Be It Enacted by The Senate and House of Representatives of The Philippine Congress Assembled
Be It Enacted by The Senate and House of Representatives of The Philippine Congress Assembled
Be It Enacted by The Senate and House of Representatives of The Philippine Congress Assembled
A corporation whose term has expired may apply for (d) The term for which the corporation is to
revival of its corporate existence, together with all exist, if the corporation has not elected
the rights and privileges under its certificate of perpetual existence;
incorporation and subject to all of its duties, debts
and liabilities existing prior to its revival. Upon
(e) The names, nationalities, and residence
approval by the Commission, the corporation shall
addresses of the incorporators;
be deemed revived and a certificate of revival of
corporate existence shall be issued, giving it
(f) The number of directors, which shall not
perpetual existence, unless its application for revival
be more than fifteen (15) or the number of
provides otherwise.
trustees which may be more than fifteen
(15);
No application for revival of certificate of
incorporation of banks, banking and quasi-banking
(g) The names, nationalities, and residence
institutions, preneed, insurance and trust
addresses of persons who shall act as
companies, non-stock savings and loan associations
directors or trustees until the first regular
(NSSLAs), pawnshops, corporations engaged in
directors or trustees are duly elected and
money service business, and other financial
qualified in accordance with this Code;
intermediaries shall be approved by the Commission
unless accompanied by a favorable recommendation
of the appropriate government agency. (h) If it be a stock corporation, the amount
of its authorized capital stock, number of
shares into which it is divided, the par value
Section 12. Minimum Capital Stock Not Required of
of each, names, nationalities, and
Stock Corporations. - Stock corporations shall not be
subscribers, amount subscribed and paid by
required to have minimum capital stock, except as
each on the subscription, and a statement
otherwise specially provided by special law.
that some or all of the shares are without
par value, if applicable;
Section 13. Contents of the Articles of
Incorporation. - All corporations shall file with the
(i) If it be a nonstock corporation, the
Commission articles of incorporation in any of the
amount of its capital, the names,
official languages, duly signed and acknowledged or
nationalities, and residence addresses of
authenticated, in such form and manner as may be
allowed by the Commission, containing substantially
the contributors, and amount contributed Fifth: That the names, nationalities, and residence
by each; and addresses of the incorporators of the corporation
are as follows:
(j) Such other matters consistent with law
and which the incorporators may deem Sixth: That the number if directors or trustees of the
necessary and convenient. corporation shall be ___________________; and the
names, nationalities, and residence addresses of the
An arbitration agreement may be provided in the first directors or trustees of the corporation are as
articles of incorporation pursuant to Section 181 of follows:
this Code.1âwphi1
Seventh: That the authorized capital stock of the
The Articles of incorporation and applications for corporation is ____________________ PESOS
amendments thereto may be filed with the (₱______), dividend into ____ shares with the par
Commission in the form of an electronic document, value of ___________________ PESOS
in accordance with the Commission's rule and (₱_____________) per share. (In case all the shares
regulations on electronic filing. are without par value): That the capital stock of the
corporation is __________________ shares without
Section 14. Form of Articles of Incorporation. - par value.
Unless otherwise prescribed by special law, the
articles of incorporation of all domestic corporations (In case some shares have par value and some are
shall comply substantially with the following form: without par value): That the capital stock of said
corporation consists of
Articles of Incorporation ________________________________ shares, of
of which _______________________ shares have a par
value of ___________________________PESOS
(₱_______) each, and of which
_____________________
____________________ shares are without par
value.
(Name of Corporation)
Eight: That the number of shares of the authorized
The undersigned incorporators, all of legal age, have capital stock-stated has been subscribed as follows:
voluntarily agreed to form a (stock) (nonstock)
corporation under the laws of the Republic of the
(Modify No. 8 if shares are with no-par value. In case
Philippines and certify the following:
the corporation is nonstock, Nos. 7 and 8 of the
above articles may be modified accordingly, and it is
First: That the name of said corporation shall be sufficient if the articles may be modified accordingly,
"_________________", Inc. Corporation or OPC"; and it is sufficient if the articles state the amount of
capital or money contributed or donated by
Second: That the purpose or purposes for which specified persons, stating the names, nationalities,
such corporation is incorporated are: (If there is and residence addresses of the contributors or
more than one purpose, indicate primary and donors and the respective amount given by each.)
secondary purposes);
Ninth: That _______________________ has been
Third: That the principal office of the corporation is elected by the subscribers as Treasurer of the
located in the City/Municipality of Corporation to act as such until after the successor is
_______________, Province of duly elected and qualified in accordance with the
______________________, Philippines; bylaws, that as Treasurer, authority has been given
to receive in the name and for the benefit of the
Fourth: That the corporation shall have perpetual corporation, all subscriptions, contributions or
existence or a term of ___________ years from the donations paid or given by the subscribers or
date of issuance of the certificate of incorporation; members, who certifies the information set forth in
the seventh and eighth clauses above, and that the
paid-up portion of the subscription in cash and/or Section 15. Amendment of Articles of Incorporation. -
property for the benefit and credit of the Unless otherwise prescribed by this Code or by
corporation has been duly received. special law, and for legitimate purposes, any
provision or matter stated in the articles of
Tenth: That the incorporators undertake to change incorporation may be amended by a majority vote of
the name of the corporation immediately upon the board of directors or trustees and the vote or
receipt of notice from the Commission that another written assent of the stockholders representing at
corporation, partnership or person has acquired a least two-thirds (2/3) of the outstanding capital
prior right to the use of such name, that the name stock, without prejudice to the appraisal right of
has been declared not distinguishable from a dissenting stockholders in accordance with the
corporation, or that it is contrary to law, public provisions of this Code. The articles of incorporation
morals, good customs or public policy. of a nonstock corporation may be amended by the
vote or written assent of majority of the trustees and
Eleventh: (Corporations which will engage in any at least two-thirds (2/3) of the members.
business or activity reserved for Filipino citizens shall
provide the following): The original and amended articles together shall
contain all provisions required by law to be set out in
"No transfer of stock or interest which shall reduce the articles of incorporation. Amendments to the
the ownership of Filipino citizens to less than the articles shall be indicated by underscoring the
required percentage of capital stock as provided by change or changes made, and a copy thereof duly
existing laws shall be allowed or permitted to be certified under oath by the corporate secretary and a
recorder in the proper books of the corporation, and majority of the directors or trustees, with a
this restriction shall be indicated in all stock statement that the amendments have been duly
certificates issued by the corporation." approved by the required vote of the stockholders or
members, shall be submitted to the Commission.
IN WITNESS WHEREOF, we have hereunto signed
these Articles of Incorporation, this ______ day of The amendments shall take effect upon their
_____, 20___ in the City/Municipality of approval by the Commission or from the date of
_________________, Province of filing with the said Commission if not acted upon
________________, Republic of the Philippines. within six (6) months from the date of filing for a
cause not attributable to the corporation.
_____________________________
_____________________________ Section 16. Grounds When Articles of Incorporation
or Amendment May be Disapproved. The
Commission may disapprove the articles of
_____________________________
incorporation or any amendment thereto if the same
_____________________________
is not compliant with the requirements of this
Code: Provided, That the Commission shall give the
_____________________________ incorporators, directors, trustees, or officers as
_____________________________ reasonable time from receipt of the disapproval
within which to modify the objectionable portions of
_____________________________ the articles or amendment. The following are ground
_____________________________ for such disapproval:
(a) The word "corporation", "company", A private corporation organized under this Code
incorporated", "limited", "limited liability", commences its corporate existence and juridical
or an abbreviation ofone if such words; and personality from the date the Commission issues the
certificate of incorporation under its official seal
thereupon the incorporators, stockholders/members
(b) Punctuations, articles, conjunctions,
and their successors shall constitute a body
contractions, prepositions, abbreviations,
corporate under the name stated in the articles of
different tenses, spacing, or number of the
incorporation for the period of time mentioned
same word or phrase.
therein, unless said period is extended or the
corporation is sooner dissolved in accordance with
The Commission upon determination that the law.
corporate name is: (1) not distinguishable from a
name already reserved or registered for the use of
Section 19. De facto Corporations. - The due
another corporation; (2) already protected by law; or
incorporation of any corporation claiming in good
(3) contrary to law, rules and regulations, may
faith to be a corporation under this Code, and its
summarily order the corporation to immediately
right to exercise corporate powers, shall not be
cease and desist from using such name and require
required into collaterally in any private suit to which
the corporation to register a new one. The
such corporation may be a party. Such inquiry may
Commission shall also cause the removal of all visible
be made by the Solicitor General in a quo
signages, marks, advertisements, labels prints and
warranto proceeding.
Section 20. Corporation by Estoppel. - All persons powers, condict all business, and control all
who assume to act as a corporation knowing it to be properties of the corporation.
without the authority to do so shall be liable as
general partners for all debts, liabilities and damages Directors shall be elected for a term of one (10 Year
incurred or arising as a result thereof: Provided, from among the holders of stocks registered in the
however, That when any such ostensible corporation's book while trustees shall be elected for
corporation is sued on any transaction entered by its a term not exceeding three (3) years from among
as a corporation or on any tort committed by it as the members of the corporation. Each director and
such, it shall not be allowed to use on any its lack of trustee shall hold office until the successor is elected
corporate personality as a defense. Anyone who and qualified. A director who ceases to own at least
assumes an obligation to an ostensible corporation one (1) share of stock or a trustee who ceases to be
as such cannot resist performance thereof on the a member of the corporation shall cease to be such.
ground that there was in fact no corporation.
The board of the following corporations vested with
Section 21. Effects of Non-Use of Corporate Charter public interest shall have independent directors
and Continous Inoperation. - If a corporation does constituting at least twenty percent (20%) of such
not formally organize and commence its business board:
within five (5) year from the date of its
incorporation, its certificate of incorporation shall be (a) Corporations covered by Section 17.2 of
deemed revoked as of the day following the end of Republic Act No. 8799, otherwise known as
the five (5)-year period. "The Securities Regulation Code", namely
those whose securities are registered with
However, if a corporation has commence its the Commission, corporations listed with an
business but subsequently becomes inoperative for a exchange or with assets of at least Fifty
period of at least five (5) consecutive years, the million pesos (50,000,000.00) and having
Commission may, after due notice and hearing, place two hundred (200) or more holders of
the corporation under delinquent status. shares, each holding at least one hundred
(100) shares of a class of its equity shares;
A delinquent corporation shall have a period of two
(2) years to resume operations and comply with all (b) Banks and quasi-banks, NSSLAs,
requirements that the Commission shall prescribed. pawnshops, corporations engaged in money
Upon the compliance by the corporation, the service business, preneed, trust and
Commission shall issue an order lifting the insurance companies and other financial
delinquent status. Failure to comply with the intermediaries; and
requirements and resume operations within the
period given by the Commission shall cause the (c) Other corporations engaged in
revocation of the corporation's certificate of businesses vested with public interest
incorporation. similar to the above, as may be determined
by the Commission, after taking into
The Commission shall give reasonable notice to, and account relevant factors which are germane
coordinate with the appropriate regulatory agency to the objective and purpose of requiring
prior to the suspension or revocation of the the election of an independent director,
certificate of incorporation of companies under their such as the extent of minority ownership,
special regulatory jurisdiction. type of financial products or securities
issued or offered to investors, public
TITLE III interest involved in the nature of business
BOARD OF DIRECTORS/TRUSTEE AND OFFICERS operations, and other analogous factors.
