MAP Insights

Cesar Villanueva

Disclosure of Shareholders’ Voting Results and Publication of the Minutes of Stockholders’ Meetings

written by Atty. Cesar L. Villanueva - July 13, 2021

Recommendation 13.3 of the Corporate Governance (CG) Code for Publicly-Listed-Companies (PLCs) provides that “The Board should encourage active shareholder participation by making the result of the votes taken during the most recent Annual or Special Shareholders’ Meeting publicly available the next working day. In addition, the Minutes of the Annual and Special Shareholders’ Meeting should be available on the company website within five [5] business days from the end of the meeting.”

Unlike in the field of public CG, where the law mandates that GOCCs shall set-up and maintain a website and post therein for unrestricted public access the audited financial statements, current operating budgets, complete compensation packages for board members, etc., nothing in the Revised Corporation Code of the Philippines (RCCP) mandates corporations registered with the SEC to set-up and maintain company websites. It is under the aegis of the Securities Regulation Code and the PSE rules that require PLCs to put up company websites wherein they comply with their obligations of full disclosure.

Section 49 of the RCCP seeks to “approximate” the CG best-practices under Recommendation 13.3 by mandating that “At each regular meeting of the stockholders or members, the board of directors or trustees shall endeavor to present to the stockholders or members” the “minutes of the most recent regular meeting which shall include among others:”

“(1) A description of the voting and vote tabulation procedures used in the previous meeting;
“(2) A description of the opportunity given to stock-holders or members to ask questions and a record of the questions asked and answers given;
“(3) The matters discussed and resolutions reached;
“(4) A record of the voting results for each agenda item;
“(5) A list of the directors or trustees, officers and stock-holders or members who attended the meeting; and
“(6) Such other items that the [SEC] may require in the interest of good corporate governance and the protection of minority stockholders;”

It should be pointed out that the “endeavor clause” on the obligation of the Board of Directors to disclose and make available the foregoing items or to comply with periods provided under Recommendation 13.3 may be transformed into mandatory undertakings by the SEC simply by adopting appropriate rules relating to such matters and invoking its power to imposed administrative sanctions under Section 158 of the RCCP.

Alternative Dispute Resolution for Intra-Corporate Disputes

Recommendation 13.4 provides that “The Board should make available, at the option of a shareholder, an alternative dispute mechanism to resolve intra-corporate disputes in an amicable and effective manner. This should be included in the company’s Manual on Corporate Governance.”

The Explanation to Recommendation 13.4 provides that it is important for the shareholders to be well-informed of the company’s processes and procedures when seeking to redress the violation of their rights; that putting in place proper safeguards ensures suitable remedies for the infringement of shareholders’ rights and prevents excessive litigation.
Section 181 of the RCCP mandates that an arbitration agreement may be provided for in the articles of incorporation or bylaws of a corporation, and that when such arbitration agreement is in place, then the following rules and procedures shall apply, thus:

(a) On Whom Binding: The arbitration agreement shall be binding on the corporation, its directors, trustees, officers, and executives or managers;
(b) Arbitrable Issues: Disputes between the corporation, its shareholders or members, which arise from the implementation of the articles of incorporation or bylaws, or from intra-corporate relations, shall be referred to arbitration.
A dispute shall be non-arbitrable when it involves criminal offenses and interests of third parties.
(c) When Arbitrable Issue Is Filed with RTC: When an intra-corporate dispute is filed with a Regional Trial Court, it shall dismiss the case before the termination of the pretrial conference, if it determines that an arbitration agreement is written in the corporation’s articles of incorporation, bylaws, or in a separate agreement.
(d) Necessary Contents to Be Enforceable: To be enforceable, the arbitration agreement should indicate the number of arbitrators and the procedure for their appointment.
The power to appoint the arbitrators forming the arbitral tribunal shall be granted to a designated independent third party. Should the third party fail to appoint the arbitrators in the manner and within the period specified in the arbitration agreement, the parties may request the SEC to appoint the arbitrators.
In any case, arbitrators must be accredited or must belong to organizations accredited for the purpose of arbitration.
(e) Power and Authority of Arbitral Tribunal: The arbitral tribunal shall have the power to
(1) Rule on its own jurisdiction and on questions relating to the validity of the arbitration agreement;
(2) Grant interim measures necessary to ensure enforcement of the award, prevent a miscarriage of justice, or otherwise protect the rights of the parties.
(f) Arbitral Award: The final arbitral award shall be executory after the lapse of fifteen (15) days from receipt thereof by the parties
It shall be stayed only by the filing of a bond or the issuance by the appellate court of an injunctive writ.

The SEC is expressly empowered to formulate the rules and regulations, which shall govern arbitration under this section, subject to existing laws on arbitration.

(This article reflects the personal opinion of the author and does not reflect the official stand of the Management Association of the Philippines or the MAP).

Atty. CESAR L. VILLANUEVA is Chair of MAP Corporate Governance Committee, Trustee of Institute of Corporate Directors (ICD), the first Chair of Governance Commission for GOCCs (GCG – August 2011 to June 2016), Dean of the Ateneo Law School (April 2004 to September 2011), and Founding Partner of Villanueva Gabionza & Dy Law Offices.