SEC Issues Guidelines on Remote Meetings Due to COVID-19 Outbreak

With the Enhanced Community Quarantine still in effect, the Securities and Exchange Commission (SEC) has issued guidelines to allow for remote corporate meetings through teleconferencing, video conferencing, and other electronic/remote means of communications.

The guidelines, issued through Memorandum Circular No. 6 Series of 2020 on March 12, immediately took effect.

Simply put, the decision allows corporations to conduct meetings through remote communication for the purpose of approving the provisions in their bylaws or internal procedures, which will govern participation in board meetings and stockholders and members meetings through remote communication.

The guidelines are in line with the declaration of a state of public health emergency in the Philippines.

SEC Chairperson Emilio B. Aquino said allowing remote communication for corporate meetings will minimize face-to-face interactions.

“The Commission encourages corporations to explore and implement all necessary measures to prevent the further spread of COVID-19” – SEC Chairperson Emilio B. Aquino

Here are the guidelines for Board Meetings:

• The corporate secretary may send notice of meetings to directors or trustees through remote communication.
  • The notice shall include materials for discussion which shall be numbered and marked in a way that those reading it can easily follow
• The company shall develop internal procedures in conducting board meetings through remote communication.
• Directors or trustees who intend to participate shall notify in advance
• During the meeting, everyone shall state their location, the device they are using, and confirm if they can clearly hear and see the other attendees.
• In deciding any matter, the voters may cast their votes through email, messaging service, or in other manner allowed in the internal procedures.
• The corporate secretary shall ensure that everyone can communicate and understand each other during the meeting, that the audio and video are secured, and that the attendees will sign the minutes of the meeting, whenever practicable.

Here are the guidelines for Stockholder, member meetings:

• The written notice of meetings may be sent to stockholders or members through email or other similar manner provided in the corporation bylaws.
  • The notice shall include requirements and procedures to be followed when stockholders or members are allowed to participate via remote communication
• The presiding officer shall call and preside the stockholders or members meetings, whether regular or special, at the principal office of the corporation or in the city or municipality where the principal office is located.
• Stockholders or members shall notify in advice if they intend to participate through remote communication.
  • Stockholders or members who participated through remote communication shall be deemed present for the purpose of attaining quorum.
• In electing directors, trustees, and officers, the stockholders and members may vote through remote communication.
  • The right to vote through remote communication can be authorized via a resolution of the majority of the board. The resolution is only applicable for a particular meeting.
• For corporations with vested public interest, stockholders and members may vote through remote communication, notwithstanding the absence of a provision in the corporation’s bylaws.
• Corporations shall issue their own internal procedures embodying the mechanisms for participation in meetings and voting through remote communication or in absentia.
  • These internal procedures shall take into account the number of shareholders or members and their location, the importance of the matter to be discussed and voted upon the meeting, promotion of minority rights and other factors consistent with the protection and promotion of shareholders or members’ rights.
  • The internal procedures shall also provide mechanisms to verify identity of stockholders or members and who among them have the right to vote during the meeting.
• Corporations must adopt measures to ensure all stockholders or members have the opportunity participate in the meeting.
• Internal guidelines must have procedures for documenting the meeting.

This article is published on BitPinas: SEC Issue Guidelines on Remote Meetings Due to COVID-19 Outbreak