Section 22. The Board of Directors or Trustees of a An independent director is a person who apart from
Corporation; Qualification and Term. - Unless shareholdings and fees received from any business
otherwise provided in this Code, the board of or other relationship which could, or could
directors or trustees shall exercise the corporate reasonable be received to materially interfere with
the exercise of independent judgment in carrying directors to be elected; (b) cumulate said shares and
out the responsibilities as a director. give one (1) candidate as many votes as the number
of directors to be elected multiplied by the number
Independent directors must be elected by the of shares owned; or (c) distribute them on the same
shareholders present or entitled to vote in principle among as many candidates as may be seen
absentia during the election of directors. fit: Provided, That the total number of votes cast
Independent directors shall be subject to rules and shall not exceed the number of shares owned by the
regulations governing their qualifications, stockholders as shown in the books of the
disqualifications, voting requirements, duration of corporation multiplied by the whole number of
term and term limit, maximum number of board directors to be elected: Provided, however, That no
membership and other requirements that the delinquent stock shall be voted. Unless otherwise
Commission will prescribed to strengthen their provided in the articles of incorporation or in the
independence and align with international best bylaws, members of nonstock corporations may cast
practices. as many votes as there are trustees to be elected by
may not cast more than one (1) vote for one (1)
Section 23. Election of Directors or Trustees. - Except candidate. Nominees for directors or trustees
when the exclusive right is reserved for holders of receiving the highest number of votes shall be
founders' shares under Section 7 of this Code, each declared elected.
stockholder or member shall have the right to
nominate any director or trustee who posseses all of If no election is held, or the owners of majority of
the qualifications and none of the disqualifications the outstanding capital stock or majority of the
and none of the disqualifications set forth in this members entitled to vote are not present in person,
Code. by proxy, or through remote communication or not
voting in absentia at the meeting, such meeting may
At all elections of directors or trustees, there must be adjourned and the corporation shall proceed in
be present, either in person or through a accordance with Section 25 of this Code.
representative authorized to act by written proxy,
the owners of majority of the outstanding capital The directors or trustees elected shall perform their
stock, or if there be no capital stock, a majority of duties as prescribed by law, rules of good corporate
the members entitled to vote. When so authorized governance, and bylaws of the corporation.
in the bylaws or by a majority of the board of
directors, the stockholders or members may also Section 24. Corporate Officers. - Immediately after
vote through remote communication or in their election, the directors of a corporation must
absentia: Provided, That the right to vote through formally organize an elect: (a) a president, who must
such modes may be exercised in corporations vested be a director; (b) a treasurer, who must be a
with public interest, notwithstanding the absence of resident; (c) a secretary, who must be a citizen and
a provision in the bylaws of such corporations. resident of the Philippines; and (d) such other
officers as may be provided in the bylaws. If the
A stockholder or member who participates through corporation is vested with public interest, the board
remote communication or in absentia, shall be shall also elect compliance officer. The same person
deemed present for purposes of quorum. may hold two (2) or more positions concurrently,
except that no one shall act as president and
The election must be by ballot if requested by any secretary or as president and treasurer at the same
voting stockholder or member. time, unless otherwise allowed in this Code.
In stock corporations, stockholders entitled to vote The officers shall manage the corporation and
shall have the right to vote the number of shares of perform such duties as may be provided in the
stock standing in their own names in the stock books bylaws and/or as resolved by the board of directors.
of the corporation at the time fixed in the bylaws or
where the bylaws are silent at the time of the Section 25. Report of Election of Directors, Trustees
election. The said stockholder may: (a) vote such and Officers, Non-holding of Election and Cessation
number of shares for as many persons as there are from Office. - Within thirty (30) days after the
election of the directors, trustees and officers of the (1) Of an offense punishable by
corporation, the secretary, or any other officer of the imprisonment for a period
corporation, the secretary, or any other officer of the exceeding six (6) years;
corporation, shall submit to the Commission, the
names, nationalities, shareholdings, and residence (2) For violating this Code; and
addresses of the directors, trustees and officers
elected. (3) For violating Republic Act No.
8799, otherwise known as "The
The non-holding of elections and the reasons Securities Regulation Code";
therefor shall be reported to the Commission within
thirty (30) days from the date of the scheduled (b) Found administratively liable for any
election. The report shall specify a new date for the offense involving fraudulent acts; and
election, which shall not be later than sixty (60) days
from the scheduled date.
(c) By a foreign court or equivalent foreign
regulatory authority for acts, violations or
If no new date has been designated, or if the misconduct similar to those enumerated in
rescheduled election is likewise not held, the paragraphs (a) and (b) above.
Commission may, upon the application of a
stockholder, member, director or trustee, and after
The foregoing is without prejudice to qualifications
verification of the unjustifiable non-holding of the
or other disqualifications, which the Commission,
election, summarily order that an election be held.
the primary regulatory agency, or Philippine
The Commission shall have the power to issue such
Competition Commission may impose in its
orders as may be appropriate, including other
promotion of good corporate governance or as a
directing the issuance of a notice stating the time
sanction in its administrative proceedings.
and place of the election, designated presiding
officer, and the record date or dates for the
Section 27. Removal of Director or Trustees. - Any
determination of stockholders or members entitled
director or trustee of a corporation may be removed
to vote.
fro office by vote of the stockholders holding or
representing at least two-thirds (2/3) of the
Notwithstanding any provision of the articles of
outstanding capital stock, or in a nonstock
incorporation or by laws to the contrary, the shares
corporation, by a vote of at least two-thirds (2/3) of
of stock or membership represented at such meeting
the member entitled to vote: Provided, That such
and entitled to vote shall constitute a quorum for
removal shall take place either at a regular meeting
purposes of conducting an election under this
of the corporation or at a special meeting called for
section.
the purpose, and in either case, after previous notice
to stockholders or members of the corporation of
Should a director, trustee or officer die, resign or in the intention to propose such removal at the
any manner case to hold office, the secretary or the meeting. A special meeting of the stockholders or
director, trustee or officer of the corporation, shall, members for the purpose of removing any director
within seven (7) days form knowledge thereof, or trustee must be called by the secretary on order
report in writing such fact to the Commission. of the president, or upon written demand of
stockholders representing or holding at least a
Section 26. Disqualification of Directors, Trustees or majority of the outstanding capital stock, or a
Officers. - A person shall be disqualified from being a majority of the members entitled to vote. If there is
director, trustee or officer of any corporation if, no secretary, or the secretary, despite demand, fails
within five (5) years prior to the election or or refuses to call the special meeting or to give
appointment as such, the person was: notice thereof, the stockholder or member of the
corporation signing the demand may call the special
(a) Convicted by final judgment: meeting or to give notice thereof, the stockholder or
member of the corporation signing the demand may
call for the meeting by directly addressing the
stockholders or members. Notice of the time and
place of such meeting, as well as of the intention to remaining directors or trustees. The action by the
propose such removal, must be given by publication designated director or trustee shall be limited to the
or by written notice prescribed in this Code. Removal emergency action necessary, and the term shall
may be with or without cause: Provided, That cease within a reasonable time form the termination
removal without cause may not be used to deprive of the emergency or upon election of the
minority stockholders or members of the right replacement director or trustee, whichever comes
representation to which they may be entitled under earlier. The corporation must notify the Commission
Section 23 of this Code. within three (3) days from the creation of the
emergency board, stating therein the reason for its
The Commission shall, motu propio or upon verified creation.
complaint, and after due notice and hearing, order
the removal of a director or trustee elected despite Any directorship or trusteeship to be filled by a
the disqualification, or whose disqualification arose reason of an increase in the number of directors or
or is discovered subsequent to an election. The trustees shall be filled only by an election at a
removal of a disqualified director shall be without regular or at a special meeting of stockholders or
prejudice to other sanctions that the Commission members duly called for the purpose, or in the same
may impose on the board of directors or trustees meeting authorizing the increase of directors or
who, with knowledge of the disqualification, failed to trustees if so stated in the notice of the meeting.
remove such director or trustee.
In all elections to fill vacancies under this section, the
Section 28. Vacancies in the Office of Director or procedure set forth in Section 23 and 25 of this Code
Trustee; Emergency Board. - Any vacancy occurring shall apply.
in the board of directors or trustees other that by
removal or expiration of term may be filled by the Section 29. Compensation of Directors or Trustees. -
vote of at least a majority of the remaining directors In the absence of any provision in the bylaws fixing
or trustees, if still constituting a quorum; otherwise, their compensation, the directors or trustees shall
said vacancies must be filled by the stockholders or not received any compensation in their capacity as
members in a regular or special meeting called for such, except for reasonable per diems: Provided,
that purpose. however, That the stockholders representing at least
a majority of the outstanding capital stock or
When the vacancy is due to term expiration, the majority of the members may grant directors or
election shall be held no later that the day of such trustees with compensation and approve the
expiration at a meeting called for that purpose. amount thereof at a regular or special meeting.
When the vacancy arises as a result of removal by
the stockholders or members, the election may be In no case shall the total yearly compensation of
held on the same day of the meeting authorizing the directors exceed ten percent (10%) of the net
removal and this fact must be so stated in the income before income tax of the corporation during
agenda and notice of said meeting. In all other cases, the preceding year.
the election must be held no later than forty-five
(45) days from the time the vacancy arose. A director Directors or trustees shall not participate in the
or trustee elected to fill vacancy shall be referred to determination of their own per diems or
as replacement director or trustee elected to fill a compensation.
vacancy shall be referred to as replacement director
or trustee and shall serve only for the unexpired
Corporations vested with public interest shall submit
term of the predecessor in office.
to their shareholders and the Commission, an annual
report of the total compensation of each of their
However, when the vacancy prevents the remaining directors or trustees.
directors from consituting a quorum and emergency
action is required to prevent grave, substantial, and
Section 30. Liability of Directors, Trustees or
irreparable loss or damage to the corporation, the
Officers. - Directors or trustees who willfully and
vacancy may be temporarily filled from among the
knowingly vote for or assent to patently unlawful
officers of the corporation by unanimous vote of the
acts of the corporation or who are guilty of gross
negligence or bad faith in directing the affairs of the may be ratified by the vote of the stockholders
corporation or acquire any personal or pecuniary representing at least two-thirds (2/3) of the
interest in conflict with their duty as such directors outstanding capital stock or of at least two-thirds
or trustees shall be liable jointly and severally for all (2/3) of the members in a meeting called for the
damages resulting therefrom suffered by the purpose: Provided, That full disclosure of the adverse
corporation, its stockholders or members and other interest of the directors or trustees involved is made
persons. at such meeting and the contract is fair and
reasonable under the circumstances.
A director, trustee or officer shall not attempt to
acquire, or any interest adverse to the corporation in Section 32. Contaracts Between Corporations with
respect of any matter which has been reposed in Interlocking Directors. - Except in cases of fraud, and
them in confidence, and upon which, equity imposes provided the contract is fair and reasonable under
a disability upon themselves to deal in their own the circumstances a contract between two (2) or
behalf; otherwise, the said director, trustee or officer more corporations having interlocking directors shall
shall be liable as a trustee for the corporation and not be invalidated on that ground
must account for the profits which otherwise would alone: Provided, That if the interest of the
have accrued to the corporation. interlocking director in one (1) corporation is
substantial and the interest in the other corporation
Section 31. Dealings of Directors, Trustees or Officers or corporations is merely nominal, the contract shall
with the Corporation. - A contract of the corporation be subject to the provisions of the preceding section
with one (1) or more of its directors, trustees, insofar as the latter corporation or corporations are
officers or their spouses and relatives within the concerned.
fourth civil degree of consanguinity or affinity is
voidable, at the option of such corporation, unless all Stockholding exceeding twenty percent (20%) of the
the following conditions are present: outstanding capital stock shall be considered
substantial for purposes of interlocking directors.
(a) The presence of such director or trustee
in the board meeting in which the contract Section 33. Disloyalty of a Director. - Where a
was approved was not necessary to director, by virtue of such office, acquires a business
constitute a quorum for such meeting; opportunity which should belong to the corporation,
thereby obtaining profits to the prejudice of such
(b) The vote of such director or trustee was corporation, the director must account for and
not necessary for the approval of the refund to the latter all such profits, unless the act
contract; has been ratified by a vote of the stockholders
owning or representing at least two-thirds (2/3) of
(c) The contract is fair and reasonable under the outstanding capital stock. This provision shall be
the circumstances; applicable, nothwithstanding the fact that the
director risked one's own funds in the venture.
