MINUTES OF THE MEETING - DECEMBER 17, 2020

TITLE II
INCORPORATION AND ORGANIZATION OF PRIVATE CORPORATIONS

1. INCORPORATION
a. The performance of conditions, acts, deeds, and writings by incorporators, and the official acts,
certification or records, which give the corporation its existence.
b. It is only through incorporation and registration with SEC that private corporations can acquire
juridical personality under the RCCP that is separate and distinct from its persons composing it.
c. The life of the corporation organized under the RCCP starts from the issuance of the Certificate
of Incorporation by the SEC.

2. SECTION 10 - INCORPORATORS
a. These are the persons mentioned in the AOI, originally forming and composing the corporation, and
signatories thereof.

b. Under Section 10 of the RCCP, the basic qualifications of incorporators are the following:
i. The incorporator must be a natural or juridical entity
1. This may refer to any person, partnership, association or corporation
ii. There must not be more than 15 incorporators
iii. If the incorporator is a natural person, he or she must be of legal age; and
iv. Each incorporator of a stock corporation must own or be a subscriber to at least 1 share of
the capital stock.

c. 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.
i. Under EO No. 65 or the 11th Foreign Investment Negative List, corporations can be
organized for the practice of a number of professions such as:
1. Architecture, Chemistry, Electronics Engineering, Forestry, Interior Design, etc.

d. A corporation with a single stockholder is considered a OPC.

i. The single stockholder can only be a natural person, estate or trust.

e. The old Corporation Code set 5 as the minimum number of incorporators and limited the
incorporators to natural persons. This has been deleted in the RCCP for the following reasons:
i. Investors name individuals as incorporators with no real interest in the corporation just to
comply with the legal requirement
ii. To improve the ease of doing business in the Philippines

f. An incorporator must have capacity to act. Restrictions on capacity to act are the following:
i. Minority, insanity or imbecility, the state of being a deaf-mute, prodigality, and civil
interdiction.

g. Under the RCCP, there is no residency nor citizenship requirement for incorporators.
i. Except – when engaged in nationalized activity, the corporation must comply with the
nationalization requirement.

h. An incorporator remains to be an incorporator even if he will later on cease to be a corporator or

shareholder because this is an accomplished fact or deed.

3. SECTION 11 - CORPORATE TERM

a. Corporate Term refers to the life or the period of existence of a corporation.

b. Under Section 11,

i. As a general rule, a corporation’s corporate term is perpetual. The exception is when the
corporation opts a fixed term in its AOI.

c. Corporations existing prior to the effectivity of this Code, and which continue to exist, shall also
have an automatic perpetual existence.
i. However, under SEC MC-22-2020, it may, nonetheless, amend its AOI to reflect such
perpetual existence, subject to filing fees and by a vote of majority of its Board and its
stockholders representing a majority of its OCS.
 d. Corporations existing prior to the RCCP may elect to retain its specific corporate term in its AOI
provided that:
i. It notifies the SEC that it elects to retain its corporate term
ii. It secures the vote of its stockholders representing a majority of its OCS.
iii. The notice must be submitted to SEC within 2 years (from February 23, 2019 to February
23, 2021). Failure to comply shall cause the term of the corporation to be perpetual.

e. A corporate term for a specified period may be extended or shortened by amending the AOI
i. Must be approved by a majority vote of the Board and by a vote or written assent of the
stockholders representing at least two-thirds (2/3) of the outstanding capital stock.
ii. No extension may be made earlier than 3 years prior to the original or subsequent expiry
date unless there are justifiable reasons for extension determined by the SEC. Also, such
extension shall take effect only on the day following the expiry date. 

f. Amendment to Change from Specific Corporate Term to Perpetual Corporate Term, and Vice
Versa
i. Corporations with a specific corporate term are allowed to amend their AOI in order to shift
to perpetual corporate existence.
ii. In the same way, corporations with a perpetual corporate term, that is,
1. corporations incorporated under the RCC whose AOI provide for a perpetual
corporate term
2. corporations incorporated under the OCC whose term is deemed perpetual for
failure to file the required Notice and
3. corporations which amended their AOI to reflect a perpetual corporate term
are allowed to amend their AOI in order to shift to specific corporate existence

g. Revival of Expired Corporations

i. Expired Corporation – a corporation whose term has expired
ii. An expired corporation may apply for a revival of its corporate existence, together with all
the rights and privileges under its certificate of incorporation and subject to all its duties,
debts, and liabilities existing prior to its revival
iii. Under SEC MC-23-2019, the required number of votes for the revival of an expired
corporation is at least majority vote of BOD/BOT and the vote of at least majority of the
OCS/members.
iv. Upon approval by the SEC, 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.

h. Rationale of Perpetual Term

i. It allows corporations:
1. To develop long-term plans and
2. To look into more sustainable and far-reaching strategies for more economic
growth.
3. To improve the ease of doing business in the Philippines

