Republic Act 11232 or The Revised Corporation Code of the GROUP OF PEOPLE IN A CORPORATION (ICOM)

Philippines 1.​ Incorporator

-​ Date Approved 2.​ Corporators
●​ February 20, 201) 3.​ Officers
4.​ Members
-​ Effectivity Date
●​ February 23, 2019 INCORPORATOR
●​ Incorporators are those stockholders or members mentioned in the
GENERAL PROVISIONS (Definitions and Classification) articles of incorporation as originally forming and composing the
corporation and who are signatories thereof. (sec. 5, R.A. 11232)
CORPORATION
●​ A corporation is an artificial being created by operation of law, CORPORATORS
having the right of succession and the powers, attributes and ●​ Corporators are those who compose a corporation, whether as
properties expressly authorized by law or incident to its existence. stockholders or shareholders in a stock corporation or as members
(Sec. 2 R.A 11232) in a nonstock corporation.

Article XII, Section 16, 1987 Constitution CLASSES/SERIES OF SHARES IN A CORPORATION

●​ “The Congress shall not, except by general law, provide for the 1.​ Non-Voting Shares
formation, organization, or regulation of private corporation. 2.​ Par Value Shares
Government owned and controlled corporations may be created or 3.​ No Par Value
established by special charters in the interest of the common good 4.​ Preferred Shares
and subject to the test of economic viability. 5.​ Founder Shares
6.​ Redeemable Shares
CLASSES OF CORPORATION 7.​ Treasury Shares
1.​ Stock Corporation
●​ Corporations which have capital stock divided into shares HOLDERS OF NON-VOTING SHARES ARE ENTITLED TO VOTE ON
and are authorized to distribute to the holders of such THE FOLLOWING:
shares dividends or allotments of the surplus profits on the a.​ Amendment of the articles of incorporation;
basis of the shares held. (Sec. 3, R.A. 11232) b.​ Adoption and amendment of bylaws;
c.​ Sale, lease, exchange, mortgage, pledge, or other disposition of all
2.​ Non-stock Corporation or substantially all of the corporate property;
●​ It is a corporation that does not have owners represented by d.​ Incurring, creating, or increasing bonded indebtedness;
shares of stock. e.​ Increase or decrease of authorized capital stock;
f.​ Merger or consolidation of the corporation with another corporation
or other corporations;
 g.​ Investment of corporate funds in another corporation or business in
accordance with this Code; and FOUNDERS EQUITY OR FOUNDERS STOCK
h.​ Dissolution of the corporation. ●​ Founder's equity or founder's stock is a class of stock issued to
founders or early members of a company.
Except for the foregoing instances, the vote required under the Revised
Corporation Code to approve a particular corporate act shall be deemed to Founder Share
refer only to stocks with voting rights. Where the exclusive right to vote and be voted for in the election of
directors is granted, it must be for a
PAR VALUE SHARES limited period not to exceed five (5) years from the date of
●​ Par value shares means that the minimum price per share is fixed incorporation: Provided, That such exclusive right shall not be
in the articles of incorporation of stock corporations. Stocks shall allowed if its exercise will violate Commonwealth Act No. 108,
not be issued for a consideration less than the par or issued price otherwise known as the “Anti-Dummy Law”; Republic Act No. 7042,
thereof. otherwise known as the “Foreign Investments Act of 1991”; and
other pertinent laws.
NO PAR VALUE SHARES
●​ No-par value stock doesn't have a redeemable price, rather prices REDEEMABLE SHARES
are determined by the amount that investors are willing to pay for ●​ Redeemable shares are shares which may be purchased by the
the stocks on the open market. corporation from the holders of such shares upon the expiration of a
fixed period, regardless of the existence of unrestricted retained
CORPORATION NOT PERMITTED TO ISSUE NO-PAR VALUE SHARES earnings in the books of the corporation, and upon such other terms
OF STOCK and conditions stated in the articles of incorporation and the
●​ banks certificate of stock representing the shares, subject to rules and
●​ trust regulations issued by the Securities and Exchange Commission
●​ insurance (SEC).
●​ pre-need companies
●​ public utilities KINDS OF REDEEMABLE SHARES
●​ building and loan associations, and 1.​ Compulsory - shares that the corporation is required to redeem.
●​ other corporations authorized to obtain or access funds from the
public, whether publicly listed or not. 2.​ Optional - shares that the corporation is not mandated to redeem.

