‘Electronic voting by stockholders not allowed under the law’



INTEGRATED Micro-Electronics Inc. (IMI) has issued 1.88 billion common shares with par value of P1. As of Dec. 31, 2015, it had 1.87 billion outstanding shares, of which 1.57 billion, including 15.89 million treasury shares, are listed on the Philippine Stock Exchange.

A public ownership report (POR) divided IMI’s outstanding shares into 1.5 billion shares, or 80.75 percent of 1.87 billion outstanding shares as non-public, and 359.52 million shares, or 19.25 percent, as publicly owned.

Three IMI stockholders, one of them the majority owner, hold 1.4 billion shares, or 74 percent. AYC Holdings Inc. owns 945.5 million, or 50.6 percent; Resins Inc., 239.4 million, or 12.8 percent; and EPIQ NV, 200 million shares, or 10.7 percent. (Note: The percentages were computed using the complete numbers.)

Ayala Corp., which the POR classified only as an IMI affiliate, holds 1.38 million shares, or 0.07 percent. IMI insiders who hold shares under the company’s stock option plan have subscribed to 91.2 million shares, or 4.88 percent.

Due Diligencer is presenting this ownership profile to guide the public when they cast their votes on April 8, either “manually or electronically,” for the 11 members of IMI’s board during the company’s annual stockholders’ meeting.

The phrase inside a pair of quotation marks is for the Securities and Exchange Commission (SEC), which has ruled that under the present Corporation Code, “stockholders’ voting and appearance cannot be conducted via teleconferencing or videoconferencing.”

Will the SEC then allow electronic voting for IMI stockholders when Camilo S. Correa, the commission’s general counsel, issued on Jan. 16 Opinion No. 16-01 disallowing “teleconferencing for stockholders’ meeting”?

Correa cited Section 51 of the Corporation Code which requires stockholders to hold their meeting “in the city or municipality where the principal office of the corporation is located, and if practicable in the principal office of the corporation.”

“This provision presupposes that the attendees to a stockholders’ meeting or members’ meeting are in the same place during the meeting,” Correa said. “This is in contrast to teleconferencing, where the participants are in different places although their communication with each other is facilitated through an electronic medium, making their presence in the meeting virtual or electronic.”

Proposed amendments
In short, stockholders should be present in the annual stockholders’ meeting to legally vote for the nominees to the board of stock corporations.

The SEC informed lawyer Althea F. Acas, who posed the legal query, on the proposed amendments to the Corporation Code which, if approved by Congress, would eventually “permit the conduct of stockholders’ meeting thru electronic means.”

This is good news for foreign investors who are not able to elect their nominees to the boards of listed companies in which they are significant stockholders.

EPIQ, for instance, is a Belgian company located at Transportstraat 1, 3980, Tessenderlo, Belgium. On March 15, it opened trading at P5.52, peaked at P5.80, dropped to a low of P5.52 and closed the session at P5.52. At the stock’s closing price, EPIQ’s 200 million IMI common shares had market value of P1.1 billion.

Why should EPIQ spend $1,000 on plane fares to travel 7,000 miles to the Philippines just to attend IMI’s annual stockholders’ meeting? If it can participate in the proceedings via teleconferencing and vote electronically for the nominees for directors, why shouldn’t it be allowed to do so?

Incidentally, the SEC allows teleconferencing stockholders’ meetings but not the election of the members of the board. The presence of stockholders in an annual or special meeting, according to the commission, is a must.



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