REPUBLIC ACT NO.

11232 stockholders or shareholders in a stock

corporation or as members in a nonstock
AN ACT PROVIDING FOR THE REVISED corporation. Incorporators are those stockholders
CORPORATION CODE OF THE PHILIPPINES or members mentioned in the articles of
incorporation as originally forming and composing
Be it enacted by the Senate and House of
the corporation and who are signatories thereof.
Representatives of the Philippines in Congress
assembled: SEC. 6. Classification of Shares. – The
classification of shares, their corresponding rights,
privileges, or restrictions, and their stated par
value, if any, must be indicated in the articles of
TITLE I GENERAL incorporation. Each share shall be equal in all
respects to every other share, except as otherwise
PROVISIONS provided in the articles of incorporation and in the
certificate of stock.
DEFINITIONS AND
The shares in stock corporations may be divided
CLASSIFICATIONS into classes or series of shares, or both. No share
may be deprived of voting rights except those
SECTION. 1. Title of the Code. – This Code shall be classified and issued as “preferred” or
known as the “Revised Corporation Code of the “redeemable” shares, unless otherwise provided in
Philippines”. this Code: Provided, That there shall always be a
class or series of shares with complete voting
SEC. 2. Corporation Defined. – A corporation is an rights.
artificial being created by operation of law, having
the right of succession and the powers, attributes, Holders of nonvoting shares shall nevertheless
and properties expressly authorized by law or be entitled to vote on the following matters:
incidental to its existence.
(a) Amendment of the articles of incorporation;
SEC. 3. Classes of Corporations. – Corporations
formed or organized under this Code may be stock (b) Adoption and amendment of bylaws;
or nonstock corporations. Stock corporations are
(c) Sale, lease, exchange, mortgage, pledge, or
those which have capital stock divided into shares
other disposition of all or substantially all of
and are authorized to distribute to the holders of
the corporate property;
such shares, dividends, or allotments of the
surplus profits on the basis of the shares held. All (d) Incurring, creating, or increasing bonded
other corporations are nonstock corporations. indebtedness;
SEC. 4. Corporations Created by Special Laws or (e) Increase or decrease of authorized capital
Charters. – Corporations created by special laws or stock;
charters shall be governed primarily by the
provisions of the special law or charter creating (f) Merger or consolidation of the corporation
them or applicable to them, supplemented by the with another corporation or other
provisions of this Code, insofar as they are corporations;
applicable.
(g) Investment of corporate funds in another
SEC. 5. Corporators and Incorporators, corporation or business in accordance with this
Stockholders and Members. – Corporators are Code; and
those who compose a corporation, whether as
 (h) Dissolution of the corporation. directors is granted, it must be for a limited period
not to exceed five (5) years from the date of
Except as provided in the immediately preceding incorporation: Provided, That such exclusive right
paragraph, the vote required under this Code to shall not be allowed if its exercise will violate
approve a particular corporate act shall be deemed Commonwealth Act No. 108, otherwise known as
to refer only to stocks with voting rights. the “Anti-Dummy Law”; Republic Act No. 7042,
otherwise known as the “Foreign Investments Act
The shares or series of shares may or may not have
of 1991”; and other pertinent laws.
a par value: Provided, That banks, trust, insurance,
and preneed companies, public utilities, building SEC. 8. Redeemable Shares. – Redeemable shares
and loan associations, and other corporations may be issued by the corporation when expressly
authorized to obtain or access funds from the provided in the articles of incorporation. They are
public, whether publicly listed or not, shall not be shares which may be purchased by the corporation
permitted to issue no-par value shares of stock. from the holders of such shares upon the
expiration of a fixed period, regardless of the
Preferred shares of stock issued by a corporation
existence of unrestricted retained earnings in the
may be given preference in the distribution of
books of the corporation, and upon such other
dividends and in the distribution of corporate
terms and conditions stated in the articles of
assets in case of liquidation, or such other
incorporation and the certificate of stock
preferences: Provided, That preferred shares of
representing the shares, subject to rules and
stock may be issued only with a stated par value.
regulations issued by the Commission.
The board of directors, where authorized in the
articles of incorporation, may fix the terms and SEC. 9. Treasury shares. – Treasury shares are
conditions of preferred shares of stock or any shares of stock which have been issued and fully
series thereof: Provided, further, That such terms paid for, but subsequently reacquired by the
and conditions shall be effective upon filing of a issuing corporation through purchase,
certificate thereof with the Securities and redemption, donation, or some other lawful
Exchange Commission, hereinafter referred to as means. Such shares may again be disposed of for a
the “Commission”. reasonable price fixed by the board of directors.
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 TITLE II INCORPORATION
corporation or to its creditors in respect
thereto: Provided, That no-par value shares must
AND ORGANIZATION OF
be issued for a consideration of at least Five pesos PRIVATE CORPORATIONS
(P5.00) per share: Provided, further, That the entire
consideration received by the corporation for its SEC. 10. Number and Qualifications of
no-par value shares shall be treated as capital and Incorporators. – Any person, partnership,
shall not be available for distribution as dividends. association or corporation, singly or jointly with
others but not more than fifteen (15) in number,
A corporation may further classify its shares for the
may organize a corporation for any lawful purpose
purpose of ensuring compliance with
or purposes: Provided, That natural persons who
constitutional or legal requirements.
are licensed to practice a profession, and
SEC. 7. Founders’ Shares. – Founders’ shares may partnerships or associations organized for the
be given certain rights and privileges not enjoyed purpose of practicing a profession, shall not be
by the owners of other stocks. Where the exclusive allowed to organize as a corporation unless
right to vote and be voted for in the election of otherwise provided under special laws.
Incorporators who are natural persons must be of issued, giving it perpetual existence, unless its
legal age. application for revival provides otherwise.

