RA 11232 REVISED CORPORATION CODE Shall not be deemed to include:

Definition of Corporation - Mere investment as a shareholder by a foreign

Sec 2. A corporation is an artificial being created by entity in domestic corporations duly registered to
operation of law, having the right of succession and the do business, and/or the exercise of rights of such
powers, attributes, and properties expressly authorized investor;
by law or incidental to its existence. - Nor having a nominee director or officer to
represent its interests in such corporation
- Nor appointing a representative or distributor
Classes of Corporations domiciled in the PH w/c transacts business in its
Stock v. Nonstock own name and for its own account.
Sec 3.
those which have capital stock divided Control Test
into shares and are authorized to Determines the nationality of the corporation by the
distribute to the holders of such nationality of the controlling stockholders
Stock
shares, dividends, or allotments of the Usually applied in times of war- citizenship of the
surplus profits on the basis of the controlling stockholders.
shares held
Adopted by the FIA of 1991 (RA 7042)
That does not issue shares of stock
- As general guideline in determining the
Nonstock (No shareholders, owned only by nationality of corporations engaged in a
members) nationalized activity
Nationalized activities under the Constitution
Nationality of Corporations Exploitation and 60% of whose capital is
Foreign v. Domestic development of natural owned by Filipino
One formed, organized or existing resources Citizens
under laws other than those of the Public Utilities 60% of whose capital is
Philippines’ and whose laws allow owned by Filipino
Filipino citizens and corporations to do Citizens
business in its own country or State Advertising 70% of whose capital is
owned by Filipino
Foreign Shall have the right to transact Citizens
business in PH after obtaining a Mass Media 100% of whose capital is
license for that purpose in accordance owned by Filipino
w/ the RCC and a certificate of Citizens
authority from the appropriate gov’t
agency. Only required to procure
license only if it is “doing business” Gamboa v. Teves (public utility) The constitutional
requirement of at least 60% Filipino ownership
One formed, organized or existing applies not only to voting control of the
Domestic
under Philippine Laws. corporation but also to the beneficial ownership of
the corporation.
Test in Determining Nationality of Corporations (Req: Shares w/ Voting rights + Full beneficial
Place of Incorporation Test ownership)
Nationality is determined by the state of
incorporation. (Regardless of the nationality of Application of two-tiered test: the required Filipino
stockholders) ownership shall be applied to both:
Excpt: Foreign Investment Act of 1991 - The total number of outstanding shares of stock
- Corporation organized/ incorporated entitled to vote in the election of directors; and
abroad - The total number of outstanding shares of stock,
- Registered as doing business in the PH whether or not entitled to vote in the election of
under the RCC directors.(SEC MC No. 8, s.2013)
o Beneficial ownership refers to the
100% of OCS and entitlement to vote is wholly
ownership of the subject shares.
owned by Filipinos.

Grandfather Rule
Doing business- implies a continuity of commercial
dealings and arrangements and contemplates to the A method of determining the nationality of a
extent, the performance of acts or works or the exercise corporation which in turn is owned by another
of some of the functions normally incident to or in corporation by breaking down the equity structure of
progressive prosecution of the purpose and subject of its the shareholders of the corporation
organization (FIA no. 4)
The percentage of Filipino Equity in a corporation
Foreign Investment Act— Doing business shall include: engaged in a nationalized and/or partly nationalized
areas of activities is computed, in case where
- Soliciting orders, service contracts, opening
corporate shareholders are present
offices, whether called “liaison” offices or
branches
- Appointing representatives or distributors
domiciled in the PH or who in any calendar year
stay in the country
o For a period of 180 days or more
- Participating in the mgmt., supervision, or control
of any domestic business, firm, entity or
corporation in the PH; and (go to first par)
•
Illustration Doctrine of Piercing the Corporate Veil
69% of XYZ Corporation’s shares are owned by ABC Refers to a situation in which courts put aside limited
Corporation while the other 31% of the shares are liability and hold a corporation's shareholders or
owned by Filipino stockholders. directors personally liable for the corporation's actions or
ABC Corporation on the other hand has the following debts.
ownership: Grounds for Application of Doctrine (Exceptional
- 47% Filipino Owned Cases)
- 53% Foreign Owned When piercing the corporate veil/
May XYZ Corporation engage in the development of Equity Cases fiction is necessary to achieve
natural resources in the PH? justice or equity.
When the corporate entity is used
XYZ Corporation to commit fraud, justify a wrong or
Fraud Cases
to defend a crime, or to commit
tax evasion
ABC Corporation Filipinos When corporation is merely a
69% 31% Alter Ego farce, alter ego, business conduit,
Cases instrumentality, agency or adjunct
of a person or another entity.
Filipinos Foreign When the corporate entity is used
47% 53% Defeat of
to defeat public convenience as
Public
when the corporate fiction is used
ANS: Yes. 31% + 32.43% =63.43% Filipino Owned Convenience
for the evasion of an existing
Cases
69% x 47%= 32.43% obligation.

