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Corporate Securities Info

Annual stockholders’ meeting

By this time, most of the country’s private corporations would have held their annual stockholders’ meeting (ASM). It’s an activity required of all corporations to hold and report to the government for regulatory purposes.

For stockholders of public companies and those listed on the Philippine Stock Exchange, this yearly ritual is the only opportunity for them to meet their top executives and inquire about company activities.

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The ASMs also provide the companies a venue to report on the profits earned, if any, in the preceding year, or, in case of losses, the reasons behind the poor performance.

The impact of those reports on investors would usually be seen on the movement of the price of their stocks the following day.

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The rules on the conduct of regular ASMs have been changed by the Revised Corporation Code (RCC) which took effect on Feb. 23, 2019.

If the company’s bylaws do not fix its date, the ASM should be held on any date after April 15 of every year as determined by the board of directors or trustees.

Under the old Corporation Code, in the absence of a fixed date, the ASM shall be held “on any date in April” as may be scheduled by the board.

This time, the cutoff date is specific, April 15, which is also the deadline for the filing of individual income tax returns.

A written notice for the ASM is required to be sent to all stockholders at least 21 days prior to the meeting, unless a different period is prescribed in the bylaws, law or regulations. Before, it was 14 days.

In keeping with technology, the notice may be sent through electronic mail or such other manner as the Securities and Exchange Commission may allow.

That notice may be waived by the stockholder. However, a waiver made through a general waiver of notice stated in the Articles of Incorporation or bylaws is prohibited.

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The prohibition is aimed at ensuring the right of every stockholder to be informed of the date of the ASM, although it’s up to him or her to decide whether or not to attend it.

For this reason, any waiver of the notice has to be made on a meeting-to-meeting basis, not in one general sweep through the AOI or bylaws.

The ASM should be held in the principal office of the company as stated in its AOI.

If for any reason this is not practicable, e.g., the office is structurally unsafe or the lease has been terminated, the meeting may be held in the city or municipality where the principal office is located.

In the latter case, any city or municipality in Metro Manila, Metro Cebu or Metro Davao or other metropolitan areas shall qualify as a site for the ASM.

Before, only companies based in Metro Manila enjoyed the privilege of choice on the site of the ASM.

That was understandable because in 1980, the year the Corporation Code took effect, Metro Manila was the sole integrated urban area in the country.

With the rise of metropolitan-type urban areas in other parts of the country, it was only fair that Congress liberalized the rule on flexible meeting sites of ASMs to reflect that development.

Although the RCC has strict rules on the conduct of ASMs, all proceedings and any business transacted in a meeting that is improperly held or called shall be considered valid if: (a) they are within the authority of the corporation; (b) all the stockholders are present or duly represented in the meeting; and (c) not one of them expressly stated at the beginning of the meeting that the purpose of his or her attendance is to object to the transaction of any business because the meeting is not lawfully called or convened.

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