The Case for Pockets of Shareholder Activism

The Case for Pockets of Shareholder Activism: Shareholder Proposal in the Philippines*

 Maria Carmen L. Jardeleza**

Download full article pdf

Proxy access is a general corporate concept which basically means shareholder voting as shareholder participation in the corporation. The proxy access rules in the Philippines are currently limited to the nomination of directors and to “Just Vote No” campaigns similar to the rules in the United States intended to block management proposals. However, shareholders in the United States enjoy wider proxy access through direct proposals, also known as the “shareholder proposal rules,”[1] which enable them to directly recommend corporate proposals for the consideration of other shareholders during annual or special meetings.

There are several factors that inhibit the development of a similar shareholder proposal system within the Philippine proxy access framework. For one, the intricate ownership structure of family-dominated holding companies in the Philippines has created a passive shareholder culture. In addition, the lower rank of the Philippines in market capitalization compared to other more developed countries[2] has hampered the development of a transparent and quality corporate disclosure system. As a result, Philippine shareholders are not fully apprised of whether or not corporations are acting towards their best interests.

Despite an underdeveloped disclosure framework in the Philippines, the growth of a similar shareholder proposal system may still be encouraged to allow for “pockets” of shareholder activism, such that Philippine shareholders will no longer be relegated to merely electing directors, or approving, abstaining, or rejecting board or management proposals during annual or special meetings. Instead, shareholders, especially minority shareholders, will be empowered to directly make proposals for the consideration of their fellow shareholders and hence actively participate in the corporation. Shareholder proposal rules will thus allow further proxy access to shareholders which would, in turn, promote corporate governance discourse in the Philippines.(Read full article in pdf)

* Cite as Maria Carmen Jardeleza, The Case For Pockets Of Shareholder Activism: Shareholder Proposals In The Philippines, 87 Phil L.J. 154, (page cited) (2012).

** Associate, SyCip Salazar Hernandez & Gatmaitan. Ll.M., Columbia Law School (2013). J.D., Dean’s Medal, University of the Philippines (2008). A.B., cum laude,Bryn Mawr College.

[1] Securities Exchange Act of 1934, Rule 14A; Exchange Act Rule 141-8.

[2] World DataBank—World Development Indicators (WDI), available at (last updated Jan. 8, 2013).