Painting by Wassily Kandinsky. Dominant Curve. 1936. Used here for educational, non-commercial purposes, free service by blog-use of image provided by and from www.allposters.com
For the annual stockholders’ meeting of Meralco on May 27, 2008, for which GSIS chair and board director Winston Garcia has threatened to vote out the present management (change or take over management) on behalf of Gloria, este, the government, following is the provision and annotation on the anticipated proxy war:
Quote “Corpo Code. Section 58. Proxies. – Stockholders and members may vote in person or by proxy in all meetings of stockholders or members. Proxies shall be in writing, signed by the stockholder or member and filed before the scheduled meeting with the corporate secretary. Unless otherwise provided in the proxy, it shall be valid only for the meeting for which it is intended. No proxy shall be valid and effective for a period longer than five (5) years at any one time. “ closed-quote.
JOSE C. CAMPOS JR. & MARIA CLARA LOPEZ-CAMPOS, The Corporation Code, Comments, Notes, and Cases: Quote “Although a proxy mat be used in any kind of corporation, as a device of control, it is most used in widely held corporations. A stockholders meeting requires the presence of stockholders representing at least a majority of the outstanding capital stock. In a widely held corporation, where there are numerous stockholders, many of whom may be residing in places far from the principal office of the corporation, it will oftentimes be difficult to obtain the necessary quorum, unless the stockholders who cannot or do not care to attend give a proxy to another to attend on his behalf. This has given rise to the practice of the incumbent management group of large corporations to solicit proxies of their stockholders. Oftentimes, even stockholders who can easily attend annual meetings are indifferent to matters of management and are mainly interested in getting dividends from their investment. Thus, as long as they are satisfied with the returns of their investment, their indifference to matters of management will either result in their signing the solicited proxy or ignoring it completely – and in either case, they will in effect perpetuate the existing control. What the management of a widely held corporation usually does is to send a proxy form together with the notice of the annual stockholders’ meeting. The persons suggested as proxies, sometimes referred to as the “proxy committee”, are persons selected by the incumbent directors. In this way, the existing management who may own only a small portion of the corporation’s shares, can retain its control over corporate affairs for as long as they can obtain the necessary number of proxies from absentee stockholders.
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Quote “(A) group of stockholders xxx may seek control xxx by soliciting proxies for the next election of directors. This may result in a proxy contest between this group and the management group. These proxy fights can become bitter, long-drawn, and very expensive. Each block will seek the proxies of absentee stockholders who are not identified with any group. The management block, usually is in a more favourable position because it can as a rule use corporate funds and facilities in its solicitation, as long as the expenses are reasonable under the circumstances and the proxy contest is not a purely personal one (Rosenfeld vs. Fairchild Engine, 309 NY 168). On the other hand, there are conflicting views as to whether the other group would be entitled to reimbursement of even reasonable expenses in their solicitation (Ibid), although there is a strong view in favour of reimbursing reasonable expenses of an opposition group, if they succeed in electing their candidates as directors.” Closed-quote.
