But last week, things were less tranquil in Baguio, no thanks to a highly publicized family squabble and a few sour grapes. Why is the Club having a hard time in its efforts to follow in the footsteps of other renowned recreational private members-only clubs in the Philippines? No one seems to understand why. So my cousin Atty. Vicky de los Reyes, secretary of the board of BCC tried to explain.
Many clubs in the Philippines, like the Manila Golf and Country Club and the Wack Wack Golf and Country Club, elect their board of directors every two years as is the right of non-stock, non-profit recreational clubs. The Securities and Exchange Commission (SEC), in fact approved a change in the BCC by-laws in 1998 which allowed the Club to do likewise. But last year, upon the insistence of a non-BCC stockholder who was no longer a member of the Club, the SEC reversed itself.
After this unusual SEC change of heart, the SEC issued six or seven orders in the span of several months calling for, among others, a further amendment of the BCC by-laws to hold elections every year, instead of SEC’s previously-approved biennial elections. Other amendments were an immediate shareholders’ meeting to elect directors, even though one was already scheduled for this November; a certified list of stockholders even though SEC rules call for a plain list; SEC watchdogs, all their attorneys to observe the proxy validation procedures and inspection of the stock and transfer book. None of the lawyers lingering around the Club last week would recall of any company, much less a private club corporation, that has gone through as many demands as the BCC has been subjected in order to satisfy the SEC and comply with the SEC guidelines.
The final straw came on November 5, the eve of the annual scheduled meeting date. Stockholders had traveled from afar, some even from the US, or submitted their proxies; meeting preparations had been made; the stock and transfer book had been inspected; and, all efforts were made to demonstrate to the five SEC watchdogs that proper SEC procedures and guidelines for proxy validation were followed. After two days of exhaustive scrutiny, the watchdogs refused to submit any objections to BCC’s proxy validation committee, and left the Club even before the committee could issue its report on the validity of the proxies. In the fastest governmental agency response time in the entire history of the Philippines – a mere 15 minutes after the SEC left and minutes before the close of business on the day before the annual meeting – the Club was served with the SEC order to reset the annual shareholders’ meeting to November 28. This order cited SEC objections that were raised for the first time, i.e., the fact that some proxies were not dated or were written in pencil. These "objections" were not even in keeping with that government agency’s own guidelines for proxy validation. What could possibly be the reason for the SEC’s stretching its own guidelines, overreaching its mandate and imposing its demands on this profitable and flourishing private club in the country?
After the BCC’s corporate secretary realized that the assembled quorum would be illegally deprived of their right to be heard and to vote (should the Club follow the SEC order), the Club decided in the interest of the majority of its stockholders to proceed with the meeting.
"In order to be transparent in our actuations, I have the honor to present to the stockholders, an order which our lawyer, Atty. Lorna Kapunan, received at 4:35 [the day before] and the order states among others that if the questioned proxies were excluded, a quorum might not be present...however, we have heard our Corporate Secretary certify[y] the presence of a quorum, and therefore this order...is not valid...and attempts to disenfranchise all of us who are present now....[Additionally] I do not know how the report could have reached the SEC [so quickly – 15 minutes after the SEC Observers left the BCC proxy validation committee] if this was not a premeditated order."
Once the SEC matter was fully revealed to the shareholders gathered, the meeting proceeded. A big discussion arose regarding the BCC’s conversion to non-stock, non-profit corporation. The conversion elicited the most comments on the floor. Some people expressed confusion over erroneous rumors that conversion would take away stockholder rights for members.
BCC director Juan Carlos del Rosario did a wonderful job clarifying the issues and sorting out the confusion illustrating with examples from other clubs. Stockholders were satisfied that the pending conversion would not adversely affect their proprietary rights which include: notice of meeting; nomination and voting. Stockholders after conversion will be issued proprietary certificates that will have the same value and rights of transferability as stock. An additional confusion arose because some members (those old-timers who were accepted for membership prior to 1981) were not required by the Club to purchase stock as a condition for membership. If they didn’t purchase or own stock, then they had no stockholder rights to lose! Current members (those who applied and were accepted for membership after 1981) were required to purchase or own stock; therefore, their stockholder rights cannot change.
Luckily, the Court of Appeals intervened to order the Club, the SEC and private parties "...observe the status quo now prevailing, and to refrain from taking actions that could further exacerbate the situation..."
With the intervention of the Court of Appeals, maybe we can stop worrying about the modern mess and "return to barracks."