REQUIRED STOCKHOLDERS’ MUST STATE

REQUIRED ALL STOCKS CAN NEEDS SEC WHEN FILED WITH WHEN APPRAISAL OTHER NEED TO
POWERS LEGAL BASIS STOCKHOLDERS MEETING PURPOSE IN
BOARD VOTE VOTE? APPROVAL? SEC? EFFECTIVE? RIGHT KNOW
VOTE REQUIRED AGENDA?

The original and

amended articles
together shall
contain all
provisions required
by law to be set out
in the articles of
incorporation.
The amendments
the vote or written Amendments to the
shall take effect
assent of the articles shall be
upon their approval
stockholders indicated by
by the Commission
representing at least without prejudice to underscoring the
or from the date of
two-thirds (2/3) of the appraisal right of change or changes
TO AMEND majority vote of the filing with the said
the outstanding YES (Fundamental dissenting made, and a copy
ARTICLES OF Sec. 15 board of directors or YES YES YES When needed Commission if not
capital stock; vote or Matter, Sec. 6) stockholders thereof duly certified
INCORPORATION trustees acted upon within
written assent of under oath by the
six (6) months from
majority of the See Sec. 80 corporate secretary
the date of filing for
trustees and at least and a majority of the
a cause not
two-thirds (2/3) of directors or trustees,
attributable to the
the members with a statement
corporation.
that the
amendments have
been duly approved
by the required vote
of the stockholders
or members, shall
be submitted to the
Commission.

The Commission
shall not accept for
filing the bylaws or
any amendment
thereto of any bank,
by-laws may be banking institution,
adopted and filed building and loan
prior to the affirmative vote association, trust
In all cases, bylaws
incorporation; in of the stockholders company, insurance
shall be effective
such case, such representing at least company, public
only upon the
by-laws shall be a majority of the If filed prior to utility, educational
issuance by the
TO ADOPT approved and outstanding capital YES (Fundamental incorporation, it institution, or other
Sec. 45 YES YES YES Commission of a None stated.
BY-LAWS signed by all the stock, or of at least Matter, Sec. 6) shall be filed special corporations
certification that the
incorporators and a majority of the together with AOI. governed by special
bylaws are in
submitted to the members in case of laws, unless
accordance with this
Commission, nonstock accompanied by a
Code.
together with the corporations certificate of the
articles of appropriate
incorporation. government agency
to the effect that
such bylaws or
amendments are in
accordance with
law.

The owners of
The amended or
two-thirds (2/3) of
the owners of at new bylaws shall
the outstanding
least a majority of only be effective
capital stock or
the outstanding upon the issuance
majority vote of the two-thirds (2/3) of
TO AMEND capital stock, or at YES (Fundamental by the Commission
Sec. 47 board of directors or YES YES YES When needed. None stated. the members in a
BY-LAWS least a majority of Matter, Sec. 6) of a certification that
trustees, non-stock
the members of a the same is in
corporation may
nonstock accordance with this
delegate to the
corporation Code and other
board of directors or
relevant laws.
trustees the power

Notes in Business Law . Chapter IV: Powers of Corporation . Atty. Ida Marie V. Escolano-Canton
 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.

In case of extension
by the stockholders
of corporate term, a
or members Upon SEC Approval
approved by a dissenting
TO EXTEND representing at least Before expiration of or upon date of filing Not applicable for
majority vote of the YES (Fundamental stockholder may
CORPORATE Sec. 36 two-thirds (2/3) of YES YES YES term provided in if SEC fails to act corporations with
board of directors or Matter, Sec. 6) exercise the right of
TERM the outstanding AOI. within 6 months perpetual existence
trustees, appraisal under the
capital stock or of its from filing.
conditions provided
members.
in this Code.

by the stockholders
or members Upon SEC Approval
approved by a
TO SHORTEN representing at least or upon date of filing
majority vote of the YES (Fundamental
CORPORATE Sec. 36 two-thirds (2/3) of YES YES YES When needed. if SEC fails to act See Sec. 80
board of directors or Matter, Sec. 6)
TERM the outstanding within 6 months
trustees,
capital stock or of its from filing.
members.

