Revised Corpo Code
Revised Corpo Code
Revised Corpo Code
An Act Providing for the Revised Corporation Code of (c) Sale, lease, echange, mortgage, pledge,
the Philippines or other disposition of all or substantially all
of the corporate property;
TITLE I
GENERAL PROVISIONS (d) Incurring, creating, or increasing bonded
indebtedness;
DEFINITIONS AND CLASSIFICATIONS
(e) Increase or decrease of authorized
Section 1. Title of the Code. - This Code shall be known as capital stock;
the "Revised Corporation Code of the Philipines".
(f) Merger or consolidation of the corporation
Section 2. Corporation Defined. - A corporation is an artificial with another corporation or other
being created by operation of law, having the right of corporations;
succession and the powers, attributes, and properties
expressly authorized by law or incidental to its existence. (g) Investment of corporate funds in another
corporation or business in accordance with
Section 3. Classes of Corporations. - Corporations formed or this Code; and
organized under this Code may be stock or nonstock
corporations. Stock corporations are those which have capital (h) Dissolution of the corporation.
stock divided into shares and are authorized to distribute to
the holders of such shares, dividends, or allotments of the Except as provided in the immediately preceding paragraph,
surplus profits on the basis of the shares held. All other the vote required under this Code to approve a particular
corporations are nonstock corporations. corporate act shall be deemed to refer only to stocks with
voting rights.
Section 4. Corporations Create by Special Laws or Charters. -
Corporations created by special laws or charters shall be The shares or series of shares may or may not have a par
governed primarily by the provisions of the special law or value: Provided, That banks, trust, insurance, and preneed
charter creating them or applicable to them, supplemented by companies, public utilities, building and loan associations, and
the provisions of this Code, insofar as they are applicable. other corporations authorized to obtain or access funds from
the public whether publicly listed or not, shall not be permitted
Section 5. Corporators and Incorporators, Stockholders and to issue no-par value shares of stock.
Members. - Corporators are those who compose a corporation,
whether as stockholders or shareholders in a stock corporation Preferred shares of stock issued by a corporation may be given
or as a members in a nonstock corporations. Incorporators are preference in the distribution of dividends and in the
those stockholders or members mentioned in the articles of distribution of corporate assets in case of liquidation, or such
incorporation as originally forming and composing the other preferences: Provided, That preferred shares of stock
corporation and who are signatories thereof. may be issued only with a stated par value. The board of
directors, where authorized in the articles of incorporation,
Section 6. Classification of Shares. - The classification of may fix the terms and conditions of preferred shares of stock
shares, their corresponding rights, priviledges, restrictions, and or any series thereof: Provided, further, That such terms and
their stated par value, if any, must be indicated in the articles conditions shall be effective upon filing of a certificate thereof
of incorporations. Each share shall be equal in all respects to with the Securities and Exchange Commission, hereinafter
every other share, except as otherwise provided in the articles referred to as the "Commission".
of incorporation. Each share shall be equal in all respects to
every other share, except as otherwise provided in the articles Shares of capital stock issued without par value shall be
of incorporation and in the certificate of stock. deemed fully paid and nonassessable and the holder of such
shares shall not be liable to the corporation or to its creditors
The share stock corporations may be divided into classes or in respect thereto: Provided, That no-par value shares must be
series of shares, or both. No share may be deprived of voting issued for a consideration of at least Five pesos (₱5.00) per
rights except those classified and issued as "preferred" or share: Provided, further, That the entire consideration received
"redeemable" shares, unless otherwise provided in this Code: by the corporation for its no-par value shares shall be treated
Provided, That there shall be a class or series of shares with as capital and shall not be available for distribution as
complete voting rights. dividends.
Holders of nonvoting shares shall nevertheless be entitled to A corporation may further classify its shares for the purpose of
vote on the following matters; ensuring compliance with constitutional or legal requirements.
(a) Amendment of the articles of Section 7. Founders' Shares. - Founders' shares may be given
incorporation; certain rights and privileges not enjoyed by the owners of
other stock. Where the exclusive right to vote and be voted for
in the election of directors is granted, it must be for a limited A corporate term for a specific period may be extended or
period not to exceed five (5) years from the date of shortened by amending the articles of incorporation: Provided,
incorporation: Provided, That such exclusive right shall not be That no extension may be made earlier than three (3) years
allowed if its exercise will violate Commonwealth Act No. 108, prior to the original or subsequent expiry date(s) unless there
otherwise known as the "Anti-Dummy Law"; Republic Act No. are justifiable reasons for an earlier extension as may be
7042, otherwise known as the "Foreign Investments Act of determined by the Commission: Provided, further, That such
1991"; and otherwise known as "Foreign Investments Act of extension of the corporate term shall take effect only on the
1991"; and other pertinent laws. day following the original or subsequent expiry date(s).
Section 8. Redeemable Shares. - Redeemable shares may be A corporation whose term has expired may apply for revival of
issued by the corporation when expressly provided in the its corporate existence, together with all the rights and
articles of incorporation. They are shares which may be privileges under its certificate of incorporation and subject to
purchased by the corporation. They are shares which may be all of its duties, debts and liabilities existing prior to its revival.
purchased by the corporation from the holders of such shares Upon approval by the Commission, the corporation shall be
upon the expiration of a fixed period, regardless of the deemed revived and a certificate of revival of corporate
existence of unrestricted retained earnings in the books of the existence shall be issued, giving it perpetual existence, unless
corporation, and upon such other terms and conditions stated its application for revival provides otherwise.
in the articles of incorporation and the certificate of stock
representing the shares, subject to rules and regulations issued No application for revival of certificate of incorporation of
by the Commission. banks, banking and quasi-banking institutions, preneed,
insurance and trust companies, non-stock savings and loan
Section 9. Treasury Shares. - Treasury shares are shares of associations (NSSLAs), pawnshops, corporations engaged in
stock which have been issued and fully paid for, but money service business, and other financial intermediaries
subsequently reacquired by the issuing corporation through shall be approved by the Commission unless accompanied by a
purchase, redemption, donation, or some other lawful means. favorable recommendation of the appropriate government
Such shares may again be disposed of for a reasonable price agency.
fixed by the board of directors.
Section 12. Minimum Capital Stock Not Required of Stock
TITLE II Corporations. - Stock corporations shall not be required to
INCORPORATION AND ORGANIZATION OF PRIVATE have minimum capital stock, except as otherwise specially
CORPORATIONS provided by special law.
Section 10. Number and Qualifications of Incorporators. - Any Section 13. Contents of the Articles of Incorporation. - All
person, partnership, association or corporation, singly or jointly corporations shall file with the Commission articles of
with others but not more than fifteen (15) in number, may incorporation in any of the official languages, duly signed and
organize a corporation for any lawful purpose or purposes: acknowledged or authenticated, in such form and manner as
Provided, That natural persons who are licensed to practice a may be allowed by the Commission, containing substantially
profession, and partnerships or associations organized for the the following matters, except as otherwise prescribed by this
purpose of practicing a profession, shall not be allowed to Code or by special law:
organize as a corporation unless otherwise provided under
special laws. Incorporators who are natural persons must be of (a) The name of corporation;
legal age.
(b) The specific purpose or purposes for
Each incorporator of a stock corporation must own or be a which the corporation is being formed.
subscriber to at least one (1) share of the capital stock. Where a corporation has more than one
stated purpose, the articles of incorporation
A corporation with a single stockholder is considered a One hsall indicate the primary purpose and the
Person Corporation as described in Title XIII, Chapter III of secondary purpose or purposes: Provided,
this Code. That a nonstock corporation may not include
a purpose which would change or contradict
Section 11. Corporate Term. - A corporation shall have its nature as such;
perpetual existence unless its articles of incorporation provides
otherwise. (c) The place where the principal office of
the corporation is to be located, which must
Corporations with certificates of incorporation issued prior to be within the Philippines;
the effectivity of this Code and which continue to exist shall
have perpetual existence, unless the corporation, upon a vote (d) The term for which the corporation is to
of its stockholders representing a majority of its articles of exist, if the corporation has not elected
incorporation: Provided, That any change in the corporate right perpetual existence;
of dissenting stockholders in accordance with the provisions of
this Code. (e) The names, nationalities, and residence
addresses of the incorporators;
(f) The number of directors, which shall not Third: That the principal office of the corporation is located in
be more than fifteen (15) or the number of the City/Municipality of _______________, Province of
trustees which may be more than fifteen ______________________, Philippines;
(15);
Fourth: That the corporation shall have perpetual existence or
(g) The names, nationalities, and residence a term of ___________ years from the date of issuance of the
addresses of persons who shall act as certificate of incorporation;
directors or trustees until the first regular
directors or trustees are duly elected and Fifth: That the names, nationalities, and residence addresses
qualified in accordance with this Code; of the incorporators of the corporation are as follows:
Second: That the purpose or purposes for which such (In case some shares have par value and some are without par
corporation is incorporated are: (If there is more than one value): That the capital stock of said corporation consists of
purpose, indicate primary and secondary purposes); ________________________________ shares, of which
_______________________ shares have a par value of
___________________________PESOS (₱_______) each, and _____________________________
of which ____________________ shares are without par _____________________________
value.
_____________________________
Eight: That the number of shares of the authorized capital _____________________________
stock-stated has been subscribed as follows:
_____________________________
_____________________________
No. of
Amount
Name of Shares Amount
Nationality Subscribe (Names and signatures of the incorporators)
Subscriber Subscribe Paid
d
d
____________________________
(Name and signature of Treasurer)
(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 may Section 15. Amendment of Articles of Incorporation. - Unless
be modified accordingly, and it is sufficient if the articles state otherwise prescribed by this Code or by special law, and for
the amount of capital or money contributed or donated by legitimate purposes, any provision or matter stated in the
specified persons, stating the names, nationalities, and articles of incorporation may be amended by a majority vote of
residence addresses of the contributors or donors and the the board of directors or trustees and the vote or written
respective amount given by each.) assent of the stockholders representing at least two-thirds
(2/3) of the outstanding capital stock, without prejudice to the
appraisal right of dissenting stockholders in accordance with
Ninth: That _______________________ has been elected by the provisions of this Code. The articles of incorporation of a
the subscribers as Treasurer of the Corporation to act as such nonstock corporation may be amended by the vote or written
until after the successor is duly elected and qualified in assent of majority of the trustees and at least two-thirds (2/3)
accordance with the bylaws, that as Treasurer, authority has of the members.
been given to receive in the name and for the benefit of the
corporation, all subscriptions, contributions or donations paid
or given by the subscribers or members, who certifies the The original and amended articles together shall contain all
information set forth in the seventh and eighth clauses above, provisions required by law to be set out in the articles of
and that the paid-up portion of the subscription in cash and/or incorporation. Amendments to the articles shall be indicated by
property for the benefit and credit of the corporation has been underscoring the change or changes made, and a copy thereof
duly received. duly certified 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
Tenth: That the incorporators undertake to change the name the stockholders or members, shall be submitted to the
of the corporation immediately upon receipt of notice from the Commission.
Commission that another corporation, partnership or person
has acquired a prior right to the use of such name, that the
name has been declared not distinguishable from a The amendments shall take effect upon their approval by the
corporation, or that it is contrary to law, public morals, good Commission or from the date of filing with the said Commission
customs or public policy. if not acted upon within six (6) months from the date of filing
for a cause not attributable to the corporation.
_____________________________
_____________________________
(c) The certification concerning the amount incorporators. The incorporators shall then submit their articles
of capital stock subscribed and/or paid is of incorporation and bylaws to the Commission.
false; and
If the Commission finds that the submitted document s and
(d) The required percentage of Filipino information are fully compliant with the requirements of this
ownership of the capital stock under existing Code, other relevant laws, rules and regulations, the
laws or the Constitution has not been Commission shall issue the certificate of incorporation.
complied with.
A private corporation organized under this Code commences its
No articles of incorporation or amendment to articles of corporate existence and juridical personality from the date the
incorporation of banks, banking and quasi-banking institutions, Commission issues the certificate of incorporation under its
preneed, insurance and trust companies, NSSLAs, pawnshops official seal thereupon the incorporators,
and other financial intermediaries shall be approved by the stockholders/members and their successors shall constitute a
Commission unless accompanied by a favorable body corporate under the name stated in the articles of
recommendation of the appropriate government agency to the incorporation for the period of time mentioned therein, unless
effect that such articles or amendment is in accordance with said period is extended or the corporation is sooner dissolved
law. in accordance with law.
Section 17. Corporation Name. - No corporate name shall be Section 19. De facto Corporations. - The due incorporation of
allowed by the Commission if it is not distinguishable from that any corporation claiming in good faith to be a corporation
already reserved or registered for the use if another under this Code, and its right to exercise corporate powers,
corporation, or if such name is already protected by law, rules shall not be required into collaterally in any private suit to
and regulations. which such corporation may be a party. Such inquiry may be
made by the Solicitor General in a quo warranto proceeding.
A name is not distinguishable even if it contains one or more of
the following: Section 20. Corporation by Estoppel. - All persons who
assume to act as a corporation knowing it to be without the
(a) The word "corporation", "company", authority to do so shall be liable as general partners for all
incorporated", "limited", "limited liability", or debts, liabilities and damages incurred or arising as a result
an abbreviation ofone if such words; and thereof: Provided, however, That when any such ostensible
corporation is sued on any transaction entered by its as a
corporation or on any tort committed by it as such, it shall not
(b) Punctuations, articles, conjunctions, be allowed to use on any its lack of corporate personality as a
contractions, prepositions, abbreviations,
defense. Anyone who assumes an obligation to an ostensible
different tenses, spacing, or number of the corporation as such cannot resist performance thereof on the
same word or phrase.
ground that there was in fact no corporation.
The Commission upon determination that the corporate name Section 21. Effects of Non-Use of Corporate Charter and
is: (1) not distinguishable from a name already reserved or
Continous Inoperation. - If a corporation does not formally
registered for the use of another corporation; (2) already organize and commence its business within five (5) year from
protected by law; or (3) contrary to law, rules and regulations,
the date of its incorporation, its certificate of incorporation
may summarily order the corporation to immediately cease and shall be deemed revoked as of the day following the end of the
desist from using such name and require the corporation to
five (5)-year period.
register a new one. The Commission shall also cause the
removal of all visible signages, marks, advertisements, labels
prints and other effects bearing such coroporate name. Upon However, if a corporation has commence its business but
the approval of the new corporate name, the Commission shall subsequently becomes inoperative for a period of at least five
issue a certificate of incorporation under the amended name. (5) consecutive years, the Commission may, after due notice
and hearing, place the corporation under delinquent status.