Corporate Juridical Personality (Corporation as an

Artificial Being) Test in Determining Applicability
Doctrine of Separate Juridical Personality Relevant Doctrines that must be remembered w/ respect
A corporation has a legal personality separate to Doctrine of Piercing the corporate fiction:
and distinct from that of the people comprising it (i.e: Where one corporation is so
shareholders, directors, and officers) organized and controlled and its
Principle of Limited Liability affairs are conducted so that in
Shareholders are not liable for corporate fact, a mere instrumentality or
Control or adjunct of the other (principal
liabilities; corporate debt is not a debt of the SHs. Instrumentality corporation)
Owners are generally liable only up to the extent Rule
of their capital contributions. - The fiction of corporate
entity of the
instrumentality may be
disregarded.
GR: A corporation itself cannot be This requires that parent
liable for felonies described in the corporation’s conduct in using the
RPC or in special laws because it subsidiary corporation be unjust,
cannot perform physical overt acts of fraudulent or wrongful
a crime.
- It recognizes that piercing
Liability Excpt: Recognized in the AMLA of is appropriate only if the
Fraud Test
for Crimes 2001. The term “offender” under parent corporation uses
AMLA refers to any person who the subsidiary in a way
commits laundering offense. It then that harm the creditor.
defines a “person” as “any natural or - “Totality of Circumstances
juridical persons”. The penalty clause Test” may be applied or
of AMLA also mentions a corporation considered.
as offender.
This requires the plaintiff to show
A corporation can be held civilly liable that the defendant’s control,
in the same manner as natural exerted in a fraudulent, illegal or
persons. (Solidary Liable) otherwise unfair manner toward
Liability When a tortious act is committed by it, caused the harm suffered.
for Torts an officer or agent under express - There must be a causal
direction or authority from the SHs or connection between the
Harm or
members acting as a body, or fraudulent conduct
Causal
generally, from the directors as the committed through the
Connection
governing body. instrumentality of the
Test
GR: A juridical person is generally not subsidiary and the injury
entitled to moral damages. suffered or the damage
(Corporations cannot experience incurred or damage
physical or mental suffering) incurred by the plaintiff.
Recovery Excp: A corporation may have a - “Totality of Circumstances
of good reputation w/c, if besmirched, Test” may be applied or
Damages may also be a ground for moral considered.
damages.
In cases of Libel, Slander, or any
other form of defamation under
Art.2219 of the Civil Code
•
Effect of Piercing the Veil Subscription Requirements
The corporation will •The SHs or members will Sec 12. Minimum Capital Stock Not Required of
be treated as an be considered as a Stock Corporations. – Stock corporations shall not
association or corporation be required to have a minimum capital stock, except
collection of persons •The liability will attach as otherwise specifically provided by special law
or individuals personally or directly to the Terms to remember:
undertaking business officers and SHs
as a group. Authorized The amount fixed in the AOI to be
Capital Stock subscribed and paid by the SHs of
Where there are two • They will be merged into the corporation.
corporations one
Subscribed The portion of the authorized
• The one will be merely Capital capital stock that is covered by
regarded as the subscription agreements whether
instrumentality, agency, fully paid or not.
conduit, or adjunct of the
other. Paid Up The portion of the authorized
Capital capital stock that is subscribed and
paid.
Paid-In The amount of outstanding capital
Capital stock and APIC or premium paid
The corporation • The corporate character is over the par value.
continues for other not necessarily abrogated Outstanding Refers to the total shares of stocks
legitimate objectives • Corporation is not Capital Stock issued to subscribers or SHs, WoN
dissolved fully or partially paid except
Note: Piercing the Corporate Veil WILL NOT treasury shares so long as there is
automatically dissolve the corporation. It will only apply a binding subscription agreement.
for a particular case. Capital Includes properties and assets of
the corporation that are used for its
business or operation.
Capital Structure
Stated The sum of the par value of all
Incorporators: those stockholders or members
Capital issued par value shares, the entire
mentioned in the Articles of Incorporation as originally
amount received for no-par value
forming and composing the corporation and who are
