Corporation Code
Corporation Code
TITLE I
General Provisions
Definitions and Classifications
SECTION 1. Title of the Code . — This Code shall be known as "The
Corporation Code of the Philippines." (n)
SECTION 2. Corporation Defined. — A corporation is an artificial being
created by operation of law, having the right of succession and the powers,
attributes and properties expressly authorized by law or incident to its existence.
(2)
SECTION 3. Classes of Corporations. — Corporations formed or
organized under this Code may be stock or non-stock corporations. Corporations
which have capital stock divided into shares and are authorized to distribute to
the holders of such shares dividends or allotments of the surplus profits on the
basis of the shares held are stock corporations. All other private corporations are
non-stock corporations. (3a)
SECTION 4. Corporations Created by Special Laws or Charters. —
Corporations created by special laws or charters shall be governed primarily by
the provisions of the special law or charter creating them or applicable to them,
supplemented by the provisions of this Code, insofar as they are applicable. (n)
SECTION 5. Corporators and Incorporators, Stockholders and Members.
— Corporators are those who compose a corporation, whether as stockholders or
as members. Incorporators are those stockholders or members mentioned in the
articles of incorporation as originally forming and composing the corporation and
who are signatories thereof. cdtai
10. Such other matters as are not inconsistent with law and which
the incorporators may deem necessary and convenient.
The Securities and Exchange Commission shall not accept the articles of
incorporation of any stock corporation unless accompanied by a sworn statement
of the Treasurer elected by the subscribers showing that at least twenty-five
(25%) percent of the authorized capital stock of the corporation has been
subscribed, and at least twenty-five (25%) percent of the total subscription has
been fully paid to him in actual cash and/or in property the fair valuation of
which is equal to at least twenty-five (25%) percent of the said subscription, such
paid-up capital being not less than five thousand (P5,000.00) pesos.
SECTION 15. Forms of Articles of Incorporation . — Unless otherwise
prescribed by special law, articles of incorporation of all domestic corporations
shall comply substantially with the following form:
ARTICLES OF INCORPORATION OF
__________________________
(Name of Corporation)
The undersigned incorporators, all of legal age and a majority of whom are
residents of the Philippines, have this day voluntarily agreed to form a
(stock) (non-stock) corporation under the laws of the Republic of the
Philippines;
FOURTH: That the term for which the said corporation is to exist is
___________ years from and after the date of issuance of the certificate of
incorporation;
(Modify Nos. 8 and 9 if shares are with no par value. In case the corporation
is non-stock, Nos. 7, 8 and 9 of the above articles may be modified
accordingly, and it is sufficient if the articles state the amount of capital or
money contributed or donated by specified persons, stating the names,
nationalities and residences of the contributors or donors and the respective
amount given by each.)
"No transfer of stock or interest which will reduce the ownership of Filipino
citizens to less than the required percentage of the capital stock as provided
by existing laws shall be allowed or permitted to be recorded in the proper
books of the corporation and this restriction shall be indicated in all the
stock certificates issued by the corporation."
_______________________ _______________________
_______________________ _______________________
___________________________
_______________________ _______________________
(Notarial Acknowledgment)
TREASURER'S AFFIDAVIT
REPUBLIC OF THE PHILIPPINES)
CITY/MUNICIPALITY OF ) S.S.
PROVINCE OF )
____________________
(Signature of Treasurer)
SUBSCRIBED AND SWORN to before me, a Notary Public, for and in the
City/Municipality of ________________, Province of __________________, this
_______ day of ___________, 19___; by _____________ with Res. Cert. No.
___________ issued at ____________________ on ____________, 19____.
NOTARY PUBLIC
My commission expires on
_________, 19____
Doc. No. _________;
Page No. _________;
Book No. ________;
Series of 19____ (7a)
The original and amended articles together shall contain all provisions
required by law to be set out in the articles of incorporation. Such articles, as
amended, shall be indicated by underscoring the change or changes made, and a
copy thereof duly certified under oath by the corporate secretary and a majority
of the directors or trustees stating the fact that said amendment or amendments
have been duly approved by the required vote of the stockholders or members,
shall be submitted to the Securities and Exchange Commission.