If the corporation fails to comply with the Commission's order,
the Commission may hold the corporation and its responsible A delinquent corporation shall have a period of two (2) years
directors or officers in contempt and/or hold them to resume operations and comply with all requirements that
administratively, civilly and/or criminally liable under this Code the Commission shall prescribed. Upon the compliance by the
and other applicable laws and/or revoke the registration of the corporation, the Commission shall issue an order lifting the
corporation. delinquent status. Failure to comply with the requirements and
resume operations within the period given by the Commission
shall cause the revocation of the corporation's certificate of
Section 18. Registration, Incorporation and Commencement
incorporation.
of Corporation Existence. - A person or group of persons
desiring to incorporate shall submit the intended corporate
name to the Commission for verification. If the Commission The Commission shall give reasonable notice to, and
finds that the name is distinguishable from a name already coordinate with the appropriate regulatory agency prior to the
reserved or registered for the use of another corporation, not suspension or revocation of the certificate of incorporation of
protected by law and is not contrary to law, rules and companies under their special regulatory jurisdiction.
regulation, the name shall be reserved in favor of the
TITLE III requirements that the Commission will prescribed to
BOARD OF DIRECTORS/TRUSTEE AND OFFICERS strengthen their independence and align with international best
practices.
Section 22. The Board of Directors or Trustees of a
Corporation; Qualification and Term. - Unless otherwise Section 23. Election of Directors or Trustees. - Except when
provided in this Code, the board of directors or trustees shall the exclusive right is reserved for holders of founders' shares
exercise the corporate powers, condict all business, and control under Section 7 of this Code, each stockholder or member
all properties of the corporation. shall have the right to nominate any director or trustee who
posseses all of the qualifications and none of the
Directors shall be elected for a term of one (10 Year from disqualifications and none of the disqualifications set forth in
among the holders of stocks registered in the corporation's this Code.
book while trustees shall be elected for a term not exceeding
three (3) years from among the members of the corporation. At all elections of directors or trustees, there must be present,
Each director and trustee shall hold office until the successor is either in person or through a representative authorized to act
elected and qualified. A director who ceases to own at least by written proxy, the owners of majority of the outstanding
one (1) share of stock or a trustee who ceases to be a member capital stock, or if there be no capital stock, a majority of the
of the corporation shall cease to be such. members entitled to vote. When so authorized in the bylaws or
by a majority of the board of directors, the stockholders or
The board of the following corporations vested with public members may also vote through remote communication or in
interest shall have independent directors constituting at least absentia: Provided, That the right to vote through such modes
twenty percent (20%) of such board: may be exercised in corporations vested with public interest,
notwithstanding the absence of a provision in the bylaws of
such corporations.
(a) Corporations covered by Section 17.2 of
Republic Act No. 8799, otherwise known as
"The Securities Regulation Code", namely A stockholder or member who participates through remote
those whose securities are registered with communication or in absentia, shall be deemed present for
the Commission, corporations listed with an purposes of quorum.
exchange or with assets of at least Fifty
million pesos (50,000,000.00) and having The election must be by ballot if requested by any voting
two hundred (200) or more holders of stockholder or member.
shares, each holding at least one hundred
(100) shares of a class of its equity shares; In stock corporations, stockholders entitled to vote shall have
the right to vote the number of shares of stock standing in
(b) Banks and quasi-banks, NSSLAs, their own names in the stock books of the corporation at the
pawnshops, corporations engaged in money time fixed in the bylaws or where the bylaws are silent at the
service business, preneed, trust and time of the election. The said stockholder may: (a) vote such
insurance companies and other financial number of shares for as many persons as there are directors to
intermediaries; and be elected; (b) cumulate said shares and give one (1)
candidate as many votes as the number of directors to be
(c) Other corporations engaged in elected multiplied by the number of shares owned; or (c)
businesses vested with public interest similar distribute them on the same principle among as many
to the above, as may be determined by the candidates as may be seen fit: Provided, That the total number
Commission, after taking into account of votes cast shall not exceed the number of shares owned by
relevant factors which are germane to the the stockholders as shown in the books of the corporation
objective and purpose of requiring the multiplied by the whole number of directors to be elected:
election of an independent director, such as Provided, however, That no delinquent stock shall be voted.
the extent of minority ownership, type of Unless otherwise provided in the articles of incorporation or in
financial products or securities issued or the bylaws, members of nonstock corporations may cast as
offered to investors, public interest involved many votes as there are trustees to be elected by may not cast
in the nature of business operations, and more than one (1) vote for one (1) candidate. Nominees for
other analogous factors. directors or trustees receiving the highest number of votes
shall be declared elected.
An independent director is a person who apart from
shareholdings and fees received from any business or other If no election is held, or the owners of majority of the
relationship which could, or could reasonable be received to outstanding capital stock or majority of the members entitled
materially interfere with the exercise of independent judgment to vote are not present in person, by proxy, or through remote
in carrying out the responsibilities as a director. communication or not voting in absentia at the meeting, such
meeting may be adjourned and the corporation shall proceed
in accordance with Section 25 of this Code.
Independent directors must be elected by the shareholders
present or entitled to vote in absentia during the election of
directors. Independent directors shall be subject to rules and The directors or trustees elected shall perform their duties as
regulations governing their qualifications, disqualifications, prescribed by law, rules of good corporate governance, and
voting requirements, duration of term and term limit, bylaws of the corporation.
maximum number of board membership and other
Section 24. Corporate Officers. - Immediately after their (2) For violating this Code; and
election, the directors of a corporation must formally organize
an elect: (a) a president, who must be a director; (b) a (3) For violating Republic Act No.
treasurer, who must be a resident of the Philippines; and (d) 8799, otherwise known as "The
such other officers as may be provided in the bylaws. If the Securities Regulation Code";
corporation is vested with public interest, the board shall also
elect compliance officer. The same person may hold two (2) or
(b) Found administratively liable for any
more positions concurrently, except that no one shall act as
offense involving fraudulent acts; and
president and secretary or as president and treasurer at the
same time, unless otherwise allowed in this Code.
(c) By a foreign court or equivalent foreign
regulatory authority for acts, violations or
The officers shall manage the corporation and perform such
misconduct similar to those enumerated in
duties as may be provided in the bylaws and/or as resolved by
paragraphs (a) and (b) above.
the board of directors.
Any directorship or trusteeship to be filled by a reason of an (b) The vote of such director or trustee was
increase in the number of directors or trustees shall be filled not necessary for the approval of the
only by an election at a regular or at a special meeting of contract;
stockholders or members duly called for the purpose, or in the
same meeting authorizing the increase of directors or trustees
(c) The contract is fair and reasonable under
if so stated in the notice of the meeting.
the circumstances;
Section 34. Executive Management, and Other Special (i) To make reasonable donations, including
Committees. - If the bylaws so provide, the board may create those for the public welfare or for hospital,
an executive committee composed of at least three (3) charitable, cultural, scientific, civic, or similar
directors. Said committee may act, by majority of vote of all its purposes: Provided, That no foreign
members, on such specific matters within the competence of corporation shall give donations in aid of any
the board, as may be delegated to it in the bylaws or by political party or candidate or for purpose s
majority vote of the board, except with respect to the: (a) of partisan political activity;
approval of any action for which shareholders' approval is also
required; (b) filing of vacancies in the board; (c) amendment (j) To establish pension, retirement, and
or repeal of bylaws or the adoption of new bylaws; (d) other plans for the benefit of its directors,
amendment or term is not amendable or repealable; and (e) trustees, officers, and employees; and
distribution of cash divendends to the shareholders.
(k) To exercise such other powers as may be
The board of directors may create special committees of essential or necessary to carry out its
temporary or permanent nature and determine the members' purpose or purposes as stated in the articles
term, composition, compensation, powers, and responsibilities. of incorporation.
(b) The amount of the increase or decrease Bonds issued by a corporation shall be registered with the
of the capital stock; Commission, which shall have the authority to determine the
sufficiency of the terms thereof.
(c) In case of an increase of the capital
stock, the amount of capital stock or number Section 38. Power to Deny Preemptive Right. - All
of shares of no-par stock thereof actually stockholders of a stock corporation shall enjoy preemptive
subscribed, the names nationalities and right to subscribe to all issues or disposition of shares of any
addresses of the persons subscribing, the class, in proportion to their respective shareholdings, unless
amount of capital stock or number of no-par such right is denied by the articles of incorporation or an
stock subscribed, the names, nationalities amendment thereto: Provided, That such preemptive right
and addresses of the persons subscribing, shall not extend to shares issued in compliance with laws
the amount of capital stock or number of no- requiring stock offerings or minimum stock ownership by the
par stock subscribed by each, and the public; or to shares issued in good faith with the approval of
amount paid by each on the subscription in the stockholders representing two-thirds (2/3) of the
cash or property, or the amount of capital outstanding capital stock in exchange for property needed for
stock or number of shares of no-par stock corporate purposes or in payment of previously contracted
allotted to each stockholder if such increase debt.
is for the purpose of making effective stock
dividend therefor authorized; Section 39. Sale or Other Disposition of Assets. - Subject to
the provisions of Republic Act No. 10667, otherwise known as
(d) Any bonded indebtedness to be incurred, the "Philippine Competition Act", and other related laws a
created ot increased; corporation 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
(e) The amount of stock represented at the
conditions and for such consideration, which may be money,
meeting; and stock, bonds, or other instruments for the payment of money
or other property or consideration, as its board of directors or
(f) The vote authorizing the increase or trustees may deem expedient.
decrease of capital stock, or incurring,
creating or increasing of bonded
A sale of all or substantially all of the corporation's properties
indebtedness. and assets, including its goodwill, must be authorized by the
vote of stockholders representing at least two-thirds (2/3) of
Any increase or decrease in the capital stock or the incurring, the outstanding capital stock, or at least two-thirds (2/3) of the
creating or increasing of any bonded indebtedness shall require members, meeting duly called for the purpose.
prior approval of the Commission and where appropriate, of
the Philippine Competition Commission. The application with In nonstock corporations where there are no members with
the Commission shall be made within six (6) months from the
voting rights, the vote of at least a majority of the trustees in
date of approval of the board of directors and stockholders, office will be sufficient authorization for the corporation to
which period may be extended for justifiable reasons.
enter into any transaction authorized by this section.
Copies of the certificate shall be kept on file in the office of the The determination of whether or not the sale involves all or
corporation and filed with the Commission and attached to the
substantially all of the corporation's properties and assets must
original articles of incorporation. After approval by the be computed based on its net asset value, as shown in its
Commission and the issuance by the Commission of its
latest financial statemments. A sale or other disposition shall
certificate of filing may declare: Provided, That the Commission be deemed to cover substantially all the corporate property
shall not accept for filing any certificate of increase of capital
and assets if thereby the corporation would be rendered
stock unless accompanied by a sworn statement of the incapable of continuing the business or accomplishing the
treasurer of the corporation accompanied by a sworn
purpose of which it was incorporated.
statement of the treasurer of the corporation lawfully holding
office at the time of the filing of the certificate, showing that at
least twenty-five percent (25%) of the increase in capital stock Written notice of the proposed action and of the time and
place for the meeting shall be addressed to stockholders or
members at their places of residence as shown in the books of stockholder shall have appraisal right as provided in this Code:
the corporation and deposited to the addressee in the post Provided, however, That where the investment by the
office with postage prepaid, served personally, or when corporation is reasonably necessary to accomplish its primary
allowed by the bylaws or done with the consent of the purpose as stated in the articles of incorporation, the approval
stockholder, sent electronically: Provided, That any dissenting of the stockholders or members shall not be necessary.
stockholder may exercise the right of appraisal under the
conditions provided in this Code. Section 42. Power to Declare Dividends. - The board of
directors of a stock corporation may declare dividends out of
After such authorization or approval by the stockholders or the unrestricted retained earnings which shall be payable in
members, the board of directors or trustees may, nevertheless, cash, property, or in stock to all stockholders on the basis of
in its discretion, abandon such sale, lease, exchange, outstanding stock held by them: Provided, That any cash
mortgage, pledge, or other disposition of property and assets, dividends due on delinquent stock shall be first be applied to
subject to the rights of third parties under any contract relating the unpaid balance on th subscription plus costs and expenses,
thereto, without further action or approval by the stockholders while stock holders until their unpaid subscription is fully paid:
or members. Provided, further, That no stock dividend shall be issued
without the approval of stockholders representing at least two-
Nothing in this section is intended to restrict the power of any thirds (2/3)of the outstanding capital stock at a regular or
corporation, without the authorization by the stockholders or special meeting duly called for the purpose.
members, to sell, lease, exchange, mortgage, pledge, or
otherwise dispose of any of its property and assets if the same Stock corporations are prohibited from restraining surplus
is necessary in the usual and regular course of business of the profits in excess of one hundred percent (100%} of their paid-
corporation or if the proceeds of the sale or other disposition in capital stock, except: (a) when justified by the definite
of such property and assets shall be appropriated for the corporate expansion projects or programs approved by the
conduct of its remaining business. board of directors; or (b) when the corporation is prohibited
under any loan agreement with financial institutions or
Section 40. Power to Acquire Own Shares. - Provided, That creditors, whether local or foreign, from declaring dividends
the corporation has unrestricted retained earnings in its books without their consent, and such consent has not yet been
to cover the shares to be purchased or acquired, a stock secured; or (c) when it can be clearly shown that such
corporation shall have the power to purchased or acquired, a retention is necessary under special circumstances obtaining in
stock corporation shall have the power to purchase or acquire the corporation, such as when there is need for special reserve
its own shares for a legitimate corporate purpose or purposes, for probable contingencies.
