Rule 20 – Disclosures to Stockholders Prior to Meetings

20.1. Applicability

This Rule shall apply to all corporations covered by the reporting

requirements of Section 17 of the Code and to any person who shall solicit
votes for any stockholders’ meeting or securing the written assent of
stockholders in lieu of such meeting pursuant to Section 16 of the Corporation
Code.

20.2. Definitions

20.2.1. As used in this Rule and SEC Form 20-IS, the following terms
shall have the following meanings:

20.2.1.1. Employee Benefit Plan means any purchase, savings, option,

profit sharing, bonus, incentive, pension or similar plan primarily for the
benefit of employees, directors, trustees or officers.

20.2.1.2. Entity that exercises fiduciary powers means any entity that
holds securities in a nominee’s name or on behalf of a beneficial owner.

20.2.1.3. Information statement means the statement required by this

Rule.

20.2.1.4. Proxy refers to the proxy, consent or authorization referred to

in Section 20 of the Code.

20.2.1.5. Record date means the date on which the holders of securities
entitled to vote at the meeting in person or by written consent or authorization
shall be determined.

20.2.2. Solicitation

20.2.2.1. The terms solicit and solicitation shall include:

20.2.2.1.1. Any request for a proxy or authorization;

20.2.2.1.2. Any request to execute or not to execute, or to revoke, a

proxy or authorization; or

20.2.2.1.3. The furnishing of a form of proxy or other communication

to security holders under circumstances reasonably calculated to result in the
procurement, withholding or revocation of a proxy.
 20.2.2.2. The terms shall not apply to:

20.2.2.2.1. The performance by any person of ministerial acts on

behalf of a person soliciting a proxy; or

20.2.2.2.2. Any solicitation made otherwise than on behalf of the

Issuer where the total number of persons solicited is not more than nineteen
(19).

20.3. Obligations of an Issuer Proposing to Hold a Stockholders’

Meeting

20.3.1. In the conduct of annual or other stockholders’ meetings, the

Issuer shall transmit either a written or verifiable soft copy of the information
statement and proxy form (in case of a proxy solicitation) containing the
information specified under SEC Form 20-IS, and a management report under
SRC Rule 20.4, if applicable, to every security holder of the class entitled to
vote.

20.3.2. The proxy form shall be prepared in accordance with SRC Rule
20.5.

20.3.3. Filing Requirements

20.3.3.1. Preliminary copies of the information statement and proxy

form shall be filed with the Commission at least ten (10) business days prior to
the date definitive copies of such material shall be first sent or given to
security holders.

20.3.3.2. Upon filing the preliminary information material, the Issuer

shall pay a filing fee in such amount that the Commission may determine.

20.3.3.3. Copies of the definitive information statement, proxy form

and all other materials, if any, shall be filed with the Commission prior to the
date such material/s shall be first sent or given to security holders. One (1)
copy of the material/s shall at the same time be filed with, or mailed for filing
to, any Exchange in which any class of securities of the Issuer is listed for
trading.

20.3.3.4. The information statement, proxy form and management

report referred to in SRC Rule 20.4, if applicable, shall be distributed to
security holders at least fifteen (15) business days prior to the date of the
stockholders’ meeting; Provided, that in case any changes are made within the
said fifteen (15) business days, the company shall comply with the following
requirements:

20.3.3.4.1. Publish in a national newspaper of general circulation the

order of the Commission granting the request of the company to make such
changes within the said period;

20.3.3.4.2. Submit its updated Definitive Information Statement, proxy

form and Management Report within five (5) business days from the approval
by the Commission of the said changes; and

20.3.3.4.3. Distribute relevant portions of the Definitive Information

Statement, proxy form and Management Report which have been updated
pursuant to the changes made at least five (5) business days before the date of
the stockholders’ meeting.

20.3.3.5. Copies of the information statement and management report

shall likewise be uploaded in the Issuer’s website for downloading by
interested parties.

20.3.4. If the solicitation or distribution shall be made personally in

whole or in part, copies of all written instructions or other materials which (i)
discuss, review or comment on the merits of any matter to be acted upon and
(ii) which shall be furnished by the persons making the solicitation in
connection with the solicitation shall be filed with, or mailed for filing to, the
Commission by the person on whose behalf the solicitation shall be made not
later than the date any such material is first sent or given to such individuals.