The amendments shall take effect upon its approval by the Securities and
Exchange Commission or from the date of filing with the said Commission if not
acted upon within six (6) months from the date of filing for a cause not
attributable to the corporation.
SECTION 17. Grounds When Articles of Incorporation or Amendment
May Be Rejected or Disapproved. — The Securities and Exchange Commission
may reject the articles of incorporation or disapprove any amendment thereto if
the same is not in compliance with the requirements of this Code: Provided, That
the Commission shall give the incorporators a reasonable time within which to
correct or modify the objectionable portions of the articles or amendment. The
following are grounds for such rejection or disapproval:
2. That the vote of such director or trustee was not necessary for
the approval of the contract;
4. That in the case of an officer, the contract with the officer has
been previously authorized by the Board of Directors.
Where any of the first two conditions set forth in the preceding paragraph
is absent, in the case of a contract with a director or trustee, such contract may
be ratified by the vote of the stockholders representing at least two-thirds (2/3)
of the outstanding capital stock or of two-thirds (2/3) of the members in a
meeting called for the purpose: Provided, That full disclosure of the adverse
interest of the directors or trustees involved is made at such meeting: Provided,
however, That the contract is fair and reasonable under the circumstances. (n)
SECTION 33. Contracts Between Corporations with Interlocking
Directors. — Except in cases of fraud, and provided the contract is fair and
reasonable under the circumstances, a contract between two or more
corporations having interlocking directors shall not be invalidated on that ground
alone: Provided, That if the interest of the interlocking director in one corporation
is substantial and his interest in the other corporation or corporations is merely
nominal, he shall be subject to the provisions of the preceding section insofar as
the latter corporation or corporations are concerned.
Stockholdings exceeding twenty (20%) percent of the outstanding capital
stock shall be considered substantial for purposes of interlocking directors. (n)
SECTION 34. Disloyalty of a Director. — Where a director, by virtue of
his office, acquires for himself a business opportunity which should belong to the
corporation, thereby obtaining profits to the prejudice of such corporation, he
must account to the latter for all such profits by refunding the same, unless his
act has been ratified by a vote of the stockholders, owning or representing at
least two-thirds (2/3) of the outstanding capital stock. This provision shall be
applicable, notwithstanding the fact that the director risked his own funds in the
venture. (n)
SECTION 35. Executive Committee. — The by-laws of a corporation may
create an executive committee, composed of not less than three members of the
board, to be appointed by the board. Said committee may act, by majority vote of
all its members, on such specific matters within the competence of the board, as
may be delegated to it in the by-laws or on a majority vote of the board, except
with respect to: (1) approval of any action for which shareholders' approval is
also required; (2) the filling of vacancies in the board; (3) the amendment or
repeal of by-laws or the adoption of new by-laws; (4) the amendment or repeal
of any resolution of the board which by its express terms is not so amendable or
repealable; and (5) a distribution of cash dividends to the shareholders.
TITLE IV
Powers of Corporations
2. Of succession by its corporate name for the period of time stated
in the articles of incorporation and the certificate of
incorporation;
10. To establish pension, retirement, and other plans for the benefit
of its directors, trustees, officers and employees; and
The provisions of the next preceding paragraph shall apply to any contract
whereby a corporation undertakes to manage or operate all or substantially all of
the business of another corporation whether such contracts are called service
contracts, operating agreements or otherwise: Provided, however, that such
service contracts or operating agreements which relate to the exploration,
development, exploitation or utilization of natural resources may be entered into
for such periods as may be provided by the pertinent laws or regulations. (n)
SECTION 45. Ultravires Acts of Corporations. — No corporation under
this Code shall possess or exercise any corporate powers except those conferred
by this Code or by its articles of incorporation and except such as are necessary or
incidental to the exercise of the powers so conferred. (n)
TITLE V
By-Laws
4. The form for proxies of stockholders and members and the
manner of voting them;
Should there be no bidder at the public auction who offers to pay the full
amount of the balance on the subscription together with accrued interest, costs
of advertisement and expenses of sale, for the smallest number of shares or
fraction of a share, the corporation may, subject to the provisions of this Code,
bid for the same, and the total amount due shall be credited as paid in full in the
books of the corporation. Title to all the shares of stock covered by the
subscription shall be vested in the corporation as treasury shares and may be
disposed of by said corporation in accordance with the provisions of this Code.