including the following cases:
Section 43. Power to Enter into Management Contract. - No
(a) To eliminate fractional shares arising out corporation shall conclude a management contract with
of stock dividends; another corporation 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
(b) To collect or compromise an majority of the members in the case of a nonstock corporation,
indebtedness to the corporation, arising out
or both the managing and the managed corporation, at a
of unpaid subscription, in a delinquency sale, meeting duly called for the purpose: Provided, That (a) where
and to purchase delinquent shares sold
a stockholder or stockholders representing the same interest of
during said sale; and both the managing and the managed corporations own or
control more than one-third (1/3) of the total outstanding
(c) To pay dissenting or withdrawing capital stock entitled to vote of the managing corporation; or
stockholders entitled to payment for their (b) where a majority if the members of the board of directors
shares under the provisions of this Code. of the managing corporation also constitute a majority of the
members of the board of directors of the managed
Section 41. Power to Invest Corporate Funds in Another corporation, then the management contract must be approved
Corporation or Business or for Any Other Purpose. - Subject to by the stockholders of the managed corporation owning at
the provisions of this Code, a private corporation may invest its least two-thirds (2/3) of the total outstanding capital stock
funds in any other corporation, business, or for any purpose entitled to vote, or by at least two-thirds (2/3) of the members
other than the primary purpose for which it was organized, in the case of a nonstock corporation.
when approved by a majority of the board of directors or
trustees and ratified by the stockholders representing at least These shall apply to any contract whereby a corporation
two-thirds (2/3) of the outstanding capital stock, or by at least undertakes to manage or operate all or substantially all of the
two-thirds (2/3) of the outstanding capital stock, or by at least called services contracts, operating agreements or otherwise:
two-thirds (2/3) of the members in the case of nonstock Provided, however, That such service contracts or operating
corporations at a meeting duly called for the purpose. Notice of agreements which relate to the exploration, development
the proposed investment and the time place of residence as exploitation or utilization of natural resources may entered into
shown in the books of the corporation and deposited to the such periods as may be provided by the pertinent laws or
addressee in the post office with the postage prepaid. Served regulations.
personally, or sent electronically in accordance with the rules
and regulations of the Commission on the use of electronic
No management contracts shall be entered into for period
data message, when allowed by the bylaws or done with the longer that five (5) years for any one term.
consent of the stockholders: Provided, That any dissenting
Section 44. Ultra Vires Acts of the Corporations. - No (f) The directors' or trustees' qualifications,
corporation shall possess or exercise corporate powers other duties and responsibilities, the guidelines for
than those conferred by this Code or by its articles of setting the compensation of directors or
incorporation and except as necessary or incidental to the trustees and officers, and the maximum
exercise of the powers conferred. number of other board representations that
an independent director or trustee may have
TITLE V which shall, in no case, be more than the
BYLAWS number prescribed by the Commission;
Section 45. Adoption of Bylaws. - For the adoption of bylaws (g) The time for holding the annual election
by the corporation, the affirmative vote of the stockholders of directors or trustees and the mode or
representing at least a majority of the outstanding capital manner of giving notice thereof;
stock, or of at least a majority of the members in case on
nonstock corporations, shall be necessary. The bylaws shall be (h)The manner of election or appointment
signed by the stockholders or members voting for them and and the term of officers other than directors
shall be kept in the principal office of the corporation, subject or trustees;
to the inspection of the stockholders or members during office
hours. A copy thereof, duly certified by a majority of the (i) The penalties for violation of the bylaws;
directors or trustees and countersigned by the secretary of the
corporation, shall be filed with the Commission and attached to
(j) In the case of stock corporations, the
the original articles of incorporation.
manner of issuing stock certificates; and
(b) The time and manner of calling and Whenever the bylaws are amended or new bylaws are
conducting regular or special meetings and adopted, the corporation shall file with the Commission such
mode of notifying the stockholders or amended or new bylaws and, if applicable, the stockholders' or
members thereof; members' resolution authorizing the delegation of the power to
amend and/or adopt new bylaws, duly certified under oath by
(c) The required quorum in meetings of the corporate secretary and majority of the directors or
stockholders or members and the manner of trustees.
voting therein;
The amended or new bylaws shall only be effective upon the
(d) The modes by which a stockholder, issuance by the Commission of certification that the same is in
member, director or trustees may attend accordance with this Code and other relevant laws.
meetings and cast their votes;
TITLE VI
(e) The form for proxies of stockholders and MEETINGS
members and the manner of voting them;
Section 48. Kinds of Meetings. - Meeting of the directors, Code and the rules and the Commission may
trustees, stockholders, or members may be regular or special. prescribe, a statement on the adequacy of
the corporation's internal controls or risk
Section 49. Regular and Special Meetings of Stockholders or management systems, and a statement of all
Members. - Regular meetings of stockholders or members shall external audit and non-audit fees;
be held annually on a date fixed in the bylaws, or if not so
fixed in the bylaws, or if not so fixed, on any date After April (e) An explanation of the dividend policy and
15 of every year as determined by the board of directors or the fact of payment of dividends or the
trustees: Provided, further, That written notice of regular reasons for nonpayment thereof;
meetings may be sent to all stockholders or members of record
through electronic mail or such other manner as the (f) Director or trustee profiles which shall
Commission shall allow under its guidelines. include, among others, their qualifications
and relevant experience, length of service in
At each regular meeting of stockholders or members, the the corporation, trainings and continuing
board of directors or trustees shall endeavor to present to education attended, and their board
stockholders or members the following: representation in other corporations;
(a) The minutes of the most recent regular (g) A director or trustee attendance report,
meeting which shall include, among others: indicating the attendance of each of the
meetings of the board and its committees
(1) A description of the voting and and in regular or special stockholder
the vote tabulation procedures used meetings;
in the previous meetings;
(h) Appraisals and performance reports for
(2) A description of the opportunity the board and the criteria and procedure for
given to stockholders or members assessment;
to ask questions and record of the
question s asked and answers (i) A director or trustee compensation report
given; prepared in accordance with this Code and
the rules the Commission may prescribe;
(3) The matters discussed and
resolutions reached; (j) Director disclosures on self-dealings and
related party transactions; and/or
(4) A record of the voting results for
each agenda item; (k) The profiles of directors nominated ir
seeking election or reelection.
(5) A list of the director or trustees,
officers and stockholders or A director, trustee, stockholder, or member may propose any
members who attended the other matter for inclusion in the agenda at may regular
meeting; and meeting of stockholders or members.
(6) Such other items that the Special meetings of stockholders or members shall be held at
Commission may require in the any time deemed necessary or as provided in the bylaws:
interest of good corporate Provided, however, That at least one (1) week written notice
governance and protection of shall be sent to all stockholders or members, unless a different
minority stockholders; period is provided in the bylaws, law or regulation.
(b) A members' list for nonstock corporations A stockholder or member may propose the holding of a special
and, for stock corporations, material meeting and items to be included in the agenda.
information on the current stockholders, and
their voting rights; Notice of any meeting may be waived, expressly or impliedly,
by any stockholder or member: Provided, That general waivers
(c) A detailed, descriptive, balanced and of notice in the articles of incorporation or the bylaws shall not
comprehensible assessment of the be allowed: Provided, further, That attendance at a meeting
corporation's performance, which shall shall constitute a waiver of notice of such meeting, except
include information on any material change when the person attends a meeting for the express purpose of
in the corporation's business strategy, and objecting to the transaction of any business because the
other affairs; meeting is not lawfully called or convened.
(d) A financial report for the preceding year, Whenever for any cause, there is no person authorized or the
which shall include financial statements duly person authorized unjustly refuses to call a meeting, the
signed and certified in accordance wit this Commission, upon petition of a stockholder or member on a
showing of good cause therefor, may issue an order, directing All proceedings and any business transacted at a meeting of
the petitioning stockholder or member to call a meeting of he the stockholders or members, if within the powers or authority
corporation by giving proper notice required by this Code or of the corporation, shall be valid even if the meeting is
the bylaws. The petitioning stockholder or member shall improperly held or called: Provided, That all the stockholders
preside thereat until at least a majority of the stockholders or or members of the corporation are present or duly represented
members present have chosen from among themselves, a at the meeting and not one of them expressly states at the
presiding officer. beginning of the meeting that the purpose of their attendance
is to object to the transaction of any business because the
Unless the bylaws provide for a longer period, the stock and meeting is not lawfully called or convened.
transfer book or membership book shall be closed at least
twenty (20) days for regular meetings and seven (7) days for Section 51. Quorum in Meetings. - Unless otherwise provided
special meetings before the scheduled sate of the meeting. in this Code or in the bylaws, a quorum shall consist of the
stockholders representing a majority of the outstanding capital
In case of postponement of stockholders' or members' regular stock pr a majority of the members in the case of nonstock
meetings, written notice thereof and the reason therefor shall corporations.
be sent to all stockholders or members of record at least two
(2) weeks prior to the date of the meeting, unless a different Section 52. Regular and Special Meetings of Directors or
period is required under the bylaws, law or regulation. Trustees; Quorum. - Unless the articles of incorporation or the
bylaws provides for a greater majority, a majority of the
The right to vote of stockholders or members may be exercised directors or trustees as stated in the articles of incorporation
in person, through remote communication or in absentia. The shall constitute a quorum to transact corporate business, and
Commission shall issue the rules and regulations governing every decision reached by at least a majority of the directors or
participation and voting through remote communication or in trustees constituting a quorum, except for the election of
absentia, taking into account the company’s scale, number of officers which shall require the vote of a majority of all the
stockholders or members, structure, and other factors members of the board, shall be valid as a corporate act.
consistent with the protection and promotion of shareholders'
or members' meetings. Regular meetings of the board of directors or trustees of every
corporation shall be held monthly, unless the bylaws provide
Section 50. Place and Time of Meetings of Stockholders or otherwise.
Members. - Stockholders' or members' meetings, whether
regular or special, shall be held in the principal office of the Special meetings of the board of directors or trustees may be
corporation as set forth in the articles of incorporation, or if not held at any time upon the call of the president or as provided
practicable, in the city or municipality where the principal office in the bylaws.
of the corporation is located: Provided, That any city of
municipality in Metro Manila, Metro Cebu, Metro Davao, and Meetings of directors or trustees of corporations may be held
other Metropolitan areas shall, for purposes of this section, be anywhere in or outside the Philippines, unless the bylaws
considered a city or municipality. provide otherwise. Notice of regular or special meetings stating
the date, time and place of the meeting must be sent to every
Notice of meetings shall be sent through the means of director or trustee at least two (2) days prior to the scheduled
communication provided in the bylaws, which notice shall state meeting, unless a longer time is provided in the bylaws. A
the time, place and purpose of the meetings. director or trustee may waive this requirement, either
expressly or impliedly.
Each notice of meeting shall further be accompanied by the
following: Directors or trustees who cannot physically attend or vote at
board meetings can participate and vote through remote
(a) The agenda for the meeting; communication such as videoconferencing, teleconferencing, or
other alternative modes of communication that allow them
reasonable opportunities to participate. Directors or trustees
(b) A proxy which shall be submitted to the cannot attend or vote by proxy at board meetings.
corporate secretary within a reasonable time
prior to the meeting;
A director or trustee who has a potential interest in any related
party transaction must recuse from voting on the approval of
(c) When attendance, participation, and
the related party transaction without prejudice to compliance
voting are allowed by remote communication with the requirments of Section 31 of this Code.
or in absentia, the requirements and
procedures to be followed when a
stockholder or member elects either option; Section 53. Who Shall Preside at Meetings. - The chairman
and or, in his absence, the president shall preside at all meetings of
the directors or trustees as well as of the stockholders or
members, unless the bylaws provide otherwise.
(d) When the meeting is for the election of
directors or trustees, the requirements and
procedure for nomination and election. Section 54. Right to Vote of Secures Creditors and
Administrators. - In case a stockholder grants security interest
in his or her shares in stock corporations, the stockholder-
grantor shall have the right to attend and vote at meetings of A certified copy of such agreement shall be filed with the
stockholders, unless the secured creditor is expressly given by corporation and with the Commission; otherwise, the
the stockholder-grantor such right in writing which is recorded agreement is ineffective and uneforceable. The certificate or
in the appropriate corporate books. certificates of stock covered by the voting trust agreement
shall be cancelled and new ones shall be issued pursuant to
Executors, administrators, receivers, and other legal said agreement. The books of the corporation shall state that
representatives duly appointed by the court may attend and the transfer in the name of the trustee or trustees is made
vote on behalf of the stockholders or members without need of pursuant to the voting trust agreement.
any written proxy.
The trustee or trustees shall execute and deliver to the
Section 55. Voting in Case of Joint Ownership of Stock. - The transferors, voting trust certificates, which shall be transferable
consent of all the co-owners shall be necessary in voting in the same manner and with the same effect as certificates of
shares of stock owned jointly by two (2) or more persons, stock.
unless there is a written proxy, signed by all the co-owners,
authorizing one (1) or some of them or any other person to The voting trust agreement filed with the corporation shall be
vote such share or shares: Provided, That when the shares are subject to examination by any stockholder of the corporation in
owned in an "and/or" capacity by the holders thereof, any one the same manner as any other corporate book or record:
of the joint owners can vote said shares or appoint a proxy Provided, That both the trustor and the trustee or trustees may
therefor. exercise the right of inspection of all corporate books and
records in accordance with the provisions of this Code.
Section 56. Voting Right for Treasury Shares. - Treasury
shares shall have no voting right as long as such shares remain Any other stockholder may transfer the shares to the same
in the Treasury. trustee or trustees upon the term and conditions stated in the
voting trust agreement, and thereupon shall be bound by all
Section 57. Manner of Voting; Proxies. - Stockholders and the provisions of said agreement.
members may vote in person or proxy in all meetings of
stockholders or members No voting trust agreement shall be entered into for purposes of
circumventing the laws against anti-competitive agreements,
When so authorized in the bylaws or by a majority of the board abuse of dominant position, anti-competitive mergers and
of directors, the stockholders or members of corporations may acquisitions, violation of nationality and capital requirements,
also vote through remote communication or in absentia: or for the perpetuation of fraud.
Provided, That the votes are received before the corporation
finishes the tally of votes. Unless expressly renewed, all rights granted in a voting trust
agreement shall automatically expire at the end of the agreed
A stockholder or member who participates through remote period. The voting trust certificates as well as the certificate of
communication or in absentia shall be deemed present for stock in the name of the trustees shall thereby be deemed
purposes of quorum. cancelled and new certificates of stock shall be reissued in the
name of the trustors.
The corporation shall establish the appropriate requirements
and procedures for voting through remote communication and The voting trustee or trustees may vote by proxy or in any
in absentia, taking into account the company's scale, number manner authorized under the bylaws unless the agreement
of shareholders or members, structure and other factors provides otherwise.
consistent with the basic right of corporate suffrage.
