Corporate Books

CORPORATE BOOKS AND RECORDS
I. Corporate Books and Records
What corporate book and records that have to be maintained?

Section 73 requires the following corporate books and records to be kept and
preserved at its principal office:
1. Articles of Incorporation and by-laws, and all their amendments
2. The current ownership structure and voting rights of the corporation,

including lists of stockholders or members, group structures, intra-group
structures, ownership data, and beneficial interest.
3. The names and addresses of all members of the board of directors and
executive officers.
4. Record of all business transactions.
5. A record of resolutions of the board and stockholders and members.
6. Copies of the latest reportorial requirements submitted to the SEC.
7. Minutes of stockholders or Board meetings, setting forth: time and place,

how authorized, notice given, the agenda, whether regular or special, its object if
special, those present/absent, every act done or ordered. Upon demand, the time
that the a director, trustee or officer entered or left, the yeas and the nay, and any
protest may be recorded in full upon their demand.
Stock and Transfer Book

Stock corporations must also keep a stock and transfer book, which shall
contain a record of all stocks in the names of the stockholders alphabetically
arranged; the installments paid and unpaid on all stocks for which subscription
has been made, and the date of payment of any installment; a statement of every
alienation, sale or transfer of stock made, the date thereof, by and to whom
made; and such other entries as the bylaws may prescribe.
 Stock corporations are also required to maintain what is known as a stock

and transfer book.
 The stock and transfer book is where we will see a record of all the stocks
that are issued by the corporation, to whom they have been issued if they
have been dispositions by the person or stockholders to whom they have
been issued, it will also contain a record of all subscriptions, the total
amount paid and outstanding in these subscriptions and when they should
be paid.
The stock and transfer book shall be kept in the principal office of the
corporation or in the office of its stock transfer agent and shall be open for
inspection by any director or stockholder of the corporation at reasonable hours
on business days.
Stock and Transfer Agent

A stock transfer agent or one engaged principally in the business of
registering transfers of stocks in behalf of a stock corporation shall be allowed to
operate in the Philippines upon securing a license from the Commission and the
payment of a fee to be fixed by the Commission, which shall be renewable
annually: Provided, That a stock corporation is not precluded from performing or
making transfers of its own stocks, in which case all the rules and regulations
imposed on stock transfer agents, except the payment of a license fee herein
provided, shall be applicable: Provided, further, That the Commission may require
stock corporations which transfer and/or trade stocks in secondary markets to
have an independent transfer agent.
II. Inspection Of Corporate Records
The rule is corporate records, regardless of the form in which they are
stored, shall be open to inspection by any director, trustee, stockholder or
member of the corporation in person or by a representative at reasonable hours
on business days, and in addition, there can be a demand in writing made by such
director, trustee or stockholder at their own expense, for copies of such records
or excerpts from said records.
 The rule is as follows, so if you are going to be ask who can inspect the
books and records of the corporation, they are the following: Director,
Trustee, Stockholder or a member.
 If the question is when? The answer would be: at reasonable hours on a

business day.
 And they can exercise the right of inspection regardless of the from in
which the record is being kept.
 In addition to inspection there is what is called the “right of reproduction”
o The right of reproduction refers to a demand in writing for copies of

records or excerpts from the records. This demand must be
inwriting and the expense is at the party asking for inspection or
reproduction.
The inspecting or reproducing party shall remain bound by confidentiality

rules under prevailing laws, such as the rules on trade secrets or processes under
Republic Act No. 8293, otherwise known as the “Intellectual Property Code of the
Philippines”, as amended, Republic Act No. 10173, otherwise known as the “Data
Privacy Act of 2012”, Republic Act No. 8799, otherwise known as “The Securities
Regulation Code”, and the Rules of Court.
Who cannot exercise the right of inspection and reproduction?
The same section says that, a requesting party who is not a stockholder or
not member of record, or is a competitor, director, officer, controlling stockholder
or otherwise represents the interests of a competitor shall have no right to
inspect or demand reproduction of corporate records.
It would seem to be implied that even if one is a stockholder but he is

