Corporation Law (BP68) Comparison Revised Corporation Code (R.A 112321)
CORPORATION LAW (BP68) |
REVISED CORPORATION
CODE (RA 112321) |
REMARKS |
TITLE I GENERAL PROVISIONS DEFINITIONS AND CLASSIFICATIONS |
TITLE I GENERAL PROVISIONS DEFINITIONS AND
CLASSIFICATIONS |
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Section 1. Title of the Code. – This Code
shall be known as "The Corporation Code of the Philippines." (n) |
SECTION 1. Title of the Code. –
This Code shall be known as the “Revised
Corporation Code of the Philippines” |
The new law will
be known as “Revised Corporation Code” |
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) |
SEC. 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 incidental to its
existence. |
same |
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 corporations are non-stock corporations. (3a) |
SEC. 3. Classes of Corporations. –
Corporations formed or organized under this Code may be stock or nonstock
corporations. Stock corporations are
those which have capital stock divided into shares and are authorized to
distribute to the holders of such shares, dividends, or allotments of the
surplus profits on the basis of the shares held. All other corporations
are nonstock corporations |
Change in form |
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) |
SEC. 4.
C o r p o r a t i o n s C r e a t e d b y S p e c i a l L a w s o r
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. |
Same |
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 inthe articles of incorporation as originally forming
and composing the corporation and who are signatories thereof. Corporators in a stock corporation are
called stockholders or shareholders. Corporators in a non-stock corporation
are called members. (4a) |
SEC. 5.
C o r p o r a t o r s a n d I n c o r p o r a t o r s , S t o c k h o
l d e r s a n d M e m b e r s . – Corporators are those who compose a
corporation, whether as stockholders or shareholders
in a stock corporation or as members in a nonstock corporation.
Incorporators are those stockholders or members mentioned in the articles of
incorporation as originally forming and composing the corporation and who are
signatories thereof. |
Change in form |
Section 6. Classification of shares . – The
shares of stock of stock corporations may be divided into classes or series
of shares, or both, any of which classes or series of shares may have such
rights, privileges or restrictions as may be stated in the articles of
incorporation: Provided, That no share may be deprived of voting rights
except those classified and issued as "preferred" or
"redeemable" shares, unless otherwise provided in this Code:
Provided, further, That there shall always be a class or series of shares
which have complete voting rights. Any or all of the shares or series of
shares may have a par value or have no par value as may be provided for in
the articles of incorporation: Provided, however, That banks, trust
companies, insurance companies, public utilities, and building and loan
associations shall not be permitted to issue no-par value shares of stock. Preferred shares of stock issued by any
corporation may be given preference in the distribution of the assets of the
corporation in case of liquidation and in the distribution of dividends, or
such other preferences as may be stated in the articles of incorporation
which are not violative of the provisions of this Code: Provided, That
preferred shares of stock may be issued only with a stated par value. The
board of directors, where authorized in the articles of incorporation, may
fix the terms and conditions of preferred shares of stock or any series thereof:
Provided, That such terms and conditions shall be effective upon the filing
of a certificate thereof with the Securities and Exchange Commission. Shares of capital stock issued without par
value shall be deemed fully paid and non-assessable and the holder of such
shares shall not be liable to the corporation or to its creditors in respect
thereto: Provided; That shares without par value may not be issued for a
consideration less than the value of five (P5.00) pesos per share: Provided,
further, That the entire consideration received by the corporation for its
no-par value shares shall be treated as capital and shall not be available
for distribution as dividends. A corporation may, furthermore, classify its
shares for the purpose of insuring compliance with constitutional or legal
requirements. Except as otherwise provided in the articles
of incorporation and stated in the certificate of stock, each share shall be
equal in all respects to every other share. Where the articles of incorporation provide
for non-voting shares in the cases allowed by this Code, the holders of such
shares shall nevertheless be entitled to vote on the following matters: 1. Amendment of the articles of
incorporation; 2. Adoption and amendment of by-laws; 3. Sale, lease, exchange, mortgage, pledge
or other disposition of all or substantially all of the corporate property; 4. Incurring, creating or increasing bonded
indebtedness; 5. Increase or decrease of capital stock; 6. Merger or consolidation of the
corporation with another corporation or other corporations; 7. Investment of corporate funds in another
corporation or business in accordance with this Code; and 8. Dissolution of the corporation. Except as provided in the immediately
preceding paragraph, the vote necessary to approve a particular corporate act
as provided in this Code shall be deemed to refer only to stocks with voting
rights. (5a) |
Section
6. Classification of shares. The
Classification of shares, their corresponding rights, privileges, or
restrictions, and their stated par value, if any, must be indicated in the
articles of incorporation. Each share shall be equal in all respects to every
other share, except as otherwise provided in the articles of incorporation
and in the certificate of stock. The shares in stock
corporations may be divided into classes or series of shares, or both. No
share may be deprived of voting rights except those classified and issued as
“preferred” or “redeemable” shares, unless otherwise provided in this Code:
Provided, That there shall always be a class or series of shares with
complete voting rights. Holders
of nonvoting shares shall nevertheless be entitled to vote on the following
matters: (a)
Amendment of the articles of incorporation; (b) Adoption
and amendment of bylaws; (c)
Sale, lease, exchange, mortgage, pledge, or
other disposition of all or substantially all of the corporate property; (d) Incurring,
creating, or increasing bonded indebtedness; (e)
Increase or decrease of authorized capital
stock; (f)
Merger or consolidation of the corporation
with another corporation or other corporations; (g) Investment
of corporate funds in another corporation or business in accordance with this
Code; and (h) Dissolution
of the corporation Except
as provided in the immediately preceding paragraph, the vote required under
this Code to approve a particular corporate act shall be deemed to refer only
to stocks with voting rights. The
shares or series of shares may or may not have a par value: Provided, That
banks, trust, insurance, and preneed companies, public utilities, building
and loan associations, and other corporations authorized to obtain or access
funds from the public, whether publicly listed or not, shall not be permitted
to issue no-par value shares of stock. Preferred
shares of stock issued by a corporation may be given preference in the
distribution of dividends and in the distribution of corporate assets in case
of liquidation, or such other preferences: Provided, That preferred shares of
stock may be issued only with a stated par value. The board of directors,
where authorized in the articles of incorporation, may fix the terms and
conditions of preferred shares of stock or any series thereof: P r o vid e d
, f u r t h e r , That such terms and conditions shall be effective upon
filing of a certificate thereof with the Securities and Exchange Commission,
hereinafter referred to as the “Commission”. Shares
of capital stock issued without par value shall be deemed fully paid and
nonassessable and the holder of such shares shall not be liable to the
corporation or to its creditors in respect thereto: Provided, That no-par
value shares must be issued for a consideration of at least Five pesos
(P5.00) per share: Provided, further, That the entire consideration received
by the corporation for its no-par value shares shall be treated as capital
and shall not be available for distribution as dividends. A
corporation may further classify its shares for the purpose of ensuring
compliance with constitutional or legal requirements. |
change in corporations not permitted to
issue no-par shares |
Section 7. Founders’ shares . – Founders’
shares classified as such in the articles of incorporation may be given
certain rights and privileges not enjoyed by the owners of other stocks,
provided that where the exclusive right to vote and be voted for in the
election of directors is granted, it must be for a limited period not to
exceed five (5) years subject to the approval of the Securities and Exchange
Commission. The five-year period shall commence from the date of the
aforesaid approval by the Securities and Exchange Commission. (n |
SEC.
7. Founders’ Shares . – Founders’ shares may be given certain rights and
privileges not enjoyed by the owners of other stocks. Where the exclusive
right to vote and be voted for in the election of directors is granted, it
must be for a limited period not to exceed five (5) years from the date of
incorporation: Provided, That such
exclusive right shall not be allowed if its exercise will violate Commonwealth
Act No. 108, otherwise known as the “Anti-Dummy Law”; Republic Act No. 7042,
otherwise known as the “Foreign Investments Act of 1991”; and other
pertinent laws. |
The RCC Introduces a new rule. |
Section 8. Redeemable shares . – Redeemable
shares may be issued by the corporation when expressly so provided in the
articles of incorporation. They may be purchased or taken up by the
corporation upon the expiration of a fixed period, regardless of the
existence of unrestricted retained earnings in the books of the corporation,
and upon such other terms and conditions as may be stated in the articles of
incorporation, which terms and conditions must also be stated in the
certificate of stock representing said shares. (n) |
SEC.
8. Redeemable Share s . – Redeemable shares may be issued by the corporation
when expressly provided in the articles of incorporation. They are shares which may be
purchased by the corporation from the holders of such shares upon the
expiration of a fixed period, regardless of the existence of unrestricted
retained earnings in the books of the corporation, and upon such other terms
and conditions stated in the articles of incorporation
and the certificate of stock representing the shares, subject to rules and
regulations issued by the Commission. |
New: subject to rules and regulations issued
by the Commission. |
Section 9. Treasury shares . – Treasury
shares are shares of stock which have been issued and fully paid for, but
subsequently reacquired by the issuing corporation by purchase, redemption,
donation or through some other lawful means. Such shares may again be
disposed of for a reasonable price fixed by the board of directors. (n) |
SEC.
9. Treasury Shares . – Treasury shares are shares of stock which have been
issued and fully paid for, but subsequently reacquired by the issuing
corporation through purchase, redemption, donation, or some other lawful
means. Such shares may again be
disposed of for a reasonable price fixed by the board of directors. |
Same |
TITLE II INCORPORATION AND ORGANIZATION OF PRIVATE
CORPORATIONS |
TITLE II INCORPORATION AND ORGANIZATION OF PRIVATE
CORPORATIONS |
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Section 10. Number and qualifications of
incorporators . – Any number of natural persons not less than five (5) but not more than fifteen (15), all of
legal age and a majority of whom are residents of the Philippines, may form a
private corporation for any lawful purpose or purposes. Each of the
incorporators of a stock corporation must own or be a subscriber to at least
one (1) share of the capital stock of the corporation. (6a) |
SEC.
10. Number and Qualificatio ns of Incorporators . – Any person, partnership, association or corporation, singly or
jointly with others but not more than fifteen (15) in number, may
organize a corporation for any lawful purpose or purposes: Provided, That natural persons who are
licensed to practice a profession, and partnerships or associations organized
for the purpose of practicing a profession, shall not be allowed to organize
as a corporation unless otherwise provided under special laws. Incorporators
who are natural persons must be of legal age. Each
incorporator of a stock corporation must own or be a subscriber to at least
one (1) share of the capital stock. A corporation with a
single stockholder is considered a One Person Corporation as described in
Title XIII, Chapter III of this Code. |
Partnership, association or corporation,
singly or jointly with others may now form a corporation |
Section 11.
Corporate term . – A corporation shall exist for a period not exceeding fifty
(50) years from the date of incorporation unless sooner dissolved or unless
said period is extended. The corporate term as originally stated in the
articles of incorporation may be extended for periods not exceeding fifty
(50) years in any single instance by an amendment of the articles of
incorporation, in accordance with this Code; Provided, That no extension can
be made earlier than five (5) years prior to the original or subsequent
expiry date(s) unless there are justifiable reasons for an earlier extension
as may be determined by the Securities and Exchange Commission. (6) |
SEC.
11. Corporate Term . – A corporation
shall have perpetual existence unless
its articles of incorporation provides otherwise. Corporations with certificates of
incorporation issued prior to the effectivity of this Code, and which
continue to exist, shall have perpetual existence, unless the corporation,
upon a vote of its stockholders representing a majority of its outstanding capital
stock, notifies the Commission that it elects to retain its specific
corporate term pursuant to its articles of incorporation: Provided , that any
change in the corporate term under this section is without prejudice to the
appraisal right of dissenting stockholders in accordance with the provisions
of this Code. A corporate term for a specific
period may be extended or shortened by amending the articles of
incorporation: Provided, That no extension may be made earlier than
three (3) years prior to the original or subsequent expiry date(s) unless
there are justifiable reasons for an earlier extension as may be determined
by the Commission: Provided, further, That such extension of the corporate
term shall take effect only on the day following the original or subsequent
expiry date(s). A corporation whose term has expired
may apply for a revival of its corporate existence, together with all
therights and privileges under its certificate of incorporation and subject
to all of its duties, debts and liabilities existing prior to its revival.
Upon approval by the Commission, the corporation shall be deemed revived and
a certificate of revival of corporate existence shall be issued, giving it
perpetual existence, unless its application for revival provides otherwise. No application for revival of
certificate of incorporation of banks, banking and quasi-banking
institutions, preneed, insurance and trust companies, nonstock savings and
loan associations, pawnshops, corporations engaged in money service business,
and other financial intermediaries shall be approved by the Commission unless
accompanied by a favorable recommendation of the appropriate government
agency. |
Perpetual
Existence and substantial changes |
Section 12. Minimum capital stock required
of stock corporations . – Stock corporations incorporated under this Code
shall not be required to have any minimum authorized capital stock except as
otherwise specifically provided for by special law, and subject to the
provisions of the following section. |
SEC.
12. M I n I m u m C a p I t a l S t o c k N o t R e q u I r e d o f Stock
Corporations . – Stock
corporations shall not be required to have a minimum capital stock, except as
otherwise specifically provided by special law. |
Change in form |
Section
13. Amount of capital stock to be subscribed and paid for the purposes of
incorporation . – At least twenty-five percent (25%) of the authorized
capital stock as stated in the articles of incorporation must be subscribed
at the time of incorporation, and at least twenty-five (25%) per cent of the
total subscription must be paid upon subscription, the balance to be payable
on a date or dates fixed in the contract of subscription without need of
call, or in the absence of a fixed date or dates, upon call for payment by
the board of directors: Provided, however, That in no case shall the paid-up
capital be less than five Thousand (P5,000.00) pesos. (n) |
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Removed |
Section 14. Contents of the articles of
incorporation . – All corporations organized under this code shall file with
the Securities and Exchange Commission articles of incorporation in any of
the official languages duly signed and acknowledged by all of the
incorporators, containing substantially the following matters, except as
otherwise prescribed by this Code or by special law: 1. The name of the corporation; 2. The specific purpose or purposes for
which the corporation is being incorporated. Where a corporation has more
than one stated purpose, the articles of incorporation shall state which is
the primary purpose and which is/are the secondary purpose or purposes: Provided, That a non-stock corporation may
not include a purpose which would change or contradict its nature as such; 3. The place where the principal office of
the corporation is to be located, which must be within the Philippines; 4. The term for which the corporation is to
exist; 5. The names, nationalities and residences
of the incorporators; 6. The number of directors or trustees,
which shall not be less than five (5) nor more than fifteen (15); 7. The names, nationalities and residences
of persons who shall act as directors or trustees until the first regular
directors or trustees are duly elected and qualified in accordance with this
Code; 8. If it be a stock corporation, the amount
of its authorized capital stock in lawful money of the Philippines, the
number of shares into which it is divided, and in case the share are par
value shares, the par value of each, the names, nationalities and residences
of the original subscribers, and the amount subscribed and paid by each on
his subscription, and if some or all of the shares are without par value,
such fact must be stated; 9. If it be a non-stock corporation, the
amount of its capital, the names, nationalities and residences of the
contributors and the amount contributed by each; and 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%)
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 twentyfive (25%)
percent of the said subscription, such paid-up capital being not less than
five thousand (P5,000.00) pesos. |
SEC. 13.
Contents of the Articles of Incorporation . – All corporations shall file
with the Commission articles of incorporation in any of the official
languages, duly signed and acknowledged or authenticated, in such form and
manner as may be allowed by the Commission, containing substantially the
following matters, except as otherwise prescribed by this Code or by special
law: (a)
The name of the corporation; (b)
The specific purpose or purposes for which the corporation is being formed.
Where a corporation has more than one stated purpose, the articles of
incorporation shall indicate the primary purpose and the secondary purpose or
purposes: Provided,
That a nonstock corporation may not include a purpose which would change or
contradict its nature as such; (c)
The place where the principal office of the corporation is to be located,
which must be within the Philippines; (d)
The term for which the corporation is to exist, if the corporation has not
elected perpetual existence; (e)
The names, nationalities, and residence addresses of the incorporators; (f)
The number of directors, which shall not be more than fifteen (15) or the
number of trustees which may be more than fifteen (15); (g)
The names, nationalities, and residence addresses of persons who shall act as
directors or trustees until the first regular directors or trustees are duly
elected and qualified in accordance with this Code; (h)
If it be a stock corporation, the amount of its authorized capital stock,
number of shares into which it is divided, the par value of each, names,
nationalities, and residence addresses of the original subscribers, amount
subscribed and paid by each on the subscription, and a statement that some or
all of the shares are without par value, if applicable; (i)
If it be a nonstock corporation, the amount of its capital, the names,
nationalities, and residence addresses of the contributors, and amount
contributed by each; and (j)
Such other matters consistent with law and which the incorporators may deem
necessary and convenient. An arbitration
agreement may be provided in the articles of incorporation pursuant to
Section 181 of this Code. The articles of
incorporation and applications for amendments thereto may be filed with the
Commission in the form of an electronic document, in accordance with the
Commission’s rules and regulations on electronic filing. |
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Section 15 |
Section
15. |
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Section 16. Amendment of Articles of
Incorporation. – Unless otherwise prescribed by this Code or by special law,
and for legitimate purposes, any provision or matter stated in the articles
of incorporation may be amended by a majority vote of the board of directors
or trustees and the vote or written 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 the
provisions of this Code, or the vote or written assent of at least twothirds
(2/3) of the members if it be a
nonstock corporation. 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
their 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. |
SEC.
15. Amendment of Articles of Incorporation. – Unless otherwise prescribed by
this Code or by special law, and for legitimate purposes, any provision or
matter stated in the articles of incorporation may be amended by a majority
vote of the board of directors or trustees and the vote or written 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 the provisions of this Code. The articles of
incorporation of a nonstock corporation may be amended by the vote or written
assent of majority of the trustees and at least two-thirds (2/3) of the
members. The
original and amended articles together shall contain all provisions required
by law to be set out in the articles of incorporation. Amendments to the
articles 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, with a statement that the amendments
have been duly approved by the required vote of the stockholders or members,
shall be submitted to the Commission. The
amendments shall take effect upon their approval by the Commission or from
the date of filing with the said Commission if not acted upon within six (6)
months from the date of filing for a cause not attributable to the
corporation. |
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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: 1. That the articles of
incorporation or any amendment thereto is not substantially in accordance
with the form prescribed herein; 2. That the purpose or purposes of the
corporation are patently unconstitutional, illegal, immoral, or contrary to
government rules and regulations; 3. That the Treasurer’s Affidavit
concerning the amount of capital stock subscribed and/or paid is false; 4.
That the percentage of ownership of the capital stock to be owned by citizens
of the Philippines has not been complied with as required by existing laws or
the Constitution. No articles of incorporation or amendment to articles of
incorporation of banks, banking and quasi-banking institutions, building and
loan associations, trust companies and other financial intermediaries,
insurance companies, public utilities, educational
institutions, and other corporations governed by special laws shall be
accepted or approved by the Commission unless accompanied by a favorable
recommendation of the appropriate government agency to the effect that such
articles or amendment is in accordance with law. (n) |
SEC. 16.
Grounds When Articles of Incorporation or Amendment may be Disapproved. – The
Commission may disapprove the
articles of incorporation or any amendment thereto if the same is not compliant with the requirements
of this Code: Provided, That the Commission shall give the incorporators,
directors, trustees, or officers a reasonable time from receipt of the
disapproval within which to modify the objectionable portions of the articles
or amendment. The following are grounds for such disapproval: (a)The articles
of incorporation or any amendment thereto is not substantially in accordance
with the form prescribed herein; (b)The purpose or purposes of the
corporation are patently unconstitutional, illegal, immoral or contrary to
government rules and regulations; (c)The certification concerning the amount
of capital stock subscribed and/or paid is false; and (d)The required
percentage of Filipino ownership of the capital stock under existing laws or
the Constitution has not been complied with. No articles of incorporation or
amendment to articles of incorporation of banks, banking and quasi-banking
institutions, preneed, insurance and trust companies, NSSLAS, pawnshops, and other financial intermediaries shall be
approved by the Commission unless accompanied by a favorable recommendation
of the appropriate government agency to the effect that such articles or
amendment is in accordance with law. |
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Section 18.
Corporate name. – No corporate name may be allowed by the Securities and Exchange Commission if the proposed name is
identical or deceptively or confusingly similar to that of any existing
corporation or to any other name already protected by law or is patently
deceptive, confusing or contrary to existing laws. When a change in the
corporate name is approved, the Commission shall issue an amended certificate
of incorporation under the amended name. (n) |
SEC. 17. Corporate
name. – No corporate name shall be allowed by the Commission if it is not
distinguishable from that already reserved or registered for the use of
another corporation, or if such name
is already protected by law, or when its use is contrary to existing law,
rules and regulations. A name is not distinguishable even if it contains one
or more of the following: (a) The word “corporation”, “company”,
“incorporated”, “limited”, “limited liability”, or an abbreviation of one of
such words; and (b) Punctuations, articles, conjunctions, contractions,
prepositions, abbreviations, different tenses, spacing, or number of the same
word or phrase. The Commission, upon determination that the corporate name
is: (1) not distinguishable from a name already reserved or registered for
the use of another corporation; (2) already protected by law; or (3) contrary
to law, rules and regulations, may summarily order the corporation to
immediately cease and desist from using such name and require the corporation
to register a new one. The Commission shall also cause the removal of all
visible signages, marks, advertisements, labels, prints and other effects
bearing such corporate name. Upon the approval of the new corporate name, the
Commission shall issue a certificate of incorporation under the amended name.
If the corporation fails to comply with the Commission’s order, the
Commission may hold the corporation and its responsible directors or officers
in contempt and/or hold them administratively, civilly and/or criminally
liable under this Code and other applicable laws and/or revoke the
registration of the corporation. |
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Section 19. Commencement of corporate
existence. – A private corporation formed or organized under this Code
commences tohave corporate existence and juridical personality and is deemed
incorporated from the date the Securities and Exchange Commission issues a
certificate of incorporation under its official seal; and thereupon the
incorporators, stockholders/members and their successors shall constitute a
body politic and corporate under the name stated in the articles of
incorporation for the period of time mentioned therein, unless said period is
extended or the corporation is sooner dissolved in accordance with law. (n) |
SEC. 18.
Registration, Incorporation and Commencement of Corporate Existence. – A person or group of persons desiring
toincorporate shall submit the intended corporate name to the Commission for
verification. If the Commission finds
that the name is distinguishable from a name already reserved or registered
for the use of another corporation, not protected by law and not contrary to
law, rules and regulations, the name shall be reserved in favor of the
incorporators. The incorporators shall
then submit their articles of incorporation and bylaws to the
Commission. If the Commission
finds that the submitted documents and information are fully compliant with
the requirements of this Code, other relevant laws, rules and regulations,
the Commission shall issue the certificate of incorporation. A private
corporation organized under this Code commences its corporate existence and
juridical personality from the date the Commission issues the certificate of
incorporation under its official seal and thereupon the incorporators,
stockholders/members and their successors shall constitute a body corporate
under the name stated in the articles of incorporation for the period of time
mentioned therein, unless said period is extended or the corporation |
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Section 20. De facto corporations. – The due
incorporation of any corporation claiming in good faith to be a corporation
under this Code, and its right to exercise corporate powers, shall not be
inquired into collaterally in any private suit to which such corporation may
be a party. Such inquiry may be made by the Solicitor General in a quo warranto
proceeding. (n) |
SEC. 19. De
facto Corporations. – The due incorporation of any corporation claiming in
good faith to be a corporation under this Code, and its right to exercise
corporate powers, shall not be inquired into collaterally in any private suit
to which such corporation may be a party. Such inquiry may be made by the
Solicitor General in a quo warranto proceeding |
Change in form |
Section 21. Corporation by estoppel. – All
persons who assume to act as a corporation knowing it to be without authority
to do so shall be liable as general partners for all debts, liabilities and
damages incurred or arising as a result thereof: Provided, however, That when
any such ostensiblecorporation is sued on any transaction entered by it as a
corporation or on any tort committed by it as such, it shall not be allowed
to use as a defense its lack of corporate personality. On who assumes an
obligation to an ostensible corporation as such, cannot resist performance
thereof on the ground that there was in fact no corporation. (n) |
SEC. 20.
Corporation by Estoppel. – All persons who assume to act as a corporation
knowing it to be without authority to do so shall be liable as general
partners for all debts, liabilities and damages incurred or arising as a result
thereof: Provided, however, That when any such ostensible corporation is sued
on any transaction entered by itas a corporation or on any tort committed by
it as such, it shall not be allowed to use
its lack of corporate personality as a defense. Anyone who assumes an
obligation to an ostensible corporation as such cannot resist performance
thereof on the ground that there was in fact no corporation. |
|
Section 22. Effects on non-use of corporate
charter and continuous inoperation of a corporation. – If a corporation does
not formally organize and commence the transaction of its business or the
construction of its works within two (2) years from the date of its
incorporation, its corporate powers cease and the corporation shall be deemed
dissolved. However, if a corporation has commenced the transaction of its
business but subsequently becomes continuously inoperative for a period of at
least five (5) years, the same shall be a ground for the suspension or
revocation of its corporate franchise or certificate of incorporation. (19a) This provision shall not apply if the
failure to organize, commence the transaction of its businesses or the
construction of its works, or to continuously operate is due to causes beyond
the control of the corporation as may be determined by the Securities and
Exchange Commission. |
SEC. 21. Effects
of Non-Use of Corporate Charter and Continuous Inoperation. – If a
corporation does not formally organize and commence its business within five (5) years from the date of its
incorporation, its certificate of
incorporation shall be deemed revoked as of the day following the end of the
five-year period. However, if a corporation has commenced its
business but subsequently becomes inoperative for a period of at least five
(5) consecutive years, the Commission may, after due notice and hearing,
place the corporation under delinquent status. A delinquent
corporation shall have a period of two (2) years to resume operations and
comply with all requirements that the Commission shall prescribe. Upon
compliance by the corporation, the Commission shall issue an order lifting
the 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
incorporation. The Commission shall
give reasonable notice to, and coordinate with the appropriate regulatory
agency prior to the suspension or revocation of the certificate of
incorporation of companies under their special regulatory jurisdiction. |
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TITLE III BOARD OF
DIRECTORS/TRUSTEES AND OFFICERS |
TITLE III BOARD OF DIRECTORS/TRUSTEES AND
OFFICERS |
|
Section 23. The board of directors or
trustees. – Unless otherwise provided in this Code, the corporate powers of
all corporations formed under this Code shall be exercised, all business
conducted and all property of such corporations controlled and held by the
board of directors or trustees to be elected from among the holders of
stocks, or where there is no stock, from among the members of the
corporation, who shall hold office for one (1) year until their successors
are elected and qualified. (28a) Every director must own at least one (1)
share of the capital stock of the corporation of which he is a director,
which share shall stand in his name on the books of the corporation. Any
director who ceases to be the owner of at least one (1) share of the capital
stock of the corporation of which he is a director shall thereby cease to be
a director. Trustees of non-stock corporations must be members thereof. A
majority of the directors or trustees of all corporations organized under
this Code must be residents of the Philippines. |
SEC. 22. The Board
of Directors or Trustees of a
Corporation; Qualification and Term. – Unless otherwise provided in this
Code, the board of directors or trustees shall exercise the corporate powers,
conduct all business, and control all properties of the corporation. Directors
shall be elected for a term of one (1) year from among the holders of stocks
registered in the corporation’s books, while trustees shall be elected for a
term not exceeding three (3) years from among the members of the corporation.
Each director and trustee shall hold office until the successor is elected
and qualified. A director who ceases to own at least one (1) share of stock
or a trustee who ceases to be a member of the corporation shall cease to be
such. The board of the
following corporations vested with public interest shall have independent
directors constituting at least twenty percent (20%) of such board: a. Corporations
covered by Section 17.2 of Republic Act No. 8799, otherwise known as “The
Securities Regulation Code,” namely those whose securities are registered
with the Commission, corporations listed with an exchange or with assets of
at least Fifty million pesos (P50,000,000.00) and having two hundred (200) or
more holders of shares, with at least one hundred (100) shares of a class of
its equity shares; b. Banks and
quasi-banks, NSSLAs, pawnshops, corporations engaged in money service
business, pre-need, trust and insurance companies, and other financial
intermediaries; and c. Other
corporations engaged in business vested with public interest similar to the
above, as may be determined by the Commission, after taking into account
relevant factors which are germane to the objective and purpose of requiring
the election of an independent director, such as the extent of minority
ownership, type of financial products or securities issued or offered to
investors, public interest involved in the nature of business operations, and
other analogous factors. An independent
director is a person who, apart from shareholdings and fees received from the
corporation, is independent of management and free from any business or other
relationship which could, or could reasonably be perceived to materially
interfere with the exercise of independent judgment in carrying out the
responsibilities as a director. 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 regulations
governing their qualifications, disqualifications, voting requirements,
duration of term and term limit, maximum number of board memberships and
other requirements that the Commission will prescribe to strengthen their independence
and align with international best practices. |
|
Section 24. Election of directors or
trustees. – At all elections of directors or trustees, there must be present,
either in person or by representative authorized to act by written proxy, the
owners of a majority of the outstanding capital stock, or if there be no
capital stock, a majority of the members entitled to vote. The election must
be by ballot if requested by any voting stockholder or member. In stock
corporations, every stockholder entitled to vote shall have the right to vote
in person or by proxy the number of shares of stock standing, at the time
fixed in the by-laws, in his own name on the stock books of the corporation,
or where the bylaws are silent, at the time of the election; and said
stockholder may vote such number of shares for as many persons as there are
directors to be elected or he may cumulate said shares and give one candidate
as many votes as the number of directors to be elected multiplied by the
number of his shares shall equal, or he may distribute them on the
sameprinciple among as many candidates as he shall see fit: Provided, That
the total number of votes cast by him shall not exceed the number of shares
owned by him as shown in the books of the corporation multiplied by the whole
number of directors to be elected: Provided, however, That no delinquent
stock shall be voted. Unless otherwise provided in the articles of
incorporation or in the by-laws, members of corporations which have no
capital stock may cast as many votes as there are trustees to be elected but
may not cast more than one vote for one candidate. Candidates receiving the
highest number of votes shall be declared elected. Any meeting of the
stockholders or members called for an election may adjourn from day to day or
from time to time but not sine die or indefinitely if, for any reason, no
election is held, or if there are not present or represented by proxy, at the
meeting, the owners of a majority of the outstanding capital stock, or if
there be no capital stock, a majority of the members entitled to vote. (31a) |
SEC. 23. Election
of Directors or Trustees. – Except
when the exclusive right is reserved for holders of founders’ shares under
Section 7 of this Code, each stockholder or member shall have the right to
nominate any director or trustee who possesses all of the qualifications and
none of the disqualifications set forth in this Code. At
all elections of directors or trustees, there must be present, either in
person or through a representative authorized to act by written proxy, the
owners of majority of the outstanding capital stock, or if there be no
capital stock, a majority of the members entitled to vote. When so authorized
in the bylaws or by a majority of the board of directors, the stockholders or
members may also vote through remote communication or in absentia: Provided,
That the right to vote through such modes may be exercised in corporations
vested with public interest, notwithstanding the absence of a provision in
the by-laws of such corporations. A stockholder or
member who participates through remote communication or in absentia, shall be
deemed present for purposes of quorum.
