Revised Corporation Code of The Philippines 16 - 24
Revised Corporation Code of The Philippines 16 - 24
Revised Corporation Code of The Philippines 16 - 24
Suspension or revocation of the certificate of registration of Verification of intended corporate name prior to
corporations registration is now expressly provided.
1) Valid law under which a corporation with powers assumed (b) Banks and quasi-banks, NSSLAs, pawnshops, corporations
might be incorporated engaged in money service business, preneed, trust and insurance
2) A bona fide attempt to organize a corporation under such law companies and other financial intermediaries; and
3) Actual user or exercise in good faith of corporate powers
conferred upon it by law.
(c) Other corporations engaged in businesses vested with public
interest similar to the above, as may be determined by the
Section 20. Corporation by Estoppel. - All persons who assume to Commission, after taking into account relevant factors which are
act as a corporation knowing it to be without the authority to do so germane to the objective and purpose of requiring the election of an
shall be liable as general partners for all debts, liabilities and damages independent director, such as the extent of minority ownership, type
incurred or arising as a result thereof: Provided, however, That when of financial products or securities issued or offered to investors,
any such ostensible corporation is sued on any transaction entered by public interest involved in the nature of business operations, and
its as a corporation or on any tort committed by it as such, it shall not other analogous factors.
be allowed to use on any its lack of corporate personality as a
defense. Anyone who assumes an obligation to an ostensible
An independent director is a person who apart from shareholdings
corporation as such cannot resist performance thereof on the ground
and fees received from any business or other relationship which
that there was in fact no corporation.
could, or could reasonable be received to materially interfere with the
exercise of independent judgment in carrying out the responsibilities
Section 21. Effects of Non-Use of Corporate Charter and as a director.
Continous Inoperation. - If a corporation does not formally organize
and commence its business within five (5) year from the date of its
Independent directors must be elected by the shareholders present or
incorporation, its certificate of incorporation shall be deemed revoked
entitled to vote in absentia during the election of directors.
as of the day following the end of the five (5)-year period.
Independent directors shall be subject to rules and regulations
governing their qualifications, disqualifications, voting requirements,
However, if a corporation has commence its business but duration of term and term limit, maximum number of board
subsequently becomes inoperative for a period of at least five (5) membership and other requirements that the Commission will
consecutive years, the Commission may, after due notice and hearing, prescribed to strengthen their independence and align with
place the corporation under delinquent status. international best practices.
A delinquent corporation shall have a period of two (2) years to Corporate powers exercised by BOD or trustees
resume operations and comply with all requirements that the
Commission shall prescribed. Upon the compliance by the 1) Governing body of the corporation
corporation, the Commission shall issue an order lifting the 2) Binding effect of stockholders’ action – directors have sole
delinquent status. Failure to comply with the requirements and authority to determine policy and conduct the ordinary business
resume operations within the period given by the Commission shall of the corporation
cause the revocation of the corporation's certificate of incorporation. 3) Extent of juridical review
The Commission shall give reasonable notice to, and coordinate with Limitations on powers of BOD
the appropriate regulatory agency prior to the suspension or
revocation of the certificate of incorporation of companies under their 1) It must be observe that limitations or restrictions imposed by
special regulatory jurisdiction. the Constitution, statutes, rules and regulations having the force
of law on the corporation including its articles of incorporation
and by-laws
Sec. 22. The Board of Directors or Trustees of a Corporation; 2) Cannot perform constituent acts, that is, acts involving
Qualification and Term. - Unless otherwise provided in this Code, fundamental or major changes in the corporation
the board of directors or trustees shall exercise the corporate powers, 3) Cannot exercise powers not possessed by the corporation.
condict all business, and control all properties of the corporation.
General rule – is that in the absence of authority from the board of 3) A stockholder may be deprived in the articles of incorporation
directors, no persons, not even its officers, can validly bind a or in the by- laws of his statutory right to use any methods of
corporation.( i.e. discretionary powers) voting.
4) No delinquent stock shall be voted
Exception to the rule- The power to bind the corporation by 5) If quorum is present, candidates receiving the highest number
contracts rests in its board of directors or trustees, but the power may of votes shall be elected.
be delegated either expressly or implied to others or agents of the 6) Failure to hold election, meeting may be adjourned from day to
corporation appointed by it.( i.e. ministerial duties) day from time to but cannot be adjourned sine die or
indefinitely
Number of Directors or Trustees 7) Requisite notice must be given
The election must be by ballot if requested by any voting stockholder Chairman of board – the concept of board chairman and his function
or member. as an executive vary so widely in different companies as to be
indefinable. There is no settled practice.
In stock corporations, stockholders entitled to vote shall have the
right to vote the number of shares of stock standing in their own
names in the stock books of the corporation at the time fixed in the
bylaws or where the bylaws are silent at the time of the election. The
said stockholder may: (a) vote such number of shares for as many 1) President – only officer required by law to be a member of the
persons as there are directors to be elected; (b) cumulate said shares BOD
and give one (1) candidate as many votes as the number of directors 2) Vice-President – to act in the absence of, or in case of vacancy
to be elected multiplied by the number of shares owned; or (c) in the office of the president.
distribute them on the same principle among as many candidates as 3) Secretary – must be resident and citizen. Need not be a
may be seen fit: Provided, That the total number of votes cast shall director unless required by the by-laws
not exceed the number of shares owned by the stockholders as shown 4) Treasurer – proper officer entrusted with the authority to
in the books of the corporation multiplied by the whole number of receive and keep the money of the corporation and to
directors to be elected: Provided, however, That no delinquent stock disburse them as he may be authorized.
shall be voted. Unless otherwise provided in the articles of 5) General manager – has the power to bind the corporation by
incorporation or in the bylaws, members of non-stock corporations acts within the scope of his apparent authority.
may cast as many votes as there are trustees to be elected by may not
cast more than one (1) vote for one (1) candidate. Nominees for
directors or trustees receiving the highest number of votes shall be
declared elected.