SEC requires 21-day notice prior to stockholders meeting

SEC Chair Emilio Aquino

The Securities and Exchange Commission (SEC) has required corporations to give an advance notice of at least 21 days prior to a stockholders or club members meeting, in line with efforts to promote good corporate governance and protect minority investors.

“The longer notice period will allow stockholders or members to prepare for, participate more effectively in their regular meetings and cast votes in matters concerning the corporation such as the election of directors,” SEC chair Emilio Aquino said in a press statement.

“This is in line with the mandate of the Commission to promote good corporate governance, protect minority investors, and make the Philippine corporate sector more competitive globally,” Aquino said.

Under the old Corporation Code, or Batas Pambansa Blg. 68, the minimum advance notice was only two weeks. This has been extended to 21 days under Republic Act No. 11232, or the Revised Corporation Code of the Philippines.

Under the new rules issued by SEC on Feb. 21 through memorandum circular No. 3, series of 2020, written notices of regular meetings must be sent to all stockholders or members of record at least 21 calendar days prior to the date of the meeting.

The longer notice intends to encourage shareholder/member participation and raise corporate governance standards.

In case of postponement of stockholders’ or members’ regular meetings, a written notice and the reason thereof must be sent to all stockholders or members of record at least two weeks prior to the date of the meeting as originally scheduled.

The stockholders or members must be notified of the new schedule of the regular meeting.
The written notices of regular meetings must contain all information and deadlines relevant to the shareholders’ or members’ participation in the meeting and exercise of the right to vote remotely, in absentia or through a proxy.

Corporations formed or organized under local laws may be stock or non-stock corporations. Stock corporations are those which have capital stock divided into shares and are authorized to distribute to the holders of such shares, dividends, or allotments of the surplus profits on the basis of the shares held. All other corporations are non-stock corporations.