PREFERRED SHARES SPECIAL RULES ON REDEEMABLE SHARES

●​ Preferred shares of stock are stocks issued by a corporation which 1.​ Redeemable shares may be issued by the corporation only when it
may be given preference in the distribution of dividends and in the is expressly authorized by the Articles of Incorporation;
distribution of corporate assets in case of liquidation, or such other
preferences.
 2.​ The terms and conditions affecting redeemable shares must be 2.​ if such redemption will cause insolvency or inability of the
stated both in the Articles of Incorporation and in the certificates of corporation to meet its debts as they mature.
stock representing such shares; and
3.​ Redeemable shares may be deprived of voting rights in the Articles TREASURY SHARES
of Incorporation unless otherwise provided. (Sections 6 and 8, ●​ Treasury shares are shares of stock which have been issued and
RCCP) fully paid for, but subsequently reacquired by the issuing
corporation through purchase, redemption, donation, or some other
LIMITATIONS OF REDEEMABLE SHARE lawful means.
(Republic Planters Banks v. Agana, G.R. No.51765, March 3, 1997)
1.​ Redeemable shares may be issued only when expressly provided INCORPORATION AND ORGANIZATION OF PRIVATE CORPORATION
for in the Articles of Incorporation. (Section 8, RCCP) ●​ Under Sec. 10 of R.A 11232, Any person, partnership, association
or corporation, singly or jointly with others but not more than fifteen
2.​ The terms and conditions affecting said shares must be stated both (15) in number, may organize a corporation for any lawful purpose
in the AOI and in the certificate of stock. (Section 8, RCCP) or purposes: Provided, That natural persons who are licensed to
practice a profession, and partnerships or associations organized
3.​ Redeemable shares may be deprived of voting rights in the Articles for the purpose of practicing a profession, shall not be allowed to
of Incorporation. (Section 6, RCCP) organize as a corporation unless otherwise provided under special
4.​ The corporation is required to maintain a sinking fund to answer for laws. Incorporators who are natural persons must be of legal age.
redemption price if the corporation is required to redeem.
(SEC-OGC Opinion No. 07-03) CORPORATE TERM
●​ A corporation shall have perpetual existence unless its articles of
5.​ The redeemable shares are deemed retired upon redemption, incorporation provides otherwise. (Sec.11)
unless otherwise provided in the AOI. (SEC Rules Governing ●​ The term may be extended or shortened by amending the articles of
Redeemable and Treasury Shares, 26 April 1982) incorporation: Provided, That no extension may be made earlier
than three (3) years prior to the original or subsequent expiry
6.​ Unrestricted retained earnings are not necessary before shares can date(s) unless there are justifiable reasons for an earlier extension
be redeemed, but there must be sufficient assets to pay the as may be determined by the Commission: Provided, further, That
creditors and to answer for operations. such extension of the corporate term shall take effect only on the
day following the original or subsequent expiry date(s).
UNRESTRICTED RETAINED EARNING ●​ A corporation whose term has expired may apply for revival of its
●​ The amount of accumulated profits and gains realized out of the corporate existence, together with all the rights and privileges under
normal and continuous operation of the corporation. its certificate of incorporation and subject to all of its duties, debts
and liabilities existing prior to its revival. Upon approval by the
REDEMPTION CANNOT BE MADE ON THE FOLLOWING: Commission, the corporation shall be deemed revived and a
1.​ Where the corporation is insolvent, or certificate of revival of corporate existence shall be issued, giving it
 perpetual existence, unless its application for revival provides i.​ If it be a nonstock corporation, the amount of its capital, the names,
otherwise. nationalities, and residence addresses of the contributors, and
amount contributed by each; and
MINIMUM CAPITAL STOCK j.​ Such other matters consistent with law and which the incorporators
●​ Stock corporations shall not be required to have minimum capital may deem necessary and convenient.
stock, except as otherwise specially provided by special law.(Sec.
12) NAME OF CORPORATION
A corporation cannot use a name which is:
CONTENTS OF ARTICLES OF INCORPORATION 1.​ identical or deceptively or confusingly similar to that of any existing
a.​ The name of corporation; corporation or to any other name protected by law; or
b.​ The specific purpose or purposes for which the corporation is being 2.​ patently deceptive, confusing or contrary to law.
formed. Where a corporation has more than one stated purpose,
the articles of incorporation shall indicate the primary purpose and SPECIFIC PURPOSE
the secondary purpose or purposes: Provided, That a nonstock Reasons for requiring a statement of purposes or objects:
corporation may not include a purpose which would change or 1.​ In order that the stockholder who contemplates on an investment in
contradict its nature as such; a business enterprise shall know within what lines of business his
c.​ The place where the principal office of the corporation is to be money is to be put at risk.
located, which must be within the Philippines; 2.​ So that the board of directors and management may know within
