In the Philippine jurisdiction, family corporations—often characterized by closely-held shares among relatives—are governed primarily by Republic Act No. 11232, otherwise known as the Revised Corporation Code (RCC). While the familial nature of these entities often leads to informal management styles, the legal validity of board actions remains strictly tied to compliance with statutory requirements for quorums and meeting protocols.

Failure to adhere to these rules can lead to "ultra vires" acts or corporate decisions being declared null and void, creating significant legal exposure during intra-corporate disputes or transitions in leadership.

I. The Concept of Quorum in Board Meetings

A quorum is the minimum number of directors required to be present at a meeting to officially transact corporate business. Under Section 51 of the RCC, the general rule is:

The Default Rule: A majority of the number of directors as fixed in the Articles of Incorporation constitutes a quorum.
The Exception: The Bylaws may provide for a greater number to constitute a quorum, but they cannot provide for a number less than a majority.

For a family corporation with five (5) seats on the board, at least three (3) directors must be present to validly conduct business, unless the Bylaws specifically require four (4) or all five (5).

II. Requirements for a Valid Board Meeting

For a board meeting—and the resulting resolutions—to be legally binding, four essential elements must be met:

Proper Authority: The meeting must be called by the person authorized by the Bylaws (typically the President or the Chairman).
Proper Notice: Written notice of the time and place of the meeting must be sent to every director at least two (2) days prior to the scheduled meeting, unless the Bylaws provide for a different period.
Existence of a Quorum: A majority (or the higher number specified in the Bylaws) must be present at the start and throughout the deliberation of business.
Actual Meeting: Decisions must be made as a body. In family corporations, informal "round-robin" approvals or individual consents obtained outside a meeting are generally invalid unless subsequently ratified.

III. Modern Flexibility: Remote Communication

Recognizing the geographical dispersion of family members, the RCC now explicitly allows for meetings via videoconferencing, teleconferencing, or other alternative modes of communication.

Directors who participate through these means are deemed present for quorum purposes. However, the Corporate Secretary must ensure that the communication allows for synchronous discussion and that the identity of the participants is properly verified to prevent future challenges to the meeting's validity.

IV. Voting Requirements and the "Majority of the Quorum"

Once a quorum is established, the validity of an act depends on the vote. Under Section 52 of the RCC:

General Rule: Every decision of at least a majority of the directors present at a meeting at which there is a quorum shall be valid as a corporate act.
Specific Exceptions: Certain actions require the vote of a majority of the entire board (e.g., the election of officers).

Example: In a board of five, if three are present (forming a quorum), a vote of two (the majority of those present) is sufficient to pass a general resolution.

V. Common Pitfalls in Family Corporations

1. The "Kitchen Table" Syndrome

Family corporations often make decisions over dinner or via informal messaging apps. While efficient, these do not constitute "valid meetings" unless formal notices were issued and minutes were recorded. If a family member later becomes estranged, they may challenge years of corporate actions based on lack of formal notice or quorum.

2. Abstentions and Disqualifications

A director who has a material interest in a transaction (a "self-dealing director") may still be counted for quorum purposes in some contexts, but their vote might be excluded under Section 31. To validate a contract with a self-dealing director, the presence of that director must not have been necessary to constitute a quorum, and their vote must not have been necessary for approval.

3. Vacancies

If the number of directors falls below the quorum requirement due to death or resignation, the remaining directors cannot validly act for the corporation except to fill the vacancies (if they still constitute a quorum) or to call a stockholder’s meeting to elect new directors.

VI. The Principle of Ratification

If a meeting was technically defective (e.g., lack of proper notice), the actions taken may still be cured through ratification. This occurs when the board later meets with a proper quorum and formally adopts the previous acts, or when the stockholders, with full knowledge of the facts, express or imply their approval of the unauthorized act. In family setups, long-term acquiescence to informal procedures can sometimes be argued as implied ratification, though this is a riskier legal strategy than procedural compliance.