Each incorporator of a stock corporation must own No application for revival of certificate of
or be a subscriber to at least one (1) share of the incorporation of banks, banking and quasi-
capital stock. banking institutions, preneed, insurance and trust
companies, non-stock savings and loan
A corporation with a single stockholder is associations (NSSLAs), pawnshops, corporations
considered a One Person Corporation as described engaged in money service business, and other
in Title XIII, Chapter III of this Code. financial intermediaries shall be approved by the
Commission unless accompanied by a favorable
SEC. 11. Corporate Term. – A corporation shall
recommendation of the appropriate government
have perpetual existence unless its articles of
agency.
incorporation provides otherwise.
SEC. 12. Minimum Capital Stock Not Required of
Corporations with certificates of incorporation
Stock Corporations. – Stock corporations shall not
issued prior to the effectivity of this Code, and
be required to have a minimum capital stock,
which continue to exist, shall have perpetual
except as otherwise specifically provided by
existence, unless the corporation, upon a vote of
special law.
its stockholders representing a majority of its
outstanding capital stock, notifies the Commission SEC. 13. Contents of the Articles of
that it elects to retain its specific corporate term Incorporation. – All corporations shall file with the
pursuant to its articles of Commission articles of incorporation in any of the
incorporation: Provided, That any change in the official languages, duly signed and acknowledged
corporate term under this section is without or authenticated, in such form and manner as may
prejudice to the appraisal right of dissenting be allowed by the Commission, containing
stockholders in accordance with the provisions of substantially the following matters, except as
this Code. otherwise prescribed by this Code or by special
law:
A corporate term for a specific period may be
extended or shortened by amending the articles of (a) The name of the corporation;
incorporation: Provided, That no extension may be
made earlier than three (3) years prior to the (b) The specific purpose or purposes for which
original or subsequent expiry date(s) unless there the corporation is being formed. Where a
are justifiable reasons for an earlier extension as corporation has more than one stated purpose,
may be determined by the Commission: Provided, the articles of incorporation shall indicate the
further, That such extension of the corporate term primary purpose and the secondary purpose or
shall take effect only on the day following the purposes: Provided, That a nonstock
original or subsequent expiry date(s). corporation may not include a purpose which
would change or contradict its nature as such;
A corporation whose term has expired may apply
for a revival of its corporate existence, together (c) The place where the principal office of the
with all the rights and privileges under its corporation is to be located, which must be
certificate of incorporation and subject to all of its within the Philippines;
duties, debts and liabilities existing prior to its
revival. Upon approval by the Commission, the (d) The term for which the corporation is to
corporation shall be deemed revived and a exist, if the corporation has not elected
certificate of revival of corporate existence shall be perpetual existence;
 (e) The names, nationalities, and residence (Name of Corporation)
addresses of the incorporators;
The undersigned incorporators, all of legal age,
(f) The number of directors, which shall not be have voluntarily agreed to form a (stock)
more than fifteen (15) or the number of (nonstock) corporation under the laws of the
trustees which may be more than fifteen (15); Republic of the Philippines and certify the
following:
(g) The names, nationalities, and residence
addresses of persons who shall act as directors First: That the name of said corporation shall be
or trustees until the first regular directors or “_______________, Inc., Corporation or OPC”;
trustees are duly elected and qualified in
accordance with this Code; Second: That the purpose or purposes for which
such corporation is incorporated are: (If there is
(h) If it be a stock corporation, the amount of more than one purpose, indicate primary and
its authorized capital stock, number of shares secondary purposes);
into which it is divided, the par value of each,
names, nationalities, and residence addresses Third: That the principal office of the corporation is
of the original subscribers, amount subscribed located in the City/Municipality of
and paid by each on the subscription, and a ______________________, Province of
statement that some or all of the shares are _______________________, Philippines;
without par value, if applicable;
Fourth: That the corporation shall have perpetual
(i) If it be a nonstock corporation, the amount existence or a term of ______________ years from
of its capital, the names, nationalities, and the date of issuance of the certificate of
residence addresses of the contributors, and incorporation;
amount contributed by each; and
Fifth: That the names, nationalities, and residence
(j)Such other matters consistent with law and addresses of the incorporators of the corporation
which the incorporators may deem necessary are as follows:
and convenient. NAME

An arbitration agreement may be provided in the ____________________________

articles of incorporation pursuant to Section 181 of
____________________________
this Code.
____________________________
The articles of incorporation and applications for
amendments thereto may be filed with the ____________________________
Commission in the form of an electronic
document, in accordance with the Commission’s ____________________________
rules and regulations on electronic filing. NATIONALITY

SEC. 14. Form of Articles of Incorporation. – ____________________________

Unless otherwise prescribed by special law, the
articles of incorporation of all domestic ____________________________
corporations shall comply substantially with the
____________________________
following form:
____________________________
Articles of Incorporation of
______________________ ____________________________
 RESIDENCE (P________), divided into _____ shares with the
par value of ____________ PESOS
____________________________ (P_______________) per share. (In case all the
shares are without par value): That the capital
____________________________
stock of the corporation is
____________________________ __________________________ shares without par
value.
____________________________
(In case some shares have par value and some are
____________________________ without par value): That the capital stock of said
Sixth: That the number of directors or trustees corporation consists of
of the corporation shall be __________________________ shares, of which
_________________; and the names, _______________________ shares have a par
nationalities, and residence addresses of the value of _________________ PESOS
first directors or trustees of the corporation are (P____________) each, and of which
as follows: _______________________ shares are without par
NAME value.

____________________________ Eighth: That the number of shares of the

authorized capital stock above-stated has been
____________________________ subscribed as follows:
Name of Subscriber
____________________________
____________________
____________________________
____________________
____________________________
NATIONALITY ____________________
____________________________ ____________________
____________________________ ____________________
Nationality
____________________________
____________________
____________________________
____________________
____________________________
RESIDENCE ____________________
____________________________ ____________________
____________________________ ____________________
No. of Shares Subscribed
____________________________
____________________
____________________________
____________________
____________________________
Seventh: That the authorized capital stock of the ____________________
corporation is ______________ PESOS
 ____________________ “No transfer of stock or interest which shall reduce
the ownership of Filipino citizens to less than the
____________________ required percentage of capital stock as provided by
Amount Subscribed existing laws shall be allowed or permitted to be
recorded in the proper books of the corporation,
____________________
and this restriction shall be indicated in all stock
____________________ certificates issued by the corporation.”

____________________ IN WITNESS WHEREOF, we have hereunto signed

these Articles of Incorporation, this _______ day of
____________________ _____________, 20_____ in the City/Municipality
of ______________________, Province of
____________________ _______________________, Republic of the
(Modify No. 8 if shares are with no-par value. In case Philippines.
the corporation is nonstock, Nos. 7 and 8 of the _______________________
above articles may be modified accordingly, and it is _______________________
sufficient if the articles state the amount of capital
or money contributed or donated by specified _______________________
persons, stating the names, nationalities, and _______________________
residence addresses of the contributors or donors
and the respective amount given by each.) _______________________
_______________________
Ninth: That _____________________ has been
elected by the subscribers as Treasurer of the _______________________
Corporation to act as such until after the successor _______________________
is duly elected and qualified in accordance with the
___________________________
bylaws, that as Treasurer, authority has been given
to receive in the name and for the benefit of the (Names and signatures of the incorporators)
corporation, all subscriptions, contributions or
donations paid or given by the subscribers or
members, who certifies the information set forth in
the seventh and eighth clauses above, and that the _______________________________________
paid-up portion of the subscription in cash and/or
(Name and signature of Treasurer)
property for the benefit and credit of the
SEC. 15. Amendment of Articles of
corporation has been duly received.
Incorporation. – Unless otherwise prescribed by
Tenth: That the incorporators undertake to change this Code or by special law, and for legitimate
the name of the corporation immediately upon purposes, any provision or matter stated in the
receipt of notice from the Commission that articles of incorporation may be amended by a
another corporation, partnership or person has majority vote of the board of directors or trustees
acquired a prior right to the use of such name, that and the vote or written assent of the stockholders
the name has been declared not distinguishable representing at least two-thirds (2/3) of the
from a name already registered or reserved for the outstanding capital stock, without prejudice to the
use of another corporation, or that it is contrary to appraisal right of dissenting stockholders in
law, public morals, good customs or public policy. accordance with the provisions of this Code. The
articles of incorporation of a nonstock corporation
Eleventh: (Corporations which will engage in any may be amended by the vote or written assent of
business or activity reserved for Filipino citizens majority of the trustees and at least two-thirds
shall provide the following): (2/3) of the members.
The original and amended articles together shall and trust companies, NSSLAS, pawnshops, and
contain all provisions required by law to be set out other financial intermediaries shall be approved by
in the articles of incorporation. Amendments to the the Commission unless accompanied by a
articles shall be indicated by underscoring the favorable recommendation of the appropriate
change or changes made, and a copy thereof duly government agency to the effect that such articles
certified under oath by the corporate secretary and or amendment is in accordance with law.
a majority of the directors or trustees, with a
statement that the amendments have been duly SEC. 17. Corporate Name. – No corporate name
approved by the required vote of the stockholders shall be allowed by the Commission if it is not
or members, shall be submitted to the distinguishable from that already reserved or
Commission. registered for the use of another corporation, or if
such name is already protected by law, or when its
The amendments shall take effect upon their use is contrary to existing law, rules and
approval by the Commission or from the date of regulations.
filing with the said Commission if not acted upon
within six (6) months from the date of filing for a A name is not distinguishable even if it contains
cause not attributable to the corporation. one or more of the following:

