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MEETINGS TITLE VI
MEETINGS KINDS OF MEETINGS (Sec. 49) KINDS OF MEETINGS
(Sec. 49) 1. Meetings of STOCKHOLDERS OR MEMBERS (Sec. 50) 1. Meetings of STOCKHOLDERS OR MEMBERS
(Sec. 50) 1. Meetings of STOCKHOLDERS OR MEMBERS
(Sec. 50) 2. Meetings of DIRECTORS OR TRUSTEES (Sec. 53) or those to be held ANNUALLY on a date fixed in the by-laws, or if not so fixed, on any date in April of every year as determined by the board of directors or trustees.
It is held principally for the purpose of electing another set of directors or trustees or those to be held at ANY TIME deemed necessary or as provided in the by-laws or those to be held by the board MONTHLY, unless the by-laws provide otherwise. or those to be held by the board at ANY TIME upon the call of the president or as provided in the by-laws. A. REGULAR B. SPECIAL A. REGULAR B. SPECIAL NOTICE 1. Meetings of STOCKHOLDERS OR MEMBERS (Sec. 50) 2. Meetings of DIRECTORS OR TRUSTEES (Sec. 53) written notice of regular meetings shall be sent to all stockholders or members of record AT LEAST (2) TWO WEEK PRIOR to the meeting, unless a different period is required by the by-laws. A. REGULAR written notice of regular meetings shall be sent to all stockholders or members of record at least two (2) weeks prior to the meeting, unless a different period is required by the by-laws. B. SPECIAL ATLEAST ONE (1) WEEK written notice shall be sent to all stockholders or members, unless otherwise provided in the by-laws. REGULAR AND SPECIAL GR: Notice of every meeting, whether regular or special, stating the date, time, and place of the same must be sent to every director or trustee AT LEAST (1) ONE DAY PRIOR TO THE SCHEDULED MEETING
X: unless otherwise provided by the by-laws or when if the articles of incorporation or by-laws specify the time of the meeting
X to the X: when it is to be held at another place Notice of any meeting may be waived, expressly or impliedly, by any stockholder or member A director or trustee may waive this requirement, either expressly or impliedly. NECESSITY OF MEETINGS The corporate powers are vested in the board of directors or trustees and/or the stockholders or members as a body and not as individuals The reason for the rule lies in the protection to the stockholders or members by notice and the opportunity to attend, discuss, and vote at a meeting. Meetings of stockholders or members Similarly, as agents of the corporation managing its affairs, the directors or trustees can only exercise their powers as a board, not individually or separately. Meetings of directors or trustees The law proceeds upon the theory that directors or trustees shall meet and counsel with each other, and that any determination affecting the corporation shall only be arrived at after a consultation at a meeting of the board upon notice to all, attended by at least a quorum of its members. Individual assents, however, given by the shareholders separately, may preclude or estop those who assent from complaining of what they have consented to. 1. It must be held at the proper place (sec. 51 ) REQUISITES OF A VALID MEETING OF STOCKHOLDERS OR MEMBERS 2. It must be held at the stated date and at the appointed time or at a reasonable time thereafter (sec. 51 ) 3. It must be called by the proper person (sec. 50 ) 4. There must be a previous notice (sec. 50, 51 ) 5. There must be a quorum (sec. 52 ) If the meeting is held at an unauthorized place or without proper notice and not all the stockholders or members are present, those who have a right to complain may take steps to set aside any action taken at such meetings even though a majority of stockholders or members were present in the absence of waiver, estoppels, or ratification EXCEPTIONS GENERAL RULE: A meeting held in the ABSENCE of some of the directors or trustees and without any notice to them is ILLEGAL, and the action at such meeting although by a majority of the directors, is INVALID GENERAL RULE: should a meeting without any notice or without a quorum take place, whether notice thereof has been given or not, all the resolutions and acts approved in said meeting CANNOT be considered valid and may be questioned by any objecting director or stockholder GENERAL RULE: where the law expressly requires a meeting for a particular transaction, any action taken by the corporation without a meeting properly held for such purpose is VOID 1.SEC. 16: “articles of incorporation may be amended by a majority vote of the board of directors or trustees and the vote or written assent of the stockholders representing at least two-thirds (2/3) of the outstanding capital stock…” Thus, a meeting of stockholders or members is not necessary 2.It is evident that the corporation will be bound by the unanimous act or agreement of its stockholders or members although expressed elsewhere than a formal meeting 3.In any of the cases mentioned in section 101, any action taken by the directors of a close corporation without a meeting shall nevertheless be deemed valid, unless otherwise provided in the by-laws. EXCEPTION: unless subsequently ratified or waived, expressly or impliedly, by the absent directors or unless rights have been acquired by innocent third persons, as against whom the corporation must be held stopped to set up the failure to observe formalities. EXCEPTION: unless subsequently ratified expressly by the board of directors or trustees in a duly convened meeting or impliedly by the corporation’s subsequent course of conduct
A proxy, as the term is used, a formal written authority given by the owner or holder of the stock, who has the right to vote, or by a member, as principal, to another person, as agent, to exercise the voting rights of the former.
