TI

TLEI
I

I
NCORPORATI
ONANDORGANI
ZATI
ONOFPRI
VATECORPORATI
ONS

Sec.10.Numberandqual i
fi
cat
ionsofi ncorporat
ors.-Anynumberofnaturalpersonsnotl ess
thanfive(5)butnotmor ethanfift
een(15),allofl
egalageandamajorit
yofwhom ar eresidents
ofthePhi l
ippines,mayform apr i
vat
ecor porati
onforanylawf
ulpurposeorpur poses.Eachof
theincorporatorsofsstockcorporat
ionmustownorbeasubscr i
bertoatleastone(1)shareof
thecapitalstockofthecorpor
ation.

St
epsi
nthecr
eat
ionofacor
por
ati
on

Ther
ear
ethr
ee(
3)st
epsi
nthecr
eat
ionandor
gani
zat
ionofacor
por
ati
on,
namel
y:

(
1)Pr
omot
ion

(
2)I
ncor
por
ati
on

(
3)For
mal
organi
zat
ionandcommencementofbusi
nessoper
ati
ons

St
epsi
nincor
por
ati
on

I
ncor
por
ati
oni
ncl
udest
hef
oll
owi
ng:

(
1)Dr
aft
ingandexecut
ionofar
ti
clesofi
ncor
por
ati
onbyt
hei
ncor
por
ator
s.

(
2)Fi
l
ingwi
tht
heSecur
it
iesandExchangeCommi
ssi
onoft
hear
ti
clesofi
ncor
por
ati
ont
oget
her
wi
tht
hefol
l
owi
ng:

(a)Treasur
er'
s af
fi
davitshowi
ng atleast25% ofthe ent
ir
e aut
hori
zed shar
es has been
subscr
ibedandatleast25%ofthesubscri
pti
onhasbeenpaidincashandorpr oper
tyt
ot he
corpor
ati
on.

(b)Incaset
hecorpor
ati
onisgovernedbyasapeci
allaw,afavorabl
erecommendat
ionofthe
apropr
iat
egover
nmentagencyt
hatsuchar
ti
clesofi
ncorpor
ati
onisinaccor
dancewi
thlaw.

(
3)Pay
mentoft
hef
il
ingandpubl
i
cat
ionf
ees,
and

(
4)Theissuancebyt
heSecur
it
iesandExchangeCommissi
onoft
hecert
if
icat
eofi
ncor
por
ati
on
i
fal
lthepapersfi
l
edaft
erv
eri
fi
cati
onandexaminat
ion,
aref
oundi
norder
.

I
ncor
por
ator
s:numberandqual
i
ficat
ions

1)nat
( uralper
sons.Thef
iveormor
eper
sonsmustbenat
ural
per
sons.

2)capaci
( tyt
ocontr
act
.Theincor
porat
orsmusthav
et hecapaci
tytoent
eri
ntoav
ali
dcont
ract
,
t
heactoffor
mingacor
porat
ionasbetweent
hepart
iesbei
ngcontract
ual
.
(3)Resident
softhePhil
i
ppines.A major
it
yoft heincorpor
atorsmustber esident
soft he
Phil
i
ppines,t
her
estmaybethepersonswhoareneit
herresi
dentsnorci
ti
zensofthePhil
ippi
nes.

(4)Cit
izenofthePhi l
i
ppines.Byspeci
fi
cconsti
tuti
onalandl
egalpr
ovi
sions,citi
zenshi
pisa
necessaryqual
if
icat
ionforincor
por
ator
sincorporat
ionsinwhi
chacert
ainper centageoft
he
capi
talstocki
srequi
redtobeownedbyFi l
i
pinoci
ti
zens.

Requi
rementofmi
nimum numberofi
ncor
por
ator
smandat
ory

Therequi
rementofmi nimum numberofi ncor
porator
sisboneofthoseprov
isions,howev
er,
whichar
er egul
arl
yevadedinpr
actice.Sincethelawpermitsaschemebewhichal lt
heshar
es
areownedbyasi ngl
eindi
vi
dua,thelatt
ermayi ncorpor
ateprov
idedt
heassoci
ateswi t
hhim,at
l
eastnominall
y,t
henumberofpersonsr equi
redbythelaw.

