PERIOD

5 YEARS Duration of Founder’s Share Rights

3 YEARS Period to extend fixed term

2 YEARS Period to decide term (retroactive)

60 DAYS Period to file of Amendment in Foreign

Corporation
5 YEARS Period of non-use of Corporate Charter;
COI deemed revoke
2 YEARS Period to place under delinquent status
for continuous inoperation
1 YEAR Term of office of BOD

2 YEARS Term of office of Cooperative

3 YEARS Term of office of Nonstock Trustees

5 YEARS Term of office of Nonstock Educational

Corporation
1 YEAR Period to own share to become or stay as
BOD
30 DAYS Period given to pay unpaid subscription
at the lapse of due date
Within 30 DAYS after election Period to report election to the SEC
after election of directors, trustees,
and officers
Within 30 DAYS from date of Period to report the non-holding of
scheduled election election and the reason.
Not later than 60 DAYS from Period to hold new schedule of election
original scheduled date
Within 7 DAYS from knowledge Period to report death, resignation etc.
thereof of director, trustees, officers
Within 45 DAYS Period to fill out vacancy of director,
Trustees, or Officer in cases other than
term expiration and removal
Within 3 DAYS from creation Period to notify Commission of creation
of Emergency board
6 MONTHS from approval Period to file application in SEC for
of BOD increase/decrease capital stock
Maximum of 5 YEARS for 1 term Term of management contract

May exceed 5 YEARS Term of management contract for

exploration of resources
At least 21 DAYS prior to Notice for regular meeting of
meeting Stockholders/members
 At least 1 WEEK Notice for special meeting of
Stockholders/members
2 DAYS Notice for regular or special meeting of
Directors/Trustees
2 WEEKS prior to meeting Notice for postponement of meeting

At least 20 days Closing of stock and Transfer book

before Regular meeting
At least 7 days Closing of stock and Transfer book
before Special meeting
1 MEETING Term of Proxy

5 YEARS Term of Continuing proxy

5 YEARS Term of Voting Trust Agreement

6 MONTHS Irrevocable period of pre-incorporation

subscription
After 30 DAYS grace period Stock will become delinquent
from call by BOD or date
specified date
30-60 DAYS from delinquency Period for delinquency sale
date of stock
2 WEEKS Publication of notice to sell delinquent
stocks
6 MONTHS from date of sale Period when sale may be questioned

3 Consecutive WEEKS Publication procedure of lost or

destroyed certificates
1 YEAR Period to contest lost/destroyed
certificates
Can be LESS THAN A YEAR Period to contest lost/destroyed
certificates (if you give a bond)
Lapse of one year or sooner Issuance of new certificate of stocks
(w/ bond)
2 WEEKS Written notice of hearing if purpose of
plan of merger/consolidation is
suspected
Within 30 DAYS from vote of Period to exercise appraisal right
Stockholder
10 DAYS from exercise of Period of Notation
appraisal right
60 DAYS from exercise of Period to pay dissenting (Not mandatory)
right of dissenting
At the lapse of 60 DAYS given Period to appoint 3 disinterested
to pay dissenting persons
30 DAYS after appointing 3 Period to pay dissenting (mandatory)
disinterested persons
 20 days prior to election Period where the list of members and
proxies are available/ updated
Within 15 DAYS from issuance Period to appoint officers in OPC
of COI
Within 5 DAYS from Period to notify SEC about appointed
appointment officers

No later than 5 DAYS from Period to notify nominee or alternate

occurrence nominee of death or incapacity of single
stockholder

Within 5 days from occurrence Period to notify SEC of death or

incapacity of single stockholder

Within 7 DAYS Period to transfer to designated legal

heirs the shares by nominee/ alternate
nominee
60 DAYS from transfer Period for legal heirs to notify SEC of
the transfer
60 DAYS from occurrence of Period to file notice to SEC of
circumstance converting OPC to ordinary corporation
At least 20 DAYS Notice of Voluntary dissolution no
creditors affected
Once prior to date of meeting Publication notice of voluntary
dissolution meeting
Within 15 days from receipt  Issuance of SEC certificate of
of verified request of dissolution
dissolution
 Withdrawal of request and petition
for dissolution
Not less than 30 DAYS nor Deadline for filing objection
more than 60 DAYS after SEC
order
5 DAY Notice after date for Period to hearing of petition or
filing objection judgment dissolving the corporation
Within 60 DAYS after issuance Submission of securities of deposit or
of license deposits securities
Within 6 MONTHS after each Deposit of additional securities or
fiscal year financial instrument and Substitute
Deposit
Within 10 DAYS after summon Period of transmitting copy of summon or
other legal processes to corporation
home or principal office
Maximum of 20 DAYS Validity of cease-and-desist order ex
parte
ANNUALLY Submission of Reportorial requirements