The
election must be by ballot if requested by any voting stockholder or
member. 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 persons as there are directors to be elected; (b)
cumulate said shares and give one (1) candidate as many votes as the number
of directors to be elected multiplied by the number of the shares owned; or
(c) distribute them on the same principle among as many candidates as may be
seen fit: Provided, That the total number of votes cast shall not exceed the
number of shares owned by the stockholders as shown in the books of the
corporation multiplied by the whole number of directors to be elected:
Provided, however, That no delinquent stock shall be voted. Unless otherwise
provided in the articles of incorporation or in the bylaws, members of
nonstock corporations may cast as many votes as there are trustees to be
elected but may not cast more than one (1) vote for one (1) candidate.
Nominees for directors or trustees receiving the highest number of votes
shall be declared elected. If no election is
held, or the owners of majority of the outstanding capital stock or majority
of the members entitled to vote are not present in person, by proxy, or
through remote 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. The directors or
trustees elected shall perform their duties ascorporate governance, and
by-laws of the corporation prescribed by law, rules of good |
|
Section 25. Corporate officers, quorum. –
Immediately after their election, the directors of a corporation must
formally organize by the election of a president, who shall be a director, a
treasurer who may or may not be a director, a secretary who shall be a
resident and citizen of the Philippines, and such other officers as may be
provided for in the bylaws. Any two (2) or more positions may be held
concurrently by the same person, except that no one shall act as president
and secretary or as president and treasurer at the same time. The
directors or trustees and officers to be elected shall perform the duties
enjoined on them by law and the by-laws of the corporation. Unless the
articles of incorporation or the by-laws provide for a greater majority, a majority
of the number of directors or trustees as fixed in the articles of
incorporation shall constitute a quorum for the transaction of corporate
business, and every decision of at least a majority of the directors or
trustees present at a meeting at which there is a quorum shall be valid as a
corporate act, except for the election of officers which shall require the
vote of a majority of all the members of the board. Directors or trustees
cannot attend or vote by proxy at board meetings. (33a) |
SEC. 24. Corporate
Officers. – Immediately after their election, the directors of a corporation
must formally organize and elect: (a) a president, who must be a director;
(b) a treasurer, who must be a resident; (c) a secretary, who must be a
citizen and resident of the Philippines; and (d) such other officers as may
be provided in the bylaws. If the corporation is vested with public interest,
the board shall also elect a compliance officer. The same person may hold two (2) or more
positions concurrently, except that no one shall act as president and
secretary or as president and treasurer at the same time, unless otherwise
allowed in this Code. The
officers shall manage the corporation and perform such duties as may be
provided in the bylaws and/or as resolved by the board of directors. |
|
Section 26. Report of election of directors,
trustees and officers. – Within thirty (30) days after the election of the
directors, trustees and officers of the corporation, the secretary, or any
other officer of the corporation, shall submit to the Securities and Exchange
Commission, the names, nationalities and residences of the directors,
trustees, and officers elected. Should a director, trustee or officer die,
resign or in any manner cease to hold office, his heirs in case of his death,
the secretary, or any other officer of the corporation, or the director,
trustee or officerhimself, shall immediately report such fact to the
Securities and Exchange Commission. (n) |
SEC. 25. Report
of Election of Directors, Trustees and Officers, Non-holding of Election and
Cessation from Office. – Within thirty (30) days after the election of the
directors, trustees and officers of the corporation, the secretary, or any
other officer of the corporation, shall submit to the Commission, the names,
nationalities, shareholdings, and residence addresses of the directors,
trustees, and officers elected. The non-holding of
elections and the reasons therefor shall be reported to the Commission within
thirty (30) days from the date of the scheduled election. The report shall
specify a new date for the election, which shall not be later than sixty (60)
days from the scheduled date. If no new date has
been designated, or if the rescheduled election is likewise not held, the
Commission may, upon the application of a stockholder, member, director or
trustee, and after verification of the unjustified non-holding of the
election, summarily order that an election be held. The Commission shall have
the power to issue such orders as may be appropriate, including orders
directing the issuance of a notice stating the time and place of the
election, designated presiding officer, and the record date or dates for the
determination of stockholders or members entitled to vote. Notwithstanding any
provision of the articles of incorporation or bylaws to the contrary, the
shares of stock or membership represented at such meeting and entitled to
vote shall constitute a quorum for purposes of conducting an election under
this section. Should a director,
trustee or officer die, resign or in any manner cease to hold office, the
secretary, or the director, trustee or officer of the corporation, or in case
of death, the officer’s heirs shall, within seven (7) days from knowledge
thereof, report in writing such fact to the Commission. |
|
Section 27. Disqualification of directors,
trustees or officers. – No person convicted by final judgment of an offense
punishable by imprisonment for a period exceeding six (6) years, or a
violation of this Code committed within five (5) years prior to the date of
his election or appointment, shall qualify as a director, trustee or officer
of any corporation. (n) |
SEC. 26.
Disqualification of Directors, Trustees or Officers. – A person shall be disqualified from being a director, trustee, or
officer of any corporation if, within five (5) years prior to the election or
appointment as such, the person was: (a) Convicted by
final judgment: (1) Of an offense
punishable by imprisonment for a period exceeding six (6) years; (2) For violating
this Code; and(3) For violating Republic Act No. 8799, otherwise known as
“The Securities Regulation Code”; (b) Found
administratively liable for any offense involving fraud acts; and (c) By a foreign
court or equivalent foreign regulatory authority for acts, violations or
misconduct similar to those enumerated in paragraphs (a) and (b) above. The foregoing is
without prejudice to qualifications or other disqualifications, which the Commission,
the primary regulatory agency, or the Philippine Competition Commission may
impose in its promotion of good corporate governance or as a sanction in its
administrative proceedings. |
|
Section 28. Removal of directors or
trustees. – Any director or trustee of a corporation may be removed from
office by a vote of the stockholders holding or representing at least
two-thirds (2/3) of the outstanding capital stock, or if the corporation be a
non-stock corporation, by a vote of at least two-thirds (2/3) of the members
entitled to vote: Provided, That such removal shall take place either at a
regular meeting of the corporation or at a special meeting called for the
purpose, and in either case, after previous notice to stockholders or members
of the corporation of the intention to propose such removal at the meeting. A
special meeting of the stockholders or members of a corporation for the
purpose of removal of directors or trustees, or any of them, must be called
by the secretary on order of the president or on the written demand of the
stockholders representing or holding at least a majority of the outstanding
capital stock, or, if it be a non-stock corporation, on the written demand of
a majority of the members entitled to vote. Should the secretary fail or
refuse to call the special meeting upon such demand or fail or refuse to give
the notice, or if there is no secretary, the call for the meeting may
beaddressed directly to the stockholders or members by any stockholder or
member of the corporation signing the demand. Notice of the time and place of
such meeting, as well as of the intention to propose such removal, must be
given by publication or by written notice prescribed in this Code. Removal
may be with or without cause: Provided, That removal without cause may not be
used to deprive minority stockholders or members of the right of
representation to which they may be entitled under Section 24 of this Code.
(n) |
SEC.
27. Removal of Directors or Trustees. – Any director or trustee of a
corporation may be removed from office by a vote of the stockholders holding
or representing at least two-thirds (2/3) of the outstanding capital stock,
or in a nonstock corporation, by a vote of at least two-thirds (2/3) of the
members entitled to vote: Provided, That such removal shall take place either
at a regular meeting of the corporation or at a special meeting called for
the purpose, and in either case, after previous notice to stockholders or
members of the corporation of the intention to propose such removal at the
meeting. A special meeting of the stockholders or members for the purpose of
removing any director or trustee must be called by the secretary on order of
the president, or upon written demand of the stockholders representing or
holding at least a majority of the outstanding capital stock, or a majority
of the members entitled to vote. If there is no secretary, or if the
secretary, despite demand, fails or refuses to call the special meeting or to
give notice thereof, the stockholder or member of the corporation signing the
demand may call for the meeting by directly addressing the stockholders or
members. Notice of the time and place of such meeting, as well as of the
intention to propose such removal, must be given by publication or by written
notice prescribed in this Code. Removal may bewith or without cause:
Provided, That removal without cause may not be used to deprive minority
stockholders or members of the right of representation to which they may be
entitled under Section 23 of this Code. The Commission
shall, motu proprio or upon verified complaint, and after due notice and
hearing, order the removal of a director or trustee elected despite the
disqualification, or whose disqualification arose or is discovered subsequent
to an election. The removal of a disqualified director shall be without
prejudice to other sanctions that the Commission may impose on the board of
directors or trustees who, with knowledge of the disqualification, failed to
remove such director or trustee. |
|
Section 29. Vacancies in the office of
director or trustee. – Any vacancy occurring in the board of directors or
trustees other than by removal by the stockholders or members or by
expiration of term, may be filled by the vote of at least a majority of the
remaining directors or trustees, if still constituting a quorum; otherwise,
said vacancies must be filled by the stockholders in a regular or special
meeting called for that purpose. A director or trustee so elected to fill a
vacancy shall be elected only or the unexpired term of his predecessor in
office. Any directorship or trusteeship to be filled
by reason of an increase in the number of directors or trustees shall be
filled only by an election at a regular or at a special meeting of
stockholders or members duly called for the purpose, or in the same meeting
authorizing the increase of directors or trustees if so stated in the notice
of the meeting. (n) |
SEC. 28.
Vacancies in the Office of Director or Trustee; Emergency Board. – Any
vacancy occurring in the board of directors or trustees other than by removal
or by expiration of term, may be filled by the vote of at least a majority of
the remaining directors or trustees, if still constituting a quorum;
otherwise, said vacancies must be filled by the stockholders or members in a
regular or special meeting called for that purpose. When the vacancy is
due to term expiration, the election shall be held no later than the day of
such expiration at a meeting called for that purpose. When the vacancy arises as a result of
removal by the stockholders or members, the election may be held on the same
day of the meeting authorizing the removal and this fact must be so stated in
the agenda and notice of said meeting.
In all other cases, the election must be held no later than forty-five
(45) days from the time the vacancy arose. A director or trustee elected to
fill a vacancy shall be referred to as replacement director or trustee and
shall serve only for the unexpired term of the predecessor in office. However, when the
vacancy prevents the remaining directors from constituting a quorum and
emergency action is required to prevent grave, substantial, and irreparable
loss ordamage to the corporation, the vacancy may be temporarily filled from
among the officers of the corporation by unanimous vote of the remaining
directors or trustees. The action by the designated director or trustee shall
be limited to the emergency action necessary, and the term shall cease within
a reasonable time from the termination of the emergency or upon election of
the replacement director or trustee, whichever comes earlier. The corporation
must notify the Commission within three (3) days from the creation of the
emergency board, stating therein the reason for its creation. Any directorship or
trusteeship to be filled by reason of an increase in the number of directors
or trustees shall be filled only by an election at a regular or at a special
meeting of stockholders or members duly called for the purpose, or in the
same meeting authorizing the increase of directors or trustees if so stated
in the notice of the meeting. In all elections to
fill vacancies under this section, the procedure set forth in Sections 23 and
25 of this Code shall apply. |
|
Section 30. Compensation of directors. – In
the absence of any provision in the by-laws fixing their compensation, the
directors shall not receive any compensation, as such directors, except for
reasonable per diems: Provided, however, That any such compensation other
than per diems may be granted to directors by the vote of the stockholders
representing at least a majority of the outstanding capital stock at a
regular or special stockholders’ meeting. In no case shall the total yearly
compensation of directors, as such directors, exceed ten (10%) percent of the
net income before income tax of the corporation during the preceding year.
(n) |
SEC. 29.
Compensation of Directors or Trustees.
– In the absence of any provision in the by-laws fixing their compensation,
the directors or trustees shall not receive any compensation in their
capacity as such, except for reasonable per diems: Provided however, That the
stockholders representing at least a majority of the outstanding capital
stock or majority of the members may grant directors or trustees with
compensation and approve the amount thereof at a regular or special meeting. In
no case shall the total yearly compensation of directors exceed ten (10%)
percent of the net income before income tax of the corporation during the
preceding year. Directors or
trustees shall not participate in the determination of their own per diems or
compensation. Corporations vested
with public interest shall submit to their shareholders and the Commission,
an annual report of the total compensation of each of their directors or
trustees. |
|
Section 31. Liability of directors, trustees
or officers. - Directors or trustees who willfully and knowingly vote for or
assent to patently unlawful acts of the corporation or who are guilty of
gross negligence or bad faith in directing the affairs of the corporation or
acquire any personal or pecuniary interest in conflict with their duty as
such directors or trustees shall be liable jointly and severally for all
damages resulting therefrom suffered by the corporation, its stockholders or
members and other persons. When a director, trustee or officer attempts
to acquire or acquire, in violation of his duty, any interest adverse to the
corporation in respect of any matter which has been reposed in him in
confidence, as to which equity imposes a disability upon him to deal in his
own behalf, he shall be liable as a trustee for the corporation and must
account for the profits which otherwise would have accrued to the
corporation. (n) |
SEC. 30.
Liability of Directors, Trustees or Officers. – Directors or trustees who
willfully and knowingly vote for or assent to patently unlawful acts of the
corporation or who are guilty of gross negligence or bad faith in directing
the affairs of the corporation or acquire any personal or pecuniary interest
in conflict with their duty as such directors or trustees shall be liable
jointly and severally for all damages resulting therefrom suffered by the
corporation, its stockholders or members and other persons. A
Director, Trustee, or Officer shall not attempt to acquire, or acquire any
interest adverse to the corporation in respect of any matter which has been
reposed in them in confidence, and upon which, equity imposes a disability
upon themselves to deal in their own behalf, otherwise the said director,
trustee, or officer shall be liable as a trustee for the corporation and must
account for the profits which otherwise would have accrued to the
corporation. |
|
Section 32. Dealings of directors, trustees
or officers with the corporation. – A contract of the corporation with one or
more of its directors or trustees or officers is voidable, at the option of
such corporation, unless all the following conditions are present: 1. That
the presence of such director or trustee in the board meeting in which the
contract was approved was not necessary to constitute a quorum for such
meeting; 2. That the vote of such director or trustee was not necessary for
the approval of the contract; 3. That the contract is fair and reasonable
under the circumstances; and 4. That in case of an officer, the contract has
been previously authorized by the board ofdirectors. 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 twothirds (2/3) of the outstanding capital stock or of
at least 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) |
SEC. 31. Dealings
of Directors, Trustees or Officers with the Corporation. – A contract of the
corporation with (1) one or more of its directors, trustees, officers or
their spouses and relatives within the fourth civil degree of consanguinity
or affinity is voidable, at the option of such corporation, unless all the
following conditions are present: (a)
The presence of such director or trustee in the board meeting in which the
contract was approved was not necessary to constitute a quorum for such
meeting; (b)
The vote of such director or trustee was not necessary for the approval of
the contract; (c)
The contract is fair and reasonable under the circumstances (d) In case of
corporations vested with public interest, material contracts are approved by
at least two-thirds (2/3) of the entire membership of the board, with at
least a majority of theindependent directors voting to approve the material
contract; and (e) In case of an
officer, the contract has been previously authorized by the board of
directors. Where any of the
first three (3) 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 at least 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 and the contract is fair and reasonable under the circumstances |
Now covers that with spouse and relative
within 4th degree |
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) |
SEC. 32.
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 (2) 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 (1)
corporation is substantial and the interest in the other corporation or
corporations is merely nominal, the contract 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. |
Same |
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) |
SEC. 33. Disloyalty
of a Director. – Where a director, by virtue of such office, acquires a
business opportunity which should belong to the corporation, thereby
obtaining profits to the prejudice of such corporation, the director must
account for and refund to the latter all such profits, unless the act has
been ratified by a vote of the stockholders owning or representing at least
twothirds (2/3) of the outstanding capital stock. This provision shall be
applicable, notwithstanding the fact that the director risked one’s own funds
in the venture. |
Same |
Section 35. Executive committee. – The
bylaws 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 filing of vacancies in the board; (3) the amendment or repeal of bylaws
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 |
SEC. 34.
Executive, Management, and Other
Special Committees. – If the bylaws so provide, the board may create an
executive committee composed of at least three (3) directors. 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 bylaws or by majority vote of the board,
except with respect to the: (a) approval of any action for which
shareholders’ approval is also required; (b) filling of vacancies in the
board; (c) amendment or repeal of bylaws or the adoption of new bylaws; (d)
amendment or repeal of any resolution of the board which by its express terms
is not amendable or repealable; and (e) distribution of cash dividends to the
shareholders. The board of
directors may create special committees of temporary or permanent nature and
to determine the members’ term, composition, compensation, powers, and
responsibilities. |
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TITLE IV POWERS OF
CORPORATIONS |
TITLE IV POWERS OF CORPORATIONS |
|
Section 36. Corporate powers and capacity. –
Every corporation incorporated under this Code has the power and capacity: 1.
To sue and be sued in its corporate name; 2. Of succession by its corporate
name for the period of time stated in the articles of incorporation and the
certificate of incorporation; 3. To adopt and use a corporate seal; 4. To
amend its articles of incorporation in accordance with the provisions of this
Code; 5. To adopt by-laws, not contrary to law, morals, or public policy, and
to amend or repeal the same in accordance with this Code; 6. In case of stock
corporations, to issue or sell stocks to subscribers and to sell stocks to
subscribers and to sell treasury stocks in accordance with the provisions of
this Code; and to admit members to the corporation if it be a non-stock
corporation; 7. To purchase, receive, take or grant, hold, convey, sell,
lease, pledge, mortgage and otherwise deal with such real and personal
property, including securities and bonds of other corporations, as the
transaction of the lawful business of the corporation may reasonably and
necessarily require, subject to the limitations prescribed by law and the
Constitution; 8. To enter into merger or consolidation with other
corporations as provided in this Code; 9. To make reasonable donations,
including those for the public welfare or for hospital, charitable, cultural,
scientific, civic, or similar purposes: Provided, That no corporation,
domestic or foreign, shall give donations in aid of any political party or
candidate or for purposes of partisan political activity; 10. To establish
pension, retirement, and other plans for the benefit of its directors,
trustees, officers and employees; and 11. To exercise such other powers as
may be essential or necessary to carry out its purpose or purposes as stated
in the articles of incorporation. (13a) |
SEC. 35.
Corporate Powers and Capacity. – Every corporation incorporated under this
Code has the power and capacity: (a)To
sue and be sued in its corporate name;
(b)To
have perpetual existence unless the certificate of incorporation provides
otherwise; (c)
To adopt and use a corporate seal (d)To
amend its articles of incorporation in accordance with the provisions of this
Code; (e)To
adopt bylaws, not contrary to law, morals or public policy, and to amend or
repeal the same in accordance with this Code; (f)In
case of stock corporations, to issue or sell stocks to subscribers and to
sell treasury stocks in accordance with the provisions of this Code; and to
admit members to the corporation if it be a nonstock corporation; (g)To
purchase, receive, take or grant, hold, convey, sell, lease, pledge,
mortgage, and otherwise deal with such real and personal property, including
securities and bonds of other corporations, as the transaction of the lawful
business of the corporation may reasonably and necessarily require, subject
to the limitations prescribed by law and the Constitution; (h)To
enter into a partnership, joint
venture, merger, consolidation, or any other commercial agreement with
natural and juridical persons; (i)To
make reasonable donations, including those for the public welfare or for
hospital, charitable, cultural, scientific, civic, or similar purposes:
Provided, Thatno foreign
corporation shall give donations in aid of any political party or candidate
or for purposes of partisan political activity; (j)To
establish pension, retirement, and other plans for the benefit of its
directors, trustees, officers, and employees; and (k)To
exercise such other powers as may be essential or necessary to carry out its
purpose or purposes as stated in the articles of incorporation |
|
Section 37. Power to extend or shorten
corporate term. – A private corporation may extend or shorten its term as
stated in the articles of incorporation when approved by a majority vote of
the board of directors ortrustees and ratified at a meeting by 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 in case of
non-stock corporations. Written notice of the proposed action and of the time
and place of the meeting shall be addressed to each stockholder or member at
his place of residence as shown on the books of the corporation and deposited
to the addressee in the post office with postage prepaid, or served
personally: Provided, That in case of extension of corporate term, any
dissenting stockholder may exercise his appraisal right under the conditions
provided in this code. (n) |
SEC. 36. Power to
Extend or Shorten Corporate Term. – A private corporation may extend or
shorten its term as stated in the articles of incorporation when approved by
a majority vote of the board of directors or trustees, and ratified at
ameeting by the stockholders or members representing at least two-thirds
(2/3) of the outstanding capital stock or
of its members. Written notice of the proposed action and the time and
place of the meeting shall be sent to stockholders or members at their
respective place of residence as shown in the books of the corporation, and
must either be deposited to the addressee in the post office with postage
prepaid, served personally, or when allowed in the by-laws or done with the
consent of the stockholder, sent
electronically in accordance with the rules and regulations of the Commission
on the use of electronic data messages. In case of extension of corporate
term, a dissenting stockholder may exercise the right of appraisal under the
conditions provided in this Code. |
|
Section 38. Power to increase or decrease
capital stock; incur, create or increase bonded indebtedness. – No
corporation shall increase or decrease its capital stock or incur, create or
increase any bonded indebtedness unless approved by a majority vote of the
board of directors and, at a stockholder’s meeting duly called for the
purpose, two-thirds (2/3) of the outstanding capital stock shall favor the
increase or diminution of the capital stock, or the incurring, creating or
increasing of any bonded indebtedness. Written notice of the proposed
increase or diminution of the capital stock or of the incurring, creating, or
increasing of any bonded indebtedness and of the time and place of the
stockholder’s meeting at which the proposed increase or diminution of the capital
stock or the incurring or increasing of any bonded indebtedness is to be
considered, must be addressed to each stockholder at his place of residence
as shown on the books of the corporation and deposited to the addressee in
the post office with postage prepaid, or served personally. A certificate in
duplicate must be signed by a majority of the directors of the corporation
and countersigned by the chairman and the secretary of the stockholders’
meeting, setting forth: (1) That the requirements of this section
have been complied with; (2) The amount of the increase or diminution of the
capital stock; (3) If an increase of the capital stock, the amount of capital
stock or number of shares of no-par stock thereof actually subscribed, the
names, nationalities and residences of the persons subscribing, the amount of
capital stock or number of no-par stock subscribed by each, and the amount
paid by each on his subscription in cash or property, or the amount of
capital stock or number of shares of no-par stock allotted to each
stockholder if such increase is for the purpose of making effective stock
dividend therefor authorized; (4) Any bonded indebtedness to be incurred,
created or increased; (5) The actual
indebtedness of the corporation on the day of the meeting; (6) The amount
of stock represented at the meeting; and (7) The vote authorizing the
increase or diminution of the capital stock, or the incurring, creating or
increasing of any bonded indebtedness. Any increase or decrease in the
capital stock or the incurring, creating or increasing of any bonded
indebtedness shall require prior approval of the Securities and Exchange
Commission. One of the duplicate certificates shall be kept on file in the
office of the corporation and the other shall be filed with the Securities
and Exchange Commission and attached to the original articles of
incorporation. From and after approval by the Securities and Exchange
Commission and the issuance by the Commission of its certificate of filing,
the capital stock shall stand increased or decreased and the incurring,
creating or increasing of any bonded indebtedness authorized, as the
certificate of filing may declare: Provided, That the Securities and Exchange
Commission shall not accept for filing any certificate of increase of capital
stock unless accompanied by the sworn statement of the treasurer of the
corporationlawfully holding office at the time of the filing of the
certificate, showing that at least twentyfive (25%) percent of such increased
capital stock has been subscribed and that at least twenty-five (25%) percent
of the amount subscribed has been paid either in actual cash to the
corporation or that there has been transferred to the corporation property
the valuation of which is equal to twenty-five (25%) percent of the
subscription: Provided, further, That no decrease of the capital stock shall
be approved by the Commission if its effect shall prejudice the rights of
corporate creditors. Non-stock corporations may incur or create bonded
indebtedness, or increase the same, with the approval by a majority vote of
the board of trustees and of at least two-thirds (2/3) of the members in a
meeting duly called for the purpose. Bonds issued by a corporation shall be
registered with the Securities and Exchange Commission, which shall have the
authority to determine the sufficiency of the terms thereof. (17a) |
SEC. 37. Power to
Increase or Decrease Capital Stock; Incur, Create or Increase Bonded
Indebtedness. – No corporation shall increase or decrease its capital stock
or incur, create or increase any bonded indebtedness unless approved by a
majority vote of the board of directors and by two-thirds (2/3) of the
outstanding capital stock at a stockholders’ meeting duly called for the
purpose. Written notice of the time and place of the stockholders’ meeting
and the purpose for said meeting must be sent to the stockholders at their
places of residence as shown in the books of the corporation and served on
the stockholders personally, or through electronic means recognized in the
corporation’s bylaws and/or the Commission’s rules as a valid mode for
service of notices. A
certificate must be signed by a majority of the directors of the corporation
and countersigned by the chairperson and secretary of the stockholders’
meeting, setting forth: (a)That
the requirements of this section have been complied with; (b)The
amount of the increase or decrease of the capital stock; (c)In
case of an increase of the capital stock, the amount of capital stock or
number of shares of nopar stock thereof actually subscribed, the names,
nationalities and addresses of the persons subscribing, the amount of capital
stock or number of no-par stock subscribed by each, and the amount paid by
each on the subscription in cash or property, or the amount of capital stock
or number of shares of no-par stock allotted to each stockholder if such
increase is for the purpose of making effective stock dividend therefor
authorized; (d)Any
bonded indebtedness to be incurred, created or increased; (e)The
amount of stock represented at the meeting; and (f)The
vote authorizing the increase or decrease of the capital stock, or the
incurring, creating or increasing of any bonded indebtedness. Any increase or decrease in the capital
stock or the incurring, creating or increasing of any bonded indebtedness
shall require prior approval of the Commission, and where appropriate, of the
Philippine Competition Commission. The
application with the Commission shall be made within six (6) months from the
date of approval of the board of directors and stockholders, which period may
be extended for justifiable reasons. Copies of the
certificate shall be kept on file in the office of the corporation and filed
with the Commission and attached to the original articles of incorporation.
After approval by the Commission and the issuance by the Commission of its
certificate of filing, the capital stock shall be deemed increased or
decreased and the incurring, creating or increasing of any bonded
indebtedness authorized, as the certificate of filing may declare: Provided,
That the Commission shall not accept for filing any certificate of increase
of capital stock unless accompanied by a sworn 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 has been subscribed and that at least twenty-five percent
(25%) of the amount subscribed has been paid in actual cash to the
corporation or that property, the valuation of which is equal to twenty-five
percent (25%) of the subscription, has been transferred to the corporation:
Provided further, That no decrease in capital stock shall be approved by the
Commission if its effect shall prejudice the rights of corporate creditors. Nonstock
corporations may incur, create or increase bonded indebtedness when approved
by a majority of the board of trustees and of at least twothirds (2/3) of the
members in a meeting duly called for the purpose. Bonds
issued by a corporation shall be registered with the Commission, which shall
have the authority to determine the sufficiency of the terms thereof |
|
Section 39. Power to deny pre-emptive right.
– All stockholders of a stock corporation shall enjoy pre-emptive right to
subscribe to all issues or disposition of shares of any class, in proportion
to their respective shareholdings, unless such right is denied by the
articles of incorporation or an amendment thereto: Provided, That such
pre-emptive right shall not extend to shares to be issued in compliance with
laws requiring stock offerings or minimum stock ownership by the public; or
to shares to be issued in good faith with the approval of the stockholders
representing two-thirds (2/3) of the outstanding capital stock, in exchange
for property needed for corporate purposes or in payment of a previously
contracted debt. |
SEC. 38. Power
to Deny Preemptive Right. – All stockholders of a stock corporation shall
enjoy preemptive right to subscribe to all issues or disposition of shares of
any class, in proportion to their respective shareholdings, unless such right
is denied by the articles of incorporation or an amendment thereto: Provided,
That such preemptive right shall not extend to shares issued in compliance
with laws requiring stock offerings or minimum stock ownership by the public;
or to shares issued in good faith with the approval of the stockholders
representing two-thirds (2/3) of the outstanding capital stock, in exchange
for property needed for corporate purposes or in payment of a previously
contracted debt. |
|
Section 40. Sale or other disposition of
assets. – Subject to the provisions of existing laws on illegal combinations
and monopolies, a corporation may, by a majority vote of its board of
directors or trustees, sell, lease,exchange, mortgage, pledge or otherwise
dispose of all or substantially all of its property and assets, including its
goodwill, upon such terms and conditions and for such consideration, which
may be money, stocks, bonds or other instruments for the payment of money or
other property or consideration, as its board of directors or trustees may
deem expedient, when authorized by the vote of the stockholders representing
at least two-thirds (2/3) of the outstanding capital stock, or in case of
non-stock corporation, by the vote of at least to two-thirds (2/3) of the
members, in a stockholder’s or member’s meeting duly called for the purpose.
Written notice of the proposed action and of the time and place of the
meeting shall be addressed to each stockholder or member at his place of
residence as shown on the books of the corporation and deposited to the
addressee in the post office with postage prepaid, or served personally:
Provided, That any dissenting stockholder may exercise his appraisal right
under the conditions provided in this Code. A sale or other disposition shall
be deemed to cover substantially all the corporate property and assets if
thereby the corporation would be rendered incapable of continuing the
business or accomplishing the purpose for which it was incorporated. After
such authorization or approval by the stockholders or members, the board of
directors or trustees may, nevertheless, in its discretion, abandon such
sale, lease, exchange, mortgage, pledge or other disposition of property and
assets, subject to the rights of third parties under any contract relating
thereto, without further action or approval by the stockholders or members.
