TITLE IIIBOARD OF
DIRECTORS/TRUSTEES/OFFICERS
Sec. 23. The board
of directors or trustees. - Unless otherwise provided in
this Code, the corporate powers of all corporations formed under this
Code
shall be exercised, all business conducted and all property of such
corporations
controlled and held by the board of directors or trustees to be elected
from among the holders of stocks, or where there is no stock, from
among
the members of the corporation, who shall hold office for one (1) year
until their successors are elected and qualified.
Every
director must own at least one (1) share
of the capital stock of the corporation of which he is a director,
which
share shall stand in his name on the books of the corporation. Any
director
who ceases to be the owner of at least one (1) share of the capital
stock
of the corporation of which he is a director shall thereby cease to be
a director. Trustees of non-stock corporations must be members thereof.
a majority of the directors or trustees of all corporations organized
under
this Code must be residents of the Philippines.
Sec. 24. Election
of directors or trustees. - At all elections of
directors
or trustees, there must be present, either in person or by
representative
authorized to act by written proxy, the owners of a majority of the
outstanding
capital stock, or if there be no capital stock, a majority of the
members
entitled to vote. The election must be by ballot if requested by any
voting
stockholder or member. In stock corporations, every stockholder
entitled
to vote shall have the right to vote in person or by proxy the number
of
shares of stock standing, at the time fixed in the by-laws, in his own
name on the stock books of the corporation, or where the by-laws are
silent,
at the time of the election; and said stockholder may vote such number
of shares for as many persons as there are directors to be elected or
he
may cumulate said shares and give one candidate as many votes as the
number
of directors to be elected multiplied by the number of his shares shall
equal, or he may distribute them on the same principle among as many
candidates
as he shall see fit: Provided, That the total number of votes cast by
him
shall not exceed the number of shares owned by him as shown in the
books
of the corporation multiplied by the whole number of directors to be
elected:
Provided, however, That no delinquent stock shall be voted. Unless
otherwise
provided in the articles of incorporation or in the by-laws, members of
corporations which have no capital stock may cast as many votes as
there
are trustees to be elected but may not cast more than one vote for one
candidate. Candidates receiving the highest number of votes shall be
declared
elected. Any meeting of the stockholders or members called for an
election
may adjourn from day to day or from time to time but not sine die or
indefinitely
if, for any reason, no election is held, or if there not present or
represented
by proxy, at the meeting, the owners of a majority of the outstanding
capital
stock, or if there be no capital stock, a majority of the member
entitled
to vote.
Sec. 25. Corporate
officers, quorum. - Immediately after their election,
the
directors of a corporation must formally organize by the election of a
president, who shall be a director, a treasurer who may or may not be a
director, a secretary who shall be a resident and citizen of the
Philippines,
and such other officers as may be provided for in the by-laws. Any two
(2) or more positions may be held concurrently by the same person,
except
that no one shall act as president and secretary or as president and
treasurer
at the same time.
The directors
or trustees and officers to
be elected shall perform the duties enjoined on them by law and the
by-laws
of the corporation. Unless the articles of incorporation or the by-laws
provide for a greater majority, a majority of the number of directors
or
trustees as fixed in the articles of incorporation shall constitute a
quorum
for the transaction of corporate business, and every decision of at
least
a majority of the directors or trustees present at a meeting at which
there
is a quorum shall be valid as a corporate act, except for the election
of officers which shall require the vote of a majority of all the
members
of the board.
Directors or
trustees cannot attend or vote
by proxy at board meetings.
Sec. 26. Report
of election of directors, trustees and officers. -
Within
thirty (30) days after the election of the directors, trustees and
officers
of the corporation, the secretary, or any other officer of the
corporation,
shall submit to the Securities and Exchange Commission, the names,
nationalities
and residences of the directors, trustees, and officers elected. Should
a director, trustee or officer die, resign or in any manner cease to
hold
office, his heirs in case of his death, the secretary, or any other
officer
of the corporation, or the director, trustee or officer himself, shall
immediately report such fact to the Securities and Exchange Commission.
Sec. 27. Disqualification
of directors, trustees or officers. - No person
convicted
by final judgment of an offense punishable by imprisonment for a period
exceeding six (6) years, or a violation of this Code committed within
five
(5) years prior to the date of his election or appointment, shall
qualify
as a director, trustee or officer of any corporation.
Sec. 28. Removal
of directors or trustees. - Any director or trustee of a
corporation may be removed from office by a vote of the stockholders
holding
or representing at least two-thirds (2/3) of the outstanding capital
stock,
or if the corporation be a non-stock corporation, by a vote of at least
two-thirds (2/3) of the members entitled to vote: Provided, That such
removal
shall take place either at a regular meeting of the corporation or at a
special meeting called for the purpose, and in either case, after
previous
notice to stockholders or members of the corporation of the intention
to
propose such removal at the meeting. A special meeting of the
stockholders
or members of a corporation for the purpose of removal of directors or
trustees, or any of them, must be called by the secretary on order of
the
president or on the written demand of the stockholders representing or
holding at least a majority of the outstanding capital stock, or, if it
be a non-stock corporation, on the written demand of a majority of the
members entitled to vote. Should the secretary fail or refuse to call
the
special meeting upon such demand or fail or refuse to give the notice,
or if there is no secretary, the call for the meeting may be addressed
directly to the stockholders or members by any stockholder or member of
the corporation signing the demand. Notice of the time and place of
such
meeting, as well as of the intention to propose such removal, must be
given
by publication or by written notice prescribed in this Code. Removal
may
be with or without cause: Provided, That removal without cause may not
be used to deprive minority stockholders or members of the right of
representation
to which they may be entitled under Section 24 of this Code.
