing procedure/ manner in their By-Laws. tion should have already adopted internal guidelines for remote communications or should have already amended their By-Laws for remote communication. Otherwise, they must do such amendment or adoption However, with the pandemic over, corporations desiring to adopt meetings via remote communica-

4 SEC Opinion No. 09-21 addressed to Ms. Rosalyn A. Enriquez of Cyher One Condomi K nium Corp., dated June 22, 2021

M The SEC Headquarters, 7907 Makati Avenue 6bid. 5 Ibid. Salcedo Village, Bel-air, Makati City IN PEOPLE INVESTORS IS0 001-201 Ae H C

S (+63 2) 5322 7696 tur thlanc a r www.sec.gov.ph { imessagemo@sec.gov.ph We ifnveat in peaple W..

Page 4 of 4

circumstances and documents disclosed/submitted, and should be considered relevant solely to the par- It shall be understood that the foregoing opinion is rendered solely on the basis of the facts,

ticular issue raised therein. It shall not be used in the nature of a standing rule binding upon the Commis- sion in other cases or upon the courts whether of similar or dissimilar circumstances.7 lf upon investigation, it will be disclosed that the facts relied upon are different, this opinion shall be rendered null and void.

Please be guided accordingly

Respectfully yours.

omwamnm ROMUALD C. PADILLA General Coy nsel

7 Paragraph 7, SEC Memorandum Circular No. 15, Series of 2003.

www.sec.gov.ph [ imessagemo@sec.gov.ph (+63 2) 5322 7696 The SEC Headquarters, 7907 Makati Avenue Salcedo Village, Bet-air, Makati City IN PEQPLE INVESTORS Wa invest in perpie TOvRhettand ERt HA Mandagement iS 901- 201# T B A