Opinion No. 15-02 Re: Conduct of Stockholders' Meeting in Metro Manila

SEC Building,EDSA.Greenhills,Mandaluyong City Securities and Exchange Commission Republic of the Philippines Department of Finance

Office of the General Counsel

2 July 2015

Meeting in Metro Manila Re:ConductofStockholders SEC-OGC Opinion No.15-02

POBLADOR BAUTISTA &REYES LAWOFFICES 5th Floor SEDCCO 1 Building Legaspi Village,Makati City 1229 120 Rada corner Legaspi Streets

Attention: Atty.Marie Cecile Roque-Quintos & Atty.Krizelle Marie P.Poblacion

Mesdames:

Corporation EEI,a public corporation,requesting for confirmation of your position that EEI can continue to hold its annual stockholders' meetings in Makati City, even if its principal office address, as reflected in its Amended Articles of Incorporationis located in Quezon City. In support thereof,you presented the following justifications: This is in relation to your letter dated 4 May 2015 on behalf of your client EEI

2.Based on the deliberations of the Batasang Pambansa, the intent of the first 1. Pursuant to Section 51 of the Corporation Code, as long as the corporation's 4. The holding of the annual stockholders' meeting in Makati City would be 3 The amendment of EEI's Articles of Incorporation to reflect its address in office is located in Metro Manila, the corporation should be able to hold its stockholders' meeting anywhere in the component cities or municipalities of Metro Manila upon compliance with the notice requirements provided under the law. two 2 paragraphs of Section 51 is to give flexibility to a corporation in the to SEC Memorandum Circular No.3,Series of 2006,should not bar EEI from holding the annual stockholders' meeting in Makati City. The purpose of said Circulars is to ensure proper service of processes and other communications to corporations Moreover, the Memorandum Circular,being mere administrative issuance, cannot amend the Corporation Code,which is a statute. more convenient for the stockholders, and there is no adequate space and facility in EEl's Quezon City office to accommodate all the stockholders. conduct of its stockholders' meetings. compliance with SEC Memorandum Circular No.6,Series of 2014, in relation

Corporation Codewhich provides The venue for the conduct of stockholders' meetings is governed by Section 51 of the

Stockholder's or member's meetings,whether regular or special,shall be held in the ciry or municipality where the principal office of the corporation is located,and if Section 51.Place and time of meetings of stockholders of members.

Re: Conduct of Stockholders' Meeting in SEC-OGC Opinion No.15-02 Metro Manila

Page 2 of 4 practicable in the principal office of the corporationProvided, That Metro Manila shall, for purposes of this section, be considered a city or municipality

therein. x x x (emphasis supplied) Notice of meetings shall be in writing, and the time and place thereof stated

municipality where the principal office of the corporation is located pursuant to the above stockholders' meetings of the corporation outside the municipality or city of its principal quoted provision. Thus, the corporate by-laws cannot provide a venue for the conduct of office. As a general rule, stockholders' meetings ought to be conducted in the city or

paragraph of Section 51, a corporation, whose principal office is located in one of the in another component city or municipality of Metro Manila, provided that notice of the time component cities or municipalities of Metro Manila,may conduct its stockholders' meetings date and particular place of the meeting is timely furnished all the stockholders. In the same Opinion, the Commission pointed out that the Legislative intent in Section 51 is to give the corporation some flexibility with respect to the conduct of its stockholders' meetings, citing the following excerpt from the deliberations on the Corporation Code by the members of the Batasang Pambansa: However, the Commission earlier opined that consistent with the proviso of the first

situs of the main office is different from the principal place of business that some flexibility may be desirable because there are instances, in fact, where because of the nature of the business of a corporation, the locality shall we say, the MR.MENDOZA.x x x The reason,howeverbehind this is that it is felt

MR.LEGASPIYES

at the particular place to give the stockholders an opportunity to see the operations of the business of the corporation, so, that is the purposc of this provision.(emphasis supplied) MR.MENDOZA.And sometimes it becomes desirable to hold the meeting

officers are therefore bound by and must comply with them. Section 51 applies only if the corporate by-laws are silent as to the venue of stockholders meetings. Where the by-laws expressly provide for a specific place of stockholders meetings corporation as have the provisions of its charter insofar as the corporation and the persons become part of the fundamental law of the corporation.The corporation,its directors and the provisions of the by-laws shall prevail. It is well-settled that the by-laws are the private laws of the corporation and as such have substantially the same force and effect as laws of the within it are concerned. They are in effect written into the charter and in this sense they In a later opinion,the Commission clarified that the proviso of the first paragraph of

Deliberations held on 4 December 1979. SEC Opinion dated 23 February 1999 addressed to Benguet Corporation SEC Opinion dated 7 April 1998,addressed to Mr.Ariel G.Palacios SEC Opinion dated 26 May 1982,addressed to AttyJesulito A.Manalo.

Re: Conduct of Stockholders' Meeting in SEC-OGC Opinion No.15-02 Metro Manila

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the corporation's principal office provided the following concur, consistent with Section 5l of the Corporation Code: In summary, stockholders meetings may be held outside the city or municipality of

2.The venue of the stockholders' meeting is in any city or municipality of Metro 3. The notice of the time, date and particular place of the meeting is timely 1.The principal office of the corporation is located in Metro Manila 4. The corporate by-laws is silent on the place of stockholders meetings or does Manila; not designate a specific venue. furnished all the stockholders; and

above requisites are satisfied.The principal office of EEI is located in Quezon Citya city of Metro Manila. Per your representation the intended venue of the meeting is in Makati, which is also a city of Metro Manila. You likewise manifested that the required notices and accordance with the rules and regulations governing public corporations. Lastly, the By-Laws of EEI do not appear to specify a place as venue for its stockholders' meeting. As you mentioned in your letter,Article II,Section l of EEI's By-Laws provides information statements will be sent to both EEI's stockholders and this Commission in With regard to EEl's circumstances represented in your letter, it appears that the

Section 1-Annual Meeting

of any business of the corporation shall be held in any place in Metro Manila that the Board of Directors shall designate x x x (emphasis supplied The Annual Meeting of the Stockholders for the election of directors and transaction

Makati is not contrary to Section 51 of the Corporation Code. In view thereof, we confirm that EEI's plan to hold its stockholders' meeting in

principal office,the purpose of which was explained previously by the Commission Circular No.3, series of 2006 are not applicable to the instant case. The said Memorandum Circulars pertain to the requirement of indicating the complete address of a corporation's Lastly, SEC Memorandum Circular No.6, Series of 2014 and SEC Memorandum

of the addressee's receipt of any and all communications, as well as the proper agencies, as well as the public, rely on the Commission to provide accurate and up- Memorandum Circular was issued by the Commission. addressed to the specific place where the principal office of the corporation is to be found so that these can be suitably received by the parties. Furthermore, facilitation service of court and any other processes, are sought. In addition,other government to-date information regarding corporations registered with it. It is in this light that the Show cause letters and the like issucd by the Commission have to be

the facts and circumstances disclosed and relevant solely to the particular issue raised therein It shall be understood, however, that the foregoing opinion is rendered based solely on

SEC-OGC Opinion No. 14-23,dated 26 August 2014adressed to A&M Realty and Development Corporation.

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inquiry and investigation, it will be disclosed that the facts relied upon are different, this and shall not be used in the nature of a standing rule binding upon the Commission in other cases or upon the courts whether of similar or dissimilar circumstances. If, upon further opinion shall be rendered void.

Please be guided accordingly

Very truly yours,

E impb SAMOS.CORREA General Counsel

SEC Memorandum Cricular No.15,Seres of 2003.