20.3.5. If any information statement, proxy form or other materials (if

applicable) filed pursuant to this Rule is amended or revised, copies of such
amended or revised material shall be filed in accordance with this Rule and
marked to indicate clearly and precisely the changes made.

20.4. Report to be Furnished to Stockholders

20.4.1. If the information statement shall relate to an annual (or special

meeting in lieu of the annual) meeting of stockholders at which directors shall
be elected, it shall be accompanied or preceded by a management report to
such stockholders containing the following:

20.4.1.1. Consolidated audited financial statements and interim

unaudited financial statements (if applicable), as required by SRC Rule 68, as
amended;
 20.4.1.2. Information concerning disagreements with accountants on
accounting and financial disclosures;

20.4.1.3. Management’s discussion and analysis or plan of operation;

20.4.1.4. Brief description of the general nature and scope of the

business of the Issuer and its subsidiaries;

20.4.1.5. Identity of each of the Issuer's directors and executive

officers, including their principal occupation or employment, name and
principal business of any organization in which such persons are employed;

20.4.1.6. Market price of and dividends on the Issuer’s common

shares;

20.4.1.7. Discussion on compliance with leading practices on corporate

governance; and

20.4.1.8. Undertaking in bold face prominent type to provide without

charge to each person solicited, upon written request of any such person, a
copy of the Issuer's annual report on SEC Form 17-A and the name and
address of the person to whom such written request is to be directed. At the
discretion of management, a charge may be made for exhibits, provided the
charge is limited to reasonable expenses incurred by the Issuer in furnishing
the exhibits.

20.4.2. Any information required to be disclosed in the information

statement, which is also contained in the Issuer’s annual report, need not be
provided in the said statement. Reference to the page of the annual report
shall, however, be made.

20.4.3. In case of a special meeting where the Issuer has already

distributed to its stockholders its annual report on SEC Form 17-A for the
fiscal year preceding the date of its annual stockholders’ meeting, it shall no
longer be required to comply with SRC Rule20.4.1 except with respect to the
disclosure of updated financial and non-financial information.

20.4.4. Copies of the management report for distribution to security

holders shall be filed with the Commission prior to the date on which such
report shall be first sent or given to security holders.

20.4.5. The distribution of the management report to security holders

shall be considered as compliance with Section 75 of the Corporation Code in
regard to the presentation of a financial report of operations, including
financial statements, to the stockholders at their regular meeting.

20.5. Requirements as to Form of Proxy and Delivery of

Information to Security Holders
20.5.1. The form of proxy shall:

20.5.1.1. Indicate in bold face on whose behalf the solicitation is being

made;

20.5.1.2. Provide a specifically designated blank space for dating the

proxy form;

20.5.1.3. Identify clearly and impartially each separate matter intended

to be acted upon;

20.5.1.4. Be in writing, signed by the stockholder or his duly

authorized representative; and

20.5.1.5. Be filed with the corporate secretary before the scheduled

meeting.

20.5.2. Appropriate means shall be provided in the proxy form to give

the person solicited the opportunity to specify his choice between approval or
disapproval of, or abstention with respect to, each separate matter referred to
therein intended to be acted upon, other than election to office. A proxy may
confer discretionary authority with respect to matters as to which a choice is
not specified by the security holder provided the form of proxy states in bold
face how it is intended to vote the shares represented by the proxy in each
such case.

20.5.3. A proxy form that provides for the election of directors shall
state the names of persons nominated for election as directors. The form shall
clearly provide any of the following means for security holders to withhold
authority to vote for each nominee:

20.5.3.1. A box opposite the name of each nominee which may be

marked to indicate that the authority to vote for such nominee is withheld;

20.5.3.2. An instruction in bold face which indicates that the security

holder may withhold the authority to vote for any nominee by lining through
or otherwise striking out the name of the nominee; or
 20.5.3.3. Designate blank spaces in which the shareholder may enter
the names of nominees to whom the shareholder chooses to withhold the
authority to vote.