Nothing in this section is intended to restrict the power of any corporation,
without the authorization by the stockholders or members, to sell, lease,
exchange, mortgage, pledge or otherwise dispose of any of its property and
assets if the same is necessary in the usual and regular course of business
of said corporation or if the proceeds of the sale or other disposition
ofsuch property and assets be appropriated for the conduct of its remaining
business. In non-stock corporations where there are no members with voting
rights, the vote of at least a majority of the trustees in office will be
sufficient authorization for the corporation to enter into any transaction
authorized by this section. |
SEC. 39. Sale or
Other Disposition of Assets. – Subject to the provisions of Republic Act No. 10667, otherwise known
as “Philippine Competition Act”, and other related laws, a corporation
may, by a majority vote of its board ofdirectors or trustees, sell, lease,
exchange, mortgage, pledge, or otherwise dispose of its property and assets,
upon such terms and conditions and for such consideration, which may be
money, stocks, bonds, or other instruments for the payment of money or other
property or consideration, as its board of directors or trustees may deem
expedient. A sale of all or
substantially all of the corporation’s properties and assets, including its
goodwill must be authorized by the vote of the stockholders representing at
least twothirds (2/3) of the outstanding capital stock, or at least
two-thirds (2/3) of the members, in a stockholders’ or members’ meeting duly
called for the purpose. In nonstock
corporations where there are no members with voting rights, the vote of at
least a majority of the trustees in office will be sufficient authorization
for the corporation to enter into any transaction authorized by this section. The determination of
whether or not the sale involves all or substantially all of the
corporation’s properties and assets must be computed based on its net asset
value, as shown in its latest financial statements. A sale or other
disposition shall be deemed to cover substantially all the corporate property
and assets if thereby the corporation would be rendered incapable of
continuing the business or accomplishing the purpose for which it was
incorporated. 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 the corporation and deposited to the addressee in the post
office with postage prepaid, served personally, or when allowed by the by-laws
or done with the consent of the stockholder, sent electronically: Provided,
That any dissenting stockholder may exercise the right of appraisal under the
conditions provided in this Code. After such
authorization or approval by the stockholders or members, the board of
directors or trustees may, nevertheless, in its discretion, abandon such
sale, lease, exchange, mortgage, pledge, or other disposition of property and
assets, subject to the rights of third parties under any contract relating
thereto, without further action or approval by the stockholders or members. Nothing in this
section is intended to restrict the power of any corporation, without the
authorization by the stockholders or members, to sell, lease, exchange,
mortgage, pledge, or otherwise dispose of any of its property and assets if
the same is necessary in the usual and regular course of business of the
corporation or if the proceeds of the sale or other disposition of such
property and assets shall be appropriated for the conduct of its remaining
business. |
|
Section 41. Power to acquire own shares. – A
stock corporation shall have the power to purchase or acquire its own shares
for a legitimate corporate purpose or purposes, including but not limited to
the following cases: Provided, That the corporation has unrestricted retained
earnings in its books to cover the shares to be purchased or acquired: 1. To
eliminate fractional shares arising out of stock dividends; 2. To collect or
compromise an indebtedness to the corporation, arising out of unpaid
subscription, in a delinquency sale, and to purchase delinquent shares sold
during said sale; and 3. To pay dissenting or withdrawing stockholders
entitled to payment for their shares under the provisions of this Code. (a) |
SEC. 40. Power to
Acquire Own Shares. – Provided that
the corporation has unrestricted retained earnings in its books to cover the
shares to be purchased or acquired, a stock corporation shall have the power
to purchase or acquire its own shares for a legitimate corporate purpose or
purposes, including the following cases: (a)To
eliminate fractional shares arising out of stock dividends; (b)To
collect or compromise an indebtedness to the corporation, arising out of
unpaid subscription, in a delinquency sale, and to purchase delinquent shares
sold during said sale; and (c)To
pay dissenting or withdrawing stockholders entitled to payment for their
shares under the provisions of this Code. |
|
Section 42. Power to invest corporate funds
in another corporation or business or for any other purpose. – Subject to the
provisions of this Code, a private corporation may invest its funds in any
other corporation or business or for any purpose other than the
primarypurpose for which it was organized when approved by a majority of the board
of directors or trustees and ratified by 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 in the case of non-stock corporations, at a
stockholder’s or member’s meeting duly called for the purpose. Written notice
of the proposed investment and the time and place of the meeting shall be
addressed to each stockholder or member at his place of residence as shown on
the books of the corporation and deposited to the addressee in the post
office with postage prepaid, or served personally: Provided, That any
dissenting stockholder shall have appraisal right as provided in this Code:
Provided, however, That where the investment by the corporation is reasonably
necessary to accomplish its primary purpose as stated in the articles of
incorporation, the approval of the stockholders or members shall not be
necessary. (17 1/2a) |
SEC. 41. Power
to Invest Corporate Funds in Another Corporation or Business or for Any Other
Purpose. – Subject to the provisions of this Code, a private corporation may
invest its funds in any other corporation, business, or for any purpose other
than the primary purpose for which it was organized,when approved by a
majority of the board of directors or trustees and ratified by 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 in the case of
nonstock corporations, at a meeting duly called for the purpose. Notice of
the proposed investment and the time and place of the meeting shall be
addressed to each stockholder or member at the place of residence as shown in
the books of the corporation and deposited to the addressee in the post
office with postage prepaid, served personally, or sent electronically in
accordance with the rules and regulations of the Commission on the use of
electronic data message, when allowed by the bylaws or done with the consent
of the stockholders: Provided, That any dissenting stockholder shall have
appraisal right as provided in this Code: Provided however, That where the
investment by the corporation is reasonably necessary to accomplish its
primary purpose as stated in the articles of incorporation, the approval of
the stockholders or members shall not be necessary. |
|
Section 43. Power to declare dividends. -
The board of directors of a stock corporation may declare dividends out of
the unrestricted retained earnings which shall be payable in cash, in
property, or in stock to all stockholders on the basis of outstanding stock
held by them: Provided, That any cash dividends due on delinquent stock shall
first be applied to the unpaid balance on the subscription plus costs and
expenses, while stock dividends shall be withheld from the delinquent stockholder
until his unpaid subscription is fully paid: Provided, further, That no stock
dividend shall be issued without the approval of stockholders representing
not less than two-thirds (2/3) of the outstanding capital stock at a regular
or special meeting duly called for the purpose. (16a) Stock corporations are prohibited from
retaining surplus profits in excess of one hundred (100%) percent of their
paid-incapital stock, except: (1) when justified by definite corporate
expansion projects or programs approved by the board of directors; or (2)
when the corporation is prohibited under any loan agreement with any
financial institution or creditor, whether local or foreign, from declaring
dividends without its/his consent, and such consent has not yet been secured;
or (3) when it can be clearly shown that such retention is necessary under
special circumstances obtaining in the corporation, such as when there is
need for special reserve for probable contingencies. (n) |
SEC. 42. Power to
Declare Dividends. – The board of directors of a stock corporation may
declare dividends out of the unrestricted retained earnings which shall be
payable in cash, property, or in stock to all stockholders on the basis of
outstanding stock held by them: Provided, That any cash dividends due on
delinquent stock shall first be applied to the unpaid balance on the
subscription plus costs and expenses, while stock dividends shall be withheld
from the delinquent stockholders until their unpaid subscription is fully
paid: Provided, further, That no stock dividend shall be issued without the
approval of stockholders representing at least two-thirds (2/3) of the
outstanding capital stock at a regular or special meeting duly called for the
purpose. Stock
corporations are prohibited from retaining surplus profits in excess of one
hundred percent (100%) of their paid-in capital stock, except: (a) when
justified by definite corporate expansion projects or programs approved by
the board of directors; or (b) when the corporation is prohibited under any
loan agreement with financial institutionsor creditors, whether local or
foreign, from declaring dividends without their consent, and such consent has
not yet been secured; or (c) when it can be clearly shown that such retention
is necessary under special circumstances obtaining in the corporation, such
as when there is need for special reserve for probable contingencies. |
|
Section 44. Power to enter into management
contract. – No corporation shall conclude a management contract with another
corporation unless such contract shall have been approved by the board of
directors and by stockholders owning at least the majority of the outstanding
capital stock, or by at least a majority of the members in the case of a
non-stock corporation, of both the managing and the managed corporation, at a
meeting duly called for the purpose: Provided, That (1) where a stockholder
or stockholders representing the same interest of both the managing and the
managed corporations own or control more than one-third (1/3) of the total
outstanding capital stock entitled to vote of the managing corporation; or
(2) where a majority of the members of the board of directors of the managing
corporation also constitute a majority of the members of the board of
directors of the managed corporation, then the management contract must be
approved by the stockholders of the managed corporation owning at least twothirds
(2/3) of the total outstanding capital stock entitled to vote, or by at least
two-thirds (2/3) of the members in the case of a nonstock corporation. No
management contract shall be entered into for a period longer than five years
for any one term. The provisions of the next preceding paragraph shall apply
to any contract whereby a corporation undertakes to manage or operate all or
substantially all ofthe 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) |
SEC. 43. Power to
Enter into Management Contract. – No corporation shall conclude a management
contract with another corporation unless such contract is approved by the
board of directors and by stockholders owning at least the majority of the
outstanding capital stock, or by at least a majority of the members in the
case of a nonstock corporation, of both the managing and the managed
corporation, at a meeting duly called for the purpose: Provided, That (a)
where a stockholder or stockholders representing the same interest of both
the managing and the managed corporations own or control more than one-third
(1/3) of the total outstanding capital stock entitled to vote of the managing
corporation; or (b) where a majority of the members of the board of directors
of the managing corporation also constitute a majority of the members of the
board of directors of the managed corporation, then the management contract
must be approved by the stockholders of the managed corporation owning at
least two-thirds (2/3) of the total outstanding capital stock entitled to
vote, or by at least two-thirds (2/3) of the members in the case of a
non-stock corporation. These 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 intofor such periods as may be provided by
the pertinent laws or regulations. No management
contract shall be entered into for a period longer than five (5) years for any
one (1) term. |
Change in form |
Section 45. Ultra vires 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 |
SEC. 44. Ultra
Vires Acts of Corporations. – No corporation shall possess or exercise
corporate powers other than those conferred by this Code or by its articles
of incorporation and except as necessary or incidental to the exercise of the
powers conferred. |
Same |
TITLE V BY LAWS |
TITLE V
BY LAWS |
|
Section 46. Adoption of by-laws. – Every corporation formed under this Code
must, within one (1) month after receipt of official notice of the issuance
of its certificate of incorporation by the Securities and Exchange
Commission, adopt a code of by-laws for its government not inconsistent with
this Code. For the adoption of by-laws by the corporation the affirmative
vote of the stockholders representing at least a majority of the outstanding
capital stock, or of at least a majority of the members in case of non-stock
corporations, shall be necessary. The by-laws shall be signed by the
stockholders or members voting for them and shall be kept in the principal
office of the corporation, subject to the inspection of the stockholders or
members during office hours. A copy thereof, duly certified to by a majority
of the directors or trustees countersigned by the secretary of the
corporation, shall be filed with the Securities and Exchange Commission which
shall be attached to the original articles of incorporation. Notwithstanding
the provisions of the preceding paragraph, by-laws may be adopted and filed
prior to incorporation; in such case, such by-laws shall be approved and
signed by all the incorporators and submitted to the Securities and Exchange
Commission, together with the articles of incorporation. In all cases, by-laws shall be effective only upon the
issuance by the Securities and Exchange Commission of a certification that
the by-laws are not inconsistent with this Code. The Securities and Exchange Commission shall
not accept for filing the by-laws or any amendment thereto of any bank,
banking institution, building and loan association, trust company, insurance
company, public utility, educational institution or other special
corporations governed by special laws, unless accompanied by a certificate of
the appropriate government agency to the effect that such by-laws or
amendments are in accordance with law. (20a) |
SEC. 45. Adoption
of Bylaws. – For the adoption of
bylaws by the corporation, the affirmative vote of the stockholders
representing at least a majority of the outstanding capital stock, or of at
least a majority of the members in case of nonstock corporations, shall be
necessary. The bylaws shall be signed by the stockholders or members
voting for them and shall be kept in the principal office of the corporation,
subject to the inspection of the stockholders or members during office hours.
A copy thereof, duly certified by a majority of the directors or trustees and
countersigned by the secretary of the corporation, shall be filed with the
Commission and attached to the original articles of incorporation. Notwithstanding
the provisions of the preceding paragraph, by-laws may be adopted and filed
prior to incorporation; in such case, such by-laws shall be approved and
signed by all the incorporators and submitted to the Commission, together
with the articles of incorporation. In
all cases, bylaws shall be effective only upon the issuance by the Commission
of a certification that the bylaws are in accordance with this Code. The
Commission shall not accept for filing the bylaws or any amendment thereto of
any bank, banking institution, building and loan association, trust company,
insurance company, public utility, educational institution, or other special
corporations governed by special laws, unless accompanied by a certificate of
the appropriate government agency to the effect that such bylaws or
amendments are in accordance with law. |
The one month period to adopt by-laws was
deleted. Change in form. |
Section 47. Contents of by-laws. – Subject
to the provisions of the Constitution, this Code, other special laws, and the
articles of incorporation, a private corporation may provide in its by-laws
for: 1. The time, place and manner of calling and conducting regular or
special meetings of the directors or trustees; 2. The time and manner of
calling and conducting regular or special meetings of the stockholders or
members; 3. The required quorum in meetings of stockholders or members and
the manner of voting therein; 4. The form for proxies of stockholders and
members and the manner of voting them; 5. The qualifications, duties and
compensation of directors or trustees, officers and employees; 6. The time
for holding the annual election of directors of trustees and the mode or
manner of giving notice thereof; 7. The manner of election or appointment and
the term of office of all officers other thandirectors or trustees; 8. The
penalties for violation of the by-laws; 9. In the case of stock corporations,
the manner of issuing stock certificates; and 10. Such other matters as may
be necessary for the proper or convenient transaction of its corporate
business and affairs. (21a) |
SEC. 46. Contents
of Bylaws. – A private corporation may
provide the following in its bylaws: (a)The
time, place and manner of calling and conducting regular or special meetings
of the directors or trustees; (b)The
time and manner of calling and conducting regular or special meetings and
mode of notifying the stockholders or members thereof; (c)The
required quorum in meetings of stockholders or members and the manner of
voting therein; (d)The
modes by which a stockholder, member, director, or trustee may attend
meetings and cast their votes; (e)The
form for proxies of stockholders and members and the manner of voting
them; (f)The
directors’ or trustees’ qualifications, duties and responsibilities, the
guidelines for setting thecompensation of directors or trustees and
officersand the maximum number of other board representations that an
independent director or trustee may have which shall, in no case, be more
than the number prescribed by the Commission; (g)The time for holding the
annual election of directors of trustees and the mode or manner of giving
notice thereof; (h)The
manner of election or appointment and the term of office of all officers
other than directors or trustees; (i)The
penalties for violation of the bylaws; (j)In
the case of stock corporations, the manner of issuing stock certificates; and
(k)Such
other matters as may be necessary for the proper or convenient transaction of
its corporate affairs for the promotion of good governance and anti-graft and
corruption measures. An arbitration
agreement may be provided in the bylaws pursuant to Section 181 of this Code. |
|
Section 48. Amendments to by-laws. – The board of directors or trustees,
by a majority vote thereof, and the owners of at least a majority of the
outstanding capital stock, or at least a majority of the members of a
nonstock corporation, at a regular or special meeting duly called for the
purpose, may amend or repeal any by-laws or adopt new by-laws. The owners of
two-thirds (2/3) of the outstanding capital stock or two-thirds (2/3) of the
members in a non-stock corporation may delegate to the board of directors or
trustees the power to amend or repeal any by-laws or adopt new by-laws:
Provided, That any power delegated to the board of directors or trustees to
amend or repeal any by-laws or adopt new by-laws shall be considered as
revoked whenever stockholders owning or representing a majority of the
outstanding capital stock or a majority of the members in non-stock
corporations, shall so vote at a regular or special meeting. Whenever any amendment or new by-laws are
adopted, such amendment or new bylaws shall be attached to the original
by-laws in the office of the corporation, and a copy thereof, duly certified
under oath by the corporate secretary and a majority of the directors or
trustees, shall be filed with the
Securities and Exchange Commission the same to be attached to the original
articles of incorporation and original bylaws. The amended or new by-laws shall only be
effective upon the issuance by the Securities and Exchange Commission of a
certification that the same are not inconsistent with this Code. (22a and
23a) |
SEC. 47. Amendment to Bylaws. – A majority of the
board of directors or trustees, and the owners of at least a majority of the
outstanding capital stock, or at least a majority of the members of a
nonstock corporation, at a regular or special meeting duly called for the
purpose, may amend or repeal the bylaws or adopt new bylaws. The owners of
twothirds (2/3) of the outstanding capital stock or twothirds (2/3) of the
members in a non-stock corporation may delegate to the board of directors or
trustees the power to amend or repeal the bylaws or adopt new bylaws: Provided,
That any power delegated to the board of directors or trustees to amend or
repeal the bylaws or adopt new bylaws shall be considered as revoked whenever
stockholders owning or representing a majority of the outstanding capital
stock or majority of the members shall so vote at a regular or special
meeting. Whenever
the bylaws are amended or new by-laws are adopted, the corporation shall file
with the Commission such amended or new bylaws and, if applicable, the
stockholders’ or members’ resolution
authorizing the delegation of the power to amend and/or adopt new bylaws,
duly certified under oath by the corporate secretary and a majority of the
directors or trustees. The
amended or new bylaws shall only be effective upon the issuance by the
Commission of a certification that the same is in accordance with this Code
and other relevant laws. |
|
TITLE VI MEETINGS Section 49. Kinds of meetings. – Meetings of
directors, trustees, stockholders, or members may be regular or special. (n) |
TITLE VI MEETINGS SEC. 48. Kinds of
Meetings. – Meetings of directors, trustees, stockholders, or members may be
regular or special. |
|
Section 50. Regular and special meetings of
stockholders or members. - Regular meetings of stockholders or members shall
be held annually on a date fixed in the bylaws, or if not so fixed, on any
date in April of every year as determined by the board of directors or
trustees: Provided, That written notice of regular meetings shall be sent to
all stockholders or members of record at least two (2) weeks prior to the
meeting, unless a different period is required by the by-laws. Special
meetings of stockholders or members shall be held at any time deemed
necessary or as provided in the by-laws: Provided, however, That at least one
(1) week written notice shall be sent to all stockholders or members, unless
otherwise provided in the by-laws. Notice of any meeting may be waived,
expressly or impliedly, by any stockholder or member. Whenever, for any cause, there is no person
authorized to call a meeting, the Securities and Exchange Commission,
uponpetition of a stockholder or member on a showing of good cause therefor,
may issue an order to the petitioning stockholder or member directing him to
call a meeting of the corporation by giving proper notice required by this
Code or by the by-laws. The petitioning stockholder or member shall preside
thereat until at least a majority of the stockholders or members present have
chosen one of their number as presiding officer. (24, 26) |
SEC. 49. Regular
and Special Meetings of Stockholders or Members. – Regular meetings of
stockholders or members shall be held annually on a date fixed in the bylaws,
or if not so fixed, on any date after
April 15 of every year as determined by the board of directors or
trustees: Provided, That written notice of regular meetings shall be sent to
all stockholders or members of record at
least twentyone (21) days prior to the meeting, unless a different period
is required in the bylaws, law, or regulation: Provided further, That written notice of regular meetings
may be sent to all stockholders or members of record through electronic mail or
such other manner as the Commission shall allow under its guidelines. At each regular
meeting of stockholders or members, the board of directors or trustees shall
endeavor to present to stockholders or members the following: a) The minutes of
the most recent regular meeting which shall include, among others: (1) A description of
the voting and vote tabulation procedures used in the previous meeting; (2) A description of
the opportunity given to stockholders or members to ask questions and a
record of the questions asked and answers given; (3) The matters
discussed and resolutions reached; (4) A record of the
voting results for each agenda item; (5) A list of the
directors or trustees, officers and stockholders or members who attended the
meeting; and (6) Such other items
that the Commission may require in the interest of good corporate governance
and the protection of minority stockholders. b) A members’ list
for non-stock corporations and, for stock corporations, material information
on the current stockholders, and their voting rights; c) A detailed,
descriptive, balanced and comprehensible assessment of the corporation’s
performance, which shall include information on any material change in the
corporation’s business, strategy, and other affairs; d) A financial
report for the preceding year, which shall include financial statements duly
signed and certified in accordance with this Code and the rules the
Commission may prescribe, a statement on the adequacy of the corporation’s
internal controls or risk management systems, and a statement of all external
audit and non-audit fees; e) An explanation of
the dividend policy and the fact of payment of dividends or the reasons for
nonpayment thereof; f) Director or
trustee profiles which shall include, among others, their qualifications and
relevant experience, length of service in the corporation, trainings and
continuing education attended, and their board representations in other
corporations; g) A director or
trustee attendance report, indicating the attendance of each director or
trustee at each of the meetings of the board and its committees and in
regular or special stockholder meetings; h) Appraisals and
performance reports for the board and the criteria and procedure for
assessment; i) A director or
trustee compensation report prepared in accordance with this Code and the
rules the Commission may prescribe; j) Director
disclosures on self-dealings and related party transactions; and/or k) The profiles of
directors nominated or seeking election or reelection. A director, trustee,
stockholder, or member may propose any other matter for inclusion in the
agenda at any regular meeting of stockholders or members. Special meetings of
stockholders or members shall be held at any time deemed necessary or as
provided in the bylaws: Provided however, That at least one (1) week written
notice shall be sent to all stockholders or members, unless a different
period is provided in the bylaws, law or regulation. A stockholder or
member may propose the holding of a special meeting and items to be included
in the agenda. Notice of any
meeting may be waived, expressly or impliedly, by any stockholder or member:
Provided, That general waivers of notice in the articles of incorporation or
the bylaws shall not be allowed: Provided, further, That attendance at a
meeting shall constitute a waiver of notice of such meeting, except when the
person attends a meeting for the express purpose of objecting to the
transaction of any business because the meeting is not lawfully called or
convened. Whenever for any
cause, there is no person authorized or the person authorized unjustly
refuses to call a meeting, the Commission, upon petition of a stockholder or
member on a showing of good cause therefor, may issue an order directing the
petitioning stockholder or member to call a meeting of the corporation by
giving proper notice required by this Code or the bylaws. The petitioning
stockholder or member shall preside thereat until at least a majority of the
stockholders or members present have chosen from among themselves, a
presiding officer. Unless the bylaws
provide for a longer period, the stock and transfer book or membership book
shall be closed at least twenty (20) days for regular meetings and seven (7)
days for special meetings before the scheduled date of the meeting. In case of
postponement of stockholders’ or members’ regular meetings, written notice
thereof and the reason therefor shall be sent to all stockholders or members
of record at least two (2) weeks prior to the date of the meeting, unless a
different period is required under the bylaws, law or regulation. The right to vote of
stockholders or members may be exercised in person, through a proxy, or when
so authorized in the bylaws, through remote communication or in absentia. The
Commission shall issue the rules and regulations governing participation and
voting through remote communication or in absentia, taking into account the
company’s scale, number of shareholders or members, structure, and other
factors consistent with the protection and promotion of shareholders’ or
member’s meetings. |
|
Section 51. Place and time of meetings of
stockholders of members. – Stockholder’s or member’s meetings, whether
regular or special, shall be held in the city or municipality where the
principal office of the corporation is located, and if practicable in the
principal office of the corporation: Provided, That Metro Manila shall, for
purposes of this section, be considered a city or municipality. Notice of
meetings shall be in writing, and the time and place thereof stated therein.
All proceedings had and any business transacted at any meeting of the
stockholders or members, if within the powers or authority of the
corporation, shall be valid even if the meeting be improperly held or called,
provided all the stockholders or members of the corporation are present or
duly represented at the meeting. (24 and 25 |
SEC. 50. Place
and Time of Meetings of Stockholders or Members. – Stockholders’ or members’
meetings, whether regular or special, shall be held in the principal office of the corporation as set forth in the
articles of incorporation, or, if not practicable, in the city or
municipality where the principal office of the corporation is located:
Provided, That any city or municipality in Metro Manila, Metro Cebu, Metro
Davao, and other Metropolitan areas shall, for purposes of this section, be
considered a city or municipality. Notice of meetings
shall be sent through the means of communication provided in the bylaws,
which notice shall state the time, place and purpose of the meetings. Each notice of
meeting shall further be accompanied by the following: (a) The agenda for
the meeting; (b) A proxy form
which shall be submitted to the corporate secretary within a reasonable time
prior to the meeting; (c) When attendance,
participation, and voting are allowed by remote communication or in absentia,
the requirements and procedures to be followed when a stockholder or member
elects either option; and (d) When the meeting
is for the election of directors or trustees, the requirements and procedure
for nomination and election. All proceedings and
any business transacted at a meeting of the stockholders or members, if
within the powers or authority of the corporation, shall be valid even if the
meeting is improperly held or called: Provided, That all the stockholders or
members ofthe corporation are present or duly represented at the meeting and
not one of them expressly states at the beginning of the meeting that the
purpose of their attendance is to object to the transaction of any business
because the meeting is not lawfully called or convened. |
|
Section 52. Quorum in meetings. – Unless otherwise
provided for in this Code or in the by-laws, a quorum shall consist of the
stockholders representing a majority of the outstanding capital stock or a
majority of the members in the case of non-stock corporations. (n) |
SEC. 51. Quorum
in Meetings. – Unless otherwise provided in this Code or in the bylaws, a
quorum shall consist of the stockholders representing a majority of the
outstanding capital stock or a majority of the members in the case of
nonstock corporations |
|
Section 53. Regular and special meetings of
directors or trustees. – Regular meetings of the board of directors or
trustees of every corporation shall be held monthly, unless the by-laws
provide otherwise. Special meetings of the board of directors or trustees may
be held at any time upon the call of the president or as provided in the
bylaws. Meetings of directors or trustees of corporations may be held
anywhere in or outside of the Philippines, unless the by-laws provide
otherwise. Notice of regular or special meetings stating the date, time and
place of the meeting must be sent to every director or trustee at least one
(1) day prior to the scheduled meeting, unless otherwise provided by the
by-laws. A director or trustee may waive this requirement, either expressly
or impliedly. (n) |
SEC. 52. Regular
and Special Meetings of Directors or Trustees; Quorum. – Unless the articles of incorporation or the by-laws
provides for a greater majority, a majority of the directors or trustees as
stated in the articles of incorporation shall constitute a quorum to transact
corporate business, and every decision reached by at least a majority of the
directors or trustees constituting a quorum, except for the election of
officers which shall require the vote of a majority of all the members of the
board, shall be valid as a corporate act. Regular meetings of
the board of directors or trustees of every corporation shall be held
monthly, unless the bylaws provide otherwise. Special meetings of
the board of directors or trustees may be held at any time upon the call of
the president or as provided in the bylaws. Meetings of
directors or trustees of corporations may be held anywhere in or outside of
the Philippines, unless the bylaws provide otherwise. Notice of regular or
special meetings stating the date, time and place of the meeting must be sent
to every director or trustee at least two (2) days prior to the scheduled
meeting, unless a longer time is provided in the bylaws. A director or
trustee may waive this requirement, either expressly or impliedly. Directors or
trustees who cannot physically attend or vote at board meetings can
participate and vote through remote communication such as videoconferencing,
teleconferencing, or other alternative modes of communication that allow them
reasonable opportunities to participate. Directors or trustees cannot attend
or vote by proxy at board meetings. A director or
trustee who has a potential interest in any related party transaction must
recuse from voting on the approval of the related party transaction without
prejudice to compliance with the requirements of Section 31 of this Code |
|
Section 54. Who shall preside at meetings. –
The president shall preside at all meetings of the directors or trustee as
well as of the stockholders or members, unless the by-laws provide otherwise.
(n) |
SEC.
53. Who Shall Preside at Meetings. – The
chairman 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. |
|
Section 55. Right to vote of pledgors,
mortgagors, and administrators. – In case of pledged or mortgaged shares in
stock corporations, the pledgor or mortgagor shall have the right to attend
and vote at meetings of stockholders, unless the pledgee or mortgagee is
expressly given by the pledgor or mortgagor such right in writing which is
recorded on the appropriate corporate books. (n) Executors, administrators,
receivers, and other legal representatives duly appointed by the court may
attend and vote in behalf of the stockholders or members without need of any written
proxy. (27a |
SEC. 54. Right to
Vote of Secured 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 stockholders, unless the secured
creditor is expressly given by the stockholder-grantor such right in
writing which is recorded in the appropriate corporate books. Executors,
administrators, receivers, and other legal representatives duly appointed by
the court may attend and vote in behalf of the stockholders or members
without need of any written proxy |
|
Section 56. Voting in case of joint
ownership of stock. – In case of shares of stock owned jointly by two or more
persons, in order to vote the same, the consent of all the coowners shall be
necessary, unless there is a written proxy, signed by all the co-owners,
authorizing one or some of them or any other person to vote such share or
shares: Provided, That when the shares are owned in
an "and/or" capacity by the holders thereof, any one of the joint
owners can vote said shares or appoint a proxy therefor. (n) |
SEC. 55. Voting
in Case of Joint Ownership of Stock. – The
consent of all the co-owners shall be necessary in voting shares of stock
owned jointly by (2) two or more persons, unless there is a written proxy,
signed by all the co-owners, authorizing (1) one or some of them or any other
person to vote such share or shares: Provided, That when the shares are
owned in an “and/or”capacity by the holders thereof, any one of the joint
owners can vote said shares or appoint a proxy therefor. |
Change in form |
Section 57. Voting right for treasury
shares. – Treasury shares shall have no voting right as long as such shares
remain in the Treasury. (n) |
SEC. 56. Voting
Right for Treasury Shares. – Treasury shares shall have no voting right as
long as such shares remain in the Treasury. |
Same |
Section 58. Proxies. – Stockholders and
members may vote in person or by proxy in all meetings of stockholders or
members. Proxies shall in writing, signed by the stockholder or member and
filed before the scheduled meeting with the corporate secretary. Unless
otherwise provided in the proxy, it shall be valid only for the meeting for
which it is intended. No proxy shall be valid and effective for a period
longer than five (5) years at any one time. (n) |
SEC. 57. Manner of
Voting; Proxies. – Stockholders and members may vote in
person or by proxy in all meetings of stockholders or members. When so authorized
in the by-laws or by a majority of the board of directors, the stockholders
or members of corporations may also vote through remote communication or in
absentia: Provided, That the votes are received before the corporation
finishes the tally of votes. A stockholder or
member who participates through remote communication or in absentia, shall be
deemed present for purposes of quorum.
