Revised Corporation

Code of the Philippines

REPUBLIC ACT 11232
 Incorporation and organization of Private
Corporations
Any person, partnership, association or
corporation, singly or jointly with others
Number of but not more than fifteen (15) in
Incorporators number
Perpetual existence unless its articles of
Corporate Term incorporation provides otherwise
Stock corporations shall not be required
Minimum Capital to have a minimum capital stock, except as
Stock otherwise specifically provided by special
law
 Majority vote of the board of directors or
Amendment of
trustees and the vote or written assent of the
Articles of
stockholders representing at least two-thirds
Incorporation
(2/3) of the outstanding capital stock
Does not formally organize and commence its
business within five (5) years from the date of
Effects of Non-Use its incorporation, its certificate of
of Corporate Charter incorporation shall be deemed revoked as of
and Continuous the day following the end of the five (5)-year
Inoperation period
Two (2) years to resume operations and
comply with all requirements
 Board of Directors/Trustees and officers

Directors - one (1) year (must own atleast 1 stock)

Term
Trustees - three (3) years (must be a member)
(a) a president, who must be a director;
(b) a treasurer, who must be a resident;
(c) a secretary, who must be a citizen and resident
of the Philippines; and
Corporate Officers
(d) such other officers as may be provided in the by-
laws
No one shall act as president and secretary or as
president and treasurer at the same time
 If within five (5) years prior to the election or appointment as
such, the person was:
(a) Convicted by final judgment:
1. Of an offense punishable by imprisonment for a period
exceeding six (6) years;
Disqualification of 2. For violating this Code; and
Directors, Trustees or 3. For violating Republic Act No. 8799, otherwise known as
Officers “The Securities Regulation Code”
(b) Found administratively liable for any offense involving
fraudulent acts; and
(c) By a foreign court or equivalent foreign regulatory authority
for acts, violations or misconduct similar to those enumerated in
paragraphs (a) and (b) above.
Vote of the stockholders holding or representing at least two-
Removal of Directors or thirds (2/3) of the outstanding capital stock, or in a nonstock
Trustees corporation, by a vote of at least two-thirds (2/3) of the members
entitled to vote
 Any vacancy occurring in the board of directors other than by
removal or by expiration of term may be filled by the vote
Vacancies in the Office of at least a majority of the remaining directors or
of Director or Trustee trustees, if still constituting a quorum; otherwise, said
vacancies must be filled by the stockholders or members in
a regular or special meeting called for that purpose
In the absence of any provision in the by-laws fixing their
compensation, the directors or trustees shall not receive
any compensation in their capacity as such, except for
reasonable per diems
Compensation of At least a majority of the outstanding capital stock or
Directors or Trustees majority of the members may grant directors or trustees
with compensation and approve the amount thereof at a
regular or special meeting. (Directors or trustees shall
not participate in the determination of their own per
diems or compensation.)
 Where a director, by virtue of such office, acquires
a business opportunity which should belong to the
corporation, thereby obtaining profits to the
prejudice of such corporation, the director must
Disloyalty of a Director account for and refund to the latter all such
profits, unless the act has been ratified by a vote
of the stockholders owning or representing at
least two-thirds (2/3) of the outstanding
capital stock.
 Powers of Corporations
Approved by a majority vote of the board of directors or
Power to Extend or trustees, and ratified at a meeting by the stockholders or members
Shorten Corporate Term representing at least two-thirds (2/3) of the outstanding capital
stock or of its members
Power to Increase or
Approved by a majority vote of the board of directors and by
Decrease Capital Stock;
two-thirds (2/3) of the outstanding capital stock at a
Incur, Create or Increase
stockholders’ meeting duly called for the purpose
Bonded Indebtedness
Pre-emptive right shall not extend to shares issued in compliance
with laws requiring stock offerings or minimum stock ownership by
Power to Deny Pre- the public; or to shares issued in good faith with the approval of the
emptive Right stockholders representing two-thirds (2/3) of the outstanding
capital stock, in exchange for property needed for corporate
purposes or in payment of a previously contracted debt.
Majority vote of its board of directors or trustees, sell, lease,
Sale or Other Disposition
exchange, mortgage, pledge, or otherwise dispose of its property
of Assets
and assets
Power to Acquire Own Provided that the corporation has unrestricted retained earnings in
Shares its books to cover the shares to be purchased or acquired
 Approved by a majority of the board of directors or
trustees and ratified by the stockholders representing at
Power to Invest Corporate Funds in
least two-thirds (2/3) of the outstanding capital stock, or
Another Corporation or Business or for
by at least two-thirds (2/3) of the members in the case of
Any Other Purpose
nonstock corporations, at a meeting duly called for the
purpose
The board of directors of a stock corporation may declare
Power to Declare Dividends
dividends out of the unrestricted retained earnings
No corporation shall possess or exercise corporate powers
other than those conferred by this Code or by its articles of
Ultra Vires Acts of Corporations
incorporation and except as necessary or incidental to the
exercise of the powers conferred
Approved by the board of directors and by stockholders
owning at least the majority of the outstanding capital
Power to Enter into Management
stock, or by at least a majority of the members in the case
Contract
of a nonstock corporation, of both the managing and the
managed corporation, at a meeting duly called for the
purpose:
 BY-LAWS