SEC. 16. Grounds When Articles of Incorporation (a) The word “corporation”, “company”,
or Amendment May be Disapproved. – The “incorporated”, “limited”, “limited liability”, or an
Commission may disapprove the articles of abbreviation of one of such words; and
incorporation or any amendment thereto if the
(b) Punctuations, articles, conjunctions,
same is not compliant with the requirements of
contractions, prepositions, abbreviations,
this Code: Provided, That the Commission shall
different tenses, spacing, or number of the same
give the incorporators, directors, trustees, or
word or phrase.
officers a reasonable time from receipt of the
disapproval within which to modify the The Commission, upon determination that the
objectionable portions of the articles or corporate name is: (1) not distinguishable from a
amendment. The following are grounds for such name already reserved or registered for the use of
disapproval: another corporation; (2) already protected by law;
or (3) contrary to law, rules and regulations, may
(a) The articles of incorporation or any amendment
summarily order the corporation to immediately
thereto is not substantially in accordance with the
cease and desist from using such name and require
form prescribed herein;
the corporation to register a new one. The
(b) The purpose or purposes of the corporation are Commission shall also cause the removal of all
patently unconstitutional, illegal, immoral or visible signages, marks, advertisements, labels,
contrary to government rules and regulations; prints and other effects bearing such corporate
name. Upon the approval of the new corporate
(c) The certification concerning the amount of name, the Commission shall issue a certificate of
capital stock subscribed and/or paid is false; and incorporation under the amended name.

(d) The required percentage of Filipino ownership If the corporation fails to comply with the
of the capital stock under existing laws or the Commission’s order, the Commission may hold the
Constitution has not been complied with. corporation and its responsible directors or
officers in contempt and/or hold them
No articles of incorporation or amendment to administratively, civilly and/or criminally liable
articles of incorporation of banks, banking and under this Code and other applicable laws and/or
quasi-banking institutions, preneed, insurance revoke the registration of the corporation.
SEC. 18. Registration, Incorporation and entered by it as a corporation or on any tort
Commencement of Corporate Existence. – A committed by it as such, it shall not be allowed to
person or group of persons desiring to incorporate use its lack of corporate personality as a defense.
shall submit the intended corporate name to the Anyone who assumes an obligation to an
Commission for verification. If the Commission ostensible corporation as such cannot resist
finds that the name is distinguishable from a name performance thereof on the ground that there was
already reserved or registered for the use of in fact no corporation.
another corporation, not protected by law and is
not contrary to law, rules and regulations, the SEC. 21. Effects of Non-Use of Corporate Charter
name shall be reserved in favor of the and Continuous Inoperation. – If a corporation
incorporators. The incorporators shall then submit does not formally organize and commence its
their articles of incorporation and bylaws to the business within five (5) years from the date of its
Commission. incorporation, its certificate of incorporation shall
be deemed revoked as of the day following the end
If the Commission finds that the submitted of the five (5)-year period.
documents and information are fully compliant
with the requirements of this Code, other relevant However, if a corporation has commenced its
laws, rules and regulations, the Commission shall business but subsequently becomes inoperative
issue the certificate of incorporation. for a period of at least five (5) consecutive years,
the Commission may, after due notice and hearing,
A private corporation organized under this Code place the corporation under delinquent status.
commences its corporate existence and juridical
personality from the date the Commission issues A delinquent corporation shall have a period of two
the certificate of incorporation under its official (2) years to resume operations and comply with all
seal and thereupon the incorporators, requirements that the Commission shall prescribe.
stockholders/members and their successors shall Upon compliance by the corporation, the
constitute a body corporate under the name stated Commission shall issue an order lifting the
in the articles of incorporation for the period of delinquent status. Failure to comply with the
time mentioned therein, unless said period is requirements and resume operations within the
extended or the corporation is sooner dissolved in period given by the Commission shall cause the
accordance with law. revocation of the corporation’s certificate of
incorporation.
SEC. 19. De facto Corporations. – The due
incorporation of any corporation claiming in good The Commission shall give reasonable notice to,
faith to be a corporation under this Code, and its and coordinate with the appropriate regulatory
right to exercise corporate powers, shall not be agency prior to the suspension or revocation of the
inquired into collaterally in any private suit to certificate of incorporation of companies under
which such corporation may be a party. Such their special regulatory jurisdiction.
inquiry may be made by the Solicitor General in
a quo warranto proceeding.

SEC. 20. Corporation by Estoppel. – All persons

who assume to act as a corporation knowing it to
be without authority to do so shall be liable as
general partners for all debts, liabilities and
damages incurred or arising as a result
thereof: Provided, however, That when any such
ostensible corporation is sued on any transaction
 determined by the Commission, after taking into
account relevant factors which are germane to the
objective and purpose of requiring the election of
TITLE III BOARD OF an independent director, such as the extent of
minority ownership, type of financial products or
DIRECTORS/TRUSTEES securities issued or offered to investors, public
interest involved in the nature of business
AND OFFICERS operations, and other analogous factors.