TITLE VII
Proxies shall be in writing, signed and filed, by the stockholder STOCKS AND STOCKHOLDERS
or member, in any form authorized in the bylaws and received
by the corporate secretary within a reasonable time before the Section 59. Subscription Contract. - Any contract for the
scheduled meeting. Unless otherwise provided in the proxy acquisition of unissued stock in an existing corporation or a
form, it shall be valid only for the meeting for which it is corporation still to be formed shall be deemed a subscription
intended. No proxy shall be valid and effective for a period within the meaning of this Title, notwithsatnding the fact that
longer than five (5) years at any one time. the parties refer to it as a purchase or some other contract.
Section 58. Voting Trusts. - One or more stockholders of Section 60. Pre-incorporation Subscription. - A subscription of
stock corporation may create a voting trust for the purpose of shares in a corporation till to be formed shall be irrevocable for
conferring upon a trustee or trustees the right to vote and a period of at least six (6) months from the date of
other rights pertaining to the shares for a period not exceeding subscription, unless all of the other subscribers consent to the
five (5) years at any time: Provided, That in the case of a revocation, or the corporation fails to incorporate wuthin the
voting trust specially required as a condition in a loan same period or within a longer period stipulated in the contract
agreement, said voting trust may be for a period exceeding of subscription. No pre-incorporation is submitted to the
five (5) years but shall automatically expire upon full payment Commission .
of the load. A voting trust agreement must be in writing and
notarized, and shall specify the terms and conditions thereof.
Section 61. Consideration for Stocks. - Stocks shall not be transferred. The Commission may require corporations whose
issued for a consideration less than the par or issued price securities are traded in trading markets and which can
thereof. Consideration for the issuance of stock may be: reasonably demonstrate their capability to do so to issue their
securities or shares of stocks in uncertificated or scripless form
(a) Actual cash paid to the corporation; in accordance with the rules of the Commission.
(b) Property, tangible or intangible, actually No shares of stock against which the corporation holds any
received by the corporation and necessary or unpaid claim shall be transferable in the books of the
convenient for its use and lawful purposes at corporation.
a fair valuation equal to the par or issued
value of the stock issued; Section 63. Issuance of Stock Certificates. - No certificate of
stock shall be issued to a subscriber until the full amount of
(c) Labor performed for or services actually subscription together with interest and expenses (in case of
rendered to the corporation; delinquent shares), if any is due, has been paid.
(d) Previously incurred indebtedness of the Section 64. Liability of Directors for Watered Stocks. - A
corporation; director or officer of a corporation who: (a) consents to the
issuance of stocks for a consideration less than its par or
issued value: (b) consents to the issuance of stocks for the
(e) Amounts transferred from unrestricted consideration other than cash, valued in excess of its fair
retained earnings to stated capital;
value; or (c) having knowledge of the insufficient
consideration, does not file written objection with the
(f) Outstanding shares exchanged for stocks corporate secretary, shall be liable to the corporation or its
in the event of reclassification or conversion; creditors, solidarily with the stockholder concerned for the
differnce between the value receive at the time of issuance of
(g) Shares of stock in another corporation; the stock and the par or issued value of the same.
and/or
Section 65. Interest on Unpaid Subscriptions. - Subscribers to
(h) Other generally accepted form of stock shall be liable to the corporation for interest on all unpaid
consideration. subscriptions from the date of subscription, if so required by
and at the rate of interest fixed in the subscription contract. If
no rate of interest is fixed in the subscription contract. If no
Where the consideration is other than actual cash, or consists
rate of interest is fixed in the subscription contract, the
of intangible property such as patents or copyrights, the
prevailing legal rate shall apply.
valuation thereof shall initially be determined by the
stockholders or the board of directors, subject to the approval
of the Commission. Section 66. Payment of Balance of Subscription. - Subject to
the provisions of the subscription contract, the board of
directors may, at any time, declare due and payable to the
Shares of stock shall not be issued in exchange for promissory
corporation unpaid subscription and may collect the same or
notes or future service. The same considerations provided in
such percentage thereof, in either case, with accrued interest,
this section, insofar as applicable, may be used for the
if any, as it may dem necessary.
issuance or bonds by the corporation.
(c) The names and addresses of all the Any officer or agent of the corporation who shall refuse to
members of the board of directors or allow the inspection and/or reproduction of records in
trustees and the executive officers; accordance with the provisions of this Code shall be liable to
such director, trustee, stockholder or member for damages,
(d) A record of all business transactions; and in addition, shall be guilty of an offense which shall be
punishable under Section 161 of this Code: Provided, That if
such refusal is made pursuant to a resolution or order of the
(e) A record of the resolutions of the board
board of directors or trustees, the liability under this section for
of directors or trustees and of the such action shall be imposed upon the directors or trustees
stockholders or members;
who voted for such refusal: Provided, further,That it shall be a
defense to any action under this section that the person
(f) Copies of the latest reportorial demanding to examine and copy excerpts from the
requirements submitted to the Commission; corporation's record or minutes of such corporation or of any
and other corporation, or was not acting in good faith or of any
other corporation or was not acting in good faith or for a
(g) The minutes of all meetings of legitimate purpose in making the demand to examine or
stockholders or members, or of the board of reproduce corporate records or is a competitor, director,
directors or trsutees. Such minutes shall set officer, controlling stockholder or otherwise represents the
forth in detail among others; the time and interest of a competitor.
the place of the meeting held, how it was
authorized, the notice given, the agenda If the corporation denies or does not act on a demand for
therefor, whether the meeting was regular or inspection and/or reproduction, the aggrieved party may report
special, its object if special, those present such denial or inaction to the Commission Within five (5) days
and absent, and every act done or ordered from receipt of such report, the Commission shall conduct a
done at the meeting. Upon the demand of a summary investigation and issue an order directing the
director trustee, stockholder or member, the inspection or reproduction of the requested records.
time when any director, trustee, stockholder
or member entered or left the meeting must
Stock corporations must also keep a stock and transfer book,
be noted in the minutes; and on a similar which shall contain a record of all stocks in the names of the
demand, the yeas and nays must be taken
stockholders alphabetically arranged; the installments paid and
on any motion or proposition, and a record unpaid on all stocks for which subscription has been made, and
thereof carefully made. The protest of a
the date of payment of any installment; a statement of every
director, trustee, stock holder or member on alienation, sale or transfer of stock made, the date thereof, by
any action or proposed action must be
and to whom made; and such other entries as the bylaws may
recorded in full upon their demand. prescribed, The stock and transfer book shall be kept in the
principal office of the corporation or in the office of its stock
Corporate records, regardless of the form in which they are transfer agent and shall be open or inspection by any director
stored, shall be open to inspection by any director, trustee, or stockholder of the corporation at reasonable hours on
stockholder or member of the corporation in person or by a business days.
representative at reasonable hours on business days, and a
demand in writing may be made by such director , trustee or
A stock transfer agent or one engaged principally in the
stockholder at their expense, for copies of such records or business of registering transfers of stocks in behalf of a stock
excerpts from said records. The inspecting or reproducing
corporation shall be allowed to operate in the Philippines upon
party shall remain bound by confidentiality rules under securing a license from the Commission and the payment of a
prevailing laws, such as the rules on trade secrets or processes
fee to be fixed by the Commission, which shall be renewable
under Republic Act No. 8293, otherwise known as the annually: Provided, That a stock corporation is not precluded
"Intellectual Property Code of the Philippines", as amended,
from performing or making transfer of its own stocks, in which
Republic Act No. 10173, otherwise known as the "Data Privacy case all the rules and regulations imposed on stock transfer
Act of 2012" Republic Act No. 8799, otherwise known as "The
agents, except the payment of a license fee herein provided,
Securities Regulation Code", and the Rules of Court. shall be applicable: Provided, further, That the Commission
may require stock corporations which transfer and/or trade
A requesting party who is not a stockholder or member of stocks in secondary markets to have an independent transfer
record, or is a competitor, director, officer, controlling agent.
stockholder or otherwise represents the interests of a
competitor shall have no right to inspect or demand Section 74. Right to Financial Statements. - A corporation
reproduction of corporate records.
shall furnish a stockholder or member, within ten (10) days
from receipt of their written request, its most recent financial
Any stockholder who shall abuse the rights granted under this statement, in the form and substance of the financial reporting
section shall be penalized under Section 158 of this Code, required by the Commission.
without prejudice to the provisions of Republic Act No. 8293,
otherwise known as the "Intellectual Property Code of the
At the regular meeting of stockholders or members, the board corporation in the case of stock corporations or at least two-
of directors or trustees shall present to such stockholders or thirds (2/3) of the members in the case of nonstock
members a financial report of the operations of the corporation corporations shall be necessary for the approval of such plan.
for the preceding year, which shall include financial Any dissenting stockholder may exercise the right of appraisal
statements, duly signed and certified in accordance with this in accordance with this Code: Provided, That if after the
Code, and the rules the Commission may prescribe. approval by the stockholders of such plan, the board of
directors decides to abandon the plan, the right of appraisal
However, if the total assets or total liabilities of the corporation shall be extinguished.
are less than Six hundred thousand pesos (₱600,000.00), or
such other amount as may be determined appropriate by the Any amendment to the plan of merger or consolidation may be
Department of Finance, the financial statements may be made: Provided, That such amendment is approved by a
certified under oath by the treasurer and the president. majority vote of the respective boards of directors or trustees
of all the constituents corporations and ratified by the
TITLE IX affirmative vote of stockholders representing at least two-
MERGER AND CONSOLIDATION thirds (2/3) of the outstanding capital stock or of two-thirds
(2/3) of the members of each of the constituents corporations.
Such plan, together with any amendment, shall be considered
Section 75. Plan of Merger or Consolidation. - Two (2) or as the agreement of merger or consolidation.
more corporations may merge into a single corporation which
shall be one of the constituents corporations or may
consolidate into a new single corporation which shall be the Section 77. Articles of Merger or Consolidation. - After the
consolidated corporation. 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
The board of directors or trustees of each corporation, party to
be signed by the president or vice president and certified by
the merger or consolidation, shall approved a plan of merger the secretary or assistant secretary of each corporation setting
or consolidation, shall approved a plan of merger or
forth
consolidation, shall approve a plan of merger or consolidation
setting forth the following:
(a) The plan of the merger or the plan of
consolidation;
(a) The names of the corporations proposing
to merge or consolidate hereinafter referred
to as the constituent corporations; (b) As to stock corporations, the number of
shares outstanding, or in the case of
nonstock corporations, the number of
(b) The terms of the merger or consolidation
members;
and the mode of carrying the same into
effect;
(c) As to each corporation, the number of
shares or members voting for or against
(c) A statement of the changes, if any, in the such plan, respectively;
articles of incorporation of the surviving
corporation in case of merger; and, in case
of consolidation, all the statements required (d) The carrying amounts and fair values of
to be set forth in the articles of incorporation the assets and liabilities of the respective
for corporations organized under this Code; companies as of the agreed cut-off date;
and
(e) The method to be used in the merger or
(d) Such other provisions with respect to the consolidation of accounts of the companies;
proposed merger or consolidation as are
deemed necessary or desirable. (f) The provisional or pro forma values, as
merged or consolidated, using the
Section 76. Stockholders' or Members' Approval. - Upon accounting method; and
approval by a majority vote of each of the board of directors or
trustees of the constituent corporations of the plan of merger (g) Such other information as may be
or consolidation, the same shall be submitted for approval by prescribed by the Commission.
the stockholders or members of each of such corporations at
separate corporate meetings duly called for the purpose. Section 78. Effectivity of Merger or Consolidation. - The
Notice of such meetings shall be given to all stockholders or articles of merger or of consolidation, signed and certified as
members of the respective corporations in the same manner as required by this Code, shall be submitted to the Commission
giving notice of regular or special meetings under Section 49 of for its approval: Provided, That in the case of merger or
this Code. The notice shall state the purpose of the meeting consolidation of banks or banking institutions, loan
and include a copy or a summary of the plan of merger or associations, trust companies, insurance companies, public
consolidation. utilities, educational institutions, and other special corporations
governed by special laws, the favorable recommendation of
The affirmative vote of stockholders representing at least two- the appropriate government agency shall first be obtained. If
thirds (2/3) of the outstanding capital stock of each the Commission is satisfied that the merger or consolidation of
the corporations concerned is consistent with the provisions of in any respect superior to those of
this Code and existing laws, it shall issue a certificate outstanding shares of any class, or of
approving the articles and plan or merger or of consolidation, extending or shortening the term of
at which time the merger or consolidation shall be effective. corporate existence;
If upon investigation, the Commission has reason to believe (b) In case of sale, lease, exchange,
that the proposed merger or consolidation is contrary to or transfer, mortgage, pledge or other
inconsistent with he provisions of this Code or existing laws, it disposition of all or substantially all of the
shall set a hearing to give the corporations concerned the corporate property and assets as provided in
opportunity to be heard. Written notice of the date, time, and this Code;
place of hearing shall be given to each constituent corporation
at least two (2) weeks before said hearing. The Commission (c) In case of merger or consolidation; and
shall thereafter proceed as provided in this Code.
(d) In case of investment of corporate funds
Section 79. Effects of Merger or Consolidation. - The merger for any purpose other than the primary
of consolidation shall have the following effects: purpose of the corporation.
(a) The constituent corporations shall Section 81. How Right is Exercised. - The dissenting
become a single corporation shall become a stockholder who votes against a proposed corporate action
single corporation which, in case of merger, may exercise the right of appraisal by making a written
shall be the surviving corporation designated demand on the corporation for the payment of the fair value of
in the plan of merger; and in case of shares held within thirty (30) days from the date on which the
consolidation, shall be the consolidated vote was taken: Provided, That failure to make the demand
corporation designated in the plan of within such perios shall be deemed a waiver of the appraisal
consolidation; right. If the proposed corporate action is implemented, the
corporation shall pay the stockholder, upon surrender of the
(b) The separate existence of the constituent certificate or certificates of stock representing the stockholder's
corporations shall cease, except that of the shares, the fair value thereof as of the day before the vote was
surviving or the consolidated corporation; taken excluding any appreciation or depreciation in anticipation
of such corporate action.
