Election of directors and the holdover principle

The election of directors is usually conducted during the annual shareholders' meetings. In one case, the Supreme Court explained that, since the policy under the Corporation Code (now the Revised Corporation Code or RCC) is that the powers and affairs of a corporation are carried through the board of directors, the members of the board must have actually been elected by the shareholders on a yearly basis. It is only through this yearly election that the "directors' continued accountability to the shareholders, and the legitimacy of their decisions that bind the corporation's shareholders, (may) be assured." (Valle Verde Country Club Inc., et al. v Africa, GR 151969, Sept. 4, 2009).

For an election of directors to be valid, there must be present, in person or by written proxy, the owners of a majority of the outstanding capital stock of the corporation. An election of directors may also be conducted through remote communication or in absentia, when allowed in the bylaws or by majority of the board of directors. In voting for directors, each voting stockholder is allowed as many votes as there are candidates and may give or accumulate votes all to one candidate or in varying numbers to several.