(d) In case of corporations vested with
public interest, material contracts are Section 34. Executive Management, and Other
approved by at least a majority of the Special Committees. - If the bylaws so provide, the
independent directors voting to approved board may create an executive committee composed
the material contract; and of at least three (3) directors. Said committee may
act, by majority of vote of all its members, on such
specific matters within the competence of the board,
(e) In case of an officer, the contract has
as may be delegated to it in the bylaws or by
been previously authorized by the board of
majority vote of the board, except with respect to
directors.
the: (a) approval of any action for which
shareholders' approval is also required; (b) filing of
Where any of the first three (3) conditions set forth vacancies in the board; (c) amendment or repeal of
in the preceding paragraph is absent, in the case of a bylaws or the adoption of new bylaws; (d)
contract with a director or trustee, such contract amendment or term is not amendable or repealable;
and (e) distribution of cash divendends to the other commercial agreement with natural
shareholders. and juridical persons;
The board of directors may create special (i) To make reasonable donations, including
committees of temporary or permanent nature and those for the public welfare or for hospital,
determine the members' term, composition, charitable, cultural, scientific, civic, or
compensation, powers, and responsibilities. similar purposes: Provided, That no foreign
corporation shall give donations in aid of
TITLE IV any political party or candidate or for
POWERS OF THE CORPORATIONS purpose s of partisan political activity;
Section 35. Corporate Powers and Capacity. - Every (j) To establish pension, retirement, and
corporation incorporated under this Code has the other plans for the benefit of its directors,
power and capacity: trustees, officers, and employees; and
(a) To sue and be sued in its corporate (k) To exercise such other powers as may be
name; essential or necessary to carry out its
purpose or purposes as stated in the articles
(b) To have perpetual existence unless the of incorporation.
certificate of incorporation provides
otherwise; Section 36. Power to Extend or Shorten Corporate
Term. - A private corporation may extend or shorten
(c) To adopt and use a corporate seal; its term as stated in the articles of incorporation
when approved by a majority vote of the board of
directors or trustees, and ratified at a meeting by the
(d) To amend its articles of incorporation in
stockholders or members representing at least two-
accordance with the provisions of this Code;
thirds (2/3) of the outstanding capital stock or of its
membrs. Written notice of the proposed action and
(e) To adopt bylaws, not contrary to law, the time and place of the meeting shall be sent to
morals or public policy, and to amend or the stockholders or members at their respective
repeal the same in accordance with this place of residence as shown in the books of the
Code; corporation, and must be deposited to the
addressee in the post office with postage prepaid,
(f) In case of stock corporations, to issue or served personally, or when allowed in the bylaws or
sell stocks to subscribers and to sell done with the consent of the stockholder, sent
treasury stocks in accordance with the electronically in accordance with the rules and
provisions of this Code; and to admit regulations of the Commission on the use of
members to the corporation if it be a electronic data messages. In case of extension of
nonstock corporation; corporate term, a dissenting stockholder may
exercise the right of appraisal under the conditions
(g) To purchase, receive, take or grant, hold, provided in this Code.
convey, sell, lease, pledge, mortgage, and
otherwise deal with such real and personal Section 37. Power to increase or Decrease Capital
property, including securities and bonds of Stock; Incur, Create or Increase Bonded
other corporations, as the transaction of Indebtedness. - No corporation shall increase or
the lawful business of the corporation may decrease its capital stock or incur, create or increase
reasonably and necessarily require, subject any bonded indebtedness unless approved by a
to the limitations prescribed by law and the majority vote of the board of directors and by two-
constitution; thirds (2/3) of the outstanding capital stock at a
stockholders' meeting duly called for the purpose.
(h) To enter into a partnership, joint Written notice of the time and place of the
venture, merger, consolidation, or any stockholders' meeting and the purpose for said
meeting must be sent to the stockholders at their Philippine Competition Commission. The application
places of residence as shown in the books of the with the Commission shall be made within six (6)
corporation served on the stockholders personally, months from the date of approval of the board of
or through electronic means recognized in the directors and stockholders, which period may be
corporation's bylaws and/or the Commission's rules extended for justifiable reasons.
as a valid mode for service of notices.
Copies of the certificate shall be kept on file in the
A certificate must be signed by a majority of the office of the corporation and filed with the
directors of the corporation and countersigned by Commission and attached to the original articles of
the chairperson and secretary of the stockholders' incorporation. After approval by the Commission and
meeting, setting forth: the issuance by the Commission of its certificate of
filing may declare: Provided, That the Commission
(a) That the requirements of this section shall not accept for filing any certificate of increase
have been complied with; of capital stock unless accompanied by a sworn
statement of the treasurer of the corporation
(b) The amount of the increase or decrease accompanied by a sworn statement of the treasurer
of the capital stock; of the corporation lawfully holding office at the time
of the filing of the certificate, showing that at least
twenty-five percent (25%) of the increase in capital
(c) In case of an increase of the capital
stock has been subscribed and that at least twenty-
stock, the amount of capital stock or
five percent (25%) of the amount subscribed has
number of shares of no-par stock thereof
been paid in actual cash to the corporation or that
actually subscribed, the names nationalities
property, the valuation of which is equal to twenty-
and addresses of the persons subscribing,
five percent (25%) of the subscription, has been
the amount of capital stock or number of
transferred to the corporation: Provided,
no-par stock subscribed, the names,
further, That no decrease in capital stock shall be
nationalities and addresses of the persons
approved by the Commission if its effect shall
subscribing, the amount of capital stock or
prejudice the rights of corporate creditors.
number of no-par stock subscribed by each,
and the amount paid by each on the
subscription in cash or property, or the Nonstock corporations may incur, create or increase
amount of capital stock or number of shares bonded indebtedness when approved by a majority
of no-par stock allotted to each stockholder of the board of trustees and of at least two-thirds
if such increase is for the purpose of making (2/3) of the members in a meeting duly called for the
effective stock dividend therefor purpose.
authorized;
Bonds issued by a corporation shall be registered
(d) Any bonded indebtedness to be with the Commission, which shall have the authority
incurred, created ot increased; to determine the sufficiency of the terms thereof.
(e) The amount of stock represented at the Section 38. Power to Deny Preemptive Right. - All
meeting; and stockholders of a stock corporation shall enjoy
preemptive right to subscribe to all issues or
disposition of shares of any class, in proportion to
(f) The vote authorizing the increase or
their respective shareholdings, unless such right is
decrease of capital stock, or incurring,
denied by the articles of incorporation or an
creating or increasing of bonded
amendment thereto: Provided, That such
indebtedness.
preemptive right shall not extend to shares issued in
compliance with laws requiring stock offerings or
Any increase or decrease in the capital stock or the minimum stock ownership by the public; or to shares
incurring, creating or increasing of any bonded issued in good faith with the approval of the
indebtedness shall require prior approval of the stockholders representing two-thirds (2/3) of the
Commission and where appropriate, of the outstanding capital stock in exchange for property
needed for corporate purposes or in payment of After such authorization or approval by the
previously contracted debt. stockholders or members, the board of directors or
trustees may, nevertheless, in its discretion,
Section 39. Sale or Other Disposition of Assets. - abandon such sale, lease, exchange, mortgage,
Subject to the provisions of Republic Act No. 10667, pledge, or other disposition of property and assets,
otherwise known as the "Philippine Competition subject to the rights of third parties under any
Act", and other related laws a corporation may, by a contract relating thereto, without further action or
majority vote of its board of directors or trustees, approval by the stockholders or members.
sell, lease, exchange, mortgage, pledge, or otherwise
dispose of its property and assets, upon such terms Nothing in this section is intended to restrict the
and conditions and for such consideration, which power of any corporation, without the authorization
may be money, stock, bonds, or other instruments by the stockholders or members, to sell, lease,
for the payment of money or other property or exchange, mortgage, pledge, or otherwise dispose of
consideration, as its board of directors or trustees any of its property and assets if the same is
may deem expedient. necessary in the usual and regular course of business
of the corporation or if the proceeds of the sale or
A sale of all or substantially all of the corporation's other disposition of such property and assets shall
properties and assets, including its goodwill, must be be appropriated for the conduct of its remaining
authorized by the vote of stockholders representing business.
at least two-thirds (2/3) of the outstanding capital
stock, or at least two-thirds (2/3) of the members, Section 40. Power to Acquire Own
meeting duly called for the purpose. Shares. - Provided, That the corporation has
unrestricted retained earnings in its books to cover
In nonstock corporations where there are no the shares to be purchased or acquired, a stock
members with voting rights, the vote of at least a corporation shall have the power to purchased or
majority of the trustees in office will be sufficient acquired, a stock corporation shall have the power
authorization for the corporation to enter into any to purchase or acquire its own shares for a
transaction authorized by this section. legitimate corporate purpose or purposes, including
the following cases:
The determination of whether or not the sale
involves all or substantially all of the corporation's (a) To eliminate fractional shares arising out
properties and assets must be computed based on of stock dividends;
its net asset value, as shown in its latest financial
statemments. A sale or other disposition shall be (b) To collect or compromise an
deemed to cover substantially all the corporate indebtedness to the corporation, arising out
property and assets if thereby the corporation would of unpaid subscription, in a delinquency
be rendered incapable of continuing the business or sale, and to purchase delinquent shares
accomplishing the purpose of which it was sold during said sale; and
incorporated.
(c) To pay dissenting or withdrawing
Written notice of the proposed action and of the stockholders entitled to payment for their
time and place for the meeting shall be addressed to shares under the provisions of this Code.
stockholders or members at their places of residence
as shown in the books of the corporation and Section 41. Power to Invest Corporate Funds in
deposited to the addressee in the post office with Another Corporation or Business or for Any Other
postage prepaid, served personally, or when allowed Purpose. - Subject to the provisions of this Code, a
by the bylaws or done with the consent of the private corporation may invest its funds in any other
stockholder, sent electronically: Provided, That any corporation, business, or for any purpose other than
dissenting stockholder may exercise the right of the primary purpose for which it was organized,
appraisal under the conditions provided in this Code. when approved by a majority of the board of
directors or trustees and ratified by the stockholders
representing at least two-thirds (2/3) of the
outstanding capital stock, or by at least two-thirds Section 43. Power to Enter into Management
(2/3) of the outstanding capital stock, or by at least Contract. - No corporation shall conclude a
two-thirds (2/3) of the members in the case of management contract with another corporation
nonstock corporations at a meeting duly called for unless such contract is approved by the board of
the purpose. Notice of the proposed investment and directors and by the stockholders owning at least the
the time place of residence as shown in the books of majority of the outstanding capital stock, or by at
the corporation and deposited to the addressee in least a majority of the members in the case of a
the post office with the postage prepaid. Served nonstock corporation, or both the managing and the
personally, or sent electronically in accordance with managed corporation, at a meeting duly called for
the rules and regulations of the Commission on the the purpose: Provided, That (a) where a stockholder
use of electronic data message, when allowed by the or stockholders representing the same interest of
bylaws or done with the consent of the both the managing and the managed corporations
stockholders: Provided, That any dissenting own or control more than one-third (1/3) of the total
stockholder shall have appraisal right as provided in outstanding capital stock entitled to vote of the
this Code: Provided, however, That where the managing corporation; or (b) where a majority if the
investment by the corporation is reasonably members of the board of directors of the managing
necessary to accomplish its primary purpose as corporation also constitute a majority of the
stated in the articles of incorporation, the approval members of the board of directors of the managed
of the stockholders or members shall not be corporation, then the management contract must be
necessary. approved by the stockholders of the managed
corporation owning at least two-thirds (2/3) of the
Section 42. Power to Declare Dividends. - The board total outstanding capital stock entitled to vote, or by
of directors of a stock corporation may declare at least two-thirds (2/3) of the members in the case
dividends out of the unrestricted retained earnings of a nonstock corporation.
which shall be payable in cash, property, or in stock
to all stockholders on the basis of outstanding stock These shall apply to any contract whereby a
held by them: Provided, That any cash dividends due corporation undertakes to manage or operate all or
on delinquent stock shall be first be applied to the substantially all of the called services contracts,
unpaid balance on th subscription plus costs and operating agreements or otherwise: Provided,
expenses, while stock holders until their unpaid however, That such service contracts or operating
subscription is fully paid: Provided, further, That no agreements which relate to the exploration,
stock dividend shall be issued without the approval development exploitation or utilization of natural
of stockholders representing at least two-thirds resources may entered into such periods as may be
(2/3)of the outstanding capital stock at a regular or provided by the pertinent laws or regulations.
special meeting duly called for the purpose.