(c) The surviving or the consolidated
corporation shall possess all the right, If, within sixty (60) days form the approval of the corporate
privileges, immunities and franchises of each action by the stockholders, the withdrawing stockholder and
constituent corporation; and all real or the corporation cannot agree on the fair value of the shares, it
personal property, all receivables due on shall be determined and appraised by three (3) disinterested
whatever account, including subscriptions to persons, one of whom shall be named by the stockholder,
shares and other choses in action, and every another by the corporation and the third by the two (2) thus
other interest of, belonging to, or due to chosen. The findings of the majority of the appraisers shall be
each constituents corporation, shall be final, and their award shall be paid by the corporation within
deemed transferred to and vested in such thirty (30) days after such award is made: Provided, That no
surviving or consolidated corporation as payment shall be made to any dissenting stockholder or unless
though such surviving or consolidated the corporation has unrestricted retained earnings in its books
corporation had itself incurred such liabilities to cover such payment: Provided, further, That upon payment
or obligations; and any pending claim, action by the corporation of the agreed or awarded price, the
or proceeding brought by or against any stockholder shall forthwith transfer the shares to the
constituent corporation may be prosecuted corporation.
by or against the surviving or consolidated
corporation. The rights of creditors or liens Section 82. Effect of Demand and Termination of Right. -
upon the property of such constituent From the time of demand for payment of the fair value of a
corporations shall not be impaired by the stockholder's shares until either the abandonment of the
merger or consolidation. corporate action involved or the purchase of the said shares by
the corporation, all rights accruing to such shares, including
TITLE X voting and dividend rights shall immediately be restored.
APPRAISAL RIGHT
Section 83. When Right to Payment Ceases. - No demand for
Section 80. When the Right of Appraisal May Be Exercised. - payment under this Title may be withdrawn unless the
Any stockholder of a corporation shall have the right to dissent corporation consents thereto. If, however, such demand for
and demand payment of the fair value of the shares in the payment is withdrawn with the consent of the corporation, or if
following instances: the proposed corporate action is abandoned or rescinded by
the corporation or disapproved by the Commission where such
(a) In case an amendment to the articles of approval is necessary, or if the Commission where such
incorporation has the effect of changing or stockholder is not entitled to the appraisal right, then the right
restricting the rights of any stockholder or of the stockholder to be paid the fair value of the shares shall
class of shares, or of authorizing preferences cease, the status as the stockholder shall be restored, and all
dividend distributions which would have accrued on the shares Unless otherwise provided in the articles of incorporation or
shall be paid to the stockholder. the bylaws, a member may vote by proxy, in accordance with
the provisions of this Code. The bylaws may likewise authorize
Section 84. Who Bears Costs of Appraisal. - The costs and voting through remote communication and/or in absentia.
expenses of appraisal shall be borne by the corporation, unless
the fair value ascertained by appraisers is approximately the Section 89. Nontransferability of Membership. - Membership
same as the price which the corporation may have offered to in a nonstock corporation and all rights arising therefrom are
pay the stockholder, in which the corporation may have personal and nontransferable, unless the articles of
offered to pay the stockholder, in which case they shall be incorporation or the bylaws otherwise provide.
borne by the latter. In the case of an action to recover such
fair value, all costs and expenses shall be assessed against the Section 90. Termination of Membership. - Membership shall
corporation, unless the refusal of the stockholder or receive be terminated in the manner and for the cause provided in the
payment was unjustified. articles of incorporation or the bylaws. Termination of
membership shall extinguish all rights of a member in the
Section 85. Notation on Certificates; Rights of Transferee. - corporation or in its property, unless otherwise provided in the
Within ten (10) days after demanding payment for shares held, articles of incorporation or the bylaws.
a dissenting stockholder shall submit the certificates of stock
representing the shares to the corporation for notation that CHAPTER II
such representing the shares to the corporation for notation TRUSTEES AND OFFICERS
that such shares are dissenting shares. Failure to do so shall,
at the option of the corporation, terminate the rights under this
Section 91. Election and Term of Trustees. - The number of
Title. If shares represented by the certificates bearing such
trustees shall be fixed in the articles of incorporation or bylaw
notation are transferred, and the certificates consequently
which may or may not be more than fifteen (15). They shall
cancelled, the rights of the transferor as a dissenting
hold office for not more than three (3) years until their
stockholder under this Title shall cease and the transferee shall
successors are elected and qualified. Trustees elected to fill
have all the rights of a regular stockholder; and all dividend
vacancies occurring before the expiration of a particular term
distributions which would have accrued on such shares shall be
shall hold office for the unexpired period.
paid to the transferee.
(e) In any other case, assets may be Section 96. Articles of Incorporation. - The articles of
distributed to such person, societies, incorporation of a close corporation may provide for:
organizations or corporations, whether or not
organized for profit, as may be specified in a (a) A classification of shares or rights, the
plan of distribution adopted pursuant to this qualifications for owning or holding the
Chapter. same, and restictions on their transfers,
subject to the provisions of the following
Section 94. Plan of Distribution of Assets. - A plan providing section;
for the distribution of assets, consistent with the provisions of
this Title, may be adopted by a nonstock corporation in the (b) A classification of director into one (1) or
process of dissolution in the following manner: more classes, each of whom may be voted
for and elected solely by a particular class of
(a) The board of trustees shall, by majority stock; and
vote, adopt a resolution recommending a
plan of distribution and directing the (c) Greater quorum or voting requirements in
submission thereof to a vote at a regular or the meetings of stockholders or directors
special meeting of members having voting than those provided in this Code.
rights;
The articles of incorporation of a close corporation may provide
(b) Each member entitled to vote shall be that the business of the corporation may provide that the
given a written notice setting forth the business of the corporation shall be managed by the
proposed plan of distribution or summary stockholders of the corporation rather than by a board of
thereof and the date, time and place of such directors. So long as this provision continues in effect, no
meeting within the time and in the manner meeting of stockholders need be called to elect directors:
provided in this Code for the giving of notice Provided, That the stockholders of the corporation shall be
of meetings; and deemed to be directors for the purpose of applying the
provisions of this Code, unless the context clearly requires
(c) Such plan of distribution shall be adopted otherwise: Provided, further, That the stockholders of the
upon approval of at least two-thirds (2/3) of corporation shall be subject to all liabilities of directors.
the members having voting rights present or
represented by proxy at such meeting. The articles of incorporation may likewise provide that all
officers ro employees or that specified officers or employees
TITLE XII shall be elected or appointed by the stockholders, instead of by
CLOSE CORPORATIONS the board of directors.
Section 97. Validity of Restrictions on Transfer of Shares. - contrary to subsections (a), (b) or (c), has
Restrictions on the right to transfer shares must appear in the been consented to by all stockholders of the
articles of incorporation, in the bylaws, as well as in the close corporation, or if the close corporation
certificate of stock; otherwise, the same shall not be binding has amended its articles of incorporation in
on any purchaser in good faith. Said restrictions shall not more accordance with this Title.
onerous than granting the existing stockholders or the
corporation the option to purchase the shares of the (f) The term "transfer", as used in this
transferring stockholder may sell their shares to any third section, is not limited to a transfeer for
person. value.
Section 98. Effects if Issuance or Transfer of Stock in Breach (g) The provisions of this section shall not
of Qualifying Conditions. - impair any right which the transferee may
have to either rescind the transfer or recover
(a) If a stock of a close corporation is issued the stock under any express or implied
or transferred to any person who is not warranty.
eligible to be a holder thereof under any
provision of the articles of incorporation, and Section 99. Agreements by Stockholders. -
if the certificate for such stock conspicuously
shows the qualifications of the persons
(a) Agreements duly signed and executed by
entitled to be holders of record thereof, such
and among all stockholders before the
person is conclusively presumed to have
formation and organization of a close
notice of the fact of the ineligibility to be a
corporation shall survive the incorporation
stockholder.
and shall continue to be valid and binding
between such stockholders, if such be their
(b) If the articles of incorporation of a close intent, to the extent that such agreements
corporation states the number of persons, are consistent with the articles of
not exceeding twenty (20), who are entitled incorporation, irrespective of where the
to be stockholders of record, and if the provisions of such agreements are contained
certificate for such stock conspicuously except those required by this Title to be
states such number, and the issuance or embodied in said articles of incorporation.
transfer of stock to any person would cause
the stock to be held by more than such
(b) A written agreement signed by two (2) or
number of persons, the person to whom
more stockholders may provide that in
such stock is issued of transferred is
exercising any voting right, the shares held
conclusively presumed to have notice of this
by them shall be voted as provided or as
fact.
agreed, or in accordance with a procedure
agreed upon by them.
(c) If a stock certificate of a close
corporation conspicuously shows a restriction
(c) No provision in a written agreement
on transfer of the corporation has been
signed by the stockholders, relating to any
issued or transferred has or is conclusively
phase of corporate affairs, shall be
presumed to have notice of the fact that the
stock in violation of such restriction, the invalidated between the parties on the
ground that its effect is to make them
transferee is conclusively presumed to have
partners among themselves.
notice of the fact that the stock was acquired
in violation of the restriction.
(d) A written agreement among some or all
the stockholders in a close corporation shall
(d) Whenever a person to whom stock of a
not be invalidated on the ground that it
close corporation has been issued or
relates to the conduct of the business and
transferred has or is conclusively presumed
affairs of the corporation as to restrict or
under this section to have notice of: (1) the
interfere with the discretion or powers of the
person's ineligibility to be a stockholder of
board of directors: Provided, That such
the corporation; or (2) that the transfer of
agreement shall impose on the stockholders
stock would cause the stock of the
who are parties thereto the liabilities for
corporation to be held by more than the
managerial acts imposed on directors by this
number of persons permitted under its
Code.
articles of incorporation ; or (3) that the
transfer violates a restriction on transfer of
stock, the corporation may, at its option, (e) Stockholders actively engaged in the
refuse to register the tansfer in the name of management or operation of the business
the transferee. and affairs of a close corporation shall be
held to strict fiduciary duties to each other
and among themselves. The stockholders
(e) The provisions of subsection (d) shall not
shall be personally liable for corporate torts
be applicable if the transfer of stock, though
unless the corporation has obtained agreement; (b) cancelling, altering or enjoining a resolution or
reasonably adequate liability insurance. act of the corporation or its board of directors, stockholders,
officers, or other person party to the action; (d) requiring the
Section 100. When a Board Meeting is Unnecessary or purchase at their fair value of shares of any stockholder, either
Improperly Held. - Unless the bylaws provide otherwise, any by the corporation regardless of the availability or unrestricted
action taken by the directors of a close corporation without a retained earnings in its, books or by the other stockholder; (e)
meeting called properly and with due notice shall nevertheless appointing a provisional director; (f) dissolving the corporation;
be deemed valid if: or (g) granting such other relief as the circumstances may
warrant.
(a) Before or after such action is taken, a
written consent thereto is signed by all the A provisional director shall be an impartial person who is
directors; or neither a stockholder nor a creditor of the corporation or any
of its subsidiaries or affiliates, and whose further qualifications,
if any, may be determined by the Commission. A provisional
(b) All the stockholders have actual or
director is not a receiver of the corporation and does not have
implied knowledge of the action and make the title and powers of a custodian or receiver. A provisional
no prompt objection in writing; or
director shall have all the rights and powers of a duly elected
director, including the right to be notified of and to vote at
(c) The directors are accustomed to take meetings of directors until removed by order of the
informal action with the express or implied Commission pr by all the stockholders. The compensation of
acquiescence of all the stockholders; or the provisional director shall be determined by agreement
between such provisional director and the corporation.
(d) All the directors have express or implied
knowledge of the action in question and Section 104. Withdrawal of Stockholder or Dissolution of
none of them makes prompt objection in Corporation. - In addition and without prejudice to other rights
writing. and remedies available under this Title, any stockholder of a
close corporation may, for any reason, compel the corporation
An action within the corporate powers taken at a meeting held to purchase shares held at fair value, which shall not be less
without proper call or notice is deemed ratified by a director than the par or issued value, when the corporation has
who failed to attend, unless after having knowledge thereof, sufficient assets in its books to cover its debts and liabilities
the director promptly files his written objection with the exclusive of capital stock: Provided, That any stockholder of a
secretary of the corporation. close corporation may, by written petition to the Commission,
compel the dissolution of such corporation whenever any acts
of the directors, officers or those in control whenever any acts
Section 101. Preemptive Right in Close Corporations. - The
of the directors, officers, or those in control of the corporation
preemptive right of stockholders in close corporations shall
are illegal, fraudulent, dishonest, oppressive or unfairly
extend to all stock to be issues, including reissuance of
prejudicial to the corporation or any stockholder, or whenever
services, or in payment or corporate debts, unless the article s
corporate assets are being misapplied or wasted.
of incorporation provide otherwise.
TITLE XIII
Section 102. Amendment of Articles of Incorporation. - Any
SPECIAL CORPORATIONS
amendment to the articles of incorporation which seeks to
delete or remove any provision required by this Title or to
reduce a quorum or voting requirement stated in said articles CHAPTER I
of incorporation shall require affirmative vote of at least two- EDUCATIONAL CORPORATIONS
thirds (2/3) of the outstanding capital, whether with or without
voting rights, or of such greater proportion of shares as may Section 105. Incorporation. - Education corporations shall be
be specifically provided in the articles of incorporation for governed by special laws and by the general provisions of this
amending, deleting or removing any of the aforesaid Code.
provisions, at a meeting duly called for this purpose.
Section 106. Board of Trustees. - Trustees of educational
Section 103. Deadlocks. Nowithstanding any contrary institutions organized as nonstock corporations shall not be
provision in the close corporation's articles of incorporation, less than five (5) nor more than fifteen (15): Provided, That
bylaws, or stockholders' agreement, if the directors or the number of trustees shall be in multiples of five (5).
stockholders are so divided on the management of the
corporation's business and affairs that the votes required for a
Unless otherwise provided in the articles of incorporation or
corporate action canot be obtained, with the consequence that bylaws, the board of trustees of incorporated schools, colleges,
the business and affairs that the votes required for that the
or other institutions of learning shall, as soon as organized, so
business of the corporation can lo longer be conducted to the classify themeselves that the term of office of one-fifth (1/5) of
advantage of the stockholders generally, the Commission,
their number shall expire every year. Trustees thereafter
upon written petition by any stockholder, shall have the power elected to fill vacancies, occurring before the expiration of a
to arbitrate the dispute. In the exercise o such power, the
particular term shall hold office only for the unexpired period.
