How Board Meetings Are Conducted

The board of directors of a corporation exercise the powers of the corporation. Under the Corporation Code, the corporate powers of a corporation, all business conducted and all property of a corporation are generally controlled and held by the board of directors.

The validity of a corporate act is predicated on the following requisites:

(1)      meeting of the directors;

(2)      presence of the required quorum;

(3)     decision of majority of the quorum, or in other cases, a majority of the board (or the vote requirement provided in the by-laws);

(4)      meeting at the time, place, and manner provided in the by-laws. (see Corporation Code, sec. 25; see Corporation Code of the Philippines Annotated, p. 267 [2006]).

A typical agenda for a board meeting is as follows:

1.      Call to Order

During this part of the meeting, the person authorized to call the meeting states that he is calling the meeting to order. Unless otherwise provided in the by-laws, the President of the corporation has authority to preside at all meetings of board of directors (Corporation Code, sec. 54). If there is a Chairman of the Board, the Chairman of the Board will usually call the meeting to order.

After the presiding officer calls the meeting to order, the presiding officer will usually note that the Corporate Secretary will record the proceedings. The Corporate Secretary prepares the minutes of meeting, which he will co-sign with the members of the board.

2.     Certification of Quorum

A quorum is necessary in order that business can be transacted during the board meeting. During this part of the meeting, Corporate Secretary certifies that a quorum exists for the transaction of business by the board. Unless the articles of incorporation or the by-laws provide a greater majority, a majority of the number of directors as fixed in the articles of incorporation constitutes a quorum for the transaction of corporate business. (Corporation Code, sec. 25) Hence, if the articles of incorporation provide for 5 directors, 3 directors are required to constitute a quorum. In this regard, vacancies in the board of directors do not affect the minimum number required for a quorum. Thus, if there are only 4 directors in a 5-man board, 3 directors are still required to constitute a quorum.

If notice of the meeting was not given within the period provided in the by-laws, the Corporate Secretary will also certify whether the members of the board have waived the notice requirement.

Sometime 2001, the SEC allowed directors to attend board meetings via teleconference or videoconference. If some directors are attending via teleconference or video conference, the Corporate Secretary takes a roll call at the start of the scheduled meeting. Every director and each participant must state, for the record, the following: (a) full name; (b) location; and (c) for those attending though tele/videconferencing, each such participant shall confirm that: (i) he can completely and clearly hear the others who can clearly hear him at the end of the line; (ii) state whether he has received the agenda and all the materials for the meeting; (iii) specify type of device used. Thereafter, the Corporate Secretary shall confirm and note the contact numbers being used by the directors and participants not physically present. After the roll call, the Secretary may certify the existence of a quorum.

3.     Transaction of corporate business

During this part of the meeting, management will submit for consideration and approval by the board various matters that may require board approval.

In general, every decision of at least a majority of the directors present at a meeting at which there is a quorum is valid as a corporate act. (Corporation Code, sec. 25) For example, if the articles provide for 5 directors and 3 of the directors are present during the meeting, the vote of 2 directors is sufficient to approve the proposed corporate act. In certain instances, the majority vote of all members of the board is required, such as the election of officers.

If some directors are joining the meeting via teleconference, the proceeding must be recorded and all participants must identify themselves for the record before speaking and must clearly hear and/or see each other in the course of the meeting. If a person fails to identify himself, the Secretary must state the identity of the last speaker. If the person speaking is not physically present and the Secretary is not certain of the identity of the speaker, the Secretary must inquire to elicit a confirmation or correction. If a statement of a director/participant in the meeting via tele/videoconferencing is interrupted or garbled, the Secretary must request for a repeat or reiteration, and if need be, the Secretary must repeat what he heard the director/participant was saying for confirmation or correction.

4.      Adjournment

If there is no other business to be conducted, the meeting is adjourned.

(Note: This is part of a series of “How To” articles. These articles intend to give the reader a general overview of the legal aspects of doing certain things and they will not contain all details regarding the proposed action. There may be changes to applicable laws and regulations after the article is posted. You should consult your lawyer if you wish to take a particular action. See Disclaimer page for additional disclaimers.)

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