Comparative Matrix Comparative Matrix

Corporation Code (1980) Revised Corporation Code (2019) Corporation Code (1980) Revised Corporation Code (2019)

a non-stock corporation are called members.

(4a)

Batas Pambansa Bilang 68 Republic Act No. 11232 Section 6. Classification of shares. – The SEC. 6. Classification of Shares. – The
shares of stock of stock corporations may be classification of shares, their corresponding
Section 1. Title of the Code. – This Code shall SEC. 1. Title of the Code. – This Code shall be divided into classes or series of shares, or rights, privileges, or restrictions, and their
be known as "The Corporation Code of the known as the “Revised Corporation Code of the both, any of which classes or series of shares stated par value, if any, must be indicated in the
Philippines." (n) Philippines”. may have such rights, privileges or articles of incorporation. Each share shall be
restrictions as may be stated in the articles of equal in all respects to every other share,
incorporation: Provided, That no share may except as otherwise provided in the articles of
Section 2. Corporation defined. – A SEC. 2. Corporation Defined. – A corporation is an
be deprived of voting rights except those incorporation and in the certificate of stock.
corporation is an artificial being created by artificial being created by operation of law, having
classified and issued as "preferred" or
operation of law, having the right of the right of succession and the powers, attributes,
"redeemable" shares, unless otherwise The shares in stock corporations may be
succession and the powers, attributes and and properties expressly authorized by law or
provided in this Code: Provided, further, That divided into classes or series of shares, or both.
properties expressly authorized by law or incidental to its existence.
there shall always be a class or series of No share may be deprived of voting rights
incident to its existence. (2)
shares which have complete voting rights. except those classified and issued as
Any or all of the shares or series of shares “preferred” or “redeemable” shares, unless
Section 3. Classes of corporations. – SEC. 3. Classes of Corporations. – Corporations
may have a par value or have no par value otherwise provided in this Code: Provided, That
Corporations formed or organized under this formed or organized under this Code may be stock
as may be provided for in the articles of there shall always be a class or series of shares
Code may be stock or non-stock or nonstock corporations. Stock corporations are
incorporation: Provided, however, That with complete voting rights.
corporations. Corporations which have those which have capital stock divided into
banks, trust companies, insurance
capital stock divided into shares and are shares and are authorized to distribute to the Holders of nonvoting shares shall nevertheless be
companies, public utilities, and building and
authorized to distribute to the holders of such holders of such shares, dividends, or allotments entitled to vote on the following matters:
loan associations shall not be permitted to
shares dividends or allotments of the surplus of the surplus profits on the basis of the shares
issue no-par value shares of stock.
profits on the basis of the shares held are held. All other corporations are nonstock (a)Amendment of the articles of incorporation;
stock corporations. All other corporations are corporations.
Preferred shares of stock issued by any
non-stock corporations. (3a) (b)Adoption and amendment of bylaws;
corporation may be given preference in the
distribution of the assets of the corporation in
case of liquidation and in the distribution of (c)Sale, lease, exchange, mortgage, pledge, or
Section 4. Corporations created by special SEC. 4. Corporations Created by Special Laws or other disposition of all or substantially all of the
dividends, or such other preferences as may
laws or charters. – Corporations created by Charters. – Corporations created by special laws or corporate property;
be stated in the articles of incorporation
special laws or charters shall be governed charters shall be governed primarily by the
which are not violative of the provisions of
primarily by the provisions of the special law provisions of the special law or charter creating (d)Incurring, creating, or increasing bonded
this Code: Provided, That preferred shares of
or charter creating them or applicable to them or applicable to them, supplemented by the indebtedness;
stock may be issued only with a stated par
them, supplemented by the provisions of this provisions of this Code, insofar as they are
value. The board of directors, where
Code, insofar as they are applicable. (n) applicable. (e)Increase or decrease of authorized capital stock;
authorized in the articles of incorporation,
may fix the terms and conditions of preferred
shares of stock or any series thereof: (f)Merger or consolidation of the corporation with
Section 5. Corporators and incorporators, SEC. 5. Corporators and Incorporators, another corporation or other corporations;
Provided, That such terms and conditions
stockholders and members. – Corporators Stockholders and Members. – Corporators are
shall be effective upon the filing of a
are those who compose a corporation, those who compose a corporation, whether as (g)Investment of corporate funds in another
certificate thereof with the Securities and
whether as stockholders or as members. stockholders or shareholders in a stock corporation or business in accordance with this
Exchange Commission.
Incorporators are those stockholders or corporation or as members in a nonstock Code; and
members mentioned in the articles of corporation. Incorporators are those stockholders
Shares of capital stock issued without par
incorporation as originally forming and or members mentioned in the articles of (h)Dissolution of the corporation.
value shall be deemed fully paid and non-
composing the corporation and who are incorporation as originally forming and composing
assessable and the holder of such shares
signatories thereof. the corporation and who are signatories thereof. Except as provided in the immediately
shall not be liable to the corporation or to its
creditors in respect thereto: Provided; That preceding paragraph, the vote required under
Corporators in a stock corporation are called this Code to approve a particular corporate act
shares without par value may not be issued
stockholders or shareholders. Corporators in
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Corporation Code (1980) Revised Corporation Code (2019) Corporation Code (1980) Revised Corporation Code (2019)

for a consideration less than the value of five shall be deemed to refer only to stocks with shares classified as such in the articles of SEC. 7. Founders’ Shares. – Founders’ shares may
(P5.00) pesos per share: Provided, further, voting rights. incorporation may be given certain rights and be given certain rights and privileges not enjoyed by
That the entire consideration received by the privileges not enjoyed by the owners of other the owners of other stocks. Where the exclusive
corporation for its no-par value shares shallThe shares or series of shares may or may not stocks, provided that where the exclusive right to vote and be voted for in the election of
be treated as capital and shall not be have a par value: Provided, That banks, trust, right to vote and be voted for in the election directors is granted, it must be for a limited period
available for distribution as dividends. insurance, and preneed companies, public of directors is granted, it must be for a limited not to exceed five (5) years from the date of
utilities, building and loan associations, and period not to exceed five (5) years subject to incorporation: Provided, That such exclusive
A corporation may, furthermore, classify its other corporations authorized to obtain or the approval of the Securities and Exchange right shall not be allowed if its exercise will
shares for the purpose of insuring access funds from the public, whether publicly Commission. The five-year period shall violate Commonwealth Act No. 108, otherwise
compliance with constitutional or legal listed or not, shall not be permitted to issue no- commence from the date of the aforesaid known as the “Anti-Dummy Law”; Republic Act
requirements. par value shares of stock. approval by the Securities and Exchange No. 7042, otherwise known as the “Foreign
Commission. (n) Investments Act of 1991”; and other pertinent
Except as otherwise provided in the articles Preferred shares of stock issued by a laws.
of incorporation and stated in the certificate corporation may be given preference in the
of stock, each share shall be equal in all distribution of dividends and in the distribution Section 8. Redeemable shares. – SEC. 8. Redeemable Shares. – Redeemable
respects to every other share. of corporate assets in case of liquidation, or Redeemable shares may be issued by the shares may be issued by the corporation when
such other preferences: Provided, That corporation when expressly so provided in expressly provided in the articles of incorporation.
Where the articles of incorporation provide preferred shares of stock may be issued only the articles of incorporation. They may be They are shares which may be purchased by the
for non-voting shares in the cases allowed by with a stated par value. The board of directors, purchased or taken up by the corporation corporation from the holders of such shares upon
this Code, the holders of such shares shall where authorized in the articles of upon the expiration of a fixed period, the expiration of a fixed period, regardless of the
nevertheless be entitled to vote on the incorporation, may fix the terms and conditions regardless of the existence of unrestricted existence of unrestricted retained earnings in the
following matters: of preferred shares of stock or any series retained earnings in the books of the books of the corporation, and upon such other
thereof: Provided, further, That such terms and corporation, and upon such other terms and terms and conditions stated in the articles of
1. Amendment of the articles of conditions shall be effective upon filing of a conditions as may be stated in the articles of incorporation and the certificate of stock
incorporation; certificate thereof with the Securities and incorporation, which terms and conditions representing the shares, subject to rules and
2. Adoption and amendment of by-laws; Exchange Commission, hereinafter referred to must also be stated in the certificate of stock regulations issued by the Commission.
3. Sale, lease, exchange, mortgage, pledge as “Commission”. representing said shares. (n)
or other disposition of all or substantially all
of the corporate property; Shares of capital stock issued without par value Section 9. Treasury shares. – Treasury SEC. 9. Treasury shares. – Treasury shares are
4. Incurring, creating or increasing bonded shall be deemed fully paid and non-assessable shares are shares of stock which have been shares of stock which have been issued and fully
indebtedness; and the holder of such shares shall not be liable issued and fully paid for, but subsequently paid for, but subsequently reacquired by the issuing
5. Increase or decrease of capital stock; to the corporation or to its creditors in respect reacquired by the issuing corporation by corporation through purchase, redemption,
6. Merger or consolidation of the corporation thereto: Provided, That no-par value shares purchase, redemption, donation or through donation, or some other lawful means. Such shares
with another corporation or other must be issued for a consideration of at least some other lawful means. Such shares may may again be disposed of for a reasonable price
corporations; Five pesos (P5.00) per share: Provided, further, again be disposed of for a reasonable price fixed by the board of directors.
7. Investment of corporate funds in another That the entire consideration received by the fixed by the board of directors. (n)
corporation or business in accordance with corporation for its no-par value shares shall be
this Code; and treated as capital and shall not be available for TITLE II TITLE II
8. Dissolution of the corporation. distribution as dividends. INCORPORATION AND ORGANIZATION INCORPORATION AND ORGANIZATION OF
OF PRIVATE CORPORATIONS PRIVATE CORPORATIONS
Except as provided in the immediately A corporation may further classify its shares for
preceding paragraph, the vote necessary to the purpose of ensuring compliance with Section 10. Number and qualifications of SEC. 10. Number and Qualifications of
approve a particular corporate act as constitutional or legal requirements. incorporators. – Any number of natural Incorporators. – Any person, partnership,
provided in this Code shall be deemed to persons not less than five (5) but not more association or corporation, singly or jointly with
refer only to stocks with voting rights. (5a) than fifteen (15), all of legal age and a others but not more than fifteen (15) in number,
majority of whom are residents of the may organize a corporation for any lawful purpose
Philippines, may form a private corporation or purposes: Provided, That natural persons who
for any lawful purpose or purposes. Each of are licensed to practice a profession, and
Section 7. Founders’ shares. – Founders’ the incorporators of s stock corporation must partnerships or associations organized for the
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Corporation Code (1980) Revised Corporation Code (2019) Corporation Code (1980) Revised Corporation Code (2019)

own or be a subscriber to at least one (1) purpose of practicing a profession, shall not be liabilities existing prior to revival. Upon
share of the capital stock of the corporation. allowed to organize as a corporation unless approval by the Commission, the corporation
(6a) otherwise provided under special laws. shall be deemed revived and a certificate of
Incorporators who are natural persons must be revival of corporate existence shall be issued,
of legal age. giving it perpetual existence, unless its
application for revival provides otherwise.
Each incorporator of a stock corporation must own
or be a subscriber to at least one (1) share of the No application for revival of certificate of
capital stock. incorporation of banks, banking and quasi-
banking institutions, preneed, insurance and
A corporation with a single stockholder is trust companies, non-stock savings and loan
considered a One Person Corporation as associations (NSSLAs), pawnshops,
described in Title XIII, Chapter III of this Code. corporations engaged in money service
business, and other financial intermediaries
shall be approved by the Commission unless
Section 11. Corporate term. – A corporation SEC. 11. Corporate Term. – A corporation shall accompanied by a favorable recommendation of
shall exist for a period not exceeding fifty (50) have perpetual existence unless its articles of the appropriate government agency.
years from the date of incorporation unless incorporation provides otherwise.
sooner dissolved or unless said period is
extended. The corporate term as originally Corporations with certificates of incorporation Section 12. Minimum capital stock required SEC. 12. Minimum Capital Stock Not Required of
stated in the articles of incorporation may be issued prior to the effectivity of this Code, and of stock corporations. – Stock corporations Stock Corporations. – Stock corporations shall
extended for periods not exceeding fifty (50) which continue to exist shall have perpetual incorporated under this Code shall not be not be required to have a minimum capital
years in any single instance by an existence, unless the corporation, upon a vote required to have any minimum authorized stock, except as otherwise specifically provided
amendment of the articles of incorporation, in of its stockholders representing a majority of its capital stock except as otherwise specifically by special law.
accordance with this Code; Provided, That outstanding capital stock, notifies the provided for by special law, and subject to the
no extension can be made earlier than five Commission that it elects to retain its specific provisions of the following section.
(5) years prior to the original or subsequent corporate term pursuant to its articles of
expiry date(s) unless there are justifiable incorporation: Provided, that any change in the
reasons for an earlier extension as may be corporate term under this section is without Section 13. Amount of capital stock to be
determined by the Securities and Exchange prejudice to the appraisal right of dissenting subscribed and paid for the purposes of
Commission. (6) stockholders in accordance with the provisions incorporation. – At least twenty-five
of this Code. percent (25%) of the authorized capital
stock as stated in the articles of
A corporate term for a specific period may be incorporation must be subscribed at the
extended or shortened by amending the articles time of incorporation, and at least twenty-
of incorporation: Provided, That no extension five (25%) per cent of the total
may be made earlier than three (3) years prior to subscription must be paid upon
the original or subsequent expiry date(s) unless subscription, the balance to be payable
there are justifiable reasons for an earlier on a date or dates fixed in the contract of
extension as may be determined by the subscription without need of call, or in the
Commission: Provided, further, That such absence of a fixed date or dates, upon call
extension of the corporate term shall take effect for payment by the board of directors:
only on the day following the original or Provided, however, That in no case shall
subsequent expiry date(s). the paid-up capital be less than five
A corporation whose term has expired may, at Thousand (P5,000.00) pesos. (n)
any time, apply for a revival of its corporate
existence, together with all the rights and
privileges under its certificate of incorporation Section 14. Contents of the articles of SEC. 13. Contents of the Articles of Incorporation.
and subject to all of its duties, debts and incorporation. – All corporations organized – All corporations shall file with the Commission
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Corporation Code (1980) Revised Corporation Code (2019) Corporation Code (1980) Revised Corporation Code (2019)

under this code shall file with the Securities articles of incorporation in any of the official inconsistent with law and which the addresses of the contributors, and amount
and Exchange Commission articles of languages, duly signed and acknowledged or incorporators may deem necessary and contributed by each;
incorporation in any of the official languages authenticated, in such form and manner as may be convenient.
duly signed and acknowledged by all of the allowed by the Commission, containing (j)Such other matters consistent with law and which
incorporators, containing substantially the substantially the following matters, except as The Securities and Exchange the incorporators may deem necessary and
following matters, except as otherwise otherwise prescribed by this Code or by special law: Commission shall not accept the articles convenient.
prescribed by this Code or by special law: of incorporation of any stock corporation
(a)The name of the corporation; unless accompanied by a sworn An arbitration agreement may be provided in
1. The name of the corporation; statement of the Treasurer elected by the the articles of incorporation pursuant to Section
2. The specific purpose or purposes for which (b)The specific purpose or purposes for which the subscribers showing that at least twenty- 181 of this Code.
the corporation is being incorporated. Where corporation is being formed. Where a corporation five (25%) percent of the authorized
a corporation has more than one stated has more than one stated purpose, the articles of capital stock of the corporation has been
purpose, the articles of incorporation shall incorporation shall indicate the primary purpose and subscribed, and at least twenty-five (25%) The articles of incorporation and applications
state which is the primary purpose and which the secondary purpose or purposes: Provided, That of the total subscription has been fully for amendments thereto may be filed with the
is/are the secondary purpose or purposes: a non-stock corporation may not include a purpose paid to him in actual cash and/or in Commission in the form of an electronic
Provided, That a non-stock corporation may which would change or contradict its nature as property the fair valuation of which is document, in accordance with the
not include a purpose which would change or such; equal to at least twenty-five (25%) percent Commission’s rules and regulations on
contradict its nature as such; of the said subscription, such paid-up electronic filing.
3. The place where the principal office of the (c)The place where the principal office of the capital being not less than five thousand
corporation is to be located, which must be corporation is to be located, which must be within (P5,000.00) pesos.
within the Philippines; the Philippines;
4. The term for which the corporation is to Section 15. Forms of Articles of SEC. 14. Form of Articles of Incorporation. – Unless
exist; (d)The term for which the corporation is to exist, if Incorporation. – Unless otherwise prescribed otherwise prescribed by special law, the articles of
5. The names, nationalities and residences of the corporation has not elected perpetual existence; by special law, articles of incorporation of all incorporation of all domestic corporations shall
the incorporators; domestic corporations shall comply comply substantially with the following form:
6. The number of directors or trustees, which (e)The names, nationalities, and residence substantially with the following form:
shall not be less than five (5) nor more than addresses of the incorporators; ARTICLES OF INCORPORATION Articles of Incorporation
fifteen (15); OF of
7. The names, nationalities and residences of (f)The number of directors, which shall not be more __________________________ __________________________
persons who shall act as directors or trustees than fifteen (15) or the number of trustees which (Name of Corporation) (Name of Corporation)
until the first regular directors or trustees are may be more than fifteen (15); KNOW ALL MEN BY THESE PRESENTS:
duly elected and qualified in accordance with The undersigned incorporators, all of legal The undersigned incorporators, all of legal
this Code; (g)The names, nationalities, and residence age and a majority of whom are residents of age, have voluntarily agreed to form a (stock) (non-
8. If it be a stock corporation, the amount of addresses of persons who shall act as directors or the Philippines, have this day voluntarily stock) corporation under the laws of the Republic of
its authorized capital stock in lawful money of trustees until the first regular directors or trustees agreed to form a (stock) (non-stock) the Philippines and certify the following:
the Philippines, the number of shares into are duly elected and qualified in accordance with corporation under the laws of the Republic
which it is divided, and in case the share are this Code; of the Philippines; First: That the name of said corporation shall
par value shares, the par value of each, the AND WE HEREBY CERTIFY: be “_______________, Inc., Corporation or
names, nationalities and residences of the (h)If it be a stock corporation, the amount of its FIRST: That the name of said corporation OPC”;
original subscribers, and the amount authorized capital stock, number of shares into shall be "_____________________, INC. or
subscribed and paid by each on his which it is divided, the par value of each, names, CORPORATION";
subscription, and if some or all of the shares nationalities, and residence addresses of the
are without par value, such fact must be original subscribers, amount subscribed and paid SECOND: That the purpose or purposes for Second: That the purpose or purposes for
stated; by each on the subscription, and a statement that which such corporation is incorporated are: which such corporation is incorporated are:
9. If it be a non-stock corporation, the amount some or all of the shares are without par value, if (If there is more than one purpose, indicate (If there is more than one purpose, indicate
of its capital, the names, nationalities and applicable; primary and secondary purposes); primary and secondary purposes);
residences of the contributors and the (i)If it be a nonstock corporation, the amount of its
amount contributed by each; and capital, the names, nationalities, and residence
10. Such other matters as are not THIRD: That the principal office of the
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Corporation Code (1980) Revised Corporation Code (2019) Corporation Code (1980) Revised Corporation Code (2019)

corporation is located in the City/Municipality Third: That the principal office of the ______________________ Seventh: That the authorized capital stock
of ________________________, Province corporation is located in the City/Municipality (P___________) PESOS in lawful money of of the corporation is ______________
of _______________________, Philippines; of ______________________, Province of the Philippines, divided into __________ PESOS (P________), divided into _____
_______________________, Philippines; shares with the par value of shares with the par value of ____________
FOURTH: That the term for which said ____________________ PESOS (P_______________) per share.
corporation is to exist is _____________ Fourth: That the corporation shall have (P_____________) Pesos per share.
years from and after the date of issuance of perpetual existence or a term of (In case all the share are without par value): (In case all the shares are without par value):
the certificate of incorporation; ______________ years from the date of That the capital stock of the corporation is That the capital stock of the corporation is
issuance of the certificate of incorporation; ______________ shares without par value. __________________________ shares
FIFTH: That the names, nationalities and (In case some shares have par value and without par value.
residences of the incorporators of the Fifth: That the names, nationalities, and some are without par value): That the capital
corporation are as follows: residence addresses of the incorporators of stock of said corporation consists of (In case some shares have par value and
the corporation are as follows: _____________ shares of which some are without par value): That the capital
______________ shares are of the par stock of said corporation consists of
Name Nationality Residence value of _________________ __________________________ shares, of
________ _________ _________ Name Nationality Residence (P____________) PESOS each, and of which _______________________ shares
_________ _________ _________ which _________________ shares are have a par value of _________________
_________ _________ _________ without par value. PESOS (P____________) each, and of
_________ _________ _________ which _______________________ shares
_________ _________ _________ EIGHTH: That at least twenty five (25%) are without par value.
_________ ________ _________ per cent of the authorized capital stock
_________ _________ _________ above stated has been subscribed as Eighth: That the number of shares of the
_________ _________ _________ follows: authorized capital stock above stated has
_________ _________ _________ been subscribed as follows:
_________ _________ _________ Name of Nationality No. of Shares Amount Amount Paid
Subscribed
Subscriber Subscribed Name of Nationality No. of Shares Amount Amount Paid
Subscribed
Subscriber Subscribed
SIXTH: That the number of directors or
trustees of the corporation shall be _______; Sixth: That the number of directors or
and the names, nationalities and residences trustees of the corporation shall be
of the first directors or trustees of the _________________; and the names,
corporation are as follows: nationalities, and residence addresses of the
first directors or trustees of the corporation
Name Nationality Residence are as follows:
_________ _________ _________
Name Nationality Residence
_________ _________ _________ _________ _________ _________

_________ _________ _________ (Modify No. 8 if shares are with no par value. In
_________ _________ _________
case the corporation is nonstock, Nos. 7 and 8
_________ _________ _________ of the above articles may be modified
_________ _________ _________
accordingly, and it is sufficient if the articles
_________ _________ _________ state the amount of capital or money
_________ _________ _________
contributed or donated by specified persons,
_________ _________ _________ stating the names, nationalities, and residence
addresses of the contributors or donors and the
respective amount given by each.)
NINTH: That the above-named
SEVENTH: That the authorized capital stock
subscribers have paid at least twenty-five
of the corporation is
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(25%) percent of the total subscription as ................................................., Republic of

follows: Ninth: That _____________________ has IN WITNESS WHEREOF, we have hereunto the Philippines.
Name of Amountbeen
Subscribed
elected by the subscribers Total
as signed these Articles of Incorporation, this
Treasurer of the Corporation to act as such __________ day of ________________, 19 _______________________________________
Subscriber Paid-In
until after the successor is duly elected and ______ in the City/Municipality of ___________________ _______________
___________________ qualified in accordance with the
___________________ bylaws, that
___________________ ____________________, Province of __________________ _________________
as Treasurer, authority has been given to ________________________, Republic of
___________________ ___________________
receive in the name and for the___________________
benefit of the the Philippines. (Names and signatures of the incorporators)
___________________ corporation, all subscriptions,___________________
___________________ contributions ___________________ ___________________
or donations paid or given by the subscribers (Name and signature of Treasurer)
___________________ ___________________ ___________________ ___________________ ___________________
or 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 property for the _________
(Modify Nos. 8 and 9 if shares are with no par benefit and credit of the corporation has (Names and signatures of the incorporators)
value. In case the corporation is non-stock, been duly received. SIGNED IN THE PRESENCE OF:
Nos. 7, 8 and 9 of the above articles may be ___________________ ___________________
modified accordingly, and it is sufficient if the Tenth: That the incorporators undertake
articles state the amount of capital or money to change the name of the corporation (Notarial Acknowledgment)
contributed or donated by specified persons, immediately upon receipt of notice from
stating the names, nationalities and the Commission that another TREASURER’S AFFIDAVIT
residences of the contributors or donors and corporation, partnership or person has REPUBLIC OF THE PHILIPPINES)
the respective amount given by each.) acquired a prior right to the use of such CITY/MUNICIPALITY OF ) S.S.
name, that the name has been declared PROVINCE OF )
TENTH: That _____________________ has not distinguishable from a name already I, ____________________, being duly
been elected by the subscribers as Treasurer registered or reserved for the use of sworn, depose and say:
of the Corporation to act as such until his another corporation, or that it is contrary That I have been elected by the
successor is duly elected and qualified in to law, public morals, good customs or subscribers of the corporation as
accordance with the by-laws, and that as public policy. Treasurer thereof, to act as such until my
such Treasurer, he has been authorized to successor has been duly elected and
receive for and in the name and for the Eleventh: (Corporations which will engage in qualified in accordance with the by-laws
benefit of the corporation, all subscription (or any business or activity reserved for Filipino of the corporation, and that as such
fees) or contributions or donations paid or citizens shall provide the following): Treasurer, I hereby certify under oath that
given by the subscribers or members. at least 25% of the authorized capital
“No transfer of stock or interest which shall stock of the corporation has been
ELEVENTH: (Corporations which will engage reduce the ownership of Filipino citizens to subscribed and at least 25% of the total
in any business or activity reserved for less than the required percentage of capital subscription has been paid, and received
Filipino citizens shall provide the following): stock as provided by existing laws shall be by me, in cash or property, in the amount
"No transfer of stock or interest which shall allowed or permitted to be recorded in the of not less than P5,000.00, in accordance
reduce the ownership of Filipino citizens to proper books of the corporation, and this with the Corporation Code.
less than the required percentage of the restriction shall be indicated in all stock ____________________
capital stock as provided by existing laws certificates issued by the corporation.” (Signature of Treasurer)
shall be allowed or permitted to be recorded SUBSCRIBED AND SWORN to before me,
in the proper books of the corporation and IN WITNESS WHEREOF, we have hereunto a Notary Public, for and in the
this restriction shall be indicated in all stock signed these Articles of Incorporation, this City/Municipality
certificates issued by the corporation." ................... day of .............................., of___________________Province of
20........... in the City/Municipality of _____________________, this _______
........................................, Province of day of ___________, 19 _____; by
__________________ with Res. Cert. No.
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___________ issued at
_______________________ on Section 17. Grounds when articles of SEC. 16. Grounds When Articles of Incorporation or
____________, 19 ______ incorporation or amendment may be rejected Amendment may be Disapproved. – The
NOTARY PUBLIC or disapproved. – The Securities and Commission may disapprove the articles of
My commission expires on _________, 19 Exchange Commission may reject the incorporation or any amendment thereto if the same
_____ articles of incorporation or disapprove any is not compliant with the requirements of this
Doc. No. _________; amendment thereto if the same is not in Code: Provided, That the Commission shall give the
Page No. _________; compliance with the requirements of this incorporators, directors, trustees, or officers a
Book No. ________; Code: Provided, That the Commission shall reasonable time from receipt of the disapproval
Series of 19____ (7a) give the incorporators a reasonable time within which to modify the objectionable portions of
within which to correct or modify the the articles or amendment. The following are
objectionable portions of the articles or grounds for such disapproval:
Section 16. Amendment of Articles of SEC. 15. Amendment of Articles of Incorporation. – amendment. The following are grounds for
Incorporation. – Unless otherwise prescribed Unless otherwise prescribed by this Code or by such rejection or disapproval: (a)The articles of incorporation or any amendment
by this Code or by special law, and for special law, and for legitimate purposes, any thereto is not substantially in accordance with the
legitimate purposes, any provision or matter provision or matter stated in the articles of 1. That the articles of incorporation or any form prescribed herein;
stated in the articles of incorporation may be incorporation may be amended by a majority vote amendment thereto is not substantially in
amended by a majority vote of the board of of the board of directors or trustees and the vote or accordance with the form prescribed herein; (b)The purpose or purposes of the corporation are
directors or trustees and the vote or written written assent of the stockholders representing at patently unconstitutional, illegal, immoral or
assent of the stockholders representing at least two-thirds (2/3) of the outstanding capital 2. That the purpose or purposes of the contrary to government rules and regulations;
least two-thirds (2/3) of the outstanding stock, without prejudice to the appraisal right of corporation are patently unconstitutional,
capital stock, without prejudice to the dissenting stockholders in accordance with the illegal, immoral, or contrary to government (c)The certification concerning the amount of capital
appraisal right of dissenting stockholders in provisions of this Code. The articles of incorporation rules and regulations; stock subscribed and/or paid is false; and
accordance with the provisions of this Code, of a nonstock corporation may be amended by the
or the vote or written assent of at least two- vote or written assent of majority of the trustees and 3. That the Treasurer’s Affidavit concerning (d)The required percentage of Filipino ownership of
thirds (2/3) of the members if it be a non- at least two-thirds (2/3) of the members. the amount of capital stock subscribed and/or the capital stock under existing laws or the
stock corporation. paid is false; Constitution has not been complied with.
The original and amended articles together shall
The original and amended articles together contain all provisions required by law to be set out 4. That the percentage of ownership of the No articles of incorporation or amendment to
shall contain all provisions required by law to in the articles of incorporation. Amendments to the capital stock to be owned by citizens of the articles of incorporation of banks, banking and
be set out in the articles of incorporation. articles shall be indicated by underscoring the Philippines has not been complied with as quasi-banking institutions, preneed, insurance and
Such articles, as amended shall be indicated change or changes made, and a copy thereof duly required by existing laws or the Constitution. trust companies, NSSLAS, pawnshops, and other
by underscoring the change or changes certified under oath by the corporate secretary and financial intermediaries shall be approved by the
made, and a copy thereof duly certified under a majority of the directors or trustees, with a No articles of incorporation or amendment to Commission unless accompanied by a favorable
oath by the corporate secretary and a statement that the amendments have been duly articles of incorporation of banks, banking recommendation of the appropriate government
majority of the directors or trustees stating approved by the required vote of the stockholders and quasi-banking institutions, building and agency to the effect that such articles or
the fact that said amendment or amendments or members, shall be submitted to the Commission. loan associations, trust companies and other amendment is in accordance with law.
have been duly approved by the required financial intermediaries, insurance
vote of the stockholders or members, shall be The amendments shall take effect upon their companies, public utilities, educational
submitted to the Securities and Exchange approval by the Commission or from the date of institutions, and other corporations
Commission. filing with the said Commission if not acted upon governed by special laws shall be accepted
within six (6) months from the date of filing for a or approved by the Commission unless
The amendments shall take effect upon their cause not attributable to the corporation. accompanied by a favorable
approval by the Securities and Exchange recommendation of the appropriate
Commission or from the date of filing with the government agency to the effect that such
said Commission if not acted upon within six articles or amendment is in accordance with
(6) months from the date of filing for a cause law. (n)
not attributable to the corporation.

