REPUBLIC ACT No.

11232

An Act Providing for the Revised Corpora@on Code of the Philippines

Be it enacted by the Senate and House of Representa6ves of the Philippine Congress Assembled:

TITLE I
GENERAL PROVISIONS
DEFINITIONS AND CLASSIFICATIONS

Sec@on 1. Title of the Code. - This Code shall be known as the "Revised Corpora7on Code of the
Philippines".

Sec@on 2. Corpora6on Defined. - A corpora7on is an ar7ficial being created by opera7on of law, having
the right of succession and the powers, aBributes, and proper7es expressly authorized by law or incidental
to its existence.

Sec@on 3. Classes of Corpora6ons. - Corpora7ons formed or organized under this Code may be stock or
nonstock corpora7ons. Stock corpora7ons are those which have capital stock divided into shares and are
authorized to distribute to the holders of such shares, dividends, or allotments of the surplus profits on
the basis of the shares held. All other corpora7ons are nonstock corpora7ons.

Sec@on 4. Corpora6ons Create by Special Laws or Charters. - Corpora7ons created by special laws or
charters shall be governed primarily by the provisions of the special law or charter crea7ng them or
applicable to them, supplemented by the provisions of this Code, insofar as they are applicable.

Sec@on 5. Corporators and Incorporators, Stockholders and Members. - Corporators are those who
compose a corpora7on, whether as stockholders or shareholders in a stock corpora7on or as a members
in a nonstock corpora7ons. Incorporators are those stockholders or members men7oned in the ar7cles of
incorpora7on as originally forming and composing the corpora7on and who are signatories thereof.

Sec@on 6. Classifica6on of Shares. - The classifica7on of shares, their corresponding rights, privileges,
restric7ons, and their stated par value, if any, must be indicated in the ar7cles of incorpora7ons. Each
share shall be equal in all respects to every other share, except as otherwise provided in the ar7cles of
incorpora7on. Each share shall be equal in all respects to every other share, except as otherwise provided
in the ar7cles of incorpora7on and in the cer7ficate of stock.

The share stock corpora7ons may be divided into classes or series of shares, or both. No share may be
deprived of vo7ng rights except those classified and issued as "preferred" or "redeemable" shares, unless
otherwise provided in this Code: Provided, That there shall be a class or series of shares with complete
vo7ng rights.

Holders of nonvo7ng shares shall nevertheless be en7tled to vote on the following maBers;
(a) Amendment of the ar7cles of incorpora7on;
(b) Adop7on and amendment of bylaws;
(c) Sale, lease, echange, mortgage, pledge, or other disposi7on of all or substan7ally all of the
corporate property;
(d) Incurring, crea7ng, or increasing bonded indebtedness;
(e) Increase or decrease of authorized capital stock;
(f) Merger or consolida7on of the corpora7on with another corpora7on or other corpora7ons;
(g) Investment of corporate funds in another corpora7on or business in accordance with this Code;
and
(h) Dissolu7on of the corpora7on.
Except as provided in the immediately preceding paragraph, the vote required under this Code to approve
a par7cular corporate act shall be deemed to refer only to stocks with vo7ng rights.

The shares or series of shares may or may not have a par value: Provided, That banks, trust, insurance,
and preneed companies, public u7li7es, building and loan associa7ons, and other corpora7ons authorized
to obtain or access funds from the public whether publicly listed or not, shall not be permiBed to issue
no-par value shares of stock.

Preferred shares of stock issued by a corpora7on may be given preference in the distribu7on of dividends
and in the distribu7on of corporate assets in case of liquida7on, or such other preferences: Provided, That
preferred shares of stock may be issued only with a stated par value. The board of directors, where
authorized in the ar7cles of incorpora7on, may fix the terms and condi7ons of preferred shares of stock
or any series thereof: Provided, further, That such terms and condi7ons shall be effec7ve upon filing of a
cer7ficate thereof with the Securi7es and Exchange Commission, hereinaSer referred to as the
"Commission".

Shares of capital stock issued without par value shall be deemed fully paid and nonassessable and the
holder of such shares shall not be liable to the corpora7on or to its creditors in respect
thereto: Provided, That no-par value shares must be issued for a considera7on of at least Five pesos
(₱5.00) per share: Provided, further, That the en7re considera7on received by the corpora7on for its no-
par value shares shall be treated as capital and shall not be available for distribu7on as dividends.

A corpora7on may further classify its shares for the purpose of ensuring compliance with cons7tu7onal
or legal requirements.

Sec@on 7. Founders' Shares. - Founders' shares may be given certain rights and privileges not enjoyed by
the owners of other stock. Where the exclusive right to vote and be voted for in the elec7on of directors
is granted, it must be for a limited period not to exceed five (5) years from the date of
incorpora7on: Provided, That such exclusive right shall not be allowed if its exercise will violate
Commonwealth Act No. 108, otherwise known as the "An7-Dummy Law"; Republic Act No. 7042,
otherwise known as the "Foreign Investments Act of 1991"; and otherwise known as "Foreign Investments
Act of 1991"; and other per7nent laws.

Sec@on 8. Redeemable Shares. - Redeemable shares may be issued by the corpora7on when expressly
provided in the ar7cles of incorpora7on. They are shares which may be purchased by the corpora7on.
They are shares which may be purchased by the corpora7on from the holders of such shares upon the
expira7on of a fixed period, regardless of the existence of unrestricted retained earnings in the books of
the corpora7on, and upon such other terms and condi7ons stated in the ar7cles of incorpora7on and the
cer7ficate of stock represen7ng the shares, subject to rules and regula7ons issued by the Commission.

Sec@on 9. Treasury Shares. - Treasury shares are shares of stock which have been issued and fully paid
for, but subsequently reacquired by the issuing corpora7on through purchase, redemp7on, dona7on, or
some other lawful means. Such shares may again be disposed of for a reasonable price fixed by the board
of directors.