Quest
ions:

1.Whatar
ethet
hreest
epsi
nthecr
eat
ionofacor
por
ati
on?

2.Howmanyper
sonsar
erequi
redt
ofor
m ai
ncor
por
ati
on?

3.Whyi
ncor
por
aionsr
equi
redt
hatt
hei
ncor
por
atormustbeanat
ural
per
son?

4.Whyincorpor
ati
oni
srequi
redt
ofi
l
lthear
ti
clesofi
ncor
por
ati
ont
oSecur
it
iesandExchange
Commission?

5.Howmanyst
ockar
eneedt
osubscr
ibeofani
ncor
por
ator
s?

Sec.11.Cor porateterm.-Acor porati

onshal lexistforaper i
odnotexceedingf i
ft
y( 50)years
from thedat eofincorporati
onunl esssoonerdi ssolvedorunl esssai dper
iodisextended.The
corporateterm asoriginall
ystat
edi nt heart
iclesofi ncorporati
onmaybeext endedforperiods
notexceedi ngf i
ft
y( 50)y earsinanysi nglei nstancebyanamendmentoft hear t
icl
esof
i
ncor porat
ion,inaccordancewi tht hi
sCode;Pr ovided,Thatnoext ensi
oncanbemadeear l
i
er
thanf i
ve(5)y ear
spr i
ort otheoriginalorsubsequentexpi r
ydat e(
s)unlesstherearejusti
fi
able
reasons foran ear l
ierext ensi
on as maybe det ermined byt he Securi
ti
es and Exchange
Commi ssi
on.

Ter
m ofcor
por
ateexi
stence

Thecor porati
onshallexi
stfortheterm speci
fi
edinthearti
clesofincorpor
ati
onnotexceedi
ng
fi
ftyy ears,unlesssoonerlegal
l
ydissolvedorunlessi
tsregi
strat
ionisrevokeduponanyofthe
groundspr ovi
dedbyl aw.Thecorporat
el i
femustbereducedorextendedbyamendmentoft he
arti
clesofi ncorpor
ati
on.
Expansi
onofcor
por
atet
erms

1)Li
( mit
ati
ons.Theext
ensi
onofcor
por
atet
ermi
ssubj
ectt
othef
oll
owi
ngl
i
mit
ati
ons:

(
a)Thet
erm shal
lnotexceedf
if
tyy
ear
sinanyonei
nst
ance.

(b)Theamendmentisaffectedbefor
etheexpi
rat
ionoft
hecorporat
eterm exi
stenceforaf
ter
dissol
uti
onbyexpi
rat
ionofthecorpor
atet
ermther
eisnomorecorporat
eli
fetoextend.

(c)Theextensi
oncannotbemadeearl
i
ert
hanf
ive(
5)year
spri
ortot
heexpir
ati
ondat
eunless
ther
ear ejusti
fi
edreasonst
her
eforasmaybedeter
minedbytheSecur
it
iesandExchange
Commi ssi
on.

(2)Automati
cext ension.Itall
owst heaut omati
cext ensi
onoft hecorporateexistenceby
amendmentoft hear t
icl
esofincorporat
ionwithi
nt hef i
ve(5)yearper
iodbeforetheexpirat
ion
dateoftheexisti
ngt erm,dur
ingwhi cht heSecur
itiesandExchangeCommi ssionmayl ook,i
f
necessar
y,i
ntothefinanci
alst
ructureofthecorporationanfit
spastoperat
ionsoractuati
ons.

Quest
ions:

1.Howmanyy
ear
scanancor
por
ati
onexi
st?

2.Howmanyy
ear
sthatanext
ensi
oncanbemade?

3.Whatar
etheext
ensi
onofcor
por
atet
erms?

4.Whent
heamendment
sbeaf
fect
ed?

5.Howmanyy
ear
sthatancor
por
ateal
l
owst
heaut
omat
icext
ensi
on?