SEC. 22. The Board of Directors or Trustees of a An independent director is a person who, apart
Corporation; Qualification and Term. – Unless from shareholdings and fees received from the
otherwise provided in this Code, the board of corporation, is independent of management and
directors or trustees shall exercise the corporate free from any business or other relationship which
powers, conduct all business, and control all could, or could reasonably be perceived to
properties of the corporation. materially interfere with the exercise of
independent judgment in carrying out the
Directors shall be elected for a term of one (1) year responsibilities as a director.
from among the holders of stocks registered in the
corporation’s books, while trustees shall be Independent directors must be elected by the
elected for a term not exceeding three (3) years shareholders present or entitled to vote in
from among the members of the corporation. Each absentia during the election of directors.
director and trustee shall hold office until the Independent directors shall be subject to rules and
successor is elected and qualified. A director who regulations governing their qualifications,
ceases to own at least one (1) share of stock or a disqualifications, voting requirements, duration of
trustee who ceases to be a member of the term and term limit, maximum number of board
corporation shall cease to be such. memberships and other requirements that the
Commission will prescribe to strengthen their
The board of the following corporations vested independence and align with international best
with public interest shall have independent practices.
directors constituting at least twenty percent
(20%) of such board: SEC. 23. Election of Directors or Trustees. – Except
when the exclusive right is reserved for holders of
a) Corporations covered by Section 17.2 of founders’ shares under Section 7 of this Code, each
Republic Act No. 8799, otherwise known as “The stockholder or member shall have the right to
Securities Regulation Code”, namely those whose nominate any director or trustee who possesses all
securities are registered with the Commission, of the qualifications and none of the
corporations listed with an exchange or with assets disqualifications set forth in this Code.
of at least Fifty million pesos (P50,000,000.00) and
having two hundred (200) or more holders of At all elections of directors or trustees, there must
shares, each holding at least one hundred (100) be present, either in person or through a
shares of a class of its equity shares; representative authorized to act by written proxy,
the owners of majority of the outstanding capital
b) Banks and quasi-banks, NSSLAs, pawnshops, stock, or if there be no capital stock, a majority of
corporations engaged in money service business, the members entitled to vote. When so authorized
pre-need, trust and insurance companies, and in the bylaws or by a majority of the board of
other financial intermediaries; and directors, the stockholders or members may also
c) Other corporations engaged in business vested vote through remote communication or in
with public interest similar to the above, as may be absentia: Provided, That the right to vote through
such modes may be exercised in corporations The directors or trustees elected shall perform
vested with public interest, notwithstanding the their duties as prescribed by law, rules of good
absence of a provision in the bylaws of such corporate governance, and bylaws of the
corporations. corporation.

A stockholder or member who participates SEC. 24. Corporate Officers. – Immediately after
through remote communication or in absentia, their election, the directors of a corporation must
shall be deemed present for purposes of quorum. formally organize and elect: (a) a president, who
must be a director; (b) a treasurer, who must be a
The election must be by ballot if requested by any resident; (c) a secretary, who must be a citizen and
voting stockholder or member. resident of the Philippines; and (d) such other
officers as may be provided in the bylaws. If the
In stock corporations, stockholders entitled to vote
corporation is vested with public interest, the
shall have the right to vote the number of shares of
board shall also elect a compliance officer. The
stock standing in their own names in the stock
same person may hold two (2) or more positions
books of the corporation at the time fixed in the
concurrently, except that no one shall act as
bylaws or where the bylaws are silent, at the time
president and secretary or as president and
of the election. The said stockholder may: (a) vote
treasurer at the same time, unless otherwise
such number of shares for as many persons as
allowed in this Code.
there are directors to be elected; (b) cumulate said
shares and give one (1) candidate as many votes as The officers shall manage the corporation and
the number of directors to be elected multiplied by perform such duties as may be provided in the
the number of the shares owned; or (c) distribute bylaws and/or as resolved by the board of
them on the same principle among as many directors.
candidates as may be seen fit: Provided, That the
total number of votes cast shall not exceed the SEC. 25. Report of Election of Directors, Trustees
number of shares owned by the stockholders as and Officers, Non-holding of Election and
shown in the books of the corporation multiplied Cessation from Office. – Within thirty (30) days
by the whole number of directors to be after the election of the directors, trustees and
elected: Provided, however, That no delinquent officers of the corporation, the secretary, or any
stock shall be voted. Unless otherwise provided in other officer of the corporation, shall submit to the
the articles of incorporation or in the bylaws, Commission, the names, nationalities,
members of nonstock corporations may cast as shareholdings, and residence addresses of the
many votes as there are trustees to be elected but directors, trustees, and officers elected.
may not cast more than one (1) vote for one (1)
candidate. Nominees for directors or trustees The non-holding of elections and the reasons
receiving the highest number of votes shall be therefor shall be reported to the Commission
declared elected. within thirty (30) days from the date of the
scheduled election. The report shall specify a new
If no election is held, or the owners of majority of date for the election, which shall not be later than
the outstanding capital stock or majority of the sixty (60) days from the scheduled date.
members entitled to vote are not present in
person, by proxy, or through remote If no new date has been designated, or if the
communication or not voting in absentia at the rescheduled election is likewise not held, the
meeting, such meeting may be adjourned and the Commission may, upon the application of a
corporation shall proceed in accordance with stockholder, member, director or trustee, and after
Section 25 of this Code. verification of the unjustified non-holding of the
election, summarily order that an election be held.
The Commission shall have the power to issue such
orders as may be appropriate, including orders The foregoing is without prejudice to qualifications
directing the issuance of a notice stating the time or other disqualifications, which the Commission,
and place of the election, designated presiding the primary regulatory agency, or the Philippine
officer, and the record date or dates for the Competition Commission may impose in its
determination of stockholders or members promotion of good corporate governance or as a
entitled to vote. sanction in its administrative proceedings.

