How can a voidable contract with an interested director be ratified if quorum or voting conditions were absent?
If any of the first three validating conditions (quorum, voting, or fairness) are absent in a contract involving a director or trustee, the contract may still be ratified by the stockholders (SEC. 31, Revised Corporation Code of the Philippines). The ratification requires the vote of stockholders representing at least two-thirds (2/3) of the outstanding capital stock, or two-thirds (2/3) of the members in a nonstock corporation. This meeting must be duly called specifically for the purpose of considering the contract. Crucially, full disclosure of the adverse interest of the directors or trustees involved must be made at the meeting, and the contract must still be fair and reasonable under the circumstances to achieve valid ratification.
30 October 2025
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