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Section 18. Corporate name. – No corporate SEC. 17. Corporate name. – No corporate name have corporate existence and juridical incorporate shall submit the intended corporate
name may be allowed by the Securities and shall be allowed by the Commission if it is not personality and is deemed incorporated from name to the Commission for verification. If the
Exchange Commission if the proposed distinguishable from that already reserved or the date the Securities and Exchange Commission finds that the name is
name is identical or deceptively or registered for the use of another corporation, or Commission issues a certificate of distinguishable from a name already reserved
confusingly similar to that of any existing if such name is already protected by law, or incorporation under its official seal; and or registered for the use of another corporation,
corporation or to any other name already when its use is contrary to existing law, rules thereupon the incorporators, not protected by law and not contrary to law,
protected by law or is patently deceptive, and regulations. stockholders/members and their successors rules and regulations, the name shall be
confusing or contrary to existing laws. When shall constitute a body politic and corporate reserved in favor of the incorporators. The
a change in the corporate name is approved, A name is not distinguishable even if it contains under the name stated in the articles of incorporators shall then submit their articles of
the Commission shall issue an amended one or more of the following: incorporation for the period of time incorporation and bylaws to the Commission.
certificate of incorporation under the mentioned therein, unless said period is
amended name. (n) (a) The word “corporation”, “company”, extended or the corporation is sooner If the Commission finds that the submitted
“incorporated”, “limited”, “limited liability”, or dissolved in accordance with law. (n) documents and information are fully compliant
an abbreviation of one of such words; and with the requirements of this Code, other
relevant laws, rules and regulations, the
(b) Punctuations, articles, conjunctions, Commission shall issue the certificate of
contractions, prepositions, abbreviations, incorporation.
different tenses, spacing, or number of the
same word or phrase. A private corporation organized under this Code
commences its corporate existence and
The Commission, upon determination that the juridical personality from the date the
corporate name is: (1) not distinguishable from Commission issues the certificate of
a name already reserved or registered for the incorporation under its official seal and
use of another corporation; (2) already thereupon the incorporators,
protected by law; or (3) contrary to law, rules stockholders/members and their successors
and regulations, may summarily order the shall constitute a body corporate under the
corporation to immediately cease and desist name stated in the articles of incorporation for
from using such name and require the the period of time mentioned therein, unless
corporation to register a new one. The said period is extended or the corporation is
Commission shall also cause the removal of all sooner dissolved in accordance with law.
visible signages, marks, advertisements, labels,
prints and other effects bearing such corporate
name. Upon the approval of the new corporate Section 20. De facto corporations. – The due SEC. 19. De facto Corporations. – The due
name, the Commission shall issue a certificate incorporation of any corporation claiming in incorporation of any corporation claiming in good
of incorporation under the amended name. good faith to be a corporation under this faith to be a corporation under this Code, and its
Code, and its right to exercise corporate right to exercise corporate powers, shall not be
If the corporation fails to comply with the powers, shall not be inquired into collaterally inquired into collaterally in any private suit to which
Commission’s order, the Commission may hold in any private suit to which such corporation such corporation may be a party. Such inquiry may
the corporation and its responsible directors or may be a party. Such inquiry may be made be made by the Solicitor General in a quo warranto
officers in contempt and/or hold them by the Solicitor General in a quo warranto proceeding.
administratively, civilly and/or criminally liable proceeding. (n)
under this Code and other applicable laws
and/or revoke the registration of the Section 21. Corporation by estoppel. – All SEC. 20. Corporation by Estoppel. – All persons
corporation. persons who assume to act as a corporation who assume to act as a corporation knowing it to be
knowing it to be without authority to do so without authority to do so shall be liable as general
shall be liable as general partners for all partners for all debts, liabilities and damages
Section 19. Commencement of corporate SEC. 18. Registration, Incorporation and debts, liabilities and damages incurred or incurred or arising as a result thereof: Provided,
existence. – A private corporation formed or Commencement of Corporate Existence. – A arising as a result thereof: Provided, however, That when any such ostensible
organized under this Code commences to person or group of persons desiring to however, That when any such ostensible corporation is sued on any transaction entered by it
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corporation is sued on any transaction as a corporation or on any tort committed by it as

entered by it as a corporation or on any tort such, it shall not be allowed to use its lack of Section 23. The board of directors or SEC. 22. The Board of Directors or Trustees of a
committed by it as such, it shall not be corporate personality as a defense. Anyone who trustees. – Unless otherwise provided in this Corporation; Qualification and Term. – Unless
allowed to use as a defense its lack of assumes an obligation to an ostensible corporation Code, the corporate powers of all otherwise provided in this Code, the board of
corporate personality. as such cannot resist performance thereof on the corporations formed under this Code shall be directors or trustees shall exercise the corporate
On who assumes an obligation to an ground that there was in fact no corporation. exercised, all business conducted and all powers, conduct all business, and control all
ostensible corporation as such, cannot resist property of such corporations controlled and properties of the corporation.
performance thereof on the ground that there held by the board of directors or trustees to
was in fact no corporation. (n) be elected from among the holders of stocks, Directors shall be elected for a term of one (1) year
or where there is no stock, from among the from among the holders of stocks registered in the
members of the corporation, who shall hold corporation’s books, while trustees shall be elected
Section 22. Effects on non-use of corporate SEC. 21. Effects of Non-Use of Corporate Charter office for one (1) year until their successors for a term not exceeding three (3) years from among
charter and continuous inoperation of a and Continuous Inoperation. – If a corporation does are elected and qualified. (28a) the members of the corporation. Each director and
corporation. – If a corporation does not not formally organize and commence its business Every director must own at least one (1) trustee shall hold office until the successor is
formally organize and commence the within five (5) years from the date of its share of the capital stock of the corporation elected and qualified. A director who ceases to own
transaction of its business or the construction incorporation, its certificate of incorporation of which he is a director, which share shall at least one (1) share of stock or a trustee who
of its works within two (2) years from the date shall be deemed revoked as of the day following stand in his name on the books of the ceases to be a member of the corporation shall
of its incorporation, its corporate powers the end of the five-year period. corporation. Any director who ceases to be cease to be such.
cease and the corporation shall be deemed the owner of at least one (1) share of the
dissolved. However, if a corporation has However, if a corporation has commenced its capital stock of the corporation of which he is The board of the following corporations vested
commenced the transaction of its business business but subsequently becomes inoperative for a director shall thereby cease to be a director. with public interest shall have independent
but subsequently becomes continuously a period of at least five (5) consecutive years, the Trustees of non-stock corporations must be directors constituting at least twenty percent
inoperative for a period of at least five (5) Commission may, after due notice and hearing, members thereof. A majority of the directors (20%) of such board:
years, the same shall be a ground for the place the corporation under delinquent status. or trustees of all corporations organized
suspension or revocation of its corporate under this Code must be residents of the a. Corporations covered by Section 17.2 of
franchise or certificate of incorporation. (19a) A delinquent corporation shall have a period of Philippines. Republic Act No. 8799, otherwise known as
This provision shall not apply if the failure two (2) years to resume operations and comply “The Securities Regulation Code,” namely
to organize, commence the transaction of with all requirements that the Commission shall those whose securities are registered with the
its businesses or the construction of its prescribe. Upon compliance by the corporation, Commission, corporations listed with an
works, or to continuously operate is due the Commission shall issue an order lifting the exchange or with assets of at least Fifty million
to causes beyond the control of the delinquent status. Failure to comply with the pesos (P50,000,000.00) and having two hundred
corporation as may be determined by the requirements and resume operations within the (200) or more holders of shares, with at least
Securities and Exchange Commission. period given by the Commission shall cause the one hundred (100) shares of a class of its equity
revocation of the corporation’s certificate of shares;
incorporation.
b. Banks and quasi-banks, NSSLAs,
The Commission shall give reasonable notice pawnshops, corporations engaged in money
to, and coordinate with the appropriate service business, pre-need, trust and insurance
regulatory agency prior to the suspension or companies, and other financial intermediaries;
revocation of the certificate of incorporation of and
companies under their special regulatory
jurisdiction. c. Other corporations engaged in business
vested with public interest similar to the above,
as may be determined by the Commission, after
taking into account relevant factors which are
germane to the objective and purpose of
TITLE III TITLE III requiring the election of an independent
BOARD OF DIRECTORS/TRUSTEES AND BOARD OF DIRECTORS/ TRUSTEES AND director, such as the extent of minority
OFFICERS OFFICERS ownership, type of financial products or
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securities issued or offered to investors, public principle among as many candidates as he A stockholder or member who participates
interest involved in the nature of business shall see fit: Provided, That the total number through remote communication or in absentia,
operations, and other analogous factors. of votes cast by him shall not exceed the shall be deemed present for purposes of
number of shares owned by him as shown in quorum.
An independent director is a person who, apart the books of the corporation multiplied by the
from shareholdings and fees received from the whole number of directors to be elected: The election must be by ballot if requested by any
corporation, is independent of management and Provided, however, That no delinquent stock voting stockholder or member.
free from any business or other relationship shall be voted. Unless otherwise provided in
which could, or could reasonably be perceived the articles of incorporation or in the by-laws, In stock corporations, stockholders entitled to
to materially interfere with the exercise of members of corporations which have no vote shall have the right to vote the number of
independent judgment in carrying out the capital stock may cast as many votes as shares of stock standing in their own names in
responsibilities as a director. there are trustees to be elected but may not the stock books of the corporation at the time
cast more than one vote for one candidate. fixed in the bylaws or where the bylaws are
Independent directors must be elected by the Candidates receiving the highest number of silent, at the time of the election. The said
shareholders present or entitled to vote in votes shall be declared elected. Any meeting stockholder may: (a) vote such number of
absentia during the election of directors. of the stockholders or members called for an shares for as many persons as there are
Independent directors shall be subject to rules election may adjourn from day to day or from directors to be elected; (b) cumulate said shares
and regulations governing their qualifications, time to time but not sine die or indefinitely if, and give one (1) candidate as many votes as the
disqualifications, voting requirements, duration for any reason, no election is held, or if there number of directors to be elected multiplied by
of term and term limit, maximum number of are not present or represented by proxy, at the number of the shares owned; or (c)
board memberships and other requirements the meeting, the owners of a majority of the distribute them on the same principle among as
that the Commission will prescribe to outstanding capital stock, or if there be no many candidates as may be seen fit: Provided,
strengthen their independence and align with capital stock, a majority of the members That the total number of votes cast shall not
international best practices. entitled to vote. (31a) exceed the number of shares owned by the
stockholders as shown in the books of the
corporation multiplied by the whole number of
Section 24. Election of directors or trustees. SEC. 23. Election of Directors or Trustees. – directors to be elected: Provided, however, That
– At all elections of directors or trustees, Except when the exclusive right is reserved for no delinquent stock shall be voted. Unless
there must be present, either in person or by holders of founders’ shares under Section 7 of otherwise provided in the articles of
representative authorized to act by written this Code, each stockholder or member shall incorporation or in the bylaws, members of non-
proxy, the owners of a majority of the have the right to nominate any director or stock corporations may cast as many votes as
outstanding capital stock, or if there be no trustee who possesses all of the qualifications there are trustees to be elected but may not cast
capital stock, a majority of the members and none of the disqualifications set forth in this more than one (1) vote for one (1) candidate.
entitled to vote. The election must be by Code. Nominees for directors or trustees receiving the
ballot if requested by any voting stockholder highest number of votes shall be declared
or member. In stock corporations, every At all elections of directors or trustees, there must elected.
stockholder entitled to vote shall have the be present, either in person or through a
right to vote in person or by proxy the number representative authorized to act by written proxy, If no election is held, or the owners of majority
of shares of stock standing, at the time fixed the owners of majority of the outstanding capital of the outstanding capital stock or majority of
in the by-laws, in his own name on the stock stock, or if there be no capital stock, a majority of the members entitled to vote are not present in
books of the corporation, or where the by- the members entitled to vote. When so authorized person, by proxy, or through remote
laws are silent, at the time of the election; and in the bylaws or by a majority of the board of communication or not voting in absentia at the
said stockholder may vote such number of directors, the stockholders or members may also meeting, such meeting may be adjourned and
shares for as many persons as there are vote through remote communication or in absentia: the corporation shall proceed in accordance
directors to be elected or he may cumulate Provided, That the right to vote through such modes with Section 25 of this Code.
said shares and give one candidate as many may be exercised in corporations vested with public
votes as the number of directors to be elected interest, notwithstanding the absence of a provision The directors or trustees elected shall perform
multiplied by the number of his shares shall in the by-laws of such corporations. their duties as prescribed by law, rules of good
equal, or he may distribute them on the same
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corporate governance, and by-laws of the himself, shall immediately report such fact to scheduled election. The report shall specify a
corporation. the Securities and Exchange Commission. new date for the election, which shall not be
(n) later than sixty (60) days from the scheduled
Section 25. Corporate officers, quorum. – SEC. 24. Corporate Officers. – Immediately after date.
Immediately after their election, the directors their election, the directors of a corporation must
of a corporation must formally organize by formally organize and elect: (a) a president, who If no new date has been designated, or if the
the election of a president, who shall be a must be a director; (b) a treasurer, who must be a rescheduled election is likewise not held, the
director, a treasurer who may or may not be resident; (c) a secretary, who must be a citizen and Commission may, upon the application of a
a director, a secretary who shall be a resident resident of the Philippines; and (d) such other stockholder, member, director or trustee, and
and citizen of the Philippines, and such other officers as may be provided in the bylaws. If the after verification of the unjustified non-holding
officers as may be provided for in the by- corporation is vested with public interest, the board of the election, summarily order that an election
laws. Any two (2) or more positions may be shall also elect a compliance officer. The same be held. The Commission shall have the power
held concurrently by the same person, person may hold two (2) or more positions to issue such orders as may be appropriate,
except that no one shall act as president and concurrently, except that no one shall act as including orders directing the issuance of a
secretary or as president and treasurer at the president and secretary or as president and notice stating the time and place of the election,
same time. treasurer at the same time, unless otherwise designated presiding officer, and the record
The directors or trustees and officers to allowed in this Code. date or dates for the determination of
be elected shall perform the duties stockholders or members entitled to vote.
enjoined on them by law and the by-laws The officers shall manage the corporation and
of the corporation. Unless the articles of perform such duties as may be provided in the Notwithstanding any provision of the articles of
incorporation or the by-laws provide for a bylaws and/or as resolved by the board of directors. incorporation or bylaws to the contrary, the
greater majority, a majority of the number shares of stock or membership represented at
of directors or trustees as fixed in the such meeting and entitled to vote shall
articles of incorporation shall constitute a constitute a quorum for purposes of conducting
quorum for the transaction of corporate an election under this section.
business, and every decision of at least a
majority of the directors or trustees Should a director, trustee or officer die, resign
present at a meeting at which there is a or in any manner cease to hold office, the
quorum shall be valid as a corporate act, secretary, or the director, trustee or officer of
except for the election of officers which the corporation, or in case of death, the officer’s
shall require the vote of a majority of all heirs shall, within seven (7) days from
the members of the board. knowledge thereof, report in writing such fact to
Directors or trustees cannot attend or the Commission.
vote by proxy at board meetings. (33a)

Section 27. Disqualification of directors, SEC. 26. Disqualification of Directors, Trustees or

Section 26. Report of election of directors, SEC. 25. Report of Election of Directors, Trustees trustees or officers. – No person convicted by Officers. – A person shall be disqualified from
trustees and officers. – Within thirty (30) days and Officers, Non-holding of Election and Cessation final judgment of an offense punishable by being a director, trustee, or officer of any
after the election of the directors, trustees from Office. – Within thirty (30) days after the imprisonment for a period exceeding six (6) corporation if, within five (5) years prior to the
and officers of the corporation, the secretary, election of the directors, trustees and officers of the years, or a violation of this Code committed election or appointment as such, the person
or any other officer of the corporation, shall corporation, the secretary, or any other officer of the within five (5) years prior to the date of his was:
submit to the Securities and Exchange corporation, shall submit to the Commission, the election or appointment, shall qualify as a
Commission, the names, nationalities and names, nationalities, shareholdings, and residence director, trustee or officer of any corporation. (a) Convicted by final judgment:
residences of the directors, trustees, and addresses of the directors, trustees, and officers (n)
officers elected. Should a director, trustee or elected. (1) Of an offense punishable by imprisonment
officer die, resign or in any manner cease to for a period exceeding six (6) years;
hold office, his heirs in case of his death, the The non-holding of elections and the reasons
secretary, or any other officer of the therefor shall be reported to the Commission (2) For violating this Code; and
corporation, or the director, trustee or officer within thirty (30) days from the date of the
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(3) For violating Republic Act No. 8799, addressed directly to the stockholders or with or without cause: Provided, That removal
otherwise known as “The Securities Regulation members by any stockholder or member of without cause may not be used to deprive minority
Code”; the corporation signing the demand. Notice stockholders or members of the right of
of the time and place of such meeting, as well representation to which they may be entitled under
(b) Found administratively liable for any offense as of the intention to propose such removal, Section 23 of this Code.
involving fraud acts; and must be given by publication or by written
notice prescribed in this Code. Removal may The Commission shall, motu proprio or upon
(c) By a foreign court or equivalent foreign be with or without cause: Provided, That verified complaint, and after due notice and
regulatory authority for acts, violations or removal without cause may not be used to hearing, order the removal of a director or
misconduct similar to those enumerated in deprive minority stockholders or members of trustee elected despite the disqualification, or
paragraphs (a) and (b) above. the right of representation to which they may whose disqualification arose or is discovered
be entitled under Section 24 of this Code. (n) subsequent to an election. The removal of a
The foregoing is without prejudice to disqualified director shall be without prejudice
qualifications or other disqualifications, which to other sanctions that the Commission may
the Commission, the primary regulatory agency, impose on the board of directors or trustees
or the Philippine Competition Commission may who, with knowledge of the disqualification,
impose in its promotion of good corporate failed to remove such director or trustee.
governance or as a sanction in its
administrative proceedings.
Section 29. Vacancies in the office of director SEC. 28. Vacancies in the Office of Director or
or trustee. – Any vacancy occurring in the Trustee; Emergency Board. – Any vacancy
Section 28. Removal of directors or trustees. SEC. 27. Removal of Directors or Trustees. – Any board of directors or trustees other than by occurring in the board of directors or trustees other
– Any director or trustee of a corporation may director or trustee of a corporation may be removed removal by the stockholders or members or than by removal or by expiration of term, may be
be removed from office by a vote of the from office by a vote of the stockholders holding or by expiration of term, may be filled by the filled by the vote of at least a majority of the
stockholders holding or representing at least representing at least two-thirds (2/3) of the vote of at least a majority of the remaining remaining directors or trustees, if still constituting a
two-thirds (2/3) of the outstanding capital outstanding capital stock, or in a nonstock directors or trustees, if still constituting a quorum; otherwise, said vacancies must be filled by
stock, or if the corporation be a non-stock corporation, by a vote of at least two-thirds (2/3) of quorum; otherwise, said vacancies must be the stockholders or members in a regular or special
corporation, by a vote of at least two-thirds the members entitled to vote: Provided, That such filled by the stockholders in a regular or meeting called for that purpose.
(2/3) of the members entitled to vote: removal shall take place either at a regular meeting special meeting called for that purpose. A
Provided, That such removal shall take place of the corporation or at a special meeting called for director or trustee so elected to fill a vacancy When the vacancy is due to term expiration, the
either at a regular meeting of the corporation the purpose, and in either case, after previous shall be elected only or the unexpired term of election shall be held no later than the day of
or at a special meeting called for the purpose, notice to stockholders or members of the his predecessor in office. such expiration at a meeting called for that
and in either case, after previous notice to corporation of the intention to propose such removal Any directorship or trusteeship to be purpose. When the vacancy arises as a result
stockholders or members of the corporation at the meeting. A special meeting of the filled by reason of an increase in the number of removal by the stockholders or members, the
of the intention to propose such removal at stockholders or members for the purpose of of directors or trustees shall be filled only by election may be held on the same day of the
the meeting. A special meeting of the removing any director or trustee must be called by an election at a regular or at a special meeting authorizing the removal and this fact
stockholders or members of a corporation for the secretary on order of the president, or upon meeting of stockholders or members duly must be so stated in the agenda and notice of
the purpose of removal of directors or written demand of the stockholders representing or called for the purpose, or in the same said meeting. In all other cases, the election
trustees, or any of them, must be called by holding at least a majority of the outstanding capital meeting authorizing the increase of directors must be held no later than forty-five (45) days
the secretary on order of the president or on stock, or a majority of the members entitled to vote. or trustees if so stated in the notice of the from the time the vacancy arose. A director or
the written demand of the stockholders If there is no secretary, or if the secretary, despite meeting. (n) trustee elected to fill a vacancy shall be referred
representing or holding at least a majority of demand, fails or refuses to call the special meeting to as replacement director or trustee and shall
the outstanding capital stock, or, if it be a or to give notice thereof, the stockholder or member serve only for the unexpired term of the
non-stock corporation, on the written demand of the corporation signing the demand may call for predecessor in office.
of a majority of the members entitled to vote. the meeting by directly addressing the stockholders
Should the secretary fail or refuse to call the or members. Notice of the time and place of such However, when the vacancy prevents the
special meeting upon such demand or fail or meeting, as well as of the intention to propose such remaining directors from constituting a quorum
refuse to give the notice, or if there is no removal, must be given by publication or by written and emergency action is required to prevent
secretary, the call for the meeting may be notice prescribed in this Code. Removal may be grave, substantial, and irreparable loss or
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damage to the corporation, the vacancy may be Corporations vested with public interest shall
temporarily filled from among the officers of the submit to their shareholders and the
corporation by unanimous vote of the remaining Commission, an annual report of the total
directors or trustees. The action by the compensation of each of their directors or
designated director or trustee shall be limited to trustees.
the emergency action necessary, and the term
shall cease within a reasonable time from the
termination of the emergency or upon election Section 31. Liability of directors, trustees or SEC. 30. Liability of Directors, Trustees or Officers.
of the replacement director or trustee, officers. - Directors or trustees who willfully – Directors or trustees who willfully and knowingly
whichever comes earlier. The corporation must and knowingly vote for or assent to patently vote for or assent to patently unlawful acts of the
notify the Commission within three (3) days unlawful acts of the corporation or who are corporation or who are guilty of gross negligence or
from the creation of the emergency board, guilty of gross negligence or bad faith in bad faith in directing the affairs of the corporation or
stating therein the reason for its creation. directing the affairs of the corporation or acquire any personal or pecuniary interest in conflict
acquire any personal or pecuniary interest in with their duty as such directors or trustees shall be
Any directorship or trusteeship to be filled by conflict with their duty as such directors or liable jointly and severally for all damages resulting
reason of an increase in the number of directors trustees shall be liable jointly and severally therefrom suffered by the corporation, its
or trustees shall be filled only by an election at for all damages resulting therefrom suffered stockholders or members and other persons.
a regular or at a special meeting of stockholders by the corporation, its stockholders or
or members duly called for the purpose, or in members and other persons.
the same meeting authorizing the increase of
directors or trustees if so stated in the notice of When a director, trustee or officer A Director, Trustee, or Officer shall not attempt to
the meeting. attempts to acquire or acquire, in violation of acquire, or acquire any interest adverse to the
his duty, any interest adverse to the corporation in respect of any matter which has been
In all elections to fill vacancies under this corporation in respect of any matter which reposed in them in confidence, and upon which,
section, the procedure set forth in Sections 23 has been reposed in him in confidence, as to equity imposes a disability upon themselves to deal
and 25 of this Code shall apply. which equity imposes a disability upon him to in their own behalf, otherwise the said director,
deal in his own behalf, he shall be liable as a trustee, or officer shall be liable as a trustee for the
trustee for the corporation and must account corporation and must account for the profits which
Section 30. Compensation of directors. – In SEC. 29. Compensation of Directors or Trustees. for the profits which otherwise would have otherwise would have accrued to the corporation.
the absence of any provision in the by-laws – In the absence of any provision in the by-laws accrued to the corporation. (n)
fixing their compensation, the directors shall fixing their compensation, the directors or trustees
not receive any compensation, as such shall not receive any compensation in their capacity
directors, except for reasonable per diems: as such, except for reasonable per diems: Provided Section 32. Dealings of directors, trustees or SEC. 31. Dealings of Directors, Trustees or Officers
Provided, however, That any such however, That the stockholders representing at officers with the corporation. – A contract of with the Corporation. – A contract of the corporation
compensation other than per diems may be least a majority of the outstanding capital stock or the corporation with one or more of its with (1) one or more of its directors, trustees,
granted to directors by the vote of the majority of the members may grant directors or directors or trustees or officers is voidable, at officers or their spouses and relatives within the
stockholders representing at least a majority trustees with compensation and approve the the option of such corporation, unless all the fourth civil degree of consanguinity or affinity is
of the outstanding capital stock at a regular amount thereof at a regular or special meeting. following conditions are present: voidable, at the option of such corporation, unless
or special stockholders’ meeting. In no case 1. That the presence of such director or all the following conditions are present:
shall the total yearly compensation of In no case shall the total yearly compensation of trustee in the board meeting in which the
directors, as such directors, exceed ten directors exceed ten (10%) percent of the net contract was approved was not necessary to (a) The presence of such director or trustee in the
(10%) percent of the net income before income before income tax of the corporation during constitute a quorum for such meeting; board meeting in which the contract was approved
income tax of the corporation during the the preceding year. 2. That the vote of such director or trustee was not necessary to constitute a quorum for such
preceding year. (n) was not necessary for the approval of the meeting;
Directors or trustees shall not participate in the contract;
determination of their own per diems or 3. That the contract is fair and reasonable (b) The vote of such director or trustee was not
compensation. under the circumstances; and necessary for the approval of the contract;
4. That in case of an officer, the contract has
been previously authorized by the board of
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directors. (c) The contract is fair and reasonable under the Section 34. Disloyalty of a director. – SEC. 33. Disloyalty of a Director. – Where a
Where any of the first two conditions set forth circumstances; Where a director, by virtue of his office, director, by virtue of such office, acquires a
in the preceding paragraph is absent, in the acquires for himself a business opportunity business opportunity which should belong to the
case of a contract with a director or trustee, (d) In case of corporations vested with public which should belong to the corporation, corporation, thereby obtaining profits to the
such contract may be ratified by the vote of interest, material contracts are approved by at thereby obtaining profits to the prejudice of prejudice of such corporation, the director must
the stockholders representing at least two- least two-thirds (2/3) of the entire membership such corporation, he must account to the account for and refund to the latter all such profits,
thirds (2/3) of the outstanding capital stock or of the board, with at least a majority of the latter for all such profits by refunding the unless the act has been ratified by a vote of the
of at least two-thirds (2/3) of the members in independent directors voting to approve the same, unless his act has been ratified by a stockholders owning or representing at least two-
a meeting called for the purpose: Provided, material contract; and vote of the stockholders owning or thirds (2/3) of the outstanding capital stock. This
That full disclosure of the adverse interest of representing at least two-thirds (2/3) of the provision shall be applicable, notwithstanding the
the directors or trustees involved is made at (e) In case of an officer, the contract has been outstanding capital stock. This provision shall fact that the director risked one’s own funds in the
such meeting: Provided, however, That the previously authorized by the board of directors. be applicable, notwithstanding the fact that venture.
contract is fair and reasonable under the the director risked his own funds in the
circumstances. (n) Where any of the first three (3) conditions set venture. (n)
forth in the preceding paragraph is absent, in
the case of a contract with a director or trustee, Section 35. Executive committee. – The by- SEC. 34. Executive, Management, and Other
such contract may be ratified by the vote of the laws of a corporation may create an Special Committees. – If the bylaws so provide, the
stockholders representing at least two-thirds executive committee, composed of not less board may create an executive committee
(2/3) of the outstanding capital stock or of at than three members of the board, to be composed of at least three (3) directors. Said
least two-thirds (2/3) of the members in a appointed by the board. Said committee may committee may act, by majority vote of all its
meeting called for the purpose: Provided, That act, by majority vote of all its members, on members, on such specific matters within the
full disclosure of the adverse interest of the such specific matters within the competence competence of the board, as may be delegated to it
directors or trustees involved is made at such of the board, as may be delegated to it in the in the bylaws or by majority vote of the board,
meeting and the contract is fair and reasonable by-laws or on a majority vote of the board, except with respect to the: (a) approval of any action
under the circumstances. except with respect to: (1) approval of any for which shareholders’ approval is also required;
action for which shareholders’ approval is (b) filling of vacancies in the board; (c) amendment
also required; (2) the filing of vacancies in the or repeal of bylaws or the adoption of new bylaws;
Section 33. Contracts between corporations SEC. 32. Contracts between Corporations with board; (3) the amendment or repeal of by- (d) amendment or repeal of any resolution of the
with interlocking directors. – Except in cases Interlocking Directors. – Except in cases of fraud, laws or the adoption of new by-laws; (4) the board which by its express terms is not amendable
of fraud, and provided the contract is fair and and provided the contract is fair and reasonable amendment or repeal of any resolution of the or repealable; and (e) distribution of cash dividends
reasonable under the circumstances, a under the circumstances, a contract between two board which by its express terms is not so to the shareholders.
contract between two or more corporations (2) or more corporations having interlocking amendable or repealable; and (5) a
having interlocking directors shall not be directors shall not be invalidated on that ground distribution of cash dividends to the The board of directors may create special
invalidated on that ground alone: Provided, alone: Provided, That if the interest of the shareholders. committees of temporary or permanent nature
That if the interest of the interlocking director interlocking director in one (1) corporation is and to determine the members’ term,
in one corporation is substantial and his substantial and the interest in the other corporation composition, compensation, powers, and
interest in the other corporation or or corporations is merely nominal, the contract shall responsibilities.
corporations is merely nominal, he shall be be subject to the provisions of the preceding section
subject to the provisions of the preceding insofar as the latter corporation or corporations are TITLE IV TITLE IV
section insofar as the latter corporation or concerned. POWERS OF CORPORATIONS POWERS OF CORPORATIONS
corporations are concerned.
Stockholdings exceeding twenty (20%) percent of Section 36. Corporate powers and capacity. SEC. 35. Corporate Powers and Capacity. – Every
Stockholdings exceeding twenty (20%) the outstanding capital stock shall be considered – Every corporation incorporated under this corporation incorporated under this Code has the
percent of the outstanding capital stock shall substantial for purposes of interlocking directors. Code has the power and capacity: power and capacity:
be considered substantial for purposes of 1. To sue and be sued in its corporate name;
interlocking directors. (n) 2. Of succession by its corporate name for (a)To sue and be sued in its corporate name;
the period of time stated in the articles of
incorporation and the certificate of (b)To have perpetual existence unless the
incorporation; certificate of incorporation provides otherwise;
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3. To adopt and use a corporate seal; (c)To adopt and use a corporate seal; trustees and ratified at a meeting by the meeting by the stockholders or members
4. To amend its articles of incorporation in stockholders representing at least two-thirds representing at least two-thirds (2/3) of the
accordance with the provisions of this Code; (d)To amend its articles of incorporation in (2/3) of the outstanding capital stock or by at outstanding capital stock or of its members.
5. To adopt by-laws, not contrary to law, accordance with the provisions of this Code; least two-thirds (2/3) of the members in case Written notice of the proposed action and the time
morals, or public policy, and to amend or of non-stock corporations. Written notice of and place of the meeting shall be sent to
repeal the same in accordance with this (e)To adopt bylaws, not contrary to law, morals or the proposed action and of the time and place stockholders or members at their respective place
Code; public policy, and to amend or repeal the same in of the meeting shall be addressed to each of residence as shown in the books of the
6. In case of stock corporations, to issue or accordance with this Code; stockholder or member at his place of corporation, and must either be deposited to the
sell stocks to subscribers and to sell stocks residence as shown on the books of the addressee in the post office with postage prepaid,
to subscribers and to sell treasury stocks in (f)In case of stock corporations, to issue or sell corporation and deposited to the addressee served personally, or when allowed in the by-laws
accordance with the provisions of this Code; stocks to subscribers and to sell treasury stocks in in the post office with postage prepaid, or or done with the consent of the stockholder, sent
and to admit members to the corporation if it accordance with the provisions of this Code; and to served personally: Provided, That in case of electronically in accordance with the rules and
be a non-stock corporation; admit members to the corporation if it be a nonstock extension of corporate term, any dissenting regulations of the Commission on the use of
7. To purchase, receive, take or grant, hold, corporation; stockholder may exercise his appraisal right electronic data messages. In case of extension of
convey, sell, lease, pledge, mortgage and under the conditions provided in this code. (n) corporate term, a dissenting stockholder may
otherwise deal with such real and personal (g)To purchase, receive, take or grant, hold, exercise the right of appraisal under the conditions
property, including securities and bonds of convey, sell, lease, pledge, mortgage, and provided in this Code.
other corporations, as the transaction of the otherwise deal with such real and personal
lawful business of the corporation may property, including securities and bonds of other
reasonably and necessarily require, subject corporations, as the transaction of the lawful Section 38. Power to increase or decrease SEC. 37. Power to Increase or Decrease Capital
to the limitations prescribed by law and the business of the corporation may reasonably and capital stock; incur, create or increase Stock; Incur, Create or Increase Bonded
Constitution; necessarily require, subject to the limitations bonded indebtedness. – No corporation shall Indebtedness. – No corporation shall increase or
8. To enter into merger or consolidation with prescribed by law and the Constitution; increase or decrease its capital stock or decrease its capital stock or incur, create or
other corporations as provided in this Code; incur, create or increase any bonded increase any bonded indebtedness unless
9. To make reasonable donations, including (h)To enter into a partnership, joint venture, indebtedness unless approved by a majority approved by a majority vote of the board of directors
those for the public welfare or for hospital, merger, consolidation, or any other commercial vote of the board of directors and, at a and by two-thirds (2/3) of the outstanding capital
charitable, cultural, scientific, civic, or similar agreement with natural and juridical persons; stockholder’s meeting duly called for the stock at a stockholders’ meeting duly called for the
purposes: Provided, That no corporation, purpose, two-thirds (2/3) of the outstanding purpose. Written notice of the time and place of the
domestic or foreign, shall give donations in (i)To make reasonable donations, including those capital stock shall favor the increase or stockholders’ meeting and the purpose for said
aid of any political party or candidate or for for the public welfare or for hospital, charitable, diminution of the capital stock, or the meeting must be sent to the stockholders at their
purposes of partisan political activity; cultural, scientific, civic, or similar purposes: incurring, creating or increasing of any places of residence as shown in the books of the
10. To establish pension, retirement, and Provided, That no foreign corporation shall give bonded indebtedness. Written notice of the corporation and served on the stockholders
other plans for the benefit of its directors, donations in aid of any political party or candidate proposed increase or diminution of the personally, or through electronic means recognized
trustees, officers and employees; and or for purposes of partisan political activity; capital stock or of the incurring, creating, or in the corporation’s bylaws and/or the
11. To exercise such other powers as may be increasing of any bonded indebtedness and Commission’s rules as a valid mode for service of
essential or necessary to carry out its (j)To establish pension, retirement, and other plans of the time and place of the stockholder’s notices.
purpose or purposes as stated in the articles for the benefit of its directors, trustees, officers, and meeting at which the proposed increase or
of incorporation. (13a) employees; and diminution of the capital stock or the incurring A certificate must be signed by a majority of the
or increasing of any bonded indebtedness is directors of the corporation and countersigned by
(k)To exercise such other powers as may be to be considered, must be addressed to each the chairperson and secretary of the stockholders’
essential or necessary to carry out its purpose or stockholder at his place of residence as meeting, setting forth:
purposes as stated in the articles of incorporation. shown on the books of the corporation and
deposited to the addressee in the post office (a)That the requirements of this section have been
with postage prepaid, or served personally. complied with;
Section 37. Power to extend or shorten SEC. 36. Power to Extend or Shorten Corporate A certificate in duplicate must be signed by a
corporate term. – A private corporation may Term. – A private corporation may extend or majority of the directors of the corporation (b)The amount of the increase or decrease of the
extend or shorten its term as stated in the shorten its term as stated in the articles of and countersigned by the chairman and the capital stock;
articles of incorporation when approved by a incorporation when approved by a majority vote of secretary of the stockholders’ meeting,
majority vote of the board of directors or the board of directors or trustees, and ratified at a setting forth:
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(1) That the requirements of this section have (c)In case of an increase of the capital stock, the lawfully holding office at the time of the filing of the increase in capital stock has been
been complied with; amount of capital stock or number of shares of no- of the certificate, showing that at least twenty- subscribed and that at least twenty-five percent
(2) The amount of the increase or diminution par stock thereof actually subscribed, the names, five (25%) percent of such increased capital (25%) of the amount subscribed has been paid
of the capital stock; nationalities and addresses of the persons stock has been subscribed and that at least in actual cash to the corporation or that
(3) If an increase of the capital stock, the subscribing, the amount of capital stock or number twenty-five (25%) percent of the amount property, the valuation of which is equal to
amount of capital stock or number of shares of no-par stock subscribed by each, and the amount subscribed has been paid either in actual twenty-five percent (25%) of the subscription,
of no-par stock thereof actually subscribed, paid by each on the subscription in cash or property, cash to the corporation or that there has been has been transferred to the corporation:
the names, nationalities and residences of or the amount of capital stock or number of shares transferred to the corporation property the Provided further, That no decrease in capital
the persons subscribing, the amount of of no-par stock allotted to each stockholder if such valuation of which is equal to twenty-five stock shall be approved by the Commission if
capital stock or number of no-par stock increase is for the purpose of making effective stock (25%) percent of the subscription: Provided, its effect shall prejudice the rights of corporate
subscribed by each, and the amount paid by dividend therefor authorized; further, That no decrease of the capital stock creditors.
each on his subscription in cash or property, shall be approved by the Commission if its
or the amount of capital stock or number of (d)Any bonded indebtedness to be incurred, effect shall prejudice the rights of corporate Nonstock corporations may incur, create or
shares of no-par stock allotted to each stock- created or increased; creditors. increase bonded indebtedness when approved by a
holder if such increase is for the purpose of Non-stock corporations may incur or create majority of the board of trustees and of at least two-
making effective stock dividend therefor (e)The amount of stock represented at the meeting; bonded indebtedness, or increase the same, thirds (2/3) of the members in a meeting duly called
authorized; and with the approval by a majority vote of the for the purpose.
(4) Any bonded indebtedness to be incurred, board of trustees and of at least two-thirds
created or increased; (f)The vote authorizing the increase or decrease of (2/3) of the members in a meeting duly called Bonds issued by a corporation shall be registered
(5) The actual indebtedness of the the capital stock, or the incurring, creating or for the purpose. with the Commission, which shall have the authority
corporation on the day of the meeting; increasing of any bonded indebtedness. Bonds issued by a corporation shall be to determine the sufficiency of the terms thereof.
(6) The amount of stock represented at the registered with the Securities and Exchange
meeting; and Any increase or decrease in the capital stock or the Commission, which shall have the authority
(7) The vote authorizing the increase or incurring, creating or increasing of any bonded to determine the sufficiency of the terms
diminution of the capital stock, or the indebtedness shall require prior approval of the thereof. (17a)
incurring, creating or increasing of any Commission, and where appropriate, of the
bonded indebtedness. Philippine Competition Commission. The Section 39. Power to deny pre-emptive right. SEC. 38. Power to Deny Preemptive Right. – All
Any increase or decrease in the capital stock application with the Commission shall be made – All stockholders of a stock corporation shall stockholders of a stock corporation shall enjoy pre-
or the incurring, creating or increasing of any within six (6) months from the date of approval enjoy pre-emptive right to subscribe to all emptive right to subscribe to all issues or disposition
bonded indebtedness shall require prior of the board of directors and stockholders, issues or disposition of shares of any class, of shares of any class, in proportion to their
approval of the Securities and Exchange which period may be extended for justifiable in proportion to their respective respective shareholdings, unless such right is
Commission. reasons. shareholdings, unless such right is denied by denied by the articles of incorporation or an
One of the duplicate certificates shall be kept the articles of incorporation or an amendment amendment thereto: Provided, That such pre-
on file in the office of the corporation and the Copies of the certificate shall be kept on file in thereto: Provided, That such pre-emptive emptive right shall not extend to shares issued in
other shall be filed with the Securities and the office of the corporation and filed with the right shall not extend to shares to be issued compliance with laws requiring stock offerings or
Exchange Commission and attached to1 the Commission and attached to the original in compliance with laws requiring stock minimum stock ownership by the public; or to
original articles of incorporation. From 8and articles of incorporation. After approval by the offerings or minimum stock ownership by the shares issued in good faith with the approval of the
after approval by the Securities and Commission and the issuance by the public; or to shares to be issued in good faith stockholders representing two-thirds (2/3) of the
Exchange Commission and the issuance by Commission of its certificate of filing, the capital with the approval of the stockholders outstanding capital stock, in exchange for property
the Commission of its certificate of filing, the stock shall be deemed increased or decreased representing two-thirds (2/3) of the needed for corporate purposes or in payment of a
capital stock shall stand increased or and the incurring, creating or increasing of any outstanding capital stock, in exchange for previously contracted debt.
decreased and the incurring, creating or bonded indebtedness authorized, as the property needed for corporate purposes or in
increasing of any bonded indebtedness certificate of filing may declare: Provided, That payment of a previously contracted debt.
authorized, as the certificate of filing may the Commission shall not accept for filing any
declare: Provided, That the Securities and certificate of increase of capital stock unless Section 40. Sale or other disposition of SEC. 39. Sale or Other Disposition of Assets. –
Exchange Commission shall not accept for accompanied by a sworn statement of the assets. – Subject to the provisions of existing Subject to the provisions of Republic Act No.
filing any certificate of increase of capital treasurer of the corporation lawfully holding laws on illegal combinations and monopolies, 10667, otherwise known as “Philippine
stock unless accompanied by the sworn office at the time of the filing of the certificate, a corporation may, by a majority vote of its Competition Act”, and other related laws, a
statement of the treasurer of the corporation showing that at least twenty-five percent (25%) board of directors or trustees, sell, lease, corporation may, by a majority vote of its board of
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Corporation Code (1980) Revised Corporation Code (2019) Corporation Code (1980) Revised Corporation Code (2019)