3 TIMES within 5 YEARS Delinquent status

After the lapse of 15 DAYS Final arbitral award will become

executory
2 YEARS to comply Applicability to existing Corporations

VOTING REQUIREMENTS
M of OCS Vote to decide to be fixed term
(retroactive)
 2/3 of OCS Ratified ultra vires

M + 2/3 Amendment of AOI

M + M Amendment of bylaws

2/3 of OCS with/without voting rights Amendment of AOI in Close

Corporation
2/3 of M Amendment in Cooperative

M + 2/3; M + 2/3 Amendment of Plan of Merger or

Consolidation
No voting requirements Amendment in Foreign Corporation

M + 2/3 Change the name of corporation

M of OCS Election of Board of

Directors/Trustees
M of OCS Meeting for removal

2/3 of OCS Removal of Board of

Directors/Trustees
Unanimous vote of remaining BOT/BOD Vote to create Emergency Board

M of OCS Vote for Stockholders to grant BOD

compensation
M of Quorum of BOD Vote for BOD to grant
Stockholder’s dividends
2/3 of OCS Vote to ratify if any of first
three conditions in self-dealing
director is absent
2/3 of the entire membership of the Self-dealing director for
board + M of independent directors corporation vested with public
interest
2/3 of OCS Vote to ratify violation of
substantial condition under
interlocking doctrine
2/3 of OCS Vote to ratify violation of
seizing business opportunity
M of BOD Vote to create Executive Committee

M of all its members Vote to decide under executive

committee
M of BOD/BOT Vote to approve shorten/extend
term of Fixed Corporation
2/3 of OCS/Members Vote to ratify shorten/extend term
of Fixed Corporation
M + 2/3 Vote to increase/decrease capital
stock
M + 2/3 Vote to remove right to pre-
emptive right
M of BOD Vote to sale or other disposition
of assets in regular course of
 business
M + 2/3 Vote to sale or other disposition
of assets not for primary purpose
of business
M of BOD/BOT Vote to abandon plan to sale or
dispose assets
M + 2/3 Vote to sale of all or
substantially all assets
M f BOD Vote to invest corporate funds in
another corporation or business
for primary purpose or reasonably
necessary to achieve primary
purpose
M + 2/3 Vote to invest corporate funds in
another corporation or business
for other than primary purpose
M of Quorum of BOD Vote to declare dividends

M of Quorum of BOD + 2/3 of OCS Vote to declare stock dividends

(Managing) M + M ; (managed) M + M Vote to enter into management

contract
M + M ; M + 2/3 Vote to enter into management
contract with Interlocking
director or SHs same interest of
1/3 of total OCS
2/3 of OCS Ratification of ultra vires acts

All incorporators Vote for creation of By-laws

(prior)
M of OCS Vote for creation of By-laws
(after)
2/3 of OCS/MS Vote to delegate to BOD/BOT the
power to amend/repeal bylaws
M of OCS Vote to revoke delegation

M of Quorum of BOD Vote to decide in meetings of

Directors/ trustees
M of OCS Vote to fix price of no-par shares

M + 2/3 (BOTH absorbing and absorbed) Approval of plan of

Merger/consolidation
M of BOD Vote to abandon plan of
merger/consolidation
M of BOT and 2/3 of Members Plan of Distribution of Assets

2/3 of Members Vote to create religious societies

M + M Voluntary Dissolution No creditors

affected
M + 2/3 Voluntary Dissolution with
creditors affected
M + 2/3 Dissolution by shortening term
 REQUISITES

Right to Operate Corporation:

1. Elect BOD
2. Elect officer
3. File Bylaws

Requisites of De facto Corporation:

 1. Valid Law
2. Attempt to incorporate/organize (has a name, file AOI)
3. Actual user of corporate power (has elected BOD, officers)
4. Issuance of COI despite noncompliance with legal requirements

Requisites to be qualified as BOD:

1. Must own at least 1 share
2. Share must be registered in his name
3. Share must be continuously registered for a period of 1 year

Requisites to be qualified as BOT

1. Must be a member

Qualification of officers
 President- must be a director
 Secretary- must be a resident and a citizen
 Treasurer- must be a resident

Requisites for Board Meeting

1. Meeting of BOD/BOT duly assembled
2. Presence of Quorum
3. Decision of majority of quorum
4. Meeting at the time, place and manner provided in the bylaws