20.5.4. Any proxy form executed by the security holder in such manner
as not to withhold the authority to vote for the election of any nominee shall
be deemed to grant such authority, provided the form so states in prominent
bold face.

20.5.5. A proxy may confer discretionary authority to vote with respect

to any of the following:

20.5.5.1. Matters that are to be presented at the meeting but which, at a

reasonable time before the solicitation, are not known to the persons making
the solicitation; Provided, that a specific statement to that effect is made in the
information statement or proxy form;

20.5.5.2. Approval of the minutes of the prior meeting;

20.5.5.3. Election of any person to any office for which a bona fide
nominee is named in the information statement and such nominee is unable to
serve or for good cause will not be able to serve; or

20.5.5.4. Matters incidental to the conduct of the meeting.

20.5.6. No proxy shall confer authority:

20.5.6.1. To vote for any person to any office for which a bona fide
nominee is not named in the information statement or any material attached to
it;

20.5.6.2. To vote with respect to more than one meeting (and any of its
adjournment), unless a specific statement is made in the information statement
and proxy form that the proxy is valid for more than one meeting; Provided,
that no proxy shall be valid and effective for a period longer than five (5)
years from the date of the proxy; or

20.5.6.3. To consent to or authorize any action other than the action

proposed to be taken in the information statement or matters referred to above.

20.5.7. The proxy form shall provide, subject to reasonable specific

conditions, that the shares represented by the proxy will be voted and that,
where the person solicited specifies by means of a ballot provided pursuant to
this Rule a choice with respect to any matter to be acted upon, the shares will
be voted in accordance with the stated specifications made.

20.5.8. No person making a solicitation covered by this Rule shall

solicit:

20.5.8.1. Any undated or post-dated proxy; or

20.5.8.2. Any proxy which provides that it shall be deemed to be dated

as of any date subsequent to the date on which it is signed by the security
holder.

20.6. Obligations of an Issuer to Provide a List of, or Mail Meeting

Material/s to Security Holders

20.6.1. If a record or beneficial holder of securities of the class entitled

to vote at the meeting makes a written request to be provided with a list of
stockholders or to mail the meeting materials, the Issuer shall grant the request
either by providing the list or mailing the materials to the requesting
stockholder.

20.6.2. If the Issuer opts to mail the materials for the requesting
stockholder, the Issuer shall:

20.6.2.1. Promptly advise the requesting stockholder of the number of

record holders and beneficial holders to whom the materials will be sent;

20.6.2.2. Inform the requesting stockholder of the estimated cost of

mailing an information statement, proxy form or other materials to such
holders; and

20.6.2.3. Promptly mail the materials to the stockholders.

20.7. Providing Copies of Material to Beneficial Owners

20.7.1. If the Issuer or solicitor knows that the securities of any class
entitled to vote at a meeting for which SEC Form 20-IS is furnished are held
of record by a broker, dealer, investment house, voting trustee, bank,
association, or other entity that exercises fiduciary powers in a nominee’s
name or otherwise, the Issuer or solicitor shall, by first class mail, electronic
mail, facsimile, or other equally prompt means, inquire from such record
holders at least twenty (20) business days prior to the record date of the
meeting:
 20.7.1.1. Whether other persons are the beneficial owners of such
securities and, if so, the number of copies of the information statement
necessary to supply such material to such beneficial owners; and

20.7.1.2. In the case of an annual (or special meeting in lieu of the

annual) meeting at which directors are to be elected, the number of copies of
the management report to security holders necessary to supply such report to
beneficial owners to whom such reports are to be distributed by such record
holder.

20.7.2. The Issuer or solicitor shall supply, in a timely manner, each

record holder for whom the inquiries required by SRC Rule 20.7.1 are made
with copies of the information statement and/or the management report to
security holders in such quantities, assembled in such form and at such
place(s), as the record holder may reasonably request in order to send such
material to each beneficial owner of securities to be furnished with such
material by the record holder.

20.7.3. At the request of any record holder that is supplied with the
information statement and/or annual reports to security holders pursuant to
SRC Rule 20.7.1, the Issuer shall reimburse the record holder for its
reasonable expenses for the mailing of such material to the beneficial owners.