exchange, mortgage, pledge or otherwise directors or trustees, sell, lease, exchange, such property and assets be appropriated for After such authorization or approval by the
dispose of all or substantially all of its mortgage, pledge, or otherwise dispose of its the conduct of its remaining business. stockholders or members, the board of
property and assets, including its goodwill, property and assets, upon such terms and In non-stock corporations where there directors or trustees may, nevertheless, in its
upon such terms and conditions and for such conditions and for such consideration, which may are no members with voting rights, the vote discretion, abandon such sale, lease, exchange,
consideration, which may be money, stocks, be money, stocks, bonds, or other instruments for of at least a majority of the trustees in office mortgage, pledge, or other disposition of
bonds or other instruments for the payment the payment of money or other property or will be sufficient authorization for the property and assets, subject to the rights of
of money or other property or consideration, consideration, as its board of directors or trustees corporation to enter into any transaction third parties under any contract relating thereto,
as its board of directors or trustees may may deem expedient. authorized by this section. without further action or approval by the
deem expedient, when authorized by the stockholders or members.
vote of the stockholders representing at least A sale of all or substantially all of the
two-thirds (2/3) of the outstanding capital corporation’s properties and assets, including Nothing in this section is intended to restrict the
stock, or in case of non-stock corporation, by its goodwill must be authorized by the vote of power of any corporation, without the
the vote of at least to two-thirds (2/3) of the the stockholders representing at least two- authorization by the stockholders or members,
members, in a stockholder’s or member’s thirds (2/3) of the outstanding capital stock, or to sell, lease, exchange, mortgage, pledge, or
meeting duly called for the purpose. Written at least two-thirds (2/3) of the members, in a otherwise dispose of any of its property and
notice of the proposed action and of the time stockholders’ or members’ meeting duly called assets if the same is necessary in the usual and
and place of the meeting shall be addressed for the purpose. regular course of business of the corporation or
to each stockholder or member at his place if the proceeds of the sale or other disposition
of residence as shown on the books of the In nonstock corporations where there are no of such property and assets shall be
corporation and deposited to the addressee members with voting rights, the vote of at least appropriated for the conduct of its remaining
in the post office with postage prepaid, or a majority of the trustees in office will be business.
served personally: Provided, That any sufficient authorization for the corporation to
dissenting stockholder may exercise his enter into any transaction authorized by this Section 41. Power to acquire own shares. – SEC. 40. Power to Acquire Own Shares. –
appraisal right under the conditions provided section. A stock corporation shall have the power to Provided that the corporation has unrestricted
in this Code. purchase or acquire its own shares for a retained earnings in its books to cover the
A sale or other disposition shall be deemed The determination of whether or not the sale legitimate corporate purpose or purposes, shares to be purchased or acquired, a stock
to cover substantially all the corporate involves all or substantially all of the including but not limited to the following corporation shall have the power to purchase or
property and assets if thereby the corporation corporation’s properties and assets must be cases: Provided, That the corporation has acquire its own shares for a legitimate corporate
would be rendered incapable of continuing computed based on its net asset value, as unrestricted retained earnings in its books to purpose or purposes, including the following
the business or accomplishing the purpose shown in its latest financial statements. A sale cover the shares to be purchased or cases:
for which it was incorporated. or other disposition shall be deemed to cover acquired:
After such authorization or approval by the substantially all the corporate property and 1. To eliminate fractional shares arising out (a)To eliminate fractional shares arising out of stock
stockholders or members, the board of assets if thereby the corporation would be of stock dividends; dividends;
directors or trustees may, nevertheless, in its rendered incapable of continuing the business 2. To collect or compromise an indebtedness
discretion, abandon such sale, lease, or accomplishing the purpose for which it was to the corporation, arising out of unpaid (b)To collect or compromise an indebtedness to the
exchange, mortgage, pledge or other incorporated. subscription, in a delinquency sale, and to corporation, arising out of unpaid subscription, in a
disposition of property and assets, subject to purchase delinquent shares sold during said delinquency sale, and to purchase delinquent
the rights of third parties under any contract Written notice of the proposed action and of the sale; and shares sold during said sale; and
relating thereto, without further action or time and place for the meeting shall be 3. To pay dissenting or withdrawing
approval by the stockholders or members. addressed to stockholders or members at their stockholders entitled to payment for their (c)To pay dissenting or withdrawing stockholders
Nothing in this section is intended to restrict places of residence as shown in the books of shares under the provisions of this Code. (a) entitled to payment for their shares under the
the power of any corporation, without the the corporation and deposited to the addressee provisions of this Code.
authorization by the stockholders or in the post office with postage prepaid, served
members, to sell, lease, exchange, personally, or when allowed by the by-laws or Section 42. Power to invest corporate funds SEC. 41. Power to Invest Corporate Funds in
mortgage, pledge or otherwise dispose of done with the consent of the stockholder, sent in another corporation or business or for any Another Corporation or Business or for Any Other
any of its property and assets if the same is electronically: Provided, That any dissenting other purpose. – Subject to the provisions of Purpose. – Subject to the provisions of this Code, a
necessary in the usual and regular course of stockholder may exercise the right of appraisal this Code, a private corporation may invest private corporation may invest its funds in any other
business of said corporation or if the under the conditions provided in this Code. its funds in any other corporation or business corporation, business, or for any purpose other than
proceeds of the sale or other disposition of or for any purpose other than the primary the primary purpose for which it was organized,
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Corporation Code (1980) Revised Corporation Code (2019) Corporation Code (1980) Revised Corporation Code (2019)

purpose for which it was organized when when approved by a majority of the board of capital stock, except: (1) when justified by or creditors, whether local or foreign, from declaring
approved by a majority of the board of directors or trustees and ratified by the stockholders definite corporate expansion projects or dividends without their consent, and such consent
directors or trustees and ratified by the representing at least two-thirds (2/3) of the programs approved by the board of directors; has not yet been secured; or (c) when it can be
stockholders representing at least two-thirds outstanding capital stock, or by at least two thirds or (2) when the corporation is prohibited clearly shown that such retention is necessary
(2/3) of the outstanding capital stock, or by at (2/3) of the members in the case of nonstock under any loan agreement with any financial under special circumstances obtaining in the
least two thirds (2/3) of the members in the corporations, at a meeting duly called for the institution or creditor, whether local or corporation, such as when there is need for special
case of non-stock corporations, at a purpose. Notice of the proposed investment and the foreign, from declaring dividends without reserve for probable contingencies.
stockholder’s or member’s meeting duly time and place of the meeting shall be addressed to its/his consent, and such consent has not yet
called for the purpose. Written notice of the each stockholder or member at the place of been secured; or (3) when it can be clearly
proposed investment and the time and place residence as shown in the books of the corporation shown that such retention is necessary under
of the meeting shall be addressed to each and deposited to the addressee in the post office special circumstances obtaining in the
stockholder or member at his place of with postage prepaid, served personally, or sent corporation, such as when there is need for
residence as shown on the books of the electronically in accordance with the rules and special reserve for probable contingencies.
corporation and deposited to the addressee regulations of the Commission on the use of (n)
in the post office with postage prepaid, or electronic data message, when allowed by the by-
served personally: Provided, That any laws or done with the consent of the stockholders: Section 44. Power to enter into management SEC. 43. Power to Enter into Management
dissenting stockholder shall have appraisal Provided, That any dissenting stockholder shall contract. – No corporation shall conclude a Contract. – No corporation shall conclude a
right as provided in this Code: Provided, have appraisal right as provided in this Code: management contract with another management contract with another corporation
however, That where the investment by the Provided however, That where the investment by corporation unless such contract shall have unless such contract is approved by the board of
corporation is reasonably necessary to the corporation is reasonably necessary to been approved by the board of directors and directors and by stockholders owning at least the
accomplish its primary purpose as stated in accomplish its primary purpose as stated in the by stockholders owning at least the majority majority of the outstanding capital stock, or by at
the articles of incorporation, the approval of articles of incorporation, the approval of the of the outstanding capital stock, or by at least least a majority of the members in the case of a non-
the stockholders or members shall not be stockholders or members shall not be necessary. a majority of the members in the case of a stock corporation, of both the managing and the
necessary. (17 1/2a) non-stock corporation, of both the managing managed corporation, at a meeting duly called for
and the managed corporation, at a meeting the purpose: Provided, That (a) where a stockholder
duly called for the purpose: Provided, That or stockholders representing the same interest of
Section 43. Power to declare dividends. - The SEC. 42. Power to Declare Dividends. – The board (1) where a stockholder or stockholders both the managing and the managed corporations
board of directors of a stock corporation may of directors of a stock corporation may declare representing the same interest of both the own or control more than one-third (1/3) of the total
declare dividends out of the unrestricted dividends out of the unrestricted retained earnings managing and the managed corporations outstanding capital stock entitled to vote of the
retained earnings which shall be payable in which shall be payable in cash, property, or in stock own or control more than one-third (1/3) of managing corporation; or (b) where a majority of the
cash, in property, or in stock to all to all stockholders on the basis of outstanding stock the total outstanding capital stock entitled to members of the board of directors of the managing
stockholders on the basis of outstanding held by them: Provided, That any cash dividends vote of the managing corporation; or (2) corporation also constitute a majority of the
stock held by them: Provided, That any cash due on delinquent stock shall first be applied to the where a majority of the members of the board members of the board of directors of the managed
dividends due on delinquent stock shall first unpaid balance on the subscription plus costs and of directors of the managing corporation also corporation, then the management contract must be
be applied to the unpaid balance on the expenses, while stock dividends shall be withheld constitute a majority of the members of the approved by the stockholders of the managed
subscription plus costs and expenses, while from the delinquent stockholders until their unpaid board of directors of the managed corporation owning at least two-thirds (2/3) of the
stock dividends shall be withheld from the subscription is fully paid: Provided, further, That no corporation, then the management contract total outstanding capital stock entitled to vote, or by
delinquent stockholder until his unpaid stock dividend shall be issued without the approval must be approved by the stockholders of the at least two-thirds (2/3) of the members in the case
subscription is fully paid: Provided, further, of stockholders representing at least two-thirds (2/3) managed corporation owning at least two- of a non-stock corporation.
That no stock dividend shall be issued of the outstanding capital stock at a regular or thirds (2/3) of the total outstanding capital
without the approval of stockholders special meeting duly called for the purpose. stock entitled to vote, or by at least two-thirds These shall apply to any contract whereby a
representing not less than two-thirds (2/3) of (2/3) of the members in the case of a non- corporation undertakes to manage or operate all or
the outstanding capital stock at a regular or
Stock corporations are prohibited from retaining stock corporation. No management contract substantially all of the business of another
special meeting duly called for the purpose.
surplus profits in excess of one hundred percent shall be entered into for a period longer than corporation, whether such contracts are called
(16a) (100%) of their paid-in capital stock, except: (a) five years for any one term. service contracts, operating agreements or
when justified by definite corporate expansion The provisions of the next preceding otherwise: Provided however, That such service
Stock corporations are prohibited from projects or programs approved by the board of paragraph shall apply to any contract contracts or operating agreements which relate to
retaining surplus profits in excess of one directors; or (b) when the corporation is prohibited whereby a corporation undertakes to the exploration, development, exploitation or
hundred (100%) percent of their paid-in under any loan agreement with financial institutions manage or operate all or substantially all of utilization of natural resources may be entered into
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the business of another corporation, whether for such periods as may be provided by the preceding paragraph, by-laws may be The Commission shall not accept for filing the
such contracts are called service contracts, pertinent laws or regulations. adopted and filed prior to incorporation; bylaws or any amendment thereto of any bank,
operating agreements or otherwise: in such case, such by-laws shall be banking institution, building and loan association,
Provided, however, That such service No management contract shall be entered into approved and signed by all the trust company, insurance company, public utility,
contracts or operating agreements which for a period longer than five (5) years for any one incorporators and submitted to the educational institution, or other special corporations
relate to the exploration, development, (1) term. Securities and Exchange Commission, governed by special laws, unless accompanied by
exploitation or utilization of natural resources together with the articles of incorporation. a certificate of the appropriate government agency
may be entered into for such periods as may In all cases, by-laws shall be effective only to the effect that such bylaws or amendments are in
be provided by the pertinent laws or upon the issuance by the Securities and accordance with law.
regulations. (n) Exchange Commission of a certification that
the by-laws are not inconsistent with this
Section 45. Ultra vires acts of corporations. – SEC. 44. Ultra Vires Acts of Corporations. – No Code.
No corporation under this Code shall corporation shall possess or exercise corporate
possess or exercise any corporate powers powers other than those conferred by this Code or The Securities and Exchange Commission
except those conferred by this Code or by its by its articles of incorporation and except as shall not accept for filing the by-laws or any
articles of incorporation and except such as necessary or incidental to the exercise of the amendment thereto of any bank, banking
are necessary or incidental to the exercise of powers conferred. institution, building and loan association,
the powers so conferred. (n) trust company, insurance company, public
utility, educational institution or other special
TITLE V TITLE V corporations governed by special laws,
BY LAWS BY-LAWS unless accompanied by a certificate of the
appropriate government agency to the effect
Section 46. Adoption of by-laws. – Every SEC. 45. Adoption of Bylaws. – For the adoption that such by-laws or amendments are in
corporation formed under this Code must, of bylaws by the corporation, the affirmative accordance with law. (20a)
within one (1) month after receipt of vote of the stockholders representing at least a
official notice of the issuance of its majority of the outstanding capital stock, or of Section 47. Contents of by-laws. – Subject to SEC. 46. Contents of Bylaws. – A private
certificate of incorporation by the at least a majority of the members in case of the provisions of the Constitution, this Code, corporation may provide the following in its
Securities and Exchange Commission, nonstock corporations, shall be necessary. The other special laws, and the articles of bylaws:
adopt a code of by-laws for its bylaws shall be signed by the stockholders or incorporation, a private corporation may
government not inconsistent with this members voting for them and shall be kept in the provide in its by-laws for: (a)The time, place and manner of calling and
Code. For the adoption of by-laws by the principal office of the corporation, subject to the 1. The time, place and manner of calling and conducting regular or special meetings of the
corporation the affirmative vote of the inspection of the stockholders or members during conducting regular or special meetings of the directors or trustees;
stockholders representing at least a office hours. A copy thereof, duly certified by a directors or trustees;
majority of the outstanding capital stock, majority of the directors or trustees and 2. The time and manner of calling and (b)The time and manner of calling and conducting
or of at least a majority of the members in countersigned by the secretary of the corporation, conducting regular or special meetings of the regular or special meetings and mode of notifying
case of non-stock corporations, shall be shall be filed with the Commission and attached to stockholders or members; the stockholders or members thereof;
necessary. The by-laws shall be signed by the original articles of incorporation. 3. The required quorum in meetings of
the stockholders or members voting for them stockholders or members and the manner of (c)The required quorum in meetings of stockholders
and shall be kept in the principal office of the Notwithstanding the provisions of the preceding voting therein; or members and the manner of voting therein;
corporation, subject to the inspection of the paragraph, by-laws may be adopted and filed prior 4. The form for proxies of stockholders and
stockholders or members during office hours. to incorporation; in such case, such by-laws shall be members and the manner of voting them; (d)The modes by which a stockholder, member,
A copy thereof, duly certified to by a majority approved and signed by all the incorporators and 5. The qualifications, duties and director, or trustee may attend meetings and
of the directors or trustees countersigned by submitted to the Commission, together with the compensation of directors or trustees, cast their votes;
the secretary of the corporation, shall be filed articles of incorporation. officers and employees;
with the Securities and Exchange 6. The time for holding the annual election of (e)The form for proxies of stockholders and
Commission which shall be attached to the In all cases, bylaws shall be effective only upon the directors of trustees and the mode or manner members and the manner of voting them;
original articles of incorporation. issuance by the Commission of a certification that of giving notice thereof;
the bylaws are in accordance with this Code. 7. The manner of election or appointment and (f)The directors’ or trustees’ qualifications, duties
Notwithstanding the provisions of the the term of office of all officers other than and responsibilities, the guidelines for setting the
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Corporation Code (1980) Revised Corporation Code (2019) Corporation Code (1980) Revised Corporation Code (2019)

directors or trustees; compensation of directors or trustees and officers, applicable, the stockholders’ or members’
8. The penalties for violation of the by-laws; and the maximum number of other board Whenever any amendment or new by-laws resolution authorizing the delegation of the power to
9. In the case of stock corporations, the representations that an independent director or are adopted, such amendment or new by- amend and/or adopt new bylaws, duly certified
manner of issuing stock certificates; and trustee may have which shall, in no case, be more laws shall be attached to the original by-laws under oath by the corporate secretary and a
10. Such other matters as may be necessary than the number prescribed by the Commission; in the office of the corporation, and a copy majority of the directors or trustees.
for the proper or convenient transaction of its (g)The time for holding the annual election of thereof, duly certified under oath by the
corporate business and affairs. (21a) directors of trustees and the mode or manner of corporate secretary and a majority of the The amended or new bylaws shall only be effective
giving notice thereof; directors or trustees, shall be filed with the upon the issuance by the Commission of a
Securities and Exchange Commission the certification that the same is in accordance with this
(h)The manner of election or appointment and the same to be attached to the original Code and other relevant laws.
term of office of all officers other than directors or articles of incorporation and original by-
trustees; laws.

(i)The penalties for violation of the bylaws; The amended or new by-laws shall only be
effective upon the issuance by the Securities
(j)In the case of stock corporations, the manner of and Exchange Commission of a certification
issuing stock certificates; and that the same are not inconsistent with this
Code. (22a and 23a)
(k)Such other matters as may be necessary for the TITLE VI TITLE VI
proper or convenient transaction of its corporate MEETINGS MEETINGS
affairs for the promotion of good governance and Section 49. Kinds of meetings. – Meetings of SEC. 48. Kinds of Meetings. – Meetings of
anti-graft and corruption measures. directors, trustees, stockholders, or members directors, trustees, stockholders, or members may
may be regular or special. (n) be regular or special.
An arbitration agreement may be provided in the
bylaws pursuant to Section 181 of this Code.
Section 50. Regular and special meetings of SEC. 49. Regular and Special Meetings of
Section 48. Amendments to by-laws. – The SEC. 47. Amendment to Bylaws. – A majority of the stockholders or members. - Regular Stockholders or Members. – Regular meetings of
board of directors or trustees, by a majority board of directors or trustees, and the owners of at meetings of stockholders or members shall stockholders or members shall be held annually on
vote thereof, and the owners of at least a least a majority of the outstanding capital stock, or be held annually on a date fixed in the by- a date fixed in the bylaws, or if not so fixed, on any
majority of the outstanding capital stock, or at at least a majority of the members of a nonstock laws, or if not so fixed, on any date in April of date after April 15 of every year as determined by
least a majority of the members of a non- corporation, at a regular or special meeting duly every year as determined by the board of the board of directors or trustees: Provided, That
stock corporation, at a regular or special called for the purpose, may amend or repeal the directors or trustees: Provided, That written written notice of regular meetings shall be sent to all
meeting duly called for the purpose, may bylaws or adopt new bylaws. The owners of two- notice of regular meetings shall be sent to all stockholders or members of record at least twenty-
amend or repeal any by-laws or adopt new thirds (2/3) of the outstanding capital stock or two- stockholders or members of record at least one (21) days prior to the meeting, unless a
by-laws. The owners of two-thirds (2/3) of the thirds (2/3) of the members in a non-stock two (2) weeks prior to the meeting, unless a different period is required in the bylaws, law, or
outstanding capital stock or two-thirds (2/3) corporation may delegate to the board of directors different period is required by the by-laws. regulation: Provided further, That written notice of
of the members in a non-stock corporation or trustees the power to amend or repeal the bylaws Special meetings of stockholders or regular meetings may be sent to all
may delegate to the board of directors or or adopt new bylaws: Provided, That any power members shall be held at any time deemed stockholders or members of record through
trustees the power to amend or repeal any delegated to the board of directors or trustees to necessary or as provided in the by-laws: electronic mail or such other manner as the
by-laws or adopt new by-laws: Provided, amend or repeal the bylaws or adopt new bylaws Provided, however, That at least one (1) Commission shall allow under its guidelines.
That any power delegated to the board of shall be considered as revoked whenever week written notice shall be sent to all
directors or trustees to amend or repeal any stockholders owning or representing a majority of stockholders or members, unless otherwise At each regular meeting of stockholders or
by-laws or adopt new by-laws shall be the outstanding capital stock or majority of the provided in the by-laws. members, the board of directors or trustees
considered as revoked whenever members shall so vote at a regular or special Notice of any meeting may be waived, shall endeavor to present to stockholders or
stockholders owning or representing a meeting. expressly or impliedly, by any stockholder or members the following:
majority of the outstanding capital stock or a member.
majority of the members in non-stock Whenever the bylaws are amended or new by-laws Whenever, for any cause, there is no a) The minutes of the most recent regular
corporations, shall so vote at a regular or are adopted, the corporation shall file with the person authorized to call a meeting, the meeting which shall include, among others:
special meeting. Commission such amended or new bylaws and, if Securities and Exchange Commission, upon
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petition of a stockholder or member on a (1) A description of the voting and vote f) Director or trustee profiles which shall
showing of good cause therefor, may issue tabulation procedures used in the previous include, among others, their qualifications and
an order to the petitioning stockholder or meeting; relevant experience, length of service in the
member directing him to call a meeting of the corporation, trainings and continuing education
corporation by giving proper notice required (2) A description of the opportunity given to attended, and their board representations in
by this Code or by the by-laws. The stockholders or members to ask questions and other corporations;
petitioning stockholder or member shall a record of the questions asked and answers
preside thereat until at least a majority of the given; g) A director or trustee attendance report,
stockholders or members present have indicating the attendance of each director or
chosen one of their number as presiding (3) The matters discussed and resolutions trustee at each of the meetings of the board and
officer. (24, 26) reached; its committees and in regular or special
stockholder meetings;
(4) A record of the voting results for each
agenda item; h) Appraisals and performance reports for the
board and the criteria and procedure for
(5) A list of the directors or trustees, officers and assessment;
stockholders or members who attended the
meeting; and i) A director or trustee compensation report
prepared in accordance with this Code and the
(6) Such other items that the Commission may rules the Commission may prescribe;
require in the interest of good corporate
governance and the protection of minority j) Director disclosures on self-dealings and
stockholders. related party transactions; and/or

b) A members’ list for non-stock corporations k) The profiles of directors nominated or

and, for stock corporations, material seeking election or reelection.
information on the current stockholders, and
their voting rights; A director, trustee, stockholder, or member may
propose any other matter for inclusion in the
c) A detailed, descriptive, balanced and agenda at any regular meeting of stockholders
comprehensible assessment of the or members.
corporation’s performance, which shall include
information on any material change in the Special meetings of stockholders or members
corporation’s business, strategy, and other shall be held at any time deemed necessary or
affairs; as provided in the bylaws: Provided however,
That at least one (1) week written notice shall be
d) A financial report for the preceding year, sent to all stockholders or members, unless a
which shall include financial statements duly different period is provided in the bylaws, law or
signed and certified in accordance with this regulation.
Code and the rules the Commission may
prescribe, a statement on the adequacy of the A stockholder or member may propose the
corporation’s internal controls or risk holding of a special meeting and items to be
management systems, and a statement of all included in the agenda.
external audit and non-audit fees;
Notice of any meeting may be waived, expressly
e) An explanation of the dividend policy and the or impliedly, by any stockholder or member:
fact of payment of dividends or the reasons for Provided, That general waivers of notice in the
nonpayment thereof; articles of incorporation or the bylaws shall not
be allowed: Provided, further, That attendance
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at a meeting shall constitute a waiver of notice

of such meeting, except when the person Section 51. Place and time of meetings of SEC. 50. Place and Time of Meetings of
attends a meeting for the express purpose of stockholders of members. – Stockholder’s or Stockholders or Members. – Stockholders’ or
objecting to the transaction of any business member’s meetings, whether regular or members’ meetings, whether regular or special,
because the meeting is not lawfully called or special, shall be held in the city or shall be held in the principal office of the
convened. municipality where the principal office of the corporation as set forth in the articles of
corporation is located, and if practicable in incorporation, or, if not practicable, in the city or
Whenever for any cause, there is no person the principal office of the corporation: municipality where the principal office of the
authorized or the person authorized unjustly Provided, That Metro Manila shall, for corporation is located: Provided, That any city
refuses to call a meeting, the Commission, upon purposes of this section, be considered a city or municipality in Metro Manila, Metro Cebu,
petition of a stockholder or member on a or municipality. Metro Davao, and other Metropolitan areas
showing of good cause therefor, may issue an Notice of meetings shall be in writing, and the shall, for purposes of this section, be
order directing the petitioning stockholder or time and place thereof stated therein. considered a city or municipality.
member to call a meeting of the corporation by All proceedings had and any business
giving proper notice required by this Code or transacted at any meeting of the Notice of meetings shall be sent through the
the bylaws. The petitioning stockholder or stockholders or members, if within the means of communication provided in the
member shall preside thereat until at least a powers or authority of the corporation, shall bylaws, which notice shall state the time, place
majority of the stockholders or members be valid even if the meeting be improperly and purpose of the meetings.
present have chosen from among themselves, a held or called, provided all the stockholders
presiding officer. or members of the corporation are present or Each notice of meeting shall further be
duly represented at the meeting. (24 and 25) accompanied by the following:
Unless the bylaws provide for a longer period,
the stock and transfer book or membership (a) The agenda for the meeting;
book shall be closed at least twenty (20) days
for regular meetings and seven (7) days for (b) A proxy form which shall be submitted to the
special meetings before the scheduled date of corporate secretary within a reasonable time
the meeting. prior to the meeting;

In case of postponement of stockholders’ or (c) When attendance, participation, and voting

members’ regular meetings, written notice are allowed by remote communication or in
thereof and the reason therefor shall be sent to absentia, the requirements and procedures to
all stockholders or members of record at least be followed when a stockholder or member
two (2) weeks prior to the date of the meeting, elects either option; and
unless a different period is required under the
bylaws, law or regulation. (d) When the meeting is for the election of
directors or trustees, the requirements and
The right to vote of stockholders or members procedure for nomination and election.
may be exercised in person, through a proxy, or
when so authorized in the bylaws, through All proceedings and any business transacted at
remote communication or in absentia. The a meeting of the stockholders or members, if
Commission shall issue the rules and within the powers or authority of the
regulations governing participation and voting corporation, shall be valid even if the meeting is
through remote communication or in absentia, improperly held or called: Provided, That all the
taking into account the company’s scale, stockholders or members of the corporation are
number of shareholders or members, structure, present or duly represented at the meeting and
and other factors consistent with the protection not one of them expressly states at the
and promotion of shareholders’ or member’s beginning of the meeting that the purpose of
meetings. their attendance is to object to the transaction

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of any business because the meeting is not allow them reasonable opportunities to
lawfully called or convened. participate. Directors or trustees cannot attend
or vote by proxy at board meetings.
Section 52. Quorum in meetings. – SEC. 51. Quorum in Meetings. – Unless otherwise
Unless otherwise provided for in this Code or provided in this Code or in the bylaws, a quorum A director or trustee who has a potential interest
in the by-laws, a quorum shall consist of the shall consist of the stockholders representing a in any related party transaction must recuse
stockholders representing a majority of the majority of the outstanding capital stock or a from voting on the approval of the related party
outstanding capital stock or a majority of the majority of the members in the case of nonstock transaction without prejudice to compliance
members in the case of non-stock corporations. with the requirements of Section 31 of this
corporations. (n) Code.