Commission shall have authority to make appropriate orders, Trustees elected thereafter to fill vacancies caused by
such as: (a) cancelling or altering any provision contained in
expiration of term shall hold office for five (5) years. A majority
the articles of incorporation, bylaws, ot any stockholders' of the trustees shall constitute a quorum for the transaction of
business. The powers and authority of trustees shall be defined The articles of incorporation may include any other provisions
in the bylaws. not contrary to law for the regulation of the affairs of the
corporation.
For institutions organized as stock corporations, the number
and term of directors shall be governed by the provisions on Section 110. Submission of the Articles of Incorporation. -
stock corporations. The articles of the incorporation must be verified, bu affidavit
or affirmation of the chief archbishop, bishop, priest, minister,
CHAPTER II rabbi, presiding elder, as the case may be, and accompanied
RELIGIOUS CORPORATIONS by a copy of the commission, certificate of election or letter of
appointment of such chief archbishop, bishop, priest, minister,
rabbi or presiding elder, as the case may be, and accompanied
Section 107. Classes of Religious Corporations. - Religious by a copy of the commission, certificate of election or letter of
corporations may be incorporated by one (1) or more persons.
appointment of such chief archbishop, bishop, priest, minister,
Such corporations may be classified into corporations sole and rabbi, or presiding elder, duly certified to be correct by any
religious societies.
notary public.
Religious corporations shall be governed by this Chapter and From and after filing with the Commission of the said articles
by the general provisions on nonstock corporations insofar as
of incorporation, verified by affidavit or affirmation, and
applicable. accompanied by the documents mentioned in the preceding
paragraph, such chief archbishop, bishop, priest, minister,
Section 108. Corporation Sole. - For the purpose of rabbi, or presiding elder shall become a corporation sole and
administering and managing, as trustee, the affairs, property all temporalities, estate and properties of the religious
and temporalities of any religious denomination, sect or denomination, sect or church theretofore administered or
church, a corporation sole may be formed by the chief manage as such chief archbishop, bishop, priest, minister,
archbishop, bishop, priest, minister, rabbi, or other presiding rabbi, or presiding elder shall be personally held in trust as a
elder of such religious denomination, sect or church. corporation sole, for the use, purpose, exclusive benefit and on
behalf of the religious denomination, sect or church, including
Section 109. Articles of Incorporation. - In order to become a hospitals, schools, colleges, orphan asylums parsonages, and
corporation sole, the chief archbishop, bishop, priest, minister, cemeteries thereof.
rabbi, or presiding elder of any religious denomination, sect or
church must file with the Commission articles of incorporation Section 111. Acquisition and Alienation of Property. - A
setting forth the following: corporation sole may purchase and hold real estate and
personal property for each church, charitable, benevolent, or
(a) That the applicant chief archbishop, educational purposes, and may received bequests or gifts for
bishop, priest. Minister, rabbi, or presiding such purposes. Such corporation may sell or mortgage real
elder represents the religious denomination, property held by it by obtaining an order for that purpose from
set or church which desires to become a the Regional Trial Court of the province where the property is
corporation sole; situated upon proof that the notice of the application for leave
to sell or mortgage has been made through publication or as
directed by the Court, and that it is in the interest of the
(b) That the rules, regulations and discipline
corporation that leave to sell or mortgage be granted. The
of the religious denomination, sect or church
application for leave to sell or mortgage must be made by
are consistent with becoming a corporation
petition, duly verified, by the chief archbishop, bishop, priest,
sole and do not forbid it;
minister, rabbi, or presiding elder acting as corporation sole,
and may be opposed by any member of the religious
(c) That such chief archbishop, bishop, denomination, sect or church represented by the corporation
priest, minister, rabbi or presiding elder is sole: Provided, That in cases where the rules, regulations, and
charged with the administration of the discipline of the religious denomination, set or church, religious
temporalities and the management of the society, or colder concerned represented by such corporation
affairs, estate and properties of the religious sole regulate the method of acquiring, holding, selling, and
denomination, sect or church within the mortgaging real estate and personal property, such rules,
territorial jurisdiction, so described succinctly regulations and discipline shall govern, and the intervention of
in the articles of incorporation; the courts shall not be necessary.
(d) The manner by which vacancy occurring Section 112. Filling of Vacancies. - The successor in the office
in the office of chief archbishop, bishop, of any chief archbishop, bishop, priest, minister, rabbi, or
priest, rabbi or presiding elder is required to presiding elder in a corporation sole shall become the
be filled, according to the rules, regulations corporation sole on their accession to office and shall be
or discipline of the religious denomination, permitted to transact business as such upon filing a copy of
sect or church; and their commission, certificate of election, or letters of
appointment, duly certified by any notary public with the
(e) The place where the principals office of Commission.
the corporation sole is to be established and
located, which place must be within the
territory of the Philippines.
During any vacancy in the office of chief archbishop, bishop, denomination, sect or church of which it
priest, minister, rabbi, or presiding elder of any donomination, forms part;
sect or church incorporated as a corporate sole, the person or
persons authorized by the rules, regulations or discipline of the (d) That the religious society or religious
religious denomination, sect or church represented by the order, or diocese, synod, or district
corporation sole to administer the temporalities and manage organization desires to incorporate for the
the affairs, estate, and properties of the corporation sole shall administration of its affairs, properties and
exercise all the powers and authority of the corporation sole estate;
during such vacancy.
(e) The place within the Philippines where
Section 113. Dissolution. - A corporation sole may be dissolve the principal office of the corporation is to be
and its affairs settled voluntarily by submitting to the established and located; and
Commission a verified declaration of dissolution, setting forth:
(f) The names, nationalities, and residence
(a) The name of the corporation; addresses of the trustees, not less than five
(5) no more than fifteen (15), elected by the
(b) The reason of dissolution and winding religious society or religious order, or the
up; diocese, synod or district organization to
serve for the first year or such other period
(c) The authorization for the dissolution of as may be prescribed by the laws of the
the corporation by the particular religious religious society or religious order, or of the
denomination, sect or church; and diocese, synod, or district organization.
Section 114. Religious Societies. - Unless forbidden by the Section 116. One Person Corporation. - A One Person
competent authority, the Constitution, pertinent, rules , Corporation is a corporation with a single stockholder:
regulations, or discipline of the religious denomination, sect or Provided, That only a natural person, trust, or an estate may
church of which it is part, any religious society, religious order, form a One Person Corporation.
diocese, or synod, or district organization of any religious
denomination, sect or church, may, upon written consent Banks and quasi-banks, preneed, trust, insurance, public and
and/or by an affirmative vote at a meeting called for the publicly-listed companies, and non-chartered government-
purpose of at least two-thirds (2/3) of its membership, owned and -controlled corporations may not incorporate as
incorporate for the administration of its temporalities or for the ONe Person Corporations: Provided, further, That a natural
management of its affairs, properties, and estate by filing the person who is licensed to exercise a profession may not
management of its affairs, properties, and estate by filing with organize as a One Person Corporation for the purpose of
the Commission, articles of incorporation verified by the exercising such profession except as otherwise provided under
affidavit of the presiding elder, secretary, or clerk or other special laws.
member of such religious society or religious denomination,
sect or church, setting forth the following: Section 117. Minimum Capital Stock Not Required for One
Person Corporation. - A One Person Corporation shall not be
(a) That the religious society or religious required to have a minimum authorized capital stock except as
order, or diocese, synod, or district otherwise provided by special law.
organization is a religious organization of
religious denomination, sect or church; Section 118. Articles of Incorporation. A One Person
Corporation shall file articles of incorporation in accordance
(b) That at least two-thirds (2/3) of its with the requirements under Section 14 of this Code. It shall
membership has given written consent or likewise substantially contain the following:
has voted to incorporate, at a duly convened
meeting of the body; (a) If the single stockholder is a trust or an
estate, the name, nationality, and residence
(c) That the incorporation of the religious of the trustee, administrator, executor,
society or religious order, or diocese, synod, guardian, conservator, custodian, or other
or district organization is not forbidden by person exercising fiduciary duties together
competent, authority or by the Constitution, with the proof of such authority to act on
rules, regulations or discipline of the religious behalf of the trust or estate; and
(b) Name, nationality, residence of the Section 124. Nominee and Alternate Nominee. - The single
nominee and alternate nominee, and the stockholder shall designate a nominee and an alternate
extent, coverage and limitation of the nominee who shall, in the event of the single stockholder's
authority. death or incapacity, take the place of the single stockholder as
director and shall manage the corporation's affairs.
Section 119. Bylaws. - The One Person Corporation is not
required to submit and file corporate bylaws. The articles of incorporation shall state the names, residence
addresses and contact details of the nominee and alternate
Section 120. Display of Corporate Name. - A One Person nominee, as well as the extent and limitations of their authority
Corporation shall indicate the letters "OPC" either below or at in managing the affairs of the One Person Corporation until the
the end of its corporate name. stockholder, by self determination, regains the capacity to
assume such duties.
Section 121. Single Stockholder as Director, President. - The
single stockholder shall be the sole director and president of In case of death or permanent incapacity of the single
the One Person Corporation. stockholder, the nominee shall sot as director and manage the
affairs of the One Person Corporation until the legal heirs of
the single stockholder have been lawfully determined, and the
Section 122. Treasurer, Corporate Secretary, and Other
heors have designated one of them or have agreed that the
Officers. - Within fifteen (15) days from the issuance of its estate shall be the single stockholder of the One Person
certificate or incorporation, the One Person Corporation shall
Corporation.
appoint a treasurer, corporate secretary, and other officers as
it may deem necessary, and notify the Commission thereof
within five (5) days from appointment. The alternate nominee shall sit as director and manage the
One Person Corporation in case of the nominee's inability,
incapacity, death, or refusal to discharge the functions as
The single stockholder may not be appointed as the corporate
director and manager of the corporation, and only for the
secretary. same term and under the same conditions applicable to the
nominee.
A single stockholder who is likewise the self-appointed
treasurer of the corporation shall give a bond to the Section 126. Change of Nominee or Alternate Nominee. - The
Commission in such a sum as may be required: Provided, That
singe stockholder may, at any time, change its nominee and
the said stockholder/treasurer shall undertake in writing to alternate nominee by submitting to the Commission the names
faithfully administer the One person Corporation's funds to be
of the new nominees and their corresponding written consent.
received as treasurer, and to disburse and invest the same For this purpose, the articles of incorporation need not be
according to the articles of incorporation as approved by the
amended.
Commission. The bond shall be renewed every two (2) years or
as often as may be required.
Section 127. Minute Book. - A One Person Corporation shall
maintain a minutes book which shall contain all actions,
Section 123. Special Functions of the Corporate Secretary. - decisions, and resolutions taken by the One Person
In addition to the functions designated by the One Person
Corporation.
Corporation, the corporate secretary shall:
(d) Other reports as the Commission may The ordinary stock corporation converted from One Person
require. Corporation shall succeed the latter and be legally responsible
for all the latter's outstanding liabilities as of the date of
conversion.
For the purpose of this provision, the fiscal year of a One
Person Corporation shall be that set forth in its articles of
incorporation or, in the absence thereof, the calendar year. TITLE XIV
DISSOLUTION
The Commission may place the corporation fail to submit the
reportorial requirements three (3) times, consecutively or Section 133. Methods of Dissolution. - A corporation formed
intermittently, within a period of five (5) years. or organized under the provisions of this Code may be
dissolved voluntarily or involuntarily.
Section 130. Liability of Single Shareholder. - A sole
shareholder claiming limited liability has the burden of Section 134. Voluntarily Dissolution Where No Creditors are
affirmatively showing that the corporation was adequately Affected. - If dissolution of a corporation does not prejudice
financed. the rights of any creditor having a claim against it, the
dissolution may be effected by majority vote of the board of
directors or trustees, and by a resolution adopted by the
Where the single stockholder cannot prove that the property of
affirmative vote of the stockholders owning at least majority of
the One Person Corporation is independent of the stockholder's the outstanding capital stock or majority of the members fo a
personal property, the stockholder shall be jointly and severally
meeting to be held upon the call of the directors or trustees.
liable for the debts and other liabilities of the One Person
Corporation.
At least twenty (20) days prior to the meeting, notice shall be
given to each shareholder or member of record personally, by
The principles of piercing the corporate veil applies with equal registered mail, or by any means authorized under its bylaws,
force to One Person Corporations as with other corporations.
whether or not entitled to vote at the meeting, in the manner
provided in Section 50 of this Code and shall state that the
Section 131. Conversion from an Ordinary Corporation to a purpose of the meeting is to vote on the dissolution of the
One Person Corporation. When a single stockholder acquires all corporation. Notice of the time, place and object of th meeting
the stocks of an ordinary stock corporation, the later may shall be published once prior to the date of the meeting in a
apply for conversion into a One Person Corporation, subject to newspaper published in the place where the principal office of
the submission of such documents as the Commission may said corporation is located, or if general circulation in the
require. If the application for conversion is approved, the Philipines.
Commission shall issue a certificate of filing of amended
articles of incorporation reflecting the conversion. The One
A verified request for dissolution shall be filed with the
Person Corporation converted from an ordinary stock Commission stating: (a) the reason for the dissolution; (b) the
corporation shall succeed the later and be legally responsible
form, manner, and time when the notices were given; (c)
for all the latter's outstanding liabilities as of the date of names of the stockholders and directors or members and
conversion.
trustees who approved the dissolution; (d) the date, place, and
time of the meeting in which the vote was made; and (e)
Section 132. Conversion from One Person Corporation to an details of publication.
Ordinary Stock Corporation. - A One Person Corporation may
be converted into an ordinary stock corporation after due The corporation shall submit the following to the Commission:
notice to the Commission of such fact and of the circumstances
(1) a copy of the resolution authorizing the dissolution,
leading to the conversion, and after compliance with all other certified by a majority of the board of directors or trustees and
requirements for stock corporations under this Code and
countersigned by the secretary of the corporation; (2) proof of
applicable rules. Such notice shall be filed with the Commission publication; and (3) favorable recommendation form the
within sixty (60) days from the occurrence of the
appropriate regulatory agency, when necessary.
circumstances leading to the conversion into an ordinary stock
corporation. If all requirement a have been complied with, the
Commission shall issue a certificate of filing or amended Within fifteen (15) days from receipt of the verified request for
articles of incorporation reflecting the conversion. dissolution, and in the absence of any withdrawal within said
period, the Commission shall approved the request and issue
the certificate of dissolution. The dissolution shall take effect
In case of death if the single stockholder, the nominee or only upon the issuance by the Commission of certificate of
alternate nominee shall transfer the shares to the duly
dissolution.
designated legal heir or estate within seven (7) days from
receipt of either an affidavit of heirship or self-adjudication
No application for dissolution of banks, banking and quasi- shall be deemed dissolve without any further proceedings,
banking institutions, preneed, insurance and trust companies, subject to the provisions of this Code on liquidation.