The corporation
shall establish the appropriate requirements and procedures for voting
through remote communication and in absentia, taking into account the
company’s scale, number of shareholders or members, structure and other
factors consistent with the basic right of corporate suffrage. Proxies
shall be in writing, signed and filed, by the stockholder or member, in any
form authorized in the bylaws and received by the corporate secretary within
a reasonable time before the scheduled meeting. Unless otherwise provided in
the proxy form, it shall be valid only for the meeting for which it is
intended. No proxy shall be valid and effective for a period longer than five
(5) years at any one time. |
|
Section 59. Voting trusts. – One or
morestockholders of a stock corporation may create a voting trust for the
purpose of conferring upon a trustee or trustees the right to vote and other
rights pertaining to the shares for a period not exceeding five (5) years at
any time: Provided, That in the case of a voting trust specifically required
as a condition in a loan agreement, said voting trust may be for a period
exceeding five (5) years but shall automatically expire upon full payment of
the loan. A voting trust agreement must be in writing and notarized, and
shall specify the terms and conditions thereof. A certified copy of such
agreement shall be filed with the corporation and with the Securities and
Exchange Commission; otherwise, said agreement is ineffective and
unenforceable. The certificate or certificates of stock covered by the voting
trust agreement shall be cancelled and new ones shall be issued in the name
of the trustee or trustees stating that they are issued pursuant to said
agreement. In the books of the corporation, it shall be noted that the
transfer in the name of the trustee or trustees is made pursuant to said
voting trust agreement. The trustee or trustees shall execute and deliver to
the transferors voting trust certificates, which shall be transferable in the
same manner and with the same effect as certificates of stock. The voting
trust agreement filed with the corporation shall be subject to examination by
any stockholder of the corporation in the same manner as any other corporate
book or record: Provided, That both the transferor and the trustee or
trustees may exercise the right of inspection of all corporate books and
records in accordance with the provisions of this Code. Any other stockholder
may transfer his shares to the same trustee or trustees upon the terms and
conditions stated in the voting trust agreement, and thereupon shall be bound
by all the provisions of said agreement. No voting trust agreement shall be
entered into for the purpose of circumventing the law against monopolies and
illegal combinationsin restraint of trade or used for purposes of fraud.
Unless expressly renewed, all rights granted in a voting trust agreement
shall automatically expire at the end of the agreed period, and the voting
trust certificates as well as the certificates of stock in the name of the
trustee or trustees shall thereby be deemed cancelled and new certificates of
stock shall be reissued in the name of the transferors. The voting trustee or
trustees may vote by proxy unless the agreement provides otherwise. (36a) |
SEC. 58. Voting Trusts. – One or more stockholders
of a stock corporation may create a voting trust for the purpose of
conferring upon a trustee or trustees the right to vote and other rights
pertaining to the shares for a period not exceeding five (5) years at any
time: Provided, That in the case of a voting trust specifically required as a
condition in a loan agreement, said voting trust may be for a period
exceeding five (5) years but shall automatically expire upon full payment of
the loan. A voting trust agreement must be in writing and notarized, and
shall specify the terms and conditions thereof. A certified copy of such
agreement shall be filed with the corporation and with the Commission;
otherwise, the agreement is ineffective and unenforceable. The certificate or
certificates of stock covered by the voting trust agreement shall be
cancelled and new ones shall be issued in the name of the trustee or
trustees, stating that they are issued pursuant to said agreement. The books
of the corporation shall state that the transfer in the name of the trustee
or trustees is made pursuant to the voting trust agreement. The
trustee or trustees shall execute and deliver to the transferors, voting
trust certificates, which shall be transferable in the same manner and with
the same effect as certificates of stock. The
voting trust agreement filed with the corporation shall be subject to
examination by any stockholder of the corporation in the same manner as any
other corporate book or record: Provided, That both the trustor and the
trustee or trustees may exercise the right of inspection of all corporate
books and records in accordance with the provisions of this Code. Any
other stockholder may transfer the shares to the same trustee or trustees
upon the terms and conditions stated in the voting trust agreement, and
thereupon shall be bound by all the provisions of said agreement. No
voting trust agreement shall be entered into for purposes of circumventing
the laws against anticompetitive agreements, abuse of dominant position,
anti-competitive mergers and acquisitions,violation of nationality and
capital requirements, or for the perpetuation of fraud. Unless
expressly renewed, all rights granted in a voting trust agreement shall
automatically expire at the end of the agreed period. The voting trust certificates as well as
the certificates of stock in the name of the trustee or trustees shall
thereby be deemed cancelled and new certificates of stock shall be reissued
in the name of the trustors. The
voting trustee or trustees may vote by proxy or in any manner authorized
under the bylaws unless the agreement provides otherwise |
|
TITLE VII STOCKS
AND STOCKHOLDERS |
TITLE VII STOCKS AND STOCKHOLDERS |
|
Section 60. Subscription contract. – Any
contract for the acquisition of unissued stock in an existing corporation or
a corporation still to be formed shall be deemed a subscription within the
meaning of this Title, notwithstanding the fact that the parties refer to it
as a purchase or some other contract. (n) |
SEC. 59.
Subscription Contract. – Any contract for the acquisition of unissued stock
in an existing corporation or a corporation still to be formed shall be
deemed a subscription within the meaning of this Title, notwithstanding the
fact that the parties refer to it as a purchase or some other contract. |
Same |
Section 61. Pre-incorporation subscription.
– A subscription for shares of stock
of a corporation still to be formed shall be irrevocable for a period of at
least six (6) months from the date of subscription, unless all of the other
subscribers consent to the revocation, or unless the incorporation of said
corporation fails to materialize within said period or within a longer period
as may be stipulated in the contract of subscription: Provided, That no pre-incorporation
subscription may be revoked after the submission of the articles of
incorporation to the Securities and Exchange Commission. (n) |
SEC. 60. Pre-incorporation
Subscription. – A subscription of shares in a corporation still to be formed
shall be irrevocable for a period of at least six (6) months from the date of
subscription, unless all of the other subscribers consent to the revocation,
or the corporation fails to incorporate within the same period or within a
longer period stipulated in the contract of subscription. No preincorporation
subscription may be revoked after the articles of incorporation is submitted
to the Commission |
Same |
Section 62. Consideration for stocks. –
Stocks shall not be issued for a consideration less than the par or issued
price thereof. Consideration for the issuance of stock may be any or a combination of any two or more
of the following: 1. Actual cash paid to the corporation; 2.
Property, tangible or intangible, actually received by the corporation and
necessary or convenient for its use and lawful purposes at a fair valuation
equal to the par or issued value of the stock issued; 3. Labor performed for
or services actually rendered to the corporation; 4. Previously incurred
indebtedness of the corporation; 5. Amounts transferred from unrestricted
retained earnings to stated capital; and 6. Outstanding shares exchanged for
stocks in the event of reclassification or conversion Where the consideration is other than actual
cash, or consists of intangible property such as patents of copyrights, the
valuation thereof shall initially be determined by the incorporators or the
board of directors, subject to approval by the Securities and Exchange
Commission. Shares of stock shall not be issued in
exchange for promissory notes or future service. The same considerations provided for in this
section, insofar as they may be applicable, may be used for the issuance of
bonds by the corporation. The issued price of no-par value shares may
be fixed in the articles of incorporation or by the board of directors
pursuant to authority conferred upon it by the articles of incorporation or
the by-laws, or in the absence thereof, by the stockholders representing at
least a majority of the outstanding capital stock at a meeting duly called
for the purpose. (5 and 16) |
SEC. 61. Consideration for Stocks. – Stocks shall
not be issued for a consideration less than the par or issued price thereof.
Consideration for the issuance of stock may be: (a
)Actual cash paid to the corporation (b)
Property, tangible or intangible, actually received by the corporation and
necessary or convenient for its use and lawful purposes at a fair valuation
equal to the par or issued value of the stock issued; (c)
Labor performed for or services actually rendered to the corporation; (d)
Previously incurred indebtedness of the corporation; (e)
Amounts transferred from unrestricted retained earnings to stated
capital; (f)
Outstanding shares exchanged for stocks in the event of reclassification or
conversion; (g) Shares of stock in another
corporation; and/or (h) Other generally
accepted form of consideration. Where
the consideration is other than actual cash, or consists of intangible
property such as patents or copyrights, the valuation thereof shall initially
be determined by the stockholders or the board of directors, subject to the
approval of the Commission. Shares
of stock shall not be issued in exchange for promissory notes or future
service. The same considerations provided in this section, insofar as
applicable, may be used for the issuance of bonds by the corporation. The
issued price of no-par value shares may be fixed in the articles of
incorporation or by the board of directors pursuant to authority conferred by
the articles of incorporation or the bylaws, or if not so fixed, by the
stockholders representing at least a majority of the outstanding capital
stock at a meeting duly called for the purpose. |
New items (g and
h) which can be used as consideration for issuance of stock |
Section 63. Certificate of stock and
transfer of shares. – The capital stock of stockcorporations shall be divided
into shares for which certificates signed by the president or vice president,
countersigned by the secretary or assistant secretary, and sealed with the
seal of the corporation shall be issued in accordance with the by-laws.
Shares of stock so issued are personal property and may be transferred by
delivery of the certificate or certificates indorsed by the owner or his
attorney-in-fact or other person legally authorized to make the transfer. No
transfer, however, shall be valid, except as between the parties, until the
transfer is recorded in the books of the corporation showing the names of the
parties to the transaction, the date of the transfer, the number of the
certificate or certificates and the number of shares transferred. No shares
of stock against which the corporation holds any unpaid claim shall be
transferable in the books of the corporation. (35) |
SEC.
62. Certificate of Stock and Transfer of Shares. – The capital stock of
corporations shall bedivided into shares for which certificates signed by the
president or vice president, countersigned by the secretary or assistant
secretary, and sealed with the seal of the corporation shall be issued in
accordance with the bylaws. Shares of stock so issued are personal property
and may be transferred by delivery of the certificate or certificates
indorsed by the owner, his attorney-infact, or any other person legally
authorized to make the transfer. No transfer, however, shall be valid, except
as between the parties, until the transfer is recorded in the books of the
corporation showing the names of the parties to the transaction, the date of
the transfer, the number of the certificate or certificates, and the number
of shares transferred. The Commission
may require corporations whose securities are traded in trading markets and
which can reasonably demonstrate their capability to do so to issue their
securities or shares of stocks in uncertificated or scripless form in
accordance with the rules of the Commission. No
shares of stock against which the corporation holds any unpaid claim shall be
transferable in the books of the corporation. |
|
Section 64. Issuance of stock certificates.
– No certificate of stock shall be issued to a subscriber until the full
amount of his subscription together with interest and expenses (in case of
delinquent shares), if any is due, has been paid. (37) |
SEC. 63.
Issuance of Stock Certificates. – No certificate of stock shall be issued to
a subscriber until the full amount of the subscription together with interest
and expenses (in case of delinquent shares), if any is due, has been paid. |
Same |
Section 65. Liability of directors for
watered stocks. – Any director or officer
of a corporation consenting to the issuance of stocks for a consideration
less than its par or issued value or for a consideration in any form other
than cash, valued in excess of its fair value, or who, having knowledge
thereof, does not forthwith express his objection in writing and file the
same with the corporate secretary, shall be solidarily, liable with the
stockholder concerned to the corporation and its creditors for the difference
between the fair value received at the time of issuance of the stock and the
par or issued value of the same. (n) |
SEC. 64.
Liability of Directors for Watered Stocks. – A 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 a consideration other than cash,
valued in excess of its fair value; or (c) having knowledge of the
insufficient consideration, does not file a written objection with the
corporate secretary, shall be liable to the corporation or its creditors,
solidarily with the stockholder concerned for the difference between the
value received at the time of issuance of the stock and the par or issued
value of the same. |
Change in form |
Section 66. Interest on unpaid
subscriptions. – Subscribers for stock shall pay to the corporation interest
on all unpaid subscriptions from the date of subscription, if so required by,
and at the rate of interest fixed in the by-laws. If no rate of interest is
fixed in the by-laws, such rate shall be deemed to be the legal rate. (37) |
SEC. 65. Interest
on Unpaid Subscriptions. – Subscribers to stocks shall be liable to the
corporation for interest on all unpaid 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, the prevailing legal rate shall
apply. |
|
Section 67. Payment of balance of
subscription. – Subject to the provisions of the contract of subscription,
the board of directors of any stock corporation may at any time declare due
and payable to the corporation unpaid subscriptions to the capital stock and
may collect the same or such percentage thereof, in either case with accrued
interest, if any, as it may deem necessary. Payment of any unpaid subscription or any
percentage thereof, together with the interest accrued, if any, shall be made
on the date specified in the contract of subscription or on the date stated
in the call made by the board. Failure to pay on such date shall render the
entire balance due and payable and shall make the stockholder liable for
interest at the legal rate on such balance, unless a different rate of
interest is provided in the by-laws, computed from such date until full
payment. If within thirty (30) days from the said date no payment is made,
all stocks covered by said subscription shall thereupon become delinquent and
shall be subject to sale as hereinafter provided, unless the board of
directors orders otherwise. (38) |
SEC. 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 corporation unpaid subscriptions and may collect the same or such
percentage thereof, in either case, with accrued interest, if any, as it may
deem necessary. Payment
of unpaid subscription or any percentage thereof, together with any interest
accrued shall be made on the date specified in the subscription contract or
on the date stated in the call made by the board. Failure to pay on such date
shall render the entire balance due and payable and shall make the
stockholder liable for interest at the legal rate on such balance, unless a
different interest rate is provided in the subscription contract. The interest shall be computed from the
date specified, until full payment of the subscription. If no payment is made
within thirty (30) days from the said date, all stocks covered by the
subscription shall thereupon become delinquent and shall be subject to sale
as hereinafter provided, unless the board of directors orders otherwise. |
|
Section 68. Delinquency sale. – The board of
directors may, by resolution, order the sale of delinquent stock and shall
specifically state the amount due on each subscription plus all accrued
interest, and the date, time and place of the sale which shall not be less
than thirty (30) days nor more than sixty (60) days from the date the stocks
become delinquent. Notice of said sale, with a copy of theresolution, shall
be sent to every delinquent stockholder either personally or by registered
mail. The same shall furthermore be published once a week for two (2)
consecutive weeks in a newspaper of general circulation in the province or
city where the principal office of the corporation is located. Unless the delinquent stockholder pays to
the corporation, on or before the date specified for the sale of the
delinquent stock, the balance due on his subscription, plus accrued interest,
costs of advertisement and expenses of sale, or unless the board of directors
otherwise orders, said delinquent stock shall be sold at public auction to
such bidder who shall offer 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 stock so purchased shall be transferred to such purchaser in the books of
the corporation and a certificate for such stock shall be issued in his
favor. The remaining shares, if any, shall be credited in favor of the
delinquent stockholder who shall likewise be entitled to the issuance of a
certificate of stock covering such shares. 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) |
SEC. 67.
Delinquency Sale. – The board of directors may, by resolution, order the sale
of delinquent stock and shall specifically state the amount due on each
subscription plus all accrued interest, and the date, time and place of the
sale which shall not be less than thirty (30) days nor more than sixty (60)
days from the date the stocks become delinquent. |
|
Section 69. When sale may be questioned. –
No action to recover delinquent stock soldcan 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) |
SEC. 68. When
Sale may be Questioned. – No action to recover delinquent stock sold can
besustained 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. No such action shall be
maintained unless a complaint is filed within six (6) months from the date of
sale. |
|
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) |
SEC. 69. Court
Action to Recover Unpaid Subscription. – Nothing in this Code shall prevent
the corporation from collecting through court action, the amount due on any
unpaid subscription, with accrued interest, costs and expenses. |
|
Section 71. Effect of delinquency. – No
delinquent stock shall be voted for or be entitled to vote or to
representation at any stockholder’s 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) |
SEC. 70. Effect
of Delinquency. – No delinquent stock shall be voted for, be entitled to
vote, or be represented at any stockholder’s 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
payment is made by the holder such delinquent stock for the amount due on the
subscription with accrued interest, and the costs and expenses of
advertisement, if any. |
|
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) |
SEC. 71. Rights
of Unpaid Shares, Nondelinquent. –
Holders of subscribed shares not fully paid which are not delinquent shall
have all the rights of a stockholder |
|
Section 73. Lost or destroyed certificates.
– The following procedure shall be followed for the issuance by a corporation
of new certificates of stock in lieu of those which have been lost, stolen or
destroyed: 1. The registered owner of a certificate of
stock in a corporation or his legal representative shall file with the
corporation an affidavit in triplicate setting forth, if possible, the
circumstances as to how the certificate was lost, stolen or destroyed,
thenumber of shares represented by such certificate, the serial number of the
certificate and the name of the corporation which issued the same. He shall
also submit such other information and evidence which he may deem necessary; 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 of stock which has been lost, stolen or destroyed. The notice
shall state the name of said corporation, the name of the registered owner
and the serial number of said certificate, and the number of shares
represented by such certificate, 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 of stock, the right to make
such contest shall be barred and said corporation shall cancel in its books
the certificate of stock which has been lost, stolen or destroyed and issue
in lieu thereof new certificate of stock, unless the registered owner files a
bond or other security in lieu thereof as may be required, effective for a
period of one (1) year, for such amount 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 of stock which has been lost, stolen or destroyed, the
issuance of the new certificate of stock in lieu thereof shall be suspended
until the final decision by the court regarding the ownership of said
certificate of stock which has been lost, stolen or destroyed. Except in case of fraud, bad faith, or
negligence on the part of the corporation and its officers, no action may be
brought against any corporation which shall have issued certificate of stock
in lieu of those lost, stolen or destroyed pursuant to the procedure
above-described. (R.A. 201a) |
SEC. 72. Lost or
Destroyed Certificates. – The following procedure shall be followed by a
corporation in issuing new certificates of stock in lieu of those which have
been lost, stolen or destroyed: (a)
The registered owner of a certificate of stock in a corporation or such
person’s legal representative shall file with the corporation an affidavit in
triplicate setting forth, if possible, the circumstances as to how the
certificate was lost, stolen or destroyed, the number of shares represented
by such certificate, the
serial number of the certificate and the name of the corporation which issued
the same. The owner of such certificate of stock shall also submit such other
information and evidence as may be deemed necessary;
(b) After verifying the affidavit and other information and evidence
with the books of the corporation, the corporation shall publish a notice in
a newspaper of general circulation 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 of stock which has been lost, stolen
or destroyed. The notice shall state the name of the corporation, the name of
the registered owner, the serial number of the certificate, the number of
shares represented by such certificate, and shall state that after the
expiration of one (1) year from the date of the last publication, if no
contest has been presented to the corporation regarding the certificate of
stock, the right to make such contest shall be barred and the corporation
shall cancel the lost, destroyed or stolen certificate of stock in its
books. In lieu thereof, the
corporation shall issue a new certificate of stock, unless the registered
owner files a bond or other security as may be required, effective for a
period of one (1) year, for such amount 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. If a contest
has been presented to the corporation or if an action is pending in court
regarding the ownership of the certificate of stock which has been lost,
stolen or destroyed, the issuance of the new certificate of stock in lieu
thereof shall be suspended until the court renders a final decision regarding
the ownership of the certificate of stock which has been lost, stolen or
destroyed. Except
in case of fraud, bad faith, or negligence on the part of the corporation and
its officers, no action may be brought against any corporation which shall
have issued certificate of stock in lieu of those lost, stolen or destroyed
pursuant to the procedure above-described. |
|
TITLE VIII
CORPORATE BOOKS AND RECORDS |
TITLE VIII CORPORATE BOOKS AND RECORDS |
|
Section 74. Books to be kept; stock transfer
agent. – Every corporation shall keep and carefully preserve at its principal
office a record of all business transactions and minutes of all meetings of
stockholders or members, or of the board of directors or trustees, in which
shall be set forth in detail the time and place of holding the meeting, how
authorized, the notice given, whether the meeting was regular or special, if
special its object, those present and absent, and every act done or ordered
done at the meeting. Upon the demand of any director, trustee, stockholder or
member, the time when any director, trustee, stockholder or member entered or
left the meeting must be noted in the minutes; and on a similar demand, the
yeas and nays must be taken on any motion or proposition, and a record
thereof carefully made. The protest of any director, trustee, stockholder or
member on any action or proposed action must be recorded in full on his
demand. The records of all business transactions of
the corporation and the minutes of any meetings shall be open to inspection
by any director, trustee, stockholder or member of the corporation at
reasonable hours on business days and he may demand, in writing, for a copy
of excerpts from said records or minutes, at his expense. Any officer or
agent of the corporation who shall refuse to allow any director, trustees,
stockholder or member of the corporation to examine and copy excerpts from
its records or minutes, in accordance with the provisions of this Code, shall
be liable to such director, trustee, stockholder or member for damages,
and in addition, shall be guilty of an offense which shall be punishable
under Section 144 of this Code: Provided, That if such refusal is made
pursuant to a resolution or order of the board of directors or trustees, the
liability under this section for such action shall be imposed upon the
directors or trustees who voted for such refusal: and Provided, further, That
it shall be a defense to any action under this section that the person
demanding to examine and copy excerpts from the corporation’s records and
minutes has improperly used any information secured through any prior
examination of the records or minutes of such corporation or of any other
corporation, or was not acting in good faith or for a legitimate purpose in
making his demand. Stock corporations must also keep a book to
be known as the "stock and transfer book", in which must be kept a
record of all stocks in the names of the stockholders alphabetically
arranged; the installments paid and unpaid on all stock for which
subscription has been made, and the date of payment of any installment; a
statement of every alienation, sale or transfer of stock made, the date
thereof, and by and to whom made; and such other entries as the by-laws may
prescribe. The stock and transfer book shall be kept in the principal office
of the corporation or in the office of its stock transfer agent and shall be
open for inspection by any director or stockholder of the corporation at
reasonable hours on business days. No stock transfer agent or one engaged
principally in the business of registering transfers of stocks in behalf of a
stock corporation shall be allowed to operate in the Philippines unless he
secures a license from the Securities and Exchange Commission and pays a fee
as may be fixed by the Commission, which shall be renewable annually:
Provided, That a stock corporation is not precluded from performing or making
transfer of its own stocks, in which case allthe rules and regulations
imposed on stock transfer agents, except the payment of a license fee herein
provided, shall be applicable. (51a and 32a; P.B. No. 268.) |
SEC. 73. Books to be Kept; Stock Transfer Agent.
– Every corporation shall keep and carefully preserve at its principal office
all information relating to the corporation including, but not limited to: (a) The articles of
incorporation and by-laws of the corporation and all their amendments; (b) The current
ownership structure and voting rights of the corporation, including lists of
stockholders or members, group structures, intra-group relations, ownership
data, and beneficial ownership; (c) The names and
addresses of all the members of the board of directors or trustees and the
executive officers; (d) A record of all
business transactions; (e) A record of the
resolutions of the board of directors or trustees and of the stockholders or
members; (f) Copies of the
latest reportorial requirements submitted to the Commission; and (g) The minutes of
all meetings of stockholders or members, or of the board of directors or
trustees. Such minutes shall set forth
in detail, among others: the time and place of the meeting held, how it was
authorized, the notice given, the agenda therefor, whether the meeting was
regular or special, its object if special, those present and absent, and
every act done or ordered done at the meeting. Upon the demand of a director,
trustee, stockholder or member, the time when any
director, trustee, stockholder or member entered or left the meeting must be
noted in the minutes; and on a similar demand, the yeas and nays must be
taken on any motion or proposition, and a record thereof carefully made. The
protest of a director, trustee, stockholder or member on any action or
proposed action must be recorded in full upon their demand. Corporate records,
regardless of the form in which they are stored, shall be open to inspection
by any director, trustee, stockholder or member of the corporation in person
or by a representative at reasonable hours on business days, and a demand in
writing may be made by such director, trustee or stockholder at their
expense, for copies of such records or excerpts from said records. The inspecting or reproducing party shall
remain bound by confidentiality rules under prevailing laws, such as the
rules on trade secrets or processes under Republic Act No. 8293, otherwise
known as the “Intellectual Property Code of the Philippines”, as amended,
Republic Act No. 10173, otherwise known as the “Data Privacy Act of 2012”,
Republic Act No. 8799, otherwise known as “The Securities Regulation Code”,
and the Rules of Court. A requesting party
who is not a stockholder or member of record, or is a competitor, director,
officer, controlling stockholder or otherwise represents the interests of a
competitor shall have no right to inspect or demand reproduction of corporate
records. Any stockholder who
shall abuse the rights granted under this section shall be penalized under
Section 158 of this Code, without prejudice to the provisions of Republic Act
No. 8293, otherwise known as the “Intellectual Property Code of the
Philippines,” as amended, and Republic Act No. 10173, otherwise known as the
“Data Privacy Act of 2012”. Any officer or agent
of the corporation who shall refuse to allow the inspection and/or
reproduction of records in accordance with the provisions of this Code shall
be liable to such director, trustee, stockholder or member for damages, 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 board of directors or trustees, the liability
under this section for such action shall be imposed upon the directors or
trustees who voted for such refusal: Provided further, That it shall be a
defense to any action under this section that the person demanding to examine
and copy excerpts from the corporation’s records and minutes has improperly
used any information secured through any prior examination of the records or
minutes of such corporation or of any other corporation, or was not acting in
good faith or for a legitimate purpose in making the demand to examine or
reproduce corporate records, or is a competitor, director, officer,
controlling stockholder or otherwise represents the interests of a
competitor. If the corporation
denies or does not act on a demand for inspection and/or reproduction, the
aggrieved party may report such to the Commission. Within five (5) days from
receipt of such report, the Commission shall conduct a summary investigation
and issue an order directing the inspection or reproduction of the requested
records. Stock corporations
must also keep a stock and transfer book, which shall contain a record of all
stocks in the names of the stockholders alphabetically arranged; the
installments paid and unpaid on all stocks for which subscription has been
made, and the date of payment of any installment; a statement of every
alienation, sale or transfer of stock made, the date thereof, by and to whom
made; and such other entries as the by-laws may prescribe. The stock and
transfer book shall be kept in the principal office of the corporation or in
the office of its stock transfer agent and shall be open for inspection by
any director or stockholder of the corporation at reasonable hours on
business days. |
|
Section 75. Right to financial statements. –
Within ten (10) days from receipt of a written request of any stockholder or
member, the corporation shall furnish to him its most recent financial
statement, which shall include a balance sheet as of the end of the last
taxable year and a profit or loss statement for said taxable year, showing in
reasonable detail its assets and liabilities and the result of its
operations. At the regular meeting of stockholders or members, the board of
directors or trustees shall present to such stockholders or members a
financial report of the operations of the corporation for the preceding year,
which shall include financial statements, duly signed and certified by an
independent certified public accountant. However, if the paid-up capital of the
corporation is less than P50,000.00, the financial statements may be
certified under oath by the treasurer or any responsible officer of the
corporation. (n) |
SEC. 74. Right
to Financial Statements. – A
corporation shall furnish a stockholder or member, within ten (10) days
from receipt of their written request, its most recent financial statement, in
the form and substance of the financial reporting required by the
Commission. At
the regular meeting of stockholders or members, the board of directors or
trustees shall present to such stockholders or members a financial report of
the operations of the corporation for the preceding year, which shall include
financial statements, duly signed and certified in accordance with this Code,
and the rules the Commission may prescribe. However,
if the total assets or total liabilities of the corporation is less than Six hundred thousand pesos
(P600,000.00), or such other amount as may be determined appropriate by the
Department of Finance, the financial statements may be certified under oath
by the treasurer and the president. |
|
TITLE IX MERGER AND CONSOLIDATION |
TITLE IX
MERGER AND CONSOLIDATION |
|
Section 76. Plan or merger of consolidation.
– Two or more corporations may merge into a single corporation which shall be
one of the constituent corporations or may consolidate into a new single
corporation which shall be the consolidated corporation. The board of directors or trustees of each
corporation, party to the merger or consolidation, shall approve a plan of
merger or consolidation setting forth the following: 1. The names of the corporations proposing
to merge or consolidate, hereinafter referred to as the constituent
corporations; 2. The terms of the merger or consolidation
and the mode of carrying the same into effect; 3. A statement of the changes,
if any, in the articles of incorporation of the surviving corporation in case
of merger; and, with respect to the consolidated corporation in case of
consolidation, all the statements required to be set forth in the articles of
incorporation for corporations organized under this Code; and 4. Such other
provisions with respect to the proposed merger or consolidation as are deemed
necessary or desirable. (n) |
SEC. 75. Plan of
Merger or Consolidation. – Two (2) or more corporations may merge into a
single corporation which shall be one of the constituent corporations or may
consolidate into a new single corporation which shall be the consolidated
corporation. The
board of directors or trustees of each corporation, party to the merger or
consolidation, shall approve a plan of merger or consolidation setting forth
the following: (a)
The names of the corporations proposing to merge or consolidate, hereinafter
referred to as the constituent corporations; (b)
The terms of the merger or consolidation and the mode of carrying the same
into effect; (c)
A statement of the changes, if any, in the articles of incorporation of the
surviving corporation in case of merger; and, in case of consolidation, all
the statements required to be set forth in the articles of incorporation for
corporations organized under this Code; and (d)
Such other provisions with respect to the proposed merger or consolidation as
are deemed necessary or desirable. |
Same |
Section 77. Stockholder’s or member’s
approval. – Upon approval by majority vote of each of the board of directors
or trustees of the constituent corporations of the plan of merger or
consolidation, the same shall be submitted for approval by the stockholders
or members of each of such corporations at separate corporate meetings duly
called for the purpose. Notice of such
meetings shall be given to all stockholders or members of the respective
corporations, at least two (2) weeks prior to the date of the meeting,
either personally or by registered mail. Said notice shall state the purpose
of the meeting and shall include a copy or a summary of the plan of merger
orconsolidation. The affirmative vote of stockholders representing at least
two-thirds (2/3) of the outstanding capital stock of each corporation in the
case of stock corporations or at least two-thirds (2/3) of the members in the
case of non-stock corporations shall be necessary for the approval of such
plan. Any dissenting stockholder in stock corporations may exercise his
appraisal right in accordance with the Code: Provided, That if after the
approval by the stockholders of such plan, the board of directors decides to
abandon the plan, the appraisal right shall be extinguished. Any amendment to
the plan of merger or consolidation may be made, provided such amendment is
approved by majority vote of the respective boards of directors or trustees
of all the constituent corporations and ratified by the affirmative vote of
stockholders representing at least two-thirds (2/3) of the outstanding
capital stock or of two-thirds (2/3) of the members of each of the constituent
corporations. Such plan, together with any amendment, shall be considered as
the agreement of merger or consolidation. (n) |
SEC. 76.
Stockholders’ or Members’ Approval. – Upon approval by a majority vote of
each of the board of directors or trustees of the constituent corporations of
the plan of merger or consolidation, the same shall be submitted for approval
by the stockholders or members of each of such corporations at separate
corporate meetings duly called for the purpose. Notice of such meetings shall be given to all stockholders or members
of the respective corporations in the same manner as giving notice of regular
or special meetings under Section 49 of this Code. The notice shall state the purpose of the
meeting and include a copy or a summary of the plan of merger or
consolidation. The affirmative vote
of stockholders representing at least two-thirds (2/3) of the outstanding
capital stock of each corporation in the case of stock corporations or at
least twothirds (2/3) of the members in the case of nonstock corporations
shall be necessary for the approval of such plan. Any dissenting stockholder
may exercise the right of appraisal in accordance with this Code: Provided,
That if after the approval by the stockholders of such plan, the board of
directors decides to abandon the plan, the right of appraisal shall be
extinguished. Any
amendment to the plan of merger or consolidation may be made: Provided, That
such amendment is approved by a majority vote of the respective boards of
directors or trustees of all the constituent corporations and ratified by the
affirmative vote of stockholders representing at least two-thirds (2/3) of
the outstanding capital stock or of two-thirds (2/3) of the members of each
of the constituent corporations. Such plan, together with any amendment,
shall be considered as the agreement of merger or consolidation. |
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Section 78. Articles of merger or
consolidation. – After the 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
be signed by the president or vice-president and certified by the secretary
or assistant secretary of each corporation setting forth: 1. The plan of the
merger or the plan of consolidation; 2. As to stock corporations, the number
of shares outstanding, or in the case of nonstock corporations, the number of
members; and 3. As to each corporation, the number of shares or members
voting for and against such plan, respectively. (n) |
SEC. 77.