Affirmative vote of the stockholders

representing at least a majority of the
Adoption of By-laws outstanding capital stock, or of at least a
majority of the members in case of nonstock
corporations, shall be necessary
A majority of the board of directors or
trustees, and the owners of at least a
majority of the outstanding capital stock, or
at least a majority of the members of a non-
Amendment to By-laws
stock corporation, at a regular or special
meeting duly called for the purpose, may
amend or repeal the bylaws or adopt new
bylaws
 MEETINGS

Regular meetings of stockholders or members shall be

held annually on a date fixed in the bylaws, or if not so
fixed, on any date after April 15 of every year as
determined by the board of directors or trustees.
written notice of regular meetings shall be sent to all
stockholders or members of record at least twenty-one
(21) days prior to the meeting, unless a different
Kinds of Meetings
period is required in the bylaws, law, or regulation
Special meetings of stockholders or members shall be
held at any time deemed necessary or as provided in the
bylaws: Provided, however. That at least one (1) week
written notice shall be sent to all stockholders or
members, unless a different period is provided in the
bylaws, law or regulation.
 In the principal office of the corporation or, if not
Place and Time of Meetings practicable, in the city or municipality where the
of Stockholders or Members principal office of the corporation is located
Consist of the stockholders representing a majority
of the outstanding capital stock or a majority of
Quorum in Meetings the members in the case of nonstock corporations.
Consent of all the co-owners shall be necessary in
voting shares of stock owned jointly by two (2) or
Voting in Case of Joint
more persons, unless there is a written proxy, signed
Ownership of Stock
by all the co-owners, authorizing one (1) or some of
them or any other person to vote such share or shares
Voting Right for Treasury Treasury shares shall have no voting right as long as
Shares such shares remain in the Treasury
 Stockholders and members may vote in
person or by proxy in all meetings of
stockholders or members. When so
authorized in the by-laws or by a majority of
Manner of Voting
the board of directors, the stockholders or
members of corporations may also vote
through remote communication or in
absentia
One or more stockholders of a stock
corporation may create a voting trust for the
purpose of conferring upon a trustee or
Voting Trusts
trustees the right to vote and other rights
pertaining to the shares for a period not
exceeding five (5) years at any time
 STOCK AND STOCKHOLDERS

