It is well-established in corporation law that the corporate powers of corporations are exercised by the boards of directors. In turn, the medium for the exercise of such powers would be the board meetings where the board actions are recorded and reflected in the resolutions issued by the corporate secretary. All contractual matters, personnel actions and strategic plans are decided in this manner. This is the standard process in the conduct of the corporate business. Atty. Jun de Zuñiga It is also the normal process that board meetings are conducted on the basis of the agenda items submitted, filed and circulated among the directors following the procedure in the corporation’s bylaws. These papers are usually coursed through the CEO for endorsement to the chairman. However, it is possible that, due to sensitivity and confidentiality concerns, some items may not have to be forthright brought for discussion as part of the regular agenda. These may include, for example, trade secrets, discovery of fraud, and disciplinary concerns for some senior officers, which by their nature, may warrant a preliminary discussion within a limited group before these are formally brought out for formal board action. It is also possible that in the course of a board meeting, disorderly behaviour may arise between or among some directors which may require a more private forum to mediate differences among the quarrelling parties and restore decorum in the proceedings. An effective vehicle to address these sensitive issues would be the holding of executive sessions among the directors. Executive sessions can be a tactful way of approaching such difficult issues confronting the board. These are usually conducted at the initiative of the presiding officer. There are no provisions in the Corporation Code on this subject but corporate practice has not disapproved but has in fact countenanced such sessions. An “executive session” has been defined to mean any meeting of a deliberative assembly, or a portion of a meeting, of which the proceedings are secret. It is believed to have originated in the consideration of executive business, that is, presidential nominations to appointive offices and treaties, behind closed doors in the United States Senator (Robert’s Rules of Order). Only members of the body can attend although resource persons may be invited to attend. Those who attend are honor bound not to divulge anything that occurred (ibid.). We see this practice from time to time in the course of Congressional investigations where, for reasons of national security or interest, resource persons would request that the vital data they have be di sclosed only in an executive session. Executive sessions still form part of the corporate proceedings and should accordingly be recorded and put in minutes. However, the minutes can only be reported and confirmed also in executive session unless there is decision to release them as part of the board’s regular records. I would also think that the better practice is for the board in executive session to agree on a statement that can be noted in the regular board meeting for transparency. The statement need not disclose all the details of what was taken up but can be of general tenor. Necessarily also, if there are agreements arrived at during the executive sessions, these can be recognized as corporate actions only if translated by way of corporate resolutions formally adopted by the board.

* The above comments are the personal views of the writer. His email address is [email protected]