Articles of Merger or Consolidation. – After the 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 be signed by the president or vice-president and certified
by the secretary or assistant secretary of each corporation setting forth: (a)
The plan of the merger or the plan of consolidation; (b)
As to stock corporations, the number of shares outstanding, or in the case of
non-stock corporations, the number of members; (c)
As to each corporation, the number of shares or members voting for or against
such plan, respectively (d) The carrying amounts and fair values
of the assets and liabilities of the respective companies as of the agreed
cut-off date; (e) The method to be
used in the merger or consolidation of accounts of the companies; (f) The provisional
or pro-forma values, as merged or consolidated, using the accounting method;
and (g) Such other
information as may be prescribed by the Commission. |
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Section 79. Effectivity of merger or
consolidation. – The articles of merger or of consolidation, signed and
certified as herein above required, shall be submitted to the Securities and
Exchange Commission in quadruplicate for its approval: Provided, That in the
case of merger or consolidation of banks or banking institutions, building
and loan associations, trust companies, insurance companies, public
utilities, educational institutions and other special corporations governed
by special laws, the favorable recommendation of the appropriate government
agency shall first be obtained. If the Commission is satisfied that the merger
or consolidation of the corporations concerned is not inconsistent with the
provisions of this Code and existing laws, it shall issue a certificate of
merger or of consolidation, at which time the merger or consolidation shall
be effective. If, upon investigation, the Securities and
Exchange Commission has reason to believe that the proposed merger or
consolidation is contrary to or inconsistent with the provisions of this Code
or existing laws, it shall set a hearing to give the corporations concerned the
opportunity to be heard. Written notice of the date, time and place of
hearing shall be given to each constituent corporation at least two (2) weeks
before said hearing. The Commission shall thereafter proceed as provided in
this Code. (n) |
SEC. 78. Effectivity
of Merger or Consolidation. – The articles of merger or of consolidation,
signed and certified as required by
this Code, shall be submitted to the Commission for its approval: Provided,
That in the case of merger or consolidation of banks or banking institutions,
loan associations, trust companies, insurance companies, public utilities,
educational institutions, and other special corporations governed by special
laws, the favorable recommendation of the appropriate government agency shall
first be obtained. If the Commission is satisfied that the merger or
consolidation of the corporations concerned is consistent with the provisions
of this Code and existing laws, it shall issue a certificate approving the
articles and plan of merger or of consolidation, at which time the merger or
consolidation shall be effective. If,
upon investigation, the Commission has reason to believe that the proposed
merger or consolidation is contrary to or inconsistent with the provisions of
this Code or existing laws, it shall set a hearing to give the corporations
concerned the opportunity to be heard. Written notice of the date, time, and
place of hearing shall be given to each constituent corporation at least two
(2) weeks before said hearing. The Commission shall thereafter proceed as
provided in this Code. |
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Section 80. Effects of merger or
consolidation. – The merger or consolidation shall have the following
effects: 1. The constituent corporations shall become
a single corporation which, in case of merger, shall be the surviving
corporation designated in the plan of merger; and, in case of consolidation,
shall be the consolidated corporation designated in the plan of
consolidation; 2. The separate existence of the constituent corporations
shall cease, except that of the surviving or the consolidated corporation; 3.
The surviving or the consolidated corporation shall possess all the rights,
privileges, immunities and powers and shall be subject to all the duties and
liabilities of a corporation organized under this Code; 4. The surviving or
the consolidated corporation shall thereupon and thereafter possess all the
rights, privileges, immunities and franchises of each of the constituent
corporations; and all property, real or personal, and all receivables due on
whatever account, including subscriptions to shares and other choses in
action, and all and every other interest of, or belonging to, or due to each
constituent corporation, shall be deemed transferred to and vested in such
surviving or consolidated corporation without further act or deed; and 5. The
surviving or consolidated corporation shall be responsible and liable for all
the liabilities and obligations of each of the constituent corporations in
the same manner as if such surviving or consolidated corporation had itself
incurred such liabilities or obligations; and any pending claim, action or
proceeding brought by or against any of such constituent corporations may be
prosecuted by or against the surviving or consolidated corporation. The
rights of creditors or liens upon the property of any of such constituent
corporations shall not be impaired by such merger or consolidation. (n) |
SEC. 79. Effects
of Merger or Consolidation. – The merger or consolidation shall have the
following effects: (a)
The constituent corporations shall become a single corporation which, in case
of merger, shall be the surviving corporation designated in the plan of
merger; and, in case of consolidation, shall be the consolidated corporation
designated in the plan of consolidation; (b)
The separate existence of the constituent corporations shall cease, except
that of the surviving or the consolidated corporation; (c)
The surviving or the consolidated corporation shall possess all the rights,
privileges, immunities, and powers and shall be subject to all the duties and
liabilities of a corporation organized under this Code; (d)
The surviving or the consolidated corporation shall possess all the rights,
privileges, immunities and franchises of each constituent corporation; and
all real or personal property, all receivables due on whatever account,
including subscriptions to shares and other choses in action, and every other
interest of, belonging to, or due to each constituent corporation, shall be
deemed transferred to and vested in such surviving or consolidated
corporation without further act or deed; and (e)
The surviving or consolidated corporation shall be responsible for all the
liabilities and obligations of each constituent corporation as though such
surviving or consolidated corporation had itself incurred such liabilities or
obligations; and any pending claim, action or proceeding brought by or
against any constituent corporation may be prosecuted by or against the
surviving or consolidated corporation. The rights of creditors or liens upon
the property of such constituent corporations shall not be impaired by the
merger or consolidation. |
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TITLE X
APPRAISAL RIGHT |
TITLE X
APPRAISAL RIGHT |
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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: 1. In case any amendment to the articles of
incorporation has the effect of changing or restricting the rights of any
stockholder or class of shares, or of authorizing preferences in any respect
superior to those of outstanding shares of any class, or of extending or
shortening the term of corporate existence; 2. In case of sale, lease,
exchange, transfer, mortgage, pledge or other disposition of all or
substantially all of the corporate property and assets as provided in the Code;
and 3. In case of merger or consolidation. (n) |
SEC. 80.When the Right of Appraisal
May Be Exercised.
– Any stockholder of a corporation shall have the right to dissent and demand
payment of the fair value of the shares in the following instances: (a) In case
an amendment to the articles of incorporation has the effect of changing or
restricting the rights of any stockholder or class of shares, or of
authorizing preferences in any respect superior to those of outstanding
shares of any class, or of extending or shortening the term of corporate
existence; (b) In case of sale, lease, exchange, transfer, mortgage, pledge
or other disposition of all or substantially all of the corporate property
and assets as provided in this Code; (c) In case of merger or consolidation;
and (d) In case of investment of
corporate funds for any purpose other than the primary purpose of the
corporation. |
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Section 82.
How right is exercised. – The appraisal right may be exercised by any
stockholder who shall have voted against the proposed corporate action, by
making a written demand on the corporation within thirty (30) days after the
date on which the vote was taken for payment of the fair value of his shares:
Provided, That failure to make the demand within such period shall be deemed
a waiver of the appraisal right. If the proposed corporate action is
implemented or affected, the corporation shall pay to such stockholder, upon
surrender of the certificate or certificates of stock representing his
shares, the fair value thereof as of the day prior to the date on which the
vote was taken, excluding any appreciation or depreciation in anticipation of
such corporate action. If within a period of sixty (60) days from the date
the corporate action was approved by the stockholders, the
withdrawingstockholder and the corporation cannot agree on the fair value of
the shares, it shall be determined and appraised by three (3) disinterested
persons, one of whom shall be named by the stockholder, another by the
corporation, and the third by the two thus chosen. The findings of the
majority of the appraisers shall be final, and their award shall be paid by
the corporation within thirty (30) days after such award is made: Provided,
That no payment shall be made to any dissenting stockholder unless the
corporation has unrestricted retained earnings in its books to cover such
payment: and Provided, further, That upon payment by the corporation of the
agreed or awarded price, the stockholder shall forthwith transfer his shares
to the corporation. (n) |
SEC. 81. How Right is Exercised. – The dissenting stockholder who votes
against a proposed corporate action may exercise the right of appraisal by
making a written demand on the corporation for the payment of the fair value
of shares held within thirty (30) days from the date on which the vote
was taken: Provided, That failure to make the demand within such period shall
be deemed a waiver of the appraisal right. If the proposed corporate action
is implemented, the corporation shall pay the stockholder, upon surrender of
the certificate or certificates of stock representing the stockholder’s
shares, the fair value thereof as of the day before the vote was taken,
excluding any appreciation or depreciation in anticipation of such corporate
action. If, within
sixty (60) days from the approval of the corporate action by the
stockholders, the withdrawing stockholder and the corporationcannot agree on
the fair value of the shares, it shall be determined and appraised by three
(3) disinterested persons, one of whom shall be named by the stockholder,
another by the corporation, and the third by the two (2) thus chosen. The
findings of the majority of the appraisers shall be final, and their award
shall be paid by the corporation within thirty (30) days after such award is
made: Provided, That no payment shall be made to any dissenting stockholder
unless the corporation has unrestricted retained earnings in its books to
cover such payment: Provided, further, That upon payment by the corporation
of the agreed or awarded price, the stockholder shall forthwith transfer the
shares to the corporation. |
|
Section 83.
Effect of demand and termination of right. – From the time of demand for
payment of the fair value of a stockholder’s shares until either the
abandonment of the corporate action involved or the purchase of the said
shares by the corporation, all rights accruing to such shares, including voting
and dividend rights, shall be suspended in accordance with the provisions of
this Code, except the right of such stockholder to receive payment of the
fair value thereof: Provided, That if the dissenting stockholder is not paid
the value of his shares within 30 days after the award, his voting and
dividend rights shall immediately be restored. (n) |
SEC. 82. Effect of Demand and Termination of
Right. – From the time of demand for payment of the fair value of a
stockholder’s shares until either the abandonment of the corporate action
involved or the purchase of the said shares by the corporation, all rights
accruing to such shares, including voting and dividend rights, shall be
suspended in accordance with the provisions of this Code, except the right of
such stockholder to receive payment of the fair value thereof: Provided, That
if the dissenting stockholder is not paid the value of the said shares within
thirty (30) days after the award, the voting and dividend rights shall
immediately be restored. |
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Section 84.
When right to payment ceases. – No demand for payment under this Title may be
withdrawn unless the corporation consents thereto. If, however, such demand
for payment is withdrawn with the consent of the corporation, or if the
proposed corporate action is abandoned or rescinded by the corporation or
disapproved by the Securities and Exchange Commission where such approval is
necessary, or if the Securities and Exchange Commission determines that such
stockholder is not entitled to the appraisal right, then the right of said
stockholder to bepaid the fair value of his shares shall cease, his status as
a stockholder shall thereupon be
restored, and all dividend distributions which would have accrued on his
shares shall be paid to him. (n) |
SEC. 83.
When Right to Payment Ceases. – No demand for payment under this Title may be
withdrawn unless the corporation consents thereto. If, however, such demand
for payment is withdrawn with the consent of the corporation, or if the
proposed corporate action is abandoned or rescinded by the corporation or
disapproved by the Commission where such approval is necessary, or if the
Commission determines that such stockholder is not entitled to the appraisal
right, then the right of the stockholder to be paid the fair value of the
shares shall cease, the status as the stockholder shall be restored, and all
dividenddistributions which would have accrued on the shares shall be paid to
the stockholder. |
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Section 85.
Who bears costs of appraisal. – The costs and expenses of appraisal shall be
borne by the corporation, unless the fair value ascertained by the appraisers
is approximately the same as the price which the corporation may have offered
to pay the stockholder, in which case they shall be borne by the latter. In
the case of an action to recover such fair value, all costs and expenses
shall be assessed against the corporation, unless the refusal of the
stockholder to receive payment was unjustified. (n) |
SEC. 84. Who Bears Costs of Appraisal. – The
costs and expenses of appraisal shall be borne by the corporation, unless the
fair value ascertained by the appraisers is approximately the same as the
price which the corporation may have offered to pay the stockholder, in which
case they shall be borne by the latter. In the case of an action to recover
such fair value, all costs and expenses shall be assessed against the
corporation, unless the refusal of the stockholder to receive payment was
unjustified |
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Section 86.
Notation on certificates; rights of transferee. – Within ten (10) days after
demanding payment for his shares, a dissenting stockholder shall submit the
certificates of stock representing his shares to the corporation for notation
thereon that such shares are dissenting shares. His failure to do so shall,
at the option of the corporation, terminate his rights under this Title. If
shares represented by the certificates bearing such notation are transferred,
and the certificates consequently cancelled, the rights of the transferor as
a dissenting stockholder under this Title shall cease and the transferee
shall have all the rights of a regular stockholder; and all dividend
distributions which would have accrued on such shares shall be paid to the
transferee. (n) |
SEC. 85. Notation on Certificates; Rights of
Transferee. – Within ten (10) days after demanding payment for shares held, a
dissenting stockholder shall submit the certificates of stock representing
the shares to the corporation for notation that such shares are dissenting
shares. Failure to do so shall, at the option of the corporation, terminate
the rights under this Title. If shares represented by the certificates
bearing such notation are transferred, and the certificates consequently
cancelled, the rights of the transferor as a dissenting stockholder under
this Title shall cease and the transferee shall have all the rights of a
regular stockholder; and all dividend distributions which would have accrued
on such shares shall be paid to the transferee. |
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TITLE XI NON-STOCK
CORPORATIONS |
TITLE XI NON-STOCK
CORPORATIONS |
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Section 87.
Definition. – For the purposes of this Code, a non-stock corporation is one
where no part of its income is distributable as dividends to its members,
trustees, or officers, subject to the provisions of this Codeon dissolution:
Provided, That any profit which a non-stock corporation may obtain as an
incident to its operations shall, whenever necessary or proper, be used for
the furtherance of the purpose or purposes for which the corporation was
organized, subject to the provisions of this Title. The
provisions governing stock corporation, when pertinent, shall be applicable
to nonstock corporations, except as may be covered by specific provisions of
this Title. (n) |
SEC. 86. Definition. – For purposes of this
Code and subject to its provisions on dissolution, a nonstock corporation is
one where no part of its income is distributable as dividends to its members,
trustees, or officers: Provided, That any profit whicha non-stock corporation
may obtain incidental to its operations shall, whenever necessary or proper,
be used for the furtherance of the purpose or purposes for which the
corporation was organized, subject to the provisions of this Title. The
provisions governing stock corporations, when pertinent, shall be applicable
to non-stock corporations, except as may be covered by specific provisions of
this Title. |
|
Section 88.
Purposes. – Non-stock corporations may be formed or organized for charitable,
religious, educational, professional, cultural, fraternal, literary,
scientific, social, civic service, or similar purposes, like trade, industry,
agricultural and like chambers, or any combination thereof, subject to the
special provisions of this Title governing particular classes of nonstock
corporations. (n) |
SEC. 87. Purposes. – Non-stock corporations
may be formed or organized for charitable, religious, educational,
professional, cultural, fraternal, literary, scientific, social, civic
service, or similar purposes, like trade, industry, agricultural and like
chambers, or any combination thereof, subject to the special provisions of
this Title governing particular classes of non-stock corporations. |
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CHAPTER I MEMBERS |
CHAPTER I MEMBERS |
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Section 89.
Right to vote. – The right of the members of any class or classes to vote may
be limited, broadened or denied to the extent specified in the articles of
incorporation or the by-laws. Unless so limited, broadened or denied, each
member, regardless of class, shall be entitled to one vote. Unless otherwise
provided in the articles of incorporation or the by-laws, a member may vote
by proxy in accordance with the provisions of this Code. (n) Voting by mail or other similar means
by members of non-stock corporations may be authorized by the by-laws of
non-stock corporations with the approval of, and under such conditions which
may be prescribed by, the Securities and Exchange Commission |
SEC. 88. Right to Vote. – The right of the
members of any class or classes to vote may be limited, broadened, or denied
to the extent specified in the articles of incorporation or the bylaws.
Unless so limited, broadened, or denied, each member, regardless of class,
shall be entitled to one (1) vote. Unless otherwise provided in the articles
of incorporation or the bylaws, a member may vote by proxy, in accordance
with the provisions of this Code. The
bylaws may likewise authorize voting through remote communication and/or in
absentia. |
|
Section 90.
Non-transferability of membership. – Membership in a non-stock corporation
and all rights arising therefrom are personal and non-transferable, unless
the articles of incorporation or the by-laws otherwise provide. (n) |
SEC. 89.Nontransferability of Membership. –
Membership in a nonstock corporation and all rights arising therefrom are
personal and nontransferable, unless the articles of incorporation or the
by-laws otherwise provide |
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Section 91.
Termination of membership. – Membership shall be terminated in the manner and
for the causes provided in the articles of incorporation or the by-laws.
Termination of membership shall have the effect of extinguishing all rights
of a member in the corporation or in its property, unless otherwise provided
in the articles of incorporation or the by-laws. (n) |
SEC. 90. Termination of Membership. –
Membership shall be terminated in the manner and for the causes provided in
the articles of incorporation or the by-laws. Termination of membership shall
extinguish all rights of a member in the corporation or in its property, unless
otherwise provided in the articles of incorporation or the by-laws |
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CHAPTER II TRUSTEES AND
OFFICES |
CHAPTER II TRUSTEES AND
OFFICES |
|
Section 92.
Election and term of trustees. – Unless otherwise provided in the articles of
incorporation or the by-laws, the board of trustees of non-stock
corporations, which may be more than
fifteen (15) in number as may be fixed in their articles of incorporation
or by-laws, shall, as soon as organized, so classify themselves that the term of office of one-third (1/3) of their number
shall expire every year; and subsequent elections of trustees comprising
one-third (1/3) of the board of trustees shall be held annually and trustees
so elected shall have a term of three (3) years. Trustees thereafter
elected to fill vacancies occurring before the expiration of a particular
term shall hold office only for the unexpired period. No person shall be
elected as trustee unless he is a member of the corporation. Unless otherwise
provided in the articles of incorporation or the by-laws, officers of a
non-stock corporation may be directly elected by the members. (n) |
SEC. 91. Election and Term of Trustees. – The
number of trustees shall be fixed in the articles of incorporation or bylaws
which may or may not be more than
fifteen (15). They shall hold office for not more than three (3) years
until their successors are elected and qualified. Trustees elected to fill
vacancies occurring before the expiration of a particular term shall hold
office only for the unexpired period. Except with respect to independent
trustees of nonstock corporations vested with public interest, only a member
of the corporation shall be elected as trustee. Unless otherwise provided in
the articles of incorporation or the bylaws, the members may directly elect
officers of a nonstock corporation. |
|
Section 93.
Place of meetings. – The by-laws may provide that the members of a non-stock
corporation may hold their regular or special meetings at any place even
outside the place where the principal office of the corporation is located:
Provided, That proper notice is sent to all members indicating the date, time
and place of the meeting: and Provided, further, That the place of meeting
shall be within the Philippines. (n) |
SEC. 92. List of Members and Proxies,
Place of Meetings. – The corporation shall, at all times, keep a list of its
members and their proxies in the form the Commission may require. The list
shall be updated to reflect the members and proxies of record twenty (20)
days prior to any scheduled election. The bylaws may provide that the
members of a nonstock corporation may hold their regular or special meetings
at any place even outside the place where the principal office of the
corporation is located: Provided, That proper notice is sent to all members
indicating the date, time and place of the meeting: Provided, further, That
the place of meeting shall be within Philippine territory. |
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CHAPTER III DISTRIBUTION
OF ASSETS IN NONSTOCK CORPORATIONS |
CHAPTER III DISTRIBUTION
OF ASSETS IN NONSTOCK CORPORATIONS |
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Section 94.
Rules of distribution. – In case dissolution of a non-stock corporation in
accordance with the provisions of this Code, its assets shall be applied and
distributed as follows: 1. All liabilities and obligations of the corporation
shall be paid, satisfied and discharged, or adequate provision shall be made
therefore; 2. Assets held by the corporation upon a condition requiring
return, transfer or conveyance, and which condition occurs by reason of the
dissolution, shall be returned, transferred or conveyed in accordance with
such requirements; 3. Assets received and held by the corporation subject to
limitations permitting their use only for charitable, religious, benevolent,
educational or similar purposes, but not held upon a condition requiring
return, transfer or conveyance by reason of the dissolution, shall be
transferred or conveyed to one or more corporations, societies or
organizations engaged in activities in the Philippines substantially similar
to those of the dissolving corporation according to a plan of distribution
adopted pursuant to this Chapter; 4.
Assets other than those mentioned in the preceding paragraphs, if any, shall
be distributed in accordance with the provisions of the articles of
incorporation or the by-laws, to the extent that the articles of
incorporation or the by-laws, determine the distributive rights of members,
or any class or classes of members, or provide for distribution; and 5. In
any other case, assets may be distributed to such persons, societies,
organizations or corporations, whether or not organized for profit, as may be
specified in a plan of distribution adopted pursuant to this Chapter. (n) |
SEC. 93. Rules of Distribution. – The assets of a nonstock corporation
undergoing the process of dissolution for reasons other than those set forth
in Section 139 of this Code, shall be applied and distributed as follows:
(a) All liabilities and obligations of the corporation shall be paid,
satisfied and discharged, or adequate provision shall be made therefor; (b)
Assets held by the corporation upon a condition requiring return, transfer or
conveyance, and which condition occurs by reason of the dissolution, shall be
returned, transferred or conveyed in accordance with such requirements; (c)
Assets received and held by the corporation subject to limitations permitting
their use only for charitable, religious, benevolent, educational or similar
purposes, but not held upon a condition requiring return, transfer or
conveyance by reason of the dissolution, shall be transferred or conveyed to
one (1) or more corporations, societies or organizations engaged in
activities in the Philippines substantially similar to those of the
dissolving corporation according to a plan of distribution adopted pursuant
to this Chapter;(d) Assets other than those mentioned in the preceding
paragraphs, if any, shall be distributed in accordance with the provisions of
the articles of incorporation or the bylaws, to the extent that the articles
of incorporation or the bylaws, determine the distributive rights of members,
or any class or classes of members, or provide for distribution; and (e) In
any other case, assets may be distributed to such persons, societies,
organizations or corporations, whether or not organized for profit, as may be
specified in a plan of distribution adopted pursuant to this Chapter |
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Section 95.
Plan of distribution of assets. – A plan providing for the distribution of
assets, not inconsistent with the provisions of this Title, may be adopted by
a non-stock corporation in the process of dissolution in the following
manner: The board of trustees shall, by majority vote, adopt a resolution
recommending a plan of distribution and directing the submission thereof to a
vote at a regular or special meeting of members having voting rights. Written
notice setting forth the proposed plan of distribution or a summary thereof
and the date, time and place of such meeting shall be given to each member
entitled to vote, within the time and in the manner provided in this Code for
the giving of notice of meetings to members. Such plan of distribution shall
be adopted upon approval of at least two-thirds (2/3) of the members having
voting rights present or represented by proxy at such meeting. (n |
SEC. 94. Plan of Distribution of Assets. – A
plan providing for the distribution of assets, consistent with the provisions
of this Title, may be adopted by a non-stock corporation in the process of
dissolution in the following manner: a) The board of trustees shall, by
majority vote, adopt a resolution recommending a plan of distribution and
directing the submission thereof to a vote at a regular or special meeting of
members having voting rights; b) Each member entitled to vote shall be given
a written notice setting forth the proposed plan of distribution or a summary
thereof and the date, time and place of such meeting within the time and in
the manner provided in this Code for the giving of notice of meetings; and c)
Such plan of distribution shall be adopted upon approval of at least
two-thirds (2/3) of the members having voting rights present or represented
by proxy at such meeting. |
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TITLE XII CLOSE
CORPORATIONS |
TITLE XII CLOSE CORPORATIONS |
|
Section 96.
Definition and applicability of Title. - A close corporation, within the
meaning of this Code, is one whose articles of incorporation provide that:
(1) All the corporation’s issued stock of all classes,exclusive of treasury
shares, shall be held of record by not more than a specified number of
persons, not exceeding twenty (20); (2) all the issued stock of all classes
shall be subject to one or more specified restrictions on transfer permitted
by this Title; and (3) The corporation shall not list in any stock exchange
or make any public offering of any of its stock of any class. Notwithstanding
the foregoing, a corporation shall not be deemed a close corporation when at
least two-thirds (2/3) of its voting stock or voting rights is owned or controlled
by another corporation which is not a close corporation within the meaning of
this Code. Any corporation may be incorporated as a close corporation, except
mining or oil companies, stock exchanges, banks, insurance companies, public
utilities, educational institutions and corporations declared to be vested
with public interest in accordance with the provisions of this Code. The
provisions of this Title shall primarily govern close corporations: Provided,
That the provisions of other Titles of this Code shall apply suppletorily
except insofar as this Title otherwise
provides. |
SEC. 95. Definition and
Applicability of Title. – A close corporation, within the meaning of this
Code, is one whose articles of incorporation provides that: (a) All the corporation’s issued
stock of all classes, exclusive of treasury shares, shall be held of recordby
not more than a specified number of persons, not exceeding twenty (20); (b) All the issued stock of all
classes shall be subject to one or more specified restrictions on transfer
permitted by this Title; and (c) The
corporation shall not list in any stock exchange or make any public offering
of its stocks of any class. Notwithstanding the foregoing, a corporation
shall not be deemed a close corporation when at least two-thirds (2/3) of its
voting stock or voting rights is owned or controlled by another corporation
which is not a close corporation within the meaning of this Code. Any
corporation may be incorporated as a close corporation, except mining or oil
companies, stock exchanges, banks, insurance companies, public utilities,
educational institutions and corporations declared to be vested with public
interest in accordance with the provisions of this Code. The provisions of
this Title shall primarily govern close corporations: Provided, That other
Titles in this Code shall apply suppletorily, except as otherwise provided
under this Title. |
|
Section 97.
Articles of incorporation. – The articles of incorporation of a close
corporation may provide: 1. For a classification of shares or rights and the
qualifications for owning or holding the same and restrictions on their
transfers as may be stated therein, subject to the provisions of the
following section; 2. For a classification of directors into one or more
classes, each of whom may be voted for and elected solely by a particular
class of stock; and 3. For a greater quorum or voting requirements in
meetings of stockholders or directors than those provided in this Code. The
articles of incorporation of a close corporation may provide that the
business of the corporation shall be managed by the stockholders of the
corporation rather than by a board of directors. So long as this provision
continues in effect: 1. No meeting of stockholders need be
called to elect directors; 2. Unless the context clearly requires otherwise,
the stockholders of the corporation shall be deemed to be directors for the
purpose of applying the provisions of this Code; and 3. The stockholders of
the corporation shall be subject to all liabilities of directors. The articles of
incorporation may likewise provide that all officers or employees or that
specified officers or employees shall be elected or appointed by the
stockholders, instead of by the board of directors. |
SEC. 96. Articles of Incorporation. – The
articles of incorporation of a close corporation may provide for: (a) A classification
of shares or rights, the qualifications for owning or holding the same, and
restrictions on their transfers, subject to the provisions of the following
section; (b) A classification of directors into one (1) or more classes, each
of whom may be voted for and elected solely by a particular class of stock;
and (c) Greater quorum or voting requirements in meetings of stockholders or
directors than those provided in this Code. The articles of incorporation of a close corporation may provide that
the business of the corporation shall be managed by the stockholders of the
corporation rather than bya board of directors. So long as this provision
continues in effect, no meeting of stockholders need be called to elect
directors: Provided, That the stockholders of the corporation shall be deemed
to be directors for the purpose of applying the provisions of this Code,
unless the context clearly requires otherwise: Provided further, That the
stockholders of the corporationshall be subject to all liabilities of
directors. The articles
of incorporation may likewise provide that all officers or employees or that
specified officers or employees shall be elected or appointed by the
stockholders, instead of by the board of directors. |
|
Section 98.
Validity of restrictions on transfer of shares. – Restrictions on the right
to transfer shares must appear in the articles of incorporation and in the
by-laws as well as in the certificate of stock; otherwise, the same shall not
be binding on any purchaser thereof in good faith. Said restrictions shall
not be more onerous than granting the existing stockholders or the
corporation the option to purchase the shares of the transferring stockholder
with such reasonable terms, conditions or period stated therein. If upon the
expiration of said period, the existing stockholders or the corporation fails
to exercise the option to purchase, the transferring stockholder may sell his
shares to any third person. |
SEC. 97.
Validity of Restrictions on Transfer of Shares. – Restrictions on the right
to transfer shares must appear in the articles of incorporation, in the
by-laws, as well as in the certificate of stock; otherwise, the same shall
not be binding on any purchaser in good faith. Said restrictions shall not be
more onerous than granting the existing stockholders or the corporation the
option to purchase the shares of the transferring stockholder with such
reasonable terms, conditions or period stated. If upon the expiration of said
period, the existing stockholders or the corporation fails to exercise the
option to purchase, the transferring stockholder may sell their shares to any
third person. |
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Section 99.
Effects of issuance or transfer of stock in breach of qualifying conditions.
- 1. If stock of a close corporation is issued or transferred to any person
who is not entitled under any provision of the articles of incorporation to
be a holder of record of its stock, and if the certificate for such stock
conspicuously shows the qualifications of the persons entitled to be holders
of record thereof, such person is conclusively presumed to have notice of the
fact of his ineligibility to be a stockholder. 2. If the
articles of incorporation of a close corporation states the number of
persons, not exceeding twenty (20), who are entitled to be holders of record
of its stock, and if the certificate for such stock conspicuously states such
number, and if the issuance or transfer of stock to any person would cause
the stock to be held by more than such number of persons, the person to whom
such stock is issued or transferred is conclusively presumed to have notice
of this fact. 3. If a stock certificate of any close corporation
conspicuously shows a restriction on transfer of stock of the corporation,
the transferee of the stock is conclusively presumed to have notice of the
fact that he has acquired stock in violation of the restriction, if such
acquisition violates the restriction. 4. Whenever any person to whom stock of
a close corporation has been issued or transferred has, or is conclusively
presumed under this section to have, notice either (a) that he is a person
not eligible to be a holder of stock of the corporation, or (b) that transfer
of stock to him would cause the stock of the corporation to be held by more
than the number of persons permitted by its articles of incorporation to hold
stock of the corporation, or (c) that the transfer of stock is in violation
of a restriction on transfer of stock, the corporation may, at its option,
refuse to register the transfer of stock in the name of the transferee. 5.
