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SEC Issues Guidelines on the Participation in Regular and Special Meetings through Remote Means of Communication
This accounting alert circulates guidelines issued by SEC providing corporations guidance in formulating internal procedures and bylaws allowing their directors, trustees, stockholders, members and other persons to participate and vote in meetings through remote modes of communication, pursuant to relevant provisions of the Revised Corporation Code.
SEC Memorandum Circular No. 06 s. 2020 shall apply to all SEC-registered corporations.
Participation in Board Meetings Through Remote Communication - Internal Procedures
Directors or trustees who cannot physically attend or vote at board meetings can participate and vote through remote communication such as videoconferencing, teleconferencing, or other alternative modes of communication that allow them reasonable opportunities to participate. However, directors or trustees cannot attend or vote by proxy at board meetings.
The director or trustee participating in the meeting via remote communication may cast his vote through electronic mail, messaging service or such other manner as may be provided in the internal procedures. The vote shall be sent to the Presiding Officer and the Corporate Secretary for notation.
The Corporate Secretary shall likewise assume the following responsibilities:
- ensure that suitable equipment and facilities are available for the conduct of meeting by remote communication (i.e., reliable internet connection, high bandwidth availability capable of supporting numerous simultaneous connections, etc.);
- ensure that the attendees are able to hear and see the other participants clearly during the course of the meeting and that attendees should be able to communicate and understood by the other party;
- ensure that the visual and audio recordings of the meeting are secured;
- ensure that the visual and audio recordings of the election/meeting are current and on-going and that there is no stoppage or interruption. Should an interruption or stoppage occur, the recording shall restart from the point where it was stopped or interrupted with proper statement of points in time;
- ensure to safe-keep and perpetuate in updated data storage equipment or facility the visual and audio recordings; and,
- require those who attended the meeting through remote communication, to sign the minutes of the meeting whenever the act of signing is practicable, on a reasonable time after the meeting.
Corporations may issue their own internal procedures for the conduct of board meetings through remote communication or other alternative modes of communication to address administrative, technical and logistical issues.
Participation in Stockholders' or Members' Meetings Through Remote Communication - Internal Procedures
When so provided in the Bylaws or by majority of the Board of Directors, stockholders or members who cannot physically attend at stockholders' or members' meetings may participate in such meetings through remote communications or other alternative modes of communication. Provided, that he/she shall notify in advance the Presiding Officer and the Corporate Secretary of his/her intention. The Corporate Secretary shall note such fact in the minutes of the meeting.
For the convenience of their stockholders and members, corporations shall issue their own internal procedures embodying the mechanisms for participation in meetings and voting through remote communication or in absentia.
The internal procedures may provide for the following:
a. mechanism to verify the identity of the stockholders or members and who among them have the right to vote during the meeting;
b. measures to ensure that all stockholders or members have the opportunity to participate in the meeting including an opportunity to read or hear the discussion substantially;
c. mechanism to enable the stockholders or members to vote during the meeting including ensuring that the integrity and secrecy of the votes are protected;
d. procedures for documenting the meeting and any process/motion which may be done afterwards;
e. mechanism in making the record of the meeting, either video or audio recording, available to the stockholders or members; and,
f. other matters to address administrative, technical and logistical issues.
Voting in the Election of Directors, Trustees and Officer Through Remote Communication.
The right to vote of stockholders or members may be exercised in person, through a proxy, or when so authorized in the Bylaws, through remote communication or in absentia.
The right to vote of stockholders or members may be exercised also through remote communication or in absentia when authorized by a resolution of the majority of the board of directors; provided, that the resolution shall only be applicable for a particular meeting.
In the election of directors, trustees and officers of corporations vested with public interest, stockholders and members may vote through remote communication or in absentia, notwithstanding the absence of a provision in the Bylaws of such corporations.
In order to immediately operationalize these guidelines, corporations, upon approval of this Circular, may already conduct their board meetings and stockholders' and members' meetings through remote communication or other alternative modes of communication for the limited purpose of approving the provisions in their Bylaws or internal procedures which will govern participation in board meetings and stockholders' and members' meetings by means of remote communication or other alternative modes of communication.
Memorandum Circular No. 06, issued on March 12, 2020, shall take effect upon its approval.
See attached memorandum circular for the details of this publication.