20.8. Special Provisions Applicable to Solicitation of Votes Other

Than by the Issuer

20.8.1. This Rule applies to solicitations by any person or group of

persons other than the Issuer in regard to any item/s to be taken up in an
annual or special stockholders’ meeting.

20.8.2. Notwithstanding the provisions of SRC Rule 20.3, a solicitation

subject to this Rule may be made without furnishing the security holders an
information statement on SEC Form 20-IS, provided that:

20.8.2.1. The following information are stated in the communication

that shall be attached to and distributed with the proxy form prepared in
accordance with SRC Rule 20.5:

20.8.2.1.1. The name of the solicitor and person who shall shoulder the
expenses, and the mode of solicitation;

20.8.2.1.2. In case of election of directors, the name/s of the nominee/s,

including his business experience for the past five (5) years, involvement in
legal proceedings, family relationship with any other nominee, incumbent
director or officer, and his interest, direct or indirect, in security holdings or
related businesses;

20.8.2.1.3. A discussion of the reason/s for the solicitation of votes

against the proposed action/s by the Issuer;

20.8.2.1.4. A brief description of any substantial interest, direct or

indirect, in security holdings or related businesses of each solicitor or
participant to the solicitation in any matter to be acted upon at the meeting,
and with respect to each solicitor the following information or its fair and
accurate summary:

20.8.2.1.4.1. Name and business address of the solicitor;

20.8.2.1.4.2. Present principal occupation or employment and the

name, principal business and address of any corporation or other organization
in which such employment is carried on;

20.8.2.1.4.3. Amount of each class of securities of the Issuer which the

solicitor owns beneficially, directly or indirectly;

20.8.2.1.4.4. Amount of each class of securities of the Issuer which the

solicitor owns of record but not beneficially;

20.8.2.1.4.5. All securities of the Issuer purchased or sold by the

solicitor within the past two (2) years, the dates on which they were purchased
or sold and the amount purchased or sold on each date;

20.8.2.1.4.6. If the solicitor is, or was within the past year, a party to
any contract, arrangement or understanding with any person with respect to
any security of the Issuer, including, but not limited to, joint ventures, loan or
option arrangements, puts or calls, guarantees against loss or of profit, division
of losses or profits, or the giving or withholding of proxies. If so, name the
parties to such contracts, arrangements or understandings and give their
details; and

20.8.2.1.4.7. Amount of each class of securities of any parent or

subsidiary of the Issuer which the solicitor owns beneficially, directly or
indirectly.

20.8.2.1.5. If specially engaged employees, representatives or other

persons have been or are to be employed to solicit security holders, the [i]
material features of any contract or arrangement for such solicitation and the
identity of the parties, [ii] their cost or anticipated cost, and [iii] approximate
number of such employees or employees of any other person (naming such
other person) who will solicit security holders; and

20.8.2.1.6. The total amount estimated to be spent and the total

expenditures in furtherance of, or in connection with, the solicitation of
security holders.

20.8.2.2. All matters to be taken up in the meeting shall be described

and reflected in the proxy form and its attachments.

20.8.3. Copies of the proxy form with its attachments shall be filed with
the Commission at least fifteen (15) business days prior to the date such
materials shall be distributed, sent or given to any security holder.

20.8.4. The prescribed filing fees for each proxy solicitation other than
by the Issuer shall be paid to the Commission.

20.9. False or Misleading Statements

20.9.1. No information subject to this Rule shall be made containing

any statement which, at the time and in the light of the circumstances under
which it is made, is false or misleading with respect to any material fact, or
which omits to state any material fact necessary in order to make the statements
therein not false or misleading or necessary to correct any statement in any
earlier communication with respect to the solicitation of a proxy for the same
meeting or subject matter which has become false or misleading.

20.9.2. The fact that a statement or other material has been filed with or
examined by the Commission shall not be considered a finding by the
Commission that such material is accurate or complete, or not false or
misleading, or that the Commission has passed upon the merits of or approved
any statement contained therein or any matter to be acted upon by security
holders. No representation contrary to the foregoing shall be made.