Any contract for the acquisition of unissued stock in

an existing corporation or a corporation still to be
Subscription Contract
formed shall be deemed a subscription within the
meaning of this Title
A subscription of shares in a corporation still to be
formed shall be irrevocable for a period of at least six
(6) months from the date of subscription, unless all of
the other subscribers consent to the revocation, or the
Pre-incorporation corporation fails to incorporate within the same
Subscription period or within a longer period stipulated in the
contract of subscription.
No pre-incorporation subscription may be revoked
after the articles of incorporation is submitted to the
Commission.
Consideration for Stocks Stocks shall not be issued for a consideration less than the par
or issued price thereof. Consideration for the issuance of stock
may be:
(a) Actual cash paid to the corporation;
(b) Property, tangible or intangible, actually received by the
corporation and necessary or convenient for its use and lawful
purposes at a fair valuation equal to the par or issued value of
the stock issued;
(c) Labor performed for or services actually rendered to the
corporation;
(d) Previously incurred indebtedness of the corporation;
(e) Amounts transferred from unrestricted retained earnings to
stated capital;
(f) Outstanding shares exchanged for stocks in the event of
reclassification or
conversion;
(g) Shares of stock in another corporation; and/or
(h) Other generally accepted form of consideration.
 The capital stock of corporations shall be
divided into shares for which certificates
signed by the president or vice president,
Certificate of Stocks countersigned by the secretary or assistant
secretary, and sealed with the seal of the
corporation shall be issued in accordance
with the by-laws
No certificate of stock shall be issued to a
subscriber until the full amount of the
Issuance of Stock Certificates subscription together with interest and
expenses (in case of delinquent shares), if
any is due, has been paid.
 No delinquent stock shall be voted for, be entitled to vote,
or be represented at any stockholder’s meeting, nor shall
the holder thereof be entitled to any of the rights of a
stockholder except the right to dividends in accordance
Effect of Delinquency with the provisions of this Code, until and unless
payment is made by the holder of such delinquent stock
for the amount due on the subscription with accrued
interest, and the costs and expenses of advertisement, if
any
Rights of Unpaid Shares, Holders of subscribed shares not fully paid which are not
Non delinquent delinquent shall have all the rights of a stockholder
 Corporate Books and Records
Every corporation shall keep and carefully preserve at its principal office all
information relating to the corporation including, but not limited to:
1. The articles of incorporation and bylaws of the corporation and all their
amendments;
2. The current ownership structure and voting rights of the corporation, including
lists of stockholders or members, group structures, intra-group relations,
ownership data, and beneficial ownership;
3. The names and addresses of all the members of the board of directors or
trustees and the executive officers;
4. A record of all business transactions;
5. A record of the resolutions of the board of directors or trustees and of the
stockholders or members;
6. Copies of the latest reportorial requirements submitted to the Commission; and
7. The minutes of all meetings of stockholders or members, or of the board of
directors or trustees.
 A corporation shall furnish a stockholder or member, within
ten (10) days from receipt of their written request, its most
recent financial statement, in the form and substance of the
financial reporting required by the Commission.
Financial
if the total assets or total liabilities of the corporation are less
Statements
than Six hundred thousand pesos (P600.000.00), or such other
amount as may be determined appropriate by the Department
of Finance, the financial statements may be certified under
oath by the treasurer and the president.
 Merger and Consolidation

o Upon approval by a majority vote of each of the board of

directors or trustees of the constituent corporations of
the plan of merger or consolidation.
o The affirmative vote of stockholders representing at least
two-thirds (2/3) of the outstanding capital stock of each
corporation in the case of stock corporations or at least
two-thirds (2/3) of the members in the case of nonstock
corporations shall be necessary for the approval of such
plan
 Appraisal Right

Any stockholder of a corporation shall have the right to dissent and demand payment
of the fair value of the shares in the following instances:
o In case an amendment to the articles of incorporation has the effect of changing or
restricting the rights of any stockholder or class of shares, or of authorizing
preferences in any respect superior to those of outstanding shares of any class, or
of extending or shortening the term of corporate existence;
o In case of sale, lease, exchange, transfer, mortgage, pledge or other disposition of
all or substantially all of the corporate property and assets as provided in this Code;
o In case of merger or consolidation; and
o In case of investment of corporate funds for any purpose other than the primary
purpose of the corporation.
 Close Corporations
 All the corporation’s issued stock of all classes,
exclusive of treasury shares, shall be held of record by
not more than a specified number of persons, not
exceeding twenty (20);
 all the issued stock of all classes shall be subject to one
(1) or more specified restrictions on transfer permitted
by this Title; and
 the corporation shall not listed in any stock exchange or
make any public offering of its stocks of any class.
 One Person Corporations
 Single stockholder
 Only a natural person, trust, or an estate
 Minimum Capital Stock Not Required for One Person Corporation
 File articles of incorporation in accordance with the requirements under Section 14 of this Code.
 Not required to submit and file corporate bylaws.
 Corporation shall indicate the letters “OPC” at the end of its corporate name. - A One Person either below or
at the end of its corporate name.
 Single stockholder shall be the sole director and president of the One Person Corporation.
 Within fifteen (15) days from the issuance of its certificate of incorporation, the One Person Corporation
shall appoint a treasurer, corporate secretary, and other officers as it may deem necessary, and notify the
Commission thereof within five (5) days from appointment
 The single stockholder shall designate a nominee and an alternate nominee who shall, in the event of the
single stockholder’s death or incapacity, take the place of the single stockholder as director and shall manage
the corporation’s affairs.
 Dissolution

Voluntary
Effected by majority vote of the board of directors or trustees, and by a resolution
Dissolution
adopted by the affirmative vote of the stockholders owning at least majority of the
Where No
outstanding capital stock or majority of the members of a meeting to be held upon
Creditors are
the call of the directors or trustees.
Affected
Voluntary signed by a majority of the corporation’s board of directors or trustees and
Dissolution dissolution was resolved upon by the affirmative vote of the stockholders representing
Where Creditors at least two-thirds (2/3) of the outstanding capital stock or at least two-thirds (2/3)
are Affected of the members at a meeting of its stockholders or members called for that purpose.
Dissolution by
Shortening Effected by amending the articles of incorporation
Corporate Term
Involuntary Dissolution

