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Electronic Corporate Voting

By: By Raul J. Palabrica Philippine Daily Inquirer



Corporate Securities Info


 First Posted 22:12:00 05/20/2010

 

THE JURY IS STILL OUT ON ON WHETHER the recent automated elections are a boon or bane for the country.

 

THE JURY IS STILL OUT ON ON WHETHER the recent automated elections are a boon or bane for the country.
 

For the first time in our political history, the voters’ choices were counted and the results transmitted electronically to the canvassing centers with the minimum of human intervention.
 

Wireless transmission, or as the technically-savvy prefer to call it, cyberspace, has entered our electoral system.
 

After May 10, the manual reading, counting and tallying of votes has become Jurassic. Only corrupt politicians, power brokers and election officials would want to go back to that system.
 

Unknown to many, electronic transmission of votes is already practiced in certain areas of corporate activity in our country.
 

Under the Corporation Code, “voting by mail or other similar means by non-stock corporations may be authorized by the by-laws of non-stock corporations with the approval of, and under such conditions which may be prescribed, by the Securities and Exchange Commission.”
 

Obviously, when the Code was enacted in 1980, electronic transmission, e-mail, text messaging, the Internet and other modern communications gadgets were beyond the lawmakers’ contemplation when they added the phrase “other similar means.”
 

Interpretation

For those who were of age during those years, the means of written communications then were postage mail, telegram, telex and cable.
 

Except for slow mail, those communications tools have been reduced to museum pieces or part of reminiscences about the good old days.
 

The assemblyman (that was the name of the members of the legislative body that enacted the Code) responsible for the inclusion of that catch-all phrase in the law should be commended for his unwitting foresight.
 

With the advances in telecommunications in mind, the SEC has interpreted that provision to include the use of electronic mail in the casting of votes in meetings of non-stock corporations.
 

To be able to use that mechanism, however, it is essential that the by-laws of the non-stock corporation expressly allow its members to vote by mail or other similar means.
 

Absent that provision, the members have to be physically present or represented by proxies in the meeting if they want their votes to be counted on any matter presented to them for their approval.
 

The liberality in voting procedures for non-stock corporations is justified by the purposes for which they are organized and the traditional character of their membership.
 

Practical

Non-stock corporations are not meant to be money-making ventures for their members.
 

They are supposed to render religious, educational, cultural or other socially oriented services, without any expectation of remuneration, to the less privileged members of our society.
 

Usually, their members are numerous and come from different places, depending on the areas where they choose to undertake their missionary activities.
 

They may not have the financial means to personally attend the regular or special meetings at their principal office and cast their votes on corporate issues that require their consent, and later go back to their stations.
 

The time and money they would spend attending the meetings could be better used to accomplish the objectives of the organization.
 

So if their votes are needed on important corporate matters, they can simply send their votes by e-mail or other electronic means; if Internet facilities are not available in their sites, there is the old reliable slow mail to fall back on.
 

Proxies

The easy availability of electronic transmission and the Internet, not to mention their reduced costs, have similarly influenced the manner by which some companies communicate or interact with their stockholders, especially if they number in thousands.
 

Until environmental protection and climate change became buzz words, most public companies sent notices and annual reports to their stockholders using high quality paper.
 

After scanning through the pages, these documents often wind up in the trash can or, if the stockholder is ecology conscious, recycled for other uses.
 

In recent years, many companies have stopped the wide scale printing of their annual reports and instead send CDs with user-friendly instructions on how to open their encrypted files.
 

If the CDs are rewritable, they can, after reading their contents, be recycled for other uses.
 

In case the stockholder has any questions about the matters to be discussed in the stockholders’ meeting, he can call a given number or go to the company’s website for more information.
 

Subject to certain identification procedures, even the sending of proxy letter can be done online. No need to fill up a proxy form and send it by mail to the corporate secretary.
 

The proxy sender can access the company’s website and send his proxy through it, or using his own e-mail address, send a proxy letter to the company naming the person he wants to represent him in the meeting.
 

With the secretary put on notice about the proxy authorization, a downloaded copy of the e-mail presented by the proxy at the meeting would be sufficient to empower the latter to vote the stockholder’s shares in the meeting.
 

(For feedback, please write to rpalabrica@inquirer.com.ph)


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