The Corporate Corner
Jesus Enrique G. Martinez
corporate_corner@yahoo.com
TECHNOLOGICAL advances have made “telecommuting” and “virtual office” buzzwords in present business environments. The Securities and Exchange Commission (SEC) has recognized that it must respond to the exigencies of the times and the technological developments of the 21st century (SEC Opinion dated 09 August 2001).
The SEC issued Memo Circular No. 15-01 dated November 20, 2001 prescribing the guidelines for the conduct of teleconferencing and videoconferencing (that is, conferences or meetings through an electronic medium, with the participants not physically present and may be located at different local or international places) of the Board of Directors.
The Secretary of the meeting is responsible for ensuring that the integrity of the meeting via tele/videoconferencing is adequately safeguarded. Thus, technically sufficient tele/videoconference equipment and facilities should be used. The Secretary records the proceedings and prepares the minutes of the meeting. The Secretary also stores for safekeeping and marks the tape recording/s and other electronic recording mechanism to form part of the records of the corporation.
It is also the Secretary, who sends out the notices of the meeting to all directors in accordance with the manner of giving notice as stated in the corporate bylaws. The notice shall include (a) an inquiry on whether the director will attend physically or through tele/videoconferencing; (b) the contact number/s of the Secretary and office staff whom the director may call to notify and state whether he shall be physically present or attend through tele/videoconferencing; (c) the agenda of the meeting; and (d) all documents to be discussed in the meeting, including attachments, numbered and duly marked by the Secretary in such a way that all the directors, physically or electronically present, can easily follow, refer to the documents and participate in the meeting.
If the director chooses tele/videoconferencing, he shall give notice of at least five days prior to the scheduled meeting to the Secretary. The latter shall be informed of his contact number/s. In the same way, the Secretary shall inform the director concerned of the contact number/s he will call to join the meeting. The Secretary shall keep the records of the details, and on the date of the scheduled meeting, confirm and note such details as part of the minutes of the meeting. In the absence of an arrangement, it is presumed that the director would physically attend the Board meeting.
At the start of the scheduled meeting, a roll call shall be made by the Secretary. Every director and participant shall state, for the record, his full name and location. Those attending through tele/videoconferencing shall confirm that he or she can completely and clearly hear the others who can likewise clearly hear him at the end of the line. He shall also state whether he has received the agenda and all the materials for the meeting, and specify the type of device used.
Thereafter, the 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.
All participants shall 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 shall quickly 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 motion is objected to and there is a need to vote and divide the Board, the Secretary should call the roll and note the vote of each director who should identify himself.
If a statement of a director/participant in the meeting via tele/videoconferencing is interrupted or garbled, the Secretary shall request for a repeat or reiteration, and if need be, the Secretary shall repeat what he heard the director/participant was saying for confirmation or correction.
The Secretary shall then require all the directors who attended the meeting, whether personally or through tele/videoconferencing, to sign the minutes of the meeting to dispel all doubts on matters taken up during the meeting.
Thus the SEC has modified its previous opinion requiring “actual presence” of directors or trustees during board meetings. The SEC takes its basis from and in accordance with Section 16 of the Electronic Commerce Act (R.A. 8792), which provides in part that “no contract shall be denied validity or enforceability on the sole ground that it is in the form of an electronic data message or electronic document or that any or all of the elements required under existing laws for the formation of contracts is expressed, demonstrated or proved by means of electronic documents.” The SEC is likewise of the opinion that the intended benefits of the above-referenced law may be made to apply to Section 25 of the Corporation Code, which conversely requires the presence of the directors in board meetings (SEC Opinion dated 09 August 2001).
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