As to refer to the holder of the authority to represent the absent stockholder or member.
The term is also applied to refer to the instrument which evidences the authority of the agent.
A proxy is thus a special form of agency. The proxy holder in the eye of the law an agent and as such a fiduciary. Sec. 57 expressly denies voting rights to treasury shares as long as such stock remains in the treasury.
Since such stocks are “dormant”, they neither receives dividends or voting rights but regain such after reissue for valuable consideration. Points to Remember Generally, proxies are revocable unless coupled with an interest.
Revocation can be done through formal notice, orally or by the conduct of the stockholder or member.
Last proxy renders all previous proxies revoked.
The last proxy that appears to have been made shall be counted since it is the most recent proxy. Even if done without notifying the prior agent of the revocation.
In case of more than one proxy, the postdate or time of presentation shall determine which shall be counted. However, if it cannot be determined due to time constraints, the corporate secretary must refer it to the presiding officer or to a special committee of inspectors whose decision shall be binding. Revocation of proxies Majority is the presumed action of the principal. And the minority cannot break the quorum.
In case of 3 or more proxies, majority of those who attended may exercise the power given.
Or if two proxies, to both or either of them who usually exercises the power to vote.
The proxy which has the later date, later time or later presented shall be counted.
If the principal designates several proxies, the number of shares of stock shall be specifically indicated.
*Number of person designated as proxies may be limited by the by-laws Proxy given to two or more persons *Restrictions on right to vote by proxy shall only be void if they are unjust, unreasonable and oppressive to the voters. Restrictions on right to vote by proxy in the by-laws In stock corporation, any provision prohibiting the use of proxy is contrary to law and hence, null and void.
In non-stock corporation, such provisions are allowed provided they are not discriminatory. Denial of the right to vote by proxy in the by-laws Proxy instrument is not rendered invalid by the fact being undated, or the holder’s name is in blank, or authority written in ink of different color used in the signature of the principal.
For corporate members, a board resolution authorizing the signatory to the proxy should be submitted. Being a juridical person, a corporation can only act through its board of directors. In case of stock corporation, it would be in order to adopt a resolution authorizing the proxy, and to execute it in a formal corporate manner.
There is a presumption of regularity in the execution of proxies.
As a rule, they should be accepted if they have the appearance of prima facie authenticity in the absence of a timely and valid challenge.
Rules and procedure regarding proxies should be decided before each meeting and stockholders or members should be informed of them for their guidance. In fact, same should be provided by the by-laws. Lacking extraordinary circumstances, trend in court decisions is in upholding the ruling of inspectors of elections. The Code does not contain express provisions, other than that provided in Section 58. Leaving the rules to the by-laws.
Absence of by-laws provision to the contrary, no particular form or words are necessary. All that is necessary is that it shall be in writing and signed by the stockholder or member, showing an intention to empower the person to act as an agent in voting the stock.
In the absence of provision in the article of incorporation or by-laws, the board of directors cannot prescribe the form of proxies other than as provided for under Section 58.