NSSLAs, pawnshops, and other financial intermediaries shall be
approved by the Commission unless accompanied by a In the case of expiration of corporate term, dissolution shall
favorable recommendation of the appropriate government automatically take effect on the day of the following the last
agency. day of the corporate term stated in the articles of incorporation
without the need for the issuance by the Commission of a
Section 135. Voluntary Dissolution Where Creditors are certificate of dissolution.
Affected; Procedure and Contents of Petition. - Where the
dissolution of a corporation may prejudice the rights of any Section 137. Withdrawal of Request and Petition for
creditor; a verified petition for dissolution shall be filed with the Dissolution. - A withdrawal of the request for dissolution shall
Commission. The petition shall be signed by a majority of the be made in writing, duly verified by any incorporator, director,
corporation's board of directors or trustees, verified by its trustees, shareholder, or member and signed by the same
president or secretary or one of its director or trustees, and number of incorporators, directors, trustees, shareholder, or
shall set forth all claims and demands against it, and that its member and signed by the same number of incorporators,
dissolution was resolved upon by the affirmative vote of the directors, trustees, shareholders, or members necessary to
stockholders representing at least two-thirds (2/3) of the request for dissolution as set forth in the foregoing sections.
outstanding capital stock or at least two-thirds (2/3) of the The withdrawal shall be submitted no later than fifteen (15)
member at a meeting of its stockholder or members called for days from receipt by the Commission of the request for
that purpose. The petition shall likewise state: (a) the reason dissolution, the Commission shall withhold action on the
for the dissolution; (b) the form, manner, and time when the request for dissolution and shall, after investigation: (a) make
notices where given; and (c) the date, place and time of the a pronouncement that the request for dissolution is deemed
meeting in which vote was made. The corporation shall submit withdrawn; (b) direct joint meeting of the board of directors or
to the Commission the following: (1) a copy of the resolution trustees and the stockholders or members for the purpose of
authorizing the dissolution, certified by a majority of the board ascertaining whether to proceed with dissolution; or (c) issue
of directors or trustees and countersigned by the secretary of such other orders as it may deem appropriate.
the corporation; and (2) a list of all its creditors.
A withdrawal of the petition for dissolution shall be in the form
If the petition is sufficient in form and substance, the of a motion and similar in substance to a withdrawal of request
Commission shall by an order reciting the purpose of the for dissolution but shall be verified and filed prior to publication
petition, fix a deadline for filing objections to the petition which of the order setting the deadline for filing objections to the
date shall not be less than thirty (30) days nor more than sixty petition.
(60) days after the entry of the order. Before such date, a copy
of the order shall be published at lease one week for three (3)
Section 138. Involuntary Dissolution. - A corporation may be
consecutive weeks in a newspaper of general circulation
dissolve by the Commission motu propio or upon filing of a
published in the municipality or city where the principal office
verified complaint by any interested party. The following may
of the corporation is situated, or if there be no such
be grounds for dissolution of the corporation:
newspaper, then in a newspaper of general circulation in the
Philippines, and a similar copy shall be posted for three (3)
consecutive weeks in three (3) public places in such (a) None-use of corporate charter as
municipality or city. provided under Section 21 of his Code;
Upon five (5) days' notice given after the date on which the (b) Continuous inoperation of a corporation
right to file objections as fixed in the order has expired, the as provided under Section 21 of this Code;
Commission shall proceed to hear the petition and try any
issue raised in the objections filed; and if no such obejection is (c) Upon receipt of a lawful court order
sufficient, and the material allegations of the petition are true, dissolving the corporation;
it shall render judgment dissolving the corporation and
directing such disposition of its assets as justice requires, and
(d) Upon finding by the final judgment that
may appoint a receiver to collect such assets and pay the
the corporation procured its incorporation
debts of the corporation.
through fraud;
The dissolution shall take effect only upon the issuance by the
(e) Upon finding by final judgment that the
Commission of a certificate of dissolution.
corporation:
Foreign banking, financial, and insurance corporations shall, in Section 144. Who May be a Resident Agent. - A resident
addition to the above requirements, comply with the provisions agent may be either an individual residing in the Philippines or
of existing laws applicable to them. In the case of all other a domestic corporation lawfully transacting business in the
foreign corporations, no application for license to transact Philippines: Provided, That an individual resident agent must
business in the Philippines shall be accepted by the be of good moral character and of sound financial standing:
Commission without previous authority from the appropriate Provided, further, That in case of a domestic corporation who
government agency, whether required by law. will act as a resident agent, it must be likewise be of sound
financial standing and must show proof that it is in good
standing as certified by the Commission.
Section 143. Issuance of a License. - If the Commission is
satisfied that the applicant has complied with all the
requirements of this Code and other special laws, rules and Section 145. Rsident Agent; Service of Process. - As a
regulations, the Commission shall issue a license to transact condition to the issuance of the license for a foreign
business in the Philippines to the applicant for the purpose or corporation to transact business in the Philippines, such
purposes specified in such license. Upon issuance of the corporation shall file with he Commission a written power of
license, such foreign corporation may commence to transact attorney designating a person who must be a resident of the
business in the Philippines and continue to do so for as long as Philippines, on whom summons and other legal processes may
it retains authority to act as a corporation under the laws of be served in all actions or other legal processes may be served
the country or State of its incorporation , unless such license is in all actions or legal proceedings against such corporation,
sooner surrendered, revoked suspended, or annulled in and consenting that service upon such resident agent shall be
accordance with this Code or other special laws. Within sixty admitted and held as valid if served upon the duly authorized
(60) days after the issuance of the license to transact business officers of foreign corporation shall likewise execute and file
in the Philippines, the licensee, except foreign banking or with the Commission an agreement or stipulation, executed by
insurance corporations, shall deposit with the Commission for the proper authorities of said corporation, in form and
the benefit of present and future creditors of the licensee in substance as follows:
the Philippines, securities satisfactorily to the Commission,
consisting of bonds or other evidence of the indebtedness of "The (name of foreign corporation) hereby stipulates and
the Government of the Philippines, its political subdivisions and agrees, in consideration of being granted a license to transact
instrumentalities, or of government-owned or -controlled business in the Philippines, that if the corporation shall cease
corporations and entities, shares of stock or debt securities to transact business in the Philipines, or shall be without any
that are registered under Republic Act No. 8799, otherwise resident agent in the Philippines on whom any summons or
other legal process may be served, then service of any law authorizing its incorporation, such foreign corporation
summons or other legal process may be made upon the shall, within sixty (60) days after the effectivity of such merger
Commission in any action or proceeding arising out of any or consolidation, file with the Commission, and in proper cases,
business or transaction which occurred in the Philippines and with the appropriate government agency, a copy of the articles
such service shall have the same force and effect as if made of merger or consolidation was effected: Provided, however,
upon the duly authorized officers of the corporation at its That if the abosrbed corporation is the foreign corporation
home office." doing business in the Philippines, the latter shall at the same
time file a petition for withdrawal of its license in accordance
Whenever such service of summons or other process is made with this Title.
upon the Commission, the Commission shall, within ten (10)
days thereafter, transmit by mail a copy of such summons or Section 150. Doing Business Without a License. - No foreign
other legal process to the corporation at its home or principal corporation transacting business in the Philippines without a
office. The sending of such copy by the Commission shall be license, or its successor or assigns, shall be permitted to
necessary part of and shall complete such service. All expenses maintain or intervene in any action, suit or proceeding in any
incurred by the Commission for such service shall be paid in court or administrative agency of the Philippines; but such
advance by the party at whose instance the service is made. corporation may be sued or proceeded against before the
Philippin courts or administrative tribunals on any valid cause
It shall be the duty of the resident agent to immediately notify of action recognized under Philippine laws.
the Commission in writing of any change in the resident
agent's address. Section 151. Revocation of License. - Without prejudice to
other grounds provided under special laws, the license of a
Section 146. Law Applicable. - A foreign corporation lawfully foreign corporation to transact business in the Philippines may
doing business in the Philippines shall be bound by all laws, be revoked or suspended by the Commission upon any of the
rules and regulations applicable to domestic corporations of following grounds:
the same class, except those which provide for the creation,
formation, organization or dissolution of corporations or those (a) Failure to file its annual report or pay any
which fix the relations, liabilities, responsibilities, or duties of fees as required by this Code;
stockholders, members or officers of corporations to each
other or to the corporation. (b) Failure to appoint and maintain a
resident agent in the Philippines as required
Section 147. Amendments to Articles of Incorporation or by this Title;
Bylaws of Foreign Corporations. - Whenever the article of
incorporation or bylaws of a foreign corporation authorized to (c) Failure, after change of its resident agent
transact business in the Philippines are amended, such foreign or address, to submit to the Commission a
corporation shall, within sixty (60) days after the amendment statement of such change as required by this
becomes effective, file with the Commission, and in proper Title;
cases, with the appropriate government agency, a duly
authenticated copy of the amendment articles of incorporation
(d) Failure to submit to the Commission an
or bylaws, indicating clearly in capital letters or underscoring
authenticated copy of any amendment to its
the change or changes made, duly certified by the authorized
articles of incorporation or bylaws or of any
official or officials of the country or State of incorporation.
articles of merger or consolidation within the
Such filing shall not in itself enlarge or alter the purpose or
purposes for which such corporation is authorized to transact time prescribed by this Title;
business in the Philippines.
(e) A misrepresentation of any material
mater in any application, report, affidavit or
Section 148. Amended License. - A foreign corporation
other document submitted by such
authorized to transact business in the Philippines shall obtain
corporation pursuant to this Title;
an amended license in the event it changes its corporate
name, or desires to pursue other or additional purposes in the
Philippines, by submitting an application with the Commission, (f) Failure to pay any and all taxes, imposts,
favorably endorsed by the appropriate government agency in assessments or penalties, if any, lawfully due
the proper cases. to the Philippine Government or any of its
agencies or political subdivisions;
Section 149. Merger or Consolidation Involving a Foreign
Corporation Licensed in the Philippines. - One or more foreign (g) Transacting business in the Philippines
corporations authorized to transact business in the Philippines outside of the purpose or purposes for which
may merge or consolidate with any domestic corporation or such corporation is authorized under its
corporations if permitted under Philippine laws and by the law license;
of its incorporation: Provided, That the requirements on
merger or consolidation as provided in this Code are followed. (h) Transacting business in the Philippines as
agent of or acting on behalf of any foreign
Whenever a foreign corporation authorized to transact corporation or entity not duly licensed to do
business in the Philippines shall be a party to merger or business in the Philippine; or
consolidation in its home country or State as permitted by the
(i) Any other ground as would render it unfit order of the Commission, it may direct such person to desist
to transact business in the Philippines. from committing the act constituting the violation.
Section 152. Issuance of Certificate of Revocation. - Upon the The Commission may issue a cease and desist order ex parte
revocation of the license to transact business in the Philippines, to enjoin an act or practice which is fraudulent or can be
the Commission shall issue a corresponding certificate of reasonably expected to cause significant, imminent, and
revocation, furnishing a copy thereof to the appropriate irreparable danger or injury to public safety or welfare. The ex
government agency in the proper cases. parte order shall be valid for a maximum period of twenty (20)
says, without prejudice to the order being made permanent
The Commission shall also mail the notice and copy of the after due notice and hearing.
certificate of revocation to the corporation, at its registered
office in the Philippines. Thereafter the Commission may proceed administratively
against such person in accordance with Section 158 of this
Section 153. Withdrawal of Foreign Corporations. - Subject to Code, and/or transmit evidence to the Department of Justice
existing laws and regulations, a foreign corporation licensed to for preliminary investigation or criminal prosecution and/or
transact business in the Philippines may be allowed to initiate criminal prosecution for any violation of this Code, rule,
withdraw from the Philippines by filing a petition for withdrawal or regulation.
of license. No certificate of withdrawal shall be issued by the
Commission unless all the following requirements are met: Section 157. Contempt. - Any person who, without justifiable
cause, fails or refuses to comply with any lawful order,
(a) All claims which have accrued in the decision, or subpoena issued by the Commission shall, after
Philippines have been paid, compromised or due notice and hearing, be held in contempt and fined in an
settled; amount not exceeding Thirty thousand pesos (₱30,000.00).
When the refusal amounts to clear and open defiance of the
Commission's order, decision, or subpoena, the Commission
(b) All taxes, imposts, assessments, and may impose a daily fine of One thousand pesos (₱1,000.00)
penalties, if any, agencies or political
until the order, decision, or subpoena is complied with.
subdivisions, have been paid; and
Section 155. Administration of Oaths, Subpoena of Witnesses Section 159. Unauthorized Use of Corporate Name; Penalties.
and Documents. - The Commission, through its designated - The unauthorized use of corporate name shall be punished
officer, may administer oaths and affirmations, issue subpoena with a fine ranging from Ten thousand pesos (₱10,000.00) to
and subpoena duces tecum, take testimony in any inquiry or
Two hundred thousand pesos (₱200,000.00).
investigation, and may perform other acts necessary to the
proceedings or to the investigation.
Section 160. Violation of Disqualification Provision; Penalties.
- When, despite the knwoledge of the existence of a ground
Section 156. Cease and Desist Orders. - Whenever the for disqualification as provided in Section 26 of this Code, a
Commission has reasonable basis to believe that a person has
director, trustee or officer willfully holds office, or willfully
violated, or is about to violate this Code, a rule, regulation, or conceals such disqualification, such director, trustee or officer
shall be punished with a fine ranging from Ten thousand pesos Section 165. Fraudulent Conduct of Business; Penalties. - A
(₱10,000.00) to Two hundred thousand pesos (₱200,000.00) corporation that conduct its business through fraud shall be
at the discretion of the court, and shall be permanently punished with a fine ranging from Two hundred thousand
disqualified from being a director, trustee or officer of any pesos (₱200,000.00) to Two million pesos (₱2,000,000.00).
corporation. When the violation of this provision is injurious or When the violation of this provision is injurious or detrimental
detrimental to the public, the penalty shall be a fine ranging to the public, the penalty is a fine ranging from Four hundred
from Twenty thousand pesos (₱20,000.00) to Four hundred thousand pesos (₱400,000.00) to Five million pesos
thousand pesos (₱400,000.00). (₱5,000,000.00).
