VOTING REQUIREMENTS

Election of BOD/BOT

o Presence of the owners of the majority outstanding capital stock in

case of a stock corporation.
o A majority of the members entitled to vote, in case of a non-stock
corporation.

Stockholders or members can vote through;

o Person
o By written proxy
o Through remote communication or in absentia when so authorized by
the bylaws or by majority of the BOD.
Exp. The corporation can exercise such mode of voting even in
the absence of the provisions of by-laws when it is vested with public
interest.

In stock corporations, stockholders entitled to vote shall have the right to

vote the number of shares of stock standing in their own names in the stock
books of the corporation at the time fixed in the bylaws or where the bylaws
are silent, at the time of the election.

The shareholders may:

a. vote such number of shares for as many persons as there are
directors to be elected;
b. cumulate said shares and give one (1) candidate as many votes as
the number of directors to be elected multiplied by the number of the
shares owned; or
c. distribute them on the same principle among as many candidates as
may be seen fit
Exp. total number of votes cast shall not exceed the number of shares
owned by the stockholders for each director to be elected.
Method of Voting

A. Straight Voting
total number of votes cast shall not exceed the number of shares
owned by the stockholders as shown in the books of the
corporation multiplied by the whole number of directors to be
elected.

Example: A owns 100 shares. If there are 5 directors to be elected, A is

entitled to 500 votes multiplying 100 by 5. He may give to the 5 candidates
100 votes each.

B. Cumulative Voting (for 1 candidate)

Cumulate said shares and give 1 candidate as many votes as the

number of directors to be elected multiplied by the number of shares
owned.

The privilege of cumulative voting is permitted for the purpose of

giving minority stockholders representation in the BOD. Stockholders
shall have the right to vote the number of shares of stock standing in
their own names.

A director elected because of the vote of the minority stockholders

who untied in cumulative voting cannot be removed without cause.

Unless otherwise provided in the AOI and by-laws, member in a non-

stock corporation may;

a. cast as many votes as there are trustees to be elected but may not
cast more than one (1) vote for one (1) candidate.
Notes:

1. In absence of the required majority, there will be failure of

election.
2. The law follows plurality voting, wherein the nominee with
the highest number of votes shall be elects as a director.
3. The election is generally done through straight voting
4. Cumulative voting is generally not permitted in a non- stock
corporation, where each member may not cast more than 1
vote for 1 candidate.

Removal of the BOD/BOT

Any director or trustee of a corporation may be removed

from office by vote of:

a. The stockholders holding or representing at least two-thirds (2/3)

of the outstanding capital stock
b. by a vote of at least two-thirds (2/3) of the member entitled to vote
in a non-stock corporation

How removal is done:

o By the stockholders through a regular or special meeting. If in a

special meeting, the special meeting shall be called for the purpose
of removing the director.
o It must be called by the secretary on order of the president, or upon
written demand of the stockholders representing or holding at least a
majority of the outstanding capital stock, or a majority of the members
entitled to vote.
o If there is no secretary, or if the secretary, despite demand, fails or
refuses to call the special meeting or to give notice thereof, the
stockholder or member of the corporation signing the demand may
call for the meeting by directly addressing the stockholders or
members.
 o Notice of the time and place of such meeting, as well as the
information to propose such removal, must be given by publication or
by written notice prescribed in this Code by SEC
o Upon verified complaint, and after due notice and hearing,
order the removal of a director or trustee elected despite the
disqualification, or whose disqualification arose or is
discovered subsequent to an election.

Compensation of Directors/Trustees

General Rule: The directors/trustees shall not receive any compensation in

their capacity as such.

Exp. (1) Reasonable per diems

(2) As stipulated in their by-laws fixing their compensation
(3) Voted upon by the stockholders representing majority of the OCS

Exp. to exp.

A vote of at least of the majority of the outstanding capital stock or majority

of the members entitled to vote grants the directors compensation in a
meeting specifically called for that purpose.

Vacancy

They are filled a vote of majority of the board of directors were there
is still a qourum, and the elected replacement officer has a term of only
the unexpired portion of his predecessor.

Dealings with Directors/Trustees or Officers

General Rule: A contract of the Corporation with 1 or more of its directors,
trustees, officers, or their spouses and relatives within the 4th civil degree
of consanguinity or affinity is VOIDABLE, at the option of the corporation

Exp. The contract is held valid provided that the following

conditions are present:
(1) Presence of the director or trustee in the BOD meeting in
which contract is approved was not necessary to constitute a
quorum for such meeting;
(2) Vote of such director or trustee was not necessary for the
approval of the contract

(3) The contract is fair and reasonable under the

circumstances

(4) In case of corporations vested with public interest, material

contracts are approved by at least two- thirds (2/3) of the
entire membership of the board, with at least a majority of the
independent directors voting to approve the material contract;
and

(5) In case of an officer, the contract has been previously

authorized by the board of directors.

Ratification by a vote of 2/3

o Although the contract is VOIDABLE, the contract may be

ratified by the vote of the stockholders representing at least
2/3 of the outstanding capital stock. Provided, that full
disclosure of the director or trustee’s adverse interest is
made at such meeting and the contract is fair and
reasonable.

Disloyalty of a Director
General Rule: A director, by virtue of such office, ACQUIRES A
BUSINESS OPPORTUNITY belonging to the corporation, (that
should have benefitted the corporation itself), thereby obtaining
profits to the prejudice of the corporation, must ACCOUNT FOR
AND REFUND the corporation for ALL PROFITS.

Exp. Ratification of the stockholders owning at least 2/3 of the

OCS

Emergency Board

As a rule, 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.

Summary of voting requirements, including but not limited to Title III of the
RCC.

Voting Requirements Summary

Section Purpose Voting Requirements
Stockholders/Members BOD/BOT
16 Amendment of AOI 2/3 of OCS/members Majority
28 Removal of 2/3 of OCS/members
Directors/Trustees
29 Filling of vacancy in board When there is no quorum, Majority of the
regular voting of remaining
stockholders/ members directors, if
still
constituting a
quorum
30 Granting compensation to Majority of the OCS
directors
32 Ratification of contracts dealt 2/3 of OCS/members
by directors
36 Extending or shortening 2/3 Majority
corporate term
37 Increase/decrease capital 2/3 Majority
stock / Create or increase
bond indebtedness
38 Approval of shares as 2/3 of OCS
payment for property or debt
39 Sale or disposition of 2/3 of OCS Majority
substantially or all of the
corporate assets
41 Investing corporate funds in 2/3 of OCS/members Majority
another corporation or
business or for any other
purpose
42 Approval to issue stock 2/3 of OCS
dividend
43 Entering into management 2/3 of OCS/members Majority of the
contracts qourum
45 Adoption of by-laws 2/3 of OCS/members
47 Amendment of by-laws 2/3 of OCS/members Majority
May be
delegated to
the board by
2/3 vote of
OCS/members
61 Authorizing the board to fix 2/3 of OCS
the issue price of no-par
value shares if no
authorization in AOI and by-
laws
76 Approval/amendment of a 2/3 of OCS/members Majority
merger plan
94 Adopting a distribution plan 2/3 of members with Majority
of assets for a dissolving voting rights
non-stock corporation
134 Voluntary dissolution where Majority of OCS/members Majority
no creditors are affected
135 Voluntary dissolution where 2/3 of OCS/members Majority
creditors are affected
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