The provisions of subsection (4) shall not be applicable if the transfer of
stock, though contrary to subsections (1), (2) or (3), has been consented to
by all the stockholders of the close corporation, or if the close corporation
has amended its articles of incorporation in accordance with this Title. 6.
The term "transfer", as used in this section, is not limited to a
transfer for value. 7. The provisions of this section shall not impair any
right which the transferee may have to rescind the transfer or to recover
under any applicable warranty, express or implied. |
SEC. 98. Effects of Issuance or Transfer of
Stock in Breach of Qualifying Conditions. – (a) If a stock of a close
corporation is issued or transferred to any person who is not eligible
thereof under any provision of the articles of incorporation, and if the
certificate for such stock conspicuously shows the qualifications of the
persons entitled to be holders of record thereof, such person is conclusively
presumed to have notice of the fact of the ineligibility to be a stockholder (b) If the
articles of incorporation of a close corporation states the number of
persons, not exceeding twenty (20), who are entitled to be stockholders of
record, and if the certificate for such stock conspicuously states such
number, and the issuance or transfer of stock to any person would cause the
stock to be held by more than such number of persons, the person to whom such
stock is issued or transferred is conclusively presumed to have notice of
this fact. (c) If a stock certificate of a close corporation conspicuously
shows a restriction on transfer of the corporation’s stock and the transferee
acquires the stock in violation of such restriction, the transferee is
conclusively presumed to have notice of the fact that the stock was acquired
in violation of the restriction. (d) Whenever a person to whom stock of a
close corporation has been issued or transferred has, or is conclusively
presumed under this section to have notice of: (1) the person’s ineligibility
to be a stockholder of the corporation, or (2) that the transfer of stock
would cause the stock of the corporation to be held by more than the number
of persons permitted under its articles of incorporation; or (3) that the
transfer violates a restriction on transfer of stock, and the corporation
may, at its option, refuse to register the transfer in the name of the
transferee. (e) The provisions of Subsection (d) shall not be applicable if
the transfer of stock, though contrary to Subsections (a), (b) or (c), has
been consented to by all the stockholders of the close corporation, or if the
close corporation has amended its articles of incorporation in accordance
with this Title. (f) The term “transfer”, as used in this section, is not
limited to a transfer for value. (g) The provisions of this section shall not
impair any right which the transferee may have to either rescind the transfer
or recover the stock under any express or implied warranty. |
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Section 100.
Agreements by stockholders. - 1. Agreements by and among stockholders
executed before the formation and organization of a close corporation, signed
by all stockholders, shall survive the incorporation of such corporation and
shall continue to be valid and binding between and among such stockholders,
if such be their intent, to the extent that such agreements are not
inconsistent with the articles of incorporation, irrespective of where the
provisions of such agreements are contained, except those required by this
Title to be embodied in said articles of incorporation. 2. An agreement
between two or more stockholders, if in writing and signed by the parties
thereto, may provide that in exercising any voting rights, the shares held by
them shall be voted as therein provided, or as they may agree, or as
determined in accordance with a procedure agreed upon by them. 3. No
provision in any written agreement signed by the stockholders, relating to
any phase of the corporate affairs, shall be invalidated as between the
parties on the ground that its effect is to make them partners among
themselves. 4. A written agreement among some or all of the stockholders in a
close corporation shall not be invalidated on the ground that it so relates
to the conduct of the business and affairs of the corporation as to restrict
or interfere with the discretion or powers of the board of directors:
Provided, That such agreement shall impose on the stockholders who are
parties thereto the liabilities for managerial acts imposed by this Code on
directors. 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
tortsunless the corporation has obtained reasonably adequate liability
insurance. |
SEC. 99. Agreements by Stockholders. – (a)
Agreements duly signed and executed by and among all stockholders before the
formation and organization of a close corporation shall survive the
incorporation and shall continue to be valid and binding between such
stockholders, if such be their intent, to the extent that such agreements are
consistent with the articles of incorporation, irrespective of where the
provisions of such agreements are contained, except those required by this
Title to be embodied in said articles of incorporation. (b) A written
agreement signed by two (2) or more stockholders may provide that in
exercising any voting right, the shares held by them shall be voted as
provided as agreed, or in accordance with a procedure agreed upon by them.
(c) No provision in a written agreement signed by the stockholders, relating
to any phase of corporate affairs, shall be invalidated between the parties
on the ground that its effect is to make them partners among themselves. (d)
A written agreement among some or all of the stockholders in a close
corporation shall not be invalidated on the ground that it relates to the
conduct of the business and affairs of the corporation as to restrict or
interfere with the discretion or powers of the board of directors: Provided,
That such agreement shall impose on the stockholders who are parties thereto
the liabilities for managerial acts imposed on directors by this Code. (e)
Stockholders actively engaged in the management or operation of the business
and affairs of a close corporation shall be held to strict fiduciary duties
to each other and among themselves. The stockholders shall be personally
liable for corporate torts unless the corporation has obtained reasonably
adequate liability insurance. |
|
Section 101.
When board meeting is unnecessary or improperly held. - Unless the by-laws
provide otherwise, any action by the directors of a close corporation without
a meeting shall nevertheless be deemed valid if: 1. Before or after such
action is taken, written consent thereto is signed by all the directors; or
2. All the stockholders have actual or implied knowledge of the action and
make no prompt objection thereto in writing; or 3. The directors are
accustomed to take informal action with the express or implied acquiescence
of all the stockholders; or 4. All the directors have express or implied
knowledge of the action in question and none of them makes prompt objection
thereto in writing. If a director’s meeting is held without proper call or
notice, an action taken therein within the corporate powers is deemed
ratified by a director who failed to attend, unless he promptly files his
written objection with the secretary of the c |
SEC. 100. When a Board Meeting is Unnecessary
or Improperly Held. – Unless the by-laws provide otherwise, any action taken
by the directors of a close corporation without a meeting called properly and
with due notice shall nevertheless be deemed valid if: (a)Before or after
such action is taken, written consent thereto is signed by all the directors;
or (b)All the stockholders have actual or implied knowledge of the action and
make no prompt objection in writing; or (c)The directors are accustomed to
take informal action with the express or implied acquiescence of all the
stockholders; or (d)All the directors have express or implied knowledge of
the action in question and none of them makes a prompt objection in writing.
An action within the corporate powers taken at a meeting held without proper
call or notice, is deemed ratified by a director who failed to attend, unless
after having knowledge thereof, the
director promptly files his written objection with the secretary of the
corporation |
|
Section 102.
Pre-emptive right in close corporations. – The pre-emptive right of
stockholders in close corporations shall extend to all stock to be issued,
including reissuance of treasury shares, whether for money, property or
personal services, or in payment of corporate debts, unless the articles of
incorporation provide otherwise. |
SEC. 101. Preemptive
Right in Close Corporations. – The preemptive right of stockholders in close
corporations shall extend to all stock to be issued, including reissuance of
treasury shares, whether for money, property or personal services, or in
payment of corporate debts, unless the articles of incorporation provide
otherwise. |
Same |
Section 103.
Amendment of articles of incorporation. – Any amendment to the articles of
incorporation which seeks to delete or remove any provision required by this
Title to be contained in the articles of incorporation or to reduce a quorum or voting requirement
stated in said articles of incorporation shall not be valid oreffective
unless approved by the affirmative vote of at least two-thirds (2/3) of
the outstanding capital stock, whether with or without voting rights, or of
such greater proportion of shares as may be specifically provided in the
articles of incorporation for amending, deleting or removing any of the
aforesaid provisions, at a meeting duly called for the purpose |
SEC. 102. Amendment of Articles of
Incorporation. – Any 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 of incorporation shall
require the affirmative vote of at least two-thirds (2/3) of the outstanding
capital stock, whether with or without voting rights, or ofsuch greater
proportion of shares as may be specifically provided in the articles of
incorporation for amending, deleting or removing any of the aforesaid
provisions, at a meeting duly called for the purpose. |
|
Section 104.
Deadlocks. – Notwithstanding any contrary provision in the articles of
incorporation or by-laws or agreement of stockholders of a close corporation,
if the directors or stockholders are so divided respecting the management of
the corporation’s business and affairs that the votes required for any
corporate action cannot be obtained, with the consequence that the business
and affairs of the corporation can no longer be conducted to the advantage of
the stockholders generally, the Securities and Exchange Commission, upon
written petition by any stockholder, shall have the power to arbitrate the
dispute. In the exercise of such power, the Commission shall have authority
to make such order as it deems appropriate, including an order: (1)
cancelling or altering any provision contained in the articles of
incorporation, by-laws, or any stockholder’s agreement; (2) cancelling,
altering or enjoining any resolution or act of the corporation or its board
of directors, stockholders, or officers; (3) directing or prohibiting any act
of the corporation or its board of directors, stockholders, officers, or
other persons party to the action; (4) requiring the purchase at their fair
value of shares of any stockholder, either by the corporation regardless of
the availability of unrestricted retained earnings in its books, or by the
other stockholders; (5) appointing a provisional director; (6) dissolving the
corporation; or (7) granting such other relief as the circumstances may
warrant. A provisional director shall be an impartial person who is neither a
stockholder nor a creditor of the corporation or of anysubsidiary or
affiliate of the corporation, and whose further qualifications, if any, may
be determined by the Commission. A provisional director is not a receiver of
the corporation and does not have the title and powers of a custodian or
receiver. A provisional director shall have all the rights and powers of a
duly elected director of the corporation, including the right to notice of
and to vote at meetings of directors, until such time as he shall be removed
by order of the Commission or by all the stockholders. His compensation shall
be determined by agreement between him and the corporation subject to
approval of the Commission, which may fix his compensation in the absence of
agreement or in the event of disagreement between the provisional director
and the corporation |
SEC. 103. Deadlocks. – Notwithstanding any
contrary provision in the close corporation’s articles of incorporation,
bylaws, or stockholders’ agreement, if the directors or stockholders are so
divided on the management of the corporation’s business and affairs that the
votes required for a corporate action cannot be obtained, with the
consequence that the business and affairs of the corporation can no longer be
conducted to the advantage of the stockholders generally, the Commission,
upon written petition by any stockholder, shall have the power to arbitrate
the dispute. In the exercise of such power, the Commission shall have authority
to make appropriate orders, such as: (a) cancelling or altering any provision
contained in the articles of incorporation, bylaws, or any stockholder’s
agreement; (b) cancelling, altering or enjoining a resolution or act of the
corporation or its board of directors, stockholders, or officers; (c)
directing or prohibiting any act of the corporation or its board of
directors, stockholders, officers, or other persons party to the action; (d)
requiring the purchase at their fair value of shares of any stockholder,
either by the corporation regardless of the availability of unrestricted
retained earnings in its books, or by the other stockholders; (e) appointing
a provisional director; (f) dissolving the corporation; or (g) granting such
other relief as the circumstances may warrant. A provisional director shall
be an impartial person who is 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
director is not a receiver of the corporation and does not have the title and
powers of a custodian or receiver. A provisional director shall have all
therights and powers of a duly elected director, including the right to be
notified of and to vote at meetings of directors until removed by order of
the Commission or by all the stockholders. The compensation of the
provisional director shall be determined by agreement between such director
and the corporation, subject to approval of the Commission, which may fix the
compensation absent an agreement or in the event of disagreement between the
provisional director and the corporation |
Same |
Section 105.
Withdrawal of stockholder or dissolution of corporation. – In addition and
without prejudice to other rights and remedies available to a stockholder
under this Title, any stockholder of a close corporation may, for any reason,
compel the said corporation to purchase his shares at their fair value, which
shall not be less than their par or issued value, when the corporation has
sufficient assets in its books to cover its debts and liabilities exclusive
of capital stock: Provided, That any stockholder of a close corporation may,
by written petition to the Securities and Exchange Commission, compel the
dissolution of such corporation whenever any of acts of the directors,
officers or those in control of the corporation is illegal, or fraudulent, or
dishonest, or oppressive or unfairly prejudicial to the corporation or any
stockholder, or whenever corporate assets are being misapplied or wasted |
SEC. 104. Withdrawal of Stockholder or
Dissolution of Corporation. – In addition and without prejudice to other
rights and remedies available under this Title, any stockholder of a close
corporation may, for any reason, compel the corporation to purchase shares
held at fair value, which shall not be less than the par or issued value,
when the corporation has sufficient assets in its books to cover its debts
and liabilities exclusive of capital stock: Provided, That any stockholder of
a close corporation may, by written petition to the Commission, compel the
dissolution of such corporation whenever any of acts of the directors,
officers, or those in control of the corporation is illegal, fraudulent,
dishonest, oppressive or unfairly prejudicial to the corporation or any
stockholder, or whenever corporate assets are being misapplied or wasted. |
|
TITLE XIII SPECIAL
CORPORATIONS CHAPTER I - EDUCATIONAL
CORPORATIONS |
TITLE XIII SPECIAL
CORPORATIONS CHAPTER I - EDUCATIONAL
CORPORATIONS |
|
Section 106.
Incorporation. – Educational corporations shall be governed by special laws
and by the general provisions of this code (n) |
SEC. 105. Incorporation. – Educational
corporations shall be governed by special laws and by the general provisions
of this Code. |
|
Section 107. Pre-requisites to
incorporation. – Except upon favorable recommendation of the Ministry of
Education and Culture, the Securities and Exchange Commission shall not
accept or approve the articles of incorporation and by-laws of any
educational institution. (168a) |
|
Removed |
Section 108.
Board of trustees. – Trustees of educational institutions organized as
nonstock corporations shall not be less than five (5) nor more than fifteen
(15): Provided, however, That the number of trustees shall be in multiples of
five (5). Unless otherwise provided in the articles of incorporation on the
by-laws, the board of trustees of incorporated schools, colleges, or other
institutions of learning shall, as soon as organized, so classify themselves
that the term of office of one-fifth (1/5) of their number shall expire every
year. Trustees thereafter elected to fill vacancies, occurring before the
expiration of a particular term, shall hold office only for the unexpired
period. Trustees elected thereafter to fill vacancies caused by expiration of
term shall hold office for five (5) years. A majority of the trustees shall
constitute a quorum for the transaction of business. The powers and authority
of trustees shall be defined in the by-laws. For institutions organized as
stock corporations, the number and term of directors shall be governed by |
SEC. 106. Board of Trustees. –Trustees of
educational institutions organized as nonstock corporations shall not be less
than five (5) nor more than fifteen (15): Provided however, That the number
of trustees shall be in multiples of five (5). Unless otherwise provided in
the articles of incorporation or by-laws, the board of trustees of
incorporated schools, colleges, or other institutions of learning shall, as
soon as organized, so classify themselves that the term of office of
one-fifth (1/5) of their number shall expire every year. Trustees thereafter
elected to fill vacancies, occurring before the expiration of a particular
term, shall hold office only for the unexpired period. Trustees elected
thereafter to fill vacancies caused by expiration of term shall hold office
for five (5) years. A majority of the trustees shall constitute a quorum for
the transaction of business. The powers and authority of trustees shall be
defined in the bylaws. For institutions organized as stock corporations, the
number and term of directors shall be governed by the provisions on stock
corporations. |
Same |
CHAPTER II RELIGIOUS
CORPORATIONS |
CHAPTER II RELIGIOUS
CORPORATIONS |
|
Section 109.
Classes of religious corporations. – Religious corporations may be
incorporated by one or more persons. Such corporations may be classified into
corporations sole and religious societies. Religious corporations shall be
governed by this Chapter and by the general provisions on non-stock
corporations insofar as they may be applicable. (n) |
SEC. 107. Classes of Religious Corporations. –
Religious corporations may be incorporated by one or more persons. Such
corporations may be classified into corporations sole and religious
societies. Religious corporations shall be governed by this Chapter and by
the general provisions on non-stock corporations insofar as applicable. |
Same |
Section 110.
Corporation sole. – For the purpose of administering and managing, as
trustee, the affairs, property and temporalities of any religious
denomination, sect or church, a corporation sole may be formed by the chief
archbishop, bishop, priest, minister, rabbi or other presiding elder of such
religious denomination, sect or church. (154a) |
SEC. 108. Corporation sole. – For the purpose
of administering and managing, as trustee, the affairs, property and
temporalities of any religious denomination, sect or church, a corporation
sole may be formed by the chief archbishop, bishop, priest, minister, rabbi,
or other presiding elder of such religious denomination, sect, or church. |
Same |
Section 111.
Articles of incorporation. – In order to become a corporation sole, the chief
archbishop, bishop, priest, minister, rabbi or presiding elder of any
religious denomination, sect or church must file with the Securities and
Exchange Commission articles of incorporation setting forth the following: 1.
That he is the chief archbishop, bishop, priest, minister, rabbi or presiding
elder of his religious denomination, sect or church and that he desires to
become a corporation sole; 2. That the rules, regulations and discipline of
his religious denomination, sect or church are not inconsistent with his
becoming a corporation sole and do not forbid it; 3. That as such chief
archbishop, bishop, priest, minister, rabbi or presiding elder, he is charged
with the administration of the temporalities and the management of the
affairs, estate and properties of his religious denomination, sect or church
within his territorial jurisdiction, describing such territorial
jurisdiction; 4. The manner in which any vacancy occurring in the office of
chief archbishop, bishop, priest, minister, rabbi of presiding elder is
required to be filled, according to the rules, regulations or discipline of
the religious denomination, sect or church to which he belongs; and 5. The
place where the principal office of the corporation sole is to be established
and located, which place must be within the Philippines. The articles of
incorporation may include any other provision not contrary to law for the
regulation of the affairs of the corporation. (n) |
SEC. 109. Articles of incorporation. – In
order to become a corporation sole, the chief archbishop, bishop, priest,
minister, rabbi or presiding elder of any religious denomination, sect or
church must file with the Commission articles of incorporation setting forth
the following: (a) That the applicant chief archbishop, bishop, priest,
minister, rabbi, or presiding elder represents the religious denomination,
sect, or church who desires to become a corporation sole; (b) That the rules,
regulations and discipline of the religious denomination, sect or church are
consistent with becoming a corporation sole and do not forbid it; (c) That
such chief archbishop, bishop, priest, minister, rabbi, or presiding elder is
charged with the administration of the temporalities and the management of
the affairs, estate and properties of the religious denomination, sect, or church
within the territorial jurisdiction, so described succinctly in the articles
of incorporation; (d) The manner by which any vacancy occurring in the office
of chief archbishop, bishop, priest, minister, rabbi, or presiding elder is
required to be filled, according to the rules, regulations or discipline of
the religious denomination, sect, or church; and (e) The place where the
principal office of the corporation sole is to be established and located,
which place must be within the territory of the Philippines. The articles
of incorporation may include any other provision not contrary to law for the
regulation of the affairs of the corporation |
Same |
Section 112.
Submission of the articles of incorporation. – The articles of incorporation
must be verified, before filing, by affidavit or affirmation of the chief
archbishop, bishop, priest, minister, rabbi or presiding elder, as the case
may be, and accompanied by a copy of the commission, certificate of election
or letter of appointment of such chief archbishop, bishop, priest, minister,
rabbi or presiding elder, duly certified to be correct by any notary public.
From and after the filing with the Securities and Exchange Commission of the
said articles of incorporation, verified by affidavit or affirmation, and
accompanied by the documents mentioned in the preceding paragraph, such chief
archbishop, bishop, priest, minister, rabbi or presiding elder shall become a
corporation sole and all temporalities, estate and properties of the
religious denomination, sect or church theretofore administered or managed by
him as such chief archbishop, bishop, priest, minister, rabbi or presiding
elder shall be held in trust by him as a corporation sole, for the use,
purpose, behalf and sole benefit of his religious denomination, sect or
church, including hospitals, schools, colleges, orphan asylums, parsonages
and cemeteries thereof. (n) |
SEC. 110. Submission of the Articles of
Incorporation. – The articles of incorporation must be verified, by affidavit
or affirmation of the chief archbishop, bishop, priest, minister, rabbi, or
presiding elder, as the case may be, and accompanied by a copy of the
commission, certificate of election or letter of appointment of such chief
archbishop, bishop, priest, minister, rabbi, or presiding elder, duly
certified to be correct by any notary public. From and after filing with the
Commission of the said articles of incorporation, verified by affidavit or
affirmation, and accompanied by the documents mentioned in the preceding
paragraph, such chief archbishop, bishop, priest, minister, rabbi, or
presiding elder shall become a corporation sole and all temporalities, estate
and properties of the religious denomination, sect or church theretofore
administered or managed as such chief archbishop, bishop, priest, minister,
rabbi, or presiding elder shall be personally held in trust as a corporation
sole, for the use, purpose, exclusive benefit and on behalf of the religious
denomination, sect, or church, including hospitals, schools, colleges, orphan
asylums, parsonages, and cemeteries thereof. |
Same |
Section 113.
Acquisition and alienation of property. – Any corporation sole may purchase
and hold real estate and personal property for its church, charitable,
benevolent or educational purposes, and may receive bequests or gifts for
such purposes. Such corporation may sell or mortgage real property held by it
by obtaining an order for that purpose from the Court of First Instance of
the province where the property is situated upon proof made to the
satisfaction of the court that notice of the application for leave to sell or
mortgage has been given by publication or otherwise in such manner andfor
such time as said court may have directed, and that it is to the interest of
the corporation that leave to sell or mortgage should be granted. The
application for leave to sell or mortgage must be made by petition, duly
verified, by the chief archbishop, bishop, priest, minister, rabbi or
presiding elder acting as corporation sole, and may be opposed by any member
of the religious denomination, sect or church represented by the corporation
sole: Provided, That in cases where the rules, regulations and discipline of
the religious denomination, sect or church, religious society or order
concerned represented by such corporation sole regulate the method of
acquiring, holding, selling and mortgaging real estate and personal property,
such rules, regulations and discipline shall control, and the intervention of
the courts shall not be necessary. (159a) |
SEC. 111. Acquisition and Alienation of
Property. – A corporation sole may purchase and hold real estate and personal
property for its church, charitable, benevolent, or educational purposes, and
may receive bequests or gifts for such purposes. Such corporation may sell or
mortgage real property held by it by obtaining an order for that purpose from
the Regional Trial Court of the province where the property is 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 corporation that leave to sell or mortgage be granted.
The application for leave to sell ormortgage must be made by petition, duly
verified, by the chief archbishop, bishop, priest, minister, rabbi, or
presiding elder acting as corporation sole, and may be opposed by any member
of the religious denomination, sect, or church represented by the corporation
sole: Provided, That in cases where the rules, regulations, and discipline of
the religious denomination, sect, or church, religious society, or order
concerned represented by such corporation sole regulate the method of
acquiring, holding, selling, and mortgaging real estate and personal
property, such rules, regulations and discipline shall control, and the
intervention of the courts shall not be necessary. |
Same |
Section 114.
Filling of vacancies. – The successors in office of any chief archbishop,
bishop, priest, minister, rabbi or presiding elder in a corporation sole
shall become the corporation sole on their accession to office and shall be
permitted to transact business as such on the filing with the Securities and
Exchange Commission of a copy of their commission, certificate of election,
or letters of appointment, duly certified by any notary public. During any
vacancy in the office of chief archbishop, bishop, priest, minister, rabbi or
presiding elder of any religious denomination, sect or church incorporated as
a corporation sole, the person or persons authorized and empowered by the
rules, regulations or discipline of the religious denomination, sect or
church represented by the corporation sole to administer the temporalities
and manage the affairs, estate and properties of the corporation sole during
the vacancy shall exercise all the powers and authority of the corporation sole
during such vacancy. (158a) |
SEC. 112. Filling of Vacancies. – The
successors in office of any chief archbishop, bishop, priest, minister,
rabbi, or presiding elder in a corporation sole shall become the corporation
sole on their accession to office and shall be permitted to transact business
as such upon filing a copy of their commission, certificate of election, or
letters of appointment, duly certified by any notary public with the
Commission. During any vacancy in the office of chief archbishop, bishop,
priest, minister, rabbi, or presiding elder of any religious denomination,
sect or church incorporated as a corporation sole, the person or persons
authorized by the rules, regulations or discipline of the religious
denomination, sect, or church represented by the corporation sole to administer
the temporalities and manage the affairs, estate, and properties of the
corporation sole shall exercise all the powers and authority of the
corporation sole during such vacancy. |
Same |
Section 115.
Dissolution. – A corporation sole may be dissolved and its affairs settled
voluntarily by submitting to the Securities
and Exchange Commission a verified declaration of dissolution. The declaration of dissolution shall set
forth: 1. The name of the corporation; 2. The reason for dissolution and
winding up; 3. The authorization for the dissolution of the corporation by
the particular religious denomination, sect or church; 4. The names and
addresses of the persons who are to supervise the winding up of the affairs
of the corporation. Upon
approval of such declaration of dissolution by the Securities and Exchange
Commission, the corporation shall cease to carry on its operations except for
the purpose of winding up its affairs. (n) |
SEC. 113. Dissolution. – A corporation sole
may be dissolved and its affairs settled voluntarily by submitting to the
Commission a verified declaration of dissolution, setting forth: (a) The name of the corporation; (b) The reason
for dissolution and winding up; (c) The authorization for the dissolution of
the corporation by the particular religious denomination, sect or church; (d)
The names and addresses of the persons who are to supervise the winding up of
the affairs of the corporation. Upon approval of such declaration of
dissolution by the Commission, the corporation shall cease to carry on its
operations except for the purpose of winding up its affairs |
|
Section 116.
Religious societies. – Any religious society or religious order, or any
diocese, synod, or district organization of any religious denomination, sect
or church, unless forbidden by the constitution, rules, regulations, or
discipline of the religious denomination, sect or church of which it is a
part, or by competent authority, may, upon written consent and/or by an
affirmative vote at a meeting called for the purpose of at least two-thirds
(2/3) of its membership, incorporate for the administration of its
temporalities or for the management of its affairs, properties and estate by
filing with the Securities and Exchange Commission, articles of incorporation
verified by the affidavit of the presiding elder, secretary, or clerk or
other member of such religious society or religious order, or diocese, synod,
or district organization of the religious denomination, sect or church,
setting forth the following: 1. That the religious society or religious
order, or diocese, synod, or district organization is areligious organization
of a religious denomination, sect or church; 2. That at least two-thirds
(2/3) of its membership have given their written consent or have voted to
incorporate, at a duly convened meeting of the body; 3. That the
incorporation of the religious society or religious order, or diocese, synod,
or district organization desiring to incorporate is not forbidden by
competent authority or by the constitution, rules, regulations or discipline
of the religious denomination, sect, or church of which it forms a part; 4.
That the religious society or religious order, or diocese, synod, or district
organization desires to incorporate for the administration of its affairs, properties
and estate; 5. The place where the principal office of the corporation is to
be established and located, which place must be within the Philippines; and
6. The names, nationalities, and residences of the trustees elected by the
religious society or religious order, or the diocese, synod, or district
organization to serve for the first year or such other period as may be
prescribed by the laws of the religious society or religious order, or of the
diocese, synod, or district organization, the board of trustees to be not less than five (5) nor more than
fifteen (15). (160a) |
SEC. 114. Religious Societies. – Unless
forbidden by competent authority, the Constitution, pertinent rules,
regulations, or discipline of the religious denomination, sect, or church of
which it is a part, any religious society, religious order, diocese, synod,
or district organization of any religious denomination, sect, or church, may,
upon written consent and/or by an affirmative vote at a meeting called for
the purpose of at least two-thirds (2/3) of its membership, incorporate for
the administration of its temporalities or for the management of its affairs,
properties, and estate by filing with the Commission, articles of
incorporation verified by the affidavit of the presiding elder, secretary, or
clerk or other member of such religious society or religious order, or
diocese, synod, or district organization of the religious denomination, sect,
or church, setting forth the following: (a) That the religious society or
religious order, or diocese, synod, or district organization is a religious
organization of a religious denomination, sect or church; (b) That at
least two-thirds (2/3) of its membership has given written consent or has
voted to incorporate, at a duly convened meeting of the body; (c) That the
incorporation of the religious society or religious order, diocese, synod, or
district organization is not forbidden by competent authority or by the
Constitution, rules, regulations or discipline of the religious denomination,
sect, or church of which it forms part; (d) That the religious society or
religious order, diocese, synod, or district organization desires to
incorporate for the administration of its affairs, properties and estate; (e)
The place within the Philippines where the principal office of the
corporation is to be established and located; and (f) The names,
nationalities, and residence addresses of the trustees, not less than five
(5) nor more than fifteen (15), elected by the religious society or religious
order, or the diocese, synod, or district organization to serve for the first
year or such other period as may be prescribed by the laws of the religious
society or religious order, or of the diocese, synod, or district
organization. |
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Chapter
III ONE PERSON CORPORATIONS |
New Provision |
|
SEC. 115.
Applicability of Provisions to One Person Corporations. – The provisions of
this Title shall primarily apply to One Person Corporations. Other provisions
of this Code apply suppletorily, except as otherwise provided in this Title. |
New Provision |
|
SEC. 116. One Person Corporation. – A
One Person Corporation is a corporation with a single stockholder: Provided,
That only a natural person, trust, or an estate may form a One Person
Corporation. Banks and quasi-banks, pre-need,
trust, insurance, public and publicly-listed companies, and non-chartered
governmentowned and -controlled corporations may not incorporate as One
Person Corporations: Provided further, That a natural person who is licensed
to exercise a profession may not organize as a One Person Corporation for the
purpose of exercising such profession except as otherwise provided under
special laws. |
New Provision |
|
SEC. 117. Minimum Capital Stock
Required for One Person Corporation. – A One Person Corporation shall not be
required to have a minimum authorized capital stock except as otherwise
provided by special law. |
New Provision |
|
SEC. 118. Articles of Incorporation.
–A One Person Corporation shall file articles of incorporation in accordance
with the requirements under Section 14 of this Code. It shall likewise
substantially contain the following: (a) If the single stockholder is a trust
or an estate, the name, nationality, and residence of the trustee,
administrator, executor, guardian, conservator, custodian, or other person
exercising fiduciary duties together with the proof of such authority to act
on behalf of the trust or estate; and (b) Name, nationality, residence of the
nominee and alternate nominee, and the extent, coverage and limitation of the
authority. |
New Provision |
|
SEC. 119. By-laws. – The One Person
Corporation is not required to submit and file corporate by-laws. |
New Provision |
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SEC. 120. Display of Corporate Name.