The following may be grounds for dissolution of the corporation:

(a) Non-use of corporate charter as provided under Section 21 of this Code;
(b) Continuous inoperation of a corporation as provided under Section 21 of
this Code;
(c) Upon receipt of a lawful court order dissolving the corporation;
(d) Upon finding by final judgment that the corporation procured its
incorporation through fraud;
(e) Upon finding by final judgment that the corporation:
 Was created for the purpose of committing, concealing or aiding the
commission of securities violations, smuggling, tax evasion, money
laundering, or graft and corrupt practices;
 Committed or aided in the commission of securities violations, smuggling,
tax evasion, money laundering, or graft and corrupt practices, and its
stockholders knew of the same; and
 Repeatedly and knowingly tolerated the commission of graft and corrupt
practices or other fraudulent or illegal acts by its directors, trustees,
officers, or employees
 Investigations, Offenses, and penalties
Any person who, without justifiable cause, fails or refuses
to comply with any lawful order, decision, or subpoena
Contempt issued by the Commission shall, after due notice and
hearing, be held in contempt and fined in an amount not
exceeding P30,000.00.
Commission may impose any or all of the following
sanctions, taking into consideration the extent of
participation, nature, effects, frequency and seriousness of
the violation;
(a) Imposition of a fine ranging from P5,000.00 to
P2,000,000.00, and not more than P 1,000.00 for
Administrative Sanctions each day of continuing violation but in no case to
exceed P2,000,000.00:
(b) Issuance of a permanent cease and desist order;
(c) Suspension or revocation of the certificate of
incorporation; and
(d) Dissolution of the corporation and forfeiture of its
assets under the conditions in Title XIV of this Code.
Unauthorized Use of Corporate Name Fine ranging from PlO,OOO.OO to P200,000.00
  When, despite the knowledge of the existence of a ground for disqualification as
provided in Section 26 of this Code, a director, trustee or officer willfully holds
office, or willfully conceals such disqualification, such director, trustee or officer
Violation of
shall be punished with a fine ranging from P10,000.00 to P200,000.00 at the
Disqualification
discretion of the court, and shall be permanently disqualified from being a
Provision
director, trustee or officer of any corporation.
 When the violation of this provision is injurious or detrimental to the public, the
penalty shall be a fine ranging from P20,000.00 to P400,000.00.
 The unjustified failure or refusal by the corporation, or by those responsible for
keeping and maintaining corporate records, to comply with Sections 45, 73, 92,
Violation of Duty to
128, 177 and other pertinent rules and provisions of this Code on inspection and
Maintain Records, to
reproduction of records shall be punished with a fine ranging from P10,000.00
Allow their Inspection
to P200,000.00, at the discretion of the court.
or Reproduction
 When the violation of this provision is injurious or detrimental to the public, the
penalty is a fine ranging from P20,000.00 to P400,000.00.
 Fine : P20,000.00 to P200,000.00. When the wrongful
Willful Certification of Incomplete, Inaccurate, certification is injurious or detrimental to the public, the
False, or Misleading Statements or Reports auditor or the responsible person may also be punished
with a fine ranging from P40,000.00 to P400,000.00.

An independent auditor who, in collusion with the

corporation’s directors or representatives, certifies the
corporation’s financial statements despite its
incompleteness or inaccuracy, its failure to give a fair and
accurate presentation of the corporation’s condition, or
despite containing false or misleading statements, shall be
Independent Auditor Collusion
punished with a fine ranging from P80,000.00 to
P500,000.00. When the statement or report certified is
fraudulent, or has the effect of causing injury to the
general public, the auditor or responsible officer may be
punished with a fine ranging from P100,000.00 to
P600,000.00.
 Fine: P200,000.00 to P2,000,000.00). When the
Obtaining Corporate Registration Through violation of this provision is injurious or detrimental to
Fraud the public, the penalty is a fine ranging from
P400,000,00 to P5,000,000.00.

P200,000.00 to P2,000,000.00. When the violation of

this provision is injurious or detrimental to the public,
Fraudulent Conduct of Business
the penalty is a fine ranging from P400,000.00 to
P5,000,000.00.

Acting as Intermediaries for Graft and Corrupt

P100,000.00 to P5,000,000.00.
Practices
Tolerating Graft and Corrupt Practices P500,000.00 to P1,000,000.00.

Retaliation Against Whistleblowers P100,000.00 to P1,000,000.00.

not less than P10,000.00 but not more than
Other Violations of the Code
P1,000,000.00
Thank you.