Section 53. Regular and special meetings of SEC. 52. Regular and Special Meetings of Directors
directors or trustees. – Regular meetings of or Trustees; Quorum. – Unless the articles of
the board of directors or trustees of every incorporation or the by-laws provides for a
corporation shall be held monthly, unless the greater majority, a majority of the directors or
by-laws provide otherwise. trustees as stated in the articles of
Special meetings of the board of directors or incorporation shall constitute a quorum to
trustees may be held at any time upon the transact corporate business, and every
call of the president or as provided in the by- decision reached by at least a majority of the
laws. directors or trustees constituting a quorum, Section 54. Who shall preside at SEC. 53. Who Shall Preside at Meetings. – The
Meetings of directors or trustees of except for the election of officers which shall meetings. – The president shall preside at all chairman or, in his absence, the president shall
corporations may be held anywhere in or require the vote of a majority of all the members meetings of the directors or trustee as well as preside at all meetings of the directors or trustees
outside of the Philippines, unless the by-laws of the board, shall be valid as a corporate act. of the stockholders or members, unless the as well as of the stockholders or members, unless
provide otherwise. Notice of regular or by-laws provide otherwise. (n) the bylaws provide otherwise.
special meetings stating the date, time and Regular meetings of the board of directors or
place of the meeting must be sent to every trustees of every corporation shall be held
Section 55. Right to vote of pledgors, SEC. 54. Right to Vote of Secured Creditors and
director or trustee at least one (1) day prior to monthly, unless the bylaws provide otherwise.
mortgagors, and administrators. – In case of Administrators. – In case a stockholder grants
the scheduled meeting, unless otherwise
pledged or mortgaged shares in stock security interest in his or her shares in stock
provided by the by-laws. A director or trustee Special meetings of the board of directors or
corporations, the pledgor or mortgagor shall corporations, the stockholder-grantor shall have
may waive this requirement, either expressly trustees may be held at any time upon the call
have the right to attend and vote at meetings the right to attend and vote at meetings of
or impliedly. (n) of the president or as provided in the bylaws.
of stockholders, unless the pledgee or stockholders, unless the secured creditor is
mortgagee is expressly given by the pledgor expressly given by the stockholder-grantor such
Meetings of directors or trustees of
or mortgagor such right in writing which is right in writing which is recorded in the appropriate
corporations may be held anywhere in or
recorded on the appropriate corporate books. corporate books.
outside of the Philippines, unless the bylaws
(n)
provide otherwise. Notice of regular or special
Executors, administrators, receivers, Executors, administrators, receivers, and other
meetings stating the date, time and place of the
and other legal representatives duly legal representatives duly appointed by the court
meeting must be sent to every director or
appointed by the court may attend and vote may attend and vote in behalf of the stockholders or
trustee at least two (2) days prior to the
in behalf of the stockholders or members members without need of any written proxy.
scheduled meeting, unless a longer time is
without need of any written proxy. (27a)
provided in the bylaws. A director or trustee
may waive this requirement, either expressly or
Section 56. Voting in case of joint ownership SEC. 55. Voting in Case of Joint Ownership of
impliedly.
of stock. – In case of shares of stock owned Stock. – The consent of all the co-owners shall
jointly by two or more persons, in order to be necessary in voting shares of stock owned
Directors or trustees who cannot physically
vote the same, the consent of all the co- jointly by (2) two or more persons, unless there
attend or vote at board meetings can participate
owners shall be necessary, unless there is a is a written proxy, signed by all the co-owners,
and vote through remote communication such
written proxy, signed by all the co-owners, authorizing (1) one or some of them or any other
as videoconferencing, teleconferencing, or
authorizing one or some of them or any other person to vote such share or shares: Provided,
other alternative modes of communication that
person to vote such share or shares: That when the shares are owned in an “and/or”
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Provided, That when the shares are owned in capacity by the holders thereof, any one of the joint stockholders of a stock corporation may SEC. 58. Voting Trusts. – One or more
an "and/or" capacity by the holders thereof, owners can vote said shares or appoint a proxy create a voting trust for the purpose of stockholders of a stock corporation may create a
any one of the joint owners can vote said therefor. conferring upon a trustee or trustees the right voting trust for the purpose of conferring upon a
shares or appoint a proxy therefor. (n) to vote and other rights pertaining to the trustee or trustees the right to vote and other rights
shares for a period not exceeding five (5) pertaining to the shares for a period not exceeding
Section 57. Voting right for treasury shares. SEC. 56. Voting Right for Treasury Shares. – years at any time: Provided, That in the case five (5) years at any time: Provided, That in the case
– Treasury shares shall have no voting right Treasury shares shall have no voting right as long of a voting trust specifically required as a of a voting trust specifically required as a condition
as long as such shares remain in the as such shares remain in the Treasury. condition in a loan agreement, said voting in a loan agreement, said voting trust may be for a
Treasury. (n) trust may be for a period exceeding five (5) period exceeding five (5) years but shall
years but shall automatically expire upon full automatically expire upon full payment of the loan.
Section 58. Proxies. – Stockholders and SEC. 57. Manner of Voting; Proxies. – payment of the loan. A voting trust agreement A voting trust agreement must be in writing and
members may vote in person or by proxy in Stockholders and members may vote in person or must be in writing and notarized, and shall notarized, and shall specify the terms and
all meetings of stockholders or members. by proxy in all meetings of stockholders or specify the terms and conditions thereof. A conditions thereof. A certified copy of such
Proxies shall in writing, signed by the members. certified copy of such agreement shall be agreement shall be filed with the corporation and
stockholder or member and filed before the filed with the corporation and with the with the Commission; otherwise, the agreement is
scheduled meeting with the corporate When so authorized in the by-laws or by a Securities and Exchange Commission; ineffective and unenforceable. The certificate or
secretary. Unless otherwise provided in the majority of the board of directors, the otherwise, said agreement is ineffective and certificates of stock covered by the voting trust
proxy, it shall be valid only for the meeting for stockholders or members of corporations may unenforceable. The certificate or certificates agreement shall be cancelled and new ones shall
which it is intended. No proxy shall be valid also vote through remote communication or in of stock covered by the voting trust be issued in the name of the trustee or trustees,
and effective for a period longer than five (5) absentia: Provided, That the votes are received agreement shall be cancelled and new ones stating that they are issued pursuant to said
years at any one time. (n) before the corporation finishes the tally of shall be issued in the name of the trustee or agreement. The books of the corporation shall state
votes. trustees stating that they are issued pursuant that the transfer in the name of the trustee or
to said agreement. In the books of the trustees is made pursuant to the voting trust
A stockholder or member who participates corporation, it shall be noted that the transfer agreement.
through remote communication or in absentia, in the name of the trustee or trustees is made
shall be deemed present for purposes of pursuant to said voting trust agreement. The trustee or trustees shall execute and deliver to
quorum. The trustee or trustees shall execute and the transferors, voting trust certificates, which shall
deliver to the transferors voting trust be transferable in the same manner and with the
The corporation shall establish the appropriate certificates, which shall be transferable in the same effect as certificates of stock.
requirements and procedures for voting same manner and with the same effect as
through remote communication and in absentia, certificates of stock. The voting trust agreement filed with the corporation
taking into account the company’s scale, The voting trust agreement filed with the shall be subject to examination by any stockholder
number of shareholders or members, structure corporation shall be subject to examination of the corporation in the same manner as any other
and other factors consistent with the basic right by any stockholder of the corporation in the corporate book or record: Provided, That both the
of corporate suffrage. same manner as any other corporate book or trustor and the trustee or trustees may exercise the
record: Provided, That both the transferor right of inspection of all corporate books and
Proxies shall be in writing, signed and filed, by the and the trustee or trustees may exercise the records in accordance with the provisions of this
stockholder or member, in any form authorized in right of inspection of all corporate books and Code.
the bylaws and received by the corporate secretary records in accordance with the provisions of
within a reasonable time before the scheduled this Code. Any other stockholder may transfer the shares to
meeting. Unless otherwise provided in the proxy Any other stockholder may transfer his the same trustee or trustees upon the terms and
form, it shall be valid only for the meeting for which shares to the same trustee or trustees upon conditions stated in the voting trust agreement, and
it is intended. No proxy shall be valid and effective the terms and conditions stated in the voting thereupon shall be bound by all the provisions of
for a period longer than five (5) years at any one trust agreement, and thereupon shall be said agreement.
time. bound by all the provisions of said
agreement. No voting trust agreement shall be entered into for
No voting trust agreement shall be entered purposes of circumventing the laws against anti-
into for the purpose of circumventing the law competitive agreements, abuse of dominant
Section 59. Voting trusts. – One or more against monopolies and illegal combinations position, anti-competitive mergers and acquisitions,
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in restraint of trade or used for purposes of violation of nationality and capital requirements, or
fraud. for the perpetuation of fraud. 1. Actual cash paid to the corporation; (b) Property, tangible or intangible, actually
Unless expressly renewed, all rights granted 2. Property, tangible or intangible, actually received by the corporation and necessary or
in a voting trust agreement shall Unless expressly renewed, all rights granted in a received by the corporation and necessary or convenient for its use and lawful purposes at a fair
automatically expire at the end of the agreed voting trust agreement shall automatically expire at convenient for its use and lawful purposes at valuation equal to the par or issued value of the
period, and the voting trust certificates as well the end of the agreed period. The voting trust a fair valuation equal to the par or issued stock issued;
as the certificates of stock in the name of the certificates as well as the certificates of stock in the value of the stock issued;
trustee or trustees shall thereby be deemed name of the trustee or trustees shall thereby be 3. Labor performed for or services actually (c) Labor performed for or services actually
cancelled and new certificates of stock shall deemed cancelled and new certificates of stock rendered to the corporation; rendered to the corporation;
be reissued in the name of the transferors. shall be reissued in the name of the trustors. 4. Previously incurred indebtedness of the
The voting trustee or trustees may vote by corporation; (d) Previously incurred indebtedness of the
proxy unless the agreement provides The voting trustee or trustees may vote by proxy or 5. Amounts transferred from unrestricted corporation;
otherwise. (36a) in any manner authorized under the bylaws unless retained earnings to stated capital; and
the agreement provides otherwise. 6. Outstanding shares exchanged for stocks (e) Amounts transferred from unrestricted retained
in the event of reclassification or conversion. earnings to stated capital;
TITLE VII TITLE VII
STOCKS AND STOCKHOLDERS STOCKS AND STOCKHOLDERS (f) Outstanding shares exchanged for stocks in the
event of reclassification or conversion;
Section 60. Subscription contract. – Any SEC. 59. Subscription Contract. – Any contract for
contract for the acquisition of unissued stock the acquisition of unissued stock in an existing (g) Shares of stock in another corporation;
in an existing corporation or a corporation still corporation or a corporation still to be formed shall Where the consideration is other than actual and/or
to be formed shall be deemed a subscription be deemed a subscription within the meaning of this cash, or consists of intangible property such
within the meaning of this Title, Title, notwithstanding the fact that the parties refer as patents of copyrights, the valuation (h) Other generally accepted form of
notwithstanding the fact that the parties refer to it as a purchase or some other contract. thereof shall initially be determined by the consideration.
to it as a purchase or some other contract. (n) incorporators or the board of directors,
subject to approval by the Securities and
Where the consideration is other than actual cash,
Section 61. Pre-incorporation subscription. – SEC. 60. Pre-incorporation Subscription. – A Exchange Commission. or consists of intangible property such as patents or
subscription of shares in a corporation still to be copyrights, the valuation thereof shall initially be
A subscription for shares of stock of a
formed shall be irrevocable for a period of at least Shares of stock shall not be issued in determined by the stockholders or the board of
corporation still to be formed shall be
six (6) months from the date of subscription, unless exchange for promissory notes or future directors, subject to the approval of the
irrevocable for a period of at least six (6)
all of the other subscribers consent to the service. Commission.
months from the date of subscription, unless
revocation, or the corporation fails to incorporate
all of the other subscribers consent to the
within the same period or within a longer period The same considerations provided for in this Shares of stock shall not be issued in exchange for
revocation, or unless the incorporation of
stipulated in the contract of subscription. No pre- section, insofar as they may be applicable, promissory notes or future service. The same
said corporation fails to materialize within
incorporation subscription may be revoked after the may be used for the issuance of bonds by the considerations provided in this section, insofar as
said period or within a longer period as may
articles of incorporation is submitted to the corporation. applicable, may be used for the issuance of bonds
be stipulated in the contract of subscription:
Commission. by the corporation.
Provided, That no pre-incorporation
The issued price of no-par value shares
subscription may be revoked after the
may be fixed in the articles of incorporation or The issued price of no-par value shares may be
submission of the articles of incorporation to
by the board of directors pursuant to authority fixed in the articles of incorporation or by the board
the Securities and Exchange Commission.
conferred upon it by the articles of of directors pursuant to authority conferred by the
(n)
incorporation or the by-laws, or in the articles of incorporation or the bylaws, or if not so
absence thereof, by the stockholders fixed, by the stockholders representing at least a
Section 62. Consideration for stocks. – SEC. 61. Consideration for Stocks. – Stocks shall representing at least a majority of the majority of the outstanding capital stock at a
Stocks shall not be issued for a consideration not be issued for a consideration less than the par outstanding capital stock at a meeting duly meeting duly called for the purpose.
less than the par or issued price thereof. or issued price thereof. Consideration for the called for the purpose. (5 and 16)
Consideration for the issuance of stock may issuance of stock may be:
be any or a combination of any two or Section 63. Certificate of stock and transfer SEC. 62. Certificate of Stock and Transfer of
more of the following: (a) Actual cash paid to the corporation; of shares. – The capital stock of stock Shares. – The capital stock of corporations shall be
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corporations shall be divided into shares for divided into shares for which certificates signed by
which certificates signed by the president or the president or vice president, countersigned by Section 66. Interest on unpaid subscriptions. SEC. 65. Interest on Unpaid Subscriptions. –
vice president, countersigned by the the secretary or assistant secretary, and sealed with – Subscribers for stock shall pay to the Subscribers to stocks shall be liable to the
secretary or assistant secretary, and sealed the seal of the corporation shall be issued in corporation interest on all unpaid corporation for interest on all unpaid subscriptions
with the seal of the corporation shall be accordance with the bylaws. Shares of stock so subscriptions from the date of subscription, if from the date of subscription, if so required by and
issued in accordance with the by-laws. issued are personal property and may be so required by, and at the rate of interest at the rate of interest fixed in the subscription
Shares of stock so issued are personal transferred by delivery of the certificate or fixed in the by-laws. If no rate of interest is contract. If no rate of interest is fixed in the
property and may be transferred by delivery certificates indorsed by the owner, his attorney-in- fixed in the by-laws, such rate shall be subscription contract, the prevailing legal rate shall
of the certificate or certificates indorsed by fact, or any other person legally authorized to make deemed to be the legal rate. (37) apply.
the owner or his attorney-in-fact or other the transfer. No transfer, however, shall be valid,
person legally authorized to make the except as between the parties, until the transfer is
transfer. No transfer, however, shall be valid, recorded in the books of the corporation showing Section 67. Payment of balance of SEC. 66. Payment of Balance of Subscription. –
except as between the parties, until the the names of the parties to the transaction, the date subscription. – Subject to the provisions of Subject to the provisions of the subscription
transfer is recorded in the books of the of the transfer, the number of the certificate or the contract of subscription, the board of contract, the board of directors may, at any time,
corporation showing the names of the parties certificates, and the number of shares transferred. directors of any stock corporation may at any declare due and payable to the corporation unpaid
to the transaction, the date of the transfer, the The Commission may require corporations time declare due and payable to the subscriptions and may collect the same or such
number of the certificate or certificates and whose securities are traded in trading markets corporation unpaid subscriptions to the percentage thereof, in either case, with accrued
the number of shares transferred. and which can reasonably demonstrate their capital stock and may collect the same or interest, if any, as it may deem necessary.
No shares of stock against which the capability to do so to issue their securities or such percentage thereof, in either case with
corporation holds any unpaid claim shall be shares of stocks in uncertificated or scripless accrued interest, if any, as it may deem Payment of unpaid subscription or any percentage
transferable in the books of the corporation. form in accordance with the rules of the necessary. thereof, together with any interest accrued shall be
(35) Commission. made on the date specified in the subscription
Payment of any unpaid subscription or any contract or on the date stated in the call made by
No shares of stock against which the corporation percentage thereof, together with the interest the board. Failure to pay on such date shall render
holds any unpaid claim shall be transferable in the accrued, if any, shall be made on the date the entire balance due and payable and shall make
books of the corporation. specified in the contract of subscription or on the stockholder liable for interest at the legal rate on
the date stated in the call made by the board. such balance, unless a different interest rate is
Section 64. Issuance of stock SEC. 63. Issuance of Stock Certificates. – No Failure to pay on such date shall render the provided in the subscription contract. The interest
certificates. – No certificate of stock shall be certificate of stock shall be issued to a subscriber entire balance due and payable and shall shall be computed from the date specified, until full
issued to a subscriber until the full amount of until the full amount of the subscription together with make the stockholder liable for interest at the payment of the subscription. If no payment is made
his subscription together with interest and interest and expenses (in case of delinquent legal rate on such balance, unless a different within thirty (30) days from the said date, all stocks
expenses (in case of delinquent shares), if shares), if any is due, has been paid. rate of interest is provided in the by-laws, covered by the subscription shall thereupon
any is due, has been paid. (37) computed from such date until full payment. become delinquent and shall be subject to sale as
If within thirty (30) days from the said date no hereinafter provided, unless the board of directors
Section 65. Liability of directors for SEC. 64. Liability of Directors for Watered Stocks. – payment is made, all stocks covered by said orders otherwise.
watered stocks. – Any director or officer of A director or officer of a corporation who: (a) subscription shall thereupon become
a corporation consenting to the issuance of consents to the issuance of stocks for a delinquent and shall be subject to sale as
stocks for a consideration less than its par or consideration less than its par or issued value; (b) hereinafter provided, unless the board of
issued value or for a consideration in any consents to the issuance of stocks for a directors orders otherwise. (38)
form other than cash, valued in excess of its consideration other than cash, valued in excess of
fair value, or who, having knowledge thereof, its fair value; or (c) having knowledge of the Section 68. Delinquency sale. – The board of SEC. 67. Delinquency Sale. – The board of
does not forthwith express his objection in insufficient consideration, does not file a written directors may, by resolution, order the sale of directors may, by resolution, order the sale of
writing and file the same with the corporate objection with the corporate secretary, shall be delinquent stock and shall specifically state delinquent stock and shall specifically state the
secretary, shall be solidarily, liable with the liable to the corporation or its creditors, solidarily the amount due on each subscription plus all amount due on each subscription plus all accrued
stockholder concerned to the corporation and with the stockholder concerned for the difference accrued interest, and the date, time and interest, and the date, time and place of the sale
its creditors for the difference between the between the value received at the time of issuance place of the sale which shall not be less than which shall not be less than thirty (30) days nor
fair value received at the time of issuance of of the stock and the par or issued value of the same. thirty (30) days nor more than sixty (60) days more than sixty (60) days from the date the stocks
the stock and the par or issued value of the from the date the stocks become delinquent. become delinquent.
same. (n) Notice of said sale, with a copy of the
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resolution, shall be sent to every delinquent Notice of the sale, with a copy of the resolution, shall can be sustained upon the ground of sustained upon the ground of irregularity or defect
stockholder either personally or by registered be sent to every delinquent stockholder either irregularity or defect in the notice of sale, or in the notice of sale, or in the sale itself of the
mail. The same shall furthermore be personally, by registered mail, or through other in the sale itself of the delinquent stock, delinquent stock, unless the party seeking to
published once a week for two (2) means provided in the bylaws. The same shall be unless the party seeking to maintain such maintain such action first pays or tenders to the
consecutive weeks in a newspaper of published once a week for two (2) consecutive action first pays or tenders to the party party holding the stock the sum for which the same
general circulation in the province or city weeks in a newspaper of general circulation in the holding the stock the sum for which the same was sold, with interest from the date of sale at the
where the principal office of the corporation is province or city where the principal office of the was sold, with interest from the date of sale legal rate. No such action shall be maintained
located. corporation is located. at the legal rate; and no such action shall be unless a complaint is filed within six (6) months from
maintained unless it is commenced by the the date of sale.
Unless the delinquent stockholder pays to Unless the delinquent stockholder pays to the filing of a complaint within six (6) months from
the corporation, on or before the date corporation, on or before the date specified for the the date of sale. (47a)
specified for the sale of the delinquent stock, sale of the delinquent stock, the balance due on the
the balance due on his subscription, plus former’s subscription, plus accrued interest, costs of Section 70. Court action to recover SEC. 69. Court Action to Recover Unpaid
accrued interest, costs of advertisement and advertisement and expenses of sale, or unless the unpaid subscription. – Nothing in this Code Subscription. – Nothing in this Code shall prevent
expenses of sale, or unless the board of board of directors otherwise orders, said delinquent shall prevent the corporation from collecting the corporation from collecting through court action,
directors otherwise orders, said delinquent stock shall be sold at a public auction to such bidder by action in a court of proper jurisdiction the the amount due on any unpaid subscription, with
stock shall be sold at public auction to such who shall offer to pay the full amount of the balance amount due on any unpaid subscription, with accrued interest, costs and expenses.
bidder who shall offer to pay the full amount on the subscription together with accrued interest, accrued interest, costs and expenses. (49a)
of the balance on the subscription together costs of advertisement and expenses of sale, for the
with accrued interest, costs of advertisement smallest number of shares or fraction of a share. Section 71. Effect of delinquency. – No SEC. 70. Effect of Delinquency. – No delinquent
and expenses of sale, for the smallest The stock so purchased shall be transferred to such delinquent stock shall be voted for or be stock shall be voted for, be entitled to vote, or be
number of shares or fraction of a share. The purchaser in the books of the corporation and a entitled to vote or to representation at any represented at any stockholder’s meeting, nor shall
stock so purchased shall be transferred to certificate for such stock shall be issued in the stockholder’s meeting, nor shall the holder the holder thereof be entitled to any of the rights of
such purchaser in the books of the purchaser’s favor. The remaining shares, if any, thereof be entitled to any of the rights of a a stockholder except the right to dividends in
corporation and a certificate for such stock shall be credited in favor of the delinquent stockholder except the right to dividends in accordance with the provisions of this Code, until
shall be issued in his favor. The remaining stockholder who shall likewise be entitled to the accordance with the provisions of this Code, and unless payment is made by the holder such
shares, if any, shall be credited in favor of the issuance of a certificate of stock covering such until and unless he pays the amount due on delinquent stock for the amount due on the
delinquent stockholder who shall likewise be shares. his subscription with accrued interest, and subscription with accrued interest, and the costs
entitled to the issuance of a certificate of the costs and expenses of advertisement, if and expenses of advertisement, if any.
stock covering such shares. Should there be no bidder at the public auction who any. (50a)
offers to pay the full amount of the balance on the
Should there be no bidder at the public subscription together with accrued interest, costs of Section 72. Rights of unpaid shares. – SEC. 71. Rights of Unpaid Shares, Nondelinquent.
auction who offers to pay the full amount of advertisement, and expenses of sale, for the Holders of subscribed shares not fully paid – Holders of subscribed shares not fully paid which
the balance on the subscription together with smallest number of shares or fraction of a share, the which are not delinquent shall have all the are not delinquent shall have all the rights of a
accrued interest, costs of advertisement and corporation may, subject to the provisions of this rights of a stockholder. (n) stockholder.
expenses of sale, for the smallest number of Code, bid for the same, and the total amount due
shares or fraction of a share, the corporation shall be credited as fully paid in the books of the
may, subject to the provisions of this Code, corporation. Title to all the shares of stock covered Section 73. Lost or destroyed certificates. – SEC. 72. Lost or Destroyed Certificates. – The
bid for the same, and the total amount due by the subscription shall be vested in the The following procedure shall be followed for following procedure shall be followed by a
shall be credited as paid in full in the books corporation as treasury shares and may be the issuance by a corporation of new corporation in issuing new certificates of stock in
of the corporation. Title to all the shares of disposed of by said corporation in accordance with certificates of stock in lieu of those which lieu of those which have been lost, stolen or
stock covered by the subscription shall be the provisions of this Code. have been lost, stolen or destroyed: destroyed:
vested in the corporation as treasury shares
and may be disposed of by said corporation 1. The registered owner of a certificate of (a) The registered owner of a certificate of stock in
in accordance with the provisions of this stock in a corporation or his legal a corporation or such person’s legal representative
Code. (39a-46a) representative shall file with the corporation shall file with the corporation an affidavit in triplicate
an affidavit in triplicate setting forth, if setting forth, if possible, the circumstances as to
Section 69. When sale may be questioned. – SEC. 68. When Sale may be Questioned. – No possible, the circumstances as to how the how the certificate was lost, stolen or destroyed, the
No action to recover delinquent stock sold action to recover delinquent stock sold can be certificate was lost, stolen or destroyed, the number of shares represented by such certificate,
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number of shares represented by such the serial number of the certificate and the name of Except in case of fraud, bad faith, or
certificate, the serial number of the certificate the corporation which issued the same. The owner negligence on the part of the corporation and
and the name of the corporation which issued of such certificate of stock shall also submit such its officers, no action may be brought against
the same. He shall also submit such other other information and evidence as may be deemed any corporation which shall have issued
information and evidence which he may necessary; certificate of stock in lieu of those lost, stolen
deem necessary; or destroyed pursuant to the procedure
(b) After verifying the affidavit and other information above-described. (R.A. 201a)
2. After verifying the affidavit and other and evidence with the books of the corporation, the
information and evidence with the books of corporation shall publish a notice in a newspaper of TITLE VIII TITLE VIII
the corporation, said corporation shall general circulation in the place where the CORPORATE BOOKS AND RECORDS CORPORATE BOOKS AND RECORDS
publish a notice in a newspaper of general corporation has its principal office, once a week for
circulation published in the place where the three (3) consecutive weeks at the expense of the Section 74. Books to be kept; stock transfer SEC. 73. Books to be Kept; Stock Transfer
corporation has its principal office, once a registered owner of the certificate of stock which agent. – Every corporation shall keep and Agent. – Every corporation shall keep and
week for three (3) consecutive weeks at the has been lost, stolen or destroyed. The notice shall carefully preserve at its principal office a carefully preserve at its principal office all
expense of the registered owner of the state the name of the corporation, the name of the record of all business transactions and information relating to the corporation
certificate of stock which has been lost, registered owner, the serial number of the minutes of all meetings of stockholders or including, but not limited to:
stolen or destroyed. The notice shall state the certificate, the number of shares represented by members, or of the board of directors or
name of said corporation, the name of the such certificate, and shall state that after the trustees, in which shall be set forth in detail (a) The articles of incorporation and by-laws of
registered owner and the serial number of expiration of one (1) year from the date of the last the time and place of holding the meeting, the corporation and all their amendments;
said certificate, and the number of shares publication, if no contest has been presented to the how authorized, the notice given, whether the
represented by such certificate, and that after corporation regarding the certificate of stock, the meeting was regular or special, if special its (b) The current ownership structure and voting
the expiration of one (1) year from the date of right to make such contest shall be barred and the object, those present and absent, and every rights of the corporation, including lists of
the last publication, if no contest has been corporation shall cancel the lost, destroyed or stolen act done or ordered done at the meeting. stockholders or members, group structures,
presented to said corporation regarding said certificate of stock in its books. In lieu thereof, the Upon the demand of any director, trustee, intra-group relations, ownership data, and
certificate of stock, the right to make such corporation shall issue a new certificate of stock, stockholder or member, the time when any beneficial ownership;
contest shall be barred and said corporation unless the registered owner files a bond or other director, trustee, stockholder or member
shall cancel in its books the certificate of security as may be required, effective for a period entered or left the meeting must be noted in (c) The names and addresses of all the members
stock which has been lost, stolen or of one (1) year, for such amount and in such form the minutes; and on a similar demand, the of the board of directors or trustees and the
destroyed and issue in lieu thereof new and with such sureties as may be satisfactory to the yeas and nays must be taken on any motion executive officers;
certificate of stock, unless the registered board of directors, in which case a new certificate or proposition, and a record thereof carefully
owner files a bond or other security in lieu may be issued even before the expiration of the one made. The protest of any director, trustee, (d) A record of all business transactions;
thereof as may be required, effective for a (1) year period provided herein. If a contest has stockholder or member on any action or
period of one (1) year, for such amount and been presented to the corporation or if an action is proposed action must be recorded in full on (e) A record of the resolutions of the board of
in such form and with such sureties as may pending in court regarding the ownership of the his demand. directors or trustees and of the stockholders or
be satisfactory to the board of directors, in certificate of stock which has been lost, stolen or members;
which case a new certificate may be issued destroyed, the issuance of the new certificate of The records of all business transactions of
even before the expiration of the one (1) year stock in lieu thereof shall be suspended until the the corporation and the minutes of any (f) Copies of the latest reportorial requirements
period provided herein: Provided, That if a court renders a final decision regarding the meetings shall be open to inspection by any submitted to the Commission; and
contest has been presented to said ownership of the certificate of stock which has been director, trustee, stockholder or member of
corporation or if an action is pending in court lost, stolen or destroyed. the corporation at reasonable hours on (g) The minutes of all meetings of stockholders
regarding the ownership of said certificate of business days and he may demand, in or members, or of the board of directors or
stock which has been lost, stolen or writing, for a copy of excerpts from said trustees. Such minutes shall set forth in detail,
destroyed, the issuance of the new certificate Except in case of fraud, bad faith, or negligence on records or minutes, at his expense. among others: the time and place of the meeting
of stock in lieu thereof shall be suspended the part of the corporation and its officers, no action Any officer or agent of the corporation who held, how it was authorized, the notice given,
until the final decision by the court regarding may be brought against any corporation which shall shall refuse to allow any director, trustees, the agenda therefor, whether the meeting was
the ownership of said certificate of stock have issued certificate of stock in lieu of those lost, stockholder or member of the corporation to regular or special, its object if special, those
which has been lost, stolen or destroyed. stolen or destroyed pursuant to the procedure examine and copy excerpts from its records present and absent, and every act done or
above-described. or minutes, in accordance with the provisions ordered done at the meeting. Upon the demand
of this Code, shall be liable to such director, of a director, trustee, stockholder or member,
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trustee, stockholder or member for damages, the time when any director, trustee, stockholder the rules and regulations imposed on stock provisions of this Code shall be liable to such
and in addition, shall be guilty of an offense or member entered or left the meeting must be transfer agents, except the payment of a director, trustee, stockholder or member for
which shall be punishable under Section 144 noted in the minutes; and on a similar demand, license fee herein provided, shall be damages, and in addition, shall be guilty of an
of this Code: Provided, That if such refusal is the yeas and nays must be taken on any motion applicable. (51a and 32a; P.B. No. 268.) offense which shall be punishable under
made pursuant to a resolution or order of the or proposition, and a record thereof carefully Section 161 of this Code: Provided, That if such
board of directors or trustees, the liability made. The protest of a director, trustee, refusal is made pursuant to a resolution or order
under this section for such action shall be stockholder or member on any action or of the board of directors or trustees, the liability
imposed upon the directors or trustees who proposed action must be recorded in full upon under this section for such action shall be
voted for such refusal: and Provided, further, their demand. imposed upon the directors or trustees who
That it shall be a defense to any action under voted for such refusal: Provided further, That it
this section that the person demanding to Corporate records, regardless of the form in shall be a defense to any action under this
examine and copy excerpts from the which they are stored, shall be open to section that the person demanding to examine
corporation’s records and minutes has inspection by any director, trustee, stockholder and copy excerpts from the corporation’s
improperly used any information secured or member of the corporation in person or by a records and minutes has improperly used any
through any prior examination of the records representative at reasonable hours on business information secured through any prior
or minutes of such corporation or of any other days, and a demand in writing may be made by examination of the records or minutes of such
corporation, or was not acting in good faith or such director, trustee or stockholder at their corporation or of any other corporation, or was
for a legitimate purpose in making his expense, for copies of such records or excerpts not acting in good faith or for a legitimate
demand. from said records. The inspecting or purpose in making the demand to examine or
reproducing party shall remain bound by reproduce corporate records, or is a competitor,
Stock corporations must also keep a book to confidentiality rules under prevailing laws, such director, officer, controlling stockholder or
be known as the "stock and transfer book", in as the rules on trade secrets or processes under otherwise represents the interests of a
which must be kept a record of all stocks in Republic Act No. 8293, otherwise known as the competitor.
the names of the stockholders alphabetically “Intellectual Property Code of the Philippines”,
arranged; the installments paid and unpaid as amended, Republic Act No. 10173, otherwise If the corporation denies or does not act on a
on all stock for which subscription has been known as the “Data Privacy Act of 2012”, demand for inspection and/or reproduction, the
made, and the date of payment of any Republic Act No. 8799, otherwise known as aggrieved party may report such to the
installment; a statement of every alienation, “The Securities Regulation Code”, and the Commission. Within five (5) days from receipt of
sale or transfer of stock made, the date Rules of Court. such report, the Commission shall conduct a
thereof, and by and to whom made; and such summary investigation and issue an order
other entries as the by-laws may prescribe. A requesting party who is not a stockholder or directing the inspection or reproduction of the
The stock and transfer book shall be kept in member of record, or is a competitor, director, requested records.
the principal office of the corporation or in the officer, controlling stockholder or otherwise
office of its stock transfer agent and shall be represents the interests of a competitor shall Stock corporations must also keep a stock and
open for inspection by any director or have no right to inspect or demand transfer book, which shall contain a record of all
stockholder of the corporation at reasonable reproduction of corporate records. stocks in the names of the stockholders
hours on business days. alphabetically arranged; the installments paid
Any stockholder who shall abuse the rights and unpaid on all stocks for which subscription
No stock transfer agent or one engaged granted under this section shall be penalized has been made, and the date of payment of any
principally in the business of registering under Section 158 of this Code, without installment; a statement of every alienation, sale
transfers of stocks in behalf of a stock prejudice to the provisions of Republic Act No. or transfer of stock made, the date thereof, by
corporation shall be allowed to operate in the 8293, otherwise known as the “Intellectual and to whom made; and such other entries as
Philippines unless he secures a license from Property Code of the Philippines,” as amended, the by-laws may prescribe. The stock and
the Securities and Exchange Commission and Republic Act No. 10173, otherwise known transfer book shall be kept in the principal office
and pays a fee as may be fixed by the as the “Data Privacy Act of 2012”. of the corporation or in the office of its stock
Commission, which shall be renewable transfer agent and shall be open for inspection
annually: Provided, That a stock corporation Any officer or agent of the corporation who shall by any director or stockholder of the
is not precluded from performing or making refuse to allow the inspection and/or corporation at reasonable hours on business
transfer of its own stocks, in which case all reproduction of records in accordance with the days.
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Section 76. Plan or merger of consolidation. SEC. 75. Plan of Merger or Consolidation. – Two (2)
A stock transfer agent or one engaged – Two or more corporations may merge into or more corporations may merge into a single
principally in the business of registering a single corporation which shall be one of the corporation which shall be one of the constituent
transfers of stocks in behalf of a stock constituent corporations or may consolidate corporations or may consolidate into a new single
corporation shall be allowed to operate in the into a new single corporation which shall be corporation which shall be the consolidated
Philippines upon securing a license from the the consolidated corporation. corporation.
Commission and the payment of a fee to be
fixed by the Commission, which shall be The board of directors or trustees of each The board of directors or trustees of each
renewable annually: Provided, That a stock corporation, party to the merger or corporation, party to the merger or consolidation,
corporation is not precluded from performing or consolidation, shall approve a plan of merger shall approve a plan of merger or consolidation
making transfers of its own stocks, in which or consolidation setting forth the following: setting forth the following:
case all the rules and regulations imposed on
stock transfer agents, except the payment of a 1. The names of the corporations proposing (a) The names of the corporations proposing to
license fee herein provided, shall be applicable: to merge or consolidate, hereinafter referred merge or consolidate, hereinafter referred to as the
Provided, further, That the Commission may to as the constituent corporations; constituent corporations;
require stock corporations which transfer
and/or trade stocks in secondary markets to 2. The terms of the merger or consolidation (b) The terms of the merger or consolidation and the
have an independent transfer agent. and the mode of carrying the same into mode of carrying the same into effect;
effect;
3. A statement of the changes, if any, in the (c) A statement of the changes, if any, in the articles
Section 75. Right to financial statements. – SEC. 74. Right to Financial Statements. – A articles of incorporation of the surviving of incorporation of the surviving corporation in case
Within ten (10) days from receipt of a written corporation shall furnish a stockholder or corporation in case of merger; and, with of merger; and, in case of consolidation, all the
request of any stockholder or member, the member, within ten (10) days from receipt of their respect to the consolidated corporation in statements required to be set forth in the articles of
corporation shall furnish to him its most written request, its most recent financial statement, case of consolidation, all the statements incorporation for corporations organized under this
recent financial statement, which shall in the form and substance of the financial reporting required to be set forth in the articles of Code; and
include a balance sheet as of the end of the required by the Commission. incorporation for corporations organized
last taxable year and a profit or loss under this Code; and (d) Such other provisions with respect to the
statement for said taxable year, showing in At the regular meeting of stockholders or members, 4. Such other provisions with respect to the proposed merger or consolidation as are deemed
reasonable detail its assets and liabilities and the board of directors or trustees shall present to proposed merger or consolidation as are necessary or desirable.
the result of its operations. such stockholders or members a financial report of deemed necessary or desirable. (n)
At the regular meeting of stockholders or the operations of the corporation for the preceding
members, the board of directors or trustees year, which shall include financial statements, duly
shall present to such stockholders or signed and certified in accordance with this Code,
members a financial report of the operations and the rules the Commission may prescribe. Section 77. Stockholder’s or member’s SEC. 76. Stockholders’ or Members’ Approval. –
of the corporation for the preceding year, approval. – Upon approval by majority vote of Upon approval by a majority vote of each of the
which shall include financial statements, duly
However, if the total assets or total liabilities of the each of the board of directors or trustees of board of directors or trustees of the constituent
signed and certified by an independent corporation is less than Six hundred thousand the constituent corporations of the plan of corporations of the plan of merger or consolidation,
certified public accountant. pesos (P600,000.00), or such other amount as merger or consolidation, the same shall be the same shall be submitted for approval by the
may be determined appropriate by the submitted for approval by the stockholders or stockholders or members of each of such
However, if the paid-up capital of the Department of Finance, the financial statements members of each of such corporations at corporations at separate corporate meetings duly
corporation is less than P50,000.00, the may be certified under oath by the treasurer and separate corporate meetings duly called for called for the purpose. Notice of such meetings
financial statements may be certified under the president. the purpose. Notice of such meetings shall shall be given to all stockholders or members of
oath by the treasurer or any responsible be given to all stockholders or members the respective corporations in the same manner
officer of the corporation. (n) of the respective corporations, at least as giving notice of regular or special meetings
two (2) weeks prior to the date of the under Section 49 of this Code. The notice shall
meeting, either personally or by registered state the purpose of the meeting and include a
TITLE IX TITLE IX mail. Said notice shall state the purpose of copy or a summary of the plan of merger or
MERGER AND CONSOLIDATION MERGER AND CONSOLIDATION the meeting and shall include a copy or a consolidation.
summary of the plan of merger or
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consolidation. The affirmative vote of The affirmative vote of stockholders (d) The carrying amounts and fair values of the
stockholders representing at least two-thirds representing at least two-thirds (2/3) of the assets and liabilities of the respective
(2/3) of the outstanding capital stock of each outstanding capital stock of each corporation in companies as of the agreed cut-off date;
corporation in the case of stock corporations the case of stock corporations or at least two-
or at least two-thirds (2/3) of the members in thirds (2/3) of the members in the case of non- (e) The method to be used in the merger or
the case of non-stock corporations shall be stock corporations shall be necessary for the consolidation of accounts of the companies;
necessary for the approval of such plan. Any approval of such plan. Any dissenting
dissenting stockholder in stock corporations stockholder may exercise the right of appraisal (f) The provisional or pro-forma values, as
may exercise his appraisal right in in accordance with this Code: Provided, That if merged or consolidated, using the accounting
accordance with the Code: Provided, That if after the approval by the stockholders of such method; and
after the approval by the stockholders of such plan, the board of directors decides to abandon
plan, the board of directors decides to the plan, the right of appraisal shall be (g) Such other information as may be prescribed
abandon the plan, the appraisal right shall be extinguished. by the Commission.
extinguished.
Any amendment to the plan of merger Any amendment to the plan of merger or
or consolidation may be made, provided such consolidation may be made: Provided, That such Section 79. Effectivity of merger or SEC. 78. Effectivity of Merger or Consolidation. –
amendment is approved by majority vote of amendment is approved by a majority vote of the consolidation. – The articles of merger or of The articles of merger or of consolidation, signed
the respective boards of directors or trustees respective boards of directors or trustees of all the consolidation, signed and certified as herein and certified as required by this Code, shall be
of all the constituent corporations and ratified constituent corporations and ratified by the above required, shall be submitted to the submitted to the Commission for its approval:
by the affirmative vote of stockholders affirmative vote of stockholders representing at Securities and Exchange Commission in Provided, That in the case of merger or
representing at least two-thirds (2/3) of the least two-thirds (2/3) of the outstanding capital stock quadruplicate for its approval: Provided, consolidation of banks or banking institutions, loan
outstanding capital stock or of two-thirds or of two-thirds (2/3) of the members of each of the That in the case of merger or consolidation of associations, trust companies, insurance
(2/3) of the members of each of the constituent corporations. Such plan, together with banks or banking institutions, building and companies, public utilities, educational institutions,
constituent corporations. Such plan, together any amendment, shall be considered as the loan associations, trust companies, and other special corporations governed by special
with any amendment, shall be considered as agreement of merger or consolidation. insurance companies, public utilities, laws, the favorable recommendation of the
the agreement of merger or consolidation. (n) educational institutions and other special appropriate government agency shall first be
corporations governed by special laws, the obtained. If the Commission is satisfied that the
favorable recommendation of the appropriate merger or consolidation of the corporations
Section 78. Articles of merger or SEC. 77. Articles of Merger or Consolidation. – After government agency shall first be obtained. If concerned is consistent with the provisions of this
consolidation. – After the approval by the the approval by the stockholders or members as the Commission is satisfied that the merger Code and existing laws, it shall issue a certificate
stockholders or members as required by the required by the preceding section, articles of merger or consolidation of the corporations approving the articles and plan of merger or of
preceding section, articles of merger or or articles of consolidation shall be executed by concerned is not inconsistent with the consolidation, at which time the merger or
articles of consolidation shall be executed by each of the constituent corporations, to be signed provisions of this Code and existing laws, it consolidation shall be effective.
each of the constituent corporations, to be by the president or vice-president and certified by shall issue a certificate of merger or of
signed by the president or vice-president and the secretary or assistant secretary of each consolidation, at which time the merger or If, upon investigation, the Commission has reason
certified by the secretary or assistant corporation setting forth: consolidation shall be effective. to believe that the proposed merger or consolidation
secretary of each corporation setting forth: is contrary to or inconsistent with the provisions of
1. The plan of the merger or the plan of (a) The plan of the merger or the plan of If, upon investigation, the Securities and this Code or existing laws, it shall set a hearing to
consolidation; consolidation; Exchange Commission has reason to believe give the corporations concerned the opportunity to
2. As to stock corporations, the number of that the proposed merger or consolidation is be heard. Written notice of the date, time, and place
shares outstanding, or in the case of non- (b) As to stock corporations, the number of shares contrary to or inconsistent with the provisions of hearing shall be given to each constituent
stock corporations, the number of members; outstanding, or in the case of non-stock of this Code or existing laws, it shall set a corporation at least two (2) weeks before said
and corporations, the number of members; hearing to give the corporations concerned hearing. The Commission shall thereafter proceed
3. As to each corporation, the number of the opportunity to be heard. Written notice of as provided in this Code.
shares or members voting for and against (c) As to each corporation, the number of shares or the date, time and place of hearing shall be
such plan, respectively. (n) members voting for or against such plan, given to each constituent corporation at least
respectively; two (2) weeks before said hearing. The
Commission shall thereafter proceed as
provided in this Code. (n)
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TITLE X
 TITLE X
APPRAISAL RIGHT APPRAISAL RIGHT
Section 80. Effects of merger or SEC. 79. Effects of Merger or Consolidation. – The
consolidation. – The merger or consolidation merger or consolidation shall have the following Section 81. Instances of appraisal right. – SEC. 80. When the Right of Appraisal May Be
shall have the following effects: effects: Any stockholder of a corporation shall have Exercised. – Any stockholder of a corporation shall
the right to dissent and demand payment of have the right to dissent and demand payment of
the fair value of his shares in the following the fair value of the shares in the following
1. The constituent corporations shall become (a) The constituent corporations shall become a instances: instances:
a single corporation which, in case of merger, single corporation which, in case of merger, shall be
shall be the surviving corporation designated the surviving corporation designated in the plan of 1. In case any amendment to the articles of (a) In case an amendment to the articles of
in the plan of merger; and, in case of merger; and, in case of consolidation, shall be the incorporation has the effect of changing or incorporation has the effect of changing or
consolidation, shall be the consolidated consolidated corporation designated in the plan of restricting the rights of any stockholder or restricting the rights of any stockholder or class of
corporation designated in the plan of consolidation; class of shares, or of authorizing preferences shares, or of authorizing preferences in any respect
consolidation; in any respect superior to those of superior to those of outstanding shares of any
2. The separate existence of the constituent (b) The separate existence of the constituent outstanding shares of any class, or of class, or of extending or shortening the term of
corporations shall cease, except that of the corporations shall cease, except that of the extending or shortening the term of corporate corporate existence;
surviving or the consolidated corporation; surviving or the consolidated corporation; existence;
3. The surviving or the consolidated (b) In case of sale, lease, exchange, transfer,
corporation shall possess all the rights, (c) The surviving or the consolidated corporation 2. In case of sale, lease, exchange, transfer, mortgage, pledge or other disposition of all or
privileges, immunities and powers and shall shall possess all the rights, privileges, immunities, mortgage, pledge or other disposition of all or substantially all of the corporate property and
be subject to all the duties and liabilities of a and powers and shall be subject to all the duties and substantially all of the corporate property and assets as provided in this Code;
corporation organized under this Code; liabilities of a corporation organized under this assets as provided in the Code; and
4. The surviving or the consolidated Code; 3. In case of merger or consolidation. (n) (c) In case of merger or consolidation; and
corporation shall thereupon and thereafter
possess all the rights, privileges, immunities (d) The surviving or the consolidated corporation (d) In case of investment of corporate funds for
and franchises of each of the constituent shall possess all the rights, privileges, immunities any purpose other than the primary purpose of
corporations; and all property, real or and franchises of each constituent corporation; and the corporation.
personal, and all receivables due on all real or personal property, all receivables due on
whatever account, including subscriptions to whatever account, including subscriptions to shares Section 82. How right is exercised. – The SEC. 81. How Right is Exercised. – The
shares and other choses in action, and all and other choses in action, and every other interest appraisal right may be exercised by any dissenting stockholder who votes against a
and every other interest of, or belonging to, of, belonging to, or due to each constituent stockholder who shall have voted against the proposed corporate action may exercise the
or due to each constituent corporation, shall corporation, shall be deemed transferred to and proposed corporate action, by making a right of appraisal by making a written demand
be deemed transferred to and vested in such vested in such surviving or consolidated corporation written demand on the corporation within on the corporation for the payment of the fair
surviving or consolidated corporation without without further act or deed; and thirty (30) days after the date on which the value of shares held within thirty (30) days from
further act or deed; and vote was taken for payment of the fair value the date on which the vote was taken: Provided,
5. The surviving or consolidated corporation (e) The surviving or consolidated corporation shall of his shares: Provided, That failure to make That failure to make the demand within such period
shall be responsible and liable for all the be responsible for all the liabilities and obligations the demand within such period shall be shall be deemed a waiver of the appraisal right. If
liabilities and obligations of each of the of each constituent corporation as though such deemed a waiver of the appraisal right. If the the proposed corporate action is implemented, the
constituent corporations in the same manner surviving or consolidated corporation had itself proposed corporate action is implemented or corporation shall pay the stockholder, upon
as if such surviving or consolidated incurred such liabilities or obligations; and any affected, the corporation shall pay to such surrender of the certificate or certificates of stock
corporation had itself incurred such liabilities pending claim, action or proceeding brought by or stockholder, upon surrender of the certificate representing the stockholder’s shares, the fair
or obligations; and any pending claim, action against any constituent corporation may be or certificates of stock representing his value thereof as of the day before the vote was
or proceeding brought by or against any of prosecuted by or against the surviving or shares, the fair value thereof as of the day taken, excluding any appreciation or depreciation in
such constituent corporations may be consolidated corporation. The rights of creditors or prior to the date on which the vote was taken, anticipation of such corporate action.
prosecuted by or against the surviving or liens upon the property of such constituent excluding any appreciation or depreciation in
consolidated corporation. The rights of corporations shall not be impaired by the merger or anticipation of such corporate action.
creditors or liens upon the property of any of consolidation. If within a period of sixty (60) days from the If, within sixty (60) days from the approval of the
such constituent corporations shall not be date the corporate action was approved by corporate action by the stockholders, the
impaired by such merger or consolidation. (n) the stockholders, the withdrawing withdrawing stockholder and the corporation
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stockholder and the corporation cannot cannot agree on the fair value of the shares, it shall paid the fair value of his shares shall cease, distributions which would have accrued on the
agree on the fair value of the shares, it shall be determined and appraised by three (3) his status as a stockholder shall thereupon shares shall be paid to the stockholder.
be determined and appraised by three (3) disinterested persons, one of whom shall be named be restored, and all dividend distributions
disinterested persons, one of whom shall be by the stockholder, another by the corporation, and which would have accrued on his shares
named by the stockholder, another by the the third by the two (2) thus chosen. The findings of shall be paid to him. (n)
corporation, and the third by the two thus the majority of the appraisers shall be final, and
chosen. The findings of the majority of the their award shall be paid by the corporation within Section 85. Who bears costs of appraisal. – SEC. 84. Who Bears Costs of Appraisal. – The
appraisers shall be final, and their award thirty (30) days after such award is made: Provided, The costs and expenses of appraisal shall be costs and expenses of appraisal shall be borne by
shall be paid by the corporation within thirty That no payment shall be made to any dissenting borne by the corporation, unless the fair the corporation, unless the fair value ascertained by
(30) days after such award is made: stockholder unless the corporation has unrestricted value ascertained by the appraisers is the appraisers is approximately the same as the
Provided, That no payment shall be made to retained earnings in its books to cover such approximately the same as the price which price which the corporation may have offered to pay
any dissenting stockholder unless the payment: Provided, further, That upon payment by the corporation may have offered to pay the the stockholder, in which case they shall be borne
corporation has unrestricted retained the corporation of the agreed or awarded price, the stockholder, in which case they shall be by the latter. In the case of an action to recover
earnings in its books to cover such payment: stockholder shall forthwith transfer the shares to the borne by the latter. In the case of an action to such fair value, all costs and expenses shall be
and Provided, further, That upon payment by corporation. recover such fair value, all costs and assessed against the corporation, unless the
the corporation of the agreed or awarded expenses shall be assessed against the refusal of the stockholder to receive payment was
price, the stockholder shall forthwith transfer corporation, unless the refusal of the unjustified.
his shares to the corporation. (n) stockholder to receive payment was
unjustified. (n)
Section 83. Effect of demand and termination SEC. 82. Effect of Demand and Termination of
of right. – From the time of demand for Right. – From the time of demand for payment of
payment of the fair value of a stockholder’s the fair value of a stockholder’s shares until either Section 86. Notation on certificates; rights of SEC. 85. Notation on Certificates; Rights of
shares until either the abandonment of the the abandonment of the corporate action involved transferee. – Within ten (10) days after Transferee. – Within ten (10) days after demanding
corporate action involved or the purchase of or the purchase of the said shares by the demanding payment for his shares, a payment for shares held, a dissenting stockholder
the said shares by the corporation, all rights corporation, all rights accruing to such shares, dissenting stockholder shall submit the shall submit the certificates of stock representing
accruing to such shares, including voting and including voting and dividend rights, shall be certificates of stock representing his shares the shares to the corporation for notation that such
dividend rights, shall be suspended in suspended in accordance with the provisions of this to the corporation for notation thereon that shares are dissenting shares. Failure to do so shall,
accordance with the provisions of this Code, Code, except the right of such stockholder to such shares are dissenting shares. His at the option of the corporation, terminate the rights
except the right of such stockholder to receive payment of the fair value thereof: Provided, failure to do so shall, at the option of the under this Title. If shares represented by the
receive payment of the fair value thereof: That if the dissenting stockholder is not paid the corporation, terminate his rights under this certificates bearing such notation are transferred,
Provided, That if the dissenting stockholder is value of the said shares within thirty (30) days after Title. If shares represented by the certificates and the certificates consequently cancelled, the
not paid the value of his shares within 30 the award, the voting and dividend rights shall bearing such notation are transferred, and rights of the transferor as a dissenting stockholder
days after the award, his voting and dividend immediately be restored. the certificates consequently cancelled, the under this Title shall cease and the transferee shall
rights shall immediately be restored. (n) rights of the transferor as a dissenting have all the rights of a regular stockholder; and all
stockholder under this Title shall cease and dividend distributions which would have accrued on
the transferee shall have all the rights of a such shares shall be paid to the transferee.
Section 84. When right to payment ceases. – SEC. 83. When Right to Payment Ceases. – No regular stockholder; and all dividend
No demand for payment under this Title may demand for payment under this Title may be distributions which would have accrued on
be withdrawn unless the corporation withdrawn unless the corporation consents thereto. such shares shall be paid to the transferee.
consents thereto. If, however, such demand If, however, such demand for payment is withdrawn (n)
for payment is withdrawn with the consent of with the consent of the corporation, or if the
the corporation, or if the proposed corporate proposed corporate action is abandoned or TITLE XI TITLE XI
action is abandoned or rescinded by the rescinded by the corporation or disapproved by the NON-STOCK CORPORATIONS NON-STOCK CORPORATION
corporation or disapproved by the Securities Commission where such approval is necessary, or
and Exchange Commission where such if the Commission determines that such Section 87. Definition. – For the purposes of SEC. 86. Definition. – For purposes of this Code
approval is necessary, or if the Securities and stockholder is not entitled to the appraisal right, this Code, a non-stock corporation is one and subject to its provisions on dissolution, a non-
Exchange Commission determines that such then the right of the stockholder to be paid the fair where no part of its income is distributable as stock corporation is one where no part of its income
stockholder is not entitled to the appraisal value of the shares shall cease, the status as the dividends to its members, trustees, or is distributable as dividends to its members,
right, then the right of said stockholder to be stockholder shall be restored, and all dividend officers, subject to the provisions of this Code trustees, or officers: Provided, That any profit which
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on dissolution: Provided, That any profit a non-stock corporation may obtain incidental to its
which a non-stock corporation may obtain as operations shall, whenever necessary or proper, be Section 90. Non-transferability of SEC. 89. Nontransferability of Membership. –
an incident to its operations shall, whenever used for the furtherance of the purpose or purposes membership. – Membership in a non-stock Membership in a nonstock corporation and all rights
necessary or proper, be used for the for which the corporation was organized, subject to corporation and all rights arising therefrom arising therefrom are personal and non-
furtherance of the purpose or purposes for the provisions of this Title. are personal and non-transferable, unless transferable, unless the articles of incorporation or
which the corporation was organized, subject the articles of incorporation or the by-laws the by-laws otherwise provide.
to the provisions of this Title. The provisions governing stock corporations, when otherwise provide. (n)
pertinent, shall be applicable to non-stock
The provisions governing stock corporation, corporations, except as may be covered by specific Section 91. Termination of membership. – SEC. 90. Termination of Membership. –
when pertinent, shall be applicable to non- provisions of this Title. Membership shall be terminated in the Membership shall be terminated in the manner and
stock corporations, except as may be manner and for the causes provided in the for the causes provided in the articles of
covered by specific provisions of this Title. (n) articles of incorporation or the by-laws. incorporation or the by-laws. Termination of
Termination of membership shall have the membership shall extinguish all rights of a member
effect of extinguishing all rights of a member in the corporation or in its property, unless
Section 88. Purposes. – Non-stock SEC. 87. Purposes. – Non-stock corporations may in the corporation or in its property, unless otherwise provided in the articles of incorporation
corporations may be formed or organized for be formed or organized for charitable, religious, otherwise provided in the articles of or the by-laws.
charitable, religious, educational, educational, professional, cultural, fraternal, incorporation or the by-laws. (n)
professional, cultural, fraternal, literary, literary, scientific, social, civic service, or similar
scientific, social, civic service, or similar purposes, like trade, industry, agricultural and like
purposes, like trade, industry, agricultural chambers, or any combination thereof, subject to CHAPTER II Chapter II
and like chambers, or any combination the special provisions of this Title governing TRUSTEES AND OFFICES TRUSTEES AND OFFICERS
thereof, subject to the special provisions of particular classes of non-stock corporations.
this Title governing particular classes of non- Section 92. Election and term of trustees. – SEC. 91. Election and Term of Trustees. – The
stock corporations. (n) Unless otherwise provided in the articles of number of trustees shall be fixed in the articles of
incorporation or the by-laws, the board of incorporation or bylaws which may or may not be
CHAPTER I Chapter I trustees of non-stock corporations, which more than fifteen (15). They shall hold office for
MEMBERS MEMBERS may be more than fifteen (15) in number as not more than three (3) years until their successors
may be fixed in their articles of incorporation are elected and qualified. Trustees elected to fill
Section 89. Right to vote. – The right of the SEC. 88. Right to Vote. – The right of the members or by-laws, shall, as soon as organized, so vacancies occurring before the expiration of a
members of any class or classes to vote may of any class or classes to vote may be limited, classify themselves that the term of office particular term shall hold office only for the
be limited, broadened or denied to the extent broadened, or denied to the extent specified in the of one-third (1/3) of their number shall unexpired period.
specified in the articles of incorporation or the articles of incorporation or the bylaws. Unless so expire every year; and subsequent
by-laws. Unless so limited, broadened or limited, broadened, or denied, each member, elections of trustees comprising one-third Except with respect to independent trustees of non-
denied, each member, regardless of class, regardless of class, shall be entitled to one (1) vote. (1/3) of the board of trustees shall be held stock corporations vested with public interest, only
shall be entitled to one vote. annually and trustees so elected shall a member of the corporation shall be elected as
have a term of three (3) years. Trustees trustee.
Unless otherwise provided in the articles of
Unless otherwise provided in the articles of thereafter elected to fill vacancies occurring
incorporation or the by-laws, a member mayincorporation or the bylaws, a member may vote by before the expiration of a particular term shall Unless otherwise provided in the articles of
vote by proxy in accordance with the proxy, in accordance with the provisions of this hold office only for the unexpired period. incorporation or the bylaws, the members may
provisions of this Code. (n) Code. The bylaws may likewise authorize voting directly elect officers of a nonstock corporation.
through remote communication and/or in No person shall be elected as trustee unless
Voting by mail or other similar means by absentia. he is a member of the corporation.
members of non-stock corporations may
be authorized by the by-laws of non-stock Unless otherwise provided in the articles of
corporations with the approval of, and incorporation or the by-laws, officers of a
under such conditions which may be non-stock corporation may be directly
prescribed by, the Securities and elected by the members. (n)
Exchange Commission.