Notwithstanding any provision of the articles of SEC. 27. Removal of Directors or Trustees. – Any
incorporation or bylaws to the contrary, the shares director or trustee of a corporation may be
of stock or membership represented at such removed from office by a vote of the stockholders
meeting and entitled to vote shall constitute a holding or representing at least two-thirds (2/3) of
quorum for purposes of conducting an election the outstanding capital stock, or in a nonstock
under this section. corporation, by a vote of at least two-thirds (2/3) of
the members entitled to vote: Provided, That such
Should a director, trustee or officer die, resign or in removal shall take place either at a regular meeting
any manner cease to hold office, the secretary, or of the corporation or at a special meeting called for
the director, trustee or officer of the corporation, the purpose, and in either case, after previous
shall, within seven (7) days from knowledge notice to stockholders or members of the
thereof, report in writing such fact to the corporation of the intention to propose such
Commission. removal at the meeting. A special meeting of the
stockholders or members for the purpose of
SEC. 26. Disqualification of Directors, Trustees or
removing any director or trustee must be called by
Officers. – A person shall be disqualified from
the secretary on order of the president, or upon
being a director, trustee or officer of any
written demand of the stockholders representing
corporation if, within five (5) years prior to the
or holding at least a majority of the outstanding
election or appointment as such, the person was:
capital stock, or a majority of the members entitled
1. Convicted by final judgment:
to vote. If there is no secretary, or if the secretary,
1. Of an offense
despite demand, fails or refuses to call the special
punishable by
meeting or to give notice thereof, the stockholder
imprisonment for a period
or member of the corporation signing the demand
exceeding six (6) years;
may call for the meeting by directly addressing the
2. For violating this
stockholders or members. Notice of the time and
Code; and
place of such meeting, as well as of the intention to
3. For violating
propose such removal, must be given by
Republic Act No. 8799,
publication or by written notice prescribed in this
otherwise known as “The
Code. Removal may be with or without
Securities Regulation
cause: Provided, That removal without cause may
Code”;
not be used to deprive minority stockholders or
2. Found administratively
members of the right of representation to which
liable for any offense involving
they may be entitled under Section 23 of this Code.
fraudulent acts; and
3. By a foreign court or The Commission shall, motu proprio or upon
equivalent foreign regulatory verified complaint, and after due notice and
authority for acts, violations or hearing, order the removal of a director or trustee
misconduct similar to those elected despite the disqualification, or whose
enumerated in paragraphs (a) and disqualification arose or is discovered subsequent
(b) above. to an election. The removal of a disqualified
director shall be without prejudice to other
sanctions that the Commission may impose on the Any directorship or trusteeship to be filled by
board of directors or trustees who, with knowledge reason of an increase in the number of directors or
of the disqualification, failed to remove such trustees shall be filled only by an election at a
director or trustee. regular or at a special meeting of stockholders or
members duly called for the purpose, or in the
SEC. 28. Vacancies in the Office of Director or same meeting authorizing the increase of directors
Trustee; Emergency Board. – Any vacancy or trustees if so stated in the notice of the meeting.
occurring in the board of directors or trustees other
than by removal or by expiration of term may be In all elections to fill vacancies under this section,
filled by the vote of at least a majority of the the procedure set forth in Sections 23 and 25 of this
remaining directors or trustees, if still constituting Code shall apply.
a quorum; otherwise, said vacancies must be filled
by the stockholders or members in a regular or SEC. 29. Compensation of Directors or Trustees. –
special meeting called for that purpose. In the absence of any provision in the bylaws fixing
their compensation, the directors or trustees shall
When the vacancy is due to term expiration, the not receive any compensation in their capacity as
election shall be held no later than the day of such such, except for reasonable per diems: Provided
expiration at a meeting called for that purpose. however, That the stockholders representing at
When the vacancy arises as a result of removal by least a majority of the outstanding capital stock or
the stockholders or members, the election may be majority of the members may grant directors or
held on the same day of the meeting authorizing trustees with compensation and approve the
the removal and this fact must be so stated in the amount thereof at a regular or special meeting. In
agenda and notice of said meeting. In all other no case shall the total yearly compensation of
cases, the election must be held no later than forty- directors exceed ten (10%) percent of the net
five (45) days from the time the vacancy arose. A income before income tax of the corporation
director or trustee elected to fill a vacancy shall be during the preceding year.
referred to as replacement director or trustee and
shall serve only for the unexpired term of the Directors or trustees shall not participate in the
predecessor in office. determination of their own per diems or
compensation.
However, when the vacancy prevents the
remaining directors from constituting a quorum Corporations vested with public interest shall
and emergency action is required to prevent grave, submit to their shareholders and the Commission,
substantial, and irreparable loss or damage to the an annual report of the total compensation of each
corporation, the vacancy may be temporarily filled of their directors or trustees.
from among the officers of the corporation by
SEC. 30. Liability of Directors, Trustees or
unanimous vote of the remaining directors or
Officers. – Directors or trustees who willfully and
trustees. The action by the designated director or
knowingly vote for or assent to patently unlawful
trustee shall be limited to the emergency action
acts of the corporation or who are guilty of gross
necessary, and the term shall cease within a
negligence or bad faith in directing the affairs of
reasonable time from the termination of the
the corporation or acquire any personal or
emergency or upon election of the replacement
pecuniary interest in conflict with their duty as
director or trustee, whichever comes earlier. The
such directors or trustees shall be liable jointly and
corporation must notify the Commission within
severally for all damages resulting therefrom
three (3) days from the creation of the emergency
suffered by the corporation, its stockholders or
board, stating therein the reason for its creation.
members and other persons.
A director, trustee, or officer shall not attempt to adverse interest of the directors or trustees
acquire, or acquire any interest adverse to the involved is made at such meeting and the contract
corporation in respect of any matter which has is fair and reasonable under the circumstances.
been reposed in them in confidence, and upon
which, equity imposes a disability upon SEC. 32. Contracts Between Corporations with
themselves to deal in their own behalf; otherwise Interlocking Directors. – Except in cases of fraud,
the said director, trustee, or officer shall be liable and provided the contract is fair and reasonable
as a trustee for the corporation and must account under the circumstances, a contract between two
for the profits which otherwise would have accrued (2) or more corporations having interlocking
to the corporation. directors shall not be invalidated on that ground
alone: Provided, That if the interest of the
SEC. 31. Dealings of Directors, Trustees or Officers interlocking director in one (1) corporation is
with the Corporation. – A contract of the substantial and the interest in the other
corporation with (1) one or more of its directors, corporation or corporations is merely nominal, the
trustees, officers or their spouses and relatives contract shall be subject to the provisions of the
within the fourth civil degree of consanguinity or preceding section insofar as the latter corporation
affinity is voidable, at the option of such or corporations are concerned.
corporation, unless all the following conditions are
present: Stockholdings exceeding twenty percent (20%) of
the outstanding capital stock shall be considered
(a) The presence of such director or trustee in the substantial for purposes of interlocking directors.
board meeting in which the contract was approved
was not necessary to constitute a quorum for such SEC. 33. Disloyalty of a Director. – Where a
meeting; director, by virtue of such office, acquires a
business opportunity which should belong to the
(b) The vote of such director or trustee was not corporation, thereby obtaining profits to the
necessary for the approval of the contract; prejudice of such corporation, the director must
account for and refund to the latter all such profits,
(c) The contract is fair and reasonable under the unless the act has been ratified by a vote of the
circumstances; stockholders owning or representing at least two-
thirds (2/3) of the outstanding capital stock. This
(d) In case of corporations vested with public
provision shall be applicable, notwithstanding the
interest, material contracts are approved by at
fact that the director risked one’s own funds in the
least two-thirds (2/3) of the entire membership of
venture.
the board, with at least a majority of the
independent directors voting to approve the SEC. 34. Executive, Management, and Other
material contract; and Special Committees. – If the bylaws so provide, the
board may create an executive committee
(e) In case of an officer, the contract has been
composed of at least three (3) directors. Said
previously authorized by the board of directors.
committee may act, by majority vote of all its
Where any of the first three (3) conditions set forth members, on such specific matters within the
in the preceding paragraph is absent, in the case of competence of the board, as may be delegated to
a contract with a director or trustee, such contract it in the bylaws or by majority vote of the board,
may be ratified by the vote of the stockholders except with respect to the: (a) approval of any
representing at least two-thirds (2/3) of the action for which shareholders’ approval is also
outstanding capital stock or of at least two-thirds required; (b) filling of vacancies in the board; (c)
(2/3) of the members in a meeting called for the amendment or repeal of bylaws or the adoption of
purpose: Provided, That full disclosure of the new bylaws; (d) amendment or repeal of any
resolution of the board which by its express terms (h) To enter into a partnership, joint venture,
is not amendable or repealable; and (e) merger, consolidation, or any other commercial
distribution of cash dividends to the shareholders. agreement with natural and juridical persons;