TITLE II
INCORPORATION AND ORGANIZATION OF PRIVATE CORPORATIONS

Sec@on 10. Number and Qualifica6ons of Incorporators. - Any person, partnership, associa7on or
corpora7on, singly or jointly with others but not more than fiSeen (15) in number, may organize a
corpora7on for any lawful purpose or purposes: Provided, That natural persons who are licensed to
prac7ce a profession, and partnerships or associa7ons organized for the purpose of prac7cing a
profession, shall not be allowed to organize as a corpora7on unless otherwise provided under special laws.
Incorporators who are natural persons must be of legal age.

Each incorporator of a stock corpora7on must own or be a subscriber to at least one (1) share of the capital
stock.

A corpora7on with a single stockholder is considered a One Person Corpora7on as described in Title XIII,
Chapter III of this Code.

Sec@on 11. Corporate Term. - A corpora7on shall have perpetual existence unless its ar7cles of
incorpora7on provides otherwise.

Corpora7ons with cer7ficates of incorpora7on issued prior to the effec7vity of this Code and which
con7nue to exist shall have perpetual existence, unless the corpora7on, upon a vote of its stockholders
represen7ng a majority of its ar7cles of incorpora7on: Provided, That any change in the corporate right of
dissen7ng stockholders in accordance with the provisions of this Code.

A corporate term for a specific period may be extended or shortened by amending the ar7cles of
incorpora7on: Provided, That no extension may be made earlier than three (3) years prior to the original
or subsequent expiry date(s) unless there are jus7fiable reasons for an earlier extension as may be
determined by the Commission: Provided, further, That such extension of the corporate term shall take
effect only on the day following the original or subsequent expiry date(s).

A corpora7on whose term has expired may apply for revival of its corporate existence, together with all
the rights and privileges under its cer7ficate of incorpora7on and subject to all of its du7es, debts and
liabili7es exis7ng prior to its revival. Upon approval by the Commission, the corpora7on shall be deemed
revived and a cer7ficate of revival of corporate existence shall be issued, giving it perpetual existence,
unless its applica7on for revival provides otherwise.
No applica7on for revival of cer7ficate of incorpora7on of banks, banking and quasi-banking ins7tu7ons,
preneed, insurance and trust companies, non-stock savings and loan associa7ons (NSSLAs), pawnshops,
corpora7ons engaged in money service business, and other financial intermediaries shall be approved by
the Commission unless accompanied by a favorable recommenda7on of the appropriate government
agency.

Sec@on 12. Minimum Capital Stock Not Required of Stock Corpora6ons. - Stock corpora7ons shall not be
required to have minimum capital stock, except as otherwise specially provided by special law.

Sec@on 13. Contents of the Ar6cles of Incorpora6on. - All corpora7ons shall file with the Commission
ar7cles of incorpora7on in any of the official languages, duly signed and acknowledged or authen7cated,
in such form and manner as may be allowed by the Commission, containing substan7ally the following
maBers, except as otherwise prescribed by this Code or by special law:
(a) The name of corpora7on;
(b) The specific purpose or purposes for which the corpora7on is being formed. Where a
corpora7on has more than one stated purpose, the ar7cles of incorpora7on hsall indicate the
primary purpose and the secondary purpose or purposes: Provided, That a nonstock corpora7on
may not include a purpose which would change or contradict its nature as such;
(c) The place where the principal office of the corpora7on is to be located, which must be within
the Philippines;
(d) The term for which the corpora7on is to exist, if the corpora7on has not elected perpetual
existence;
(e) The names, na7onali7es, and residence addresses of the incorporators;
 (f) The number of directors, which shall not be more than fiSeen (15) or the number of trustees
which may be more than fiSeen (15);
(g) The names, na7onali7es, and residence addresses of persons who shall act as directors or
trustees un7l the first regular directors or trustees are duly elected and qualified in accordance
with this Code;
(h) If it be a stock corpora7on, the amount of its authorized capital stock, number of shares into
which it is divided, the par value of each, names, na7onali7es, and subscribers, amount subscribed
and paid by each on the subscrip7on, and a statement that some or all of the shares are without
par value, if applicable;
(i) If it be a nonstock corpora7on, the amount of its capital, the names, na7onali7es, and residence
addresses of the contributors, and amount contributed by each; and
(j) Such other maBers consistent with law and which the incorporators may deem necessary and
convenient.
An arbitra7on agreement may be provided in the ar7cles of incorpora7on pursuant to Sec7on 181
of this Code.1âwphi1
The Ar7cles of incorpora7on and applica7ons for amendments thereto may be filed with the
Commission in the form of an electronic document, in accordance with the Commission's rule and
regula7ons on electronic filing.

Sec@on 14. Form of Ar6cles of Incorpora6on. - Unless otherwise prescribed by special law, the ar7cles of
incorpora7on of all domes7c corpora7ons shall comply substan7ally with the following form:

Sec@on 15. Amendment of Ar6cles of Incorpora6on. - Unless otherwise prescribed by this Code or by
special law, and for legi7mate purposes, any provision or maBer stated in the ar7cles of incorpora7on
may be amended by a majority vote of the board of directors or trustees and the vote or wriBen assent
of the stockholders represen7ng at least two-thirds (2/3) of the outstanding capital stock, without
prejudice to the appraisal right of dissen7ng stockholders in accordance with the provisions of this Code.
The ar7cles of incorpora7on of a nonstock corpora7on may be amended by the vote or wriBen assent of
majority of the trustees and at least two-thirds (2/3) of the members.

The original and amended ar7cles together shall contain all provisions required by law to be set out in the
ar7cles of incorpora7on. Amendments to the ar7cles shall be indicated by underscoring the change or
changes made, and a copy thereof duly cer7fied under oath by the corporate secretary and a majority of
the directors or trustees, with a statement that the amendments have been duly approved by the required
vote of the stockholders or members, shall be submiBed to the Commission.

The amendments shall take effect upon their approval by the Commission or from the date of filing with
the said Commission if not acted upon within six (6) months from the date of filing for a cause not
aBributable to the corpora7on.

