Atty. Roberto C. Leong

January 25, 1990 Atty. Roberto C. Leong Soberano, Leong, Amihan Tan Esverto, Si Lo Law Offices 2nd Floor, Far East Bank Bldg. Araneta Street, Bacolod, City S i r : This refers to your letter dated November 4, 1989, requesting opinion on the queries posed therein: LexLib The answers thereto are given in the order in which they are propounded in your letter. 1. Can a director who is the president and at the same time presiding officer of the meeting, vote on all matters brought before the board? 2. In the same vein, can he participate in the deliberation of all matters brought before the board? The general rule is that a director has the right to vote. However, "a director who is disqualified by reason of personal interest in the matter before a directors' meeting loses, pro hoc vice, his capacity as a director and he cannot be counted for the purpose of making out a quorum. Nor can the vote of a director who is disqualified be counted for the purpose of determining whether a resolution has been passed by a majority vote." (Ballantine on Corporations, Sec. 45 p. 131).The same ruling should be applied if the director is at the same time the presiding officer. Being such does not deprive him the right to vote as a director. 3. Can the presiding officer delegate his duties as such to any person he wants, or just to the vice-president or to any of the directors only? The pertinent provision of the Corporation Code provides: SECTION 54. Who shall preside at meetings . The president shall preside at all meetings of the directors or trustees as well as the stockholders or members, unless the by-laws provide otherwise ".(emphasis supplied) Corollary thereto, Article IV, Sec. 1 of the new by-laws of First Farmers Holding Corporation expressly provide that the president shall preside at all meetings of the board of directors .Section 2 thereof further provides that the vice-president, in the absence or disability of the president, shall perform the duties of the latter. Accordingly, the corporation is bound by and must comply with the provisions thereof. 4. In the taking down of the minutes of the board meeting, is the corporate secretary required to take down the minutes verbatim or is it enough that his minutes be just reflective of the matters approved or taken up in the meeting? A secretary is not obligated to include everything that is said in the minutes as long as he accurately transcribes what has taken place. The minutes, however, should clearly and certainly record the transactions and proceedings as they actually occurred and should definitely and positively show what action was taken by the corporation in the matters which they purported need to memorialize. (5 Fletcher, Sec. 2190) The Corporation Code provides, thus: "SECTION 74. Books to be kept ;... Every Corporation, shall, at its principal office, keep and carefully preserve a record of all business transactions, and minutes of all meetings of stockholders or members, or of the board of directors or trustees, in which shall be set forth in detail the time and place of holding the meeting; how authorized; the notice given; whether the meeting was regular or special, if special, its object; those present and absent; and every act done or ordered done at the meeting. Upon the demand of any director, trustee, stockholder or member, the time when any director, trustee, stockholder, or member entered or left the meeting must be noted in the minutes; and on a similar demand, the yeas and nays must be taken on any motion or proposition, and a record thereof carefully made. The protest of any director, trustee, stockholder or member on any action or proposed action must be recorded in full on his demand. ...(emphasis supplied) 5. In case a quorum in the meeting is already obtained, but the development in the meeting is not to the expectation of, liking or do not favor a group of directors, does the walking out of the meeting of these directors destroy the quorum already obtained at the start of the meeting? According to the modern and better view, where a quorum is once present to organize a meeting, it is not broken by the subsequent withdrawal of a part or faction of those present. (5 Fletcher, Sec. 2013.1) This rule, however, does not hold true in those transactions covered and regulated by applicable provisions of the Corporation Code which require the affirmative vote of a greater proportion. Obviously, any resolution passed by the remaining directors present must necessarily fail if the votes attained is less than what the law requires for the particular transaction. 6. Is it perfectly legal for the board of directors by a majority vote to adopt a rule that the presiding officer can vote only in case of a tie or to create a tie? cdll It is to be noted that one of the essential rights of a stockholder/director is the right to participate in the control or management of the corporation. This is exercised through his vote. Accordingly, a director cannot be deprived of this essential right without his consent. 7. Can a director bring with him in the meeting a lawyer, accountant or adviser so that he can intelligently participate in the discussion of matters brought before the meeting? The foregoing query is answered by the following jurisprudence on the matter: "Whether individual director was entitled to have aid of counsel and a stenographer at meetings of board of directors was matter of internal corporate management upon which court properly declined to rule".(Jacobson v. Moskowitz, 27 NY2d 67, 313 NYS 2d 684, 261 NE2d 613, cited in 2 Fletcher Sec. 418) "West Virginia statutes allow the board of directors to determine who shall or shall not attend board meetings, other than directors themselves, and this determination is to be made by the board as a whole and not by directors individually." (Burt v. Irvine Co.,224 Cal App 2d 50, 36 Cal Rptr 270, cited in 2 Fletcher Sec. 418) Therefore, a director may have a counsel present at a meeting of the board of, directors if so allowed by the body. 8. Can the board of directors adopt its own rules in the conduct of its meetings which is not contrary to law, and by how many votes? Directors' meetings are often more or less informal. It may adopt its own internal rules in the conduct of its meeting, provided, however, that the same will not run-counter to the provisions of the Corporation Code, articles of incorporation and by-laws of the corporation. As to the required votes for the adoption of said internal rule, the by-laws of subject corporation provides: "SECTION 10. Quorum . Six of the directors shall constitute a quorum for the transaction of a corporate business at any meeting of the Board of Directors and every decision of a majority of the quorum duly assembled as a board is a corporate act ." (emphasis supplied) cdll Please be advised accordingly. Very truly yours, (SGD.) RODOLFO L. SAMARISTA Associate Commissioner