shares and any amount transferred
signatories thereof. (Sec 5)
by a stock dividend.
Qualifications of Incorporators
1.Must be a natural or juridical entity.
Corporate Term
2.Must not be more than 15 incorporators.
3.If natural person: he/she must be of legal age. Sec. 11
4.Each incorporator of a stock corporation must GR: Corporations shall have perpetual existence unless
own or be a subscriber to at least one share of its AOI provides otherwise.
the capital stock. Excpt: upon a vote of its stockholders representing a
Number of Incorporators majority of its outstanding capital stock, notifies the
Sec. 10 Number and Qualifications of Incorporators Commission that it elects to retain its specific corporate
term pursuant to its articles of incorporation.
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 Fixed Term: A corporate term for a specific period may
lawful purpose or purposes: Provided, That natural be extended or shortened by amending the articles of
persons who are licensed to practice a profession, incorporation:
and partnerships or associations organized for the Reqs: No extension may be made earlier than three (3)
purpose of practicing a profession, shall not be years prior to the original or subsequent expiry date(s)
allowed to organize as a corporation unless unless there are justifiable reasons for an earlier
otherwise provided under special laws. extension as may be determined by the Commission.
Incorporators who are natural persons must be of That such extension of the corporate term shall
legal age. take effect only on the day following the original or
Each incorporator of a stock corporation must own subsequent expiry date(s).
or be a subscriber to at least one (1) share of the
capital stock.
Revival: A corporation whose term has expired may
A corporation with a single stockholder is apply for a revival of its corporate existence, together
considered a One Person Corporation as described with all the rights and privileges under its certificate of
in Title XIII, Chapter III of this Code. incorporation and subject to all of its duties, debts and
liabilities existing prior to its revival.
GR: Not more than 15 incorporators Reqs: Approval by the Commission, the corporation
Excpt: One Person Corporations (OPC). Sec 10- Any shall be deemed revived and a certificate of revival of
person, partnership, association, or corporation, singly or corporate existence shall be issued, giving it perpetual
jointly with others. There can be one incorporator in OPC existence, unless its application for revival provides
but at least 2 but not mor than 15 is required for a otherwise.
corporation that is not OPC. Excpt: No application for revival of certificate of
incorporation of banks, banking and quasibanking
institutions, preneed, insurance and trust companies,
non-stock savings and loan associations (NSSLAs),
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.
•
Classification of Shares
Sec 6. 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.
Sec 6, par. 2 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.
Par and No-Par Value shares
GR: The shares or series of share may or may not
have a par value
Excpt: 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.
No-Par Value- 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
Preferred Shares v. Common Shares
May be deprived of voting rights.
However, corporations usually give
holders of P/S certain benefits not
enjoyed by common SHs.
These may include:
Preferred - Preference on dividends
distribution
- Preference in distribution of
corporate assets in case of
liquidation
Provided preferred shares are issued
only with par value.
Common shareholders have a right to
vote on corporate issues and are
entitled to declared common dividends.
Common
Common shareholders are paid out last
in the event of bankruptcy after
debtholders and preferred SHs.
*scope of voting rights subject to classification.
Founders’ Share
Sec. 7 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.
Redeemable Shares
Sec. 8 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.
*Mandatory redemption, no option for the corporation to
refuse to buy back. In substance, it’s like a liability of the
corporation.
Treasury Shares
Sec. 9 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.
*Difference w/ RS: There is appropriated retained
earnings.
Incorporation and Organization
Components of a Corporation
Corporators Those who compose a corporation,
whether as SHs or members
Incorporators Those who are mentioned in the
Articles of Incorporation as originally
forming and composing the corporation
and who are signatories thereof.
Directors & The BOD is the governing body in
Trustees Stock Corporation while BOT is the
governing body in Nonstock
