How is the election of directors or trustees conducted? (Section 23, Revised Corporation Code)

Summary

In this video, attorney Chris Batan Lasko explains the process of electing directors and trustees in both stock and non-stock corporations. He discusses the importance of a quorum, the voting methods used, and how to determine the number of votes each shareholder or member is entitled to. Lasko also covers the different methods of casting votes, including straight voting, cumulative voting, and remote voting. The video aims to simplify the election process in corporations, making it accessible and easy to understand for viewers.

Takeaways

• 📚 The video discusses how to simplify and understand legal concepts, particularly related to corporate elections.
• 🔍 The video explains the quorum requirement for conducting elections of directors or trustees in stock and non-stock corporations.
• 📈 In a stock corporation, a quorum is the majority of the outstanding capital stock, calculated as one-half plus one based on ownership.
• 🧮 For non-stock corporations, a quorum is determined by counting the number of members, with a majority being one-half plus one.
• 🗳️ Voting in stock corporations is based on the number of shares owned, with each share providing a certain number of votes.
• 📊 The video explains the three voting methods: straight voting, cumulative voting in favor of one candidate, and cumulative voting by distribution.
• 💡 Straight voting involves distributing votes equally among selected directors, while cumulative voting allows concentrating all votes on one candidate.
• 👥 Cumulative voting by distribution permits flexible allocation of votes among chosen directors based on personal preference.
• 📜 Election winners are determined by the plurality of votes, meaning the candidates with the highest number of votes are elected.
• 📲 Remote voting or voting in absentia is allowed when authorized by bylaws or approved by the board, particularly for corporations with public interest.

Q & A

What is the main purpose of Attorney Chris Batan Lasko's YouTube channel?

The main purpose of Attorney Chris Batan Lasko's YouTube channel is to simplify the law by discussing concepts and principles of law in under 10 minutes.

What does Section 23 of the Revised Corporation Code state about the requirements for holding elections?

Section 23 of the Revised Corporation Code states that at all elections of directors or trustees, there must be present either in person or through a representative authorized by written proxy, the owners of the majority of the outstanding capital stock or, if there is no capital stock, a majority of the members entitled to vote.

What is the definition of a quorum in the context of elections of directors or trustees?

A quorum is the minimum number of people required to be present to conduct legitimate business in an election of directors or trustees.

How is the majority determined for the presence of stockholders in an election in a stock corporation?

The majority is determined by the ownership of outstanding capital stock, which means one half plus one of the total outstanding capital stock must be present for the election to be held.

Can stockholders be present in an election either in person or through a representative?

Yes, stockholders can be present in an election either in person or through a representative who is authorized to act by written proxy.

What is the basis for determining the majority in a non-stock corporation?

In a non-stock corporation, the majority is determined by counting the number of members, with one half plus one of the total number of members constituting the quorum required for an election.

How is the basis for voting determined in a stock corporation?

In a stock corporation, the basis for voting is the ownership of shares, where each share entitles the shareholder to a certain number of votes, multiplied by the number of directors to be elected.

What is the difference between straight voting and cumulative voting in the context of electing directors?

Straight voting involves equally distributing the number of votes a shareholder is entitled to cast among the directors being elected. Cumulative voting allows the shareholder to either concentrate all votes on one candidate or distribute them among chosen candidates as they see fit.

How are the winners of a director or trustee election determined?

The winners of a director or trustee election are determined by the plurality of votes, meaning those who have garnered the highest number of votes are elected.

Is it necessary to be physically present to cast a vote in a corporation election?

No, it is not necessary to be physically present to cast a vote. Remote voting or voting in absentia is allowed when authorized by the bylaws or approved by the majority of the board of directors, except in corporations vested with public interest where such authorization is not required.

What does the term 'cumulative voting in favor of one candidate' mean in the context of elections?

Cumulative voting in favor of one candidate means that a shareholder can use all of their votes for just one nominee, allowing minority stockholders a chance to ensure representation on the board.