Sec.12.Mi ni
mum capi t
alstockrequir
edofstockcorpor
ati
ons.-Stockcor
porat
ions
i
ncorporatedunderthisCodeshal lnotberequi
redtohaveanymi ni
mum author
ized
capi
talstockexceptasotherwi
sespecifi
cal
l
yprovi
dedforbyspeci
all
aw,andsubj
ectto
theprovi
sionsofthefol
lowingsect
ion.

Capi
tal
stockr
equi
rement
s

TheCodedoesnotsetami ni
mum aut hor
ized capit
alst ockexceptasot herwi
se
prov
idedbyspeci
allawaslongasthepaid-upcapi
t al
,notlesst hanP5,000.
00.Theold
l
aw hasalso no capi
talstockrequi
rement.Itmer elyrequirest hatthearti
clesof
i
ncorpor
ati
onstat
etheamountofthecorporati
on'
scapi t
alstock.
Fi
l
ipi
noowner
shi
lrequi
rementr
egar
dingcor
por
atecapi
tal

1)Cor
( por
ati
onsforexpl
orat
ion,devel
opmentanduti
l
izat
ionofnatur
alr
esour
ces.At
l
east60%oft
hecapit
alofwhi
chi sownedbyci
ti
zenofthePhi
li
ppi
nes.

(2)Publ
i
cservi
cecor
por
ati
ons.Atl
east60%oft
hecapi
talofwhi
chi
sownedbyci
ti
zens
ofthePhi
li
ppi
nes.

(3) Educati
onalcor
porat
ion.Ot
herthant
hoseestabl
ishedbyr
eli
giousor der
sand
missi
onboar ds,atl
east60% ofthecapi
talofwhichisownedbyci t
izensofthe
Phil
i
ppines.

(4)Banki
ngcorporat
ion.Atleast60% oft hecapi
talstockofanybankorbanki ng
i
nsti
tut
ionwhi
chmaybeest abli
shedaftert
heapprovaloftheGener
alBanki
ngActshal
l
beownedbycit
izensofthePhil
ippi
nes.

(5)Corporat
ionsengagedinr
etai
ltr
ade.Thecapi
talofwhi
chmustbewhol
l
yownedby
cit
izensofthePhil
i
ppines.

6)Rur
( alBanks.Atl
east60%oft
hecapi
tal
stockofwhi
chi
sownedbyFi
l
ipi
noci
ti
zens.

7)Cor
( por
ati
onengagedincoast
wiseshi
ppi
ng.Atleast60% ofthecapit
alstockof
whi
chorofanyi
nter
esti
nsai
dcapit
ali
stot
all
yownedbycit
izensofthePhi
l
ippi
nes.

(8)Corpor
ati
onengagedi
nt hepawnshopbusi
ness.At
least70% oft
hev
oti
ngcapi
tal
stockshal
lbeownedbyci
ti
zensofthePhi
li
ppi
nes.

(9)Undert hefl
aglaw.Inthepurchaseofar ti
clesfortheGovernment,pr
eferenceshal l
begi v
ent omateri
alsandsuppli
espr oduced,made,ormanuf actur
edinthePhi l
ippines,
and to domest i
c enti
ti
es.The term "domest ic ent
it
ies"means anycitizen oft he
Phil
ippinesoranycorporat
ebodyorcommer cialcompanyatleast75%oft hecapi t
alof
whichisownedbyci ti
zensofthePhil
ippines.

Quest
ions:

1.How many per

centofcapitaldoes a ci
ti
zen ofthe Phil
i
ppine owned i
nthe
cor
por
ati
onsf
orexpl
orat
ion,
dev
elopmentandut
il
izat
ionofnat
uralr
esour
ces?

2.Whati
sthemeani
ngofdomest
icent
it
ies?

3.Howmanyv
otei
sneededt
ocor
por
ati
onengagedi
nthepawnshopbusi
ness?

4.Whatar
ethedi
ff
erentFi
l
ipi
noowner
shi
prequi
rementr
egar
dingcor
por
atecapi
tal
?
5.Howmuchi
sthepai
d-upcapi
tal
prov
idedbyspeci
all
aw?