No management contracts shall be entered into for
Stock corporations are prohibited from restraining period longer that five (5) years for any one term.
surplus profits in excess of one hundred percent
(100%} of their paid-in capital stock, except: (a) Section 44. Ultra Vires Acts of the Corporations. - No
when justified by the definite corporate expansion corporation shall possess or exercise corporate
projects or programs approved by the board of powers other than those conferred by this Code or
directors; or (b) when the corporation is prohibited by its articles of incorporation and except as
under any loan agreement with financial institutions necessary or incidental to the exercise of the powers
or creditors, whether local or foreign, from declaring conferred.
dividends without their consent, and such consent
has not yet been secured; or (c) when it can be TITLE V
clearly shown that such retention is necessary under BYLAWS
special circumstances obtaining in the corporation,
such as when there is need for special reserve for
Section 45. Adoption of Bylaws. - For the adoption of
probable contingencies.
bylaws by the corporation, the affirmative vote of
the stockholders representing at least a majority of
the outstanding capital stock, or of at least a
majority of the members in case on nonstock (e) The form for proxies of stockholders and
corporations, shall be necessary. The bylaws shall be members and the manner of voting them;
signed by the stockholders or members voting for
them and shall be kept in the principal office of the (f) The directors' or trustees' qualifications,
corporation, subject to the inspection of the duties and responsibilities, the guidelines
stockholders or members during office hours. A copy for setting the compensation of directors or
thereof, duly certified by a majority of the directors trustees and officers, and the maximum
or trustees and countersigned by the secretary of number of other board representations that
the corporation, shall be filed with the Commission an independent director or trustee may
and attached to the original articles of incorporation. have which shall, in no case, be more than
the number prescribed by the Commission;
Notwithstanding the provisions of the preceding
paragraph, bylaws maybe adopted and filed prior to (g) The time for holding the annual election
incorporation; in such case, such bylaws shall be of directors or trustees and the mode or
approved and signed by all incorporators and manner of giving notice thereof;
submitted to the Commission, together with the
articles of incorporation. (h)The manner of election or appointment
and the term of officers other than directors
In all cases, bylaws shall be effective only upon the or trustees;
issuance by the Commission of a certification that
the bylaws are in accordance with this Code. (i) The penalties for violation of the bylaws;
The Commission shall not accept for filing the bylaws (j) In the case of stock corporations, the
or any amendment thereto of any bank, banking manner of issuing stock certificates; and
institution, building and loan association, trust
company, insurance company, public utility,
(k) Such other matters as may be necessary
educational institution, or any other corporations
for the proper or convenient transaction of
governed by special laws, unless accompanied by a
its corporate affairs for the promotion of
certificate of the appropriate government agency to
good governance and anti-graft and
the effect that such by laws or amendments are in
corruption measures.
accordance with law.
An arbitration agreement maybe provided in the
Section 46. Contents of Bylaws. - A private
bylaws pursuant to Section 181 of this Code .
corporation may provide the following in its bylaws;
Section 47. Amendment to Bylaws. - A majority of
(a) The time, place and manner of calling
the board of directors or trustees, and the owners of
and conducting regular or special meetings
at least a majority of the outstanding capital stock,
of the directors or trustees;
or at least a majority of the members of a nonstock
corporation, at a regular or special meeting duly
(b) The time and manner of calling and called for the purpose, may amend or repeal the
conducting regular or special meetings and bylaws or adopt new bylaws. The owner of two-
mode of notifying the stockholders or thirds (2/3) of the outstanding capital stock or two-
members thereof; third (2/3) of the members in a nonstock corporation
mat delegate to the board of directors or trustees
(c) The required quorum in meetings of the power to amend or repeal the bylaws or adopt
stockholders or members and the manner new bylaws: Provided, That any power delegated to
of voting therein; the board of directors or trustee to amend or repeal
the bylaws or adopt new bylaws shall be considered
(d) The modes by which a stockholder, as revoke whenever stockholders owning or
member, director or trustees may attend representing a majority of the outstanding capital
meetings and cast their votes;
stock or majority of the members shall so vote at a record of the question s asked and
regular or special meeting. answers given;
Whenever the bylaws are amended or new bylaws (3) The matters discussed and
are adopted, the corporation shall file with the resolutions reached;
Commission such amended or new bylaws and, if
applicable, the stockholders' or members' resolution (4) A record of the voting results
authorizing the delegation of the power to amend for each agenda item;
and/or adopt new bylaws, duly certified under oath
by the corporate secretary and majority of the (5) A list of the director or trustees,
directors or trustees. officers and stockholders or
members who attended the
The amended or new bylaws shall only be effective meeting; and
upon the issuance by the Commission of certification
that the same is in accordance with this Code and (6) Such other items that the
other relevant laws. Commission may require in the
interest of good corporate
TITLE VI governance and protection of
MEETINGS minority stockholders;
Section 48. Kinds of Meetings. - Meeting of the (b) A members' list for nonstock
directors, trustees, stockholders, or members may corporations and, for stock corporations,
be regular or special. material information on the current
stockholders, and their voting rights;
Section 49. Regular and Special Meetings of
Stockholders or Members. - Regular meetings of (c) A detailed, descriptive, balanced and
stockholders or members shall be held annually on a comprehensible assessment of the
date fixed in the bylaws, or if not so fixed in the corporation's performance, which shall
bylaws, or if not so fixed, on any date After April 15 include information on any material change
of every year as determined by the board of in the corporation's business strategy, and
directors or trustees: Provided, further, That written other affairs;
notice of regular meetings may be sent to all
stockholders or members of record through (d) A financial report for the preceding year,
electronic mail or such other manner as the which shall include financial statements
Commission shall allow under its guidelines. duly signed and certified in accordance wit
this Code and the rules and the Commission
At each regular meeting of stockholders or may prescribe, a statement on the
members, the board of directors or trustees shall adequacy of the corporation's internal
endeavor to present to stockholders or members the controls or risk management systems, and a
following: statement of all external audit and non-
audit fees;
(a) The minutes of the most recent regular
meeting which shall include, among others: (e) An explanation of the dividend policy
and the fact of payment of dividends or the
(1) A description of the voting and reasons for nonpayment thereof;
the vote tabulation procedures
used in the previous meetings; (f) Director or trustee profiles which shall
include, among others, their qualifications
(2) A description of the and relevant experience, length of service in
opportunity given to stockholders the corporation, trainings and continuing
or members to ask questions and
education attended, and their board Whenever for any cause, there is no person
representation in other corporations; authorized or the person authorized unjustly refuses
to call a meeting, the Commission, upon petition of a
(g) A director or trustee attendance report, stockholder or member on a showing of good cause
indicating the attendance of each of the therefor, may issue an order, directing the
meetings of the board and its committees petitioning stockholder or member to call a meeting
and in regular or special stockholder of he corporation by giving proper notice required by
meetings; this Code or the bylaws. The petitioning stockholder
or member shall preside thereat until at least a
(h) Appraisals and performance reports for majority of the stockholders or members present
the board and the criteria and procedure have chosen from among themselves, a presiding
for assessment; officer.
(i) A director or trustee compensation Unless the bylaws provide for a longer period, the
report prepared in accordance with this stock and transfer book or membership book shall
Code and the rules the Commission may be closed at least twenty (20) days for regular
prescribe; meetings and seven (7) days for special meetings
before the scheduled sate of the meeting.
(j) Director disclosures on self-dealings and
related party transactions; and/or In case of postponement of stockholders' or
members' regular meetings, written notice thereof
and the reason therefor shall be sent to all
(k) The profiles of directors nominated ir
stockholders or members of record at least two (2)
seeking election or reelection.
weeks prior to the date of the meeting, unless a
different period is required under the bylaws, law or
A director, trustee, stockholder, or member may regulation.
propose any other matter for inclusion in the agenda
at may regular meeting of stockholders or members.
The right to vote of stockholders or members may
be exercised in person, through remote
Special meetings of stockholders or members shall communication or in absentia. The Commission shall
be held at any time deemed necessary or as issue the rules and regulations governing
provided in the bylaws: Provided, however, That at participation and voting through remote
least one (1) week written notice shall be sent to all communication or in absentia, taking into account
stockholders or members, unless a different period is the company’s scale, number of stockholders or
provided in the bylaws, law or regulation. members, structure, and other factors consistent
with the protection and promotion of shareholders'
A stockholder or member may propose the holding or members' meetings.
of a special meeting and items to be included in the
agenda. Section 50. Place and Time of Meetings of
Stockholders or Members. - Stockholders' or
Notice of any meeting may be waived, expressly or members' meetings, whether regular or special, shall
impliedly, by any stockholder or be held in the principal office of the corporation as
member: Provided, That general waivers of notice in set forth in the articles of incorporation, or if not
the articles of incorporation or the bylaws shall not practicable, in the city or municipality where the
be allowed: Provided, further, That attendance at a principal office of the corporation is
meeting shall constitute a waiver of notice of such located: Provided, That any city of municipality in
meeting, except when the person attends a meeting Metro Manila, Metro Cebu, Metro Davao, and other
for the express purpose of objecting to the Metropolitan areas shall, for purposes of this
transaction of any business because the meeting is section, be considered a city or municipality.
not lawfully called or convened.
Notice of meetings shall be sent through the means
of communication provided in the bylaws, which
notice shall state the time, place and purpose of the the vote of a majority of all the members of the
meetings. board, shall be valid as a corporate act.
Each notice of meeting shall further be accompanied Regular meetings of the board of directors or
by the following: trustees of every corporation shall be held monthly,
unless the bylaws provide otherwise.
(a) The agenda for the meeting;
Special meetings of the board of directors or
(b) A proxy which shall be submitted to the trustees may be held at any time upon the call of the
corporate secretary within a reasonable president or as provided in the bylaws.
time prior to the meeting;
Meetings of directors or trustees of corporations
(c) When attendance, participation, and may be held anywhere in or outside the Philippines,
voting are allowed by remote unless the bylaws provide otherwise. Notice of
communication or in absentia, the regular or special meetings stating the date, time
requirements and procedures to be and place of the meeting must be sent to every
followed when a stockholder or member director or trustee at least two (2) days prior to the
elects either option; and scheduled meeting, unless a longer time is provided
in the bylaws. A director or trustee may waive this
(d) When the meeting is for the election of requirement, either expressly or impliedly.
directors or trustees, the requirements and
procedure for nomination and election. Directors or trustees who cannot physically attend or
vote at board meetings can participate and vote
All proceedings and any business transacted at a through remote communication such as
meeting of the stockholders or members, if within videoconferencing, teleconferencing, or other
the powers or authority of the corporation, shall be alternative modes of communication that allow
valid even if the meeting is improperly held or them reasonable opportunities to participate.
called: Provided, That all the stockholders or Directors or trustees cannot attend or vote by proxy
members of the corporation are present or duly at board meetings.
represented at the meeting and not one of them
expressly states at the beginning of the meeting that A director or trustee who has a potential interest in
the purpose of their attendance is to object to the any related party transaction must recuse from
transaction of any business because the meeting is voting on the approval of the related party
not lawfully called or convened. transaction without prejudice to compliance with
the requirments of Section 31 of this Code.
Section 51. Quorum in Meetings. - Unless otherwise
provided in this Code or in the bylaws, a quorum Section 53. Who Shall Preside at Meetings. - The
shall consist of the stockholders representing a chairman or, in his absence, the president shall
majority of the outstanding capital stock pr a preside at all meetings of the directors or trustees as
majority of the members in the case of nonstock well as of the stockholders or members, unless the
corporations. bylaws provide otherwise.