Requisites for dealing to be Valid

1. 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. The vote of such director or trustee was not necessary for the
approval of the contract;
3. The contract is fair and reasonable under the circumstances;
4. 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 the
independent directors voting to approve the material contract;
(Applies only for corporation vested with public interest)
5. In case of an officer, the contract has been previously authorized
by the board of directors.
Requisites to create Executive Committee
1. Must be provided by Bylaws
2. Must composed of not less than three (3) Board of Director
3. Must be directors of Corporation
4. It is the BOD who will create the Executive Committee
Requisites to acquire own shares
1. Presence of unrestricted retained earnings
2. There must be a legitimate purpose
Requisites for increase
 25% of increase Capital stock has been subscribed + 25% of
subscribed has been paid
Requisites for bond indebtedness
 Must be registered in SEC
Requisites to declare dividends:
1. Presence of Unrestricted Retained earnings
2. Valid BOD Resolution

Requisites for a valid meeting

1. Proper place
2. Stated date and Time
3. Called by the proper person
4. Quorum
5. Proper Notice

Requisites for a meeting Improperly held or called be VALID

1. All stockholders/ Members are present
2. No objection from Stockholders
3. Within the power of the corporation

Requisites for Secured creditor to be able attends and vote

1. Right is expressly given
2. It must be in writing
3. It must be recorded in the books of the corporation

Requisites for proxy to be able attend and vote

1. Must be in writing
2. Signed by Stockholder
3. Filed within reasonable time before meeting of corporation

Requisite of a VALID Certificate of Stock

1. Signed by President
2. Countersigned by Secretary
3. Sealed by Seal of the corporation

Requisite for stock transfer agent be allowed to operate in PH

1. Secures license from SEC (renewable annually)
2. Paid fee fixed by SEC

Requisites for exercise of appraisal right in Close Corporation

1. Presence of unrestricted Retained earnings
2. There is a valid ground (either of the 5 grounds)

Requisites for exercise of appraisal right in Close Corporation

1. Any reason
2. Sufficient assets

Requisites if single stockholder will also be a treasurer

1. Bond
2. Undertaking in writing to faithfully administer funds
Requisites for foreign corporations
1. Incorporation test
2. Reciprocity rule
Requirements for application of license of foreign corporations
1. Copy of AOI
2. Proof of reciprocity
3. Proof that applicant is solvent and of sound financial standing
4. Certificate of appropriate government agency
5. Resident agent
Reportorial requirements
1. Annual Financial statements
2. General information sheet
Additional to corporation vested with public interests
3. D/T compensation report
4. D/T appraisal or performance report and standards/criteria used to
assess each D/T

Enumeration

Remedies in case of BOD mismanagement:

1. Receivership
2. Injunction
3. Dissolution
4. Derivative Suit
Major Ground for Disqualification of D/T/O
1. Convicted by Final Judgment
2. Found administratively liable for any offense of fraudulent acts
3. By foreign court or equivalent foreign authority for acts (1) and
(2)

Requirements for Corporation vested with Public Interest

 Submit Annual report to SEC
 Have Independent Directors (20% of the Board)
 Elect compliance officer

Instances of solidary liability

 Section 30- Violating OLD
 Section 64- Watered Stock
 Section 130- OPC

Instances where Executive Committee cannot vote to change

(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.

Ways to increase capital stock

1. Increase number of shares
2. Increase Par value of shares
3. Increasing both
Instances of exercising Appraisal right
1. Section 15 – Amendment of AOI
2. Section 36 – Extension of corporate term
3. Section 39 – Sale of all or substantially all assets

Instances where meeting is not necessary

1. Section 15 – Amendment of AOI – written assent would suffice
2. Section 100 – Close Corporation:
(a) Before or after such action is taken, a 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

Rights of Stockholder
1. Managerial Right
 2. Proprietary Right
3. Appraisal Right
4. Remedial Right
5. Right of Inspection

Certificate of Stock of a stock corporation is Non-transferable under:

1. Close Corporation
2. Widely-held Corporation

Remedies if stockholder refuses to pay for unpaid subscription

1. Extrajudicial sale at public auction
2. Judicial Action
3. Section 42
Effects of failure to pay by stockholder
1. Renders the entire balance due and payable
2. Liable to pay interest if there is a stipulation
3. Becomes delinquent stock

Instances where call of BOD is not required

1. There is a date fixed
2. Corporation is insolvent

Grounds when delinquency sale may be questioned

1. Irregularity or defect in the NOTICE
2. Irregularity or defect in ACTUAL SALE

Grounds where right of inspection is not allowed

1. Unreasonable hour/day
2. Books of foreign corporation
3. Trade secrets
4. Not a SH/M
5. Improperly used of information
6. Not acting in good faith or legitimate purpose
7. Competitor of another corporation (D/SH/O)

