When must a management contract be approved by a two-thirds (2/3) vote of the managed corporation’s stockholders?
A management contract requires approval by the stockholders of the managed corporation owning at least two-thirds (2/3) of the total outstanding capital stock entitled to vote under two specific scenarios (SEC. 43, Revised Corporation Code of the Philippines). The first scenario is where stockholders representing the same interest of both the managing and managed corporations own or control more than one-third (1/3) of the total outstanding capital stock entitled to vote of the managing corporation. The second scenario is where a majority of the members of the board of directors of the managing corporation also constitute a majority of the members of the board of directors of the managed corporation. These scenarios indicate a high degree of interlocking control, necessitating the supermajority approval from the managed corporation’s owners to protect their interests.
02 November 2025
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