Section 52. Regular and Special Meetings of Section 54. Right to Vote of Secures Creditors and
Directors or Trustees; Quorum. - Unless the articles Administrators. - In case a stockholder grants
of incorporation or the bylaws provides for a greater security interest in his or her shares in stock
majority, a majority of the directors or trustees as corporations, the stockholder-grantor shall have the
stated in the articles of incorporation shall right to attend and vote at meetings of stockholders,
constitute a quorum to transact corporate business, unless the secured creditor is expressly given by the
and every decision reached by at least a majority of stockholder-grantor such right in writing which is
the directors or trustees constituting a quorum, recorded in the appropriate corporate books.
except for the election of officers which shall require
Executors, administrators, receivers, and other legal Section 58. Voting Trusts. - One or more
representatives duly appointed by the court may stockholders of stock corporation may create a
attend and vote on behalf of the stockholders or voting trust for the purpose of conferring upon a
members without need of any written proxy. trustee or trustees the right to vote and other rights
pertaining to the shares for a period not exceeding
Section 55. Voting in Case of Joint Ownership of five (5) years at any time: Provided, That in the case
Stock. - The consent of all the co-owners shall be of a voting trust specially required as a condition in a
necessary in voting shares of stock owned jointly by loan agreement, said voting trust may be for a
two (2) or more persons, unless there is a written period exceeding five (5) years but shall
proxy, signed by all the co-owners, authorizing one automatically expire upon full payment of the load.
(1) or some of them or any other person to vote such A voting trust agreement must be in writing and
share or shares: Provided, That when the shares are notarized, and shall specify the terms and conditions
owned in an "and/or" capacity by the holders thereof.
thereof, any one of the joint owners can vote said
shares or appoint a proxy therefor. A certified copy of such agreement shall be filed with
the corporation and with the Commission;
Section 56. Voting Right for Treasury Shares. - otherwise, the agreement is ineffective and
Treasury shares shall have no voting right as long as uneforceable. The certificate or certificates of stock
such shares remain in the Treasury. covered by the voting trust agreement shall be
cancelled and new ones shall be issued pursuant to
Section 57. Manner of Voting; Proxies. - Stockholders said agreement. The books of the corporation shall
and members may vote in person or proxy in all state that the transfer in the name of the trustee or
meetings of stockholders or members trustees is made pursuant to the voting trust
agreement.
When so authorized in the bylaws or by a majority of
the board of directors, the stockholders or members The trustee or trustees shall execute and deliver to
of corporations may also vote through remote the transferors, voting trust certificates, which shall
communication or in absentia: Provided, That the be transferable in the same manner and with the
votes are received before the corporation finishes same effect as certificates of stock.
the tally of votes.
The voting trust agreement filed with the
A stockholder or member who participates through corporation shall be subject to examination by any
remote communication or in absentia shall be stockholder of the corporation in the same manner
deemed present for purposes of quorum. as any other corporate book or
record: Provided, That both the trustor and the
trustee or trustees may exercise the right of
The corporation shall establish the appropriate
inspection of all corporate books and records in
requirements and procedures for voting through
accordance with the provisions of this Code.
remote communication and in absentia, taking into
account the company's scale, number of
shareholders or members, structure and other Any other stockholder may transfer the shares to the
factors consistent with the basic right of corporate same trustee or trustees upon the term and
suffrage. conditions stated in the voting trust agreement, and
thereupon shall be bound by all the provisions of
said agreement.
Proxies shall be in writing, signed and filed, by the
stockholder or member, in any form authorized in
the bylaws and received by the corporate secretary No voting trust agreement shall be entered into for
within a reasonable time before the scheduled purposes of circumventing the laws against anti-
meeting. Unless otherwise provided in the proxy competitive agreements, abuse of dominant
form, it shall be valid only for the meeting for which position, anti-competitive mergers and acquisitions,
it is intended. No proxy shall be valid and effective violation of nationality and capital requirements, or
for a period longer than five (5) years at any one for the perpetuation of fraud.
time.
Unless expressly renewed, all rights granted in a (e) Amounts transferred from unrestricted
voting trust agreement shall automatically expire at retained earnings to stated capital;
the end of the agreed period. The voting trust
certificates as well as the certificate of stock in the (f) Outstanding shares exchanged for stocks
name of the trustees shall thereby be deemed in the event of reclassification or
cancelled and new certificates of stock shall be conversion;
reissued in the name of the trustors.
(g) Shares of stock in another corporation;
The voting trustee or trustees may vote by proxy or and/or
in any manner authorized under the bylaws unless
the agreement provides otherwise. (h) Other generally accepted form of
consideration.
TITLE VII
STOCKS AND STOCKHOLDERS Where the consideration is other than actual cash,
or consists of intangible property such as patents or
Section 59. Subscription Contract. - Any contract for copyrights, the valuation thereof shall initially be
the acquisition of unissued stock in an existing determined by the stockholders or the board of
corporation or a corporation still to be formed shall directors, subject to the approval of the Commission.
be deemed a subscription within the meaning of this
Title, notwithsatnding the fact that the parties refer Shares of stock shall not be issued in exchange for
to it as a purchase or some other contract. promissory notes or future service. The same
considerations provided in this section, insofar as
Section 60. Pre-incorporation Subscription. - A applicable, may be used for the issuance or bonds by
subscription of shares in a corporation till to be the corporation.
formed shall be irrevocable for a period of at least
six (6) months from the date of subscription, unless The issued price of no-par value shares may be fixed
all of the other subscribers consent to the in the articles of incorporation or by the board of
revocation, or the corporation fails to incorporate directors pursuant to authority conferred by the
wuthin the same period or within a longer period articles of incorporation or the bylaws, or if not so
stipulated in the contract of subscription. No pre- fixed, by the stockholders representing at least a
incorporation is submitted to the Commission . majority of the outstanding capital stock at a
meeting duly called for the purpose.
Section 61. Consideration for Stocks. - Stocks shall
not be issued for a consideration less than the par or Section 62. Certificate of Stock and Transfer of
issued price thereof. Consideration for the issuance Shares. - The capital stock of corporations shall be
of stock may be: divided into shares for which certificates signed by
the president or vice president, countersigned by the
(a) Actual cash paid to the corporation; secretary or assistant secretary, and sealed with the
seal of the corporation shall be issued in accordance
(b) Property, tangible or intangible, actually with the bylaws. Shares of stock so issued are
received by the corporation and necessary personal property and may be transferred by
or convenient for its use and lawful delivery of the certificate or certificates indorsed by
purposes at a fair valuation equal to the par the owner, his attorney-in-fact, or any other person
or issued value of the stock issued; legally authorized to make the transfer. No transfer,
however, shall be valid, except as between the
(c) Labor performed for or services actually parties, until the transfer is recorded in the books of
rendered to the corporation; the corporation showing the names of the parties to
the transaction, the date of the transfer, the number
(d) Previously incurred indebtedness of the of the certificate or certificates, and the number of
corporation; shares transferred. The Commission may require
corporations whose securities are traded in trading
markets and which can reasonably demonstrate
their capability to do so to issue their securities or such balance, unless a different interest at the legal
shares of stocks in uncertificated or scripless form in rate on such balance, unless a different interest rate
accordance with the rules of the Commission. is provided in the subscription contract. The interest
shall be computed from the date specified, until full
No shares of stock against which the corporation payment of the subscription. If no payment is made
holds any unpaid claim shall be transferable in the within thirty (30) days from the said sate, all stocks
books of the corporation. covered by the subscription shall thereupon become
delinquent and shall be subject to sale as hereinafter
Section 63. Issuance of Stock Certificates. - No provided, unless the board of directors orders
certificate of stock shall be issued to a subscriber otherwise.
until the full amount of subscription together with
interest and expenses (in case of delinquent shares), Section 67. Delinquency Sale. - The board of
if any is due, has been paid. directors may, by resolution, order the sale of
delinquent stock and shall specifically state the
Section 64. Liability of Directors for Watered Stocks. - amount due on each subscription plus all accrued
A director or officer of a corporation who: (a) interest, and the date, time and place of the sale
consents to the issuance of stocks for a which shall not be less than thirty (30) days nor more
consideration less than its par or issued value: (b) than sixty (60) days from the date the stock become
consents to the issuance of stocks for the delinquent.
consideration other than cash, valued in excess of its
fair value; or (c) having knowledge of the insufficient Notice of the salem, with a copy of the resolution,
consideration, does not file written objection with shall be sent to every delinquent stockholder either
the corporate secretary, shall be liable to the personally, by registered mail, or through other
corporation or its creditors, solidarily with the means provided in the bylaws. The same shall be
stockholder concerned for the differnce between the published once a week for two (2) consecutive
value receive at the time of issuance of the stock and weeks in newspaper of general circulation in the
the par or issued value of the same. province or city where the principal office of the
corporation is located.
Section 65. Interest on Unpaid Subscriptions. -
Subscribers to stock shall be liable to the corporation Unless the delinquent stockholder pays to the
for interest on all unpaid subscriptions from the date corporation, o or before the date specified for the
of subscription, if so required by and at the rate of sale of the delinquent stock, the balance due on the
interest fixed in the subscription contract. If no rate former's subscription, plus accrued interest, costs of
of interest is fixed in the subscription contract. If no advertisement and expenses of sale, or unless the
rate of interest is fixed in the subscription contract, board of directors otherwise orders, said delinquent
the prevailing legal rate shall apply. stock shall be sold at a public auction to such bidder
who shall offer to pay the full amount of the balance
Section 66. Payment of Balance of Subscription. - on the subscription together with accrued interest,
Subject to the provisions of the subscription costs of advertisement and expenses of sale, for the
contract, the board of directors may, at any time, smallest number of shares or fraction of a share. The
declare due and payable to the corporation unpaid stock so purchased shall be transferred to such
subscription and may collect the same or such purchaser in the books of the corporation and a
percentage thereof, in either case, with accrued certificate for such stock shall be issued in the
interest, if any, as it may dem necessary. purchaser's favor. The remaining shares, if any, shall
be credited in favor of the delinquent stockholder
who shall likewise be entitled to the issuance of a
Payment of unpaid subscription or any percentage
certificate of stock covering such shares.
thereof, together with any interest accrued, shall be
made on the date specified in the subscription
contract or on the date stated in the call made by Should there be no bidder at the public auction who
the board. Failure to pay on such date shall render offers to pay the full amount of the balance on the
the entire balance due and payable and shall make subscription together with accrued interest, costs of
the stockholder liable for interest at the legal rate on advertisement, and expenses of sale, for the smallest
number of shares or fraction of a share, the setting forth, if possible, the circumstances as to how
corporation may, subject to the provisions of this the certificate was lost, stolen or destroyed, the
Code, bid for the same, and the total amount due number of shares represented by such certificate,
shall be credited as fully paid in the books of the the serial number of the certificate and the name of
corporation. Title to all the shares of stock covered the corporation which issued the same. The owner
by the subscription shall be vested in the corporation of such certificate of stock shall also submit such
as treasury shares and may be disposed of by said other information and evidence as may be deemed
corporation in accordance with the provisions of this necessary; and
Code.
(b) After verifying the affidavit and other information
Section 68. When Sale May be Questioned. - No and evidence with the books of the corporation shall
action to recover delinquent stock sold can be publish a notice in a newspaper of general
sustained upon the ground of irregularity or defect circulation in the place where the corporation has its
in the notice of sale, or in the sale itself of the principal office, once a week for three (3)
delinquent stock, unless the party seeking to consecutive weeks at the expense of the registered
maintain such action first pays or tenders to the owner of the certificate of stock which has been lost,
party holding the sum for which the same was sold stolen or destroyed. The notice shall state the name
with interest from the date of sale at the legal rate. of the corporation, the name of the registered
No such action shall be maintained unless a owner, the serial number of the certificate, the
complaint is filed within six (6) months from the date number of shares represented by such certificate,
of sale. and shall state that after the expiration of one (1)
year from the date of the last publication, if no
Section 69. Court Action to Recover Unpaid contest has been presented to the corporation
Subscription. - Nothing in this Code shall prevent the regarding the certificate of stock, the right to make
corporation fro collecting through court action, the such contest shall be barred and the corporation
amount due on any unpaid subscription, with shall cancel the lost, destroyed or stolen certificate
accrued interest, costs and expenses. of stock, the right to make such contest shall be
barred and the corporation shall cancel the lost,
Section 70. Effect of Delinquency. - No delinquent destroyed or stolen certificate of stock in its books.
stock shall be voted for, be entitled to vote, or be In lieu thereof, the corporation shall issue a new
represented at any stockholder's meeting, nor shall certificate of stock, unless the registered owner files
the holder thereof be entitled to any of the rights of a bond or other security as may be required,
a stockholder except the right to dividends in effective for a period of one (1) year, for such
accordance with the provisions of this Code, until amount and in such form and with such sureties as
and unless payment is made by the holder of such may be satisfactory to the board of directors, in
delinquent stock for the amount due on the which case a new certificate may be issued even
distribution with accrued interest, and the costs and before the expiration of one (1) year period provided
expenses of advertisement, if any. herein. If a contest has been presented to the
corporation or if an action is pending in court
regarding the ownership of the certificate of stock
Section 71. Rights of Unpaid Shares,
which has been lost, stolen in lieu thereof shall be
Nondelinquent. - Holders of subscribed shares not
suspended until the court renders a final decision
fully paid which are not delinquent shall have all the
regarding the ownership of the certificate of stock
rights of a stockholder.
which has been lost, stolen ore destroyed.
