Atty. Felix D. Carao, Jr.

April 29, 1982 Atty. Felix D. Carao, Jr. Corporate Secretary Central Azucarera De La Carlota Elizalde Building 141 Ayala Avenue, Makati, MM P.O. Box 121, Manila Dear Atty. Carao: This refers to your letter dated April 26, 1982 (a) requesting approval of this Commission relative to the holding by the Central Azucarera De La Carlota of a Special Stockholder's Meeting sometime in the first week of May, 1982 for the ratification of the Management Contract by the stockholders of the corporation on or before May 1, 1982 as required by the Corporation Code of the Philippines (BP Blg. 68) and the election of a new set of directors considering the term of the incumbent directors will expire on May 4, 1982 and unless such election is held, the incumbent Board will be on a hold-over tenure until March 1983 or a total of almost two (2) years; and likewise (b) requesting permission by this Commission to allow corporation to hold the meeting at a suitable place in Makati, Metro Manila, other than at Elizalde Building, Makati Manila, its principal office. With respect to your first request relative to the management contract, it is worthy to mention that Section 44 of the Corporation Code of the Philippines is a new provision which specifically prescribes that: SECTION 44 ...No corporation shall conclude a management contract with another corporation unless such contract shall have been approved by the board of directors and by stockholders owning at least a majority of the outstanding capital stock, or by at least a majority of the members in the case of a non-stock corporation, of both the managing and managed corporation, at a meeting duly called for the purpose: ...No management contract shall be entered into for a period longer than five years for any one term. xxx xxx xxx Likewise, Section 148 of the aforesaid law mandates that existing corporations affected by the new requirements under said Code are given a period of two (2) years from its effectivity (May 1, 1980) within which to comply with the same. Considering that your first request is in order to comply with aforequoted provisions of law, we are inclined to grant the same. However, as a matter of policy, this Commission will not allow a period of limitation that will extend beyond April 30, 1985 for said management contract. Relative to your request to elect the directors, the same is also predicated upon an expressed provision of law which states in part that "Unless otherwise provided in this Code, the corporate powers of all corporations formed in this Code shall be exercised, . . . by the board of directors or trustees . . . , who shall hold office for one (1) year and until their successors are elected and qualified (Section 23, Corporation Code) Evidently, an annual meeting for the election of the directors and officers is mandatory. Finally, regarding your second request, it appears that the facilities in principal office at Elizalde Bldg.,Makati, Metro Manila would not be able to accommodate some one thousand stockholders who may attend such meeting and therefore you proposed to hold the same at a suitable place in Makati, Metro Manila. We are inclined to also grant said request pursuant to law. "SECTION 51. Place and time of meeting of stockholders or members . Stockholders' or members' meeting, whether regular or special, shall be held in the city or municipality where the principal office of the corporation is located, and if practicable in the principal office of the corporation, ...." Please be advised accordingly. LibLex Very truly yours, (SGD.) JULIO A. SULIT, JR. Associate Commissioner