SEC releases guidelines on electronic meetings amid lockdown

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The Securities and Exchange Commission (SEC) has approved the guidelines allowing participation in corporate meetings through teleconferencing, video conferencing and other remote or electronic means of communications amid the Covid-19 lockdown.

SEC chairman Emilio Aquino

The Guidelines, issued through SEC Memorandum Circular No. 6, Series of 2020 on March 12, immediately took effect upon approval by the Commission En Banc.

In the face of threats posed by Covid-19, the SEC will allow corporations to conduct meetings through remote communication or other alternative modes only for the purpose of approving the provisions in their by-laws or internal procedures, which will govern participation in board meetings and stockholders’ and members’ meetings through remote communication or other alternative modes.

“Aside from allowing directors, trustees, stockholders or members to participate in meetings through remote communication to minimize face-to-face interactions, the Commission encourages corporations to explore and implement all necessary measures to prevent the further spread of Covid-19,” SEC chairperson Emilio B. Aquino said.

Under the guidelines, the corporate secretary may send notice of meetings to directors or trustees through email, messaging services or such other manner provided in the corporation’s by-laws or by board resolution.

The notice shall include, among others, all pertinent materials for discussion which shall be numbered and marked in such a manner that the director or trustee can easily follow and participate in the meeting.

The company shall develop the internal procedures for the conduct of board meetings through remote communication or other alternative modes to address administrative, technical, and logistical issues.

Directors or trustees who intend to participate in a meeting through remote communication shall notify in advance the presiding officer and corporate secretary. The directors or trustees shall be deemed present for the purpose of attaining quorum.

During the roll call, they shall state their location, specify the device they are using and confirm that they can clearly hear and/or see the other attendees, among others. In deciding any item or matter in the agenda, the directors or trustees may cast their votes through email, message services or such other manner allowed in the internal procedures.

The corporate secretary shall ensure, among others, that the directors or trustees can communicate with and understand each other during the meeting, that the visual and audio recordings of the meeting are secured, and that attendees will sign the minutes of the meeting, whenever practicable, within a reasonable time after the meeting.

In stockholders’ or members’ meetings, the written notice of meetings may likewise be sent to stockholders or members through email or such other similar manner as may be provided in the corporation’s by-laws.

The notice shall include the requirements and procedures to be followed when stockholders or members are allowed to participate by remote communication or in absentia, and the manner of casting of votes and the period during which votes by remote communication or in absentia will be accepted.

Notwithstanding the provision for participation through remote communication, the presiding officer shall call and preside the stockholders’ or members’ meetings, whether regular or special, at the principal office of the corporation, or in the city or municipality where the principal office is located.

Stockholders or members shall notify in advance the presiding officer or corporate secretary of their intention to participate through remote communication. Stockholders or members who participate through remote communication or in absentia shall be deemed present for purposes of attaining quorum.

In the election of directors, trustees and officers, stockholders or members may exercise their right to vote in person, through a proxy or, when so authorized in the corporation’s 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. The resolution, however, shall only be applicable for a particular meeting.

In corporations vested with public interest, stockholders or members may vote through remote communication or in absentia in the election of directors, trustees and officers notwithstanding the absence of a provision in the corporation’s by-laws.

Corporations shall issue their own internal procedures procedures embodying the mechanisms for participation in meetings and voting through remote communication or in absentia.

The internal procedures may take into account the number of shareholders or members and their location, the 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 shareholders’ or members’ rights.

The internal procedures shall provide, among others, mechanisms to verify the identity of stockholders or members and who among them have the right to vote during the meeting, and to enable stockholders or members to vote during the meeting and ensure that the integrity and secrecy of the votes are protected.

Corporations shall also adopt 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.

In addition, the internal guidelines shall include procedures for documenting the meeting and any process or motion which may be done afterwards, and a mechanism to make the record of the meeting, either in video or audio format, available to stockholders or members.

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