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Chapter; (d) Assets other than those mentioned in the

Section 93. Place of meetings. – The SEC. 92. List of Members and Proxies, Place of 4. Assets other than those mentioned in the preceding paragraphs, if any, shall be distributed in
by-laws may provide that the members of a Meetings. – The corporation shall, at all times, preceding paragraphs, if any, shall be accordance with the provisions of the articles of
non-stock corporation may hold their regular keep a list of its members and their proxies in distributed in accordance with the provisions incorporation or the bylaws, to the extent that the
or special meetings at any place even outside the form the Commission may require. The list of the articles of incorporation or the by-laws, articles of incorporation or the bylaws, determine
the place where the principal office of the shall be updated to reflect the members and to the extent that the articles of incorporation the distributive rights of members, or any class or
corporation is located: Provided, That proper proxies of record twenty (20) days prior to any or the by-laws, determine the distributive classes of members, or provide for distribution; and
notice is sent to all members indicating the scheduled election. The bylaws may provide that rights of members, or any class or classes of
date, time and place of the meeting: and the members of a nonstock corporation may hold members, or provide for distribution; and (e) In any other case, assets may be distributed to
Provided, further, That the place of meeting their regular or special meetings at any place even 5. In any other case, assets may be such persons, societies, organizations or
shall be within the Philippines. (n) outside the place where the principal office of the distributed to such persons, societies, corporations, whether or not organized for profit, as
corporation is located: Provided, That proper notice organizations or corporations, whether or not may be specified in a plan of distribution adopted
is sent to all members indicating the date, time and organized for profit, as may be specified in a pursuant to this Chapter.
place of the meeting: Provided, further, That the plan of distribution adopted pursuant to this
place of meeting shall be within Philippine territory. Chapter. (n)

CHAPTER III Chapter III Section 95. Plan of distribution of assets. – A SEC. 94. Plan of Distribution of Assets. – A plan
DISTRIBUTION OF ASSETS IN NON- DISTRIBUTION OF ASSETS IN NON-STOCK plan providing for the distribution of assets, providing for the distribution of assets, consistent
STOCK CORPORATIONS CORPORATIONS not inconsistent with the provisions of this with the provisions of this Title, may be adopted by
Title, may be adopted by a non-stock a non-stock corporation in the process of
Section 94. Rules of distribution. – In case SEC. 93. Rules of Distribution. – The assets of a corporation in the process of dissolution in dissolution in the following manner:
dissolution of a non-stock corporation in nonstock corporation undergoing the process the following manner:
accordance with the provisions of this Code, of dissolution for reasons other than those set The board of trustees shall, by majority a) The board of trustees shall, by majority vote,
its assets shall be applied and distributed as forth in Section 139 of this Code, shall be applied vote, adopt a resolution recommending a adopt a resolution recommending a plan of
follows: and distributed as follows: plan of distribution and directing the distribution and directing the submission thereof to
submission thereof to a vote at a regular or a vote at a regular or special meeting of members
1. All liabilities and obligations of the (a) All liabilities and obligations of the corporation special meeting of members having voting having voting rights;
corporation shall be paid, satisfied and shall be paid, satisfied and discharged, or adequate rights. Written notice setting forth the
discharged, or adequate provision shall be provision shall be made therefor; proposed plan of distribution or a summary b) Each member entitled to vote shall be given a
made therefore; thereof and the date, time and place of such written notice setting forth the proposed plan of
(b) Assets held by the corporation upon a condition meeting shall be given to each member distribution or a summary thereof and the date, time
2. Assets held by the corporation upon a requiring return, transfer or conveyance, and which entitled to vote, within the time and in the and place of such meeting within the time and in the
condition requiring return, transfer or condition occurs by reason of the dissolution, shall manner provided in this Code for the giving manner provided in this Code for the giving of
conveyance, and which condition occurs by be returned, transferred or conveyed in accordance of notice of meetings to members. Such plan notice of meetings; and
reason of the dissolution, shall be returned, with such requirements; of distribution shall be adopted upon
transferred or conveyed in accordance with approval of at least two-thirds (2/3) of the c) Such plan of distribution shall be adopted upon
such requirements; (c) Assets received and held by the corporation members having voting rights present or approval of at least two-thirds (2/3) of the members
3. Assets received and held by the subject to limitations permitting their use only for represented by proxy at such meeting. (n) having voting rights present or represented by
corporation subject to limitations permitting charitable, religious, benevolent, educational or proxy at such meeting.
their use only for charitable, religious, similar purposes, but not held upon a condition
benevolent, educational or similar purposes, requiring return, transfer or conveyance by reason
but not held upon a condition requiring return, of the dissolution, shall be transferred or conveyed TITLE XII TITLE XII
transfer or conveyance by reason of the to one (1) or more corporations, societies or CLOSE CORPORATIONS CLOSE CORPORATIONS
dissolution, shall be transferred or conveyed organizations engaged in activities in the
to one or more corporations, societies or Philippines substantially similar to those of the Section 96. Definition and applicability of SEC. 95. Definition and Applicability of Title. – A
organizations engaged in activities in the dissolving corporation according to a plan of Title. - A close corporation, within the close corporation, within the meaning of this Code,
Philippines substantially similar to those of distribution adopted pursuant to this Chapter; meaning of this Code, is one whose articles is one whose articles of incorporation provides that:
the dissolving corporation according to a plan of incorporation provide that: (1) All the (a) All the corporation’s issued stock of all classes,
of distribution adopted pursuant to this corporation’s issued stock of all classes, exclusive of treasury shares, shall be held of record
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exclusive of treasury shares, shall be held of by not more than a specified number of persons, 1. No meeting of stockholders need be a board of directors. So long as this provision
record by not more than a specified number not exceeding twenty (20); (b) All the issued stock called to elect directors; continues in effect, no meeting of stockholders
of persons, not exceeding twenty (20); (2) all of all classes shall be subject to one or more 2. Unless the context clearly requires need be called to elect directors: Provided, That
the issued stock of all classes shall be specified restrictions on transfer permitted by this otherwise, the stockholders of the the stockholders of the corporation shall be
subject to one or more specified restrictions Title; and (c) The corporation shall not list in any corporation shall be deemed to be deemed to be directors for the purpose of
on transfer permitted by this Title; and (3) The stock exchange or make any public offering of its directors for the purpose of applying the applying the provisions of this Code, unless the
corporation shall not list in any stock stocks of any class. Notwithstanding the foregoing, provisions of this Code; and context clearly requires otherwise: Provided
exchange or make any public offering of any a corporation shall not be deemed a close 3. The stockholders of the corporation further, That the stockholders of the
of its stock of any class. Notwithstanding the corporation when at least two-thirds (2/3) of its shall be subject to all liabilities of corporation shall be subject to all liabilities of
foregoing, a corporation shall not be deemed voting stock or voting rights is owned or controlled directors. directors.
a close corporation when at least two-thirds by another corporation which is not a close
(2/3) of its voting stock or voting rights is corporation within the meaning of this Code. The articles of incorporation may likewise The articles of incorporation may likewise provide
owned or controlled by another corporation provide that all officers or employees or that that all officers or employees or that specified
which is not a close corporation within the Any corporation may be incorporated as a close specified officers or employees shall be officers or employees shall be elected or appointed
meaning of this Code. corporation, except mining or oil companies, stock elected or appointed by the stockholders, by the stockholders, instead of by the board of
Any corporation may be incorporated as a exchanges, banks, insurance companies, public instead of by the board of directors. directors.
close corporation, except mining or oil utilities, educational institutions and corporations
companies, stock exchanges, banks, declared to be vested with public interest in Section 98. Validity of restrictions on transfer SEC. 97. Validity of Restrictions on Transfer of
insurance companies, public utilities, accordance with the provisions of this Code. of shares. – Restrictions on the right to Shares. – Restrictions on the right to transfer
educational institutions and corporations transfer shares must appear in the articles of shares must appear in the articles of incorporation,
declared to be vested with public interest in The provisions of this Title shall primarily govern incorporation and in the by-laws as well as in in the by-laws, as well as in the certificate of stock;
accordance with the provisions of this Code. close corporations: Provided, That other Titles in the certificate of stock; otherwise, the same otherwise, the same shall not be binding on any
The provisions of this Title shall primarily this Code shall apply suppletorily, except as shall not be binding on any purchaser thereof purchaser in good faith. Said restrictions shall not
govern close corporations: Provided, That otherwise provided under this Title. in good faith. Said restrictions shall not be be more onerous than granting the existing
the provisions of other Titles of this Code more onerous than granting the existing stockholders or the corporation the option to
shall apply suppletorily except insofar as this stockholders or the corporation the option to purchase the shares of the transferring stockholder
Title otherwise provides. purchase the shares of the transferring with such reasonable terms, conditions or period
stockholder with such reasonable terms, stated. If upon the expiration of said period, the
Section 97. Articles of incorporation. – The SEC. 96. Articles of Incorporation. – The articles of conditions or period stated therein. If upon existing stockholders or the corporation fails to
articles of incorporation of a close incorporation of a close corporation may provide the expiration of said period, the existing exercise the option to purchase, the transferring
corporation may provide: for: stockholders or the corporation fails to stockholder may sell their shares to any third
1. For a classification of shares or rights and exercise the option to purchase, the person.
the qualifications for owning or holding the (a) A classification of shares or rights, the transferring stockholder may sell his shares
same and restrictions on their transfers as qualifications for owning or holding the same, and to any third person.
may be stated therein, subject to the restrictions on their transfers, subject to the
provisions of the following section; provisions of the following section;
2. For a classification of directors into one or
more classes, each of whom may be voted (b) A classification of directors into one (1) or more Section 99. Effects of issuance or transfer of SEC. 98. Effects of Issuance or Transfer of Stock
for and elected solely by a particular class of classes, each of whom may be voted for and stock in breach of qualifying conditions. - in Breach of Qualifying Conditions. –
stock; and elected solely by a particular class of stock; and 1. If stock of a close corporation is issued or
3. For a greater quorum or voting transferred to any person who is not entitled (a) If a stock of a close corporation is issued or
requirements in meetings of stockholders or (c) Greater quorum or voting requirements in under any provision of the articles of transferred to any person who is not eligible thereof
directors than those provided in this Code. meetings of stockholders or directors than those incorporation to be a holder of record of its under any provision of the articles of incorporation,
The articles of incorporation of a close provided in this Code. stock, and if the certificate for such stock and if the certificate for such stock conspicuously
corporation may provide that the business of conspicuously shows the qualifications of the shows the qualifications of the persons entitled to
the corporation shall be managed by the The articles of incorporation of a close persons entitled to be holders of record be holders of record thereof, such person is
stockholders of the corporation rather than by corporation may provide that the business of thereof, such person is conclusively conclusively presumed to have notice of the fact of
a board of directors. So long as this provision the corporation shall be managed by the presumed to have notice of the fact of his the ineligibility to be a stockholder.
continues in effect: stockholders of the corporation rather than by ineligibility to be a stockholder.
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2. If the articles of incorporation of a close (b) If the articles of incorporation of a close

corporation states the number of persons, corporation states the number of persons, not Section 100. Agreements by stockholders. - SEC. 99. Agreements by Stockholders. –
not exceeding twenty (20), who are entitled exceeding twenty (20), who are entitled to be 1. Agreements by and among stockholders
to be holders of record of its stock, and if the stockholders of record, and if the certificate for such executed before the formation and (a) Agreements duly signed and executed by and
certificate for such stock conspicuously stock conspicuously states such number, and the organization of a close corporation, signed by among all stockholders before the formation and
states such number, and if the issuance or issuance or transfer of stock to any person would all stockholders, shall survive the organization of a close corporation shall survive the
transfer of stock to any person would cause cause the stock to be held by more than such incorporation of such corporation and shall incorporation and shall continue to be valid and
the stock to be held by more than such number of persons, the person to whom such stock continue to be valid and binding between and binding between such stockholders, if such be their
number of persons, the person to whom such is issued or transferred is conclusively presumed to among such stockholders, if such be their intent, to the extent that such agreements are
stock is issued or transferred is conclusively have notice of this fact. intent, to the extent that such agreements are consistent with the articles of incorporation,
presumed to have notice of this fact. not inconsistent with the articles of irrespective of where the provisions of such
3. If a stock certificate of any close (c) If a stock certificate of a close corporation incorporation, irrespective of where the agreements are contained, except those required
corporation conspicuously shows a conspicuously shows a restriction on transfer of the provisions of such agreements are by this Title to be embodied in said articles of
restriction on transfer of stock of the corporation’s stock and the transferee acquires the contained, except those required by this Title incorporation.
corporation, the transferee of the stock is stock in violation of such restriction, the transferee to be embodied in said articles of
conclusively presumed to have notice of the is conclusively presumed to have notice of the fact incorporation. (b) A written agreement signed by two (2) or more
fact that he has acquired stock in violation of that the stock was acquired in violation of the 2. An agreement between two or more stockholders may provide that in exercising any
the restriction, if such acquisition violates the restriction. stockholders, if in writing and signed by the voting right, the shares held by them shall be voted
restriction. parties thereto, may provide that in as provided as agreed, or in accordance with a
4. Whenever any person to whom stock of a (d) Whenever a person to whom stock of a close exercising any voting rights, the shares held procedure agreed upon by them.
close corporation has been issued or corporation has been issued or transferred has, or by them shall be voted as therein provided,
transferred has, or is conclusively presumed is conclusively presumed under this section to have or as they may agree, or as determined in (c) No provision in a written agreement signed by
under this section to have, notice either (a) notice of: (1) the person’s ineligibility to be a accordance with a procedure agreed upon by the stockholders, relating to any phase of corporate
that he is a person not eligible to be a holder stockholder of the corporation, or (2) that the them. affairs, shall be invalidated between the parties on
of stock of the corporation, or (b) that transfer transfer of stock would cause the stock of the 3. No provision in any written agreement the ground that its effect is to make them partners
of stock to him would cause the stock of the corporation to be held by more than the number of signed by the stockholders, relating to any among themselves.
corporation to be held by more than the persons permitted under its articles of phase of the corporate affairs, shall be
number of persons permitted by its articles of incorporation; or (3) that the transfer violates a invalidated as between the parties on the (d) A written agreement among some or all of the
incorporation to hold stock of the corporation, restriction on transfer of stock, and the corporation ground that its effect is to make them stockholders in a close corporation shall not be
or (c) that the transfer of stock is in violation may, at its option, refuse to register the transfer in partners among themselves. invalidated on the ground that it relates to the
of a restriction on transfer of stock, the the name of the transferee. 4. A written agreement among some or all of conduct of the business and affairs of the
corporation may, at its option, refuse to the stockholders in a close corporation shall corporation as to restrict or interfere with the
register the transfer of stock in the name of (e) The provisions of Subsection (d) shall not be not be invalidated on the ground that it so discretion or powers of the board of directors:
the transferee. applicable if the transfer of stock, though contrary relates to the conduct of the business and Provided, That such agreement shall impose on the
5. The provisions of subsection (4) shall not to Subsections (a), (b) or (c), has been consented affairs of the corporation as to restrict or stockholders who are parties thereto the liabilities
be applicable if the transfer of stock, though to by all the stockholders of the close corporation, interfere with the discretion or powers of the for managerial acts imposed on directors by this
contrary to subsections (1), (2) or (3), has or if the close corporation has amended its articles board of directors: Provided, That such Code.
been consented to by all the stockholders of of incorporation in accordance with this Title. agreement shall impose on the stockholders
the close corporation, or if the close who are parties thereto the liabilities for (e) Stockholders actively engaged in the
corporation has amended its articles of (f) The term “transfer”, as used in this section, is not managerial acts imposed by this Code on management or operation of the business and
incorporation in accordance with this Title. limited to a transfer for value. directors. affairs of a close corporation shall be held to strict
6. The term "transfer", as used in this section, 5. To the extent that the stockholders are fiduciary duties to each other and among
is not limited to a transfer for value. (g) The provisions of this section shall not impair actively engaged in the management or themselves. The stockholders shall be personally
7. The provisions of this section shall not any right which the transferee may have to either operation of the business and affairs of a liable for corporate torts unless the corporation has
impair any right which the transferee may rescind the transfer or recover the stock under any close corporation, the stockholders shall be obtained reasonably adequate liability insurance.
have to rescind the transfer or to recover express or implied warranty. held to strict fiduciary duties to each other
under any applicable warranty, express or and among themselves. Said stockholders
implied. shall be personally liable for corporate torts

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unless the corporation has obtained effective unless approved by the such greater proportion of shares as may be
reasonably adequate liability insurance. affirmative vote of at least two-thirds (2/3) of specifically provided in the articles of incorporation
the outstanding capital stock, whether with or for amending, deleting or removing any of the
Section 101. When board meeting is SEC. 100. When a Board Meeting is Unnecessary without voting rights, or of such greater aforesaid provisions, at a meeting duly called for
unnecessary or improperly held. - Unless the or Improperly Held. – Unless the by-laws provide proportion of shares as may be specifically the purpose.
by-laws provide otherwise, any action by the otherwise, any action taken by the directors of a provided in the articles of incorporation for
directors of a close corporation without a close corporation without a meeting called properly amending, deleting or removing any of the
meeting shall nevertheless be deemed valid and with due notice shall nevertheless be deemed aforesaid provisions, at a meeting duly called
if: valid if: for the purpose.
1. Before or after such action is taken, written
consent thereto is signed by all the directors; (a)Before or after such action is taken, written Section 104. Deadlocks. – Notwithstanding SEC. 103. Deadlocks. – Notwithstanding any
or consent thereto is signed by all the directors; or any contrary provision in the articles of contrary provision in the close corporation’s articles
2. All the stockholders have actual or implied incorporation or by-laws or agreement of of incorporation, bylaws, or stockholders’
knowledge of the action and make no prompt (b)All the stockholders have actual or implied stockholders of a close corporation, if the agreement, if the directors or stockholders are so
objection thereto in writing; or knowledge of the action and make no prompt directors or stockholders are so divided divided on the management of the corporation’s
3. The directors are accustomed to take objection in writing; or respecting the management of the business and affairs that the votes required for a
informal action with the express or implied corporation’s business and affairs that the corporate action cannot be obtained, with the
acquiescence of all the stockholders; or (c)The directors are accustomed to take informal votes required for any corporate action consequence that the business and affairs of the
4. All the directors have express or implied action with the express or implied acquiescence of cannot be obtained, with the consequence corporation can no longer be conducted to the
knowledge of the action in question and none all the stockholders; or that the business and affairs of the advantage of the stockholders generally, the
of them makes prompt objection thereto in corporation can no longer be conducted to Commission, upon written petition by any
writing. (d)All the directors have express or implied the advantage of the stockholders generally, stockholder, shall have the power to arbitrate the
If a director’s meeting is held without knowledge of the action in question and none of the Securities and Exchange Commission, dispute. In the exercise of such power, the
proper call or notice, an action taken therein them makes a prompt objection in writing. upon written petition by any stockholder, Commission shall have authority to make
within the corporate powers is deemed shall have the power to arbitrate the dispute. appropriate orders, such as: (a) cancelling or
ratified by a director who failed to attend, An action within the corporate powers taken at a In the exercise of such power, the altering any provision contained in the articles of
unless he promptly files his written objection meeting held without proper call or notice, is Commission shall have authority to make incorporation, bylaws, or any stockholder’s
with the secretary of the corporation after deemed ratified by a director who failed to attend, such order as it deems appropriate, including agreement; (b) cancelling, altering or enjoining a
having knowledge thereof. unless after having knowledge thereof, the an order: (1) cancelling or altering any resolution or act of the corporation or its board of
director promptly files his written objection with provision contained in the articles of directors, stockholders, or officers; (c) directing or
the secretary of the corporation. incorporation, by-laws, or any stockholder’s prohibiting any act of the corporation or its board of
agreement; (2) cancelling, altering or directors, stockholders, officers, or other persons
Section 102. Pre-emptive right in close SEC. 101. Preemptive Right in Close Corporations. enjoining any resolution or act of the party to the action; (d) requiring the purchase at
corporations. – The pre-emptive right of – The preemptive right of stockholders in close corporation or its board of directors, their fair value of shares of any stockholder, either
stockholders in close corporations shall corporations shall extend to all stock to be issued, stockholders, or officers; (3) directing or by the corporation regardless of the availability of
extend to all stock to be issued, including including reissuance of treasury shares, whether prohibiting any act of the corporation or its unrestricted retained earnings in its books, or by the
reissuance of treasury shares, whether for for money, property or personal services, or in board of directors, stockholders, officers, or other stockholders; (e) appointing a provisional
money, property or personal services, or in payment of corporate debts, unless the articles of other persons party to the action; (4) director; (f) dissolving the corporation; or (g)
payment of corporate debts, unless the incorporation provide otherwise. requiring the purchase at their fair value of granting such other relief as the circumstances may
articles of incorporation provide otherwise. shares of any stockholder, either by the warrant.
corporation regardless of the availability of
Section 103. Amendment of articles of SEC. 102. Amendment of Articles of Incorporation. unrestricted retained earnings in its books, or A provisional director shall be an impartial person
incorporation. – Any amendment to the – Any amendment to the articles of incorporation by the other stockholders; (5) appointing a who is neither a stockholder nor a creditor of the
articles of incorporation which seeks to which seeks to delete or remove any provision provisional director; (6) dissolving the corporation or any of its subsidiaries or affiliates,
delete or remove any provision required by required by this Title or to reduce a quorum or corporation; or (7) granting such other relief and whose further qualifications, if any, may be
this Title to be contained in the articles of voting requirement stated in said articles of as the circumstances may warrant. determined by the Commission. A provisional
incorporation or to reduce a quorum or incorporation shall require the affirmative vote of at A provisional director shall be an impartial director is not a receiver of the corporation and
voting requirement stated in said articles least two-thirds (2/3) of the outstanding capital person who is neither a stockholder nor a does not have the title and powers of a custodian
of incorporation shall not be valid or stock, whether with or without voting rights, or of creditor of the corporation or of any or receiver. A provisional director shall have all the
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subsidiary or affiliate of the corporation, and rights and powers of a duly elected director, Code. (n)
whose further qualifications, if any, may be including the right to be notified of and to vote at Section 107. Pre-requisites to
determined by the Commission. A provisional meetings of directors until removed by order of the incorporation. – Except upon favorable
director is not a receiver of the corporation Commission or by all the stockholders. The recommendation of the Ministry of
and does not have the title and powers of a compensation of the provisional director shall be Education and Culture, the Securities and
custodian or receiver. A provisional director determined by agreement between such director Exchange Commission shall not accept
shall have all the rights and powers of a duly and the corporation, subject to approval of the or approve the articles of incorporation
elected director of the corporation, including Commission, which may fix the compensation and by-laws of any educational
the right to notice of and to vote at meetings absent an agreement or in the event of institution. (168a)
of directors, until such time as he shall be disagreement between the provisional director and
removed by order of the Commission or by all the corporation. Section 108. Board of trustees. – Trustees of SEC. 106. Board of Trustees. –Trustees of
the stockholders. His compensation shall be educational institutions organized as non- educational institutions organized as nonstock
determined by agreement between him and stock corporations shall not be less than five corporations shall not be less than five (5) nor more
the corporation subject to approval of the (5) nor more than fifteen (15): Provided, than fifteen (15): Provided however, That the
Commission, which may fix his however, That the number of trustees shall number of trustees shall be in multiples of five (5).
compensation in the absence of agreement be in multiples of five (5).
or in the event of disagreement between the Unless otherwise provided in the articles of Unless otherwise provided in the articles of
provisional director and the corporation. incorporation on the by-laws, the board of incorporation or by-laws, the board of trustees of
trustees of incorporated schools, colleges, or incorporated schools, colleges, or other institutions
Section 105. Withdrawal of stockholder or SEC. 104. Withdrawal of Stockholder or Dissolution other institutions of learning shall, as soon as of learning shall, as soon as organized, so classify
dissolution of corporation. – In addition and of Corporation. – In addition and without prejudice organized, so classify themselves that the themselves that the term of office of one-fifth (1/5)
without prejudice to other rights and to other rights and remedies available under this term of office of one-fifth (1/5) of their number of their number shall expire every year. Trustees
remedies available to a stockholder under Title, any stockholder of a close corporation may, shall expire every year. Trustees thereafter thereafter elected to fill vacancies, occurring before
this Title, any stockholder of a close for any reason, compel the corporation to purchase elected to fill vacancies, occurring before the the expiration of a particular term, shall hold office
corporation may, for any reason, compel the shares held at fair value, which shall not be less expiration of a particular term, shall hold only for the unexpired period. Trustees elected
said corporation to purchase his shares at than the par or issued value, when the corporation office only for the unexpired period. Trustees thereafter to fill vacancies caused by expiration of
their fair value, which shall not be less than has sufficient assets in its books to cover its debts elected thereafter to fill vacancies caused by term shall hold office for five (5) years. A majority of
their par or issued value, when the and liabilities exclusive of capital stock: Provided, expiration of term shall hold office for five (5) the trustees shall constitute a quorum for the
corporation has sufficient assets in its books That any stockholder of a close corporation may, by years. A majority of the trustees shall transaction of business. The powers and authority
to cover its debts and liabilities exclusive of written petition to the Commission, compel the constitute a quorum for the transaction of of trustees shall be defined in the bylaws.
capital stock: Provided, That any stockholder dissolution of such corporation whenever any of business. The powers and authority of
of a close corporation may, by written petition acts of the directors, officers, or those in control of trustees shall be defined in the by-laws. For institutions organized as stock corporations, the
to the Securities and Exchange Commission, the corporation is illegal, fraudulent, dishonest, For institutions organized as stock number and term of directors shall be governed by
compel the dissolution of such corporation oppressive or unfairly prejudicial to the corporation corporations, the number and term of the provisions on stock corporations.
whenever any of acts of the directors, officers or any stockholder, or whenever corporate assets directors shall be governed by the provisions
or those in control of the corporation is illegal, are being misapplied or wasted. on stock corporations. (169a)
or fraudulent, or dishonest, or oppressive or CHAPTER II Chapter II
unfairly prejudicial to the corporation or any RELIGIOUS CORPORATIONS RELIGIOUS CORPORATIONS
stockholder, or whenever corporate assets
are being misapplied or wasted. Section 109. Classes of religious SEC. 107. Classes of Religious Corporations. –
corporations. – Religious corporations may Religious corporations may be incorporated by one
TITLE XIII TITLE XIII be incorporated by one or more persons. or more persons. Such corporations may be
SPECIAL CORPORATIONS SPECIAL CORPORATIONS Such corporations may be classified into classified into corporations sole and religious
corporations sole and religious societies. societies.
CHAPTER I - EDUCATIONAL Chapter I Religious corporations shall be governed by
CORPORATIONS EDUCATIONAL CORPORATIONS this Chapter and by the general provisions on Religious corporations shall be governed by this
Section 106. Incorporation. – Educational SEC. 105. Incorporation. – Educational non-stock corporations insofar as they may Chapter and by the general provisions on non-stock
corporations shall be governed by special corporations shall be governed by special laws and be applicable. (n) corporations insofar as applicable.
laws and by the general provisions of this by the general provisions of this Code.
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Section 110. Corporation sole. – For the SEC. 108. Corporation sole. – For the purpose of The articles of incorporation may include any other
purpose of administering and managing, as administering and managing, as trustee, the affairs, provision not contrary to law for the regulation of the
trustee, the affairs, property and property and temporalities of any religious affairs of the corporation.
temporalities of any religious denomination, denomination, sect or church, a corporation sole
sect or church, a corporation sole may be may be formed by the chief archbishop, bishop, Section 112. Submission of the articles of SEC. 110. Submission of the Articles of
formed by the chief archbishop, bishop, priest, minister, rabbi, or other presiding elder of incorporation. – The articles of incorporation Incorporation. – The articles of incorporation must
priest, minister, rabbi or other presiding elder such religious denomination, sect, or church. must be verified, before filing, by affidavit or be verified, by affidavit or affirmation of the chief
of such religious denomination, sect or affirmation of the chief archbishop, bishop, archbishop, bishop, priest, minister, rabbi, or
church. (154a) priest, minister, rabbi or presiding elder, as presiding elder, as the case may be, and
the case may be, and accompanied by a accompanied by a copy of the commission,
copy of the commission, certificate of election certificate of election or letter of appointment of
Section 111. Articles of incorporation. – In SEC. 109. Articles of incorporation. – In order to or letter of appointment of such chief such chief archbishop, bishop, priest, minister,
order to become a corporation sole, the chief become a corporation sole, the chief archbishop, archbishop, bishop, priest, minister, rabbi or rabbi, or presiding elder, duly certified to be correct
archbishop, bishop, priest, minister, rabbi or bishop, priest, minister, rabbi or presiding elder of presiding elder, duly certified to be correct by by any notary public.
presiding elder of any religious any religious denomination, sect or church must file any notary public.
denomination, sect or church must file with with the Commission articles of incorporation From and after the filing with the From and after filing with the Commission of the
the Securities and Exchange Commission setting forth the following: Securities and Exchange Commission of the said articles of incorporation, verified by affidavit or
articles of incorporation setting forth the said articles of incorporation, verified by affirmation, and accompanied by the documents
following: (a) That the applicant chief archbishop, bishop, affidavit or affirmation, and accompanied by mentioned in the preceding paragraph, such chief
1. That he is the chief archbishop, bishop, priest, minister, rabbi, or presiding elder represents the documents mentioned in the preceding archbishop, bishop, priest, minister, rabbi, or
priest, minister, rabbi or presiding elder of his the religious denomination, sect, or church who paragraph, such chief archbishop, bishop, presiding elder shall become a corporation sole and
religious denomination, sect or church and desires to become a corporation sole; priest, minister, rabbi or presiding elder shall all temporalities, estate and properties of the
that he desires to become a corporation sole; become a corporation sole and all religious denomination, sect or church theretofore
2. That the rules, regulations and discipline of (b) That the rules, regulations and discipline of the temporalities, estate and properties of the administered or managed as such chief
his religious denomination, sect or church are religious denomination, sect or church are religious denomination, sect or church archbishop, bishop, priest, minister, rabbi, or
not inconsistent with his becoming a consistent with becoming a corporation sole and do theretofore administered or managed by him presiding elder shall be personally held in trust as a
corporation sole and do not forbid it; not forbid it; as such chief archbishop, bishop, priest, corporation sole, for the use, purpose, exclusive
3. That as such chief archbishop, bishop, minister, rabbi or presiding elder shall be held benefit and on behalf of the religious denomination,
priest, minister, rabbi or presiding elder, he is (c) That such chief archbishop, bishop, priest, in trust by him as a corporation sole, for the sect, or church, including hospitals, schools,
charged with the administration of the minister, rabbi, or presiding elder is charged with use, purpose, behalf and sole benefit of his colleges, orphan asylums, parsonages, and
temporalities and the management of the the administration of the temporalities and the religious denomination, sect or church, cemeteries thereof.
affairs, estate and properties of his religious management of the affairs, estate and properties of including hospitals, schools, colleges, orphan
denomination, sect or church within his the religious denomination, sect, or church within asylums, parsonages and cemeteries
territorial jurisdiction, describing such the territorial jurisdiction, so described succinctly in thereof. (n)
territorial jurisdiction; the articles of incorporation;
4. The manner in which any vacancy Section 113. Acquisition and alienation of SEC. 111. Acquisition and Alienation of Property. –
occurring in the office of chief archbishop, (d) The manner by which any vacancy occurring in property. – Any corporation sole may A corporation sole may purchase and hold real
bishop, priest, minister, rabbi of presiding the office of chief archbishop, bishop, priest, purchase and hold real estate and personal estate and personal property for its church,
elder is required to be filled, according to the minister, rabbi, or presiding elder is required to be property for its church, charitable, benevolent charitable, benevolent, or educational purposes,
rules, regulations or discipline of the religious filled, according to the rules, regulations or or educational purposes, and may receive and may receive bequests or gifts for such
denomination, sect or church to which he discipline of the religious denomination, sect, or bequests or gifts for such purposes. Such purposes. Such corporation may sell or mortgage
belongs; and church; and corporation may sell or mortgage real real property held by it by obtaining an order for that
5. The place where the principal office of the property held by it by obtaining an order for purpose from the Regional Trial Court of the
corporation sole is to be established and (e) The place where the principal office of the that purpose from the Court of First Instance province where the property is situated upon proof
located, which place must be within the corporation sole is to be established and located, of the province where the property is situated that the notice of the application for leave to sell or
Philippines. which place must be within the territory of the upon proof made to the satisfaction of the mortgage has been made through publication or as
The articles of incorporation may include any Philippines. court that notice of the application for leave directed by the Court, and that it is in the interest of
other provision not contrary to law for the to sell or mortgage has been given by the corporation that leave to sell or mortgage be
regulation of the affairs of the corporation. (n) publication or otherwise in such manner and granted. The application for leave to sell or
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for such time as said court may have mortgage must be made by petition, duly verified,
directed, and that it is to the interest of the by the chief archbishop, bishop, priest, minister, Section 115. Dissolution. – A corporation SEC. 113. Dissolution. – A corporation sole may be
corporation that leave to sell or mortgage rabbi, or presiding elder acting as corporation sole, sole may be dissolved and its affairs settled dissolved and its affairs settled voluntarily by
should be granted. The application for leave and may be opposed by any member of the voluntarily by submitting to the Securities submitting to the Commission a verified declaration
to sell or mortgage must be made by petition, religious denomination, sect, or church represented and Exchange Commission a verified of dissolution, setting forth:
duly verified, by the chief archbishop, bishop, by the corporation sole: Provided, That in cases declaration of dissolution.
priest, minister, rabbi or presiding elder where the rules, regulations, and discipline of the (a) The name of the corporation;
acting as corporation sole, and may be religious denomination, sect, or church, religious The declaration of dissolution shall set
opposed by any member of the religious society, or order concerned represented by such forth: (b) The reason for dissolution and winding up;
denomination, sect or church represented by corporation sole regulate the method of acquiring, 1. The name of the corporation;
the corporation sole: Provided, That in cases holding, selling, and mortgaging real estate and 2. The reason for dissolution and winding up; (c) The authorization for the dissolution of the
where the rules, regulations and discipline of personal property, such rules, regulations and 3. The authorization for the dissolution of the corporation by the particular religious
the religious denomination, sect or church, discipline shall control, and the intervention of the corporation by the particular religious denomination, sect or church;
religious society or order concerned courts shall not be necessary. denomination, sect or church;
represented by such corporation sole 4. The names and addresses of the persons (d) The names and addresses of the persons who
regulate the method of acquiring, holding, who are to supervise the winding up of the are to supervise the winding up of the affairs of the
selling and mortgaging real estate and affairs of the corporation. corporation.
personal property, such rules, regulations
and discipline shall control, and the Upon approval of such declaration of Upon approval of such declaration of dissolution by
intervention of the courts shall not be dissolution by the Securities and Exchange the Commission, the corporation shall cease to
necessary. (159a) Commission, the corporation shall cease to carry on its operations except for the purpose of
carry on its operations except for the purpose winding up its affairs.
Section 114. Filling of vacancies. – The SEC. 112. Filling of Vacancies. – The successors of winding up its affairs. (n)
successors in office of any chief archbishop, in office of any chief archbishop, bishop, priest,
bishop, priest, minister, rabbi or presiding minister, rabbi, or presiding elder in a corporation
elder in a corporation sole shall become the sole shall become the corporation sole on their Section 116. Religious societies. – Any SEC. 114. Religious Societies. – Unless forbidden
corporation sole on their accession to office accession to office and shall be permitted to religious society or religious order, or any by competent authority, the Constitution, pertinent
and shall be permitted to transact business transact business as such upon filing a copy of their diocese, synod, or district organization of any rules, regulations, or discipline of the religious
as such on the filing with the Securities and commission, certificate of election, or letters of religious denomination, sect or church, denomination, sect, or church of which it is a part,
Exchange Commission of a copy of their appointment, duly certified by any notary public with unless forbidden by the constitution, rules, any religious society, religious order, diocese,
commission, certificate of election, or letters the Commission. regulations, or discipline of the religious synod, or district organization of any religious
of appointment, duly certified by any notary denomination, sect or church of which it is a denomination, sect, or church, may, upon written
public. During any vacancy in the office of chief part, or by competent authority, may, upon consent and/or by an affirmative vote at a meeting
During any vacancy in the office of chief archbishop, bishop, priest, minister, rabbi, or written consent and/or by an affirmative vote called for the purpose of at least two-thirds (2/3) of
archbishop, bishop, priest, minister, rabbi or presiding elder of any religious denomination, sect at a meeting called for the purpose of at least its membership, incorporate for the administration
presiding elder of any religious or church incorporated as a corporation sole, the two-thirds (2/3) of its membership, of its temporalities or for the management of its
denomination, sect or church incorporated as person or persons authorized by the rules, incorporate for the administration of its affairs, properties, and estate by filing with the
a corporation sole, the person or persons regulations or discipline of the religious temporalities or for the management of its Commission, articles of incorporation verified by
authorized and empowered by the rules, denomination, sect, or church represented by the affairs, properties and estate by filing with the the affidavit of the presiding elder, secretary, or
regulations or discipline of the religious corporation sole to administer the temporalities and Securities and Exchange Commission, clerk or other member of such religious society or
denomination, sect or church represented by manage the affairs, estate, and properties of the articles of incorporation verified by the religious order, or diocese, synod, or district
the corporation sole to administer the corporation sole shall exercise all the powers and affidavit of the presiding elder, secretary, or organization of the religious denomination, sect, or
temporalities and manage the affairs, estate authority of the corporation sole during such clerk or other member of such religious church, setting forth the following:
and properties of the corporation sole during vacancy. society or religious order, or diocese, synod,
the vacancy shall exercise all the powers and or district organization of the religious (a) That the religious society or religious order, or
authority of the corporation sole during such denomination, sect or church, setting forth diocese, synod, or district organization is a religious
vacancy. (158a) the following: organization of a religious denomination, sect or
1. That the religious society or religious order, church;
or diocese, synod, or district organization is a
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religious organization of a religious (b) That at least two-thirds (2/3) of its membership Banks and quasi-banks, pre-need, trust,
denomination, sect or church; has given written consent or has voted to insurance, public and publicly-listed
2. That at least two-thirds (2/3) of its incorporate, at a duly convened meeting of the companies, and non-chartered government-
membership have given their written consent body; owned and -controlled corporations may not
or have voted to incorporate, at a duly incorporate as One Person Corporations:
convened meeting of the body; (c) That the incorporation of the religious society or Provided further, That a natural person who is
3. That the incorporation of the religious religious order, diocese, synod, or district licensed to exercise a profession may not
society or religious order, or diocese, synod, organization is not forbidden by competent organize as a One Person Corporation for the
or district organization desiring to incorporate authority or by the Constitution, rules, regulations purpose of exercising such profession except
is not forbidden by competent authority or by or discipline of the religious denomination, sect, or as otherwise provided under special laws.
the constitution, rules, regulations or church of which it forms part;
discipline of the religious denomination, sect, SEC. 117. Minimum Capital Stock Required for
or church of which it forms a part; (d) That the religious society or religious order, One Person Corporation. – A One Person
4. That the religious society or religious order, diocese, synod, or district organization desires to Corporation shall not be required to have a
or diocese, synod, or district organization incorporate for the administration of its affairs, minimum authorized capital stock except as
desires to incorporate for the administration properties and estate; otherwise provided by special law.
of its affairs, properties and estate;
5. The place where the principal office of the (e) The place within the Philippines where the SEC. 118. Articles of Incorporation. –A One
corporation is to be established and located, principal office of the corporation is to be Person Corporation shall file articles of
which place must be within the Philippines; established and located; and incorporation in accordance with the
and requirements under Section 14 of this Code. It
6. The names, nationalities, and residences (f) The names, nationalities, and residence shall likewise substantially contain the
of the trustees elected by the religious society addresses of the trustees, not less than five (5) nor following:
or religious order, or the diocese, synod, or more than fifteen (15), elected by the religious
district organization to serve for the first year society or religious order, or the diocese, synod, or (a) If the single stockholder is a trust or an
or such other period as may be prescribed by district organization to serve for the first year or estate, the name, nationality, and residence of
the laws of the religious society or religious such other period as may be prescribed by the laws the trustee, administrator, executor, guardian,
order, or of the diocese, synod, or district of the religious society or religious order, or of the conservator, custodian, or other person
organization, the board of trustees to be diocese, synod, or district organization. exercising fiduciary duties together with the
not less than five (5) nor more than fifteen proof of such authority to act on behalf of the
(15). (160a) trust or estate; and
Chapter III
ONE PERSON CORPORATIONS (b) Name, nationality, residence of the nominee
and alternate nominee, and the extent,
SEC. 115. Applicability of Provisions to One coverage and limitation of the authority.
Person Corporations. – The provisions of this
Title shall primarily apply to One Person SEC. 119. By-laws. – The One Person
Corporations. Other provisions of this Code Corporation is not required to submit and file
apply suppletorily, except as otherwise corporate by-laws.
provided in this Title.
SEC. 120. Display of Corporate Name. – A One
Person Corporation shall indicate the letters
SEC. 116. One Person Corporation. – A One “OPC” either below or at the end of its
Person Corporation is a corporation with a corporate name.
single stockholder: Provided, That only a
natural person, trust, or an estate may form a SEC. 121. Single stockholder as Director,
One Person Corporation. President. – The single stockholder shall be the
sole director and president of the One Person
Corporation.
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SEC. 122. Treasurer, Corporate Secretary, and articles of incorporation, and other ancillary
Other Officers. – Within fifteen (15) days from and/or consequential matters.
the issuance of its certificate of incorporation,
the One Person Corporation shall appoint a
treasurer, corporate secretary, and other SEC. 124. Nominee and Alternate Nominee. –
officers as it may deem necessary, and notify The single stockholder shall designate a
the Commission thereof within five (5) days nominee and an alternate nominee who shall, in
from appointment. the event of the single stockholder’s death or
incapacity, take the place of the single
The single stockholder may not be appointed as stockholder as director and shall manage the
the corporate secretary. corporation’s affairs.

A single stockholder who is likewise the self- The articles of incorporation shall state the
appointed treasurer of the corporation, shall names, residence addresses and contact
give a bond to the Commission in such a sum details of the nominee and alternate nominee,
as may be required: Provided, That, the said as well as the extent and limitations of their
stockholder/treasurer shall undertake in writing authority in managing the affairs of the One
to faithfully administer the One Person Person Corporation.
Corporation’s funds to be received as treasurer,
and to disburse and invest the same according The written consent of the nominee and
to the articles of incorporation as approved by alternate nominee shall be attached to the
the Commission. The bond shall be renewed application for incorporation. Such consent
every two (2) years or as often as may be may be withdrawn in writing any time before the
required. death or incapacity of the single stockholder.

SEC. 123. Special Functions of the Corporate SEC. 125. Term of Nominee and Alternate
Secretary. – In addition to the functions Nominee. – When the incapacity of the single
designated by the One Person Corporation, the stockholder is temporary, the nominee shall sit
corporate secretary shall: as director and manage the affairs of the One
Person Corporation until the stockholder, by
(a) Be responsible for maintaining the minutes self-determination, regains the capacity to
book and/or records of the corporation; assume such duties.

(b) Notify the nominee or alternate nominee of In case of death or permanent incapacity of the
the death or incapacity of the single single stockholder, the nominee shall sit as
stockholder, which notice shall be given no director and manage the affairs of the One
later than five (5) days from such occurrence; Person Corporation until the legal heirs of the
single stockholder have been lawfully
(c) Notify the Commission of the death of the determined, and the heirs have designated one
single stockholder within five (5) days from of them or have agreed that the estate shall be
such occurrence and stating in such notice the the single stockholder of the One Person
names, residence addresses, and contact Corporation.
details of all known legal heirs; and
The alternate nominee shall sit as director and
(d) Call the nominee or alternate nominee and manage the One Person Corporation in case of
the known legal heirs to a meeting and advise the nominee’s inability, incapacity, death, or
the legal heirs with regard to, among others, the refusal to discharge the functions as director
election of a new director, amendment of the and manager of the corporation, and only for

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the same term and under the same conditions One Person Corporation and the single
applicable to the nominee. stockholder; and

SEC. 126. Change of Nominee or Alternate (d) Other reports as the Commission may
Nominee. – The single stockholder may, at any require.
time, change its nominee and alternate nominee
by submitting to the Commission the names of For purposes of this provision, the fiscal year of
the new nominees and their corresponding a One Person Corporation shall be that set forth
written consent. For this purpose, the articles of in its articles of incorporation or, in the absence
incorporation need not be amended. thereof, the calendar year.

SEC. 127. Minutes Book. – A One Person The Commission may place the corporation
Corporation shall maintain a minutes book under delinquent status should the corporation
which shall contain all actions, decisions, and fail to submit the reportorial requirements three
resolutions taken by the One Person (3) times, consecutively or intermittently, within
Corporation. a period of five (5) years.

SEC. 128. Records in Lieu of Meetings. – When SEC. 130. Liability of Single Shareholder. – A
action is needed on any matter, it shall be sole shareholder claiming limited liability has
sufficient to prepare a written resolution, the burden of affirmatively showing that the
signed and dated by the single stockholder, and corporation was adequately financed.
recorded in the minutes book of the One Person
Corporation. The date of recording in the Where the single stockholder cannot prove that
minutes book shall be deemed to be the date of the property of the One Person Corporation is
the meeting for all purposes under this Code. independent of the stockholder’s personal
property, the stockholder shall be jointly and
severally liable for the debts and other liabilities
SEC. 129. Reportorial Requirements. – The One of the One Person Corporation.
Person Corporation shall submit the following
within such period as the Commission may The principles of piercing the corporate veil
prescribe: applies with equal force to One Person
Corporations as with other corporations.
(a) Annual financial statements audited by an
independent certified public accountant: SEC. 131. Conversion from an Ordinary
Provided, That if the total assets or total Corporation to a One Person Corporation. –
liabilities of the corporation are less than Six When a single stockholder acquires all the
Hundred Thousand Pesos (P600,000.00), the stocks of an ordinary stock corporation, the
financial statements shall be certified under latter may apply for conversion into a One
oath by the corporation’s treasurer and Person Corporation, subject to the submission
president. of such documents as the Commission may
require. If the application for conversion is
(b) A report containing explanations or approved, the Commission shall issue
comments by the president on every certificate of filing of amended articles of
qualification, reservation, or adverse remark or incorporation reflecting the conversion. The
disclaimer made by the auditor in the latter’s One Person Corporation converted from an
report; ordinary stock corporation shall succeed the
latter and be legally responsible for all the
(c) A disclosure of all self-dealings and related latter’s outstanding liabilities as of the date of
party transactions entered into between the conversion.
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corporation does not prejudice the rights of corporation does not prejudice the rights of any
SEC. 132. Conversion from a One Person any creditor having a claim against it, the creditor having a claim against it, the dissolution
Corporation to an Ordinary Stock Corporation. dissolution may be effected by majority vote may be effected by majority vote of the board of
– A One Person Corporation may be converted of the board of directors or trustees, and by a directors or trustees, and by a resolution adopted
into an ordinary stock corporation after due resolution duly adopted by the affirmative by the affirmative vote of the stockholders owning
notice to the Commission of such fact and of vote of the stockholders owning at least at least majority of the outstanding capital
the circumstances leading to the conversion, two-thirds (2/3) of the outstanding capital stock or majority of the members of a meeting
and after compliance with all other stock or of at least two-thirds (2/3) of the to be held upon the call of the directors or
requirements for stock corporations under this members of a meeting to be held upon call trustees.
Code and applicable rules. Such notice shall be of the directors or trustees after
filed with the Commission within sixty (60) days publication of the notice of time, place At least twenty (20) days prior to the meeting,
from the occurrence of the circumstances and object of the meeting for three (3) notice shall be given to each shareholder or
leading to the conversion into an ordinary stock consecutive weeks in a newspaper member of record personally, by registered
corporation. If all requirements have been published in the place where the principal mail, or by any means authorized under its by-
complied with, the Commission shall issue an office of said corporation is located; and laws whether or not entitled to vote at the
amended certificate of incorporation reflecting if no newspaper is published in such meeting, in the manner provided in Section 50
the conversion. place, then in a newspaper of general of this Code and shall state that the purpose of
circulation in the Philippines, after the meeting is to vote on the dissolution of the
In case of death of the single stockholder, the sending such notice to each stockholder corporation. Notice of the time, place, and
nominee or alternate nominee shall transfer the or member either by registered mail or by object of the meeting shall be published once
shares to the duly designated legal heir or personal delivery at least thirty (30) days prior to the date of the meeting in a newspaper
estate within seven (7) days from receipt of prior to said meeting. A copy of the published in the place where the principal office
either an affidavit of heirship or self- resolution authorizing the dissolution of said corporation is located, or if no
adjudication executed by a sole heir, or any shall be certified by a majority of the newspaper is published in such place, in a
other legal document declaring the legal heirs board of directors or trustees and newspaper of general circulation in the
of the single stockholder and notify the countersigned by the secretary of the Philippines.
Commission of the transfer. Within sixty (60) corporation. The Securities and Exchange
days from the transfer of the shares, the legal Commission shall thereupon issue the A verified request for dissolution shall be filed
heirs shall notify the Commission of their certificate of dissolution. (62a) with the Commission stating: (a) the reason for
decision to either wind up and dissolve the One the dissolution; (b) the form, manner, and time
Person Corporation or convert it into an when the notices were given; (c) names of the
ordinary stock corporation. stockholders and directors or members and
trustees, who approved the dissolution; (d) the
The ordinary stock corporation converted from date, place, and time of the meeting in which the
a One Person Corporation shall succeed the vote was made; and (e) details of publication.
latter and be legally responsible for all the
latter’s outstanding liabilities as of the date of The corporation shall submit the following to
conversion. the Commission: (1) a copy of the resolution
authorizing the dissolution, certified by a
TITLE XIV TITLE XIV majority of the board of directors or trustees
DISSOLUTION DISSOLUTION and countersigned by the secretary of the
Section 117. Methods of dissolution. – A corporation; (2) proof of publication; and (3)
corporation formed or organized under the SEC. 133. Methods of Dissolution. – A corporation favorable recommendation from the
provisions of this Code may be dissolved formed or organized under the provisions of this appropriate regulatory agency, when
voluntarily or involuntarily. (n) Code may be dissolved voluntarily or involuntarily. necessary.

Within fifteen (15) days from receipt of the

Section 118. Voluntary dissolution where no SEC. 134. Voluntary Dissolution Where No verified request for dissolution, and in the
creditors are affected. – If dissolution of a Creditors are Affected. – If dissolution of a absence of any withdrawal within said period,
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the Commission shall approve the request and consecutive weeks in three (3) public places general circulation published in the municipality or
issue the certificate of dissolution. The in such municipality or city. city where the principal office of the corporation is
dissolution shall take effect only upon the Upon five (5) day’s notice, given after the situated, or if there be no such newspaper, then in
issuance by the Commission of a certificate of date on which the right to file objections as a newspaper of general circulation in the
dissolution. fixed in the order has expired, the Philippines, and a similar copy shall be posted for
Commission shall proceed to hear the three (3) consecutive weeks in three (3) public
No application for dissolution of banks, petition and try any issue made by the places in such municipality or city.
banking and quasi-banking institutions, pre- objections filed; and if no such objection is
need, insurance and trust companies, non- sufficient, and the material allegations of the Upon five (5) days’ notice, given after the date on
stock savings and loan associations, petition are true, it shall render judgment which the right to file objections as fixed in the order
pawnshops, and other financial intermediaries dissolving the corporation and directing such has expired, the Commission shall proceed to hear
shall be approved by the Commission unless disposition of its assets as justice requires, the petition and try any issue raised in the
accompanied by a favorable recommendation and may appoint a receiver to collect such objections filed; and if no such objection is
of the appropriate government agency. assets and pay the debts of the corporation. sufficient, and the material allegations of the
(Rule 104, RCa) petition are true, it shall render judgment dissolving
Section 119. Voluntary dissolution where SEC. 135. Voluntary Dissolution Where Creditors the corporation and directing such disposition of its
creditors are affected. – Where the are Affected; Procedure and Contents of Petition. – assets as justice requires, and may appoint a
dissolution of a corporation may prejudice the Where the dissolution of a corporation may receiver to collect such assets and pay the debts of
rights of any creditor, the petition for prejudice the rights of any creditor, a verified the corporation.
dissolution shall be filed with the Securities petition for dissolution shall be filed with the
and Exchange Commission. The petition Commission. The petition shall be signed by a The dissolution shall take effect only upon the
shall be signed by a majority of its board of majority of the corporation’s board of directors or issuance by the Commission of a certificate of
directors or trustees or other officers having trustees, verified by its president or secretary or dissolution.
the management of its affairs, verified by its one of its directors or trustees, and shall set forth all
president or secretary or one of its directors claims and demands against it, and that its Section 120. Dissolution by shortening SEC. 136. Dissolution by Shortening Corporate
or trustees, and shall set forth all claims and dissolution was resolved upon by the affirmative corporate term. – A voluntary dissolution may Term. – A voluntary dissolution may be effected by
demands against it, and that its dissolution vote of the stockholders representing at least two- be effected by amending the articles of amending the articles of incorporation to shorten
was resolved upon by the affirmative vote of thirds (2/3) of the outstanding capital stock or at incorporation to shorten the corporate term the corporate term pursuant to the provisions of this
the stockholders representing at least two- least two-thirds (2/3) of the members at a meeting pursuant to the provisions of this Code. A Code. A copy of the amended articles of
thirds (2/3) of the outstanding capital stock or of its stockholders or members called for that copy of the amended articles of incorporation incorporation shall be submitted to the Commission
by at least two-thirds (2/3) of the members at purpose. The petition shall likewise state: (a) the shall be submitted to the Securities and in accordance with this Code.
a meeting of its stockholders or members reason for the dissolution; (b) the form, manner, Exchange Commission in accordance with
called for that purpose. and time when the notices were given; and (c) the this Code. Upon approval of the amended Upon the expiration of the shortened term, as
If the petition is sufficient in form and date, place, and time of the meeting in which the articles of incorporation of the expiration of stated in the approved amended articles of
substance, the Commission shall, by an vote was made. The corporation shall submit to the the shortened term, as the case may be, the incorporation, the corporation shall be deemed
order reciting the purpose of the petition, fix Commission the following: (1) a copy of the corporation shall be deemed dissolved dissolved without any further proceedings, subject
a date on or before which objections thereto resolution authorizing the dissolution, certified by a without any further proceedings, subject to to the provisions of this Code on liquidation.
may be filed by any person, which date shall majority of the board of directors or trustees and the provisions of this Code on liquidation. (n)
not be less than thirty (30) days nor more countersigned by the secretary of the corporation; In the case of expiration of corporate term,
than sixty (60) days after the entry of the and (2) a list of all its creditors. dissolution shall automatically take effect on
order. Before such date, a copy of the order the day following the last day of the corporate
shall be published at least once a week for If the petition is sufficient in form and substance, the term stated in the articles of incorporation,
three (3) consecutive weeks in a newspaper Commission shall, by an order reciting the purpose without the need for the issuance by the
of general circulation published in the of the petition, fix a deadline for filing objections to Commission of a certificate of dissolution.
municipality or city where the principal office the petition which date shall not be less than thirty
of the corporation is situated, or if there be no (30) days nor more than sixty (60) days after the
such newspaper, then in a newspaper of entry of the order. Before such date, a copy of the SEC. 137. Withdrawal of Request and Petition
general circulation in the Philippines, and a order shall be published at least once a week for for Dissolution. – A withdrawal of the request for
similar copy shall be posted for three (3) three (3) consecutive weeks in a newspaper of dissolution shall be made in writing, duly verified by
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any incorporator, director, trustee, shareholder, or (1) Was created for the purpose of committing,
member and signed by the same number of concealing or aiding the commission of
incorporators, directors, trustees, shareholders, or securities violations, smuggling, tax evasion,
members necessary to request for dissolution as money laundering, or graft and corrupt
set forth in the foregoing sections. The withdrawal practices;
shall be submitted no later than fifteen (15) days
from receipt by the Commission of the request for (2) Committed or aided in the commission of
dissolution. Upon receipt of a withdrawal of request securities violations, smuggling, tax evasion,
for dissolution, the Commission shall withhold money laundering, or graft and corrupt
action on the request for dissolution and shall, after practices, and its stockholders knew; and
investigation: (a) make a pronouncement that the
request for dissolution is deemed withdrawn; (b) (3) Repeatedly and knowingly tolerated the
direct a joint meeting of the board of directors or commission of graft and corrupt practices or
trustees and the stockholders or members for the other fraudulent or illegal acts by its directors,
purpose of ascertaining whether to proceed with trustees, officers, or employees.
dissolution; or (c) issue such other orders as it may
deem appropriate. If the corporation is ordered dissolved by final
judgment pursuant to the grounds set forth in
A withdrawal of the petition for dissolution shall be subparagraph (e) hereof, its assets, after
in the form of a motion and similar in substance to payment of its liabilities, shall, upon petition of
a withdrawal of request for dissolution but shall be the Commission with the appropriate court, be
verified and filed prior to publication of the order forfeited in favor of the national government.
setting the deadline for filing objections to the Such forfeiture shall be without prejudice to the
petition. rights of innocent stockholders and employees
for services rendered, and to the application of
other penalty or sanction under this Code or
Section 121. Involuntary dissolution. – A SEC. 138. Involuntary Dissolution. – A corporation other laws.
corporation may be dissolved by the may be dissolved by the Commission motu proprio
Securities and Exchange Commission upon or upon filing of a verified complaint by any The Commission shall give reasonable notice
filing of a verified complaint and after proper interested party. The following may be grounds to, and coordinate with, the appropriate
notice and hearing on the grounds provided for dissolution of the corporation: regulatory agency prior to the involuntary
by existing laws, rules and regulations. (n) dissolution of companies under their special
(a)Non-use of corporate charter as provided regulatory jurisdiction.
under Section 21 of this Code;
Section 122. Corporate liquidation. – Every
(b)Continuous inoperation of a corporation as corporation whose charter expires by its own SEC. 139. Corporate Liquidation. – Except for
provided under Section 21 of this Code; limitation or is annulled by forfeiture or banks, which shall be covered by the applicable
otherwise, or whose corporate existence for provisions of Republic Act No. 7653, otherwise
(c)Upon receipt of a lawful court order other purposes is terminated in any other known as the “New Central Bank Act,” as amended,
dissolving the corporation; manner, shall nevertheless be continued as and Republic Act No. 3591, otherwise known as the
a body corporate for three (3) years after the Philippine Deposit Insurance Corporation Charter,
(d)Upon finding by final judgment that the time when it would have been so dissolved, as amended, every corporation whose charter
corporation procured its incorporation through for the purpose of prosecuting and defending expires pursuant to its articles of incorporation, is
fraud; suits by or against it and enabling it to settle annulled by forfeiture, or whose corporate
and close its affairs, to dispose of and convey existence is terminated in any other manner, shall
(e)Upon finding by final judgment that the its property and to distribute its assets, but nevertheless remain as a body corporate for three
corporation: not for the purpose of continuing the business (3) years after the effective date of dissolution, for
for which it was established. the purpose of prosecuting and defending suits by
or against it and enabling it to settle and close its
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affairs, dispose of and convey its property, and

distribute its assets, but not for the purpose of Section 124. Application to existing foreign
continuing the business for which it was corporations. – Every foreign corporation SEC. 141. Application to Existing Foreign
established. which on the date of the effectivity of this Corporations. – Every foreign corporation which on
At any time during said three (3) years, the Code is authorized to do business in the the date of the effectivity of this Code is authorized
corporation is authorized and empowered to At any time during said three (3) years, the Philippines under a license therefore issued to do business in the Philippines under a license
convey all of its property to trustees for the corporation is authorized and empowered to to it, shall continue to have such authority issued to it, shall continue to have such authority
benefit of stockholders, members, creditors, convey all of its property to trustees for the benefit under the terms and condition of its license, under the terms and conditions of its license,
and other persons in interest. From and after of stockholders, members, creditors, and other subject to the provisions of this Code and subject to the provisions of this Code and other
any such conveyance by the corporation of persons in interest. After any such conveyance by other special laws. (n) special laws.
its property in trust for the benefit of its the corporation of its property in trust for the benefit
stockholders, members, creditors and others of its stockholders, members, creditors and others
in interest, all interest which the corporation in interest, all interest which the corporation had in Section 125. Application for a license. – A SEC. 142. Application for a License. – A foreign
had in the property terminates, the legal the property terminates, the legal interest vests in foreign corporation applying for a license to corporation applying for a license to transact
interest vests in the trustees, and the the trustees, and the beneficial interest in the transact business in the Philippines shall business in the Philippines shall submit to the
beneficial interest in the stockholders, stockholders, members, creditors or other persons- submit to the Securities and Exchange Commission a copy of its articles of incorporation
members, creditors or other persons in in-interest. Commission a copy of its articles of and bylaws, certified in accordance with law, and
interest. incorporation and by-laws, certified in their translation to an official language of the
Except as otherwise provided for in Sections 93 accordance with law, and their translation to Philippines, if necessary. The application shall be
Upon the winding up of the corporate affairs, and 94 of this Code, upon the winding up of an official language of the Philippines, if under oath and, unless already stated in its articles
any asset distributable to any creditor or corporate affairs, any asset distributable to any necessary. The application shall be under of incorporation, shall specifically set forth the
stockholder or member who is unknown or creditor or stockholder or member who is unknown oath and, unless already stated in its articles following:
cannot be found shall be escheated to the or cannot be found shall be escheated in favor of of incorporation, shall specifically set forth
city or municipality where such assets are the national government. the following: (a) The date and term of incorporation;
located. 1. The date and term of incorporation;
Except by decrease of capital stock and as 2. The address, including the street number, (b) The address, including the street number, of the
Except by decrease of capital stock and as otherwise allowed by this Code, no corporation of the principal office of the corporation in the principal office of the corporation in the country or
otherwise allowed by this Code, no shall distribute any of its assets or property except country or state of incorporation; State of incorporation;
corporation shall distribute any of its assets upon lawful dissolution and after payment of all its 3. The name and address of its resident
or property except upon lawful dissolution debts and liabilities. agent authorized to accept summons and (c) The name and address of its resident agent
and after payment of all its debts and process in all legal proceedings and, pending authorized to accept summons and process in all
liabilities. (77a, 89a, 16a) the establishment of a local office, all notices legal proceedings and all notices affecting the
affecting the corporation; corporation, pending the establishment of a local
TITLE XV TITLE XV 4. The place in the Philippines where the office;
FOREIGN CORPORATIONS FOREIGN CORPORATIONS corporation intends to operate;
Section 123. Definition and rights of foreign SEC. 140. Definition and Rights of Foreign 5. The specific purpose or purposes which (d) The place in the Philippines where the
corporations. – For the purposes of this Corporations. – For purposes of this Code, a foreign the corporation intends to pursue in the corporation intends to operate;
Code, a foreign corporation is one formed, corporation is one formed, organized or existing transaction of its business in the Philippines:
organized or existing under any laws other under laws other than the Philippines’ and whose Provided, That said purpose or purposes are (e) The specific purpose or purposes which the
than those of the Philippines and whose laws laws allow Filipino citizens and corporations to do those specifically stated in the certificate of corporation intends to pursue in the transaction of
allow Filipino citizens and corporations to do business in its own country or State. It shall have authority issued by the appropriate its business in the Philippines: Provided, That said
business in its own country or state. It shall the right to transact business in the Philippines after government agency; purpose or purposes are those specifically stated in
have the right to transact business in the obtaining a license for that purpose in accordance 6. The names and addresses of the present the certificate of authority issued by the appropriate
Philippines after it shall have obtained a with this Code and a certificate of authority from the directors and officers of the corporation; government agency;
license to transact business in this country in appropriate government agency. 7. A statement of its authorized capital stock
accordance with this Code and a certificate and the aggregate number of shares which (f) The names and addresses of the present
of authority from the appropriate government the corporation has authority to issue, directors and officers of the corporation;
agency. (n) itemized by classes, par value of shares,
shares without par value, and series, if any;
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8. A statement of its outstanding capital stock (g) A statement of its authorized capital stock and without previous authority from the accepted by the Commission without previous
and the aggregate number of shares which the aggregate number of shares which the appropriate government agency, whenever authority from the appropriate government agency,
the corporation has issued, itemized by corporation has authority to issue, itemized by required by law. (68a) whenever required by law.
classes, par value of shares, shares without class, par value of shares, shares without par value,
par value, and series, if any; and series, if any; SEC. 143. Issuance of a License. – If the
9. A statement of the amount actually paid in; Section 126. Issuance of a license. – If the Commission is satisfied that the applicant has
and (h) A statement of its outstanding capital stock and Securities and Exchange Commission is complied with all the requirements of this Code and
10. Such additional information as may be the aggregate number of shares which the satisfied that the applicant has complied with other special laws, rules and regulations, the
necessary or appropriate in order to enable corporation has issued, itemized by class, par value all the requirements of this Code and other Commission shall issue a license to transact
the Securities and Exchange Commission to of shares, shares without par value, and series, if special laws, rules and regulations, the business in the Philippines to the applicant for the
determine whether such corporation is any; Commission shall issue a license to the purpose or purposes specified in such license.
entitled to a license to transact business in applicant to transact business in the Upon issuance of the license, such foreign
the Philippines, and to determine and assess (i) A statement of the amount actually paid in; and Philippines for the purpose or purposes corporation may commence to transact business in
the fees payable. specified in such license. Upon issuance of the Philippines and continue to do so for as long as
(j) Such additional information as may be necessary the license, such foreign corporation may it retains its authority to act as a corporation under
Attached to the application for license shall or appropriate in order to enable the Commission to commence to transact business in the the laws of the country or State of its incorporation,
be a duly executed certificate under oath by determine whether such corporation is entitled to a Philippines and continue to do so for as long unless such license is sooner surrendered,
the authorized official or officials of the license to transact business in the Philippines, and as it retains its authority to act as a revoked, suspended, or annulled in accordance
jurisdiction of its incorporation, attesting to to determine and assess the fees payable. corporation under the laws of the country or with this Code or other special laws. Within sixty
the fact that the laws of the country or state state of its incorporation, unless such license (60) days after the issuance of the license to
of the applicant allow Filipino citizens and Attached to the application for license shall be a is sooner surrendered, revoked, suspended transact business in the Philippines, the licensee,
corporations to do business therein, and that certificate under oath duly executed by the or annulled in accordance with this Code or except foreign banking or insurance corporations,
the applicant is an existing corporation in authorized official or officials of the jurisdiction of its other special laws. shall deposit with the Commission for the benefit of
good standing. If such certificate is in a incorporation, attesting to the fact that the laws of Within sixty (60) days after the issuance of present and future creditors of the licensee in the
foreign language, a translation thereof in the country or State of the applicant allow Filipino the license to transact business in the Philippines, securities satisfactory to the
English under oath of the translator shall be citizens and corporations to do business therein, Philippines, the license, except foreign Commission, consisting of bonds or other evidence
attached thereto. and that the applicant is an existing corporation in banking or insurance corporation, shall of indebtedness of the Government of the
good standing. If the certificate is in a foreign deposit with the Securities and Exchange Philippines, its political subdivisions and
The application for a license to transact language, a translation thereof in English under Commission for the benefit of present and instrumentalities, or of government-owned or -
business in the Philippines shall likewise be oath of the translator shall be attached to the future creditors of the licensee in the controlled corporations and entities, shares of stock
accompanied by a statement under oath of application. Philippines, securities satisfactory to the or debt securities that are registered under
the president or any other person authorized Securities and Exchange Commission, Republic Act No. 8799, otherwise known as “The
by the corporation, showing to the The application for a license to transact business in consisting of bonds or other evidence of Securities Regulation Code”, shares of stock in
satisfaction of the Securities and Exchange the Philippines shall likewise be accompanied by a indebtedness of the Government of the domestic corporations listed in the stock exchange,
Commission and other governmental agency statement under oath of the president or any other Philippines, its political subdivisions and shares of stock in domestic insurance companies
in the proper cases that the applicant is person authorized by the corporation, showing to instrumentalities, or of government-owned or and banks, any financial instrument determined
solvent and in sound financial condition, and the satisfaction of the Commission and when controlled corporations and entities, shares suitable by the Commission, or any combination
setting forth the assets and liabilities of the appropriate, other governmental agencies that the of stock in "registered enterprises" as this thereof with an actual market value of at least Five
corporation as of the date not exceeding one applicant is solvent and in sound financial condition, term is defined in Republic Act No. 5186, hundred thousand (P500,000.00) pesos or such
(1) year immediately prior to the filing of the setting forth the assets and liabilities of the shares of stock in domestic corporations other amount that may be set by the Commission:
application. corporation as of the date not exceeding one (1) registered in the stock exchange, or shares Provided however, That within six (6) months after
Foreign banking, financial and insurance year immediately prior to the filing of the application. of stock in domestic insurance companies each fiscal year of the licensee, the Commission
corporations shall, in addition to the above and banks, or any combination of these kinds shall require the licensee to deposit additional
requirements, comply with the provisions of Foreign banking, financial, and insurance of securities, with an actual market value of securities or financial instruments equivalent in
existing laws applicable to them. In the case corporations shall, in addition to the above at least one hundred thousand (P100,000.) actual market value to two (2%) percent of the
of all other foreign corporations, no requirements, comply with the provisions of existing pesos; Provided, however, That within six (6) amount by which the licensee’s gross income for
application for license to transact business in laws applicable to them. In the case of all other months after each fiscal year of the licensee, that fiscal year exceeds Ten million pesos
the Philippines shall be accepted by the foreign corporations, no application for license to the Securities and Exchange Commission (P10,000,000.00). The Commission shall also
Securities and Exchange Commission transact business in the Philippines shall be shall require the licensee to deposit require the deposit of additional securities or
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additional securities equivalent in actual financial instruments if the actual market value of Commission shall require as a condition a foreign corporation to transact business in the
market value to two (2%) percent of the the deposited securities or financial instruments precedent to the issuance of the license to Philippines, such corporation shall file with the
amount by which the licensee’s gross income has decreased by at least ten (10%) percent of their transact business in the Philippines by any Commission a written power of attorney
for that fiscal year exceeds five million actual market value at the time they were foreign corporation that such corporation file designating a person who must be a resident of
(P5,000,000.00) pesos. The Securities and deposited. The Commission may, at its discretion, with the Securities and Exchange the Philippines, on whom summons and other
Exchange Commission shall also require release part of the additional deposit if the gross Commission a written power of attorney legal processes may be served in all actions or
deposit of additional securities if the actual income of the licensee has decreased, or if the designating some person who must be a other legal proceedings against such
market value of the securities on deposit has actual market value of the total deposit has resident of the Philippines, on whom any corporation, and consenting that service upon
decreased by at least ten (10%) percent of increased, by more than ten (10%) percent of their summons and other legal processes may be such resident agent shall be admitted and held
their actual market value at the time they actual market value at the time they were served in all actions or other legal as valid as if served upon the duly authorized
were deposited. The Securities and deposited. The Commission may, from time to time, proceedings against such corporation, and officers of the foreign corporation at its home
Exchange Commission may at its discretion allow the licensee to make substitute deposits for consenting that service upon such resident office. Such foreign corporation shall likewise
release part of the additional securities those already on deposit as long as the licensee is agent shall be admitted and held as valid as execute and file with the Commission an
deposited with it if the gross income of the solvent. Such licensee shall be entitled to collect if served upon the duly authorized officers of agreement or stipulation, executed by the
licensee has decreased, or if the actual the interest or dividends on such deposits. In the the foreign corporation at its home office. Any proper authorities of said corporation, in form
market value of the total securities on deposit event the licensee ceases to do business in the such foreign corporation shall likewise and substance as follows:
has increased, by more than ten (10%) Philippines, its deposits shall be returned, upon the execute and file with the Securities and
percent of the actual market value of the licensee’s application therefor and upon proof to Exchange Commission an agreement or “The (name of foreign corporation) hereby
securities at the time they were deposited. the satisfaction of the Commission that the licensee stipulation, executed by the proper stipulates and agrees, in consideration of being
The Securities and Exchange Commission has no liability to Philippine residents, including the authorities of said corporation, in form and granted a license to transact business in the
may, from time to time, allow the licensee to Government of the Republic of the Philippines. For substance as follows: Philippines, that if the corporation shall cease to
substitute other securities for those already purposes of computing the securities deposit, "The (name of foreign corporation) does transact business in the Philippines, or shall be
on deposit as long as the licensee is solvent. the composition of gross income and allowable hereby stipulate and agree, in consideration without any resident agent in the Philippines on
Such licensee shall be entitled to collect the deductions therefrom shall be in accordance of its being granted by the Securities and whom any summons or other legal processes may
interest or dividends on the securities with the rules of the Commission. Exchange Commission a license to transact be served, then service of any summons or other
deposited. In the event the licensee ceases business in the Philippines, that if at any time legal process may be made upon the Commission
to do business in the Philippines, the said corporation shall cease to transact in any action or proceeding arising out of any
securities deposited as aforesaid shall be business in the Philippines, or shall be business or transaction which occurred in the
returned, upon the licensee’s application without any resident agent in the Philippines Philippines and such service shall have the same
therefor and upon proof to the satisfaction of on whom any summons or other legal force and effect as if made upon the duly-authorized
the Securities and Exchange Commission processes may be served, then in any action officers of the corporation at its home office.”
that the licensee has no liability to Philippine or proceeding arising out of any business or
residents, including the Government of the transaction which occurred in the Philippines, Whenever such service of summons or other
Republic of the Philippines. (n) service of any summons or other legal process is made upon the Commission, the
process may be made upon the Securities Commission shall, within ten (10) days thereafter,
Section 127. Who may be a resident agent. – SEC. 144. Who May be a Resident Agent. – A and Exchange Commission and that such transmit by mail a copy of such summons or other
A resident agent may be either an individual resident agent may be either an individual residing service shall have the same force and effect legal process to the corporation at its home or
residing in the Philippines or a domestic in the Philippines or a domestic corporation lawfully as if made upon the duly-authorized officers principal office. The sending of such copy by the
corporation lawfully transacting business in transacting business in the Philippines: Provided, of the corporation at its home office." Commission shall be a necessary part of and shall
the Philippines: Provided, That in the case of That an individual resident agent must be of good Whenever such service of summons or other complete such service. All expenses incurred by the
an individual, he must be of good moral moral character and of sound financial standing: process shall be made upon the Securities Commission for such service shall be paid in
character and of sound financial standing. (n) Provided further, that in case of a domestic and Exchange Commission, the Commission advance by the party at whose instance the service
corporation who will act as a resident agent, it shall, within ten (10) days thereafter, transmit is made.
must likewise be of sound financial standing by mail a copy of such summons or other
and must show proof that it is in good standing legal process to the corporation at its home It shall be the duty of the resident agent to
as certified by the Commission. or principal office. The sending of such copy immediately notify the Commission in writing of any
by the Commission shall be necessary part change in the resident agent’s address.
Section 128. Resident agent; service of SEC. 145. Resident Agent; Service of Process. – of and shall complete such service. All
process. – The Securities and Exchange As a condition to the issuance of the license for expenses incurred by the Commission for
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such service shall be paid in advance by the by the appropriate government agency in the cases.
party at whose instance the service is made. proper cases. (n)
In case of a change of address of the resident
agent, it shall be his or its duty to immediately
notify in writing the Securities and Exchange Section 132. Merger or consolidation SEC. 149. Merger or Consolidation Involving a
Commission of the new address. (72a; and n) involving a foreign corporation licensed in the Foreign Corporation Licensed in the Philippines. –
Philippines. – One or more foreign One or more foreign corporations authorized to
Section 129. Law applicable. – Any SEC. 146. Law Applicable. – A foreign corporation corporations authorized to transact business transact business in the Philippines may merge or
foreign corporation lawfully doing business in lawfully doing business in the Philippines shall be in the Philippines may merge or consolidate consolidate with any domestic corporation or
the Philippines shall be bound by all laws, bound by all laws, rules and regulations applicable with any domestic corporation or corporations if permitted under Philippine laws and
rules and regulations applicable to domestic to domestic corporations of the same class, except corporations if such is permitted under by the law of its incorporation: Provided, That the
corporations of the same class, except such those which provide for the creation, formation, Philippine laws and by the law of its requirements on merger or consolidation as
only as provide for the creation, formation, organization or dissolution of corporations or those incorporation: Provided, That the provided in this Code are followed.
organization or dissolution of corporations or which fix the relations, liabilities, responsibilities, or requirements on merger or consolidation as
those which fix the relations, liabilities, duties of stockholders, members, or officers of provided in this Code are followed.
responsibilities, or duties of stockholders, corporations to each other or to the corporation. Whenever a foreign corporation authorized to
members, or officers of corporations to each Whenever a foreign corporation transact business in the Philippines shall be a party
other or to the corporation. (73a) authorized to transact business in the to a merger or consolidation in its home country or
Philippines shall be a party to a merger or State as permitted by the law authorizing its
Section 130. Amendments to articles of consolidation in its home country or state as incorporation, such foreign corporation shall, within
incorporation or by-laws of foreign SEC. 147. Amendments to Articles of Incorporation permitted by the law of its incorporation, such sixty (60) days after the effectivity of such merger
corporations. – Whenever the articles of or Bylaws of Foreign Corporations. – Whenever the foreign corporation shall, within sixty (60) or consolidation, file with the Commission, and in
incorporation or by-laws of a foreign articles of incorporation or bylaws of a foreign days after such merger or consolidation proper cases, with the appropriate government
corporation authorized to transact business corporation authorized to transact business in the becomes effective, file with the Securities agency, a copy of the articles of merger or
in the Philippines are amended, such foreign Philippines are amended, such foreign corporation and Exchange Commission, and in proper consolidation duly authenticated by the proper
corporation shall, within sixty (60) days after shall, within sixty (60) days after the amendment cases with the appropriate government official or officials of the country or state under
the amendment becomes effective, file with becomes effective, file with the Commission, and in agency, a copy of the articles of merger or whose laws, the merger or consolidation was
the Securities and Exchange Commission, the proper cases, with the appropriate government consolidation duly authenticated by the effected: Provided however, That if the absorbed
and in the proper cases with the appropriate agency, a duly authenticated copy of the amended proper official or officials of the country or corporation is the foreign corporation doing
government agency, a duly authenticated articles of incorporation or bylaws, indicating clearly state under the laws of which merger or business in the Philippines, the latter shall at the
copy of the articles of incorporation or by- in capital letters or underscoring the change or consolidation was effected: Provided, same time file a petition for withdrawal of its license
laws, as amended, indicating clearly in changes made, duly certified by the authorized however, That if the absorbed corporation is in accordance with this Title.
capital letters or by underscoring the change official or officials of the country or state of the foreign corporation doing business in the
or changes made, duly certified by the incorporation. Such filing shall not in itself enlarge Philippines, the latter shall at the same time
authorized official or officials of the country or or alter the purpose or purposes for which such file a petition for withdrawal of its license in
state of incorporation. The filing thereof shall corporation is authorized to transact business in the accordance with this Title. (n)
not of itself enlarge or alter the purpose or Philippines.
purposes for which such corporation is Section 133. Doing business without a
authorized to transact business in the license. – No foreign corporation transacting SEC. 150. Doing Business Without a License. – No
Philippines. (n) business in the Philippines without a license, foreign corporation transacting business in the
or its successors or assigns, shall be Philippines without a license, or its successors or
Section 131. Amended license. – A foreign permitted to maintain or intervene in any assigns, shall be permitted to maintain or intervene
SEC. 148. Amended License. – A foreign in any action, suit or proceeding in any court or
corporation authorized to transact business action, suit or proceeding in any court or
corporation authorized to transact business in the administrative agency of the Philippines; but such
in the Philippines shall obtain an amended administrative agency of the Philippines; but
Philippines shall obtain an amended license in the corporation may be sued or proceeded against
license in the event it changes its corporate such corporation may be sued or proceeded
event it changes its corporate name, or desires to before Philippine courts or administrative tribunals
name, or desires to pursue in the Philippines against before Philippine courts or
pursue other or additional purposes in the on any valid cause of action recognized under
other or additional purposes, by submitting administrative tribunals on any valid cause of
Philippines, by submitting an application with the Philippine laws.
an application therefor to the Securities and action recognized under Philippine laws.
Commission, favorably endorsed by the
Exchange Commission, favorably endorsed (69a)
appropriate government agency in the proper
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Section 135. Issuance of certificate of SEC. 152. Issuance of Certificate of Revocation. –