– A One Person Corporation shall indicate the letters “OPC” either below or
at the end of its corporate name. |
New Provision |
|
SEC. 121. Single stockholder as
Director, President. – The single stockholder shall be the sole director and
president of the One Person Corporation |
New Provision |
|
SEC. 122. Treasurer, Corporate
Secretary, and Other Officers. – Within fifteen (15) days from the issuance
of its certificate of incorporation, the One Person Corporation shall 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 single stockholder may not be appointed as the corporate
secretary. A single stockholder who is likewise the selfappointed treasurer
of the corporation, shall give a bond to the Commission in such a sum as may
be required: Provided, That, the said stockholder/treasurer shall undertake
in writing to faithfully administer the One Person Corporation’s funds to be
received as treasurer, and to disburse and invest the same according to the
articles of incorporation as approved by the Commission. The bond shall be
renewed every two (2) years or as often as may be required. |
New Provision |
|
SEC. 123. Special Functions of the
Corporate Secretary. – In addition to the functions designated by the One
Person Corporation, the corporate secretary shall: (a) Be responsible for
maintaining the minutes book and/or records of the corporation; (b) Notify
the nominee or alternate nominee of the death or incapacity of the single
stockholder, which notice shall be given no later than five (5) days from
such occurrence; (c) Notify the Commission of the death of the single
stockholder within five (5) days from such occurrence and stating in such
notice the names, residence addresses, and contact details of all known legal
heirs; and (d) Call the nominee or alternate nominee and the known legal
heirs to a meeting and advise the legal heirs with regard to, among others,
the election of a new director, amendment of thearticles of incorporation,
and other ancillary and/or consequential matters. |
New Provision |
|
SEC. 124. Nominee and Alternate
Nominee. – The single stockholder shall designate a nominee and an alternate
nominee who shall, in the event of the single stockholder’s death or
incapacity, take the place of the single stockholder as director and shall
manage the corporation’s affairs. The articles of incorporation shall state
the names, residence addresses and contact details of the nominee and
alternate nominee, as well as the extent and limitations of their authority
in managing the affairs of the One Person Corporation. The written consent of
the nominee and alternate nominee shall be attached to the application for
incorporation. Such consent may be withdrawn in writing any time before the
death or incapacity of the single stockholder. |
New Provision |
|
SEC. 125. Term of Nominee and
Alternate Nominee. – When the incapacity of the single stockholder is temporary,
the nominee shall sit as director and manage the affairs of the One Person
Corporation until the stockholder, by self-determination, regains the
capacity to assume such duties. In case of death or permanent incapacity of
the single stockholder, the nominee shall sit 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 heirs have designated one
of them or have agreed that the estate shall be the single stockholder of the
One Person Corporation. 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 director and
manager of the corporation, and only forthe same term and under the same
conditions applicable to the nominee. |
New Provision |
|
SEC. 126. Change of Nominee or
Alternate Nominee. – The single stockholder may, at any time, change its
nominee and alternate nominee by submitting to the Commission the names of
the new nominees and their corresponding written consent. For this purpose,
the articles of incorporation need not be amended. |
New Provision |
|
SEC. 127. Minutes Book. – A One
Person Corporation shall maintain a minutes book which shall contain all
actions, decisions, and resolutions taken by the One Person Corporation. |
New Provision |
|
SEC. 128. Records in Lieu of
Meetings. – When action is needed on any matter, it shall be sufficient to
prepare a written resolution, signed and dated by the single stockholder, and
recorded in the minutes book of the One Person Corporation. The date of
recording in the minutes book shall be deemed to be the date of the meeting
for all purposes under this Code. |
New Provision |
|
SEC. 129. Reportorial Requirements. –
The One Person Corporation shall submit the following within such period as
the Commission may prescribe: (a) Annual financial statements audited by an
independent certified public accountant: Provided, That if the total assets
or total liabilities of the corporation are less than Six Hundred Thousand
Pesos (P600,000.00), the financial statements shall be certified under oath
by the corporation’s treasurer and president. (b) A report containing
explanations or comments by the president on every qualification,
reservation, or adverse remark or disclaimer made by the auditor in the
latter’s report; (c) A disclosure of all self-dealings and related party
transactions entered into between theOne Person Corporation and the single
stockholder; and (d) Other reports as the Commission may require. For
purposes 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. The Commission may place the corporation under
delinquent status should the corporation fail to submit the reportorial
requirements three (3) times, consecutively or intermittently, within a
period of five (5) years. |
New Provision |
|
SEC. 130. Liability of Single
Shareholder. – A sole shareholder claiming limited liability has the burden
of affirmatively showing that the corporation was adequately financed. Where
the single stockholder cannot prove that the property of the One Person
Corporation is independent of the stockholder’s personal property, the
stockholder shall be jointly and severally liable for the debts and other
liabilities of the One Person Corporation. The principles of piercing the
corporate veil applies with equal force to One Person Corporations as with
other corporations. |
New Provision |
|
SEC. 131. Conversion from an Ordinary
Corporation to a One Person Corporation. – When a single stockholder acquires
all the stocks of an ordinary stock corporation, the latter may apply for
conversion into a One Person Corporation, subject to the submission of such
documents as the Commission may require. If the application for conversion is
approved, the Commission shall issue certificate of filing of amended
articles of incorporation reflecting the conversion. The One Person Corporation
converted from an ordinary stock corporation shall succeed the latter and be
legally responsible for all the latter’s outstanding liabilities as of the
date of conversion. |
New Provision |
|
SEC. 132. Conversion from a One
Person Corporation to an Ordinary Stock Corporation. – A One Person
Corporation may be converted into an ordinary stock corporation after due
notice to the Commission of such fact and of the circumstances leading to the
conversion, and after compliance with all other requirements for stock
corporations under this Code and applicable rules. Such notice shall be filed
with the Commission within sixty (60) days from the occurrence of the
circumstances leading to the conversion into an ordinary stock corporation.
If all requirements have been complied with, the Commission shall issue an
amended certificate of incorporation reflecting the conversion. In case of
death of the single stockholder, the nominee or alternate nominee shall
transfer the shares to the duly designated legal heir or estate within seven
(7) days from receipt of either an affidavit of heirship or selfadjudication
executed by a sole heir, or any other legal document declaring the legal
heirs of the single stockholder and notify the Commission of the transfer.
Within sixty (60) days from the transfer of the shares, the legal heirs shall
notify the Commission of their decision to either wind up and dissolve the
One Person Corporation or convert it into an ordinary stock corporation. The
ordinary stock corporation converted from a One Person Corporation shall
succeed the latter and be legally responsible for all the latter’s
outstanding liabilities as of the date of conversion. |
New Provision |
TITLE XIV DISSOLUTION |
TITLE XIV DISSOLUTION |
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Section 117.
Methods of dissolution. – A corporation formed or organized under the
provisions of this Code may be dissolved voluntarily or involuntarily. (n) |
SEC. 133. Methods of Dissolution. – A
corporation formed or organized under the provisions of this Code may be
dissolved voluntarily or involuntarily |
Same |
Section 118.
Voluntary dissolution where no creditors are affected. – If dissolution of
acorporation does not prejudice 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 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 of a meeting to be held upon call of the
directors or trustees after publication of the notice of 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, after sending such notice to each
stockholder or member either by registered mail or by 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) |
SEC. 134. Voluntary Dissolution Where No
Creditors are Affected. – If dissolution of acorporation does not prejudice
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 affirmative vote of the stockholders owning at least majority of the
outstanding capital stock or majority of the members of a meeting to be held
upon the call of the directors or trustees. At least twenty (20) days prior to
the meeting, notice shall be given to each shareholder or member of record
personally, by registered mail, or by any means authorized under its bylaws
whether or not entitled to vote at the meeting, in the manner provided in
Section 50 of this Code and shall state that the purpose of the meeting is to
vote on the dissolution of the corporation. Notice of the time, place, and
object of the meeting shall be published once prior to the date of the
meeting in a newspaper published in the place where the principal office of
said corporation is located, or if no newspaper is published in such place,
in a newspaper of general circulation in the Philippines. A verified request for dissolution
shall be filed with the Commission stating: (a) the reason for the
dissolution; (b) the form, manner, and time when the notices were given; (c)
names of the stockholders and directors or members and trustees, who approved
the dissolution; (d) the date, place, and time of the meeting in which the
vote was made; and (e) details of publication. The corporation shall submit
the following to the Commission: (1) a copy of the resolution authorizing the
dissolution, certified by a majority of the board of directors or trustees
and countersigned by the secretary of the corporation; (2) proof of
publication; and (3) favorable recommendation from the appropriate regulatory
agency, when necessary. Within fifteen (15) days from receipt of the verified
request for dissolution, and in the absence of any withdrawal within said
period, the Commission shall approve the
request and issue the certificate of dissolution. The dissolution shall take
effect only upon the issuance by the Commission of a certificateof dissolution.
No application for dissolution of banks, banking and quasi-banking
institutions, preneed, insurance and trust companies, nonstock savings and
loan associations, pawnshops, and other financial intermediaries shall be
approved by the Commission unless accompanied by a favorable recommendation
of the appropriate government agency. |
|
Section 119.
Voluntary dissolution where creditors are affected. – Where the dissolution
of a corporation may prejudice the rights of any creditor, the petition for
dissolution 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 twothirds (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 shall, by an order reciting the purpose of the petition, 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)
day’s 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) |
SEC. 135. Voluntary Dissolution Where
Creditors are Affected; Procedure and Contents of Petition. – Where the
dissolution of a corporation may prejudice the rights of any creditor, a
verified petition for dissolution shall be filed with the Commission. The
petition shall be signed by a majority of the corporation’s board of
directors or trustees, 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 twothirds (2/3) of the outstanding capital
stock or at least two-thirds (2/3) of the members at a meeting of its
stockholders or members called for that purpose. The petition shall likewise
state: (a) the reason for the dissolution; (b) the form, manner, and time
when the notices were given; and (c) the date, place, and time of the meeting
in which the vote was made. The corporation shall submit to the Commission
the following: (1) a copy of the resolution authorizing the dissolution,
certified by a majority of the board of directors or trustees and
countersigned by the secretary of the corporation; and (2) a list of all its
creditors. If the petition is sufficient in form and substance, the
Commission shall, by an order reciting the purpose of the petition, fix a
deadline for filing objections to the petition 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 raised in 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. The dissolution shall
take effect only upon the issuance by the Commission of a certificate of
dissolution. |
|
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 of 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) |
SEC. 136. 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 Commission in accordance with this Code. Upon the expiration of the
shortened term, as stated in the approved amended articles of incorporation,
the corporation shall be deemed dissolved without any further proceedings,
subject to the provisions of this Code on liquidation. In the case of expiration of
corporate term, dissolution shall automatically take effect on the day
following the last day of the corporate term stated in the articles of
incorporation, without the need for the issuance by the Commission of a
certificate of dissolution. |
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|
SEC. 137. Withdrawal of Request and
Petition for Dissolution.
– A withdrawal of the request for dissolution shall be made in writing, duly
verified byany incorporator, director, trustee, shareholder, or member and
signed by the same number of incorporators, directors, trustees,
shareholders, or members necessary to request for dissolution as set forth in
the foregoing sections. The withdrawal shall be submitted no later than
fifteen (15) days from receipt by the Commission of the request for
dissolution. Upon receipt of a withdrawal of request for dissolution, the
Commission shall withhold action on the request for dissolution and shall,
after investigation: (a) make a pronouncement that the request for
dissolution is deemed withdrawn; (b) direct a joint meeting of the board of
directors or trustees and the stockholders or members for the purpose of
ascertaining whether to proceed with dissolution; or (c) issue such other
orders as it may deem appropriate. A withdrawal of the petition for
dissolution shall be in the form of a motion and similar in substance to a
withdrawal of request for dissolution but shall be verified and filed prior
to publication of the order setting the deadline for filing objections to the
petition. |
New Provision |
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 the grounds provided by existing laws, rules and
regulations. (n) |
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|
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, the 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. Except by decrease of capital stock and as
otherwise allowed by this Code, no corporation shall distribute any of its
assets or property except upon lawful dissolution and after payment of all
its debts and liabilities. (77a, 89a, 16a |
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TITLE XV FOREIGN CORPORATIONS |
TITLE XV FOREIGN CORPORATIONS |
|
Section 123.
Definition and rights of foreign corporations. – For the purposes of this
Code, a foreign corporation is one formed, organized or existing under any
laws other than those of the Philippines and whose laws allow Filipino
citizens and corporations to do business in its own country or state. It
shall have the right to transact business in the Philippines after it shall
have obtained a license to transact business in this country in accordance
with this Code and a certificate of authority from the appropriate government
agency. (n) |
SEC. 140. Definition and Rights of Foreign
Corporations. – For purposes of this Code, a foreign corporation is one
formed, organized or existing under laws other than the Philippines’ and
whose laws allow Filipino citizens and corporations to do business in its own
country or State. It shall have the right to transact business in the
Philippines after obtaining a license for that purpose in accordance with
this Code and a certificate of authority from the appropriate government
agency. |
Same |
Section 124.
Application to existing foreign corporations. – Every foreign corporation
which on the date of the effectivity of this Code is authorized to do
business in the Philippines under a license therefore issued to it, shall
continue to have such authority under the terms and condition of its license,
subject to the provisions of this Code and other special laws. (n) |
SEC. 141. Application to Existing Foreign
Corporations. – Every foreign corporation which on the date of the
effectivity of this Code is authorized to do business in the Philippines
under a license issued to it, shall continue to have such authority under the
terms and conditions of its license, subject to the provisions of this Code
and other special laws |
Same |
Section 125.
Application for a license. – A foreign corporation applying for a license to
transact business in the Philippines shall submit to the Securities and
Exchange Commission a copy of its articles of incorporation and by-laws,
certified in accordance with law, and their translation to an official
language of the Philippines, if necessary. The application shall be under
oath and, unless already stated in its articles of incorporation, shall
specifically set forth the following: 1. The date and term of incorporation;
2. The address, including the street number, of the principal office of the
corporation in the country or state of incorporation; 3. The name and address
of its resident agent authorized to accept summons and process in all legal
proceedings and, pending the establishment of a local office, all notices
affecting the corporation; 4. The place in the Philippines where the corporation
intends to operate; 5. The specific purpose or purposes which the corporation
intends to pursue in the transaction of its business in the Philippines:
Provided, That said purpose or purposes are those specifically stated in the
certificate of authority issued by the appropriate government agency; 6. The
names and addresses of the present directors and officers of the corporation;
7. A statement of its authorized capital stock and the aggregate number of
shares which the corporation has authority to issue, itemized by classes, par
value of shares, shares without par value, and series, if any;8. A statement
of its outstanding capital stock and the aggregate number of shares which the
corporation has issued, itemized by classes, par value of shares, shares
without par value, and series, if any; 9. A statement of the amount actually
paid in; and 10. Such additional information as may be necessary or
appropriate in order to enable the Securities and Exchange Commission to
determine whether such corporation is entitled to a license to transact
business in the Philippines, and to determine and assess the fees payable.
Attached to the application for license shall be a duly executed certificate
under oath by the authorized official or officials of the jurisdiction of its
incorporation, attesting to the fact that the laws of the country or state of
the applicant allow Filipino citizens and corporations to do business
therein, and that the applicant is an existing corporation in good standing.
If such certificate is in a foreign language, a translation thereof in
English under oath of the translator shall be attached thereto. The
application for a license to transact business in the Philippines shall
likewise be accompanied by a statement under oath of the president or any
other person authorized by the corporation, showing to the satisfaction of
the Securities and Exchange Commission and other governmental agency in the
proper cases that the applicant is solvent and in sound financial condition,
and setting forth the assets and liabilities of the corporation as of the
date not exceeding one (1) year immediately prior to the filing of the
application. Foreign banking, financial and insurance corporations shall, in
addition to the above requirements, comply with the provisions of existing
laws applicable to them. In the case of all other foreign corporations, no
application for license to transact business in the Philippines shall be
accepted by the Securities and Exchange Commissionwithout previous authority
from the appropriate government agency, whenever required by law. (68a) |
SEC. 142. Application for a License. – A
foreign corporation applying for a license to transact business in the
Philippines shall submit to the Commission a copy of its articles of incorporation
and bylaws, certified in accordance with law, and their translation to an
official language of the Philippines, if necessary. The application shall be
under oath and, unless already stated in its articles of incorporation, shall
specifically set forth the following: (a) The date and term of incorporation;
(b) The address, including the street number, of the principal office of the
corporation in the country or State of incorporation; (c) The name and
address of its resident agent authorized to accept summons and process in all
legal proceedings and all notices affecting the corporation, pending the
establishment of a local office; (d) The place in the Philippines where the
corporation intends to operate; (e) The specific purpose or purposes which
the corporation intends to pursue in the transaction of its business in the
Philippines: Provided, That said purpose or purposes are those specifically
stated in the certificate of authority issued by the appropriate government
agency; (f) The names and addresses of the present directors and officers of
the corporation; (g) A
statement of its authorized capital stock and the aggregate number of shares
which the corporation has authority to issue, itemized by class, par value of
shares, shares without par value, and series, if any; (h) A statement of its
outstanding capital stock and the aggregate number of shares which the
corporation has issued, itemized by class, par value of shares, shares
without par value, and series, if any; (i) A statement of the amount actually
paid in; and (j) Such additional information as may be necessary or
appropriate in order to enable the Commission to determine whether such
corporation is entitled to a license to transact business in the Philippines,
and to determine and assess the fees payable. Attached to the application for
license shall be a certificate under oath duly executed by the authorized
official or officials of the jurisdiction of its incorporation, attesting to
the fact that the laws of the country or State of the applicant allow
Filipino citizens and corporations to do business therein, and that the
applicant is an existing corporation in good standing. If the certificate is
in a foreign language, a translation thereof in English under oath of the
translator shall be attached to the application. The application for a
license to transact business in the Philippines shall likewise be accompanied
by a statement under oath of the president or any other person authorized by
the corporation, showing to the satisfaction of the Commission and when
appropriate, other governmental agencies that the applicant is solvent and in
sound financial condition, setting forth the assets and liabilities of the
corporation as of the date not exceeding one (1) year immediately prior to
the filing of the application. Foreign banking, financial, and insurance
corporations shall, in addition to the above requirements, comply with the
provisions of existing laws applicable to them. In the case of all other
foreign corporations, no application for license to transact business in the
Philippines shall beaccepted by the Commission without previous authority
from the appropriate government agency, whenever required by law. |
Same |
Section 126.
Issuance of a license. – If the Securities and Exchange Commission is
satisfied that the applicant has complied with all the requirements of this
Code and other special laws, rules and regulations, the Commission shall
issue a license to the applicant to transact business in the Philippines for
the purpose or purposes specified in such license. Upon issuance of the
license, such foreign corporation may commence to transact business in the
Philippines and continue to do so for as long as it retains its authority to
act as a corporation under the laws of the country or state of its
incorporation, unless such license is sooner surrendered, revoked, suspended
or annulled in accordance with this Code or other special laws. Within sixty
(60) days after the issuance of the license to transact business in the
Philippines, the license, except foreign banking or insurance corporation,
shall deposit with the Securities and Exchange Commission for the benefit of
present and future creditors of the licensee in the Philippines, securities
satisfactory to the Securities and Exchange Commission, consisting of bonds
or other evidence of indebtedness of the Government of the Philippines, its
political subdivisions and instrumentalities, or of government-owned or controlled
corporations and entities, shares of stock in "registered
enterprises" as this term is defined in Republic Act No. 5186, shares of
stock in domestic corporations registered in the stock exchange, or shares of
stock in domestic insurance companies and banks, or any combination of these
kinds of securities, with an actual market value of at least one hundred
thousand (P100,000.) pesos; Provided, however, That within six (6) months
after each fiscal year of the licensee, the Securities and Exchange Commission
shall require the licensee to depositadditional securities equivalent in
actual market value to two (2%) percent of the amount by which the licensee’s
gross income for that fiscal year exceeds five million (P5,000,000.00) pesos.
The Securities and Exchange Commission shall also require deposit of
additional securities if the actual market value of the securities on deposit
has decreased by at least ten (10%) percent of their actual market value at
the time they were deposited. The Securities and Exchange Commission may at
its discretion release part of the additional securities deposited with it if
the gross income of the licensee has decreased, or if the actual market value
of the total securities on deposit has increased, by more than ten (10%) percent
of the actual market value of the securities at the time they were deposited.
The Securities and Exchange Commission may, from time to time, allow the
licensee to substitute other securities for those already on deposit as long
as the licensee is solvent. Such licensee shall be entitled to collect the
interest or dividends on the securities deposited. In the event the licensee
ceases to do business in the Philippines, the securities deposited as
aforesaid shall be returned, upon the licensee’s application therefor and
upon proof to the satisfaction of the Securities and Exchange Commission that
the licensee has no liability to Philippine residents, including the
Government of the Republic of the Philippines. (n) |
SEC. 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 regulations, the
Commission shall issue a license to transact business in the Philippines to
the applicant for the purpose or purposes specified in such license. Upon
issuance of the license, such foreign corporation may commence to transact
business in the Philippines and continue to do so for as long as it retains
its authority to act as a corporation under the laws of the country or State
of its incorporation, unless such license is sooner surrendered, revoked,
suspended, or annulled in accordance with this Code or other special laws.
Within sixty (60) days after the issuance of the license to transact business
in the Philippines, the licensee, except foreign banking or insurance
corporations, shall deposit with the Commission for the benefit of present
and future creditors of the licensee in the Philippines, securities
satisfactory to the Commission, consisting of bonds or other evidence of
indebtedness of the Government of the Philippines, its political subdivisions
and instrumentalities, or of government-owned or - controlled corporations
and entities, shares of stock or debt securities that are registered under
Republic Act No. 8799, otherwise known as “The Securities Regulation Code”,
shares of stock in domestic corporations listed in the stock exchange, shares
of stock in domestic insurance companies and banks, any financial instrument
determined suitable by the Commission, or any combination thereof with an
actual market value of at least Five hundred thousand (P500,000.00) pesos or
such other amount that may be set by the Commission: Provided however, That
within six (6) months after each fiscal year of the licensee, the Commission
shall require the licensee to deposit additional securities or financial
instruments equivalent in actual market value to two (2%) percent of the
amount by which the licensee’s gross income for that fiscal year exceeds Ten million pesos (P10,000,000.00).
The Commission shall also require the deposit of additional securities or financial
instruments if the actual market value of the deposited securities or
financial instruments has decreased by at least ten (10%) percent of their
actual market value at the time they were deposited. The Commission may, at
its discretion, release part of the additional deposit if the gross income of
the licensee has decreased, or if the actual market value of the total
deposit has increased, by more than ten (10%) percent of their actual market
value at the time they were deposited. The Commission may, from time to time,
allow the licensee to make substitute deposits for those already on deposit
as long as the licensee is solvent. Such licensee shall be entitled to collect
the interest or dividends on such deposits. In the event the licensee ceases
to do business in the Philippines, its deposits shall be returned, upon the
licensee’s application therefor and upon proof to the satisfaction of the
Commission that the licensee has no liability to Philippine residents,
including the Government of the Republic of the Philippines. For purposes of computing the securities
deposit, the composition of gross income and allowable deductions therefrom
shall be in accordance with the rules of the Commission |
Amended: Proviso : ·
the
Commission shall require the licensee to deposit additional securities or
financial instruments equivalent in actual market value to two (2%) percent
of the amount by which the licensee’s gross income for that fiscal year
exceeds Ten million pesos (P10,000,000.00). ·
For
purposes of computing the securities deposit, the composition of gross income
and allowable deductions therefrom shall be in accordance with the rules of
the Commission |
Section 127.
Who may be a resident agent. – A resident agent may be either an individual
residing in the Philippines or a domestic corporation lawfully transacting
business in the Philippines: Provided, That in the case of an individual, he
must be of good moral character and of sound financial standing. (n) |
SEC. 144. Who May be a Resident Agent. – A
resident agent may be either an individual residing in the Philippines or a
domestic corporation lawfully transacting business in the Philippines:
Provided, That an individual resident agent must be of good moral character
and of sound financial standing:
Provided further, that in case of a domestic corporation who will act as a
resident agent, it must likewise be of sound financial standing and must show
proof that it is in good standing as certified by the Commission. |
Proviso: a domestic corporation who will act as a resident agent,
it must likewise be of sound financial standing and must show proof that it
is in good standing as certified by the Commission. |
Section 128.
Resident agent; service of process. – The Securities and ExchangeCommission
shall require as a condition precedent to the issuance of the license to
transact business in the Philippines by any foreign corporation that such
corporation file with the Securities and Exchange Commission a written power
of attorney designating some person who must be a resident of the
Philippines, on whom any summons and other legal processes may be served in
all actions or other legal proceedings against such corporation, and consenting
that service upon such resident agent shall be admitted and held as valid as
if served upon the duly authorized officers of the foreign corporation at its
home office. Any such foreign corporation shall likewise execute and file
with the Securities and Exchange Commission an agreement or stipulation,
executed by the proper authorities of said corporation, in form and substance
as follows: "The (name of foreign corporation) does hereby stipulate and
agree, in consideration of its being granted by the Securities and Exchange
Commission a license to transact business in the Philippines, that if at any
time said corporation shall cease to transact business in the Philippines, or
shall be without any resident agent in the Philippines on whom any summons or
other legal processes may be served, then in any action or proceeding arising
out of any business or transaction which occurred in the Philippines, service
of any summons or other legal process may be made upon the Securities and
Exchange Commission and that such service shall have the same force and
effect as if made upon the duly-authorized officers of the corporation at its
home office." Whenever such service of summons or other process shall be
made upon the Securities and Exchange Commission, the Commission shall,
within ten (10) days thereafter, transmit by mail a copy of such summons or
other legal process to the corporation at its home or principal office. The
sending of such copy by the Commission shall be necessary part of and shall
complete such service. All expenses incurred by the Commission forsuch
service shall be paid in advance by the party at whose instance the service
is made. In case of a change of address of the resident agent, it shall be
his or its duty to immediately notify in writing the Securities and Exchange
Commission of the new address. (72a; and n) |
SEC. 145. Resident Agent; Service of Process.
– As a condition to the issuance of
the license for a foreign corporation to transact
business in the Philippines, such corporation shall file with the Commission
a written power of attorney designating a person who must be a resident of
the Philippines, on whom summons and other legal processes may be served in
all actions or other legal proceedings against such corporation, and
consenting that service upon such resident agent shall be admitted and held
as valid as if served upon the duly authorized officers of the foreign
corporation at its home office. Such foreign corporation shall likewise
execute and file with the Commission an agreement or stipulation, executed by
the proper authorities of said corporation, in form and substance as follows:
“The (name
of foreign corporation) hereby stipulates and agrees, in consideration of
being granted a license to transact business in the Philippines, that if the
corporation shall cease to transact business in the Philippines, or shall be
without any resident agent in the Philippines on whom any summons or other legal
processes may be served, then service of any summons or other legal process
may be made upon the Commission in any action or proceeding arising out of
any business or transaction which occurred in the Philippines and such
service shall have the same force and effect as if made upon the
duly-authorized officers of the corporation at its home office.” Whenever
such service of summons or other process is made upon the Commission, the
Commission shall, within ten (10) days thereafter, transmit by mail a copy of
such summons or other legal process to the corporation at its home or
principal office. The sending of such copy by the Commission shall be a
necessary part of and shall complete such service. All expenses incurred by
the Commission for such service shall be paid in advance by the party at
whose instance the service is made. It shall be the duty of the resident
agent to immediately notify the Commission in writing of any change in the
resident agent’s address |
|
Section 129.
Law applicable. – Any foreign corporation lawfully doing business in the
Philippines shall be bound by all laws, rules and regulations applicable to
domestic corporations of the same class, except such only as provide for the
creation, formation, organization or dissolution of corporations or those
which fix the relations, liabilities, responsibilities, or duties of
stockholders, members, or officers of corporations to each other or to the
corporation. (73a) |
SEC. 146. Law Applicable. – A foreign
corporation lawfully doing business in the Philippines shall be bound by all
laws, rules and regulations applicable to domestic corporations of the same
class, except those which provide for the creation, formation, organization
or dissolution of corporations or those which fix the relations, liabilities,
responsibilities, or duties of stockholders, members, or officers of
corporations to each other or to the corporation |
|
Section 130.
Amendments to articles of incorporation or by-laws of foreign corporations. –
Whenever the articles of incorporation or by-laws of a foreign corporation
authorized to transact business in the Philippines are amended, such foreign
corporation shall, within sixty (60) days after the amendment becomes
effective, file with the Securities and Exchange Commission, and in the
proper cases with the appropriate government agency, a duly authenticated
copy of the articles of incorporation or bylaws, as amended, indicating
clearly in capital letters or by underscoring the change or changes made,
duly certified by the authorized official or officials of the country or
state of incorporation. The filing thereof shall not of itself enlarge or
alter the purpose or purposes for which such corporation is authorized to
transact business in the Philippines. (n) |
SEC. 147. Amendments to Articles of
Incorporation or Bylaws of Foreign Corporations. – Whenever the articles of
incorporation or bylaws of a foreign corporation authorized to transact
business in the Philippines are amended, such foreign corporation shall,
within sixty (60) days after the amendment becomes effective, file with the
Commission, and in the proper cases, with the appropriate government agency,
a duly authenticated copy of the amended articles of incorporation or bylaws,
indicating clearly in capital letters or underscoring the change or changes
made, duly certified by the authorized official or officials of the country
or state of incorporation. Such filing shall not in itself enlarge or alter
the purpose or purposes for which such corporation is authorized to transact business
in the Philippines. |
|
Section 131.
Amended license. – A foreign corporation authorized to transact business in
the Philippines shall obtain an amended license in the event it changes its
corporate name, or desires to pursue in the Philippines other or additional
purposes, by submitting an application therefor to the Securities and
Exchange Commission, favorably endorsedby the appropriate government agency
in the proper cases. (n) |
SEC. 148. Amended License. – A foreign
corporation authorized to transact business in the Philippines shall obtain
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, favorably endorsed by the appropriate
government agency in the proper cases. |
|
Section 132.
Merger or consolidation involving a foreign corporation licensed in the
Philippines. – One or more foreign corporations authorized to transact
business in the Philippines may merge or consolidate with any domestic
corporation or corporations if such is permitted under Philippine laws and by
the law of its incorporation: Provided, That the requirements on merger or
consolidation as provided in this Code are followed. Whenever a foreign corporation
authorized to transact business in the Philippines shall be a party to a
merger or consolidation in its home country or state as permitted by the law
of its incorporation, such foreign corporation shall, within sixty (60) days
after such merger or consolidation becomes effective, file with the
Securities and Exchange Commission, and in proper cases with the appropriate
government agency, a copy of the articles of merger or consolidation duly
authenticated by the proper official or officials of the country or state
under the laws of which merger or consolidation was effected: Provided,
however, That if the absorbed corporation is the foreign corporation doing
business in the Philippines, the latter shall at the same time file a
petition for withdrawal of its license in accordance with this Title. (n) |
SEC. 149. Merger or Consolidation Involving a
Foreign Corporation Licensed in the Philippines. – One or more foreign
corporations authorized to transact business in the Philippines may merge or
consolidate with any domestic corporation or corporations if permitted under
Philippine laws and by the law of its incorporation: Provided, That the
requirements on merger or consolidation as provided in this Code are
followed. Whenever a foreign corporation authorized to transact business in
the Philippines shall be a party to a merger or consolidation in its home
country or State as permitted by the law authorizing its incorporation, such
foreign corporation shall, within sixty (60) days after the effectivity of
such merger or consolidation, file with the Commission, and in proper cases,
with the appropriate government agency, a copy of the articles of merger or
consolidation duly authenticated by the proper official or officials of the
country or state under whose laws, the merger or consolidation was effected:
Provided however, That if the absorbed corporation is the foreign corporation
doing business in the Philippines, the latter shall at the same time file a
petition for withdrawal of its license in accordance with this Title |
|
Section 133.