Sec@on 16. Grounds When Ar6cles of Incorpora6on or Amendment May be Disapproved. -The
Commission may disapprove the ar7cles of incorpora7on or any amendment thereto if the same is not
compliant with the requirements of this Code: Provided, That the Commission shall give the incorporators,
directors, trustees, or officers as reasonable 7me from receipt of the disapproval within which to modify
the objec7onable por7ons of the ar7cles or amendment. The following are ground for such disapproval:
(a) The ar7cles of incorpora7on or any amendment thereto is not substan7ally in accordance with
the form prescribed herein;
(b) The purpose or purposes of the corpora7on are patently uncons7tu7onal, illegal, immoral or
contrary to government rules and regula7ons;
(c) The cer7fica7on concerning the amount of capital stock subscribed and/or paid is false; and
(d) The required percentage of Filipino ownership of the capital stock under exis7ng laws or the
Cons7tu7on has not been complied with.
No ar7cles of incorpora7on or amendment to ar7cles of incorpora7on of banks, banking and quasi-
banking ins7tu7ons, preneed, insurance and trust companies, NSSLAs, pawnshops and other financial
intermediaries shall be approved by the Commission unless accompanied by a favorable recommenda7on
of the appropriate government agency to the effect that such ar7cles or amendment is in accordance with
law.

Sec@on 17. Corpora6on Name. - No corporate name shall be allowed by the Commission if it is not
dis7nguishable from that already reserved or registered for the use if another corpora7on, or if such name
is already protected by law, rules and regula7ons.

A name is not dis7nguishable even if it contains one or more of the following:

(a) The word "corpora7on", "company", incorporated", "limited", "limited liability", or an
abbrevia7on ofone if such words; and
(b) Punctua7ons, ar7cles, conjunc7ons, contrac7ons, preposi7ons, abbrevia7ons, different tenses,
spacing, or number of the same word or phrase.

The Commission upon determina7on that the corporate name is: (1) not dis7nguishable from a name
already reserved or registered for the use of another corpora7on; (2) already protected by law; or (3)
contrary to law, rules and regula7ons, may summarily order the corpora7on to immediately cease and
desist from using such name and require the corpora7on to register a new one. The Commission shall also
cause the removal of all visible signages, marks, adver7sements, labels prints and other effects bearing
such corporate name. Upon the approval of the new corporate name, the Commission shall issue a
cer7ficate of incorpora7on under the amended name.

If the corpora7on fails to comply with the Commission's order, the Commission may hold the corpora7on
and its responsible directors or officers in contempt and/or hold them administra7vely, civilly and/or
criminally liable under this Code and other applicable laws and/or revoke the registra7on of the
corpora7on.

Sec@on 18. Registra6on, Incorpora6on and Commencement of Corpora6on Existence. - A person or

group of persons desiring to incorporate shall submit the intended corporate name to the Commission for
verifica7on. If the Commission finds that the name is dis7nguishable from a name already reserved or
registered for the use of another corpora7on, not protected by law and is not contrary to law, rules and
regula7on, the name shall be reserved in favor of the incorporators. The incorporators shall then submit
their ar7cles of incorpora7on and bylaws to the Commission.

If the Commission finds that the submiBed document s and informa7on are fully compliant with the
requirements of this Code, other relevant laws, rules and regula7ons, the Commission shall issue the
cer7ficate of incorpora7on.

A private corpora7on organized under this Code commences its corporate existence and juridical
personality from the date the Commission issues the cer7ficate of incorpora7on under its official seal
thereupon the incorporators, stockholders/members and their successors shall cons7tute a body
corporate under the name stated in the ar7cles of incorpora7on for the period of 7me men7oned therein,
unless said period is extended or the corpora7on is sooner dissolved in accordance with law.

Sec@on 19. De facto Corpora6ons. - The due incorpora7on of any corpora7on claiming in good faith to be
a corpora7on under this Code, and its right to exercise corporate powers, shall not be required into
collaterally in any private suit to which such corpora7on may be a party. Such inquiry may be made by the
Solicitor General in a quo warranto proceeding.
Sec@on 20. Corpora6on by Estoppel. - All persons who assume to act as a corpora7on knowing it to be
without the authority to do so shall be liable as general partners for all debts, liabili7es and damages
incurred or arising as a result thereof: Provided, however, That when any such ostensible corpora7on is
sued on any transac7on entered by its as a corpora7on or on any tort commiBed by it as such, it shall not
be allowed to use on any its lack of corporate personality as a defense. Anyone who assumes an obliga7on
to an ostensible corpora7on as such cannot resist performance thereof on the ground that there was in
fact no corpora7on.

Sec@on 21. Effects of Non-Use of Corporate Charter and Con6nuous Inopera6on. - If a corpora7on does
not formally organize and commence its business within five (5) year from the date of its incorpora7on,
its cer7ficate of incorpora7on shall be deemed revoked as of the day following the end of the five (5)-year
period.

However, if a corpora7on has commence its business but subsequently becomes inopera7ve for a period
of at least five (5) consecu7ve years, the Commission may, aSer due no7ce and hearing, place the
corpora7on under delinquent status.

A delinquent corpora7on shall have a period of two (2) years to resume opera7ons and comply with all
requirements that the Commission shall prescribed. Upon the compliance by the corpora7on, the
Commission shall issue an order liSing the delinquent status. Failure to comply with the requirements and
resume opera7ons within the period given by the Commission shall cause the revoca7on of the
corpora7on's cer7ficate of incorpora7on.

The Commission shall give reasonable no7ce to, and coordinate with the appropriate regulatory agency
prior to the suspension or revoca7on of the cer7ficate of incorpora7on of companies under their special
regulatory jurisdic7on.

TITLE III
BOARD OF DIRECTORS/TRUSTEE AND OFFICERS

Sec@on 22. The Board of Directors or Trustees of a Corpora6on; Qualifica6on and Term. - Unless
otherwise provided in this Code, the board of directors or trustees shall exercise the corporate powers,
condict all business, and control all proper7es of the corpora7on.