(39a-46a)
SECTION 69. When Sale May Be Questioned. — No action to recover
delinquent stock sold can be sustained upon the ground of irregularity or defect
in the notice of sale, or in the sale itself of the delinquent stock, unless the party
seeking to maintain such action first pays or tenders to the party holding the
stock the sum for which the same was sold, with interest from the date of sale at
the legal rate; and no such action shall be maintained unless it is commenced by
the filing of a complaint within six (6) months from the date of sale. (47a)
SECTION 70. Court Action to Recover Unpaid Subscription . — Nothing in
this Code shall prevent the corporation from collecting by action in a court of
proper jurisdiction the amount due on any unpaid subscription, with accrued
interest, costs and expenses. (49a)
SECTION 71. Effect of Delinquency. — No delinquent stock shall be
voted for or be entitled to vote or to representation at any stockholders' meeting,
nor shall the holder thereof be entitled to any of the rights of a stockholder
except the right to dividends in accordance with the provisions of this Code, until
and unless he pays the amount due on his subscription with accrued interest, and
the costs and expenses of advertisement, if any. (50a)
SECTION 72. Rights of Unpaid Shares. — Holders of subscribed shares
not fully paid which are not delinquent shall have all the rights of a stockholder.
(n)
SECTION 73. Lost or Destroyed Certificates. — The following procedure
shall be followed for the issuance by a corporation of new certificate(s) of stock in
lieu of those which have been lost, stolen or destroyed:
2. After verifying the affidavit and other information and evidence
with the books of the corporation, said corporation shall publish a
notice in a newspaper of general circulation published in the
place where the corporation has its principal office, once a week
for three (3) consecutive weeks at the expense of the registered
owner of the certificate(s) of stock which have been lost, stolen
or destroyed. The notice shall state the name of said corporation,
the name of the registered owner and the serial number(s) of
said certificate(s), and the number of shares represented by such
certificate(s), and that after the expiration of one (1) year from
the date of the last publication, if no contest has been presented
to said corporation regarding said certificate(s) of stock, the right
to make such contest shall be barred and said corporation shall
cancel in its books the certificate(s) of stock which has been lost,
stolen or destroyed and issue in lieu thereof new certificate(s) of
stock, unless the registered owner files a bond or other security in
lieu thereof as may be required, running for a period of one (1)
year for a sum and in such form and with such sureties as may be
satisfactory to the board of directors, in which case a new
certificate may be issued even before the expiration of the one
(1) year period provided herein: Provided, That if a contest has
been presented to said corporation or if an action is pending in
court regarding the ownership of said certificate(s) of stock which
have been lost, stolen or destroyed, the issuance of the new
certificate(s) of stock in lieu thereof shall be suspended until the
final decision by the court regarding the ownership of said
certificate(s) of stock which have been lost, stolen or destroyed.
TITLE X
Appraisal Right
SECTION 81. Instances of Appraisal Right. — Any stockholder of a
corporation shall have the right to dissent and demand payment of the fair value
of his shares in the following instances:
7. The provisions of this section do not in any way impair any right
of a transferee regarding any right to rescind the transaction or to
recover under any applicable warranty, express or implied.
