Mr. Bienvenido G. Tee

June 16, 1983 Mr. Bienvenido G. Tee President, Asian Maintenance and Developers, Inc. Suite 321 and 324, URC Bldg. 2123 Espaa St. cor. Blumentritt St. Manila Sir: This has reference to your letter dated May 31, 1983 requesting the opinion of this Commission on the questions enumerated therein. The following are our answers to your queries in the order in which they appear in your letter: (1) Although voting by proxy is granted to stockholders in all meetings of stockholders under Section 58 of the Code, the same is explicitly prohibited with respect to board members under the penultimate paragraph of Section 25 which provides: xxx xxx xxx "Directors ...cannot vote by proxy at board meetings." The reason for this is that in board meetings the director's personal judgment is necessary. Directors represent the stockholders who voted them into office presumably because of the directors' personal qualifications, business experience and sound judgment and therefore, they cannot delegate their powers to vote much less their duties. Anent your other query, the board meetings attended by these proxies will be void only if they were counted in determining if a quorum exists. Anent your second query, the pertinent provisions of the Corporation Code of the Philippines provides thus: "SECTION 23. The board of directors or trustees . ... Every director must own at least one (1) share of the capital stock of the corporation of which he is a director, which share must 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. ..." "SECTION 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." Furthermore, Section 47 of the Corporation Code provides, in part, as follows: "SECTION 47. Contents of by-laws . Subject to the provisions of the Constitution, this Code, other special laws, and the articles of incorporation, a private corporation may provide in its by-laws for: xxx xxx xxx 5. The qualifications, duties and compensation of directors, or trustees, officers and employees. xxx xxx xxx." A reading of the by-laws of that corporation qualified the directors thereof in the sense that he must not be a legitimate owner, partner, or stockholder of another corporation or any business entities that is engaged in a similar or related business of the corporation (Section 1, Article IV). Accordingly, in the absence of any qualification in your by-laws requiring the physical presence of a director in the country, a stockholder who is on overseas assignment and could not participate in any board meeting, may still be elected director, for as long as he qualifies under the Corporation Code of the Philippines. cdlex (3) & (4) Your questions thereunder fall squarely within the provisions of the Corporation Code which state: "SECTION 66. Interest on unpaid subscriptions . Subscribers for stock shall pay to the corporation interest on all unpaid subscriptions from the date of subscription, if so required by, and at the rate of interest fixed in the by-laws .If no rate of interest is fixed in the by-laws, such rate shall be deemed to be the legal rate ." (Emphasis supplied) "SECTION 67. Payment of balance subscription . Subject to the provisions to the contract of subscription, the board of directors of any stock corporation may at any time declare due and payable to the corporation unpaid subscriptions to the capital stock and may collect the same or such percentage thereof in either case with accrued interest, if any, as it may deem necessary." (Emphasis supplied) xxx xxx xxx" Considering that the law specifically empowers only the board of directors to make the call, it becomes unnecessary to answer your last question. (5) The answer to this query is in the affirmative provided that the following requirements are complied with, namely: a) Letter requesting the exemption from the registration requirements of the Revised Securities Act the issuance of shares of stock out of the unissued capital stock stating the name(s) of purchaser(s), issue value and nature of payment, whether in cash or property; b) Resolution of the Board of Directors authorizing the issuance of shares from the unissued portion of the capital stock; c) List of stockholders of record as of the date of meeting of the Board of Directors; d) Written waiver of non-subscribing stockholders of record if any; and, e) Exemption fee amounting to 1/10 of 1% of the total issue value of the shares. (6) The pre-emptive right granted to original stockholders under Section 39 of the Code is not denied them in Question No. 5; precisely, they are required to submit a written waiver before the unsubscribed stocks are offered to others; (7) Other than the limitations and qualifications regarding officers of the corporation as set forth in Section 25 of the Code, we are not aware of any provision therein governing "close relatives" as mentioned in your letter. Please be guided accordingly. Very truly yours, (SGD.) JESUS J. VALDES Associate Commissioner