The Securities and Exchange Commission (SEC) has urged companies to encourage greater stakeholder involvement in their governance by allowing shareholders or members to participate in meetings even if these are done online.
The SEC said that it allowed participation in corporate meetings through remote communication or in absentia but this was not an interim measure meant to take effect only during the pandemic. Moving forward, corporations may continue holding meetings through remote communication or other alternative modes, as provided under the Revised Corporation Code.
“The provisions of the Revised Corporation Code for the virtual participation of shareholders or members, directors or trustees, and officers in meetings allow for greater stakeholder involvement in corporate governance,” SEC Chairman Emilio B. Aquino said.
“Stronger stakeholder engagement brings in more insights that could translate to well-grounded decisions and innovations, and promotes transparency and accountability in the decision-making. All these will ultimately redound to the benefit of the corporation.”
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 bylaws or by board resolution.
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.
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 bylaws.
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.
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 bylaws.
Corporations shall issue their own internal procedures embodying the mechanisms for participation in meetings and voting through remote communication or in absentia.