The Securities and Exchange Commission issued SEC Memorandum Circular No. 12 Series of 2020 dated April 07, 2020, providing for the rules on the required shareholders’ approval on the sale of corporate assets of publicly-listed companies.

What is the purpose of the issuance:

To promote good corporate governance and the protection of minority investors.

What are the rules:

1. The sale or disposal of corporate property and assets amounting to at least 51% of the corporation's total assets shall be considered as sale of all or substantially all of corporate property and assets, whether such sale accrued in a single transaction or in several transactions taking place within one (1) year from the date of the first transaction (aggregate sale transactions).

2. In sale of corporate assets or property falling under the preceding paragraph, the vote of the stockholders representing at least two-thirds (2/3) of the outstanding capital stock in a stockholders' meeting duly called for the purpose shall be required prior to the execution of the sale transactions.

3. In aggregate sale transactions, shareholder approval shall be required for the sale transaction that breaches the 51% corporate asset threshold.

4. The determination of whether or not the sale amounts to at least 51% of the corporation's assets must be computed based on its total assets as shown in its latest audited financial statements, provided that the computation may also be based on the latest quarterly financial statement or special purpose financial statement prepared in connection with the execution of the transaction.