Even if not notarized; Without documentary stamps; or Unattested by witnesses, the proxy is valid.
Proxy should be dated. If a duly accomplished and executed proxy is indicated, the postmark or date of dispatches indicated in the election mail, or if not mailed, its actual date of presentation, shall be considered as the date of the proxy. Form and execution of proxies Must be in writing and signed by the stockholder or member and filed prior to the scheduled meeting with the corporate secretary.
Unless otherwise provided, it is only valid only for the meeting it is intended. The authority may be general or limited.
A continuing proxy must be for a period not exceeding five (5) years at any one time; otherwise, it shall not be valid and effective after such period.
PD 902-A empowers the Securities and Exchange Commission, among others, to pass upon the validity of the issuance and use of proxies and voting trust agreements for absent stockholders or members.
A proxy sold for consideration is obviously contrary to public policy. Limitations on proxies Shall be in writing.
Signed by the stockholder or member.
Must have been given by the legal owner of the stock.
A proxy cannot further be re-designate unless the legal owner gives his consent in writing. An alternate proxy can only act in case of non-attendance of the original designated proxy. Nature of proxies Presence of quorum in meetings – the inability of the stockholders to attend in person might make it impossible to secure quorum necessary to take corporate action.
Exercise of right to vote though absent – enables to those who do not want to attend meetings to protect their interest through a representative.
Voting and management control – solicitation and use of proxy is also one of the devices of securing voting control in the corporation. Purpose and Use of Proxies Proxies – Stockholder and members may vote in person or by proxy in all meeting of stockholders or members. Proxies shall be in writing, signed by the stockholder or member and filed before the scheduled meeting with the corporate secretary. Unless otherwise provided in the proxy, it shall be valid only for the meeting for which it is intended. No proxy shall be valid and effective for a period longer than five (5) years at any one time. Sec. 58 Limited and specific proxy – if the proxy is only for a certain meeting, it can only be used for such. If it is for a time stated, it can be used at any meeting within the time fixed, not exceeding five (5) years at any one time.
Continuing proxy – if the proxy authorizes the holder to vote “for any and all regular and special meetings” it shall be valid for such period, of if none is provided, it shall only be up to five (5) years from its date. Whether or not it is coupled with an interest.
A proxy may be renewed but not for more than five (5) years for each renewal. Duration of proxy Proxy authority may be general or limited.
General – confers general power to attend and vote to annual meetings which the principal would normally possess in selection of directors and all ordinary matters. However, no authority to vote which shall cause fundamental change in corporate charter or other unusual transactions. (ie. Merger and consolidation)
Limited – restrict the authority to specified matters only and may direct the manner in which the vote shall be cast. Extent of authority of proxy Sec. 58 has no limitation as to who can be a proxy.
Since a proxy acts for another, he may act as such although he himself is disqualified to vote his shares.
The same person may act as proxy for one or several stockholders or members.