Corporation.
Corporate They are the officers who are identified
Officers as such in the Corporation Code, The
AOI, or the By-Laws of the corporation
Stockholders Owners of shares of stock (Corporator)
Members Corporator of a corporation w/c has no
capital stock. They are not owners of
shares of stocks, and their membership
depends on terms provided in AOI or
by-laws (Sec.91)
Promoter A person who, acting alone or with
others, takes initiative in founding and
organizing the business or enterprise
of the issuer and receives
consideration thereof.
Subscribers Persons who have agreed to take and
pay for original, unissued shares of a
corporation formed or to be formed.
Underwriter A person who guarantees on a firm
commitment and/or declared best effort
basis the distribution and sale of
securities of any kind by another.
•
Corporator v. Incorporator
INCORPORATOR CORPORATOR
Signatory of the AOI May or may not be
signatory of the AOI
Does not cease to be an Cease to be a corporator
incorporator upon sale of by sale of his shares
his shares (Stock corporation). When
the corporator ceases to
be a member (non-Stock).
Maximum of 15 (Stock) No Limit.
May or may not be more
than 15 (Nonstock)
Originally forms part of Not necessarily
the corporation
Filipino ownership not a requirement except if the
corporation is engaged in nationalized or partly
nationalized industries.
Promoter (Mag-aasikaso ng incorporation)
A person who brings about or cause to bring about the
formation and organization of a corporation by:
1. Bringing together the incorporators or the
persons interested in the enterprise
2. Procuring subscriptions or capital for the
corporation and
3. Setting in motion the machinery w/c leads to the
incorporation of the corporation itself.
Liability of a Promoter
All promoter(s) have joint personal liability for a
corporation that was never formed. He remains liable on
contracts even after the incorporation even though
corporation adopts the contract.
Are promoters agents of a corporation?
No. Promoters are not agent of the corporation before it
comes into existence. Upon incorporation, the practice is
for the BOD to pass a resolution ratifying the contract
entered into by the incorporators with the promoter.
Then, they become agents of the corporation.
Subscription Contract
A contract for the acquisition of unissued stock in an
existing corporation or a corporation still to be formed. It
is considered as such notwithstanding the fact that the
parties refer to it as purchase or some other contract.
(RCC Sec.59)
Pre-incorporation Subscription Agreements
Sec. 60. GR: A subscription of shares in a corporation
still to be formed shall be irrevocable for at least six (6)
months from the date of subscription,
Excpt: 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 contact of subscription. No pre-incorporation is
submitted to the Commission.
Consideration for Stocks
Sec. 61 What can be used as consideration for stocks?
- Actual cash paid to the corporation;
- Property, tangible or in 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;
- Labor performed for or services actually rendered
to the corporation;
- Previously incurred indebtedness of the
corporation;
- Amounts transferred from unrestricted retained
earnings to stated capital;
- Outstanding shares exchanged for stocks in the
event of reclassification or conversion;
- Shares of stock in another corporation; and/or
- Other generally accepted form of consideration.
Where the consideration is other than actual cash, or
consist of intangible property such as patents or
copyrights, the valuation thereof shall initially be
determined by the SHs or the BOD, 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 or bonds by
the corporation.
Articles of Incorporation
I. Contents
a. Name of corporation
b. Purpose(s)- Primary and Secondary
c. Place of Principal office (must be within
the PH)
d. Corporate Term
e. Names, nationalities, and residence
addresses of the incorporators.
f. Number of Directors (not be more than
15 (stock) may be more than 15
(nonstock))
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.
II. Non-amendable Items
a. Names of the Incorporators
b. First set of directors and subscribers
c. Initial Treasurer
d. Original subscription
e. Place and Date of execution of the first
AOI
Corporate Name
Sec 17. No corporate name shall be allowed by the
Commission if it is not distinguishable from that already
reserved or registered for the use if another corporation,
or if such name is already protected by 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, abbreviation, different
tenses, spacing, or number of the same word or
phrase.
•
The corporation will be ordered to immediately cease