d.​ The term for which the corporation is to exist, if the corporation has what lines of business they are authorized to act.
not elected perpetual existence; 3.​ So that anyone who deals with the company may ascertain whether
e.​ The names, nationalities, and residence addresses of the a contract or transaction into which he contemplates entering is one
incorporators; within the general authority of the management.
f.​ The number of directors, which shall not be more than fifteen (15)
or the number of trustees which may be more than fifteen (15); GENERAL LIMITATION ON THE PURPOSE CLAUSE
g.​ The names, nationalities, and residence addresses of persons who 1.​ The purpose must be lawful.
shall act as directors or trustees until the first regular directors or 2.​ The purpose must be specific or stated concisely although in broad
trustees are duly elected and qualified in accordance with this or general terms.
Code; 3.​ If there is more than one purpose, the primary as well as the
h.​ If it be a stock corporation, the amount of its authorized capital secondary ones must be specified.
stock, number of shares into which it is divided, the par value of 4.​ The purpose must be capable of being lawfully combined.
each, names, nationalities, and subscribers, amount subscribed
and paid by each on the subscription, and a statement that some or PRINCIPAL OFFICE
all of the shares are without par value, if applicable; ●​ The residence of the corporation is the place of its principal office
as may be indicated in its articles of incorporation and may,
therefore, be sued only at that place. (CRS vs. Antillon)
 Code. The articles of incorporation of a nonstock corporation may
NAME, NATIONALITIES AND RESIDENCE OF INCORPORATOR be amended by the vote or written assent of majority of the trustees
and at least two-thirds (2/3) of the members. (Sec. 15)
NUMBER OF DIRECTOR OR TRUSTEES
●​ The number of directors, which shall not be more than fifteen (15) GROUNDS FOR DISAPPROVAL OF ARTICLES OF INCORPORATION
or the number of trustees which may be more than fifteen (15); OR AMENDMENT
a.​ The articles of incorporation or any amendment thereto is not
CAPITALIZATION substantially in accordance with the form prescribed herein;
●​ Authorized capital – the maximum amount fixed in the articles to b.​ The purpose or purposes of the corporation are patently
be subscribed and paid-in or secured to be paid by the subscribers. unconstitutional, illegal, immoral or contrary to government rules
and regulations;
●​ Subscribed capital stock– the total number of shares and its total c.​ The certification concerning the amount of capital stock subscribed
value for which there are contracts for their acquisition or and/or paid is false; and
subscription. d.​ The required percentage of Filipino ownership of the capital stock
under existing laws or the Constitution has not been complied with.
●​ Paid-up capital stock– the actual amount or value which has been (Sec. 16)
actually contributed or paid to the corporation in consideration of the
subscriptions made thereon. CORPORATE NAME
●​ No corporate name shall be allowed by the Commission if it is not
●​ Stocks shall not be issued for a consideration less than the par or distinguishable from that already reserved or registered for the use
issued price thereof if another corporation, or if such name is already protected by law,
rules and regulations. (Sec. 17)
FORMS OF ARTICLES OF INCORPORATION
●​ Unless otherwise prescribed by special law, the articles of EFFECTS OF NON-USE OF CORPORATE CHARTER AND
incorporation of all domestic corporations shall comply substantially CONTINUOUS INOPERATION
with the form prescribed by RCCP. ●​ If a corporation does not formally organize and commence its
business within five (5) year from the date of its incorporation, its
AMENDMENT OF ARTICLES OF INCORPORATION certificate of incorporation shall be deemed revoked as of the day
●​ Unless otherwise prescribed by this Code or by special law, and for following the end of the five (5)-year period.
legitimate purposes, any provision or matter stated inthe articles of ●​ However, if a corporation has commence its business but
incorporation may be amended by a majority vote of the board of subsequently becomes inoperative for a period of at least five (5)
directors or trustees and the vote or written assent of the consecutive years, the Commission may, after due notice and
stockholders representing at least two- thirds (2/3) of the hearing, place the corporation under delinquent status. (Sec 21)
outstanding capital stock, without prejudice to the appraisal right of
dissenting stockholders in accordance with the provisions of this
BOARD OF DIRECTORS/TRUSTEE AND 2. Banks and quasi-banks, non-stock savings and loan associations,
OFFICERS TERM pawnshops, corporations engaged in money service business, preneed,
●​ Director - a term of one (1) year from among the holders of stocks trust and insurance companies, and other financial intermediaries.
registered in the corporation's book.
INDEPENDENT DIRECTOR
●​ Trustee- term not exceeding three (3) years from among the ●​ An independent director is a person who apart from shareholdings
members of the corporation. and fees received from any business or other relationship which
could, or could reasonable be received to materially interfere with
●​ Each director and trustee shall hold office until the successor is the exercise of independent judgment in carrying out the
elected and qualified. (Sec. 22) responsibilities as a director.

