The Securities and Exchange Commission (“SEC”) issued on 30 March 2021 SEC-OGC Opinion No. 21-04 (“SEC Opinion”) which states that a corporation may provide in its By-laws the specific number of stockholders or members that must be present in a meeting that will constitute a quorum.
The said Opinion was requested by a non-stock, non-profit condominium corporation which intends to amend its quorum requirement in the By-laws, particularly, what constitutes a quorum. The proposed amendment shall read as follows:
“Section 5. Quorum. The presence of members in good standing representing at least thirty percent (30%) of the relevant number of units entitled to be represented and vote at the meeting shall constitute a quorum. A majority of the quorum (50% +1) shall be competent to decide on any matter unless the Corporation Code or the Condominium Act requires the affirmative vote of a greater proportion. A smaller number of votes insufficient to constitute a quorum may adjourn the meeting from time to time and may take up only social or ceremonial matters.” (Emphasis supplied)
The subject corporation sought the opinion of the SEC on whether its By-laws can stipulate that a quorum for members’ meeting requires the presence of members in good standing representing at least thirty percent (30%) of the relevant number of units entitled to be represented and vote.
The SEC opined that, pursuant to Section 51 of the Revised Corporation Code (formerly Section 52 of the Corporation Code), any corporation, whether stock or non-stock, is authorized to provide in its by-laws a specific number of stockholders or members necessary to constitute a quorum for the transaction of corporate business, except in those instances where a law explicitly prescribes the proportion of stockholders or members necessary to resolve or carry out a particular corporate proposal.