(Article published in the Oct 1, 2002 issue of TODAY, Business Section)The last ballot called out was for the Good Performance Team. But it was not good enough. After all the votes were counted, the Good Governance Team swept all the five available seats in the Board of Directors of the Manila Polo Club (MPC), one of the countrys oldest clubs for the exclusive elite. Isabel Wilson, Jose Cuisia, Jesus Tambunting, Roberto Romulo and Roman Azanza will join four other board members who were elected last year to steer the club for the next 12 months or so.
But more than they, there were five other and more real winners of the elections conducted by the club last week. First and foremost was the legal principle that should henceforth guide corporations in the conduct of their annual stockholders and membership meetings: In the absence of a specific contrary rule in the corporations articles and by-laws, Securities and Exchange Commission (SEC) Memorandum Circular 05-01 should be followed.
SEC Memorandum Circular
05-01 which was issued on May 23, 2001 provides for the application to non-stock
corporations of the rules and guidelines set forth by SEC Memorandum Circular 5 dated
August 5, 1996. Two of its significant mandates were the submission to the SEC at least 15
days prior to the date of the annual members meeting of the list of members entitled
to vote (copy to be furnished at cost to any requesting member) and, in recognition of the
common problem that members do not find it worth their while to personally attend the
annual meeting, the standardization of the execution, acceptance and validation of
About a month before the MPC annual general membership meeting, which was originally scheduled for August 26, 2002, the Good Governance Team, invoking SEC Memorandum Circular 05-01, asked the clubs management for the list of qualified voters, obviously with the intention of seeking out each of the members who could vote to inform them personally of the issues the team had raised against the incumbent board and, in the process, persuade them to give their proxies (if they did not intend to personally attend) and votes to the candidates of the team. The clubs management, which naturally had access to the list, demurred claiming that the clubs legal counsel believed that the SEC Memorandum did not apply. It seem that it was the clubs lawyers opinion that an exemption granted by the SEC in BSD Resolution 371, 1979, dated June 18, 1979, dispensing with the need to register under the securities law the 2,200 proprietary shares which at that time were proposed to be sold by the club to its members, and not to the general public, meant that the club was not a registered corporation and therefore not required to comply with the aforesaid circulars.
When the conflict of opinion was brought to the attention of the SEC Chairman Lilia R. Bautista ruled that Memorandum Circular 05-01 dated May 23, 2001 applies to the Manila Polo Club, as well as to all stock and non-stock corporations that did not have contrary rules, guidelines and provisions in their by-laws and, specifically, that BED Resolution 371, series of 1979, related only to the exemption of securities from registration under the Revised Securities Act and did not cover matters relating to the holding of annual corpoarte meetings or proxy execution, acceptance and validation. Because the SEC ruling was issued on August 16 and was only officially received by the club five days after, the Board of Directors of the club, in an emergency meeting held on August 21, moved the holding of the annual general membership meeting by thirty days, from August 26 to September 25. In fair to the clubs management, it must be stated that the list of members qualified to vote was submitted to the SEC and was made it available at the office of the general manager on September 9. That was past the 20 days prior to the elections deadline set in the SEC Memorandum Circulars, but I guess, four day delay was not a grievous offense among the genteel.
The second winner was another legal principle: Proxies granting authority to vote during the annual meeting continue to be valid even if the date of the meeting, as stated in the proxy, is subsequently reset to another day.
One day after the club boards emergency meeting on August 21, the corporate secretary issued a notice of postponement of the annual general membership meeting and told the members that new notices for September 25 will be issued and "new proxy forms...will be sent to all members on or before September 11, 2002". This implied that the old proxy form, executed by the members for August 25, would not be valid. And the gathering of proxies, feverishly conducted by both the Good Governance Team and the Good Performance Team, had to be started all over again. Once again, the SEC was called upon to make a ruling.
Quick was the response of SEC Director Benito A. Cataran. Noting that the proxy forms provided that the authority to vote was granted for the Annual General Meeting of the members to be held on August 26 "and all adjournments of the said meeting", it was ruled that there was no need to ask those who had given their proxies using the form for the August meeting to re-execute their authorization on the new proxy forms to be provided. The previous efforts of the proxy gathering teams were thus not put to waste. The postponement of the meeting in fact enabled both sides to extend their operations and, to the annoyance of not a few, call on others they had not called on before. The result was an unprecedented number of proxies, around 1,500, were submitted for validation.
The third winner was, to the credit of the Special Committee of Inspectors composed of lawyer Noel A. Laman, chairman, and Maria Isabel G. Ongpin and lawyer Eduardo F. Hernandez, members, the strong preference for the right to vote. The Special Committee of Inspectors had the difficult job, the most difficult in fact, of validating the proxies. It started on September 20, and, because the by-laws of the club permitted the submission of proxies on the day of the election itself, the Special Committee of Inspectors worked every work day since then, way past the members bedtimes, even until after the general annual membership meeting had began on September 25. Every single proxy was examined carefully and all efforts were exerted to enable a member to exercise his or her right to vote, despite technical defects. Substance ruled over form and only those proxies which were clearly unacceptable, such as those merely photopied or faxed, were invalidated.
The MPC itself was the fourth winner. It can only gain from what it had recently experiencedthe highest ever voting rate (about 70 percent of those qualified to vote did vote), an open ventilation of issues conducted in a robust debate with rules and procedure agreed to by the competing sides, and, definitely, a higher level of member interest in the affairs of their club. The club, as a whole, has been re-invigorated by what it had gone through, and the new board, hopefully, would not squander the golden opportunity afforded by the very strong mandate articulated in the way the membership voted.
Finally, the country itself benefitted from the MPC elections. It was probably a bit of an exaggeration to say, as many had said during the campaign period, that the club is a macrocosm of the country and the strifes and stripes that ripped across the club as it geared for the annual general membership meeting and elections are due to the same forces that criss-cross Philippine society. But it cannot denied that, because the members of the club are captains of industry and leaders of organizations, what they learned during the elections, of themselves and of their colleagues, of the law and of the values espoused by the contending camps, will impact on the way that they conduct themselves and their business. Good governance and good performance, transparency and responsibility, are now orders of the day, in the club and in the country.