ELECTION OF DIRECTORS OR TRUSTEES

QUALIFICATIONS ●​ Except when the exclusive right is reserved for holders of founders'
1.​ For stock corporation shares under Section 7 of this Code, each stockholder or member
●​ A director must own at least one (1) share of stock. shall have the right to nominate any director or trustee who
posseses all of the qualifications and none of the disqualifications
2.​ For nonstock Corporation set forth in this Code. (Section 23)
●​ A trustee must be a member of the corporation.
●​ At all elections of directors or trustees, there must be present, either
FOR CORPORATION VESTED WITH PUBLIC INTEREST in person or through a representative authorized to act by written
●​ It shall have independent directors constituting at least twenty proxy, the owners of majority of the outstanding capital stock, or if
percent (20%) of such board. there be no capital stock, a majority of the members entitled to vote.
●​ Independent directors must be elected by the shareholders present
or entitled to vote in absentia during the election of directors. CORPORATE OFFICERS
a.​ President, who must be a director;
CORPORATION VESTED WITH PUBLIC INTEREST b.​ Treasurer, who must be a resident;
Example of corporation vested with public interest c.​ Secretary, who must be a citizen and resident of the Philippines;
1.​ corporations covered by Section 17.2 of Republic Act No. 8799 (the d.​ Compliance Officer for corporation vested with public interest.
Securities Regulation Code) namely: e.​ Such other officers as may be provided in the bylaws. (Section 24)
a.​ those whose securities are registered with the SEC,
b.​ corporations listed with the stock exchange, or
c.​ those with assets of at least P50 million and having 200 or DISQUALIFICATION OF DIRECTORS, TRUSTEES OR OFFICERS
more stockholders, each holding at least 100 shares of a ●​ A person shall be disqualified from being a director, trustee or
class of its equity shares. officer of any corporation if, within five (5) years prior to the election
or appointment as such, the person was:
 a.​ Convicted by final judgment: the stockholders or members in a regular or special meeting called
1.​ Of an offense punishable by imprisonment for a for that purpose. (Sec. 28)
period exceeding six (6) years;
2.​ For violating this Code; and ●​ When the vacancy is due to term expiration, the election shall be
3.​ For violating Republic Act No. 8799, otherwise held no later that the day of such expiration at a meeting called for
known as "The Securities Regulation Code"; that purpose. When the vacancy arises as a result of removal by
the stockholders or members, the election may be held on the same
b.​ Found administratively liable for any offense involving day of the meeting authorizing the removal and this fact must be so
fraudulent acts; and stated in the agenda and notice of said meeting. In all other cases,
c.​ By a foreign court or equivalent foreign regulatory authority the election must be held no later than forty-five (45) days from the
foracts, violations or misconduct similar to those time the vacancy arose. A director or trustee elected to fill vacancy
enumerated in paragraphs (a) and (b) above. shall be referred to as replacement director or trustee elected to fill
The foregoing is without prejudice to qualifications or other a vacancy shall be referred to as replacement director or trustee
disqualifications, which the Commission, the primary regulatory agency, or and shall serve only for the unexpired term of the predecessor in
Philippine Competition Commission may impose in its promotion of good office.
corporate governance or as a sanction in its administrative proceedings.
(Sec. 26) ●​ However, when the vacancy prevents the remaining directors from
constituting a quorum and emergency action is required to prevent
REMOVAL OF DIRECTOR OR TRUSTEE grave, substantial, and irreparable loss or damage to the
●​ Any director or trustee of a corporation may be removed from office corporation, the vacancy may be temporarily filled from among the
by vote of the stockholders holding or representing at least officers of the corporation by unanimous vote of the remaining
two-thirds (2/3) of the outstanding capital stock, or in a nonstock directors or trustees. The action by the designated director or
corporation, by a vote of at least two-thirds (2/3) of the member trustee shall be limited to the emergency action necessary, and the
entitled to vote: Provided, That such removal shall take place either term shall cease within a reasonable time form the termination of
at a regular meeting of the corporation or at a special meeting the emergency or upon election of the replacement director or
called for the purpose, and in either case, after previous notice to trustee, whichever comes earlier. The corporation must notify the
stockholders or members of the corporation of the intention to Commission within three (3) days from the creation of the
propose such removal at the meeting. (Section 27) emergency board, stating therein the reason for its creation.