Directors shall be elected for a term of one (10 Year from among the holders of stocks registered in the
corpora7on's book while trustees shall be elected for a term not exceeding three (3) years from among
the members of the corpora7on. Each director and trustee shall hold office un7l the successor is elected
and qualified. A director who ceases to own at least one (1) share of stock or a trustee who ceases to be
a member of the corpora7on shall cease to be such.

The board of the following corpora7ons vested with public interest shall have independent directors
cons7tu7ng at least twenty percent (20%) of such board:
(a) Corpora7ons covered by Sec7on 17.2 of Republic Act No. 8799, otherwise known as "The
Securi7es Regula7on Code", namely those whose securi7es are registered with the Commission,
corpora7ons listed with an exchange or with assets of at least FiSy million pesos (50,000,000.00)
and having two hundred (200) or more holders of shares, each holding at least one hundred (100)
shares of a class of its equity shares;
(b) Banks and quasi-banks, NSSLAs, pawnshops, corpora7ons engaged in money service business,
preneed, trust and insurance companies and other financial intermediaries; and
(c) Other corpora7ons engaged in businesses vested with public interest similar to the above, as
may be determined by the Commission, aSer taking into account relevant factors which are
 germane to the objec7ve and purpose of requiring the elec7on of an independent director, such
as the extent of minority ownership, type of financial products or securi7es issued or offered to
investors, public interest involved in the nature of business opera7ons, and other analogous
factors.

An independent director is a person who apart from shareholdings and fees received from any business
or other rela7onship which could, or could reasonable be received to materially interfere with the exercise
of independent judgment in carrying out the responsibili7es as a director.

Independent directors must be elected by the shareholders present or en7tled to vote in absen8a during
the elec7on of directors. Independent directors shall be subject to rules and regula7ons governing their
qualifica7ons, disqualifica7ons, vo7ng requirements, dura7on of term and term limit, maximum number
of board membership and other requirements that the Commission will prescribed to strengthen their
independence and align with interna7onal best prac7ces.

Sec@on 23. Elec6on of Directors or Trustees. - Except when the exclusive right is reserved for holders of
founders' shares under Sec7on 7 of this Code, each stockholder or member shall have the right to
nominate any director or trustee who posseses all of the qualifica7ons and none of the disqualifica7ons
and none of the disqualifica7ons set forth in this Code.

At all elec7ons of directors or trustees, there must be present, either in person or through a representa7ve
authorized to act by wriBen proxy, the owners of majority of the outstanding capital stock, or if there be
no capital stock, a majority of the members en7tled to vote. When so authorized in the bylaws or by a
majority of the board of directors, the stockholders or members may also vote through remote
communica7on or in absen8a: Provided, That the right to vote through such modes may be exercised in
corpora7ons vested with public interest, notwithstanding the absence of a provision in the bylaws of such
corpora7ons.

A stockholder or member who par7cipates through remote communica7on or in absen8a, shall be

deemed present for purposes of quorum.

The elec7on must be by ballot if requested by any vo7ng stockholder or member.

In stock corpora7ons, stockholders en7tled to vote shall have the right to vote the number of shares of
stock standing in their own names in the stock books of the corpora7on at the 7me fixed in the bylaws or
where the bylaws are silent at the 7me of the elec7on. The said stockholder may: (a) vote such number
of shares for as many persons as there are directors to be elected; (b) cumulate said shares and give one
(1) candidate as many votes as the number of directors to be elected mul7plied by the number of shares
owned; or (c) distribute them on the same principle among as many candidates as may be seen
fit: Provided, That the total number of votes cast shall not exceed the number of shares owned by the
stockholders as shown in the books of the corpora7on mul7plied by the whole number of directors to be
elected: Provided, however, That no delinquent stock shall be voted. Unless otherwise provided in the
ar7cles of incorpora7on or in the bylaws, members of nonstock corpora7ons may cast as many votes as
there are trustees to be elected by may not cast more than one (1) vote for one (1) candidate. Nominees
for directors or trustees receiving the highest number of votes shall be declared elected.

If no elec7on is held, or the owners of majority of the outstanding capital stock or majority of the members
en7tled to vote are not present in person, by proxy, or through remote communica7on or not vo7ng in
absen7a at the mee7ng, such mee7ng may be adjourned and the corpora7on shall proceed in accordance
with Sec7on 25 of this Code.
The directors or trustees elected shall perform their du7es as prescribed by law, rules of good corporate
governance, and bylaws of the corpora7on.

Sec@on 24. Corporate Officers. - Immediately aSer their elec7on, the directors of a corpora7on must
formally organize an elect: (a) a president, who must be a director; (b) a treasurer, who must be a resident;
(c) a secretary, who must be a ci7zen and resident of the Philippines; and (d) such other officers as may
be provided in the bylaws. If the corpora7on is vested with public interest, the board shall also elect
compliance officer. The same person may hold two (2) or more posi7ons concurrently, except that no one
shall act as president and secretary or as president and treasurer at the same 7me, unless otherwise
allowed in this Code.

The officers shall manage the corpora7on and perform such du7es as may be provided in the bylaws
and/or as resolved by the board of directors.

Sec@on 25. Report of Elec6on of Directors, Trustees and Officers, Non-holding of Elec6on and Cessa6on
from Office. - Within thirty (30) days aSer the elec7on of the directors, trustees and officers of the
corpora7on, the secretary, or any other officer of the corpora7on, the secretary, or any other officer of
the corpora7on, shall submit to the Commission, the names, na7onali7es, shareholdings, and residence
addresses of the directors, trustees and officers elected.

The non-holding of elec7ons and the reasons therefor shall be reported to the Commission within thirty
(30) days from the date of the scheduled elec7on. The report shall specify a new date for the elec7on,
which shall not be later than sixty (60) days from the scheduled date.