The board of directors may create special (i) To make reasonable donations, including those
committees of temporary or permanent nature for the public welfare or for hospital, charitable,
and determine the members’ term, composition, cultural, scientific, civic, or similar
compensation, powers, and responsibilities. purposes: Provided, That no foreign corporation
shall give donations in aid of any political party or
candidate or for purposes of partisan political
activity;

(j) To establish pension, retirement, and other

plans for the benefit of its directors, trustees,
TITLE IV POWERS OF officers, and employees; and
CORPORATIONS (k) To exercise such other powers as may be
essential or necessary to carry out its purpose or
SEC. 35. Corporate Powers and Capacity. – purposes as stated in the articles of incorporation.
Every corporation incorporated under this
Code has the power and capacity: SEC. 36. Power to Extend or Shorten Corporate
Term. – A private corporation may extend or
(a) To sue and be sued in its corporate name; shorten its term as stated in the articles of
(b) To have perpetual existence unless the incorporation when approved by a majority vote of
certificate of incorporation provides otherwise; the board of directors or trustees, and ratified at a
meeting by the stockholders or members
(c) To adopt and use a corporate seal; representing at least two-thirds (2/3) of the
outstanding capital stock or of its members.
(d) To amend its articles of incorporation in Written notice of the proposed action and the time
accordance with the provisions of this Code; and place of the meeting shall be sent to
stockholders or members at their respective place
(e) To adopt bylaws, not contrary to law, morals or of residence as shown in the books of the
public policy, and to amend or repeal the same in
corporation, and must either be deposited to the
accordance with this Code;
addressee in the post office with postage prepaid,
(f) In case of stock corporations, to issue or sell served personally, or when allowed in the bylaws
stocks to subscribers and to sell treasury stocks in or done with the consent of the stockholder, sent
accordance with the provisions of this Code; and to electronically in accordance with the rules and
admit members to the corporation if it be a regulations of the Commission on the use of
nonstock corporation; electronic data messages. In case of extension of
corporate term, a dissenting stockholder may
(g) To purchase, receive, take or grant, hold, exercise the right of appraisal under the conditions
convey, sell, lease, pledge, mortgage, and provided in this Code.
otherwise deal with such real and personal
property, including securities and bonds of other SEC. 37. Power to Increase or Decrease Capital
corporations, as the transaction of the lawful Stock; Incur, Create or Increase Bonded
business of the corporation may reasonably and Indebtedness. – No corporation shall increase or
necessarily require, subject to the limitations decrease its capital stock or incur, create or
prescribed by law and the Constitution; increase any bonded indebtedness unless
approved by a majority vote of the board of
directors and by two-thirds (2/3) of the Any increase or decrease in the capital stock or the
outstanding capital stock at a stockholders’ incurring, creating or increasing of any bonded
meeting duly called for the purpose. Written notice indebtedness shall require prior approval of the
of the time and place of the stockholders’ meeting Commission, and where appropriate, of the
and the purpose for said meeting must be sent to Philippine Competition Commission. The
the stockholders at their places of residence as application with the Commission shall be made
shown in the books of the corporation and served within six (6) months from the date of approval of
on the stockholders personally, or through the board of directors and stockholders, which
electronic means recognized in the corporation’s period may be extended for justifiable reasons.
bylaws and/or the Commission’s rules as a valid
mode for service of notices. Copies of the certificate shall be kept on file in the
office of the corporation and filed with the
A certificate must be signed by a majority of the Commission and attached to the original articles of
directors of the corporation and countersigned incorporation. After approval by the Commission
by the chairperson and secretary of the and the issuance by the Commission of its
stockholders’ meeting, setting forth: certificate of filing, the capital stock shall be
deemed increased or decreased and the incurring,
(a) That the requirements of this section have creating or increasing of any bonded indebtedness
been complied with; authorized, as the certificate of filing may
declare: Provided, That the Commission shall not
(b) The amount of the increase or decrease of
accept for filing any certificate of increase of
the capital stock;
capital stock unless accompanied by a sworn
(c) In case of an increase of the capital stock, statement of the treasurer of the corporation
the amount of capital stock or number of lawfully holding office at the time of the filing of the
shares of no-par stock thereof actually certificate, showing that at least twenty-five
subscribed, the names, nationalities and percent (25%) of the increase in capital stock has
addresses of the persons subscribing, the been subscribed and that at least twenty-five
amount of capital stock or number of no-par percent (25%) of the amount subscribed has been
stock subscribed by each, and the amount paid paid in actual cash to the corporation or that
by each on the subscription in cash or property, the valuation of which is equal to twenty-
property, or the amount of capital stock or five percent (25%) of the subscription, has been
number of shares of no-par stock allotted to transferred to the corporation: Provided,
each stockholder if such increase is for the further, That no decrease in capital stock shall be
purpose of making effective stock dividend approved by the Commission if its effect shall
therefor authorized; prejudice the rights of corporate creditors.

(d) Any bonded indebtedness to be incurred, Nonstock corporations may incur, create or
created or increased; increase bonded indebtedness when approved by
a majority of the board of trustees and of at least
(e) The amount of stock represented at the two-thirds (2/3) of the members in a meeting duly
meeting; and called for the purpose.