Effect of Merger/Consolidation
1. It becomes a single corporation
2. Separate existence shall cease
3/4. Surviving corporation shall possess all rights, privileges,
powers
4. Doctrine of Automatic Assumption of Liabilities

Grounds where dissenting Stockholder can exercise Appraisal Right

1. Amendment of AOI
2. Extending/shortening the term
3. Sale, lease, exchange, etc.
4. Merger or consolidation
5. Investment of Corporate Term

Instances when exercised of appraisal right is revocable

1. Appraisal right is withdrawn with consent of corporation
 2. Proposed action is abandoned
3. Proposed action is disapproved by SEC
4. SEC determined stockholder is not entitled

Instances when Dissenting Stockholder bears cost of appraisal

1. Refusal of the Stockholder to receive payment is unjustified
2. Fair value ascertained by corporation is the same

Grounds for involuntary dissolution

 Non-use of corporate charter as provided under Section 21 of this
Code;
 Continuous inoperation of a corporation as provided under Section
21 of this Code;
 Upon receipt of a lawful court order dissolving the corporation;
 Upon finding by final judgment that the corporation procured its
incorporation through fraud;
 Upon finding by final judgment that the corporation:

Documents required to foreign corporation to operate in PH

1. License from SEC
2. Certificate of authority from appropriate government agency

Administrative sanctions:
1. Fine ranging 5,000 to 2,000,000
Continuing fine 1,000 each day not to exceed 2,000,000 until
complied
2. Issuance of permanent cease and desist order
3. Suspension or revocation of COI
4. Dissolution of the corporation and forfeiture of its assets under
the conditions of the code

Arbitrable for unlisted corporation

1. Implementation of AOI or Bylaws
2. Intracorporate relations

Non-arbitrable if involves:
1. Criminal offenses
2. Interests of third party

PENALTIES

Person liable FINE

Contempt Fails to comply or < 30,000
refuses to comply
1,000 daily
Administrative sanctions Provisions have
been violated

Unauthorized use of 10,000 to 200,000

corporate name

Violation of 10,000 to 200,000

disqualification +
provision Permanent disqualification

Violation of duty to Those responsible 10,000 to 200,000 (20,000 to

maintain records, to in keeping 400,000)
allow their inspection records/book
or reproduction
Willful certification of Anyone at fault 20,000 to 200,000 (40,000 to
incomplete, inaccurate, 200,000)
false or misleading
statements or reports
Independent auditor CPA in collusion 80,000 to 500,000 (100,000 to
collusion with corporation’s 600,000)
director or
representatives
Obtaining corporate 200,000 to 2,000,000 (400,000
registration through to 5,000,000)
fraud
Fraudulent conduct of 200,000 to 2,000,000 (400,000
business to 5,000,000)
Acting as intermediaries 100,000 to 5,000,000
for graft and corruption
Appointing 100,000 to 1,000,000
intermediaries who
Engages in graft and
corrupt practices
Tolerating graft and Director, trustee, 500,000 to 1,000,000
corrupt practices officer or
employees with
knowledge but
fails to report
Retaliation against Person commits 100,000 to 1,000,000
whistleblowers detrimental acts
to whistleblower
Other violations of the Not specifically 10,000 to 1,000,000
code penalized
Violation is Dissolution
committed by +
corporation Separate initiation of action

DOCTRINE
Trust fund Doctrine
- Stockholders are liable only up to the extent of unpaid
subscription
Doctrine of Corporate Fiction
 - Separate and distinct personality with the stockholder
Doctrine of Piercing Veil
- Separate and distinct personality will be disregarded or removed
Alter Ego Doctrine/ Instrumentality Rule
- Test applied by court to pierce corporate veil
Doctrine of Limited Capacity
- Corporation can only do or exercise acts granted by law
Doctrine of Equality of Shares
- All shares are presumed equal
Doctrine of Individuality of Subscription
- Cannot issue Certificate of Stock unless fully paid
Doctrine of Hold-over
- Where BOD at the lapse of their term (1 year), continues to hold
their position and acts as BOD until new sets are elected
Inherent power of Amotion
- BOD can be removed at any time with or without valid ground
(subject to XPN)
Special Fact Doctrine
- Director takes advantage of any information acquired by virtue of
his office to the disadvantage of the corporation
Interlocking Doctrine
- Two corporations having one, two, or all the same set of directors
Doctrine of Corporate Immunity
- protects the person acting for and in behalf of the corporation,
from being personally liable for authorized actions
Doctrine of Individuality of Subscription
- Subscription is one, whole, indivisible contract. Thus, full
payment of subscription is required before issuance of Certificate
of Stock
Doctrine of Automatic Assumption of Liabilities
- Surviving corporation shall be responsible for all liabilities and
obligations