If no new date has been designated, or if the rescheduled elec7on is likewise not held, the Commission
may, upon the applica7on of a stockholder, member, director or trustee, and aSer verifica7on of the
unjus7fiable non-holding of the elec7on, summarily order that an elec7on be held. The Commission shall
have the power to issue such orders as may be appropriate, including other direc7ng the issuance of a
no7ce sta7ng the 7me and place of the elec7on, designated presiding officer, and the record date or dates
for the determina7on of stockholders or members en7tled to vote.

Notwithstanding any provision of the ar7cles of incorpora7on or by laws to the contrary, the shares of
stock or membership represented at such mee7ng and en7tled to vote shall cons7tute a quorum for
purposes of conduc7ng an elec7on under this sec7on.

Should a director, trustee or officer die, resign or in any manner case to hold office, the secretary or the
director, trustee or officer of the corpora7on, shall, within seven (7) days form knowledge thereof, report
in wri7ng such fact to the Commission.

Sec@on 26. Disqualifica6on of Directors, Trustees or Officers. - A person shall be disqualified from being
a director, trustee or officer of any corpora7on if, within five (5) years prior to the elec7on or appointment
as such, the person was:
(a) Convicted by final judgment:
(1) Of an offense punishable by imprisonment for a period exceeding six (6) years;
(2) For viola7ng this Code; and
(3) For viola7ng Republic Act No. 8799, otherwise known as "The Securi7es Regula7on
Code";
(b) Found administra7vely liable for any offense involving fraudulent acts; and
(c) By a foreign court or equivalent foreign regulatory authority for acts, viola7ons or misconduct
similar to those enumerated in paragraphs (a) and (b) above.
The foregoing is without prejudice to qualifica7ons or other disqualifica7ons, which the Commission, the
primary regulatory agency, or Philippine Compe77on Commission may impose in its promo7on of good
corporate governance or as a sanc7on in its administra7ve proceedings.

Sec@on 27. Removal of Director or Trustees. - Any director or trustee of a corpora7on may be removed
fro office by vote of the stockholders holding or represen7ng at least two-thirds (2/3) of the outstanding
capital stock, or in a nonstock corpora7on, by a vote of at least two-thirds (2/3) of the member en7tled
to vote: Provided, That such removal shall take place either at a regular mee7ng of the corpora7on or at
a special mee7ng called for the purpose, and in either case, aSer previous no7ce to stockholders or
members of the corpora7on of the inten7on to propose such removal at the mee7ng. A special mee7ng
of the stockholders or members for the purpose of removing any director or trustee must be called by the
secretary on order of the president, or upon wriBen demand of stockholders represen7ng or holding at
least a majority of the outstanding capital stock, or a majority of the members en7tled to vote. If there is
no secretary, or the secretary, despite demand, fails or refuses to call the special mee7ng or to give no7ce
thereof, the stockholder or member of the corpora7on signing the demand may call the special mee7ng
or to give no7ce thereof, the stockholder or member of the corpora7on signing the demand may call for
the mee7ng by directly addressing the stockholders or members. No7ce of the 7me and place of such
mee7ng, as well as of the inten7on to propose such removal, must be given by publica7on or by wriBen
no7ce prescribed in this Code. Removal may be with or without cause: Provided, That removal without
cause may not be used to deprive minority stockholders or members of the right representa7on to which
they may be en7tled under Sec7on 23 of this Code.

The Commission shall, motu propio or upon verified complaint, and aSer due no7ce and hearing, order
the removal of a director or trustee elected despite the disqualifica7on, or whose disqualifica7on arose
or is discovered subsequent to an elec7on. The removal of a disqualified director shall be without
prejudice to other sanc7ons that the Commission may impose on the board of directors or trustees who,
with knowledge of the disqualifica7on, failed to remove such director or trustee.

Sec@on 28. Vacancies in the Office of Director or Trustee; Emergency Board. - Any vacancy occurring in
the board of directors or trustees other that by removal or expira7on of term may be filled by the vote of
at least a majority of the remaining directors or trustees, if s7ll cons7tu7ng a quorum; otherwise, said
vacancies must be filled by the stockholders or members in a regular or special mee7ng called for that
purpose.

When the vacancy is due to term expira7on, the elec7on shall be held no later that the day of such
expira7on at a mee7ng called for that purpose. When the vacancy arises as a result of removal by the
stockholders or members, the elec7on may be held on the same day of the mee7ng authorizing the
removal and this fact must be so stated in the agenda and no7ce of said mee7ng. In all other cases, the
elec7on must be held no later than forty-five (45) days from the 7me the vacancy arose. A director or
trustee elected to fill vacancy shall be referred to as replacement director or trustee elected to fill a
vacancy shall be referred to as replacement director or trustee and shall serve only for the unexpired term
of the predecessor in office.

However, when the vacancy prevents the remaining directors from consitu7ng a quorum and emergency
ac7on is required to prevent grave, substan7al, and irreparable loss or damage to the corpora7on, the
vacancy may be temporarily filled from among the officers of the corpora7on by unanimous vote of the
remaining directors or trustees. The ac7on by the designated director or trustee shall be limited to the
emergency ac7on necessary, and the term shall cease within a reasonable 7me form the termina7on of
the emergency or upon elec7on of the replacement director or trustee, whichever comes earlier. The
corpora7on must no7fy the Commission within three (3) days from the crea7on of the emergency board,
sta7ng therein the reason for its crea7on.
Any directorship or trusteeship to be filled by a reason of an increase in the number of directors or trustees
shall be filled only by an elec7on at a regular or at a special mee7ng of stockholders or members duly
called for the purpose, or in the same mee7ng authorizing the increase of directors or trustees if so stated
in the no7ce of the mee7ng.

In all elec7ons to fill vacancies under this sec7on, the procedure set forth in Sec7on 23 and 25 of this Code
shall apply.