Sec.13.Amountofcapi talstockt o besubscribed and paidf orthepur posesof

i
ncorporati
on.-Atleasttwenty-fi
veper cent(25%)oft heaut hori
zedcapitalstockas
stat
edint heart
icl
esofincorporati
onmustbesubscr ibedatt heti
meofi ncorpor ati
on,
andatl easttwenty-
fi
ve(25%)percentoft hetotalsubscripti
onmustbepai dupon
subscr
ipti
on,thebalancetobepay ableonadat eordat esf i
xedi nthecont ractof
subscr
ipti
onwi t
houtneedofcall
, ori
nt heabsenceofaf ixeddateordates,uponcal lfor
paymentbyt heboardofdirect
ors:Prov i
ded,however,Thatinnocaseshal lthepai d-
up
capi
talbelessthanfi
veThousand( P5,000.00)pesos.

Mi
nimum subscr
ipt
ionandpai
d-uocapi
tal

(1)Pre-
incorpor
ati
on.Thi
ssecti
onrequir
esthatatleast25% oftheamountoft he
capit
alstockhasbeenactual
l
ysubscr
ibedandthatatleast25%ofsuchsubscr
ipt
ion
paid.

(2)Posti ncorpor
ati
on.The25% subscr i
pti
onand25% pai d-upcapit
alisrequi
rednot
onlyduringt heincorpor
ationperi
odbutal soi ncaseofi ncr
easeoft heauthorized
capitalstock.The 25% mi ni
mum paid-up capi
talrequir
ementwoul d notapplyt o
subsequentsubcr i
pti
onstot heunsubscr
ibedsharesoft hecor por
ati
onsincetheev il
s
orrisksofi nsol
vencyagainstwhi
cht helawintendstosafeguar dthepubli
cnol onger
exi
st .

Comput
ati
onoft
he25%subscr
ipt
ionr
equi
rement

(1)Wherethecapi
talstockconsist
sonlyofparvalueshar
es,themi
nimum subscr
ipti
on
shoul
dbe25%oft heamountofaut hori
zedcapit
alstockor25%oftheaggregat
ev al
ue
ofall
thesharesofstockthecorporat
iobisaut
hori
zedt oi
ssue.

(2)Wher hecapi
et talstockconsist
sonlyofnoparv al
ueshares,the25%r equi
rements
shal
lbecomputedont hebasisoftheentir
enumberofauthori
zedshares.Corporati
ons
whoseshareshavenoparv al
uehav enoauthor
izedcapit
alstock.Theissuedpriceof
noparshar
esneednotbef i
xedintheart
icl
esofi
ncorporat
ion.

(
3)Wherethecapi
talstocki
sdivi
dedint
oparvalueshar
esandnoparv al
ueshar
es,t
he
r
equi
rementastoparvalueshar
esisasindi
cat
edaboveandf ort
henoparval
ueshar
es,
t
he25%isbasedont henumberofsai
dnoparv al
ueshares.
Quest
ions:

1.Howmanyper
centi
sthemi
nimum pai
d-upcapi
tal
requi
rement?

2.Howmanyper
centofcapi
tal
shoul
dbesubscr
ibed?

3.Howcany
oucomput
ethe25%subscr
ipt
ionr
equi
rement?

4.Howmanyper
centofpai
d-upcapi
tal
isr
equi
redi
ntheposti
ncor
por
ati
on?

5.How many per

centi
sthe aut
hor
ized capi
talst
ock st
ated i
nthe ar
ti
cles of
i
ncor
por
ati
on?