Doing business without a license. – No foreign corporation transacting
business in the Philippines without a license, or its successors or assigns,
shall be permitted to maintain or intervene in any action, suit or proceeding
in any court or administrative agency of the Philippines; but such
corporation may be sued or proceeded against before Philippine courts or
administrative tribunals on any valid cause of action recognized under
Philippine laws. (69a) |
SEC. 150. Doing Business Without a License. –
No foreign corporation transacting business in the Philippines without a
license, or its successors or assigns, shall be permitted to maintain or
intervene in any action, suit or proceeding in any court or administrative agency
of the Philippines; but such corporation may be sued or proceeded against
before Philippine courts or administrative tribunals on any valid cause of
action recognized under Philippine laws. |
|
Section 134.
Revocation of license. – Without prejudice to other grounds provided by
special laws, the license of a foreign corporation to transact business in
the Philippines may be revoked or suspended by the Securities and Exchange
Commission upon any of the following grounds: 1. Failure to file its annual report
or pay any fees as required by this Code; 2. Failure to appoint and maintain
a resident agent in the Philippines as required by this Title; 3. Failure,
after change of its resident agent or of his address, to submit to the
Securities and Exchange Commission a statement of such change as required by
this Title; 4. Failure to submit to the Securities and Exchange Commission an
authenticated copy of any amendment to its articles of incorporation or
by-laws or of any articles of merger or consolidation within the time
prescribed by this Title; 5. A misrepresentation of any material matter in
any application, report, affidavit or other document submitted by such
corporation pursuant to this Title; 6. Failure to pay any and all taxes,
imposts, assessments or penalties, if any, lawfully due to the Philippine
Government or any of its agencies or political subdivisions; 7. Transacting
business in the Philippines outside of the purpose or purposes for which such
corporation is authorized under its license; 8. Transacting business in the
Philippines as agent of or acting for and in behalf of any foreign
corporation or entity not duly licensed to do business in the Philippines; or
9. Any other ground as would render it unfit to transact business in the
Philippines. (n) |
SEC. 151. Revocation of License. – Without
prejudice to other grounds provided under special laws, the license of a
foreign corporation to transact business in the Philippines may be revoked or
suspended by the Commission upon any of the following grounds: (a) Failure to
file its annual report or pay any fees as required by this Code; (b) Failure
to appoint and maintain a resident agent in the Philippines as required by
this Title; (c) Failure, after change of its resident agent or address, to
submit to the Commission a statement of such change as required by this
Title; (d) Failure to submit to the Commission an authenticated copy of any
amendment to its articles of incorporation or bylaws or of any articles of
merger or consolidation within the time prescribed by this Title; (e) A
misrepresentation of any material matter in any application, report,
affidavit or other document submitted by such corporation pursuant to this
Title; (f) Failure to pay any and all taxes, imposts, assessments or
penalties, if any, lawfully due to the Philippine Government or any of its
agencies or political subdivisions; (g) Transacting business in the
Philippines outside of the purpose or purposes for which such corporation is
authorized under its license; (h) Transacting business in the Philippines as
agent of or acting on behalf of any foreign corporation or entity not duly
licensed to do business in the Philippines; or (i) Any other ground as would
render it unfit to transact business in the Philippines. |
Same |
Section 135.
Issuance of certificate of revocation. – Upon the revocation of any such
license to transact business in the Philippines, the Securities and Exchange
Commission shall issue a corresponding certificate of revocation, furnishing
a copy thereof to the appropriate government agency in the proper cases. The Securities and Exchange Commission
shall also mail to the corporation at its registered office in the
Philippines a notice of such revocation accompanied by a copy of the
certificate of revocation. (n) |
SEC. 152. Issuance of Certificate of
Revocation. – Upon the revocation of the license to transact business in the
Philippines, the Commission shall issue a corresponding certificate of
revocation, furnishing a copy thereof to the appropriate government agency in
the proper cases. The Commission shall also mail the notice and copy of the
certificate of revocation to the corporation, at its registered office in the
Philippines |
|
Section 136.
Withdrawal of foreign corporations. – Subject to existing laws and regulations,
a foreign corporation licensed to transact business in the Philippines may be
allowed to withdraw from the Philippines by filing a petition for withdrawal
of license. No certificate of withdrawal shall be issued by the Securities
and Exchange Commission unless all the following requirements are met; 1. All
claims which have accrued in the Philippines have been paid, compromised or
settled; 2. All taxes, imposts, assessments, and penalties, if any, lawfully
due to the Philippine Government or any of its agencies or political
subdivisions have been paid; and 3. The petition for withdrawal of license
has been published once a week for three (3) consecutive weeks in a newspaper
of general circulation in the Philippines. |
SEC. 153. Withdrawal of foreign corporations.
– Subject to existing laws and regulations, a foreign corporation licensed to
transact business in the Philippines may be allowed to withdraw from the
Philippines by filing a petition for withdrawal of license. No certificate of
withdrawal shall be issued by the Commission unless all the following
requirements are met: (a) All claims which have accrued in the Philippines
have been paid, compromised or settled; (b) All taxes, imposts, assessments,
and penalties, if any, lawfully due to the Philippine Government or any of
its agencies or political subdivisions have been paid; and (c) The petition
for withdrawal of license has been published once a week for three (3)
consecutive weeks in a newspaper of general circulation in the Philippines. |
|
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TITLE XVI INVESTIGATIONS, OFFENSES, AND PENALTIES |
|
|
SEC. 154. Investigation and
Prosecution of Offenses. – The Commission may investigate an alleged
violation of this Code, rule, regulation, or order of the Commission. The
Commission may publish its findings, orders, opinions, advisories, or
information concerning any such violation, as may be relevant to the general
public or to the partiesconcerned, subject to the provisions of Republic Act
No. 10173, otherwise known as the “Data Privacy Act of 2012”, and other
pertinent laws. The Commission shall give reasonable notice to and coordinate
with the appropriate regulatory agency prior to any such publication
involving companies under their special regulatory jurisdiction. |
New Provision |
|
SEC. 155. Administration of Oaths,
Subpoena of Witnesses and Documents. – The Commission, through its designated
officer, may administer oaths and affirmations, issue subpoena and subpoena
duces tecum, take testimony in any inquiry or investigation, and may perform
other acts necessary to the proceedings or to the investigation. |
New Provision |
|
SEC. 156. Cease and Desist Orders. –
Whenever the Commission has reasonable basis to believe that a person has
violated, or is about to violate, this Code, rule, regulation, or order of
the Commission, it may direct such person to desist from committing the act
constituting the violation. The Commission may issue a cease and desist order
ex parte to enjoin an act or practice which is fraudulent or can be
reasonably expected to cause significant, imminent, and irreparable danger or
injury to public safety or welfare. The ex parte order shall be valid for a
maximum period of twenty (20) days, without prejudice to the order being made
permanent after due notice and hearing. Thereafter, the Commission may
proceed administratively against such person in accordance with Section 158
of this Code, and/or transmit evidence to the Department of Justice for
preliminary investigation or criminal prosecution and/or initiate criminal
prosecution for any violation of this Code, rule, or regulation. |
New Provision |
|
SEC. 157. Contempt. – Any person who,
without justifiable cause, fails or refuses to comply with any lawful order,
decision, or subpoena issued by the Commission shall, after due notice and hearing,
be held in contempt and fined in an amount not exceeding Thirty thousand
pesos (P30,000.00). When the refusal amounts to clear and open defiance of
the Commission’s order, decision, or subpoena, the Commission may impose a
daily fine of One thousand pesos (P1,000.00) until the order, decision, or
subpoena is complied with. |
New Provision |
Section 144. Violations of the Code.
– Violations of any of the provisions of this Code or its amendments not
otherwise specifically penalized therein shall be punished by a fine of not
less than one thousand (P1,000.00) pesos but not more than ten thousand
(P10,000.00) pesos or by imprisonment for not less than thirty (30) days but
not more than five (5) years, or both, in the discretion of the court. If the
violation is committed by a corporation, the same may, after notice and
hearing, be dissolved in appropriate proceedings before the Securities and
Exchange Commission: Provided, That such dissolution shall not preclude the
institution of appropriate action against the director, trustee or officer of
the corporation responsible for said violation: Provided, further, That
nothing in this section shall be construed to repeal the other causes for
dissolution of a corporation provided in this Code. (190 1/2 a) |
SEC. 158. Administrative Sanctions. –
If, after due notice and hearing, the Commission finds that any provision of
this Code, rules or regulations, or any of the Commission’s orders has been
violated, the Commission may impose any or all of the following sanctions,
taking into consideration the extent of participation, nature, effects,
frequency and seriousness of the violation: 1.Imposition of a fine ranging
from Five thousand pesos (P5,000.00) to Two million pesos (P2,000,000.00),
and not more than One thousand pesos (P1,000.00) for each day of continuing
violation but in no case to exceed Two million pesos (P2,000,000.00);
2.Issuance of a permanent cease-and-desist order; 3.Suspension or revocation
of the certificate of incorporation; and 4.Dissolution of the corporation and
forfeiture of its assets under the conditions in Title XIV of this Code. |
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SEC. 159. Unauthorized Use of
Corporate Name; Penalties. – The unauthorized use of a corporate name shall
be punished with a fine ranging from Ten thousand pesos (P10,000.00) to Two
hundred thousand pesos (P200,000.00). |
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SEC. 160. Violation of
Disqualification Provision; Penalties. – When, despite the knowledge of the
existence of a ground for disqualification as provided in Sec. 26 of this
Code, a director, trustee, or officer willfully holds office, or willfully
conceals such disqualification, such director, trustee, or officer shall be
punished by a fine ranging from Ten thousand pesos (P10,000.00) to Two
hundred thousand pesos (P200,000.00) at the discretion of the Court, and
shall be permanently disqualified from being a director, trustee or officer
of any corporation. When the violation of this provision is injurious or
detrimental to the public, the penalty shall be a fine ranging from Twenty
thousand pesos (P20,000.00) to Four hundred thousand pesos (P400,000.00). |
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SEC. 161. Violation of Duty to
Maintain Records, to Allow their Inspection or Reproduction; Penalties. – The
unjustified failure or refusal by the corporation, or by those responsible
for keeping and maintaining corporate records, to comply with Sections 45,
73, 92, 128, 177 and other pertinent rules and provisions of this Code on
inspection and reproduction of records shall be punished with a fine ranging
from Ten thousand pesos (P10,000.00) to Two hundred thousand pesos
(P200,000.00), at the discretion of the Court, taking into consideration the
seriousness of the violation and its implications. When the violation of this
provision is injurious or detrimental to the public, the penalty is a fine
ranging from Twenty thousand pesos (P20,000.00) to Four hundred thousand
pesos (P400,000.00). The penalties imposed under this section shall be
without prejudice to the Commission’s exercise of its contempt powers under
Section 157 hereof. |
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SEC. 162. Willful Certification of
Incomplete, Inaccurate, False, or Misleading Statements or Reports;
Penalties. – Any person who willfully certifies a report required under this
Code knowing that the same contains incomplete,inaccurate, false, or
misleading information or statements, shall be punished with a fine ranging
from Twenty thousand pesos (P20,000.00) to Two hundred thousand pesos
(P200,000.00). When the wrongful certification is injurious or detrimental to
the public, the auditor or the responsible person may also be punished with a
fine ranging from Forty thousand pesos (P40,000.00) to Four hundred thousand
pesos (P400,000.00). |
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SEC. 163. Independent Auditor
Collusion; Penalties. – An independent auditor who, in collusion with the corporation’s
directors or representatives, certifies the corporation’s financial
statements despite its incompleteness or inaccuracy, its failure to give a
fair and accurate presentation of the corporation’s condition, or despite
containing false or misleading statements, shall be punished with a fine
ranging from Eighty thousand pesos (P80,000.00) to Five hundred thousand
pesos (P500,000.00). When the statement or report certified is fraudulent, or
has the effect of causing injury to the general public, the auditor or
responsible officer may be punished with a fine ranging from One hundred
thousand pesos (P100,000.00) to Six hundred thousand pesos (P600,000.00). |
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SEC. 164. Obtaining Corporate
Registration Through Fraud; Penalties. – Those responsible for the formation
of a corporation through fraud, or who assisted directly or indirectly
therein, shall be punished with a fine ranging from Two hundred thousand pesos
(P200,000.00) to Two million pesos (P2,000,000.00). When the violation of
this provision is injurious or detrimental to the public, the penalty is a
fine ranging from Four hundred thousand pesos (P400,000.00) to Five million
pesos (P5,000,000.00). |
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SEC. 165. Fraudulent Conduct of
Business; Penalties. – A corporation that conducts its business through fraud
shall be punished with a fine ranging from Two hundred thousand pesos
(P200,000.00) to Two million pesos (P2,000,000.00). When the violation of
thisprovision is injurious or detrimental to the public, the penalty is a
fine ranging from Four hundred thousand pesos (P400,000.00) to Five million
pesos (P5,000,000.00). |
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SEC. 166. Acting as Intermediaries
for Graft and Corrupt Practices; Penalties. – A corporation used for fraud,
for committing or concealing graft and corrupt practices shall be liable for
a fine ranging from One hundred thousand pesos (P100,000.00) to Five million
pesos (P5,000,000.00). When there is a finding that any of its directors, officers,
employees, agents, or representatives are engaged in graft and corrupt
practices, the corporation’s failure to install: (a) safeguards for the
transparent and lawful delivery of services; and (b) policies, code of
ethics, and procedures against graft and corruption, shall be prima facie
evidence of corporate liability under this section. |
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SEC. 167. Engaging Intermediaries for
Graft and Corrupt Practices; Penalties. – A corporation that appoints an
intermediary who engages in graft and corrupt practices for the corporation’s
benefit or interest, shall be punished with a fine ranging from One hundred
thousand pesos (P100,000.00) to One million pesos (P1,000,000.00). |
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SEC. 168. Tolerating Graft and
Corrupt Practices; Penalties. – A director, trustee, or officer who knowingly
fails to sanction, report, or file the appropriate action with proper
agencies, allows or tolerates the graft and corrupt practices or fraudulent acts
committed by a corporation’s directors, trustees, officers, or employees,
shall be punished with a fine ranging from Five hundred thousand pesos
(P500,000.00) to One million pesos (P1,000,000.00). |
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SEC. 169. Retaliation Against
Whistleblowers. – A whistleblower refers to any person who provides truthful
information relating to the commission or possible commission of any offense
or violation under this Code. Anyperson who, knowingly and with intent to
retaliate, commits acts detrimental to a whistleblower such as interfering
with the lawful employment or livelihood of the whistleblower, shall, at the
discretion of the Court, be punished with a fine ranging from One hundred
thousand pesos (P100,000.00) to One million pesos (P1,000,000.00). |
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SEC. 170. Other Violations of the
Code; Separate Liability. – Violations of any of the other provisions of this
Code or its amendments not otherwise specifically penalized therein shall be
punished by a fine of not less than Ten thousand pesos (P10,000.00) but not more
than One million pesos (P1,000,000.00). If the violation is committed by a
corporation, the same may, after notice and hearing, be dissolved in
appropriate proceedings before the Commission: Provided, That such
dissolution shall not preclude the institution of appropriate action against
the director, trustee, or officer of the corporation responsible for said
violation: Provided, further, That nothing in this section shall be construed
to repeal the other causes for dissolution of a corporation provided in this
Code. Liability for any of the foregoing offenses shall be separate from any
other administrative, civil, or criminal liability under this Code and other
laws. |
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SEC. 171. Liability of Directors,
Trustees, Officers, or Other Employees. – If the offender is a corporation,
the penalty may, at the discretion of the court, be imposed upon such
corporation and/or upon its directors, trustees, stockholders, members,
officers, or employees responsible for the violation or indispensable to its
commission. |
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SEC. 172. Liability of Aiders and
Abettors and Other Secondary Liability. – Anyone who shall aid, abet,
counsel, command, induce, or procure any violation of this Code, or any rule,
regulation, or order of the Commission shall be punished with a fine not
exceeding thatimposed on the principal offenders, at the discretion of the
Court, after taking into account their participation in the offense. |
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TITLE XVII MISCELLANEOUS PROVISIONS |
TITLE XVII MISCELLANEOUS PROVISIONS |
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Section 137.
Outstanding capital stock defined. – The term "outstanding capital
stock", as used in this Code, means the total shares of stock issued
under binding subscription agreements to subscribers or stockholders, whether
or not fully or partially paid, except treasury shares. (n) |
SEC. 173. Outstanding Capital Stock Defined. –
The term “outstanding capital stock”, as used in this Code, shall mean the
total shares of stock issued under binding subscription agreements to
subscribers or stockholders, whether fully or partially paid, except treasury
shares. |
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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) |
SEC. 174. Designation of Governing Boards. –
The provisions of specific provisions of this Code to the contrary
notwithstanding, nonstock or special corporations may, through their articles
of incorporation or their bylaws, designate their governing boards by any
name other than as board of trustees. |
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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. |
SEC. 175. Collection and Use of
Registration, Incorporation and Other Fees. – For a more effective
implementation of this Code, the Commission is hereby authorized to collect,
retain, and use fees, fines, and other charges pursuant to this Code and its
rules and regulations. The amount collected shall be deposited and maintained
in a separate account which shall form a fund for its modernization and to augment
its operational expenses such as, but not limited to, capital outlay,
increase in compensation and benefits comparable with prevailing rates in the
private sector, reasonable employee allowance, employee health care services,
and other insurance, employee career advancement and professionalization,
legal assistance, seminars, and other professional fees. |
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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
corporatevehicle 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 or 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. |
SEC. 176. Stock Ownership in Corporations. –
Pursuant to the duties specified by Article XIV of the Constitution, the
National Economic and Development Authority (NEDA) shall, from time to time,
determine if the corporate vehicle has been used by any corporation,
business, or industry to frustrate
the provisions of this Code or applicable laws, and shall submit to Congress,
whenever deemed necessary, a report its findings, including recommendations
for their prevention or correction. The Congress of the Philippines may set
maximum limits for stock ownership of individuals or groups of individuals
related to each other by consanguinity, affinity, or by close business
interests, in corporations declared to be vested with public interest
pursuant to the provisions of this section, or whenever necessary to prevent
anticompetitive practices as provided
in Republic Act No. 10667, otherwise known as the “Philippine Competition Act”,
or to implement national economic policies designed to promote general
welfare and economic development, as declared in laws, rules, and
regulations. In recommending to the Congress which corporations, businesses and industries will be
declared as vested with public interest, and in formulating proposals for
limitations on stock ownership, the NEDA shall consider the type and nature
of the industry, size of the enterprise, economies of scale, geographic
location, extent of Filipino ownership, labor intensity of the activity,
export potential, as well as other factors which are germane to the
realization and promotion of business and industry. |
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Section 141.
Annual report or 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
periodas may be prescribed by the Securities and Exchange Commission. (n) |
SEC. 177. Reportorial requirements of
corporations. – Except as otherwise provided in this Code or in the rules
issued by the Commission, every corporation, domestic or foreign, doing
business in the Philippines shall submit to the Commission: (a) Annual
financial statements audited by an independent certified public accountant:
Provided, That if the total assets or total liabilities of the corporation
are less than Six hundred thousand pesos (P600,000.00) the financial
statements shall be certified underoath by the corporation’s treasurer or
chief financial officer; and (b) A general information sheet. Corporations
vested with public interest must also submit the following: (1) A director or
trustee compensation report; (2) A director or trustee appraisal or
performance report and the standards or criteria used to assess each director
or trustee. The reportorial requirements shall be submitted annually and
within such period as may be prescribed by the Commission. The Commission may
place the corporation under delinquent status in case of failure to submit
the reportorial requirements three (3) times, consecutively or
intermittently, within a period of five (5) years. The Commission shall give
reasonable notice to and coordinate with the appropriate regulatory agency
prior to placing under delinquent status companies under their special
regulatory jurisdiction. Any person required to file a report with the
Commission may redact confidential information from such required report:
Provided, That such confidential information shall be filed in a supplemental
report prominently labelled “confidential”, together with a request for
confidential treatment of the report and the specific grounds for the grant
thereof. |
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Section 142.
Confidential nature of examination results. – All interrogatories propounded
by the Securities and Exchange Commission and the answers thereto, as well as
the results of any examination made by the Commission or by any other
official authorized by law to make an examination of the operations, books
and records of any corporation, shall be kept strictly confidential, except
insofar as the law may require thesame to be made public or where such
interrogatories, answers or results are necessary to be presented as evidence
before any court. (n) |
SEC. 178. Visitorial Power and Confidential Nature
of Examination Results. – The
Commission shall exercise visitorial powers over all corporations, which
powers shall include the examination and inspection of records, regulation
and supervision of activities, enforcement of compliance, and imposition of
sanctions in accordance with this Code. Should the
corporation, without justifiable cause, refuse or obstruct the Commission’s
exercise of its visitorial powers, the Commission may revoke its certificate
of incorporation, without prejudice to the imposition of other penalties and
sanctions under this Code. All interrogatories propounded by the Commission
and the answers thereto, as well as the results of any examination made by
the Commission or any other official authorized by law to make an examination
of the operations, books, and records of any corporation, shall be kept
strictly confidential, except when the law requires the same to be made
public, when necessary for the Commission to take action to protect the
public or to issue orders in the exercise of its powers under this Code, or
where such interrogatories, answers or results are necessary to be presented
as evidence before any Court. |
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Section 143.
Rule-making power of the Securities and Exchange Commission. – The Securities
and Exchange Commission shall have the power and authority to implement the
provisions of this Code, and to promulgate rules and regulations reasonably
necessary to enable it to perform its duties hereunder, particularly in the
prevention of fraud and abuses on the part of the controlling stockholders,
members, directors, trustees or officers. (n) |
SEC. 179. Powers, functions, and
jurisdiction of the Commission. – The Commission shall have the power
and authority to: (a) Exercise
supervision and jurisdiction over all corporations and persons acting on
their behalf, except as otherwise provided under this Code; (b) Pursuant to
Presidential Decree 902-A, retain jurisdiction over pending cases involving
intracorporate disputes submitted for final resolution. The Commission shall
retain jurisdiction over pending suspension of payment/rehabilitation cases
filed as of 30 June 2000 until finally disposed. (c) Impose sanctions for the
violation of this Code, its implementing rules, and orders of the Commission;
(d) Promote corporate governance and the protection of minority investors,
through, among others, the issuance of rules and regulations consistent with
international best practices; (e) Issue opinions to clarify the
application of laws, rules, and regulations; (f) Issue cease and desist
orders ex parte to prevent imminent fraud or injury to the public; (g) Hold
corporations in direct and indirect contempt; (h) Issue subpoena duces tecum
and summon witnesses to appear in proceedings before the Commission; (i) In
appropriate cases, order the examination, search and seizure of documents,
papers, files and records, and books of accounts of any entity or person
under investigation as may be necessary for the proper disposition of the
cases, subject to the provisions of existing laws; (j)Suspend or revoke the
certificate of incorporation after proper notice and hearing; (k) Dissolve or
impose sanctions on corporations, upon final court order, for committing,
aiding in the commission of, or in any manner furthering securities
violations, smuggling, tax evasion, money laundering, graft and corrupt
practices, or other fraudulent or illegal acts; (l) Issue writs of execution
and attachment to enforce payment of fees, administrative fines, and other
dues collectible under this Code; (m) Prescribe the number of independent
directors and the minimum criteria in determining the independence of a
director; (n) Impose or recommend new modes by which a stockholder, member,
director, or trustee may attend meetings or cast their votes, as technology
may allow, taking into account the company’s scale, number of shareholders or
members, structure, and other factors consistent with the basic right of
corporate suffrage; (o) Formulate and enforce standards,
guidelines, policies, rules, and regulations to carry out the provisions of
this Code; and (p) Exercise such other powers provided by law or those, which
may be necessary or incidental to carrying out, the powers expressly granted
to the Commission. In imposing penalties and additional monitoring and
supervision requirements, the Commission shall take into consideration the
size, nature of the business, and capacity of the corporation. No court below
the Court of Appeals shall have jurisdiction to 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 exclusively within its jurisdiction. |
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SEC. 180. Development and
Implementation of Electronic Filing and Monitoring System. – The Commission
shall develop and implement an electronic filing and monitoring system. The
Commission shall promulgate rules to facilitate and expedite, among others,
corporate name reservation and registration, incorporation, submission of
reports, notices, and documents required under this Code, and sharing of
pertinent information with other government agencies. |
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SEC. 181. Arbitration for Unlisted
Corporations. – An arbitration agreement may be provided in the articles of
incorporation or by-laws of an unlisted corporation. When such an agreement
is in place, disputes between the corporation, its stockholders or members,
which arise from the implementation of the articles of incorporation or
by-laws, or from intracorporate relations, shall be referred to arbitration.
A dispute shall be non-arbitrable when it involves criminal offenses and interests
of third parties. The arbitration agreement shall be
binding on the corporation, its directors, trustees, officers, and executives
or managers. To be enforceable, the arbitration agreement should indicate the
number of arbitrators and the procedure for their appointment. The power to
appoint the arbitrators forming the arbitral tribunal shall be granted to a
designated independent third party. Should the third party fail to appoint
the arbitrators in the manner and within the period specified in the arbitration
agreement, the parties may request the Commission to appoint the arbitrators.
In any case, arbitrators must be accredited or must belong to organizations
accredited for the purpose of arbitration. The arbitral tribunal shall have
the power to rule on its own jurisdiction and on questions relating to the
validity of the arbitration agreement. When an intracorporate dispute is
filed with a Regional Trial Court, the Court shall dismiss the case before
the termination of the pretrial conference, if it determines that an
arbitration agreement is written in the corporation’s articles of
incorporation, by-laws, or in a separate agreement. The arbitral tribunal
shall have the power to grant interim measures necessary to ensure
enforcement of the award, prevent a miscarriage of justice, or otherwise
protect the rights of the parties. A final arbitral award under this section
shall be executory after the lapse of fifteen (15) days from receipt thereof
by the parties and shall be stayed only by the filing of a bond or the
issuance by the appellate court of an injunctive writ. The Commission shall
formulate the rules and regulations, which shall govern arbitration under
this section, subject to existing laws on arbitration. |
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SEC. 182. Jurisdiction over Party-List
Organizations. – The powers, authorities, and responsibilities of the
Commission involving party-list organizations are transferred to the
Commission on Elections (COMELEC). Within six (6) months after the
effectivity of this Act, the monitoring, supervision, and regulation of such
corporations shall be deemed automatically transferred to the COMELEC. For
this purpose, the COMELEC, in coordination with the Commission, shall
promulgate the corresponding implementing rules for the transfer of
jurisdiction over the above-mentioned corporations. |
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SEC. 183. Applicability of the Code.
– Nothing in this law shall be construed as amending existing provisions of
special laws governing the registration, regulation, monitoring and
supervision of special corporations such as banks, non-bank financial
institutions and insurance companies. Notwithstanding any provision to the
contrary, regulators such as the BangkoSentral ng Pilipinas and the Insurance
Commission shall exercise primary authority over special corporations such as
banks, non-bank financial institutions, and insurance companies under their
supervision and regulation. |
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Section 144.
Violations of the Code. – Violations of any of the provisions of this Code or
its amendments not otherwise specifically penalized therein shall be punished
by a fine of not less than one thousand (P1,000.00) pesos but not more than
ten thousand (P10,000.00) pesos or by imprisonment for not less than thirty
(30) days but not more than five (5) years, or both, in the discretion of the
court. If the violation is committed by a corporation, the same may, after
notice and hearing, be dissolved in appropriate proceedings before the
Securities and Exchange Commission: Provided, That such dissolution shall not
preclude the institution of appropriate action against the director, trustee
or officer of the corporation responsible for said violation: Provided,
further, That nothing in this section shall be construed to repeal the other
causes for dissolution of a corporation provided in this Code. (190 1/2 a) |
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There are new
provisions in RCC (see above |
Section 145.
Amendment or repeal. – No right or remedy in favor of or against any
corporation, its stockholders, members, directors, trustees, or officers, nor
any liability incurred by any such corporation, stockholders, members,
directors, trustees, or officers, shall be removed or impaired either by the
subsequent dissolution of said corporation or by any subsequent amendment or
repeal of this Code or of any part thereof. (n) |
SEC. 184. Effect of Amendment or
Repeal of This Code, or the Dissolution of a Corporation. – No right or
remedy in favor of or against any corporation, its stockholders, members,
directors, trustees, or officers, nor any liability incurred by any such
corporation, stockholders, members, directors, trustees, or officers, shall
be removed or impaired either by the subsequent dissolution of said
corporation or by any subsequent amendment or repeal of this Code or of any
part thereof. |
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Section 146.
Repealing clause. – Except as expressly provided by this Code, all laws or
parts thereof inconsistent with any provision of this Code shall be deemed
repealed. (n) |
SEC. 185. Repealing clause. – Batas Pambansa Blg. 68 otherwise known as
“The Corporation Code of the Philippines” is hereby repealed. Any law,
presidential decree or issuance, executive order, letter of instruction,
administrative order, rule or regulation contrary to or inconsistent with any
provision of this Act is hereby repealed or modified accordingly. |
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Section 147.
Separability of provisions. – Should any provision of this Code or any part
thereof be declared invalid or unconstitutional, the other provisions, so far
as they are separable, shall remain in force. (n) |
SEC. 186. Separability clause. – If
any provision of this Act is declared invalid or unconstitutional, other
provisions hereof which are not affected thereby shall continue to be in full
force and effect. |
Change in form |
Section 148.
Applicability to existing corporations. – All corporations lawfully existing
and doing business in the Philippines on the date of the effectivity of this
Code and heretofore authorized, licensed or registered by the Securities and
Exchange Commission, shall be deemed to have been authorized, licensed or
registered under the provisions of this Code, subject to the terms and
conditions of its license, and shall be governed by the provisions hereof:
Provided, That if any such corporation is affected by the new requirements of
this Code, said corporation shall, unless otherwise herein provided, be given
a period of not more than two (2) years from the effectivity of this Code within
which to comply with the same. (n) |
SEC. 187. Applicability to Existing
Corporation. – A corporation lawfully
existing and doing business in the Philippines affected by the new
requirements of this Code shall be given a period of not more than two (2) years
from the effectivity of this Act within which to comply. |
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Section 149.
Effectivity. – This Code shall take effect immediately upon its approval. |
SEC. 188. Effectivity. – This Act
shall take effect upon completion of its publication in the Official Gazette
or in at least two (2) newspapers of general circulation. Published in
Manila Bulletin and Business Mirror on February 23, 2019 |
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