Sec@on 29. Compensa6on of Directors or Trustees. - In the absence of any provision in the bylaws fixing
their compensa7on, the directors or trustees shall not received any compensa7on in their capacity as
such, except for reasonable per diems: Provided, however, That the stockholders represen7ng at least a
majority of the outstanding capital stock or majority of the members may grant directors or trustees with
compensa7on and approve the amount thereof at a regular or special mee7ng.

In no case shall the total yearly compensa7on of directors exceed ten percent (10%) of the net income
before income tax of the corpora7on during the preceding year.

Directors or trustees shall not par7cipate in the determina7on of their own per diems or compensa7on.

Corpora7ons vested with public interest shall submit to their shareholders and the Commission, an annual
report of the total compensa7on of each of their directors or trustees.

Sec@on 30. Liability of Directors, Trustees or Officers. - Directors or trustees who willfully and knowingly
vote for or assent to patently unlawful acts of the corpora7on or who are guilty of gross negligence or bad
faith in direc7ng the affairs of the corpora7on or acquire any personal or pecuniary interest in conflict
with their duty as such directors or trustees shall be liable jointly and severally for all damages resul7ng
therefrom suffered by the corpora7on, its stockholders or members and other persons.

A director, trustee or officer shall not aBempt to acquire, or any interest adverse to the corpora7on in
respect of any maBer 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 corpora7on and must account for the profits which otherwise would have
accrued to the corpora7on.

Sec@on 31. Dealings of Directors, Trustees or Officers with the Corpora6on. - A contract of the
corpora7on with one (1) or more of its directors, trustees, officers or their spouses and rela7ves within
the fourth civil degree of consanguinity or affinity is voidable, at the op7on of such corpora7on, unless all
the following condi7ons are present:
(a) The presence of such director or trustee in the board mee7ng in which the contract was
approved was not necessary to cons7tute a quorum for such mee7ng;
(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 corpora7ons vested with public interest, material contracts are approved by at least
a majority of the independent directors vo7ng to approved the material contract; and
(e) In case of an officer, the contract has been previously authorized by the board of directors.

Where any of the first three (3) condi7ons set forth in the preceding paragraph is absent, in the case of a
contract with a director or trustee, such contract may be ra7fied by the vote of the stockholders
represen7ng at least two-thirds (2/3) of the outstanding capital stock or of at least two-thirds (2/3) of the
members in a mee7ng called for the purpose: Provided, That full disclosure of the adverse interest of the
directors or trustees involved is made at such mee7ng and the contract is fair and reasonable under the
circumstances.
Sec@on 32. Contracts Between Corpora6ons with Interlocking Directors. - Except in cases of fraud, and
provided the contract is fair and reasonable under the circumstances a contract between two (2) or more
corpora7ons having interlocking directors shall not be invalidated on that ground alone: Provided, That if
the interest of the interlocking director in one (1) corpora7on is substan7al and the interest in the other
corpora7on or corpora7ons is merely nominal, the contract shall be subject to the provisions of the
preceding sec7on insofar as the laBer corpora7on or corpora7ons are concerned.

Stockholding exceeding twenty percent (20%) of the outstanding capital stock shall be considered
substan7al for purposes of interlocking directors.

Sec@on 33. Disloyalty of a Director. - Where a director, by virtue of such office, acquires a business
opportunity which should belong to the corpora7on, thereby obtaining profits to the prejudice of such
corpora7on, the director must account for and refund to the laBer all such profits, unless the act has been
ra7fied by a vote of the stockholders owning or represen7ng at least two-thirds (2/3) of the outstanding
capital stock. This provision shall be applicable, nothwithstanding the fact that the director risked one's
own funds in the venture.

Sec@on 34. Execu6ve Management, and Other Special CommiYees. - If the bylaws so provide, the board
may create an execu7ve commiBee composed of at least three (3) directors. Said commiBee may act, by
majority of vote of all its members, on such specific maBers within the competence of the board, as may
be delegated to it in the bylaws or by majority vote of the board, except with respect to the: (a) approval
of any ac7on for which shareholders' approval is also required; (b) filing of vacancies in the board; (c)
amendment or repeal of bylaws or the adop7on of new bylaws; (d) amendment or term is not amendable
or repealable; and (e) distribu7on of cash dividends to the shareholders.

The board of directors may create special commiBees of temporary or permanent nature and determine
the members' term, composi7on, compensa7on, powers, and responsibili7es.

TITLE IV
POWERS OF THE CORPORATIONS

Sec@on 35. Corporate Powers and Capacity. - Every corpora7on incorporated under this Code has the
power and capacity:
(a) To sue and be sued in its corporate name;
(b) To have perpetual existence unless the cer7ficate of incorpora7on provides otherwise;
(c) To adopt and use a corporate seal;
(d) To amend its ar7cles of incorpora7on in accordance with the provisions of this Code;
(e) To adopt bylaws, not contrary to law, morals or public policy, and to amend or repeal the same
in accordance with this Code;
(f) In case of stock corpora7ons, to issue or sell stocks to subscribers and to sell treasury stocks in
accordance with the provisions of this Code; and to admit members to the corpora7on if it be a
nonstock corpora7on;
(g) To purchase, receive, take or grant, hold, convey, sell, lease, pledge, mortgage, and otherwise
deal with such real and personal property, including securi7es and bonds of other corpora7ons, as
the transac7on of the lawful business of the corpora7on may reasonably and necessarily require,
subject to the limita7ons prescribed by law and the cons7tu7on;
(h) To enter into a partnership, joint venture, merger, consolida7on, or any other commercial
agreement with natural and juridical persons;
 (i) To make reasonable dona7ons, including those for the public welfare or for hospital, charitable,
cultural, scien7fic, civic, or similar purposes: Provided, That no foreign corpora7on shall give
dona7ons in aid of any poli7cal party or candidate or for purpose s of par7san poli7cal ac7vity;
(j) To establish pension, re7rement, and other plans for the benefit of its directors, trustees,
officers, and employees; and
(k) To exercise such other powers as may be essen7al or necessary to carry out its purpose or
purposes as stated in the ar7cles of incorpora7on.