5. To the extent that the stockholders are actively engaged in the
management or operation of the business and affairs of a close
corporation, the stockholders shall be held to strict fiduciary
duties to each other and among themselves. Said stockholders
shall be personally liable for corporate torts unless the
corporation has obtained reasonably adequate liability insurance.
3. The directors are accustomed to take informal action with the
express or implied acquiescence of all the stockholders; or
The articles of incorporation may include any other provision not contrary to law for
the regulation of the affairs of the corporation. (n)
4. The names and addresses of the persons who are to supervise
the winding up of the affairs of the corporation.
TITLE XIV
Dissolution
SECTION 117. Methods of Dissolution. — A corporation formed or
organized under the provisions of this Code may be dissolved voluntarily or
involuntarily. (n)
SECTION 118. Voluntary Dissolution where no Creditors are Affected. —
In case dissolution of a corporation does not prejudice the rights of any creditor
having a claim against such corporation, then such dissolution may be effected by
majority vote of the board of directors or trustees, and by a resolution duly
adopted by the affirmative vote of the stockholders owning at least two-thirds
(2/3) of the outstanding capital stock or of at least two-thirds (2/3) of the
members at a meeting to be held on the call of the directors or trustees after
publishing the notice of the time, place and object of the meeting for three (3)
consecutive weeks in a newspaper published in the place where the principal
office of said corporation is located; and if no newspaper is published in such
place, then in a newspaper of general circulation in the Philippines, and after
sending such notice to each stockholder or member either by registered mail or
personal delivery at least thirty (30) days prior to said meeting. A copy of the
resolution authorizing the dissolution shall be certified by a majority of the board
of directors or trustees and countersigned by the secretary of the corporation. The
Securities and Exchange Commission shall thereupon issue the certificate of
dissolution. (62a)
SECTION 119. Voluntary Dissolution where Creditors are Affected. —
Where the dissolution of a corporation may prejudice the rights of any creditor, a
petition for dissolution of a corporation shall be filed with the Securities and
Exchange Commission. The petition shall be signed by a majority of its board of
directors or trustees or other officers having the management of its affairs,
verified by its president or secretary or one of its directors or trustees, and shall
set forth all claims and demands against it, and that its dissolution was resolved
upon by the affirmative vote of the stockholders representing at least two-thirds
(2/3) of the outstanding capital stock or by at least two-thirds (2/3) of the
members at a meeting of its stockholders or members called for that purpose.
If the petition is sufficient in form and substance, the Commission, by an
order reciting the purpose of the petition, shall fix a date on or before which
objections thereto may be filed by any person, which date shall not be less than
thirty (30) days nor more than sixty (60) days after the entry of the order. Before
such date, a copy of the order shall be published at least once a week for three
(3) consecutive weeks in a newspaper of general circulation published in the
municipality or city where the principal office of the corporation is situated, or if
there be no such 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 municipality or city.
Upon five (5) days notice, given after the date on which the right to file
objections as fixed in the order has expired, the Commission shall proceed to hear
the petition and try any issue made by the objections filed; and if no such
objection is sufficient, and the material allegations of the petition are true, it
shall render judgment dissolving the corporation and directing such disposition of
its assets as justice requires, and may appoint a receiver to collect such assets
and pay the debts of the corporation. (Rule 104, RCa)
SECTION 120. Dissolution by Shortening Corporate Term . — A
voluntary dissolution may be effected by amending the articles of incorporation
to shorten the corporate term pursuant to the provisions of this Code. A copy of
the amended articles of incorporation shall be submitted to the Securities and
Exchange Commission in accordance with this Code. Upon approval of the
amended articles of incorporation or the expiration of the shortened term, as the
case may be, the corporation shall be deemed dissolved without any further
proceedings, subject to the provisions of this Code on liquidation. (n)
SECTION 121. Involuntary Dissolution. — A corporation may be
dissolved by the Securities and Exchange Commission upon filing of a verified
complaint and after proper notice and hearing on grounds provided by existing
laws, rules and regulations. (n)
SECTION 122. Corporate Liquidation. — Every corporation whose
charter expires by its own limitation or is annulled by forfeiture or otherwise, or
whose corporate existence for other purposes is terminated in any other manner,
shall nevertheless be continued as a body corporate for three (3) years after the
time when it would have been so dissolved, for the purpose of prosecuting and
defending suits by or against it and enabling it to settle and close its affairs, to
dispose of and convey its property and to distribute its assets, but not for the
purpose of continuing the business for which it was established.