Directors or trustees cannot attend or vote by proxy at board meetings but they may act as proxies in stockholders’ meetings. Who may be a proxy Definition of Proxy Voting in case of joint ownership of stock. – In case of shares of stock owned jointly by two or more persons, in order to vote the same, the consent of all the co-owners shall be necessary, unless there is a written proxy, signed by all the co-owners, authorizing one or some of them or any other person to vote such share or shares: Provided, That when the shares are owned in an “and/or” capacity by the holders thereof, any one of the joint owners can vote said shares or appoint a proxy therefor. Sec. 56 Voting right for treasury shares – Treasury shares shall have no voting rights as long as such stock remains in the Treasury. Sec. 57 SEC. 54. WHO SHALL PRESIDE AT MEETINGS SEC. 54. WHO SHALL PRESIDE AT MEETINGS The president shall preside at all meetings or the directors or trustees as well as of the stockholders or members, unless the by-laws provide otherwise. Presiding Officer at meetings. 1. President/Chairman/Vice-Chairman. But When the officer entitled to preside is not present at the time of the meeting to convene; 2. Stockholder or member in a temporary capacity And Where no person is authorized to call a meeting; 3. Stockholder or member chosen authorized by the SEC to call a meeting of the corporation SEC. 55. RIGHT TO VOTE OF PLEDGORS, MORTGAGORS, AND ADMINISTRATORS In case of pledged or mortgaged shares in stock corporations, the pledgor or mortgagor shall have the right to attend and vote at meetings of stockholders, unless the pledgee or mortgagee is expressly given by the pledgor or mortgagor such right in writing which is recorded on the appropriate corporate books. Executors, administrators, receivers, and other legal representatives duly appointed by the court may attend and vote in behalf of the stockholders or members without need of any written proxy. NATURE OF VOTING RIGHT TO VOTE = STOCKHOLDER’S SUPREME RIGHT AND MAIN PROTECTION RIGHT is inherent in the exercise of ownership. Court not bound to deprive a stockholder of his right to vote his shares, except upon lawful cause. Vote is based on the number of shares represented. Owners of shares are not disabled in voting for being directors of the corporation. 1. Legal Representative of stockholder or member. *Legal representatives are duly appointed by the court without the need of any written proxy.
Exception to Sec. 24 that ONLY stockholders of record may vote. 2. Pledgee or mortgagee of stockholder’s shares. *Only when expressly given such right in writing by the pledger or mortgagor. 3. Officer or agent of corporation owning shares. REPRESENTATIVE VOTING VOTING RIGHTS FOR SHARES OF STOCK OF A DECEASED STOCKHOLDER. 1. Where a legal representative has been appointed. - on the death of a stockholder, his administrator or executor becomes vested with the legal title to the stock and entitled to vote the same at all meetings and until settlement and division of the estate is effected. 2. Where no legal representative has been appointed.
When estate of stockholder is still undivided and there is no administrator or other legal representative duly appointed the court nor an executor designated in a will to administer said estate, no person can vote the shared of the deceased since nobody can legally represent his estate under the second paragraph of 55. i. An heir of a deceased stockholder whose stock still remains pro indiviso among the heirs cannot be considered a stockholder of a stock corporation in his own right until the share is registered in his own name on the books of the corporation. ii. Judicial or extrajudicial partition if stockholder died intestate; otherwise, it will be necessary to wait for the termination of the testamentary proceedings and the final adjudication of the shares of stock in accordance of the will of the decedent. 3. Where partition has been executed by the heirs. – the presentation thereof will entitle the heir to vote the shares allotted in their respective names at the meeting. SECTION 59. Voting Trusts. – One or more stockholders of a stock corporation may create a voting trust for the purpose of conferring upon a trustee or trustees the right to vote and other rights pertaining to the shares for a period not exceeding five (5) years at any one time: Provided, That in case of a voting trust specifically required as a condition in a loan agreement, said voting trust may be for a period exceeding five (5) years and shall automatically expire upon full payment of the loan. A voting trust agreement must be in writing and notarized, and shall specify the terms and conditions thereof. A certified copy of such agreement shall be filed with the corporation and with the Securities and Exchange Commission; otherwise said agreement is ineffective and unenforceable. The certificate or certificates of stocked covered by the voting trust agreement shall be cancelled and new ones shall be issued in the name of the trustee or trustees stating that they are issued pursuant to the agreement. In the books of the corporation, it shall be noted that the transfer in the name of the trustee or trustees is made pursuant to said voting trust agreement.The trustee or trustees shall execute and deliver to the transferors voting trust certificates, which shall be transferable in the same manner and with the same effect as certificates of stock.
The voting trust agreement filed with the corporation shall be subject to examination by any stockholder of the corporation in the same manner as any other corporate book or record: Provided, that both the transferor and the trustee or trustees may exercise the right of inspection of all corporate books and records in accordance with the provisions of this Code.
Any other stockholder may transfer his shares to the same trustee or trustees upon the terms and conditions shared in the voting trust agreement, and thereupon shall be bound by all the provisions of said agreement.
No voting trust agreement shall be entered into for the purpose of circumventing the law against monopolies and illegal combinations in restraint of trade or used for purposes of fraud.
