Minority investors can soon summon stockholders to a meeting

The Securities and Exchange Commission (SEC) is preparing to issue a circular that will enable shareholders with at least 10-percent interest in publicly listed companies to call for special meetings and discuss items affecting their legitimate interests.

The end goal was to promote good corporate governance and to protect minority investors, the SEC said in an updated draft memorandum circular posted on April 16.

Any number of shareholders of a corporation holding at least 10 percent of the outstanding shares of a publicly listed corporation would have the right to call for a special stockholders’ meeting, which could be done physically or remotely through allowable means of remote communication, the memorandum stated.

The qualifying shareholders, however, should have continuously held the shares for at least one year prior to the receipt by the corporate secretary of a written call for a special stockholders’ meeting.

Legitimate interest

This request should be signed by all qualifying shareholders, addressed to the board of directors and transmitted through the corporate secretary at least two weeks prior to the proposed date of the meeting.

The purpose of the call for a special stockholders’ meeting, which should be clearly stated, must be that which “affects the legitimate interest of the stockholders and is germane to the stockholders’ interest.”

Such special shareholders’ meeting, however, can’t be used for the purpose of removing any director.

Liable

Seeking to avoid nuisance summons, the proposed circular states that no stockholder may call for a special meeting within 60 days on the same matter discussed from the previous meeting of the same nature, unless the by-laws provide otherwise or as approved by the board of directors.

The holding of such special meetings will be subject to the guidelines set under Section 49 of Republic Act No. 11232, or the Revised Corporation Code of the Philippines (RCC), as may be applicable.

The board is obliged to determine if the objectives and conditions in the call are consistent with the requirements of the memorandum circular. If found to be consistent, the board is obliged to issue a notice to convene the meeting within seven days from receipt of the call and at least seven days prior to the proposed date of special meeting.

Otherwise, the board must send a written notice to the requesting stockholders indicating that a meeting cannot be called due to failure to comply with the requirements.

Any officer or agent of the corporation who refuses to allow a qualifying shareholder to exercise the right to call a meeting would be liable under the RCC, the draft memorandum said. INQ