20.10. Obligation of Issuers in Communicating with Beneficial Owners

20.10.1. If the Issuer knows that securities of any class entitled to vote
at a meeting with respect to which the Issuer intends to solicit proxies, consents
or authorizations are held of record by a broker, dealer, investment house,
voting trustee, bank, association, or other entity that exercises fiduciary powers
in nominee name or otherwise, the Issuer shall by first class mail, electronic
mail, facsimile, or other equally prompt means, inquire of such record holders
at least twenty (20) business days prior to the record date of the meeting:
 20.10.1.1. Whether other persons are the beneficial owners of such
securities and if so, the number of copies of the proxy and other soliciting
material necessary to supply such material to such beneficial owners; and

20.10.1.2. In the case of an annual (or special meeting in lieu of the

annual) meeting at which directors are to be elected, the number of copies of
the management report to security holders necessary to supply such report to
beneficial owners to whom such reports are to be distributed by such record
holder.

20.10.2. The Issuer shall supply, in a timely manner, each record

holder of whom the inquiries required by SRC Rule 20.10.1 are made with
copies of the information statement, proxy form (if applicable), other proxy
soliciting material, and/or the management report to security holders, in such
quantities, assembled in such form and at such place(s), as the record holder
may reasonably request in order to send such material to each beneficial owner
of securities who is to be furnished with such material by the record holder.

20.10.3. Upon the request of any record holder that is supplied with the
said documents pursuant to SRC Rule 20.10.2, the Issuer shall reimburse the
record holder for its reasonable expenses in completing the mailing of such
material to beneficial owners.

20.11. Other Procedural Requirements

20.11.1. Annual Meeting

20.11.1.1. Regular meeting of stockholders for the election of

Directors and Officers of the corporation shall be held annually on the date
fixed in the by-laws, or if not so fixed, on any date in April as determined by
the Board of Directors. If the date of the annual meeting falls on a legal
holiday, the annual meeting shall be held in the next succeeding business day
which is not a legal holiday.

20.11.1.2. The annual stockholders’ meeting shall be held in the city or

municipality where the principal office of the corporation is located, and if
practicable in the principal office of the corporation. Metro Manila shall, for
purposes of said meeting, be considered a city or municipality.

20.11.1.3. Written notice, stating the date, time and place of the annual
meeting shall be sent to all stockholders of record at least two (2) weeks prior
to the scheduled annual stockholders’ meeting, unless a different period is
required by the by-laws. The distribution to stockholders of information
statement (SEC Form 20-IS) within the prescribed period under this Rule shall
be sufficient compliance with the notice requirement.

20.11.1.4. If for any justifiable and valid reason, the annual

stockholders’ meeting has to be postponed, the corporation shall notify the
Commission in writing of such postponement within ten (10) days from the
date of such postponement.

20.11.1.5. No postponement of annual stockholders’ meeting shall be

allowed except for justifiable reasons to be stated in writing signed under oath
by the President or Secretary of the corporation.

20.11.1.6. The Commission en banc may, motu propio, or upon the

written request of any stockholder, direct the calling of an annual
stockholders’ meeting under its supervision, if the corporation fails or refuses
to call said meeting for any justifiable reason.

20.11.1.7. The Commission may send its representatives/observers to

stockholders’ meetings, under such terms and conditions it deems appropriate.

20.11.1.8. Unless otherwise provided by the by-laws, the stock and

transfer book shall be closed at least twenty (20) days before the scheduled
date of the annual stockholders’ meeting to enable the corporation to prepare a
list of stockholders entitled to vote.

20.11.1.9. A copy of the list of stockholders entitled to vote shall be

made available at the company’s principal office at least fifteen (15) days prior
to the date of the annual stockholders’ meeting and the corporation shall
furnish a copy thereof to any stockholder who may request the same at the
expense of said stockholder.

20.11.2. Proxy

20.11.2.1. The corporate by-laws shall be controlling in determining

the proper procedure to be followed in the execution and acceptance of
proxies, provided that the minimum required formalities prescribed under
Section 58 of the Corporation Code and SRC Rule 20 shall be complied with.

20.11.2.2. The notice of stockholders’ meeting shall also set the date,
time and place of the validation of proxies, which in no case shall be less than
five (5) days prior to the annual stockholders’ meeting to be held. The
presence of any stockholder who may wish to be present in person or through
counsel shall be allowed.
 20.11.2.3. Failure to affix documentary stamps shall not affect the
validity of the proxy. The only adverse effect of such failure is that the same
cannot be recorded as a public document and cannot be admitted or used as
evidence in Court until the required documentary stamp is affixed and
cancelled.