Sec. 29. Vacancies
in the office of director or trustee. - Any vacancy
occurring
in the board of directors or trustees other than by removal by the
stockholders
or members or by expiration of term, may be filled by the vote of at
least
a majority of the remaining directors or trustees, if still
constituting
a quorum; otherwise, said vacancies must be filled by the stockholders
in a regular or special meeting called for that purpose. A director or
trustee so elected to fill a vacancy shall be elected only or the
unexpired
term of his predecessor in office.
A
directorship or trusteeship to be filled
by reason of an increase in the number of directors or trustees shall
be
filled only by an election at a regular or at a special meeting of
stockholders
or members duly called for the purpose, or in the same meeting
authorizing
the increase of directors or trustees if so stated in the notice of the
meeting.
Sec. 30. Compensation
of directors. - In the absence of any provision in the
by-laws
fixing their compensation, the directors shall not receive any
compensation,
as such directors, except for reasonable pre diems: Provided, however,
That any such compensation other than per diems may be granted to
directors
by the vote of the stockholders representing at least a majority of the
outstanding capital stock at a regular or special stockholders'
meeting.
In no case shall the total yearly compensation of directors, as such
directors,
exceed ten (10%) percent of the net income before income tax of the
corporation
during the preceding year.
Sec. 31. Liability
of directors, trustees or officers. - Directors or
trustees
who willfully and knowingly vote for or assent to patently unlawful
acts
of the corporation or who are guilty of gross negligence or bad faith
in
directing the affairs of the corporation or acquire any personal or
pecuniary
interest in conflict with their duty as such directors or trustees
shall
be liable jointly and severally for all damages resulting therefrom
suffered
by the corporation, its stockholders or members and other persons.
When a
director, trustee or officer attempts
to acquire or acquires, in violation of his duty, any interest adverse
to the corporation in respect of any matter which has been reposed in
him
in confidence, as to which equity imposes a disability upon him to deal
in his own behalf, he shall be liable as a trustee for the corporation
and must account for the profits which otherwise would have accrued to
the corporation.
Sec. 32. Dealings
of directors, trustees or officers with the
corporation.
- A contract of the corporation with one or more of its directors or
trustees
or officers is voidable, at the option of such corporation, unless all
the following conditions are present:
1. That the presence of such director or
trustee in the board meeting in which the contract was approved was not
necessary to constitute a quorum for such meeting;
2. That the vote of such director or
trustee
was nor necessary for the approval of the contract;
3. That the contract is fair and
reasonable
under the circumstances; and
4. That in case of an officer, the
contract
has been previously authorized by the board of directors.
Where any
of the first two conditions set forth
in the preceding paragraph is absent, in the case of a contract with a
director or trustee, such contract may be ratified by the vote of the
stockholders
representing at least two-thirds (2/3) of the outstanding capital stock
or of at least two-thirds (2/3) of the members in a meeting called for
the purpose: Provided, That full disclosure of the adverse interest of
the directors or trustees involved is made at such meeting: Provided,
however,
That the contract is fair and reasonable under the circumstances.
Sec. 33. Contracts
between corporations with interlocking
directors.
- Except in cases of fraud, and provided the contract is fair and
reasonable
under the circumstances, a contract between two or more corporations
having
interlocking directors shall not be invalidated on that ground alone:
Provided,
That if the interest of the interlocking director in one corporation is
substantial and his interest in the other corporation or corporations
is
merely nominal, he shall be subject to the provisions of the preceding
section insofar as the latter corporation or corporations are concerned.
Stockholdings
exceeding twenty (20%) percent
of the outstanding capital stock shall be considered substantial for
purposes
of interlocking directors.
Sec. 34. Disloyalty
of a director.- Where
a director, by virtue of his office, acquires for himself a business
opportunity
which should belong to the corporation, thereby obtaining profits to
the
prejudice of such corporation, he must account to the latter for all
such
profits by refunding the same, unless his act has been ratified by a
vote
of the stockholders owning or representing at least two-thirds (2/3) of
the outstanding capital stock. This provision shall be applicable,
notwithstanding
the fact that the director risked his own funds in the venture.
Sec. 35.
Executive
committee. - The by-laws of a corporation may create an
executive committee, composed of not less than three members of the
board,
to be appointed by the board. Said committee may act, by majority vote
of all its members, on such specific matters within the competence of
the
board, as may be delegated to it in the by-laws or on a majority vote
of
the board, except with respect to: (1) approval of any action for which
shareholders' approval is also required; (2) the filing of vacancies in
the board; (3) the amendment or repeal of by-laws or the adoption of
new
by-laws; (4) the amendment or repeal of any resolution of the board
which
by its express terms is not so amendable or repealable; and (5) a
distribution
of cash dividends to the shareholders. |