Sec@on 36. Power to Extend or Shorten Corporate Term. - A private corpora7on may extend or shorten
its term as stated in the ar7cles of incorpora7on when approved by a majority vote of the board of
directors or trustees, and ra7fied at a mee7ng by the stockholders or members represen7ng at least two-
thirds (2/3) of the outstanding capital stock or of its membrs. WriBen no7ce of the proposed ac7on and
the 7me and place of the mee7ng shall be sent to the stockholders or members at their respec7ve place
of residence as shown in the books of the corpora7on, and must be deposited to the addressee in the
post office with postage prepaid, served personally, or when allowed in the bylaws or done with the
consent of the stockholder, sent electronically in accordance with the rules and regula7ons of the
Commission on the use of electronic data messages. In case of extension of corporate term, a dissen7ng
stockholder may exercise the right of appraisal under the condi7ons provided in this Code.

Sec@on 37. Power to increase or Decrease Capital Stock; Incur, Create or Increase Bonded
Indebtedness. - No corpora7on shall increase or decrease its capital stock or incur, create or increase any
bonded indebtedness unless approved by a majority vote of the board of directors and by two-thirds (2/3)
of the outstanding capital stock at a stockholders' mee7ng duly called for the purpose. WriBen no7ce of
the 7me and place of the stockholders' mee7ng and the purpose for said mee7ng must be sent to the
stockholders at their places of residence as shown in the books of the corpora7on served on the
stockholders personally, or through electronic means recognized in the corpora7on's bylaws and/or the
Commission's rules as a valid mode for service of no7ces.
A cer7ficate must be signed by a majority of the directors of the corpora7on and countersigned by the
chairperson and secretary of the stockholders' mee7ng, senng forth:
(a) That the requirements of this sec7on have been complied with;
(b) The amount of the increase or decrease of the capital stock;
(c) In case of an increase of the capital stock, the amount of capital stock or number of shares of
no-par stock thereof actually subscribed, the names na7onali7es and addresses of the persons
subscribing, the amount of capital stock or number of no-par stock subscribed, the names,
na7onali7es and addresses of the persons subscribing, the amount of capital stock or number of
no-par stock subscribed by each, and the amount paid by each on the subscrip7on in cash or
property, or the amount of capital stock or number of shares of no-par stock alloBed to each
stockholder if such increase is for the purpose of making effec7ve stock dividend therefor
authorized;
(d) Any bonded indebtedness to be incurred, created ot increased;
(e) The amount of stock represented at the mee7ng; and
(f) The vote authorizing the increase or decrease of capital stock, or incurring, crea7ng or
increasing of bonded indebtedness.

Any increase or decrease in the capital stock or the incurring, crea7ng or increasing of any bonded
indebtedness shall require prior approval of the Commission and where appropriate, of the Philippine
Compe77on Commission. The applica7on with the Commission shall be made within six (6) months from
the date of approval of the board of directors and stockholders, which period may be extended for
jus7fiable reasons.

Copies of the cer7ficate shall be kept on file in the office of the corpora7on and filed with the Commission
and aBached to the original ar7cles of incorpora7on. ASer approval by the Commission and the issuance
by the Commission of its cer7ficate of filing may declare: Provided, That the Commission shall not accept
for filing any cer7ficate of increase of capital stock unless accompanied by a sworn statement of the
treasurer of the corpora7on accompanied by a sworn statement of the treasurer of the corpora7on
lawfully holding office at the 7me of the filing of the cer7ficate, showing that at least twenty-five percent
(25%) of the increase in capital stock has been subscribed and that at least twenty-five percent (25%) of
the amount subscribed has been paid in actual cash to the corpora7on or that property, the valua7on of
which is equal to twenty-five percent (25%) of the subscrip7on, has been transferred to the
corpora7on: Provided, further, That no decrease in capital stock shall be approved by the Commission if
its effect shall prejudice the rights of corporate creditors.

Nonstock corpora7ons may incur, create or increase bonded indebtedness when approved by a majority
of the board of trustees and of at least two-thirds (2/3) of the members in a mee7ng duly called for the
purpose.

Bonds issued by a corpora7on shall be registered with the Commission, which shall have the authority to
determine the sufficiency of the terms thereof.

Sec@on 38. Power to Deny Preemp6ve Right. - All stockholders of a stock corpora7on shall enjoy
preemp7ve right to subscribe to all issues or disposi7on of shares of any class, in propor7on to their
respec7ve shareholdings, unless such right is denied by the ar7cles of incorpora7on or an amendment
thereto: Provided, That such preemp7ve right shall not extend to shares issued in compliance with laws
requiring stock offerings or minimum stock ownership by the public; or to shares issued in good faith with
the approval of the stockholders represen7ng two-thirds (2/3) of the outstanding capital stock in exchange
for property needed for corporate purposes or in payment of previously contracted debt.

Sec@on 39. Sale or Other Disposi6on of Assets. - Subject to the provisions of Republic Act No. 10667,
otherwise known as the "Philippine Compe77on Act", and other related laws a corpora7on may, by a
majority vote of its board of directors or trustees, sell, lease, exchange, mortgage, pledge, or otherwise
dispose of its property and assets, upon such terms and condi7ons and for such considera7on, which may
be money, stock, bonds, or other instruments for the payment of money or other property or
considera7on, as its board of directors or trustees may deem expedient.

A sale of all or substan7ally all of the corpora7on's proper7es and assets, including its goodwill, must be
authorized by the vote of stockholders represen7ng at least two-thirds (2/3) of the outstanding capital
stock, or at least two-thirds (2/3) of the members, mee7ng duly called for the purpose.

In nonstock corpora7ons where there are no members with vo7ng rights, the vote of at least a majority
of the trustees in office will be sufficient authoriza7on for the corpora7on to enter into any transac7on
authorized by this sec7on.