Unless expressly renewed, all rights granted in a voting trust agreement shall automatically expire at the end of the agreed period, and the voting trust certificates as well as the certificate of stock in the name of the trustee or trustees shall thereby be deemed cancelled and new certificates of stock shall be released in the name of the transferors.
The voting trustee or trustees may vote by proxy unless the agreement provides otherwise. VOTING TRUST, defined: - A Trust created by agreement of a number of shareholders to deposit their stock in the hands of a trustee or trustees. Under such an agreement the shareholders retain ownership of the stock but delegate their power of voting it to the trustee or trustees. PURPOSE OF VOTING TRUST AGREEMENT – Such an agreement provides for a unified control of corporate affairs and policies by binding stockholders to vote as a unit. It also makes it possible for a majority group of shareholders who transferred their individual holdings to a voting trustee to dispose of their shares and still retain control of the corporation of the corporation through the voting trustee who shall have the power to vote as a unit the shares thus pooled. Procedure on transfer of shares a. The certificate/s of stock covered by the voting trust agreement shall be cancelled; b. New certificates shall be issued in the name of the trustee or trustees stating that they are issued pursuant to the voting trust agreement. In the books of the corporation, it shall be stated that the transfer in the name of the trustee or trustees is made pursuant to the voting trust agreement; c. The trustee or trustees shall execute and deliver to the transferors voting trust certificates, which shall be transferable in the same manner and with the same effect as certificates of stockand with the same effect as certificates of stock Effects of the voting trust agreement a. The voting trustee acquires legal title to the shares; b. The stockholders making the transfer become mere equitable owners of their shares represented by their voting trust certificates. Accordingly, they are disqualified from being elected as directors unless they retain at least 1 share of stock in their name (or such minimum number of shares as provided in the by-laws). However, they retain control over the management of the corporation; c. The trustee votes in accordance with the terms of the voting trust agreement. He may vote in person or by proxy as provided therein; d. Both the transferor and the trustee may exercise the right of inspection of all corporate books and records; e. Any stockholder may inspect the voting trust agreement filed with the corporation in the same manner as all corporate books and records; f. Any other stockholder may transfer his shares to the same trustee upon the same terms and conditions stated in the voting trust agreement, and thereupon shall be bound by all the provisions therein. A proxy votes in the absence of the stockholder, while a trustee can vote and exercise the rights of the transferor even in the latter’s presence in the meeting. DISTINCTIONS BETWEEN PROXY AND VOTING TRUST AGREEMENT
The proxy has no legal title to the shares, while a trustee acquires the title of the transferor; A proxy is generally revocable, while a voting trust agreement is irrevocable for the duration of the term; A proxy is valid only for the meeting for which it was intended except as provided therein and in the case of a continuing proxy, a voting trust agreement is not limited to a particular meeting; Sec. 51. Place and time of meetings of stockholders or members. 1. It must be held at the proper place. 2. It must be held at the stated date and at the appointed time thereafter. 3. It must be called by the proper person. (Sec 50, last par.) 4. There must be previous notice. For Stockholders whether regular or special, shall be held in the city or municipality where the principal office of the corporation is located, and if practicable in the principal office of the corporation. Metro Manila shall, for purposes of this section, be considered a city or municipality. For Members: It must be held in the place where the principal office is located. However, members may hold regular or special meetings at any place even outside the city or municipality where the principal office is located if it is provided for in their by-laws, provided that proper notice is given. Is the requirement on the place of meetings of stockholders mandatory?
