Regulatory Alerts2020-04-28
MC No. 14 s.2020 — Shareholders’ right to put items on the Agenda for Regular/ Special Stockholders’ meetings
The Securities and Exchange Commission issued this Memorandum Circular to promote good corporate governance and protect minority investors by granting shareholders holding at least five percent of outstanding capital stock the right to include items on the agenda for regular or special stockholders’ meetings. Items added after the filing of the Definitive Information Statement must be listed under "Other Matters," thereby relieving the publicly-listed company of the requirement to amend its DIS. Officers or agents who unjustly refuse this right face liability under Section 158 of the Revised Corporation Code, with board members potentially liable if the refusal was pursuant to a board resolution, unless the shareholder acted in bad faith.
SEC MEMORANDUM CIRCULAR NO. ______ Series of 2020 TO : PUBLICLY-LISTED COMPANIES SUBJECT : SHAREHOLDERS’ RIGHT TO PUT ITEMS ON THE AGENDA FOR REGULAR/ SPECIAL STOCKHOLDERS’ MEETINGS
To promote good corporate governance and the protection of minority investors, the Securities and Exchange Commission, pursuant to its regulatory power under Section 179(d) of Republic Act No. 11232, otherwise known as the Revised Corporation Code of the Philippines (RCC), and Administrative Order No. 38, Series of 2013, resolved to issue the following rules: (1) Shareholders who, alone or together with other shareholders, hold at least five percent (5%) of the outstanding capital stock of a publicly-listed company (PLC) shall have the right to include items on the agenda prior to the regular/special stockholders’ meeting. (2) All items added on the agenda by qualified shareholder(s) pursuant to this Memorandum Circular after the Definitive Information Statement (DIS) has been filed with the Commission shall be filed under “Other Matters.” In this regard, the reporting PLC shall no longer be required to amend its DIS. (3) Any officer or agent of the corporation who shall unjustly refuse to allow a shareholder or group of shareholders, duly qualified and holding the required percentage of outstanding shares of the corporation, to exercise his/her right to put items on the agenda shall be liable under Section 158 of the RCC: Provided, that, if such refusal is made pursuant to a resolution or order of the board of directors, the liability under this section for such action shall be imposed upon the directors who voted for such refusal: Provided, further, that it shall be a defense to any action under this Memorandum Circular that the shareholder exercising any of these rights was not acting in good faith or for a legitimate purpose. If, after due notice and hearing, the Commission finds that any provision of this Memorandum Circular has been violated, or that any of the right hereunder has been abused, the Commission may impose any or all of the sanctions provided under Section 158 of the RCC. 14 Published: Manila Bulletin, April 30, 2020 Philippine Star, April 30, 2020
This Memorandum Circular shall take effect upon its publication in two (2) newspapers of general circulation in the Philippines. Pasay City, Philippines, _____ April 2020. For the Commission: EMILIO B. AQUINO Chairperson 28