What must the

certificate provide,
see Sec. 37

TO INCREASE/ After approval by no decrease in

DECREASE Any increase or the Commission and capital stock shall
CAPITAL STOCK decrease in the the issuance by the be approved by the
The application with
capital stock or the Commission of its Commission if its
the Commission
incurring, creating or certificate of filing, effect shall prejudice
shall be made within
increasing of any the capital stock the rights of
by the stockholders six (6) months from
bonded shall be deemed corporate creditors.
approved by a representing the date of approval
YES (Fundamental indebtedness shall increased or
Sec. 37 majority vote of the two-thirds (2/3) of YES YES of the board of See Sec. 80
Matter, Sec. 6) require prior decreased and the Nonstock
board of directors the outstanding directors and
approval of the incurring, creating or corporations may
capital stock stockholders, which
Commission, and increasing of any incur, create or
period may be
where appropriate, bonded increase bonded
extended for
TO of the Philippine indebtedness indebtedness when
justifiable reasons
INCUR/CREATE Competition authorized, as the approved by a
BONDED Commission. certificate of filing majority of the board
INDEBTEDNESS may declare of trustees and of at
least two-thirds (2/3)
of the members in a
meeting duly called
for the purpose.

Such right can be

by the stockholders denied by the
TO DENY representing Articles of
Code merely says After stockholders’
PRE-EMPTIVE Sec. 38 majority two-thirds (2/3) of Code is silent. Code is silent. YES After SEC approval. None stated. Incorporation
approval approval
RIGHT the outstanding or an amendment
capital stock thereto. See
Approval

Notes in Business Law . Chapter IV: Powers of Corporation . Atty. Ida Marie V. Escolano-Canton
 Requirements
in amending AOI.
SH has no
pre-emptive rights to
issuance of stocks
with
approval of SH, in
payment of
previously
contracted debt
or exchange of
property needed for
corporate purpose

Nothing in this
section is intended
to restrict the power
of any corporation,
approved by a
without the
majority vote of the A sale of all or
authorization by the
board of directors substantially all of
stockholders or
the corporation’s
members, to sell,
In nonstock properties and
lease, exchange,
corporations where assets, including its
any dissenting mortgage, pledge,
there are no goodwill must be
stockholder may or otherwise
members with authorized by the
exercise the right of dispose of any of its
TO SELL OR voting rights, the vote of the
YES (Fundamental appraisal under the property and assets
DISPOSE OF Sec. 39 vote of at least a stockholders YES YES NO N/A N/A
Matter, Sec. 6) conditions provided if the same is
ASSETS majority of the representing at least
in this Code necessary in the
trustees in office will two-thirds (2/3) of
usual and regular
be sufficient the outstanding
See Sec. 80 course of business
authorization for the capital stock, or at
of the corporation or
corporation to enter least two-thirds (2/3)
if the proceeds of
into any transaction of the members
the sale or other
authorized by this
disposition of such
section.
property and assets
shall be
appropriated for the
conduct of its
remaining business.

1. There must be
unrestricted retained
earnings.
2. For a legitimate
purpose
a. To eliminate
fractional shares
TO ACQUIRE OWN b. Delinquency sale
Sec. 40 Majority vote N/A N/A N/A N/A NO N/A N/A N/A
SHARES c. Pay-off dissenting
stockholders

EFFECT: becomes
treasury shares

TRUST FUND
DOCTRINE

TO DISPOSE OF
The resale price
TREASURY Sec. 9 Majority vote N/A N/A N/A N/A NO N/A N/A N/A
must be reasonable.
SHARES

ratified by the That where the

stockholders any dissenting investment by the
approved by a
TO INVEST IN representing at least stockholder shall corporation is
majority of the board YES (Fundamental
ANOTHER Sec. 41 two-thirds (2/3) of YES YES NO N/A N/A have appraisal right reasonably
of directors or Matter, Sec. 6)
CORPORATION the outstanding as provided in this necessary to
trustees
capital stock, or by Code: accomplish its
at least two thirds primary purpose as