Sec.14.Content
soft hearti
clesofincor
porati
on.-Al
lcorporat
ionsorganizedundert hi
s
codeshallf
il
ewi ththeSecuri
tiesandExchangeCommi ssionarti
clesofincorporat
ionin
anyoftheof f
ici
allanguagesdulysignedandacknowledgedbyal lofthei ncor
porators,
contai
ningsubstanti
all
ythefoll
owingmatters,
exceptasotherwiseprescri
bedbyt his

Codeorbyspeci
all
aw:

1.Thenameoft
hecor
por
ati
on;

2.Thespecifi
cpur poseorpurposesf orwhichthecor por
ati
onisbeingi
ncorpor
ated.
Wher eacorporati
onhasmor et hanonest atedpurpose,theart
icl
esofi
ncorpor
ati
on
shallstat
ewhichi sthepri
mar ypurposeandwhi chis/ar
ehesecondarypurposeor
purposes:Pr
ovided,Thatanonst ockcorporati
onmaynoti ncl
udeapurposewhi ch
wouldchangeorcont r
adi
cti
tsnat ur
eassuch;

3.Theplacewheret
heprinci
palof
fi
ceoft
hecor
por
ati
oni
stobel
ocat
ed,whi
chmust
bewit
hinthePhi
li
ppi
nes;

4.Thet
ermf
orwhi
cht
hecor
por
ati
oni
stoexi
st;

5.Thenames,
nat
ional
i
tiesandr
esi
dencesoft
hei
ncor
por
ator
s;

6.Thenumberofdi
rect
orsort
rust
ees,whi
chshal
lnotbel
esst
hanf
ive(
5)normor
e
thanf
if
teen(
15)
;

7.Thenames,nat i
onal
i
tiesandresi
dencesofpersonswhoshallactasdi
rect
orsor
tr
usteesunti
lthefi
rstregul
ardi
rect
orsortrust
eesaredul
yelectedandquali
fi
edin
accordancewi
ththi
sCode;

8.I
fitbeast
ockcor
por
ati
on,
theamountofi
tsaut
hor
izedcapi
tal
stocki
nlawf
ulmoney
ofthePhili
ppi
nes,thenumberofshar esintowhichi
tisdivi
ded,andincaset heshare
areparvalueshares,t
heparvalueofeach,t henames,nat
ionali
ti
esandresidencesof
the or
igi
nalsubscr i
bers,and the amountsubscribed and paid by each on his
subscr
ipt
ion,andifsomeoral lofthesharesarewit
houtparv al
ue,suchfactmustbe
stat
ed;

9.Ifi
tbeanon-st
ockcorporati
on,t
heamountofitscapi
tal
,thenames,nat
ional
i
tiesand
resi
dencesoft
hecontr
ibutorsandtheamountcontr
ibut
edbyeach;and

10.Suchothermatter
sasarenoti
nconsi
stentwi
thl
aw andwhi
cht
hei
ncor
por
ator
s
maydeem necessar
yandconv
eni
ent
.

TheSecur i
ti
esandExchangeCommi ssionshallnotacceptthear t
iclesofincorporation
ofanyst ockcor por
ati
onunl essaccompani edbyaswor nstatementoft heTr easurer
elect
ed byt hesubscr i
bersshowi ng thatatl easttwenty
-fi
ve( 25%)per centoft he
authori
zedcapitalst
ockoft hecorpor
ationhasbeensubscr i
bed, andatleastt wenty-
five
(25%)oft het otalsubscr
ipti
onhasbeenf ull
ypaidt ohimi nact ualcashand/ ori n
propert
ythef ai
rv al
uati
onofwhi chisequalt oatleastt
wenty-f
ive( 25%)per centoft he
saidsubscripti
on,suchpaid-upcapitalbeingnotl essthanfivet housand( P5,000.00)
pesos.

Quest
ions:

1.Whatar
ethecont
ent
sofar
ti
clesi
ncor
por
ati
on?

2.Iti
swherethepr
inci
palof
fi
ceoft
hecor
por
ati
oni
stobel
ocat
ed,whi
chmustbe
wit
hint
hePhi
li
ppi
nes.

3.Howmanyper
centoft
otal
subscr
ipt
ionhasbeenf
ull
ypai
dasact
ual
cash?

4.Whatkindofdocument
sshal
lthecor
por
ati
onsf
il
etoSecur
it
iesandExchange
Commissi
on?

5.Whatwil
lhappentothenumberofshar
esinthest
ockcor
por
ati
oni
ftheamountof
aut
hori
zedcapi
talst
ockisl
awful
tothePhi
l
ippi
nes?