Sunday, August 30, 2009

Board Meetings in the early 21st century (SEC rules on Board Meetings Through Teleconferencing or Videoconferencing)

By Siesta-friendly

Now that telecommunication equipment have drastically improved and will continue to do so, certain government rules have been upgraded and made compatible, as it were, with current technology.

With business and business folk becoming more international and more company transactions being allowed to be done by remote, meetings can’t be avoided amongst parties in different places, even different parts of the globe. Accordingly, the Securities and Exchange Commission (SEC) issued SEC Memorandum Circular No.15 (dated November 20, 2001) precisely to regulate board meetings. This likewise dispenses with the costs of having to fly in and lodge the participants just for the meetings.

Notice requirements

As before, the Corporate Secretary shall send out the notices of the meeting to all directors in accordance with the manner of giving notice as stated in the corporation’s by-laws. (Section 2) But now, the notice shall include the following:

a. Inquiry on whether the director will attend physically or through tele/videoconferencing;

b. Contact number/s of the Secretary and office staff whom the director may call to notify and state whether he shall be physically present or attend through tele/videoconferencing;

c. Agenda of the meeting;

d. All documents to be discussed in the meeting, including attachments, shall be numbered and duly marked by the Secretary in such a way that all the directors, physically or electronically present, can easily follow, refer to the documents and participate in the meeting. (Section 3)

If the director chooses tele/videoconferencing, he shall give notice to the Secretary at least 5 days prior to the scheduled meeting and inform the latter of his contact details. The Secretary shall then inform the director of the contact number/s the latter will call to join the meeting. On the date of the scheduled meeting, the Secretary shall confirm and note such the contact details as part of the minutes of the meeting. (Section 4)

In the absence of an arrangement, it is presumed that the director will physically attend the Board meeting. (Section 5)

Requirements at and after the Board Meeting

The Secretary of the meeting shall assume the following responsibilities:

a. to safeguard the integrity of the meeting via tele/videoconferencing

b. to find good tele/videoconference equipment/facilities

c. to record the proceedings and prepare the minutes of the meeting

d. to store for safekeeping and mark the tape recording/s and/or other electronic recording mechanism as part of the records of the corporation (Section 1)

At the start of the scheduled meeting, a roll call shall be made by the Secretary. Every director and participant shall state, for the record, the following:

a. Full Name

b. Location

c. If attending through tele/videoconferencing, shall also confirm that:

i. he can completely and clearly hear the others who can clearly hear him at the end of the line

ii. state whether he has received the agenda and all the materials for the meeting, and

iii. specify the type of tele/videoconferencing device used.

Thereafter, the Secretary shall confirm and note the contact numbers being used by the directors and participants not physically present. (Section 6)

All participants shall identify themselves for the record, before speaking and must clearly hear and/or see each other in the course of the meeting. If a person fails to identify himself, the Secretary shall quickly state the identity of the last speaker. If the person speaking is not physically present and the Secretary is not certain of the identity of the speaker, the Secretary must inquire to elicit a confirmation or correction.

If a motion is objected to and there is a need to vote and divide the Board, the Secretary should call the roll and note the vote of each director who should identify himself.

If a statement of a director/participant in the meeting via tele/videoconferencing is interrupted or garbled, the Secretary shall request for a repeat or reiteration, and if need be, the Secretary shall repeat what he heard the director/participant was saying for confirmation or correction. (Section 7)

The old procedure shall then be followed in that the Secretary shall require all the directors who attended the meeting, whether personally or through tele/videoconferencing, to sign the minutes of the meeting to dispel all doubts on matters taken up during the meeting. (Section 8)

Will virtual stockholders’ meetings come next? Will per diems be different for virtual attendees? If you’re the virtual attendee, you might not be able to partake of the scrumptious meals at director’s meetings, but you could at least be in bed in your pyjamas and no one may ever know.


No comments: