Module 13

REPUBLIC ACT NO. 11232

AN ACT PROVIDING FOR THE REVISED CORPORATION CODE OF THE PHILIPPINES

TITLE IX.
MERGER AND CONSOLIDATION
SEC. 75. Plan of Merger or Consolidation. – Two (2) or more corporations may merge into a
single corporation which shall be one of the constituent corporations or may consolidate into a new
single corporation which shall be the consolidated corporation.

Merger = two or more corporations uniting, resulting to one of the corporations. (A + B= A or B)

Consolidation = two corporations uniting, giving rise to another corporation. (A + B = C)

The board of directors or trustees of each corporation, party to the merger or consolidation, shall
approve a plan of merger or consolidation setting forth the following:

What must be stated in the plan of merger and consolidation?

(a) The names of the corporations proposing to merge or consolidate, hereinafter referred to as the
constituent corporations;

(b) The terms of the merger or consolidation and the mode of carrying the same into effect;

(c) A statement of the changes, if any, in the articles of incorporation of the surviving corporation in
case of merger; and, in case of consolidation, all the statements required to be set forth in the
articles of incorporation for corporations organized under this Code; and

(d) Such other provisions with respect to the proposed merger or consolidation as are deemed
necessary or desirable.

SEC. 76. Stockholders’ or Members’ Approval. – Upon approval by a majority vote of each of the
board of directors or trustees of the constituent corporations of the plan of merger or consolidation,
the same shall be submitted for approval by the stockholders or members of each of such
corporations at separate corporate meetings duly called for the purpose. Notice of such meetings
shall be given to all stockholders or members of the respective corporations in the same manner as
giving notice of regular or special meetings under Section 49 of this Code. The notice shall state the
purpose of the meeting and include a copy or a summary of the plan of merger or consolidation.

The affirmative vote of stockholders representing at least two-thirds (2/3) of the outstanding capital
stock of each corporation in the case of stock corporations or at least two-thirds (2/3) of the
members in the case of nonstock corporations shall be necessary for the approval of such plan. Any
dissenting stockholder may exercise the right of appraisal in accordance with this
Code: Provided, That if after the approval by the stockholders of such plan, the board of directors
decides to abandon the plan, the right of appraisal shall be extinguished.

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Any amendment to the plan of merger or consolidation may be made: Provided, That such
amendment is approved by a majority vote of the respective boards of directors or trustees of all the
constituent corporations and ratified by the affirmative vote of stockholders representing at least two-
thirds (2/3) of the outstanding capital stock or of two-thirds (2/3) of the members of each of the
constituent corporations. Such plan, together with any amendment, shall be considered as the
agreement of merger or consolidation.

Voting requirements for consolidation or merger:

1. majority vote of each of the board of directors or trustees of the constituent corporations
of the plan of merger or consolidation.

2. stockholders representing at least two-thirds (2/3) of the outstanding capital stock or of two-
thirds (2/3) of the members of each of the constituent corporations.

SEC. 77. Articles of Merger or Consolidation. – After the approval by the stockholders or
members as required by the preceding section, articles of merger or articles of consolidation shall be
executed by each of the constituent corporations, to be signed by the president or vice president and
certified by the secretary or assistant secretary of each corporation setting forth:

(a) The plan of the merger or the plan of consolidation;

(b) As to stock corporations, the number of shares outstanding, or in the case of nonstock
corporations, the number of members;

(c) As to each corporation, the number of shares or members voting for or against such plan,
respectively;

(d) The carrying amounts and fair values of the assets and liabilities of the respective companies as
of the agreed cut-off date;

(e) The method to be used in the merger or consolidation of accounts of the companies;

(f) The provisional or pro forma values, as merged or consolidated, using the accounting method;
and

(g) Such other information as may be prescribed by the Commission.

SEC. 78. Effectivity of Merger or Consolidation. – The articles of merger or of consolidation,

signed and certified as required by this Code, shall be submitted to the Commission for its
approval: Provided, That in the case of merger or consolidation of banks or banking institutions, loan
associations, trust companies, insurance companies, public utilities, educational institutions, and
other special corporations governed by special laws, the favorable recommendation of the
appropriate government agency shall first be obtained. If the Commission is satisfied that the
merger or consolidation of the corporations concerned is consistent with the provisions of this
Code and existing laws, it shall issue a certificate approving the articles and plan of merger or of
consolidation, at which time the merger or consolidation shall be effective.

If, upon investigation, the Commission has reason to believe that the proposed merger or
consolidation is contrary to or inconsistent with the provisions of this Code or existing laws, it shall
set a hearing to give the corporations concerned the opportunity to be heard. Written notice of
the date, time, and place of hearing shall be given to each constituent corporation at least two (2)
weeks before said hearing. The Commission shall thereafter proceed as provided in this Code.

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SEC. 79. Effects of Merger or Consolidation. – The merger or consolidation shall have the
following effects:

(a) The constituent corporations shall become a single corporation which, in case of merger, shall be
the surviving corporation designated in the plan of merger; and, in case of consolidation, shall be the
consolidated corporation designated in the plan of consolidation;

(b) The separate existence of the constituent corporations shall cease, except that of the surviving or
the consolidated corporation;

(c) The surviving or the consolidated corporation shall possess all the rights, privileges, immunities,
and powers and shall be subject to all the duties and liabilities of a corporation organized under this
Code;

(d) The surviving or the consolidated corporation shall possess all the rights, privileges, immunities
and franchises of each constituent corporation; and all real or personal property, all receivables due
on whatever account, including subscriptions to shares and other choses in action, and every other
interest of, belonging to, or due to each constituent corporation, shall be deemed transferred to and
vested in such surviving or consolidated corporation without further act or deed; and

(e) The surviving or consolidated corporation shall be responsible for all the liabilities and obligations
of each constituent corporation as though such surviving or consolidated corporation had itself
incurred such liabilities or obligations; and any pending claim, action or proceeding brought by or
against any constituent corporation may be prosecuted by or against the surviving or consolidated
corporation. The rights of creditors or liens upon the property of such constituent corporations shall
not be impaired by the merger or consolidation.

Questions:

1. What is merger?
2. What is consolidation?
3. Steps to accomplish a merger or consolidasiton
a. The board of directors or trustees of each corporation draws up a plan of merger or
consolidation, which include any amendment, to the articles of incorporation of the surviving
corporation, or in the case of consolidation, all the statements required in the articles of
incorporations of a corporation.
b. Submission of the plan to the stockholders or members of each corporation for their approval
by least two-thirds (2/3) of the outstanding capital stock of each corporation in the case of stock
corporations or at least two-thirds (2/3) of the members
c. Execution of the formal agreement referred to as the articles of merger or consolidation by t he
corporate officers of each constituent corporation.
d. Submission of said articles of merger or consolidation to the SEC for approval.
e. If upon investigation, the Commission has reason to believe that the proposed merger or
conso0lidaiton is contrary to or inconsistent with the provisions of the Revised Corporation Code
or existing laws, it shall set a hearing to give the corporations concerned the opportunity to be
herd.
f. Issuance of certificate of merger o consolidation.

4. When is the effectivity of merger or consolidation?