Philippine Institute of Certified Public Accountants

September 28, 1984 Philippine Institute of Certified Public Accountants PICPA House, 700 Shaw Blvd. Mandaluyong, Metro Manila Attention : Mr . Manuel A . Reyes President Gentlemen: This refers to your letter dated September 18, 1984, requesting for the opinion of this Commission as to the proper interpretation of who can vote in the proposal to amend the Institute's articles of incorporation and by-laws, and how the approving vote should be determined. cdll The provision of the Corporation Code pertinent to your queries explicitly provides: "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 3. The required quorum in meetings of ...members; xxx xxx xxx (emphasis supplied) Any corporation, whether stock or non-stock, is authorized to provide in its by-laws a specific number of stockholders or members necessary to constitute a quorum for the transaction of corporate business, except in those cases where the Corporation Code itself provides a greater number of stockholders or members necessary to constitute a quorum. (SEC Opinion, dated January 2, 1980). In the case of that Institute, a quorum of only 400 members in good standing out of the total membership of around 38,000 is necessary for the transaction of ordinary and regular corporate business (Section 3, Article V of your amended by-laws), subject, however to the provisions of Sections 16 and 48 of the Corporation Code. Accordingly, while a minimum number of 400 members in good standing is sufficient to transact ordinary and regular business affecting the institute, yet, the same number would not legally constitute a quorum in the following instances prescribed by the Code: 1. In the amendment of the articles of incorporation, the law requires the majority vote of the Board of Directors/Trustees and the vote or written assent of two-thirds (2/3) of the members. (Section 16). 2. In the amendment or repeal of by-laws or adoption of new by-laws, the law requires the majority vote of the Board of Directors/Trustees and at least a majority of the members of a non-stock corporation (Section 48). Less than the number prescribed by statute cannot hold a meeting and transact business. Thus, the Commission in a previous opinion ruled that the majority of the members or some preponderance is sometimes required to carry out particular proposals such as amendment of the articles of incorporation or by-laws ( SEC Opinion, dated June 27, 1972 ).Even the California Law adheres to the rule that "if the quorum requirements are satisfied, the affirmative vote of the majority of the voting power represented at the meeting, entitled to vote, and voting on any such matter is the act of the members unless the vote of a greater number or voting classes is required by law ....." (IB Ballantine & Sterling, 1982 ed.,sec. 409.02 par. 1 at 19-292, emphasis supplied). prcd On the question of who can vote on the amendment of the articles and by-laws, all the members of that Institute, who have not been automatically dropped from the membership roster as provided for in Section 3, Article IV of the amended by-laws may so vote thereat. Conversely, members whose dues and other accounts remain unpaid after the prescribed last day of payment as set forth in Article IX of the by-laws, and consequently dropped from the membership roster upon the expiration of sixty (60) days from the date notice to that effect is sent via registered messenger or registered mail and are thereafter no longer members cannot vote, unless payment is effected prior to the expiration of the sixty (60) day period. Since Sections 16 and 48 of the Corporation Code are express provisions requiring the votes of two-thirds (2/3) and majority of the members to approve this amendment of the articles and by-laws of a non-stock corporation, respectively, it is clear that said proportions of all the members (whether or not in good standing) and not only of the members entitled to vote on ordinary corporate matters are the ones required to carry out your particular proposals. In both cases, however, the majority vote of the Board of Directors/Trustees is required. Please be advised accordingly. Very truly yours, (SGD.) MANUEL G. ABELLO Chairman