Notes in Business Law . Chapter IV: Powers of Corporation . Atty. Ida Marie V. Escolano-Canton
 (2/3) of the stated in the articles
members in the of incorporation, the
case of nonstock approval of the
corporations, stockholders or
members shall not
be necessary.

ratified by the
stockholders
representing at least
two-thirds (2/3) of
approved by a
TO ACTIVATE the outstanding
majority of the board
SECONDARY capital stock, or by YES YES NO NO N/A N/A None stated.
of directors or
PURPOSE at least two thirds
trustees
(2/3) of the
members in the
case of nonstock
corporations,

TO CALL FOR
UNPAID Sec. 66 Majority vote N/A N/A N/A NO NO N/A N/A None stated.
SUBSCRIPTIONS

TO SELL
DELINQUENT Sec. 67 Majority vote N/A N/A N/A NO NO N/A N/A None stated.
SHARES

Approval
requirements for
issuance of stock
dividends.

Corporations may
declare dividends
out of the
no stock dividend
unrestricted retained
shall be issued
earnings.
without the approval
TO
of stockholders YES, under
DECLARE/ISSUE Sec. 42 Majority vote YES YES NO See SRC/RSA See SRC/RSA None stated. See rules for
representing at least SRC/RSA
DIVIDENDS delinquent stocks.
two-thirds (2/3) of
the outstanding
See rules on
capital stock
prohibition on
retaining surplus
profits +
Exceptions.

TRUST FUND
DOCTRINE

No management
contract shall be
entered into for a
period longer than
Majority of five (5) years for any
Upon approval of
TO ENTER INTO Outstanding Capital one (1) term.
YES, if listed under stockholders of
MANAGEMENT Sec. 43 Majority vote Stock of both YES YES NO For SEC info only None stated.
SRC/RSA both corporations
CONTRACT corporations Rules differ if there
is/are interlocking
directors, will
require 2/3 votes
OCS of managed
corporation

approval by a The affirmative vote Any dissenting There must be plan

TO EFFECT majority vote of of stockholders YES (Fundamental Upon execution of Upon issuance of stockholder may and articles of
MERGER/ TITLE IX each of the board of representing at least YES YES Matter, Sec. 6) YES articles of merger or certificate of merger exercise the right of merger or
CONSOLIDATION directors or trustees two-thirds (2/3) of consolidation. or consolidation. appraisal in consolidation.
of the constituent the outstanding accordance with this

Notes in Business Law . Chapter IV: Powers of Corporation . Atty. Ida Marie V. Escolano-Canton
 corporations of the capital stock of each Code: Provided, Provided, That in
plan of merger or corporation in the That if after the the case of merger
consolidation case of stock approval by the or consolidation of
corporations or at stockholders of such banks or banking
least two-thirds (2/3) plan, the board of institutions, loan
of the members in directors decides to associations, trust
the case of abandon the plan, companies,
non-stock the right of appraisal insurance
corporations shall shall be companies, public
be necessary for the extinguished. utilities, educational
approval of such institutions, and
plan. Any dissenting other special
stockholder may corporations
exercise the governed by special
laws, the favorable
recommendation of
the appropriate
government agency
shall first be
obtained.

Other than
affirmative vote of
shortening of the
approval by a stockholders
YES (Fundamental Upon approval by corporate term.
TO DISSOLVE THE majority vote of representing at least Upon approval by
TITLE XIV YES YES Matter, Sec. 6) YES stockholders/ YES. See Sec. 80
CORPORATION each of the board of two-thirds (2/3) of SEC
members Need for Notice and
directors or trustees the outstanding
Publication
capital stock

Notes in Business Law . Chapter IV: Powers of Corporation . Atty. Ida Marie V. Escolano-Canton