20.11.2.4. Unless required by the corporate by-laws, a proxy need not

be notarized.

20.11.2.5. If the name of the proxy is left in blank, the person to whom
it is given or the issuer corporation receiving the proxy is at liberty to fill in
any name he/it chooses.

20.11.2.6. If a duly accomplished and executed proxy is undated, the

postmark or, if not mailed, its actual date of presentation shall be considered.

20.11.2.7. A proxy executed by a corporation shall be in the form of a

board resolution duly certified by the Corporate Secretary or in a proxy form
executed by a duly authorized corporate officer accompanied by a Corporate
Secretary's certificate quoting the board resolution authorizing the said
corporate officer to execute the said proxy.

20.11.2.8. If the by-laws provide for a cut-off date for the submission
of proxies the same should be strictly followed. In the absence of a provision
in the by-laws fixing a deadline, proxies shall be submitted not later than ten
(10) days prior to the date of the stockholders meeting.

20.11.2.9. Where the corporation receives more than one (1) proxy
from the same stockholder and they are all undated, the postmark dates shall
be considered. If the proxies are mailed on the same date, the one bearing the
latest time of day of postmark is counted. If the proxies are not mailed, then
the time of their actual presentation is considered. That which is presented last
will be recognized.

20.11.2.10. Where a proxy is given to two (2) or more persons in the

alternative in one instrument, the proxy designated as an alternate can only act
as proxy in the event of non-attendance of the other designated person.

20.11.2.11. Where the same stockholder gives two (2) or more proxies,
the latest one given is to be deemed to revoke all former proxies.

20.11.2.12. A proxy shall be valid only for the meeting for which it is
intended.
 20.11.2.13. Executors, administrators, receivers and other legal
representatives duly appointed by the court may attend and vote on behalf of
the stockholders without a need of any written proxy.

20.11.2.14. If the stockholder intends to designate several proxies, the

number of shares of stock to be represented by each proxy shall be specifically
indicated in the proxy form. If some of the proxy forms do not indicate the
number of shares, the total shareholdings of the stockholder shall be tallied
and the balance thereof, if any, shall be allotted to the holder of the proxy form
without the number of shares. If all are in blank, the stocks shall be distributed
equally among the proxies. The number of persons to be designated as proxies
may be limited by the By-laws.

20.11.2.15. In case of shares of stock owned jointly by two (2) or more

persons, the consent of all co-owners shall be necessary to appoint or revoke a
proxy.

20.11.2.16. For persons owning shares in an "and/or" capacity, any one

of them may appoint and revoke a proxy.

20.11.2.17. Proxies executed abroad shall be duly authenticated by the

Philippine Embassy or Consular Office.

20.11.2.18. No member of the Stock Exchange and no broker/dealer

shall give any proxy, consent or authorization, in respect of any security
carried for the account of a customer to a person other than the customer,
without the express written authorization of such customer. The proxy
executed by the broker shall be accompanied by a certification under oath
stating that before the proxy was given to the broker, he had duly obtained the
written consent of the persons in whose account the shares are held.

20.11.2.19. A proxy shall not be invalidated on the ground that the

stockholder who executed the same has no signature card on file with the
Corporate Secretary or Transfer Agent, unless it can be shown that he/she had
refused to submit the signature card despite written demand to that effect duly
received by the said stockholder at least ten (10) days before the annual
stockholders’ meeting and election.

20.11.2.20. There shall be a presumption of regularity in the execution

of proxies and shall be accepted if they have the appearance of prima facie
authenticity in the absence of a timely and valid challenge.

20.11.2.21. In the validation of proxies, a special committee of

inspectors shall be designated or appointed by the Board of Directors which
shall be empowered to pass on the validity of proxies. [GSIS –vs- Rosete
(Meralco), April 16, 2009]

20.11.2.22. Any violation of this Rule on Proxy shall be subject to the

administrative sanctions provided for under Section 144 of the Corporation
Code and Section 54 of the Code, and shall render the proceedings null and
void.