Section 72. Lost or Destroyed Certificates. The
Except in case of fraud, bad faith, or negligence on
following procedure shall be followed by a
the part of the corporation and its officers, no action
corporation in issuing new certificates of stock in lieu
may be brought against any corporation which shall
of those which have been lost, stolen or destroyed:
have issued certificate of stock in lieu of those lost,
stolen or destroyed pursuant to the procedure
(a) The registered owner of a certificate of stock in a above-described.
corporation or such person's legal representative
shall file with the corporation an affidavit in triplicate
TITLE VIII proposed action must be recorded in full
CORPORATE BOOKS AND RECORDS upon their demand.
Section 73. Books to be Kept; Stock Transfer Agent. - Corporate records, regardless of the form in which
Every corporation shall keep and carefully preserve they are stored, shall be open to inspection by any
at its principal office all information relating to the director, trustee, stockholder or member of the
corporation including, but not limited to: corporation in person or by a representative at
reasonable hours on business days, and a demand in
(a) The articles of incorporation and bylaws writing may be made by such director, trustee or
of the corporation and all their stockholder at their expense, for copies of such
amendments; records or excerpts from said records. The inspecting
or reproducing party shall remain bound by
(b) The current ownership structure and confidentiality rules under prevailing laws, such as
voting rights of the corporation, including the rules on trade secrets or processes under
lists of stockholders or members group Republic Act No. 8293, otherwise known as the
structures, intra-group relations, ownership "Intellectual Property Code of the Philippines", as
data, and beneficial ownership. amended, Republic Act No. 10173, otherwise known
as the "Data Privacy Act of 2012" Republic Act No.
8799, otherwise known as "The Securities Regulation
(c) The names and addresses of all the
Code", and the Rules of Court.
members of the board of directors or
trustees and the executive officers;
A requesting party who is not a stockholder or
member of record, or is a competitor, director,
(d) A record of all business transactions;
officer, controlling stockholder or otherwise
represents the interests of a competitor shall have
(e) A record of the resolutions of the board no right to inspect or demand reproduction of
of directors or trustees and of the corporate records.
stockholders or members;
Any stockholder who shall abuse the rights granted
(f) Copies of the latest reportorial under this section shall be penalized under Section
requirements submitted to the Commission; 158 of this Code, without prejudice to the provisions
and of Republic Act No. 8293, otherwise known as the
"Intellectual Property Code of the Philippines", as
(g) The minutes of all meetings of amended, and Republic Act No. 10173, otherwise
stockholders or members, or of the board known as the "Data Privacy Act of 2012".
of directors or trsutees. Such minutes shall
set forth in detail among others; the time Any officer or agent of the corporation who shall
and the place of the meeting held, how it refuse to allow the inspection and/or reproduction
was authorized, the notice given, the of records in accordance with the provisions of this
agenda therefor, whether the meeting was Code shall be liable to such director, trustee,
regular or special, its object if special, those stockholder or member for damages, and in
present and absent, and every act done or addition, shall be guilty of an offense which shall be
ordered done at the meeting. Upon the punishable under Section 161 of this
demand of a director trustee, stockholder Code: Provided, That if such refusal is made pursuant
or member, the time when any director, to a resolution or order of the board of directors or
trustee, stockholder or member entered or trustees, the liability under this section for such
left the meeting must be noted in the action shall be imposed upon the directors or
minutes; and on a similar demand, the yeas trustees who voted for such refusal: Provided,
and nays must be taken on any motion or further,That it shall be a defense to any action under
proposition, and a record thereof carefully this section that the person demanding to examine
made. The protest of a director, trustee, and copy excerpts from the corporation's record or
stock holder or member on any action or minutes of such corporation or of any other
corporation, or was not acting in good faith or of any form and substance of the financial reporting
other corporation or was not acting in good faith or required by the Commission.
for a legitimate purpose in making the demand to
examine or reproduce corporate records or is a At the regular meeting of stockholders or members,
competitor, director, officer, controlling stockholder the board of directors or trustees shall present to
or otherwise represents the interest of a competitor. such stockholders or members a financial report of
the operations of the corporation for the preceding
If the corporation denies or does not act on a year, which shall include financial statements, duly
demand for inspection and/or reproduction, the signed and certified in accordance with this Code,
aggrieved party may report such denial or inaction to and the rules the Commission may prescribe.
the Commission Within five (5) days from receipt of
such report, the Commission shall conduct a However, if the total assets or total liabilities of the
summary investigation and issue an order directing corporation are less than Six hundred thousand
the inspection or reproduction of the requested pesos (₱600,000.00), or such other amount as may
records. be determined appropriate by the Department of
Finance, the financial statements may be certified
Stock corporations must also keep a stock and under oath by the treasurer and the president.
transfer book, which shall contain a record of all
stocks in the names of the stockholders TITLE IX
alphabetically arranged; the installments paid and
unpaid on all stocks for which subscription has been MERGER AND CONSOLIDATION
made, and the date of payment of any installment; a
statement of every alienation, sale or transfer of
Section 75. Plan of Merger or Consolidation. - Two
stock made, the date thereof, by and to whom
(2) or more corporations may merge into a single
made; and such other entries as the bylaws may
corporation which shall be one of the constituents
prescribed, The stock and transfer book shall be kept
corporations or may consolidate into a new single
in the principal office of the corporation or in the
corporation which shall be the consolidated
office of its stock transfer agent and shall be open or
corporation.
inspection by any director or stockholder of the
corporation at reasonable hours on business days.
The board of directors or trustees of each
corporation, party to the merger or consolidation,
A stock transfer agent or one engaged principally in
shall approved a plan of merger or consolidation,
the business of registering transfers of stocks in
shall approved a plan of merger or consolidation,
behalf of a stock corporation shall be allowed to
shall approve a plan of merger or consolidation
operate in the Philippines upon securing a license
setting forth the following:
from the Commission and the payment of a fee to be
fixed by the Commission, which shall be renewable
(a) The names of the corporations
annually: Provided, That a stock corporation is not
proposing to merge or consolidate
precluded from performing or making transfer of its
hereinafter referred to as the constituent
own stocks, in which case all the rules and
corporations;
regulations imposed on stock transfer agents, except
the payment of a license fee herein provided, shall
be applicable: Provided, further, That the (b) The terms of the merger or
Commission may require stock corporations which consolidation and the mode of carrying the
transfer and/or trade stocks in secondary markets to same into effect;
have an independent transfer agent.
(c) A statement of the changes, if any, in the
Section 74. Right to Financial Statements. - A articles of incorporation of the surviving
corporation shall furnish a stockholder or member, corporation in case of merger; and, in case
within ten (10) days from receipt of their written of consolidation, all the statements
request, its most recent financial statement, in the required to be set forth in the articles of
incorporation for corporations organized by the president or vice president and certified by
under this Code; and the secretary or assistant secretary of each
corporation setting forth
(d) Such other provisions with respect to
the proposed merger or consolidation as (a) The plan of the merger or the plan of
are deemed necessary or desirable. consolidation;
(c) The surviving or the consolidated Section 81. How Right is Exercised. - The dissenting
corporation shall possess all the right, stockholder who votes against a proposed corporate
privileges, immunities and franchises of action may exercise the right of appraisal by making
each constituent corporation; and all real or a written demand on the corporation for the
personal property, all receivables due on payment of the fair value of shares held within thirty
whatever account, including subscriptions (30) days from the date on which the vote was
to shares and other choses in action, and taken: Provided, That failure to make the demand
every other interest of, belonging to, or due within such perios shall be deemed a waiver of the
to each constituents corporation, shall be appraisal right. If the proposed corporate action is
deemed transferred to and vested in such implemented, the corporation shall pay the
surviving or consolidated corporation as stockholder, upon surrender of the certificate or
though such surviving or consolidated certificates of stock representing the stockholder's
corporation had itself incurred such shares, the fair value thereof as of the day before
liabilities or obligations; and any pending the vote was taken excluding any appreciation or
claim, action or proceeding brought by or depreciation in anticipation of such corporate action.
against any constituent corporation may be
prosecuted by or against the surviving or If, within sixty (60) days form the approval of the
consolidated corporation. The rights of corporate action by the stockholders, the
creditors or liens upon the property of such withdrawing stockholder and the corporation cannot
constituent corporations shall not be agree on the fair value of the shares, it shall be
impaired by the merger or consolidation. determined and appraised by three (3) disinterested
persons, one of whom shall be named by the
TITLE X stockholder, another by the corporation and the
third by the two (2) thus chosen. The findings of the
APPRAISAL RIGHT majority of the appraisers shall be final, and their
award shall be paid by the corporation within thirty representing the shares to the corporation for
(30) days after such award is made: Provided, That notation that such shares are dissenting shares.
no payment shall be made to any dissenting Failure to do so shall, at the option of the
stockholder or unless the corporation has corporation, terminate the rights under this Title. If
unrestricted retained earnings in its books to cover shares represented by the certificates bearing such
such payment: Provided, further, That upon payment notation are transferred, and the certificates
by the corporation of the agreed or awarded price, consequently cancelled, the rights of the transferor
the stockholder shall forthwith transfer the shares to as a dissenting stockholder under this Title shall
the corporation. cease and the transferee shall have all the rights of a
regular stockholder; and all dividend distributions
Section 82. Effect of Demand and Termination of which would have accrued on such shares shall be
Right. - From the time of demand for payment of the paid to the transferee.
fair value of a stockholder's shares until either the
abandonment of the corporate action involved or TITLE XI
the purchase of the said shares by the corporation, NONSTOCK CORPORATION
all rights accruing to such shares, including voting
and dividend rights shall immediately be restored. Section 86. Definition. - For purposes of this Code
and subject to its provisions on dissolution, a
Section 83. When Right to Payment Ceases. - No nonstock corporation is one where no part of its
demand for payment under this Title may be income is distributable as dividends to its members,
withdrawn unless the corporation consents thereto. trustees, or officers: Provided, That any profit which
If, however, such demand for payment is withdrawn a nonstock corporation may obtain incidental to its
with the consent of the corporation, or if the operations shall, whenever necessary or proper, be
proposed corporate action is abandoned or used for the furtherance of the purpose of purposes
rescinded by the corporation or disapproved by the for which the corporation was organized, subject to
Commission where such approval is necessary, or if the provisions of this Title.
the Commission where such stockholder is not
entitled to the appraisal right, then the right of the The provisions governing the stock corporations,
stockholder to be paid the fair value of the shares when pertinent, shall be applicable to nonstock
shall cease, the status as the stockholder shall be corporations except as may be covered by specific
restored, and all dividend distributions which would provisions of this Title.
have accrued on the shares shall be paid to the
stockholder. Section 87. Purposes. - Nonstock corporations may
be formed or organized for charitable, religious,
Section 84. Who Bears Costs of Appraisal. - The costs educational, professional, cultural, fraternal, literary,
and expenses of appraisal shall be borne by the scientific, social, civic service, or similar purposes.
corporation, unless the fair value ascertained by like trade industry, agricultural and like chambers, or
appraisers is approximately the same as the price any combination thereof, subject to the special
which the corporation may have offered to pay the provisions of this Title governing particular classes of
stockholder, in which the corporation may have nonstock corporations.
offered to pay the stockholder, in which case they
shall be borne by the latter. In the case of an action CHAPTER I
to recover such fair value, all costs and expenses MEMBERS
shall be assessed against the corporation, unless the
refusal of the stockholder or receive payment was
Section 88. Right to Vote. - The right of the members
unjustified.