4. SECTION 12 - MINIMUM CAPITAL STOCK

a. Authorized Capital Stock
i. The total amount of capital that the corporation is authorized to raise during its lifetime
b. Subscribed Capital Stock
i. Portion of the authorized capital stocks that is covered by the subscription agreements
whether fully paid or not
c. Paid Up Capital
i. Portion of the authorized capital that is subscribed and paid
d. Paid In Capital
i. The amount of OCS and additional paid-in capital (APIC) or premium paid over the par
value of the shares
ii. Paid in capital is not necessarily paid while paid up capital is portion that is already paid
e. Outstanding Capital Stock
i. The total shares issued to subscribers or stockholders, whether or not fully or partially
paid EXCEPT treasury shares
f. Stated Capital
i. The sum of the:
1. par value of all issued par value shares
2. the entire amount received for no-par value shares
3. any amount transferred by a stock dividend
4. including treasury shares
 g. Capital
i. The properties and assets of the corporation that are used for its business or operation

h. Section 12 of the RCCP – Stock corporations shall not be required to have a minimum capital
stock, except as otherwise specifically provided by special law.
i. There is NO minimum authorized capital stock, subscribed capital stock nor paid up capital.
ii. The Old Corporation Code previously required a Minimum Subscribed Capital equal to
25% of the Authorized Capital and Minimum Paid-up Capital of 25% of Subscribed Capital
but not less than P5,000. These have been deleted under the RCCP.
iii. HOWEVER, the 25% subscribed and 25% paid-up capital requirement applies to increase
in capital stock under Section 37.
iv. Special laws may impose initial capitalization requirements.
1. This refers to the Paid Up Capital
2. Examples are banks, pre-need companies, insurance companies, etc.
v. Is it possible that at the time of incorporation, there is zero Paid Up Capital?
1. Yes. At the time of incorporation, it is possible because there is no operation yet.
There is no need for paid-up capital. However, it is likely that the subscriptions are
fully or partially paid.

5. SECTION 13 – CONTENTS OF AOI

a. CHARTER – the written grant by the State. It defines the contractual relationship:
i. Between the State and the corporation
1. AOI binds the State because the State cannot disregard the provision of the AOI
without any valid reason. It cannot whimsically revoke the AOI.
ii. Between the stockholders and the State and
iii. Between the corporation and its stockholders

b. All corporations shall file with the SEC Articles of Incorporation, signed and acknowledged or
authenticated in such form and manner as may be allowed containing substantially the following
matters:
NPP-TNNN-SN-TSA
1. The Name of the corporation which must include the terms
2. The specific Purpose or purposes for which the corporation is being formed.
Where one corporation has more than 1 purpose, the articles of incorporation shall
include 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
3. The Place where the principal office of the corporation is to be located, which must be
within the Philippines
4. The Term of corporate existence if the corporation does not opt for perpetual existence
5. The Names, nationalities, and residence of the incorporators
6. The Number of directors, which shall not be more than 15 or the number of trustees
which may be more than 15
7. The Names, nationalities, and residences of the first directors or trustees
8. If it be a Stock corporation, (ANP-NAS)
a. the amount of its Authorized capital stock,
b. Number of shares into which it is divided,
c. the Par value of each,
d. Names, nationalities, and residence addressees of the original subscribers
e. Amount of subscribed and paid by each on the subscription, and
f. a Statement that some or all of the shares are without par value, if applicable
9. If it be a Nonstock corporation, (CNA)
a. the amount of its Capital,
b. the Names, nationalities, and residence addressees of the contributors, and
c. Amount contributed by each
10. Name of Treasurer elected by subscribers and the certification of the treasurer
a. There is no more Treasurer’s Affidavit because the certification of the treasurer is
already incorporated in the AOI. But the treasurer must sign the AOI.
11. If the corporation engages in a nationalized industry, a Statement that no transfer of
stock will be allowed if it will reduce the stock ownership of Filipinos to a percentage
below the legal minimum
12. An Arbitration agreement may be provided in the articles of incorporation pursuant to
Section 181 of the Code (optional)
 6. SECTION 14 – FORM OF AOI
a. The RCCP only requires substantial compliance with the form of AOI. Substantial compliance may
not affect the de jure existence of the corporation.
b. The AOI need not be notarized.
i. The corporation may opt to submit the AOI together with a Certificate of Authentication
stating that the AOI is complete, true and correct.
ii. This is to facilitate or improve the ease of doing business in the Philippines.

NAME
1. The name of the corporation is necessary for identification purposes. The law requires each to adopt
and certify a distinctive name.
a. Corporations must verify with the SEC if the proposed name is still available for registration.
b. If available, reservation can be made for a limited period after payment of the required fees
2. For One Person Corporation, it is required that “OPC” is attached to its name.

PURPOSE CLAUSE
1. The corporation must state its purpose. If there are more than 1 purpose, it must classify to:
a. Primary purpose
b. Secondary Purposes

2. Rationale of Purpose Clause

a. The person who intends to invest his money in the business will know where and in what
kind of business or activity his money will be invested
b. The directors and officers will be informed regarding the scope of business they are
authorized to act
c. A third person will be aware if the transaction he has with the corporation is within the
authority of the corporation

3. General Limitations (IC-IC)

a. It cannot be created or formed for a purpose or function of which a corporate body is
Incapable
b. It cannot be created for a purpose that is Contrary to law, morals, or public policy
c. It cannot be organized for two or more Incompatible purposes. There may be non-allied
purposes, but they must not be incompatible
d. The corporation may not be organized for a purpose that is Contrary to its nature

4. The duty of the SEC is ministerial. If the purpose/s of the corporation is/are lawful, at the time
of application, the SEC must approve.
a. HOWEVER, if the corporation is already operating, and engages in unauthorized activity,
the SEC has the authority to revoke the AOI.