(f) The vote authorizing the increase or Bonds issued by a corporation shall be registered
decrease of the capital stock, or the incurring, with the Commission, which shall have the
creating or increasing of any bonded authority to determine the sufficiency of the terms
indebtedness. thereof.
SEC. 38. Power to Deny Preemptive Right. – All deemed to cover substantially all the corporate
stockholders of a stock corporation shall enjoy property and assets if thereby the corporation
preemptive right to subscribe to all issues or would be rendered incapable of continuing the
disposition of shares of any class, in proportion to business or accomplishing the purpose for which it
their respective shareholdings, unless such right is was incorporated.
denied by the articles of incorporation or an
amendment thereto: Provided, That such Written notice of the proposed action and of the
preemptive right shall not extend to shares issued time and place for the meeting shall be addressed
in compliance with laws requiring stock offerings to stockholders or members at their places of
or minimum stock ownership by the public; or to residence as shown in the books of the corporation
shares issued in good faith with the approval of the and deposited to the addressee in the post office
stockholders representing two-thirds (2/3) of the with postage prepaid, served personally, or when
outstanding capital stock, in exchange for property allowed by the bylaws or done with the consent of
needed for corporate purposes or in payment of a the stockholder, sent electronically: Provided, That
previously contracted debt. any dissenting stockholder may exercise the right
of appraisal under the conditions provided in this
SEC. 39. Sale or Other Disposition of Assets. – Code.
Subject to the provisions of Republic Act No. 10667,
otherwise known as “Philippine Competition Act”, After such authorization or approval by the
and other related laws, a corporation may, by a stockholders or members, the board of directors or
majority vote of its board of directors or trustees, trustees may, nevertheless, in its discretion,
sell, lease, exchange, mortgage, pledge, or abandon such sale, lease, exchange, mortgage,
otherwise dispose of its property and assets, upon pledge, or other disposition of property and assets,
such terms and conditions and for such subject to the rights of third parties under any
consideration, which may be money, stocks, contract relating thereto, without further action or
bonds, or other instruments for the payment of approval by the stockholders or members.
money or other property or consideration, as its
Nothing in this section is intended to restrict the
board of directors or trustees may deem expedient.
power of any corporation, without the
A sale of all or substantially all of the corporation’s authorization by the stockholders or members, to
properties and assets, including its goodwill, must sell, lease, exchange, mortgage, pledge, or
be authorized by the vote of the stockholders otherwise dispose of any of its property and assets
representing at least two-thirds (2/3) of the if the same is necessary in the usual and regular
outstanding capital stock, or at least two-thirds course of business of the corporation or if the
(2/3) of the members, in a stockholders’ or proceeds of the sale or other disposition of such
members’ meeting duly called for the purpose. property and assets shall be appropriated for the
conduct of its remaining business.
In nonstock corporations where there are no
members with voting rights, the vote of at least a SEC. 40. Power to Acquire Own Shares. – Provided
majority of the trustees in office will be sufficient that the corporation has unrestricted retained
authorization for the corporation to enter into any earnings in its books to cover the shares to be
transaction authorized by this section. purchased or acquired, a stock corporation shall
have the power to purchase or acquire its own
The determination of whether or not the sale shares for a legitimate corporate purpose or
involves all or substantially all of the corporation’s purposes, including the following cases:
properties and assets must be computed based on
its net asset value, as shown in its latest financial (a) To eliminate fractional shares arising out of
statements. A sale or other disposition shall be stock dividends;
 (b) To collect or compromise an indebtedness applied to the unpaid balance on the subscription
to the corporation, arising out of unpaid plus costs and expenses, while stock dividends
subscription, in a delinquency sale, and to shall be withheld from the delinquent stockholders
purchase delinquent shares sold during said until their unpaid subscription is fully
sale; and paid: Provided, further, That no stock dividend
shall be issued without the approval of
(c) To pay dissenting or withdrawing stockholders representing at least two-thirds (2/3)
stockholders entitled to payment for their of the outstanding capital stock at a regular or
shares under the provisions of this Code. special meeting duly called for the purpose.
SEC. 41. Power to Invest Corporate Funds in Stock corporations are prohibited from retaining
Another Corporation or Business or for Any Other surplus profits in excess of one hundred percent
Purpose. – Subject to the provisions of this Code, a (100%) of their paid-in capital stock, except: (a)
private corporation may invest its funds in any when justified by definite corporate expansion
other corporation, business, or for any purpose projects or programs approved by the board of
other than the primary purpose for which it was directors; or (b) when the corporation is prohibited
organized, when approved by a majority of the under any loan agreement with financial
board of directors or trustees and ratified by the institutions or creditors, whether local or foreign,
stockholders representing at least two-thirds (2/3) from declaring dividends without their consent,
of the outstanding capital stock, or by at least two and such consent has not yet been secured; or (c)
thirds (2/3) of the members in the case of nonstock when it can be clearly shown that such retention is
corporations, at a meeting duly called for the necessary under special circumstances obtaining
purpose. Notice of the proposed investment and in the corporation, such as when there is need for
the time and place of the meeting shall be special reserve for probable contingencies.
addressed to each stockholder or member at the
place of residence as shown in the books of the SEC. 43. Power to Enter into Management
corporation and deposited to the addressee in the Contract. – No corporation shall conclude a
post office with postage prepaid, served management contract with another corporation
personally, or sent electronically in accordance unless such contract is approved by the board of
with the rules and regulations of the Commission directors and by stockholders owning at least the
on the use of electronic data message, when majority of the outstanding capital stock, or by at
allowed by the bylaws or done with the consent of least a majority of the members in the case of a
the stockholders: Provided, That any dissenting nonstock corporation, of both the managing and
stockholder shall have appraisal right as provided the managed corporation, at a meeting duly called
in this Code: Provided, however, That where the for the purpose: Provided, That (a) where a
investment by the corporation is reasonably stockholder or stockholders representing the same
necessary to accomplish its primary purpose as interest of both the managing and the managed
stated in the articles of incorporation, the approval corporations own or control more than one-third
of the stockholders or members shall not be (1/3) of the total outstanding capital stock entitled
necessary. to vote of the managing corporation; or (b) where
a majority of the members of the board of directors
SEC. 42. Power to Declare Dividends. – The board of the managing corporation also constitute a
of directors of a stock corporation may declare majority of the members of the board of directors
dividends out of the unrestricted retained earnings of the managed corporation, then the
which shall be payable in cash, property, or in stock management contract must be approved by the
to all stockholders on the basis of outstanding stockholders of the managed corporation owning
stock held by them: Provided, That any cash at least two-thirds (2/3) of the total outstanding
dividends due on delinquent stock shall first be capital stock entitled to vote, or by at least two-
thirds (2/3) of the members in the case of a Notwithstanding the provisions of the preceding
nonstock corporation. paragraph, bylaws may be adopted and filed prior
to incorporation; in such case, such bylaws shall be
These shall apply to any contract whereby a approved and signed by all the incorporators and
corporation undertakes to manage or operate all submitted to the Commission, together with the
or substantially all of the business of another articles of incorporation.
corporation, whether such contracts are called
service contracts, operating agreements or In all cases, bylaws shall be effective only upon the
otherwise: Provided, however, That such service issuance by the Commission of a certification that
contracts or operating agreements which relate to the bylaws are in accordance with this Code.
the exploration, development, exploitation or
utilization of natural resources may be entered into The Commission shall not accept for filing the
for such periods as may be provided by the bylaws or any amendment thereto of any bank,
pertinent laws or regulations. banking institution, building and loan association,
trust company, insurance company, public utility,
No management contract shall be entered into for educational institution, or other special
a period longer than five (5) years for any one (1) corporations governed by special laws, unless
term. accompanied by a certificate of the appropriate
government agency to the effect that such bylaws
SEC. 44. Ultra Vires Acts of Corporations. – No or amendments are in accordance with law.
corporation shall possess or exercise corporate
powers other than those conferred by this Code or SEC. 46. Contents of Bylaws. – A private
by its articles of incorporation and except as corporation may provide the following in its
necessary or incidental to the exercise of the bylaws:
powers conferred.
(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
TITLE V BYLAWS the stockholders or members thereof;