The determina7on of whether or not the sale involves all or substan7ally all of the corpora7on's proper7es
and assets must be computed based on its net asset value, as shown in its latest financial statements. A
sale or other disposi7on shall be deemed to cover substan7ally all the corporate property and assets if
thereby the corpora7on would be rendered incapable of con7nuing the business or accomplishing the
purpose of which it was incorporated.

WriBen no7ce of the proposed ac7on and of the 7me and place for the mee7ng shall be addressed to
stockholders or members at their places of residence as shown in the books of the corpora7on and
deposited to the addressee in the post office with postage prepaid, served personally, or when allowed
by the bylaws or done with the consent of the stockholder, sent electronically: Provided, That any
dissen7ng stockholder may exercise the right of appraisal under the condi7ons provided in this Code.
ASer such authoriza7on or approval by the stockholders or members, the board of directors or trustees
may, nevertheless, in its discre7on, abandon such sale, lease, exchange, mortgage, pledge, or other
disposi7on of property and assets, subject to the rights of third par7es under any contract rela7ng thereto,
without further ac7on or approval by the stockholders or members.

Nothing in this sec7on is intended to restrict the power of any corpora7on, without the authoriza7on by
the stockholders or members, to sell, lease, exchange, mortgage, pledge, or otherwise dispose of any of
its property and assets if the same is necessary in the usual and regular course of business of the
corpora7on or if the proceeds of the sale or other disposi7on of such property and assets shall be
appropriated for the conduct of its remaining business.

Sec@on 40. Power to Acquire Own Shares. - Provided, That the corpora7on has unrestricted retained
earnings in its books to cover the shares to be purchased or acquired, a stock corpora7on shall have the
power to purchased or acquired, a stock corpora7on shall have the power to purchase or acquire its own
shares for a legi7mate corporate purpose or purposes, including the following cases:
(a) To eliminate frac7onal shares arising out of stock dividends;
(b) To collect or compromise an indebtedness to the corpora7on, arising out of unpaid
subscrip7on, in a delinquency sale, and to purchase delinquent shares sold during said sale; and
(c) To pay dissen7ng or withdrawing stockholders en7tled to payment for their shares under the
provisions of this Code.

Sec@on 41. Power to Invest Corporate Funds in Another Corpora6on or Business or for Any Other
Purpose. - Subject to the provisions of this Code, a private corpora7on may invest its funds in any other
corpora7on, business, or for any purpose other than the primary purpose for which it was organized,
when approved by a majority of the board of directors or trustees and ra7fied by the stockholders
represen7ng at least two-thirds (2/3) of the outstanding capital stock, or by at least two-thirds (2/3) of
the outstanding capital stock, or by at least two-thirds (2/3) of the members in the case of nonstock
corpora7ons at a mee7ng duly called for the purpose. No7ce of the proposed investment and the 7me
place of residence as shown in the books of the corpora7on and deposited to the addressee in the post
office with the postage prepaid. Served personally, or sent electronically in accordance with the rules and
regula7ons of the Commission on the use of electronic data message, when allowed by the bylaws or
done with the consent of the stockholders: Provided, That any dissen7ng stockholder shall have appraisal
right as provided in this Code: Provided, however, That where the investment by the corpora7on is
reasonably necessary to accomplish its primary purpose as stated in the ar7cles of incorpora7on, the
approval of the stockholders or members shall not be necessary.

Sec@on 42. Power to Declare Dividends. - The board of directors of a stock corpora7on may declare
dividends out of the unrestricted retained earnings which shall be payable in cash, property, or in stock to
all stockholders on the basis of outstanding stock held by them: Provided, That any cash dividends due on
delinquent stock shall be first be applied to the unpaid balance on the subscrip7on plus costs and
expenses, while stock holders un7l their unpaid subscrip7on is fully paid: Provided, further, That no stock
dividend shall be issued without the approval of stockholders represen7ng at least two-thirds (2/3)of the
outstanding capital stock at a regular or special mee7ng duly called for the purpose.

Stock corpora7ons are prohibited from restraining surplus profits in excess of one hundred percent (100%}
of their paid-in capital stock, except: (a) when jus7fied by the definite corporate expansion projects or
programs approved by the board of directors; or (b) when the corpora7on is prohibited under any loan
agreement with financial ins7tu7ons or creditors, whether local or foreign, from declaring dividends
without their consent, and such consent has not yet been secured; or (c) when it can be clearly shown
that such reten7on is necessary under special circumstances obtaining in the corpora7on, such as when
there is need for special reserve for probable con7ngencies.
Sec@on 43. Power to Enter into Management Contract. - No corpora7on shall conclude a management
contract with another corpora7on unless such contract is approved by the board of directors and by the
stockholders owning at least the majority of the outstanding capital stock, or by at least a majority of the
members in the case of a nonstock corpora7on, or both the managing and the managed corpora7on, at a
mee7ng duly called for the purpose: Provided, That (a) where a stockholder or stockholders represen7ng
the same interest of both the managing and the managed corpora7ons own or control more than one-
third (1/3) of the total outstanding capital stock en7tled to vote of the managing corpora7on; or (b) where
a majority if the members of the board of directors of the managing corpora7on also cons7tute a majority
of the members of the board of directors of the managed corpora7on, then the management contract
must be approved by the stockholders of the managed corpora7on owning at least two-thirds (2/3) of the
total outstanding capital stock en7tled to vote, or by at least two-thirds (2/3) of the members in the case
of a nonstock corpora7on.

These shall apply to any contract whereby a corpora7on undertakes to manage or operate all or
substan7ally all of the called services contracts, opera7ng agreements or otherwise: Provided,
however, That such service contracts or opera7ng agreements which relate to the explora7on,
development exploita7on or u7liza7on of natural resources may entered into such periods as may be
provided by the per7nent laws or regula7ons.

No management contracts shall be entered into for period longer that five (5) years for any one term.

Sec@on 44. Ultra Vires Acts of the Corpora6ons. - No corpora7on shall possess or exercise corporate
powers other than those conferred by this Code or by its ar7cles of incorpora7on and except as necessary
or incidental to the exercise of the powers conferred.