of any class or classes to vote may be limited,
broadened, or denied to the extent specified in the
Section 85. Notation on Certificates; Rights of articles of incorporation or the bylaws. Unless so
Transferee. - Within ten (10) days after demanding limited, broadened, or denied, each member,
payment for shares held, a dissenting stockholder regardless of class, shall be entitled to one (1) vote.
shall submit the certificates of stock representing the
shares to the corporation for notation that such
Unless otherwise provided in the articles of meeting: Provided, further, That the place of meeting
incorporation or the bylaws, a member may vote by shall be within the Philippine territory.
proxy, in accordance with the provisions of this
Code. The bylaws may likewise authorize voting CHAPTER III
through remote communication and/or in absentia. DISRIBUTION OF ASSETS IN NONSTOCK
CORPORATIONS
Section 89. Nontransferability of Membership. -
Membership in a nonstock corporation and all rights Section 93. Rules of Distribution. - The assets of a
arising therefrom are personal and nontransferable, nonstock corporation undergoing the process of
unless the articles of incorporation or the bylaws dissolution for reasons other than those set forth in
otherwise provide. Section 139 of this Code shall be applied and
distributed as follows:
Section 90. Termination of Membership. -
Membership shall be terminated in the manner and (a) All liabilities and obligations of the
for the cause provided in the articles of corporation shall be paid, satisfied and
incorporation or the bylaws. Termination of discharged, or adequate provision shall be
membership shall extinguish all rights of a member made therefor:
in the corporation or in its property, unless
otherwise provided in the articles of incorporation or (b) Assets held by the corporation upon a
the bylaws. condition requiring return, transfer or
conveyed in accordance with such
CHAPTER II requirements;
TRUSTEES AND OFFICERS
(c) Assets received and held by the
Section 91. Election and Term of Trustees. - The corporation subject to limitations
number of trustees shall be fixed in the articles of permitting their use only for charitable
incorporation or bylaw which may or may not be religious, benevolent, educational or similar
more than fifteen (15). They shall hold office for not purpose, but not held upon a condition
more than three (3) years until their successors are requiring return, transfer or conveyance by
elected and qualified. Trustees elected to fill reason of the dissolution, shall be
vacancies occurring before the expiration of a transferred or conveyed to one (1) or more
particular term shall hold office for the unexpired corporations, societies or organizations
period. engaged in activities in the Philippines
substantially similar to those of the
Except with respect to independent trustees of dissolving corporation according to a plan of
nonstock corporation shall be elected as trustee. distribution adopted pursuant to this
Chapter;
Unless otherwise provided in the articles of
incorporation or the bylaws, the members may (d) Assets other than those mentioned in
directly elect officers of a nonstock corporation. the preceding paragraphs, if any, shall be
distributed in accordance with the
Section 92. List of Members and Proxies, Place of provisions of the articles of incorporation or
Meetings. - The corporation shall, at all times, keep a the bylaws, to the extent that the articles of
list of its members and their proxies of record incorporation or the bylaws extent that the
twenty (20) days prior to any scheduled election. The articles of incorporation or the bylaws
bylaws may provide that the members of a nonstock determine the distributive rights of
corporation may hold their regular or special members, or any class or classes of
meetings at any place even outside the place where members, or provide for distribution; and
the principal office of the corporation is
located: Provided, That proper notice is sent to all (e) In any other case, assets may be
members indicating the date, time, and place of distributed to such person, societies,
organizations or corporations, whether or
not organized for profit, as may be specified Any corporation may be incorporated as a close
in a plan of distribution adopted pursuant corporation, except mining or oil companies, stock
to this Chapter. exchanges, banks, insurance companies, public
utilities, educational institutions and corporations
Section 94. Plan of Distribution of Assets. - A plan declared to be vested with public interest in
providing for the distribution of assets, consistent accordance with the provisions of this Code.
with the provisions of this Title, may be adopted by a
nonstock corporation in the process of dissolution in The provisions of this Title shall primarily govern
the following manner: close corporations: Provided, That other Titles shall
primarily govern close corporations: Provided, That
(a) The board of trustees shall, by majority other Titles in this Code shall apply suppletorily,
vote, adopt a resolution recommending a except as otherwise provided under this Title.
plan of distribution and directing the
submission thereof to a vote at a regular or Section 96. Articles of Incorporation. - The articles of
special meeting of members having voting incorporation of a close corporation may provide for:
rights;
(a) A classification of shares or rights, the
(b) Each member entitled to vote shall be qualifications for owning or holding the
given a written notice setting forth the same, and restictions on their transfers,
proposed plan of distribution or summary subject to the provisions of the following
thereof and the date, time and place of section;
such meeting within the time and in the
manner provided in this Code for the giving (b) A classification of director into one (1) or
of notice of meetings; and more classes, each of whom may be voted
for and elected solely by a particular class of
(c) Such plan of distribution shall be stock; and
adopted upon approval of at least two-
thirds (2/3) of the members having voting (c) Greater quorum or voting requirements
rights present or represented by proxy at in the meetings of stockholders or directors
such meeting. than those provided in this Code.
(d) A written agreement among some or all Section 101. Preemptive Right in Close
the stockholders in a close corporation shall Corporations. - The preemptive right of stockholders
not be invalidated on the ground that it in close corporations shall extend to all stock to be
relates to the conduct of the business and issues, including reissuance of services, or in
affairs of the corporation as to restrict or payment or corporate debts, unless the article s of
interfere with the discretion or powers of incorporation provide otherwise.
the board of directors: Provided, That such
agreement shall impose on the stockholders Section 102. Amendment of Articles of
who are parties thereto the liabilities for Incorporation. - Any amendment to the articles of
managerial acts imposed on directors by incorporation which seeks to delete or remove any
this Code. provision required by this Title or to reduce a
quorum or voting requirement stated in said articles
(e) Stockholders actively engaged in the of incorporation shall require affirmative vote of at
management or operation of the business least two-thirds (2/3) of the outstanding capital,
and affairs of a close corporation shall be whether with or without voting rights, or of such
held to strict fiduciary duties to each other greater proportion of shares as may be specifically
and among themselves. The stockholders provided in the articles of incorporation for
shall be personally liable for corporate torts amending, deleting or removing any of the aforesaid
unless the corporation has obtained provisions, at a meeting duly called for this purpose.
reasonably adequate liability insurance.
Section 103. Deadlocks. Nowithstanding any
Section 100. When a Board Meeting is Unnecessary contrary provision in the close corporation's articles
or Improperly Held. - Unless the bylaws provide of incorporation, bylaws, or stockholders'
otherwise, any action taken by the directors of a agreement, if the directors or stockholders are so
close corporation without a meeting called properly divided on the management of the corporation's
and with due notice shall nevertheless be deemed business and affairs that the votes required for a
valid if: corporate action canot be obtained, with the
consequence that the business and affairs that the
(a) Before or after such action is taken, a votes required for that the business of the
written consent thereto is signed by all the corporation can lo longer be conducted to the
directors; or advantage of the stockholders generally, the
Commission, upon written petition by any
(b) All the stockholders have actual or stockholder, shall have the power to arbitrate the
implied knowledge of the action and make dispute. In the exercise o such power, the
no prompt objection in writing; or Commission shall have authority to make
appropriate orders, such as: (a) cancelling or altering
any provision contained in the articles of
(c) The directors are accustomed to take
incorporation, bylaws, ot any stockholders'
informal action with the express or implied
agreement; (b) cancelling, altering or enjoining a
acquiescence of all the stockholders; or
resolution or act of the corporation or its board of
directors, stockholders, officers, or other person
(d) All the directors have express or implied party to the action; (d) requiring the purchase at
knowledge of the action in question and their fair value of shares of any stockholder, either
none of them makes prompt objection in by the corporation regardless of the availability or
writing. unrestricted retained earnings in its, books or by the
other stockholder; (e) appointing a provisional Section 106. Board of Trustees. - Trustees of
director; (f) dissolving the corporation; or (g) educational institutions organized as nonstock
granting such other relief as the circumstances may corporations shall not be less than five (5) nor more
warrant. than fifteen (15): Provided, That the number of
trustees shall be in multiples of five (5).
A provisional director shall be an impartial person
who is neither a stockholder nor a creditor of the Unless otherwise provided in the articles of
corporation or any of its subsidiaries or affiliates, and incorporation or bylaws, the board of trustees of
whose further qualifications, if any, may be incorporated schools, colleges, or other institutions
determined by the Commission. A provisional of learning shall, as soon as organized, so classify
director is not a receiver of the corporation and does themeselves that the term of office of one-fifth (1/5)
not have the title and powers of a custodian or of their number shall expire every year. Trustees
receiver. A provisional director shall have all the thereafter elected to fill vacancies, occurring before
rights and powers of a duly elected director, the expiration of a particular term shall hold office
including the right to be notified of and to vote at only for the unexpired period. Trustees elected
meetings of directors until removed by order of the thereafter to fill vacancies caused by expiration of
Commission pr by all the stockholders. The term shall hold office for five (5) years. A majority of
compensation of the provisional director shall be the trustees shall constitute a quorum for the
determined by agreement between such provisional transaction of business. The powers and authority of
director and the corporation. trustees shall be defined in the bylaws.
If the petition is sufficient in form and substance, the Section 137. Withdrawal of Request and Petition for
Commission shall by an order reciting the purpose of Dissolution. - A withdrawal of the request for
the petition, fix a deadline for filing objections to the dissolution shall be made in writing, duly verified by
petition which date shall not be less than thirty (30) any incorporator, director, trustees, shareholder, or
member and signed by the same number of money laundering, or graft and
incorporators, directors, trustees, shareholder, or corrupt practices;
member and signed by the same number of
incorporators, directors, trustees, shareholders, or (2) Committed or aided in the
members necessary to request for dissolution as set commission of securities violations,
forth in the foregoing sections. The withdrawal shall smuggling, tax evasion, money
be submitted no later than fifteen (15) days laundering, or graft and corrupt
from receipt by the Commission of the request for practices, and its stockholders
dissolution, the Commission shall withhold action on knew of the same; and
the request for dissolution and shall, after
investigation: (a) make a pronouncement that the (3) Repeatedly and knowingly
request for dissolution is deemed withdrawn; (b) tolerated the commission of graft
direct joint meeting of the board of directors or and corrupt practices or other
trustees and the stockholders or members for the fraudulent or illegal acts by its
purpose of ascertaining whether to proceed with directors, trustees, officers, or
dissolution; or (c) issue such other orders as it may employees.
deem appropriate.