and desist from using such name and be required to
register a new one when its name is:
1. Not distinguishable from a name already
reserved or registered for the use of another
corporation
2. Already protected by law
3. Contrary to law, rules and regulations
The Commission shall also cause the removal of all
visible signages, marks, advertisements, label 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.
Registration, Incorporation and Commencement of
Corporate Existence
Sec 18.
Registration: A person or group of persons desiring to
incorporate 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 is 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.
Incorporation: 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.
Commencement: 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
is sooner dissolved in accordance with law.
Election of Directors or Trustees
Sec 23. 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.
For elections to be effective, owners of majority of the
outstanding capital stock or majority of members must
be present:
- In person
- Representative (Authorized by written proxy)
- Remote communication (in absentia), if
authorized in the by-laws or by majority of the
directors
Voting in absentia in corporations vested with public
interest may be done, notwithstanding the absence of a
provision in the by-laws of such corporations.
The election must be by ballot if requested by any voting
SHs or member.
Voting (Stock Corporation)
Amount of Vote = Stocks owned X directors to be
elected
Manners of Voting
- Straight
- Cumulative
- 1 Candidate
- Distributed
Illustration: Stockholder A owns 5,000 shares out of the
15,000 outstanding shares of XYZ Corp. The AOI
provide for 12 directors.
ANS: 5,000 x 12= 60,000 votes
Number of Shares need to elect desired number of
directors:
Where:
OS X n OS= Outstanding Shares entitled to Vote
+1
N+1 n= Desired number of directors to be elected
N= Total number of directors to be elected
Illustration: Stockholder A owns 5,000 shares out of the
15,000 outstanding shares of XYZ Corp. The AOI
provide for 12 directors.
ANS:
15,000 X 2
+ 1 = 2,309 shares
12 + 1
Adoption of By-Laws (can be submitted after incorp.)
Sec 45. 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, bylaws may be adopted and filed prior to
incorporation; in such case, such bylaws 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.
Content of By-Laws
Sec. 46
(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 the
compensation of directors or trustees and officers, and
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 Delinquent Status (Sec 21)
by the Commission; A delinquent corporation shall have a period of two (2)
(g) The time for holding the annual election of directors years to resume operations and comply with all
or trustees and the mode or manner of giving notice requirements that the Commission shall prescribe. Upon
thereof; compliance by the corporation, the Commission shall
(h) The manner of election or appointment and the term issue an order lifting the delinquent status. Failure to
of office of all officers other than directors or trustees; comply with the requirements and resume operations
within the period given by the Commission shall cause
(i) The penalties for violation of the bylaws;
the revocation of the corporation’s certificate of
(j) In the case of stock corporations, the manner of incorporation.
issuing stock certificates; and
(k) Such other matters as may be necessary for the
The Commission shall give reasonable notice to, and
proper or convenient transaction of its corporate affairs
coordinate with the appropriate regulatory agency prior
for the promotion of good governance and anti-graft and
to the suspension or revocation of the certificate of
corruption measures.
incorporation of companies under their special regulatory
jurisdiction.
Binding Effects
As to They have the force of contract
members and between the members themselves.
corporation
As to third They are not bound to know the by-
persons laws w/c are merely provisions for the
government of a corporation and notice
to them will not be presumed.

Amendments
Sec 47. 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 two-thirds (2/3) of the outstanding capital
stock or two-thirds (2/3) of the members in a nonstock
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 bylaws 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.

Effects of Non-use of Corporate Charter

What if the corporation never started after incorporating?
Sec 21. 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 (5)-year period.

What if the corporation started but afterwards stops

operation?
Sec 21. 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.