Draft Memorandum Circular on Calling of Special Stockholders' Meetings

April 16, 2021 SEC NOTICE TO : All Interested Parties SUBJECT : Draft Memorandum Circular on Calling of Special Stockholders' Meetings The public is invited to submit their comments, feedback, and inputs on the draft Memorandum Circular on Calling of Special Stockholders' Meetings on or before 21 April 2021 (Wednesday) . It is requested that comments/inputs be emailed to [emailprotected] using the template provided. Issued on 16 April 2021. ATTACHMENT SEC MEMORANDUM CIRCULAR NO. ______ Series of 2021 TO : PUBLICLY-LISTED COMPANIES (PLCs) SUBJECT : CALLING OF SPECIAL STOCKHOLDERS' MEETINGS To promote good corporate governance and the protection of minority investors, the 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) Any number of shareholders of a corporation ("Qualifying Shareholders") who holds at least ten percent (10%) or more of the outstanding capital stock ("Qualifying Shares") of a PLC shall have the right to call for a Special Stockholders' Meeting, subject to the guidelines set under Section 49 of the RCC and other relevant regulations. The Special Stockholders' Meeting may be done physically or remotely through allowable means of remote communication. (2) The Qualifying Shareholders should have continuously held the Qualifying Shares for a period of at least one (1) year prior to the receipt by the Corporate Secretary of a written Call for a Special Stockholders' Meeting. (3) The Call for a Special Stockholders' Meeting shall be in writing and signed by all Qualifying Shareholders, addressed to the Board of Directors and transmitted through the Corporate Secretary at least two (2) weeks prior to the proposed date of the special meeting, setting forth therein: i. The names of the Qualifying Stockholder(s) and their respective percentage of shareholdings which must constitute at least ten percent (10%) of the outstanding capital stock of the corporation; ii. The purpose of the Call for a Special Stockholders' Meeting, which must be stated with sufficient clarity, affects the legitimate interest of the stockholders and is germane to the stockholders' interest; Provided, that , the purpose should not include the removal of any director under Section 27 of the RCC; iii. The proposed date and time of the requested Special Stockholders' Meeting; Provided, that , no stockholder may call a special meeting within sixty (60) days on the same matter discussed from the previous meeting of the same nature, unless the by-laws provide otherwise or as approved by the Board of Directors. iv. The proposed agenda items to be discussed during the Special Stockholders' Meeting; Provided, that , the matters to be discussed are those affecting the legitimate interests of the shareholders on corporate actions where stockholders' approval is required under the RCC, except the right to remove a director; Provided, further , that a special meeting cannot be called if the proposed agenda (a) covers the same matter/s discussed and resolved in a previous meeting of the stockholders, unless the company by-laws provide otherwise or as approved by the Board; (b) will be covered in the next regular or special meeting; or (c) has already been discussed and resolved in the previous meetings. (4) The Board of Directors shall determine if the objectives and conditions in the Call for Special Stockholders' Meeting are consistent with the requirements of this Memorandum Circular. If found to be consistent, the Board shall issue the Notice to convene the Special Stockholders' Meeting within seven (7) days from receipt of the Call for Special Stockholders' Meeting and at least seven (7) days prior to the proposed date of special meeting in accordance with Sections 49 and 50 of the RCC, SEC Memorandum Circular No. 6, Series of 2020 (Teleconferencing, Videoconferencing, and other remote or electronic means of communication), and the company's by-laws; Provided, further , that if found to be inconsistent, the Board shall send a written notice to the requesting stockholders indicating that a meeting cannot be called due to the failure to comply with the requirements of this Memorandum Circular, clearly setting forth the basis of such inconsistency. (5) In the event that the Board of Directors fails to respond to the Call for Special Stockholders' Meeting within seven (7) days from receipt, the Qualifying Stockholder/s may avail of the remedy provided under paragraph 7, Section 49 of the RCC. (6) Any officer or agent of the corporation who shall refuse to allow a Qualifying Shareholder to exercise his/her right to call a meeting 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 circular that the shareholder exercising any of these rights was not acting in good faith or in accordance with the requirements of this Memorandum Circular. If, after due notice and hearing, the Commission finds that any provision of this Memorandum Circular has been violated, or that any of the rights hereunder have been abused, the Commission may impose any or all of the sanctions provided under Section 158 of the RCC. This Memorandum Circular shall take effect upon its publication in two (2) newspapers of general circulation in the Philippines. Pasay City, Philippines, _____ April 2021. For the Commission: EMILIO B. AQUINO Chairperson Draft Memorandum Circular on Calling of Special Stockholders' Meetings