likewise a director, officer, a controlling stockholder or otherwise represents the
interests of a competitor, that would now constitute a valid ground to refuse
inspection or reproduction.
Any stockholder who shall abuse the rights granted under this section shall
be penalized under Section 158 of this Code where he may be liable for a fine or
may be the subject for a permanent cease and desist order, without prejudice to
the provisions of Republic Act No. 8293, otherwise known as the “Intellectual
Property Code of the Philippines”, as amended, and Republic Act No. 10173,
otherwise known as the “Data Privacy Act of 2012”.
Any officer or agent of the corporation who shall refuse to allow the
inspection and/or reproduction of records in accordance with the provisions of
this Code shall be liable to such director, trustee, stockholder or member for
damages, and in addition, shall be guilty of an offense which shall be punishable
under Section 161 of this Code which provides for a penalty or a fine of 20,000 to
200,000 and if detrimental to the public, the fine will be from 20,000 to 400,000
both without prejudice to the citation for contempt issued by the SEC.
Provided, That if such refusal is made pursuant to a resolution or order of

the board of directors or trustees, the liability under section 161 for such action
shall be imposed upon the directors or trustees who voted for such refusal.
 Defenses Available Against These Violations:
1. that the person demanding to examine and copy excerpts from the
corporation’s records and minutes has improperly used any information
secured through any prior examination of the records or minutes of such
corporation or of any other corporation. This extends to other
corporations, so if the party requesting inspection or reproduction has a
history of improper use of information gathered from inspection and
reproduction of records of other corporations, then it is a valid ground to
refuse the exercise of the right of inspection and reproduction in that
corporation.
2. Or the party who wishes to do an inspection or request reproduction
was not acting in good faith
3. or for a legitimate purpose in making the demand to examine or

reproduce corporate records, or is a competitor, director, officer,
controlling stockholder or otherwise represents the interests of a
competitor.
What can the SEC do?
If the corporation denies or does not act on a demand for inspection

and/or reproduction, the aggrieved party may report such to the Commission.
Within five (5) days from receipt of such report, the Commission shall conduct a
summary investigation and issue an order directing the inspection or reproduction
of the requested records.
III. Right of Shareholder or Member to Financial Statements
As provided by Section 74, a corporation shall furnish a stockholder or

member, within ten (10) days from receipt of their written request, its most
recent financial statement, in the form and substance of the financial reporting
required by the Commission.
In addition, at the regular meeting of stockholders or members, the board

of directors or trustees shall present to such stockholders or members a financial
report of the operations of the corporation for the preceding year, which shall
include financial statements, duly signed and certified in accordance with this
Code, and the rules the Commission may prescribe.
However, if the total assets or total liabilities of the corporation is less than
Six hundred thousand pesos (P600, 000.00), or such other amount as may be
determined appropriate by the Department of Finance, the financial statements
may be certified under oath by the treasurer and the president.

Corporate Books

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CORPORATE BOOKS AND RECORDS

I. Corporate Books and Records

What corporate book and records that have to be maintained?

1. Articles of Incorporation and by-laws, and all their amendments

2. The current ownership structure and voting rights of the corporation,

4. Record of all business transactions.

5. A record of resolutions of the board and stockholders and members.

6. Copies of the latest reportorial requirements submitted to the SEC.

7. Minutes of stockholders or Board meetings, setting forth: time and place,

Stock and Transfer Book

 Stock corporations are also required to maintain what is known as a stock

Stock and Transfer Agent

II. Inspection Of Corporate Records

 If the question is when? The answer would be: at reasonable hours on a

 In addition to inspection there is what is called the “right of reproduction”

o The right of reproduction refers to a demand in writing for copies of

The inspecting or reproducing party shall remain bound by confidentiality

Who cannot exercise the right of inspection and reproduction?

It would seem to be implied that even if one is a stockholder but he is

Provided, That if such refusal is made pursuant to a resolution or order of

 Defenses Available Against These Violations:

3. or for a legitimate purpose in making the demand to examine or

What can the SEC do?

If the corporation denies or does not act on a demand for inspection

III. Right of Shareholder or Member to Financial Statements

As provided by Section 74, a corporation shall furnish a stockholder or

In addition, at the regular meeting of stockholders or members, the board

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