VACANCIES IN THE OFFICE OF DIRECTOR OR TRUSTEE; ●​ Any directorship or trusteeship to be filled by a reason of an
EMERGENCY BOARD increase in the number of directors or trustees shall be filled only by
●​ Any vacancy occurring in the board of directors or trustees other an election at a regular or at a special meeting of stockholders or
that by removal or expiration of term may be filled by the vote of at members duly called for the purpose, or in the same meeting
least a majority of the remaining directors or trustees, if still authorizing the increase of directors or trustees if so stated in the
constituting a quorum; otherwise, said vacancies must be filled by notice of the meeting.
LIABILITY OF DIRECTORS, TRUSTEES OR OFFICERS Where any of the first three (3) conditions set forth in the preceding
●​ Directors or trustees who willfully and knowingly vote for or assent paragraph is absent, in the case of a contract with a director or trustee,
to patently unlawful acts of the corporation or who are guilty of such contract may be ratified by the vote of the stockholders representing
gross negligence or bad faith in directing the affairs of the at least two-thirds (2/3) of the outstanding capital stock or of at least
corporation or acquire any personal or pecuniary interest in conflict two-thirds (2/3) of the members in a meeting called for the purpose:
with their duty as such directors or trustees shall be liable jointly Provided, That full disclosure of the adverse interest of the directors or
and severally for all damages resulting therefrom suffered by the trustees involved is made at such meeting and the contract is fair and
corporation, its stockholders or members and other persons. reasonable under the circumstances. (Sec. 31)

●​ A director, trustee or officer shall not attempt to acquire, or any

interest adverse to the corporation in respect of any matter which
has been reposed in them in confidence, and upon which, equity
imposes a disability upon themselves to deal in their own behalf;
otherwise, the said director, trustee or officer shall be liable as a
trustee for the corporation and must account for the profits which
otherwise would have accrued to the corporation. (Sec 30)

DEALINGS OF DIRECTORS, TRUSTEES OR OFFICERS WITH THE

CORPORATION

A contract of the corporation with one (1) or more of its directors, trustees,
officers or their spouses and relatives within the fourth civil degree of
consanguinity or affinity is voidable, at the option of such corporation,
unless all the following conditions are present:
a.​ The presence of such director or trustee in the board meeting in
which the contract was approved was not necessary to constitute a
quorum for such meeting;
b.​ The vote of such director or trustee was not necessary for the
approval of the contract;
c.​ The contract is fair and reasonable under the circumstances;
d.​ In case of corporations vested with public interest, material
contracts are approved by at least a majority of the independent
directors voting to approved the material contract; and
e.​ In case of an officer, the contract has been previously authorized by
the board of directors.