Section 161. Violation of Duty to Maintain Records, to Allow Section 166. Acting as Intermediaries for Graft and Corrupt
their Inspection or Reproduction; Penalties. - The unjustified Practices; Penalties. - A corporation used for fraud, or for
failure or refusal by the corporation, or by those responsible committing or concealing graft and corrupt practices as defined
for keeping and maintaining corporate records, to comply with under pertinent statutes, shall be liable for a fine ranging from
Section s 45, 73, 92, 128, 177 and other pertinent rules and One hundred thousand pesos (₱100,000.00) to Five million
provisions of this Code on inspection and reproduction of pesos (₱5,000,000.00).
records shall be punished with a fine ranging from Ten
thousand pesos (₱10,000.00) to Two hundred thousand pesos When there is a finding that any of its directors, officers,
(₱200,000.00), at the discretion of the court, taking into employees, agents, or representatives are engaged in graft
consideration the seriousness of the violation and its and corrupt practices, the corporation's failure to install:
implications. When the violation of this provision is injurious or
detrimental to the public, the penalty is a fine ranging from
(a) safeguards for the transparent and lawful
Twenty thousand pesos (₱20,000.00) to Four hundred
delivery of services; and (b) policies, code of
thousand pesos (₱400,000.00).
ethics, and procedures against graft and
corruption shall be prima facie evidence of
The penalties impose under this section shall be without corporate liability under this section.
prejudice to the Commission's exercise of its contempt powers
under Section 157 hereof.
Section 167. Engaging Intermediaries for Graft and Corrupt
Practices; Penalties. - A corruption that appoints an
Section 162. Willful Certification of Incomplete, Inaccurate, intermediary who engages in graft and corrupt practices for
False; or Misleading Statements or Reports; Penalties. - Any the corporation's benefit or interest shall be punished with a
person who willfully certifies a report required under this Code, fine ranging from One hundred thousand pesos (₱100,000.00)
knowing that the same contains incomplete, inaccurate, false, to One million pesos (₱1,000,000.00).
or misleading information or statements, shall be punished
with a fine ranging from Twenty thousand pesos (₱20,000.00)
Section 168. Tolerating Graft and Corrupt Practices;
to Two hundred thousand pesos (₱200,000.00). When the
wrongful certification is injurious or detrimental to the public, Penalties. - A director, trustee, or officer who knowingly fails to
sanction, report, or file the appropriate action with proper
the auditor or the responsible person may also be punished
agencies, allows or tolerates the graft and corrupt practices or
with a fine ranging from Forty thousand pesos (₱40,000.00) to
fraudulent acts committed by a corporation's directors,
Four hundred thousand pesos (₱400,000.00).
trustees, officers, or employees shall be punished with a fine
ranging from Five hundred thousand pesos (₱500,000.00) to
Section 163. Independent Auditor Collusion; Penalties. - An One million pesos (₱1,000,000.00).
independent auditor who, in collusion with the corporation's
directors or representatives, certifies the corporation's financial
Section 169. Retaliation Against Whistleblowers. - A
statements despite its incompleteness or inaccuracy, its failure
whistleblower refers to any person who provides truthful
to give a fair and accurate presentation of the corporation's
information relating to the commission or possible commission
condition, or despite containing false or misleading statements,
of any offense or violation under this Code. Any person who,
shall be punished with a fine ranging from Eighty thousand
knowingly and with intent to retaliate, commits acts
pesos (₱80,000.00) to Five hundred thousand pesos
detrimental to a whistleblower such as interfering with the
(₱500,000.00). When the statement or report certified is
lawful employment or livelihood of the whistleblower, shall, at
fraudulent, or has the effect of causing injury to the general
the discretion of the court, be punished with a fine ranging
public, the auditor or responsible officer may be punished with
from One hundred thousand (₱100,000.00) to One million
a fine ranging from One hundred thousand pesos
(₱1,000,000.00).
(₱100,000.00) to Six hundred thousand pesos (₱600,000.00).
Section 173. Outstanding Capital Stock Defined. - The term (a) Annual financial statements audited by
"outstanding capital stock", as used in this Code, shall mean
an independent certified public accountant:
the total shares of stock issued under binding subscription Provided, That if the total assets or total
contracts to subscribers or stockholders, whether fully or
liabilities of the corporation are less than Six
partially paid, except treasury shares. hundred thousand pesos (₱600,000.00), the
financial statements shall be certified under
Section 174. Designation of Governing Boards. - The oath by the corporation’s treasurer or chief
provisions of specific provisions of this Code to the contrary financial officer; and
notwithstanding, nonstock or special corporations may,
through their articles of incorporation pr their bylaws, (b) A general information sheet.
designated their governing boards by any other than as board
of trustees.
Corporations vested with public interest must also submit the
following:
Section 175. Collection and Use of Registration,
Incorporation and Other Fees. - For a more implementation of
this Code, the Commission os hereby authorized to collect, (1) A director or trustee compensation
retain and use fees, fines, and other charges pursuant to this report; and
Code and its rules and regulations. The amount collected shall
be deposited and maintained in a separate account which shall (2) A director or trustee appraisal or
form a fund for its modernization and to augment its performance report and the standards or
operational expenses such as, but not limited to, capital outlay, criteria used to assess each, director or
increase in compensation and benefits comparable with trustee.
prevailing rates in the private sector, reasonable employee
allowance, employee health care services, and other insurance, The reportorial requirements shall be submitted annually and
employee career advancement and professionalization, legal within such period as may be prescribed by the Commission.
assistance, seminars, and other professional fees.
The Commission may place the corporation under delinquent
Section 176. Stock Ownership in Corporations. - Pursuant to status in case of failure to submit the reportorial requirements
the duties specified by Article XIV of the Constitution, the three (3) times, consecutively or intermittently, within a period
National Economic and Development Authority (NEDA) shall, of five (5) years. The Commission shall give reasonable notice
from time to time, determine if the corporate vehicle has been to and coordinate with the appropriate regulatory agency prior
used by any corporation, business, or industry to frustrate the to placing on delinquent status companies under their special
provisions of this Code or applicable laws, and shall submit to regulatory jurisdiction.
Congress, whenever deemed necessary, a report of its
findings, including recommendations for their prevention or
Any person required to file a report with the Commission may
correction.
redact confidential information from such required report:
Provided, That such confidential information shall be filed in a
supplemental report prominently labelled "confidential", (g) Hold corporations in direct and indirect
together with a request for confidential treatment of the report contempt;
and the specific grounds for the grant thereof.
(h) Issue subpoena duces tecum and
Section 178. Visitorial Power and Confidential Nature of summon witnesses to appear in proceedings
Examination Results. - The Commission shall exercise visitorial before the Commission;
powers over all corporations, which powers shall include the
examination and inspection of records, regulation and (i) In appropriate cases, order the
supervision of activities, enforcement of compliance, and examination, search and seizure of
imposition of sanctions in accordance with this Code. documents, papers, files and records, and
books of accounts of any entity or person
Should the corporation, without justifiable cause, refuse or under investigation as may be necessary for
obstruct the Commission’s exercise of its visitorial powers, the the proper disposition of the cases, subject
Commission may revoke its certificate of incorporation, without to the provisions of existing laws;
prejudice to the imposition of other penalties and sanctions
under this Code. (j) Suspend or revoke the certificate of
incorporation after proper notice and
All interrogatories propounded by the Commission and the hearing;
answers thereto, as well as the results of any examination
made by the Commission or by any other official authorized by (k) Dissolve or impose sanctions on
law to make an examination of the operations, books, and corporations, upon final court order, for
records of any corporation, shall be kept strictly confidential, committing, aiding in the commission of, or
except when the law requires the same to be made public, in any manner furthering securities
when necessary for the Commission to take action to protect violations, smuggling, tax evasion, money
the public or to issue orders in the exercise of its powers under laundering, graft and corrupt practices, or
this Code, or where such interrogatories, answers or results other fraudulent or illegal acts;
are necessary to be presented as evidence before any court.
(l) Issue writs of execution and attachment
Section 179. Powers, Functions, and Jurisdiction of the to enforce payment of fees, administrative
Commission. - The Commission shall have the power and fines, and other dues collectible under this
authority to: Code;
(a) Exercise supervision and jurisdiction over (m) Prescribe the number of independent
all corporations and persons acting on their directors and the minimum criteria in
behalf, except as otherwise provided under determining the independence of a director;
this Code;
(n) Impose or recommend new modes by
(b) Pursuant to Presidential Decree No. 902- which a stockholder, member, director, or
A, retain jurisdiction over pending cases trustee may attend meetings or cast their
involving intra-corporate disputes submitted votes, as technology may allow, taking into
for final resolution. The Commission shall account the company’s scale, number of
retain jurisdiction over pending suspension shareholders or members, structure, and
of payment/rehabilitation cases filed as of 30 other factors consistent with the basic right
June 2000 until finally disposed; of corporate suffrage;
(c) Impose sanctions for the violation of this (o) Formulate and enforce standards,
Code, its implementing rules and orders of guidelines, policies, rules and regulations to
the Commission; carry out the provisions of this Code; and
(d) Promote corporate governance and the (p) Exercise such other powers provided by
protection of minority investors, through, law or those which may be necessary or
among others, the issuance of rules and incidental to carrying out the powers
regulations consistent with international best expressly granted to the Commission.
practices;
In imposing penalties and additional monitoring and
(e) Issue opinions to clarify the application of supervision requirements, the Commission shall take into
laws, rules and regulations; consideration the size, nature of the business, and capacity of
the corporation.
(f) Issue cease and desist orders ex parte to
prevent imminent fraud or injury to the No court below the Court of Appeals shall have jurisdiction to
public; issue a restraining order, preliminary injunction, or preliminary
mandatory injunction in any case, dispute, or controversy that
directly or indirectly interferes with the exercise of the powers,
duties and responsibilities of the Commission that falls Within six (6) months after the effectivity of this Act, the
exclusively within its jurisdiction. monitoring, supervision, and regulation of such corporations
shall be deemed automatically transferred to the COMELEC.
Section 180. Development and Implementation of Electronic
Filing and Monitoring System. - The Commission shall develop For this purpose, the COMELEC, in coordination with the
and implement an electronic filing and monitoring system. The Commission, shall promulgate the corresponding implementing
Commission shall promulgate rules to facilitate and expedite, rules for the transfer of jurisdiction over the abovementioned
among others, corporate name reservation and registration, corporations.
incorporation, submission of reports, notices, and documents
required under this Code, and sharing of pertinent information Section 183. Applicability of the Code. - Nothing in this Act
with other government agencies. shall be construed as amending existing provisions of special
laws governing the registration, regulation, monitoring and
Section 181. Arbitration for Corporations. - An arbitration supervision of special corporations such as banks, nonbank
agreement may be provided in the articles of incorporation or financial institutions and insurance companies.
bylaws of a corporation. When such an agreement is in place,
disputes between the corporation, its stockholders or Notwithstanding any provision to the contrary, regulators such
members, which arise from the implementation of the articles as the Bangko Sentral ng Pilipinas and the Insurance
of incorporation or bylaws, or from intra-corporate relations, Commission shall exercise primary authority over special
shall be referred to arbitration. A dispute shall be nonarbitrable corporations such as banks, nonbank financial institutions, and
when it involves criminal offenses and interests of third parties. insurance companies under their supervision and regulation.
The arbitration agreement shall be binding on the corporation, Section 184. Effect of Amendment or Repeal of This Code, or
its directors, trustees, officers, and executives or managers. the Dissolution of a Corporation. - No right or remedy in favor
of or against any corporation, its stockholders, members,
To be enforceable, the arbitration agreement should indicate directors, trustees, or officers, nor any liability incurred by any
the number of arbitrators and the procedure for their such corporation, stockholders, members, directors, trustees,
appointment. The power to appoint the arbitrators forming the or officers, shall be removed or impaired either by the
arbitral tribunal shall be granted to a designated independent subsequent dissolution of said corporation or by any
third party. Should the third party fail to appoint the arbitrators subsequent amendment or repeal of this Code or of any part
in the manner and within the period specified in the arbitration thereof.
agreement, the parties may request the Commission to appoint
the arbitrators. In any case, arbitrators must be accredited or Section 185. Applicability to Existing Corporations. - A
must belong to organizations accredited for the purpose of corporation lawfully existing and doing business in the
arbitration. Philippines affected by the new requirements of this Code shall
be given a period of not more than two (2) years from the
The arbitral tribunal shall have the power to rule on its own effectivity of this Act within which to comply.
jurisdiction and on questions relating to the validity of the
arbitration agreement. When an intra-corporate dispute is filed Section 186. Separability Clause. - If any provision of this Act
with a Regional Trial Court, the court shall dismiss the case is declared invalid or unconstitutional, the other provisions
before the termination of the pretrial conference, if it hereof are not affect thereby shall continue to be in full force
determines that an arbitration agreement is written in the and effect.
corporation’s articles of incorporation, bylaws, or in a separate
agreement.
Section 187. Repealing Clause. - Batas Pambansa Blg. 68,
otherwise known as "The Corporation Code of the Philippines",
The arbitral tribunal shall have the power to grant interim is hereby repealed. Any law, presidential decree or issuance,
measures necessary to ensure enforcement of the award, executive order, letter of instruction, administrative order, rule
prevent a miscarriage of justice, or otherwise protect the rights or regulation contrary to or inconsistent with any provision of
of the parties. this Act is hereby repealed or modified accordingly..
A final arbitral award under this section shall be executory Section 188. Effectivity. - This Act shall take effect upon
after the lapse of fifteen (15) days from receipt thereof by the completion of its publication in the Official Gazette or in at
parties and shall be stayed only by the filing of a bond or the least two (2) newspaper of general circulation.
issuance by the appellate court of an injunctive writ.