At any time during said three (3) years, said corporation is authorized and
empowered to convey all of its property to trustees for the benefit of
stockholders, members, creditors, and other persons in interest. From and after
any such conveyance by the corporation of its property in trust for the benefit of
its stockholders, members, creditors and others in interest, all interest which the
corporation had in the property terminates, the legal interest vests in the
trustees, and the beneficial interest in the stockholders, members, creditors or
other persons in interest.
Upon the winding up of the corporate affairs, any asset distributable to any
creditor or stockholder or member who is unknown or cannot be found shall be
escheated to the city or municipality where such assets are located. cd
2. The address, including the street number, of the principal office
of the corporation in the country or state of incorporation;
1. Failure to file its annual report or pay any fees as required by this
Code;
1. All claims which have accrued in the Philippines have been paid,
compromised or settled;
TITLE XVI
Miscellaneous Provisions
SECTION 137. Outstanding Capital Stock Defined. — The term
"outstanding capital stock", as used in this Code, means the total shares of stock
issued to subscribers or stockholders, whether or not fully or partially paid (as
long as there is a binding subscription agreement), except treasury shares. (n)
SECTION 138. Designation of Governing Boards. — The provisions of
specific provisions of this Code to the contrary notwithstanding, non-stock or
special corporations may, through their articles of incorporation or their by-laws,
designate their governing boards by any name other than as board of trustees.
(n)
SECTION 139. Incorporation and Other Fees. — The Securities and
Exchange Commission is hereby authorized to collect and receive fees as
authorized by law or by rules and regulations promulgated by the Commission.
(n)
SECTION 140. Stock Ownership in Certain Corporations. — Pursuant to
the duties specified by Article XIV of the Constitution, the National Economic and
Development Authority shall, from time to time, make a determination of
whether the corporate vehicle has been used by any corporation or by business or
industry to frustrate the provisions thereof or of applicable laws, and shall submit
to the Batasang Pambansa, whenever deemed necessary, a report of its findings,
including recommendations for their prevention or correction.
Maximum limits may be set by the Batasang Pambansa for stockholdings in
corporations declared by it to be vested with a public interest pursuant to the
provisions of this section, belonging to individuals or groups of individuals related
to each other by consanguinity or affinity or by close business interests, or
whenever it is necessary to achieve national objectives, prevent illegal
monopolies or combinations in restraint of trade, or to implement national
economic policies declared in laws, rules and regulations designed to promote the
general welfare and foster economic development.
In recommending to the Batasang Pambansa corporations, businesses or
industries to be declared vested with a public interest and in formulating
proposals for limitations on stock ownership, the National Economic and
Development Authority shall consider the type and nature of the industry, the
size of the enterprise, the economies of scale, the geographic location, the extent
of Filipino ownership, the labor intensity of the activity, the export potential, as
well as other factors which are germane to the realization and promotion of
business and industry.
SECTION 141. Annual Report of Corporations. — Every corporation,
domestic or foreign, lawfully doing business in the Philippines, shall submit to the
Securities and Exchange Commission an annual report of its operations, together
with a financial statement of its assets and liabilities, certified by any
independent certified public accountant in appropriate cases, covering the
preceding fiscal year and such other requirements as the Securities and Exchange
Commission may require. Such report shall be submitted within such period as
may be prescribed by the Securities and Exchange Commission. (n) cd i
Published in the Official Gazette, Vol. 76 No. 29 Page 4955 on July 21, 1980.