Published 22 March 2019, The Daily Tribune
I continue with the summary of changes under the Revised Corporation Code.
F. Board of directors/officers
1. Qualification and term
• Term of a trustee not exceeding three years.
• No residence requirement for the members of the Board.
• Corporations vested with public interest required to have independent directors constituting at least 20 percent of such board.
• Corporations vested with public interest include: a) public companies; b) banks and quasi-banks, NSSLAs, pawnshops, corporations engaged in money service business, pre-need, trust, and insurance companies and other financial intermediaries; c) other corporations as may be determined by the SEC (Securities and Exchange Commission).
2. Election of directors or trustees
• Right to nominate any director subject to the right of the holders of founders’ shares. Holders of founders’ shares have the right to vote and be voted for in the election of directors for five years from the date of incorporation provided that such privilege shall not violate the Anti-Dummy Law and the Foreign Investments Act.
• Stockholders may vote through remote communication or in absentia when authorized by the by-laws and even when the by-laws are silent, in case of corporations vested with public interest.
3. Corporate officers
• Corporate treasurer must be a resident of the Philippines.
• Compliance officer is required for corporations vested with public interest.
4. Report of election of directors, trustees and officers, non-holding of election and cessation from office
• Non-holding of elections and the reasons therefor required to be reported to SEC within 30 days from date of the scheduled election.
• The report shall specify new date for election not later than 60 days from the scheduled date.
• SEC may, upon the application of any stockholder or member, summarily order the holding of elections should the reason for the non-holding of election be found unjustifiable.
• Shares of stock or membership represented at such meeting (called by the SEC) and entitled to vote shall constitute a quorum for purposes of conducting an election.
• Director, trustee or officer who ceases to hold office should be reported to the SEC within seven days from the vacancy.
5. Disqualification of directors, trustees or officers
• Additional grounds for the disqualification (on top of commission of an offense punishable by imprisonment for a period exceeding six years)
* Violation of the Securities Regulation Code
* Violation of the corporation code
• Found Administratively liable for any offense involving fraudulent acts or by a foreign court or equivalent regulatory authority for similar acts, violations or misconduct.
* Disqualifications which may be imposed by other regulatory bodies (e.g. Philippine Competitions Commission).
6. Removal of directors or trustees
• Power of SEC, motu proprio or after verified complaint, and after due notice and hearing, to order the removal of a director or trustee elected despite his/her disqualification.
• SEC may impose sanction on the board of directors or trustees who with knowledge of the disqualification, failed to remove such director or trustee.
7. Vacancies in the office of director or trustee; emergency board
• Period within which the elections to fill the vacancies shall be held.
* vacancy is due to term expiration — no later than the day of such expiration.
* vacancy arises as a result of removal by the stockholders or members — same day of the meeting authorizing the removal.
* All other cases — no later than 45 days from the time the vacancy arose.
• Emergency board — when the vacancy prevents the remaining directors from constituting a quorum and emergency action is required to prevent grave, substantial and irreparable loss or damage to the corporation, the vacancy may be temporarily filled from among the officers of the corporation by unanimous vote of the remaining directors or trustees. The action of the designated director or trustee shall be limited to the emergency action necessary, and the term shall cease within reasonable time from termination of the emergency or upon election of the replacement director, whichever comes earlier.
8. Compensation of directors or trustees
• Directors or trustees shall not participate in the determination of their own per diems or compensation.
• Submission to the SEC of the annual report of the total compensation of each of the directors or trustees.
• The annual aggregate compensation of directors shall not exceed 10 percent of the net income of the corporation before income tax of the preceding year.
9. Dealings of directors, trustees or officers with the corporation
• Contract of the corporation with spouse or relative within the fourth civil degree of consanguinity or affinity of its directors, trustees, officers — voidable unless certain conditions are present.
• Material contracts of corporations vested with public interest — must be approved by at least 2/3 of the entire membership of the board, with at least a majority of the independent directors voting affirmatively.
To be continued
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