If the corporation is ordered dissolved by final
A withdrawal of the petition for dissolution shall be judgment pursuant to the grounds set forth in
in the form of a motion and similar in substance to a subparagraph (e) hereof, its assets, after payment of
withdrawal of request for dissolution but shall be its liabilities, shall upon petition of the Commission
verified and filed prior to publication of the order with the appropriate court, be forfeited in favor of
setting the deadline for filing objections to the the national government. Such forfeiture shall be
petition. without prejudice to the rights of innocent
stockholders and employees for services rendered,
Section 138. Involuntary Dissolution. - A corporation and to the application for other penalty or sanction
may be dissolve by the Commission motu propio or under this Code or other laws.
upon filing of a verified complaint by any interested
party. The following may be grounds for dissolution The Commission shall give reasonable notice to, and
of the corporation: coordinate with, the appropriate regulatory agency
prior to the involuntary dissolution of companies
(a) None-use of corporate charter as under their special regulatory jurisdiction.
provided under Section 21 of his Code;
Section 139. Corporate Liquidation. - Except for
(b) Continuous inoperation of a corporation banks, which shall be covered by the applicable
as provided under Section 21 of this Code; provisions of Republic Act No. 7653, otherwise
known as "The New Central Bank Act", as amended,
(c) Upon receipt of a lawful court order and Republic Act No. 3591, otherwise known as the
dissolving the corporation; Philippine Deposit Insurance Corporation Charter, as
amended, every corporation whose charter expires
(d) Upon finding by the final judgment that pursuant to its article of incorporation is annulled by
the corporation procured its incorporation forfeiture, or whose corporate existence is
through fraud; terminated in any other manner, shall nevertheless
remain as a body corporate for three (3) years after
(e) Upon finding by final judgment that the the effective date of dissolution, for the purpose of
corporation: prosecuting and defending suits by or against it and
enabling it to settle and close its affairs, dispose of
and convey its property, and distribute its assets, but
(1) Was created for the purpose of
not for the purpose of continuing the business for
committing, concealing or aiding
which it was established.
the commission of securities
violation, smuggling, tax evasion,
At any time during said three (3) years, the and bylaws, certified in accordance with law, and
corporation is authorized and empowered to convey their translation to an official language of the
all of its property to trustees for the benefit of Philippines, if necessary. The application shall be
stockholders, members, creditors, and other persons under oath and, unless already stated in its articles
in interest. After any such conveyance by the of incorporation, shall specifically set forth the
corporation of its property in trust for the benefit of following:
its stockholders, members, creditors and others in
interest, all interest which the corporation had in the (a) The date and term of incorporation;
property terminates, the legal interest vests in the
trustees, and the beneficial interest in the (b) the address including the street
stockholders, members, creditors or other persons- number, of the principal office of the
in-interest. corporation in the country or State of
incorporation;
Except as otherwise provided for in Section 93 and
94 of this Code, upon the winding up of corporate (c) The name and address of its resident
affairs, any asset distributable to any creditor or agent authorized to accept summons and
stockholder or member who is unknown or cannot process in all legal proceedings and all
be found shall be escheated in favor of the national notices affecting the corporation, pending
government. the establishment of a local office;
Except by decrease of capital stock and as otherwise (d) The place in the Philippines where the
allowed by this Code, no corporation shall distribute corporation intends to operate;
any of its assets or property except upon lawful
dissolution and after payment of all its debts and
(e) The specific purpose or purposes which
liabilities.
the corporation intends to pursue in the
transaction of its business in the
TITLE XV Philippines: Provided, That said purpose or
FOREIGN CORPORATIONS purposes are those specifically stated in the
certificate of authority issued by the
Section 140. Definition of Righs of Foreign appropriate government agency;
Corporations. - For purposes of this Code, a foreign
corporation is one formed, organized or existing (f) The names and addresses of the present
under laws other than those of the Philippines' and directors and officers of the corporation;
whose laws allow Filipino citizens and corporations
to do business in its own country or State. It shall
(g) A statement of its authorized capital
have the right to transact business in the Philippines
stock and the aggregate number of shares
after obtaining a license for that purpose in
which the corporation has authority to
accordance with this Code and certificate of
issue, itemized by class, par value of shares,
authority from the appropriate government agency.
shares without par value, and series, if any;
Whenever such service of summons or other process Section 149. Merger or Consolidation Involving a
is made upon the Commission, the Commission shall, Foreign Corporation Licensed in the Philippines. - One
within ten (10) days thereafter, transmit by mail a or more foreign corporations authorized to transact
copy of such summons or other legal process to the business in the Philippines may merge or consolidate
corporation at its home or principal office. The with any domestic corporation or corporations if
sending of such copy by the Commission shall be permitted under Philippine laws and by the law of its
incorporation: Provided, That the requirements on its articles of incorporation or bylaws or of
merger or consolidation as provided in this Code are any articles of merger or consolidation
followed. within the time prescribed by this Title;
The Commission may issue a cease and desist (d) Dissolution of the corporation and
order ex parte to enjoin an act or practice which is forfeiture of its assets under the conditions
fraudulent or can be reasonably expected to cause in Title XIV of this Code.
significant, imminent, and irreparable danger or
injury to public safety or welfare. The ex parte order Section 159. Unauthorized Use of Corporate Name;
shall be valid for a maximum period of twenty (20) Penalties. - The unauthorized use of corporate name
shall be punished with a fine ranging from Ten fine ranging from Forty thousand pesos (₱40,000.00)
thousand pesos (₱10,000.00) to Two hundred to Four hundred thousand pesos (₱400,000.00).
thousand pesos (₱200,000.00).
Section 163. Independent Auditor Collusion;
Section 160. Violation of Disqualification Provision; Penalties. - An independent auditor who, in collusion
Penalties. - When, despite the knwoledge of the with the corporation's directors or representatives,
existence of a ground for disqualification as provided certifies the corporation's financial statements
in Section 26 of this Code, a director, trustee or despite its incompleteness or inaccuracy, its failure
officer willfully holds office, or willfully conceals such to give a fair and accurate presentation of the
disqualification, such director, trustee or officer shall corporation's condition, or despite containing false
be punished with a fine ranging from Ten thousand or misleading statements, shall be punished with a
pesos (₱10,000.00) to Two hundred thousand pesos fine ranging from Eighty thousand pesos
(₱200,000.00) at the discretion of the court, and (₱80,000.00) to Five hundred thousand pesos
shall be permanently disqualified from being a (₱500,000.00). When the statement or report
director, trustee or officer of any corporation. When certified is fraudulent, or has the effect of causing
the violation of this provision is injurious or injury to the general public, the auditor or
detrimental to the public, the penalty shall be a fine responsible officer may be punished with a fine
ranging from Twenty thousand pesos (₱20,000.00) ranging from One hundred thousand pesos
to Four hundred thousand pesos (₱400,000.00). (₱100,000.00) to Six hundred thousand pesos
(₱600,000.00).
Section 161. Violation of Duty to Maintain Records,
to Allow their Inspection or Reproduction; Penalties. - Section 164. Obtaining Corporate Registration
The unjustified failure or refusal by the corporation, Through Fraud; Penalties. - Those responsible for the
or by those responsible for keeping and maintaining formation of a corporation through fraud, or who
corporate records, to comply with Section s 45, 73, assisted directly or indirectly therein, shall be
92, 128, 177 and other pertinent rules and provisions punished with a fine ranging from Two hundred
of this Code on inspection and reproduction of thousand pesos (₱200,000.00) to Two million pesos
records shall be punished with a fine ranging from (₱2,000,000.00). When the violation of this provision
Ten thousand pesos (₱10,000.00) to Two hundred is injurious or detrimental to the public, the penalty
thousand pesos (₱200,000.00), at the discretion of is a fine ranging from Four hundred thousand pesos
the court, taking into consideration the seriousness (₱400,000.00) to Five million pesos, (₱5,000,000.00).
of the violation and its implications. When the
violation of this provision is injurious or detrimental Section 165. Fraudulent Conduct of Business;
to the public, the penalty is a fine ranging from Penalties. - A corporation that conduct its business
Twenty thousand pesos (₱20,000.00) to Four through fraud shall be punished with a fine ranging
hundred thousand pesos (₱400,000.00). from Two hundred thousand pesos (₱200,000.00) to
Two million pesos (₱2,000,000.00). When the
The penalties impose under this section shall be violation of this provision is injurious or detrimental
without prejudice to the Commission's exercise of its to the public, the penalty is a fine ranging from Four
contempt powers under Section 157 hereof. hundred thousand pesos (₱400,000.00) to Five
million pesos (₱5,000,000.00).
Section 162. Willful Certification of Incomplete,
Inaccurate, False; or Misleading Statements or Section 166. Acting as Intermediaries for Graft and
Reports; Penalties. - Any person who willfully Corrupt Practices; Penalties. - A corporation used for
certifies a report required under this Code, knowing fraud, or for committing or concealing graft and
that the same contains incomplete, inaccurate, false, corrupt practices as defined under pertinent
or misleading information or statements, shall be statutes, shall be liable for a fine ranging from One
punished with a fine ranging from Twenty thousand hundred thousand pesos (₱100,000.00) to Five
pesos (₱20,000.00) to Two hundred thousand pesos million pesos (₱5,000,000.00).
(₱200,000.00). When the wrongful certification is
injurious or detrimental to the public, the auditor or When there is a finding that any of its directors,
the responsible person may also be punished with a officers, employees, agents, or representatives are
engaged in graft and corrupt practices, the against the director, trustee, or officer of the
corporation's failure to install: corporation responsible for said violation: Provided,
further, That nothing in this section shall be
(a) safeguards for the transparent and construed to repeal the other causes for dissolution
lawful delivery of services; and (b) policies, of corporation provided in this Code.
code of ethics, and procedures against graft
and corruption shall be prima Liability for any of the foregoing offenses shall be
facie evidence of corporate liability under separate from any other administrative, civil, or
this section. criminal liability under this Code and other laws.
Section 167. Engaging Intermediaries for Graft and Section 171. Liability of Directors, Trustees, Officers,
Corrupt Practices; Penalties. - A corruption that or Other Employees. - If the offender is a
appoints an intermediary who engages in graft and corporation, the penalty may, at the discretion of
corrupt practices for the corporation's benefit or the court, be imposed upon such corporation and/or
interest shall be punished with a fine ranging from upon its directors, trustees, stockholders. members,
One hundred thousand pesos (₱100,000.00) to One officers, or employees responsible for the violation
million pesos (₱1,000,000.00). or indispensable to its commission.
Section 168. Tolerating Graft and Corrupt Practices; Section 172. Liability of Aiders and Abettors and
Penalties. - A director, trustee, or officer who Other Secondarr Liability. - Anyone who shall aid,
knowingly fails to sanction, report, or file the abet, counsel, command, induce, or cause any
appropriate action with proper agencies, allows or violation of this Code, or any rule regulation or order
tolerates the graft and corrupt practices or of the Commission shall be punished with a fine not
fraudulent acts committed by a corporation's exceeding that imposed on the principal offenders,
directors, trustees, officers, or employees shall be at the discretion of the court, after taking into
punished with a fine ranging from Five hundred account their participation in the offense.
thousand pesos (₱500,000.00) to One million pesos
(₱1,000,000.00). TITLE XVII
MISCELLANEOUS PROVISIONS
Section 169. Retaliation Against Whistleblowers. - A
whistleblower refers to any person who provides Section 173. Outstanding Capital Stock Defined. -
truthful information relating to the commission or The term "outstanding capital stock", as used in this
possible commission of any offense or violation Code, shall mean the total shares of stock issued
under this Code. Any person who, knowingly and under binding subscription contracts to subscribers
with intent to retaliate, commits acts detrimental to or stockholders, whether fully or partially paid,
a whistleblower such as interfering with the lawful except treasury shares.
employment or livelihood of the whistleblower,
shall, at the discretion of the court, be punished with Section 174. Designation of Governing Boards. - The
a fine ranging from One hundred thousand provisions of specific provisions of this Code to the
(₱100,000.00) to One million (₱1,000,000.00). contrary notwithstanding, nonstock or special
corporations may, through their articles of
Section 170. Other Violations of the Code; Separate incorporation pr their bylaws, designated their
Liability. - Violation of any of the other provisions of governing boards by any other than as board of
this Code or its amendments not otherwise trustees.
specifically penalized therein shall be punished by a
fine of not less than Ten thousand pesos Section 175. Collection and Use of Registration,
(₱10,000.00) but not more than One million pesos Incorporation and Other Fees. - For a more
(₱1,000,000.00). If the violation is committed by a implementation of this Code, the Commission os
corporation, the same may, after notice and hearing, hereby authorized to collect, retain and use fees,
be dissolved in appropriate proceedings before the fines, and other charges pursuant to this Code and
Commission; Provided, That such dissolution shall its rules and regulations. The amount collected shall
not preclude the institution of appropriate action be deposited and maintained in a separate account
which shall form a fund for its modernization and to (a) Annual financial statements audited by
augment its operational expenses such as, but not an independent certified public
limited to, capital outlay, increase in compensation accountant: Provided, That if the total
and benefits comparable with prevailing rates in the assets or total liabilities of the corporation
private sector, reasonable employee allowance, are less than Six hundred thousand pesos
employee health care services, and other insurance, (₱600,000.00), the financial statements
employee career advancement and shall be certified under oath by the
professionalization, legal assistance, seminars, and corporation’s treasurer or chief financial
other professional fees. officer; and
Should the corporation, without justifiable cause, (f) Issue cease and desist orders ex parte to
refuse or obstruct the Commission’s exercise of its prevent imminent fraud or injury to the
visitorial powers, the Commission may revoke its public;
certificate of incorporation, without prejudice to the
imposition of other penalties and sanctions under (g) Hold corporations in direct and indirect
this Code. contempt;