Section 134. Revocation of license. – Without SEC. 151. Revocation of License. – Without revocation. – Upon the revocation of any Upon the revocation of the license to transact
prejudice to other grounds provided by prejudice to other grounds provided under special such license to transact business in the business in the Philippines, the Commission shall
special laws, the license of a foreign laws, the license of a foreign corporation to transact Philippines, the Securities and Exchange issue a corresponding certificate of revocation,
corporation to transact business in the business in the Philippines may be revoked or Commission shall issue a corresponding furnishing a copy thereof to the appropriate
Philippines may be revoked or suspended by suspended by the Commission upon any of the certificate of revocation, furnishing a copy government agency in the proper cases.
the Securities and Exchange Commission following grounds: thereof to the appropriate government
upon any of the following grounds: agency in the proper cases. The Commission shall also mail the notice and
1. Failure to file its annual report or pay any (a) Failure to file its annual report or pay any fees The Securities and Exchange copy of the certificate of revocation to the
fees as required by this Code; as required by this Code; Commission shall also mail to the corporation corporation, at its registered office in the
2. Failure to appoint and maintain a resident at its registered office in the Philippines a Philippines.
agent in the Philippines as required by this (b) Failure to appoint and maintain a resident agent notice of such revocation accompanied by a
Title; in the Philippines as required by this Title; copy of the certificate of revocation. (n)
3. Failure, after change of its resident agent
or of his address, to submit to the Securities (c) Failure, after change of its resident agent or Section 136. Withdrawal of foreign SEC. 153. Withdrawal of foreign corporations. –
and Exchange Commission a statement of address, to submit to the Commission a statement corporations. – Subject to existing laws and Subject to existing laws and regulations, a foreign
such change as required by this Title; of such change as required by this Title; regulations, a foreign corporation licensed to corporation licensed to transact business in the
4. Failure to submit to the Securities and transact business in the Philippines may be Philippines may be allowed to withdraw from the
Exchange Commission an authenticated (d) Failure to submit to the Commission an allowed to withdraw from the Philippines by Philippines by filing a petition for withdrawal of
copy of any amendment to its articles of authenticated copy of any amendment to its articles filing a petition for withdrawal of license. No license. No certificate of withdrawal shall be issued
incorporation or by-laws or of any articles of of incorporation or bylaws or of any articles of certificate of withdrawal shall be issued by by the Commission unless all the following
merger or consolidation within the time merger or consolidation within the time prescribed the Securities and Exchange Commission requirements are met:
prescribed by this Title; by this Title; unless all the following requirements are met;
5. A misrepresentation of any material matter 1. All claims which have accrued in the (a) All claims which have accrued in the Philippines
in any application, report, affidavit or other (e) A misrepresentation of any material matter in Philippines have been paid, compromised or have been paid, compromised or settled;
document submitted by such corporation any application, report, affidavit or other document settled;
pursuant to this Title; submitted by such corporation pursuant to this 2. All taxes, imposts, assessments, and (b) All taxes, imposts, assessments, and penalties,
6. Failure to pay any and all taxes, imposts, Title; penalties, if any, lawfully due to the Philippine if any, lawfully due to the Philippine Government or
assessments or penalties, if any, lawfully due Government or any of its agencies or political any of its agencies or political subdivisions have
to the Philippine Government or any of its (f) Failure to pay any and all taxes, imposts, subdivisions have been paid; and been paid; and
agencies or political subdivisions; assessments or penalties, if any, lawfully due to the 3. The petition for withdrawal of license has
7. Transacting business in the Philippines Philippine Government or any of its agencies or been published once a week for three (3) (c) The petition for withdrawal of license has been
outside of the purpose or purposes for which political subdivisions; consecutive weeks in a newspaper of published once a week for three (3) consecutive
such corporation is authorized under its general circulation in the Philippines. weeks in a newspaper of general circulation in the
license; (g) Transacting business in the Philippines outside Philippines.
8. Transacting business in the Philippines as of the purpose or purposes for which such TITLE XVI
agent of or acting for and in behalf of any corporation is authorized under its license; INVESTIGATIONS, OFFENSES, AND
foreign corporation or entity not duly licensed PENALTIES
to do business in the Philippines; or (h) Transacting business in the Philippines as
9. Any other ground as would render it unfit agent of or acting on behalf of any foreign SEC. 154. Investigation and Prosecution of
to transact business in the Philippines. (n) corporation or entity not duly licensed to do Offenses. – The Commission may investigate
business in the Philippines; or an alleged violation of this Code, rule,
regulation, or order of the Commission.
(i) Any other ground as would render it unfit to
transact business in the Philippines. The Commission may publish its findings,
orders, opinions, advisories, or information
concerning any such violation, as may be
relevant to the general public or to the parties
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concerned, subject to the provisions of

Republic Act No. 10173, otherwise known as the SEC. 157. Contempt. – Any person who,
“Data Privacy Act of 2012”, and other pertinent without justifiable cause, fails or refuses to
laws. comply with any lawful order, decision, or
subpoena issued by the Commission shall,
The Commission shall give reasonable notice after due notice and hearing, be held in
to and coordinate with the appropriate contempt and fined in an amount not exceeding
regulatory agency prior to any such publication Thirty thousand pesos (P30,000.00). When the
involving companies under their special refusal amounts to clear and open defiance of
regulatory jurisdiction. the Commission’s order, decision, or
subpoena, the Commission may impose a daily
fine of One thousand pesos (P1,000.00) until the
SEC. 155. Administration of Oaths, Subpoena order, decision, or subpoena is complied with.
of Witnesses and Documents. – The
Commission, through its designated officer,
may administer oaths and affirmations, issue Section 144. Violations of the Code. – SEC. 158. Administrative Sanctions. – If, after
subpoena and subpoena duces tecum, take Violations of any of the provisions of this due notice and hearing, the Commission finds
testimony in any inquiry or investigation, and Code or its amendments not otherwise that any provision of this Code, rules or
may perform other acts necessary to the specifically penalized therein shall be regulations, or any of the Commission’s orders
proceedings or to the investigation. punished by a fine of not less than one has been violated, the Commission may impose
thousand (P1,000.00) pesos but not more any or all of the following sanctions, taking into
than ten thousand (P10,000.00) pesos or consideration the extent of participation,
SEC. 156. Cease and Desist Orders. – Whenever by imprisonment for not less than thirty nature, effects, frequency and seriousness of
the Commission has reasonable basis to (30) days but not more than five (5) years, the violation:
believe that a person has violated, or is about or both, in the discretion of the court. If
to violate, this Code, rule, regulation, or order the violation is committed by a 1.Imposition of a fine ranging from Five
of the Commission, it may direct such person corporation, the same may, after notice thousand pesos (P5,000.00) to Two million
to desist from committing the act constituting and hearing, be dissolved in appropriate pesos (P2,000,000.00), and not more than One
the violation. proceedings before the Securities and thousand pesos (P1,000.00) for each day of
Exchange Commission: Provided, That continuing violation but in no case to exceed
The Commission may issue a cease and desist such dissolution shall not preclude the Two million pesos (P2,000,000.00);
order ex parte to enjoin an act or practice which institution of appropriate action against 2.Issuance of a permanent cease-and-desist
is fraudulent or can be reasonably expected to the director, trustee or officer of the order;
cause significant, imminent, and irreparable corporation responsible for said
danger or injury to public safety or welfare. The violation: Provided, further, That nothing 3.Suspension or revocation of the certificate of
ex parte order shall be valid for a maximum in this section shall be construed to incorporation; and
period of twenty (20) days, without prejudice to repeal the other causes for dissolution of
the order being made permanent after due a corporation provided in this Code. (190 4.Dissolution of the corporation and forfeiture
notice and hearing. 1/2 a) of its assets under the conditions in Title XIV of
this Code.
Thereafter, the Commission may proceed
administratively against such person in
accordance with Section 158 of this Code, SEC. 159. Unauthorized Use of Corporate
and/or transmit evidence to the Department of Name; Penalties. – The unauthorized use of a
Justice for preliminary investigation or criminal corporate name shall be punished with a fine
prosecution and/or initiate criminal prosecution ranging from Ten thousand pesos (P10,000.00)
for any violation of this Code, rule, or to Two hundred thousand pesos (P200,000.00).
regulation.

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SEC. 160. Violation of Disqualification inaccurate, false, or misleading information or

Provision; Penalties. – When, despite the statements, shall be punished with a fine
knowledge of the existence of a ground for ranging from Twenty thousand pesos
disqualification as provided in Sec. 26 of this (P20,000.00) to Two hundred thousand pesos
Code, a director, trustee, or officer willfully (P200,000.00). When the wrongful certification
holds office, or willfully conceals such is injurious or detrimental to the public, the
disqualification, such director, trustee, or auditor or the responsible person may also be
officer shall be punished by a fine ranging from punished with a fine ranging from Forty
Ten thousand pesos (P10,000.00) to Two thousand pesos (P40,000.00) to Four hundred
hundred thousand pesos (P200,000.00) at the thousand pesos (P400,000.00).
discretion of the Court, and shall be
permanently disqualified from being a director, SEC. 163. Independent Auditor Collusion;
trustee or officer of any corporation. When the Penalties. – An independent auditor who, in
violation of this provision is injurious or collusion with the corporation’s directors or
detrimental to the public, the penalty shall be a representatives, certifies the corporation’s
fine ranging from Twenty thousand pesos financial statements despite its incompleteness
(P20,000.00) to Four hundred thousand pesos or inaccuracy, its failure to give a fair and
(P400,000.00). accurate presentation of the corporation’s
condition, or despite containing false or
SEC. 161. Violation of Duty to Maintain misleading statements, shall be punished with
Records, to Allow their Inspection or a fine ranging from Eighty thousand pesos
Reproduction; Penalties. – The unjustified (P80,000.00) to Five hundred thousand pesos
failure or refusal by the corporation, or by those (P500,000.00). When the statement or report
responsible for keeping and maintaining certified is fraudulent, or has the effect of
corporate records, to comply with Sections 45, causing injury to the general public, the auditor
73, 92, 128, 177 and other pertinent rules and or responsible officer may be punished with a
provisions of this Code on inspection and fine ranging from One hundred thousand pesos
reproduction of records shall be punished with (P100,000.00) to Six hundred thousand pesos
a fine ranging from Ten thousand pesos (P600,000.00).
(P10,000.00) to Two hundred thousand pesos
(P200,000.00), at the discretion of the Court, SEC. 164. Obtaining Corporate Registration
taking into consideration the seriousness of the Through Fraud; Penalties. – Those responsible
violation and its implications. When the for the formation of a corporation through
violation of this provision is injurious or fraud, or who assisted directly or indirectly
detrimental to the public, the penalty is a fine therein, shall be punished with a fine ranging
ranging from Twenty thousand pesos from Two hundred thousand pesos
(P20,000.00) to Four hundred thousand pesos (P200,000.00) to Two million pesos
(P400,000.00). (P2,000,000.00). When the violation of this
provision is injurious or detrimental to the
The penalties imposed under this section shall public, the penalty is a fine ranging from Four
be without prejudice to the Commission’s hundred thousand pesos (P400,000.00) to Five
exercise of its contempt powers under Section million pesos (P5,000,000.00).
157 hereof.
SEC. 165. Fraudulent Conduct of Business;
SEC. 162. Willful Certification of Incomplete, Penalties. – A corporation that conducts its
Inaccurate, False, or Misleading Statements or business through fraud shall be punished with
Reports; Penalties. – Any person who willfully a fine ranging from Two hundred thousand
certifies a report required under this Code pesos (P200,000.00) to Two million pesos
knowing that the same contains incomplete, (P2,000,000.00). When the violation of this
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provision is injurious or detrimental to the person who, knowingly and with intent to
public, the penalty is a fine ranging from Four retaliate, commits acts detrimental to a
hundred thousand pesos (P400,000.00) to Five whistleblower such as interfering with the
million pesos (P5,000,000.00). lawful employment or livelihood of the
whistleblower, shall, at the discretion of the
SEC. 166. Acting as Intermediaries for Graft Court, be punished with a fine ranging from One
and Corrupt Practices; Penalties. – A hundred thousand pesos (P100,000.00) to One
corporation used for fraud, for committing or million pesos (P1,000,000.00).
concealing graft and corrupt practices shall be
liable for a fine ranging from One hundred SEC. 170. Other Violations of the Code;
thousand pesos (P100,000.00) to Five million Separate Liability. – Violations of any of the
pesos (P5,000,000.00). other provisions of this Code or its
amendments not otherwise specifically
When there is a finding that any of its directors, penalized therein shall be punished by a fine of
officers, employees, agents, or representatives not less than Ten thousand pesos (P10,000.00)
are engaged in graft and corrupt practices, the but not more than One million pesos
corporation’s failure to install: (a) safeguards (P1,000,000.00). If the violation is committed by
for the transparent and lawful delivery of a corporation, the same may, after notice and
services; and (b) policies, code of ethics, and hearing, be dissolved in appropriate
procedures against graft and corruption, shall proceedings before the Commission: Provided,
be prima facie evidence of corporate liability That such dissolution shall not preclude the
under this section. institution of appropriate action against the
director, trustee, or officer of the corporation
SEC. 167. Engaging Intermediaries for Graft responsible for said violation: Provided,
and Corrupt Practices; Penalties. – A further, That nothing in this section shall be
corporation that appoints an intermediary who construed to repeal the other causes for
engages in graft and corrupt practices for the dissolution of a corporation provided in this
corporation’s benefit or interest, shall be Code.
punished with a fine ranging from One hundred
thousand pesos (P100,000.00) to One million Liability for any of the foregoing offenses shall
pesos (P1,000,000.00). be separate from any other administrative, civil,
or criminal liability under this Code and other
SEC. 168. Tolerating Graft and Corrupt laws.
Practices; Penalties. – A director, trustee, or
officer who knowingly fails to sanction, report, SEC. 171. Liability of Directors, Trustees,
or file the appropriate action with proper Officers, or Other Employees. – If the offender
agencies, allows or tolerates the graft and is a corporation, the penalty may, at the
corrupt practices or fraudulent acts committed discretion of the court, be imposed upon such
by a corporation’s directors, trustees, officers, corporation and/or upon its directors, trustees,
or employees, shall be punished with a fine stockholders, members, officers, or employees
ranging from Five hundred thousand pesos responsible for the violation or indispensable to
(P500,000.00) to One million pesos its commission.
(P1,000,000.00).
SEC. 172. Liability of Aiders and Abettors and
SEC. 169. Retaliation Against Whistleblowers. Other Secondary Liability. – Anyone who shall
– A whistleblower refers to any person who aid, abet, counsel, command, induce, or
provides truthful information relating to the procure any violation of this Code, or any rule,
commission or possible commission of any regulation, or order of the Commission shall be
offense or violation under this Code. Any punished with a fine not exceeding that
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imposed on the principal offenders, at the vehicle has been used by any corporation or frustrate the provisions of this Code or applicable
discretion of the Court, after taking into account by business or industry to frustrate the laws, and shall submit to Congress, whenever
their participation in the offense. provisions thereof or of applicable laws, and deemed necessary, a report its findings, including
shall submit to the Batasang Pambansa, recommendations for their prevention or correction.
TITLE XVI TITLE XVII whenever deemed necessary, a report of its
MISCELLANEOUS PROVISIONS MISCELLANEOUS PROVISIONS findings, including recommendations for their The Congress of the Philippines may set
prevention or correction. maximum limits for stock ownership of individuals
Section 137. Outstanding capital stock SEC. 173. Outstanding Capital Stock Defined. – Maximum limits may be set by the Batasang or groups of individuals related to each other by
defined. – The term "outstanding capital The term “outstanding capital stock”, as used in this Pambansa for stockholdings in corporations consanguinity, affinity, or by close business
stock", as used in this Code, means the total Code, shall mean the total shares of stock issued declared by it to be vested with a public interests, in corporations declared to be vested with
shares of stock issued under binding under binding subscription agreements to interest pursuant to the provisions of this public interest pursuant to the provisions of this
subscription agreements to subscribers or subscribers or stockholders, whether fully or section, belonging to individuals or groups of section, or whenever necessary to prevent anti-
stockholders, whether or not fully or partially partially paid, except treasury shares. individuals related to each other by competitive practices as provided in Republic Act
paid, except treasury shares. (n) consanguinity or affinity or by close business No. 10667, otherwise known as the “Philippine
interests, or whenever it is necessary to Competition Act”, or to implement national
Section 138. Designation of governing SEC. 174. Designation of Governing Boards. – The achieve national objectives, prevent illegal economic policies designed to promote general
boards. – The provisions of specific provisions of specific provisions of this Code to the monopolies or combinations in restraint or welfare and economic development, as declared in
provisions of this Code to the contrary contrary notwithstanding, nonstock or special trade, or to implement national economic laws, rules, and regulations.
notwithstanding, non-stock or special corporations may, through their articles of policies declared in laws, rules and
corporations may, through their articles of incorporation or their bylaws, designate their regulations designed to promote the general In recommending to the Congress which
incorporation or their by-laws, designate their governing boards by any name other than as board welfare and foster economic development. corporations, businesses and industries will be
governing boards by any name other than as of trustees. In recommending to the Batasang Pambansa declared as vested with public interest, and in
board of trustees. (n) corporations, businesses or industries to be formulating proposals for limitations on stock
declared vested with a public interest and in ownership, the NEDA shall consider the type and
Section 139. Incorporation and other fees. – SEC. 175. Collection and Use of Registration, formulating proposals for limitations on stock nature of the industry, size of the enterprise,
The Securities and Exchange Commission is Incorporation and Other Fees. – For a more ownership, the National Economic and economies of scale, geographic location, extent of
hereby authorized to collect and receive fees effective implementation of this Code, the Development Authority shall consider the Filipino ownership, labor intensity of the activity,
as authorized by law or by rules and Commission is hereby authorized to collect, type and nature of the industry, the size of the export potential, as well as other factors which are
regulations promulgated by the retain, and use fees, fines, and other charges enterprise, the economies of scale, the germane to the realization and promotion of
Commission.1âwphi1 (n) pursuant to this Code and its rules and geographic location, the extent of Filipino business and industry.
regulations. The amount collected shall be ownership, the labor intensity of the activity,
deposited and maintained in a separate account the export potential, as well as other factors
which shall form a fund for its modernization which are germane to the realization and
and to augment its operational expenses such promotion of business and industry.
as, but not limited to, capital outlay, increase in
compensation and benefits comparable with Section 141. Annual report or corporations. – SEC. 177. Reportorial requirements of
prevailing rates in the private sector, Every corporation, domestic or foreign, corporations. – Except as otherwise provided in
reasonable employee allowance, employee lawfully doing business in the Philippines this Code or in the rules issued by the
health care services, and other insurance, shall submit to the Securities and Exchange Commission, every corporation, domestic or
employee career advancement and Commission an annual report of its foreign, doing business in the Philippines shall
professionalization, legal assistance, seminars, operations, together with a financial submit to the Commission:
and other professional fees. statement of its assets and liabilities, certified
by any independent certified public (a) Annual financial statements audited by an
Section 140. Stock ownership in certain SEC. 176. Stock Ownership in Corporations. – accountant in appropriate cases, covering independent certified public accountant:
corporations. – Pursuant to the duties Pursuant to the duties specified by Article XIV of the the preceding fiscal year and such other Provided, That if the total assets or total
specified by Article XIV of the Constitution, Constitution, the National Economic and requirements as the Securities and liabilities of the corporation are less than Six
the National Economic and Development Development Authority (NEDA) shall, from time to Exchange Commission may require. Such hundred thousand pesos (P600,000.00) the
Authority shall, from time to time, make a time, determine if the corporate vehicle has been report shall be submitted within such period financial statements shall be certified under
determination of whether the corporate used by any corporation, business, or industry to
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as may be prescribed by the Securities and oath by the corporation’s treasurer or chief same to be made public or where such Should the corporation, without justifiable
Exchange Commission. (n) financial officer; and interrogatories, answers or results are cause, refuse or obstruct the Commission’s
necessary to be presented as evidence exercise of its visitorial powers, the
(b) A general information sheet. before any court. (n) Commission may revoke its certificate of
incorporation, without prejudice to the
Corporations vested with public interest must imposition of other penalties and sanctions
also submit the following: under this Code.

(1) A director or trustee compensation report; All interrogatories propounded by the Commission
and the answers thereto, as well as the results of
(2) A director or trustee appraisal or any examination made by the Commission or any
performance report and the standards or other official authorized by law to make an
criteria used to assess each director or trustee. examination of the operations, books, and records
of any corporation, shall be kept strictly confidential,
The reportorial requirements shall be submitted except when the law requires the same to be made
annually and within such period as may be public, when necessary for the Commission to take
prescribed by the Commission. action to protect the public or to issue orders in the
exercise of its powers under this Code, or where
The Commission may place the corporation such interrogatories, answers or results are
under delinquent status in case of failure to necessary to be presented as evidence before any
submit the reportorial requirements three (3) Court.
times, consecutively or intermittently, within a
period of five (5) years. The Commission shall Section 143. Rule-making power of the SEC. 179. Powers, functions, and jurisdiction of
give reasonable notice to and coordinate with Securities and Exchange Commission. – The the Commission. – The Commission shall have
the appropriate regulatory agency prior to Securities and Exchange Commission shall the power and authority to:
placing under delinquent status companies have the power and authority to implement
under their special regulatory jurisdiction. the provisions of this Code, and to (a) Exercise supervision and jurisdiction over
promulgate rules and regulations reasonably all corporations and persons acting on their
Any person required to file a report with the necessary to enable it to perform its duties behalf, except as otherwise provided under this
Commission may redact confidential hereunder, particularly in the prevention of Code;
information from such required report: fraud and abuses on the part of the
Provided, That such confidential information controlling stockholders, members, directors, (b) Pursuant to Presidential Decree 902-A,
shall be filed in a supplemental report trustees or officers. (n) retain jurisdiction over pending cases involving
prominently labelled “confidential”, together intracorporate disputes submitted for final
with a request for confidential treatment of the resolution. The Commission shall retain
report and the specific grounds for the grant jurisdiction over pending suspension of
thereof. payment/rehabilitation cases filed as of 30 June
2000 until finally disposed.

Section 142. Confidential nature of SEC. 178. Visitorial Power and Confidential (c) Impose sanctions for the violation of this
examination results. – All interrogatories Nature of Examination Results. – The Code, its implementing rules, and orders of the
propounded by the Securities and Exchange Commission shall exercise visitorial powers Commission;
Commission and the answers thereto, as well over all corporations, which powers shall
as the results of any examination made by include the examination and inspection of (d) Promote corporate governance and the
the Commission or by any other official records, regulation and supervision of protection of minority investors, through,
authorized by law to make an examination of activities, enforcement of compliance, and among others, the issuance of rules and
the operations, books and records of any imposition of sanctions in accordance with this regulations consistent with international best
corporation, shall be kept strictly confidential, Code. practices;
except insofar as the law may require the
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(e) Issue opinions to clarify the application of (o) Formulate and enforce standards,
laws, rules, and regulations; guidelines, policies, rules, and regulations to
carry out the provisions of this Code; and
(f) Issue cease and desist orders ex parte to
prevent imminent fraud or injury to the public; (p) Exercise such other powers provided by law
or those, which may be necessary or incidental
(g) Hold corporations in direct and indirect to carrying out, the powers expressly granted to
contempt; the Commission.

(h) Issue subpoena duces tecum and summon In imposing penalties and additional
witnesses to appear in proceedings before the monitoring and supervision requirements, the
Commission; Commission shall take into consideration the
size, nature of the business, and capacity of the
(i) In appropriate cases, order the examination, corporation.
search and seizure of documents, papers, files
and records, and books of accounts of any No court below the Court of Appeals shall have
entity or person under investigation as may be jurisdiction to issue a restraining order,
necessary for the proper disposition of the preliminary injunction, or preliminary
cases, subject to the provisions of existing mandatory injunction in any case, dispute, or
laws; controversy that directly or indirectly interferes
with the exercise of the powers, duties and
(j)Suspend or revoke the certificate of responsibilities of the Commission that falls
incorporation after proper notice and hearing; exclusively within its jurisdiction.

(k) Dissolve or impose sanctions on SEC. 180. Development and Implementation of

corporations, upon final court order, for Electronic Filing and Monitoring System. – The
committing, aiding in the commission of, or in Commission shall develop and implement an
any manner furthering securities violations, electronic filing and monitoring system. The
smuggling, tax evasion, money laundering, Commission shall promulgate rules to facilitate
graft and corrupt practices, or other fraudulent and expedite, among others, corporate name
or illegal acts; reservation and registration, incorporation,
submission of reports, notices, and documents
(l) Issue writs of execution and attachment to required under this Code, and sharing of
enforce payment of fees, administrative fines, pertinent information with other government
and other dues collectible under this Code; agencies.

(m) Prescribe the number of independent

directors and the minimum criteria in SEC. 181. Arbitration for Unlisted Corporations.
determining the independence of a director; – An arbitration agreement may be provided in
the articles of incorporation or by-laws of an
(n) Impose or recommend new modes by which unlisted corporation. When such an agreement
a stockholder, member, director, or trustee may is in place, disputes between the corporation,
attend meetings or cast their votes, as its stockholders or members, which arise from
technology may allow, taking into account the the implementation of the articles of
company’s scale, number of shareholders or incorporation or by-laws, or from intracorporate
members, structure, and other factors relations, shall be referred to arbitration. A
consistent with the basic right of corporate dispute shall be non-arbitrable when it involves
suffrage; criminal offenses and interests of third parties.
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SEC. 182. Jurisdiction over Party-List

The arbitration agreement shall be binding on Organizations. – The powers, authorities, and
the corporation, its directors, trustees, officers, responsibilities of the Commission involving
and executives or managers. party-list organizations are transferred to the
Commission on Elections (COMELEC).
To be enforceable, the arbitration agreement
should indicate the number of arbitrators and Within six (6) months after the effectivity of this
the procedure for their appointment. The power Act, the monitoring, supervision, and regulation
to appoint the arbitrators forming the arbitral of such corporations shall be deemed
tribunal shall be granted to a designated automatically transferred to the COMELEC.
independent third party. Should the third party
fail to appoint the arbitrators in the manner and For this purpose, the COMELEC, in
within the period specified in the arbitration coordination with the Commission, shall
agreement, the parties may request the promulgate the corresponding implementing
Commission to appoint the arbitrators. In any rules for the transfer of jurisdiction over the
case, arbitrators must be accredited or must above-mentioned corporations.
belong to organizations accredited for the
purpose of arbitration.
SEC. 183. Applicability of the Code. – Nothing in
The arbitral tribunal shall have the power to rule this law shall be construed as amending
on its own jurisdiction and on questions existing provisions of special laws governing
relating to the validity of the arbitration the registration, regulation, monitoring and
agreement. When an intracorporate dispute is supervision of special corporations such as
filed with a Regional Trial Court, the Court shall banks, non-bank financial institutions and
dismiss the case before the termination of the insurance companies.
pretrial conference, if it determines that an
arbitration agreement is written in the Notwithstanding any provision to the contrary,
corporation’s articles of incorporation, by-laws, regulators such as the Bangko Sentral ng
or in a separate agreement. Pilipinas and the Insurance Commission shall
exercise primary authority over special
The arbitral tribunal shall have the power to corporations such as banks, non-bank financial
grant interim measures necessary to ensure institutions, and insurance companies under
enforcement of the award, prevent a their supervision and regulation.
miscarriage of justice, or otherwise protect the
rights of the parties.
Section 145. Amendment or repeal. – No SEC. 184. Effect of Amendment or Repeal of
A final arbitral award under this section shall be right or remedy in favor of or against any This Code, or the Dissolution of a Corporation.
executory after the lapse of fifteen (15) days corporation, its stockholders, members, – No right or remedy in favor of or against any
from receipt thereof by the parties and shall be directors, trustees, or officers, nor any liability corporation, its stockholders, members,
stayed only by the filing of a bond or the incurred by any such corporation, directors, trustees, or officers, nor any liability
issuance by the appellate court of an injunctive stockholders, members, directors, trustees, incurred by any such corporation,
writ. or officers, shall be removed or impaired stockholders, members, directors, trustees, or
either by the subsequent dissolution of said officers, shall be removed or impaired either by
The Commission shall formulate the rules and corporation or by any subsequent the subsequent dissolution of said corporation
regulations, which shall govern arbitration amendment or repeal of this Code or of any or by any subsequent amendment or repeal of
under this section, subject to existing laws on part thereof. (n) this Code or of any part thereof.
arbitration.

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(Note: Please check the official versions of the Codes; SEC-OCS March 08, 2019) (Note: Please check the official versions of the Codes; SEC-OCS March 08, 2019)
 Comparative Matrix Comparative Matrix
Corporation Code (1980) Revised Corporation Code (2019) Corporation Code (1980) Revised Corporation Code (2019)

Section 146. Repealing clause. – Except as SEC. 187. Repealing clause. – Batas Pambansa
expressly provided by this Code, all laws or Blg. 68 otherwise known as “The Corporation
parts thereof inconsistent with any provision Code of the Philippines” is hereby repealed.
of this Code shall be deemed repealed. (n) Any law, presidential decree or issuance,
executive order, letter of instruction,
administrative order, rule or regulation contrary
to or inconsistent with any provision of this Act
is hereby repealed or modified accordingly.

Section 147. Separability of provisions. – SEC. 186. Separability clause. – If any provision
Should any provision of this Code or any part of this Act is declared invalid or
thereof be declared invalid or unconstitutional, other provisions hereof which
unconstitutional, the other provisions, so far are not affected thereby shall continue to be in
as they are separable, shall remain in force. full force and effect.
(n)

Section 148. Applicability to existing SEC. 187. Applicability to Existing Corporation. – A

corporations. – All corporations lawfully corporation lawfully existing and doing
existing and doing business in the Philippines business in the Philippines affected by the new
on the date of the effectivity of this Code and requirements of this Code shall be given a
heretofore authorized, licensed or registered period of not more than two (2) years from the
by the Securities and Exchange effectivity of this Act within which to comply.
Commission, shall be deemed to have been
authorized, licensed or registered under the
provisions of this Code, subject to the terms
and conditions of its license, and shall be
governed by the provisions hereof: Provided,
That if any such corporation is affected by the
new requirements of this Code, said
corporation shall, unless otherwise herein
provided, be given a period of not more than
two (2) years from the effectivity of this Code
within which to comply with the same. (n)

Section 149. Effectivity. – This Code shall SEC. 188. Effectivity. – This Act shall take effect
take effect immediately upon its approval. upon completion of its publication in the Official
Gazette or in at least two (2) newspapers of
general circulation.

Published in Manila Bulletin and Business Mirror on

February 23, 2019.

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(Note: Please check the official versions of the Codes; SEC-OCS March 08, 2019) (Note: Please check the official versions of the Codes; SEC-OCS March 08, 2019)