YES, the requirement in Sec 51 on place of meetings of stockholders is mandatory; to do otherwise will make the meeting illegal. Nevertheless, this requirement admits of one exception, that is when all the stockholders or members of the corporation are present or duly represented at the meeting. May notice to meetings be waived? YES, notice of any meeting may be waived, expressly or impliedly, by any stockholder or member. On what grounds may the annual stockholders’ meeting be postponed? It may be postponed for justifiable and meritorious reasons, provided however, that the annual stockholders’ meeting be held within a reasonable time from the date it has been postponed with proper notice in all cases. Regular meetings Special meetings Annually on a due date fixed in the by-laws; or At any time deemed necessary; or If not so fixed, on any date in April of every year as determined by the Board of directors or trustees. As provided in by-laws A. The person’s designated in the by-laws;
B. Director or trustee or by an officer entrusted with the management of the corporation;
C. Stockholder or member on a showing of good cause;
D. Secretary or clerk; Except when:
The secretary or clerk fails or refuses to call the meeting; or
The secretary or clerk fails or refuses to give notice;
There is no secretary or clerk.
The call for the meeting maybe addressed directly to the members or stockholders by any member or stockholder signing the demand. Regular Special 1. At least two (2) weeks prior to the meeting;
2. Unless a different period is required by the by-laws. 1. At least one (1) week written notice shall be sent to all stockholders or members;
2. Unless otherwise provided in the by-laws. What is the effect of failure to comply with requisites for meeting? Under Sec 51 par2, all proceedings had and any business transacted at any meeting of stockholders or members shall be valid even if the meeting be improperly held or called, provided the two requisites are present:
1. That the proceedings had and the business transacted are within the power or authority of the corporation, that is, they are not ultra vires;
2. That all the stockholders or members of the corporation are present or duly represented at the meeting. Sec 52: Quorum in meetings Effect of failure to comply with the requisites for a valid meeting: Who shall preside at the meetings of stockholders? There must be a quorum. General Rule:
A QUORUM shall consist of the stockholders representing a majority of the outstanding capital stock or a majority of the members in the case of non-stock corporation. Exceptions:
A. Those otherwise provided for in the Corporation Code;
B. Those otherwise provided for in the by-laws. General Rule:
the by-laws provide otherwise (Sec 54)
The meeting is invalid, except if the proceedings and business transacted are within the powers of the corporation, and all stockholders are present or duly represented. Effect of improper meeting Meeting held without notice Meeting held not in the proper place Not all stockholders are present; stockholders are not notified and not attending the meeting may take steps to set aside any action taken thereat, even if majority of the stockholders are present. But such action must be taken promptly otherwise it is deemed waived by latches.
All stockholders are present and all proceedings taken are valid if within the powers of the corporation Not all stockholders are present: Action taken not valid unless attended by all persons entitled to participate and they did not object to the improper place.
All stockholders are present: Action taken are valid, the stockholders will be guilty of estoppel. QUORUM Unless otherwise provided in the by-laws, the quorum of such meeting shall consist of stockholders representing a majority of the outstanding capital stock (Se c 52). Basis of quorum referred to in Sec 52 of the Corporation Code:
a. For stock corporations, the number of outstanding voting stocks.
b. For non-stock corporations, only those who are actual, living members with voting rights. Any matter or transaction must necessarily fail if the number of votes attained is less than what is prescribed for the particular transaction. If an issue to be resolved requires a majority for it to be passed and there is a deadlock, the issue or proposition simply loses. There is, therefore, no need to break the deadlock. (De Leon, 2006) Private corporations may provide in their by-laws for the required quorum in meetings of stockholders, but the by-laws cannot provide for a lesser quorum in those cases where the corporation laws requires a minimum number of votes for the approval of certain corporate acts.
Once a quorum is called and the meetings was called to order, even if some people called out and the people left are less than the majority the proceeding will be valid so long as there is a quorum when the meeting was called to order. A minority group cannot prevent corporation by walking out. (De Leon, 2006) MERRY CHRISTMAS ;) EVERLO CRUZ ROCEL TIPON ROMMELL CONCEPCION PONCIVER CEBREROS CLARO CARINO Reporters 5 In cases of jointly-owned stock, consent of all the co-owners are necessary.
There is written proxy executed authorizing one or some of them to vote.
Shares are owned in an “and/or” capacity, in which case any of them can vote said share or appoint a proxy.
Property relation between husband and wife is Absolute Community Property, the same shall be governed by the rules on co-ownership. Consequently, they are deemed as one stockholder. Points to Remember