SEC. 45. Adoption of Bylaws. – For the adoption of (c) The required quorum in meetings of
bylaws by the corporation, the affirmative vote of stockholders or members and the manner of
the stockholders representing at least a majority of voting therein;
the outstanding capital stock, or of at least a
majority of the members in case of nonstock (d) The modes by which a stockholder, member,
corporations, shall be necessary. The bylaws shall director, or trustee may attend meetings and cast
be signed by the stockholders or members voting their votes;
for them and shall be kept in the principal office of (e) The form for proxies of stockholders and
the corporation, subject to the inspection of the members and the manner of voting them;
stockholders or members during office hours. A
copy thereof, duly certified by a majority of the (f) The directors’ or trustees’ qualifications, duties
directors or trustees and countersigned by the and responsibilities, the guidelines for setting the
secretary of the corporation, shall be filed with the compensation of directors or trustees and officers,
Commission and attached to the original articles of and the maximum number of other board
incorporation. representations that an independent director or
trustee may have which shall, in no case, be more to amend and/or adopt new bylaws, duly certified
than the number prescribed by the Commission; under oath by the corporate secretary and a
majority of the directors or trustees.
(g) The time for holding the annual election of
directors or trustees and the mode or manner of The amended or new bylaws shall only be effective
giving notice thereof; upon the issuance by the Commission of a
certification that the same is in accordance with
(h) The manner of election or appointment and the this Code and other relevant laws.
term of office of all officers other than directors or
trustees;

(i) The penalties for violation of the bylaws;

(j) In the case of stock corporations, the manner of

issuing stock certificates; and TITLE VI MEETINGS
(k) Such other matters as may be necessary for the SEC. 48. Kinds of Meetings. – Meetings of directors,
proper or convenient transaction of its corporate trustees, stockholders, or members may be regular
affairs for the promotion of good governance and or special.
anti-graft and corruption measures.
SEC. 49. Regular and Special Meetings of
An arbitration agreement may be provided in the Stockholders or Members. – Regular meetings of
bylaws pursuant to Section 181 of this Code. stockholders or members shall be held annually on
a date fixed in the bylaws, or if not so fixed, on any
SEC. 47. Amendment to Bylaws. – A majority of the
date after April 15 of every year as determined by
board of directors or trustees, and the owners of at
least a majority of the outstanding capital stock, or the board of directors or trustees: Provided, That
written notice of regular meetings shall be sent to
at least a majority of the members of a nonstock
all stockholders or members of record at least
corporation, at a regular or special meeting duly
called for the purpose, may amend or repeal the twenty-one (21) days prior to the meeting, unless a
different period is required in the bylaws, law, or
bylaws or adopt new bylaws. The owners of two-
regulation: Provided, further, That written notice of
thirds (2/3) of the outstanding capital stock or two-
thirds (2/3) of the members in a nonstock regular meetings may be sent to all stockholders or
members of record through electronic mail or such
corporation may delegate to the board of directors
other manner as the Commission shall allow under
or trustees the power to amend or repeal the
bylaws or adopt new bylaws: Provided, That any its guidelines.
power delegated to the board of directors or At each regular meeting of stockholders or
trustees to amend or repeal the bylaws or adopt members, the board of directors or trustees
new bylaws shall be considered as revoked shall endeavor to present to stockholders or
whenever stockholders owning or representing a members the following:
majority of the outstanding capital stock or
majority of the members shall so vote at a regular a) The minutes of the most recent regular
or special meeting. meeting which shall include, among others:

Whenever the bylaws are amended or new bylaws (1) A description of the voting and vote
are adopted, the corporation shall file with the tabulation procedures used in the previous
Commission such amended or new bylaws and, if meeting;
applicable, the stockholders’ or members’
resolution authorizing the delegation of the power
(2) A description of the opportunity given to education attended, and their board
stockholders or members to ask questions and representations in other corporations;
a record of the questions asked and answers
given; g) A director or trustee attendance report,
indicating the attendance of each director or
(3) The matters discussed and resolutions trustee at each of the meetings of the board
reached; and its committees and in regular or special
stockholder meetings;
(4) A record of the voting results for each
agenda item; h) Appraisals and performance reports for the
board and the criteria and procedure for
(5) A list of the directors or trustees, officers assessment;
and stockholders or members who attended
the meeting; and i) A director or trustee compensation report
prepared in accordance with this Code and the
(6) Such other items that the Commission may rules the Commission may prescribe;
require in the interest of good corporate
governance and the protection of minority j) Director disclosures on self-dealings and
stockholders. related party transactions; and/or

b) A members’ list for nonstock corporations k) The profiles of directors nominated or

and, for stock corporations, material seeking election or reelection.
information on the current stockholders, and
their voting rights; A director, trustee, stockholder, or member may
propose any other matter for inclusion in the
c) A detailed, descriptive, balanced and agenda at any regular meeting of stockholders or
comprehensible assessment of the members.
corporation’s performance, which shall include
information on any material change in the Special meetings of stockholders or members shall
corporation’s business, strategy, and other be held at any time deemed necessary or as
affairs; provided in the bylaws: Provided, however, That at
least one (1) week written notice shall be sent to all
d) A financial report for the preceding year, stockholders or members, unless a different period
which shall include financial statements duly is provided in the bylaws, law or regulation.
signed and certified in accordance with this
Code and the rules the Commission may A stockholder or member may propose the holding
prescribe, a statement on the adequacy of the of a special meeting and items to be included in the
corporation’s internal controls or risk agenda.
management systems, and a statement of all
Notice of any meeting may be waived, expressly or
external audit and non-audit fees;
impliedly, by any stockholder or
e) An explanation of the dividend policy and member: Provided, That general waivers of notice
the fact of payment of dividends or the reasons in the articles of incorporation or the bylaws shall
for nonpayment thereof; not be allowed: Provided, further, That attendance
at a meeting shall constitute a waiver of notice of
f) Director or trustee profiles which shall such meeting, except when the person attends a
include, among others, their qualifications and meeting for the express purpose of objecting to the
relevant experience, length of service in the transaction of any business because the meeting is
corporation, trainings and continuing not lawfully called or convened.
Whenever for any cause, there is no person Davao, and other Metropolitan areas shall, for
authorized or the person authorized unjustly purposes of this section, be considered a city or
refuses to call a meeting, the Commission, upon municipality.
petition of a stockholder or member on a showing
of good cause therefor, may issue an order Notice of meetings shall be sent through the means
directing the petitioning stockholder or member to of communication provided in the bylaws, which
call a meeting of the corporation by giving proper notice shall state the time, place and purpose of
notice required by this Code or the bylaws. The the meetings.
petitioning stockholder or member shall preside
Each notice of meeting shall further be
thereat until at least a majority of the stockholders
accompanied by the following:
or members present have chosen from among
themselves, a presiding officer. (a) The agenda for the meeting;
Unless the bylaws provide for a longer period, the (b) A proxy form which shall be submitted to
stock and transfer book or membership book shall the corporate secretary within a reasonable
be closed at least twenty (20) days for regular time prior to the meeting;
meetings and seven (7) days for special meetings
before the scheduled date of the meeting. (c) When attendance, participation, and voting
are allowed by remote communication or in
In case of postponement of stockholders’ or absentia, the requirements and procedures to
members’ regular meetings, written notice thereof be followed when a stockholder or member
and the reason therefor shall be sent to all elects either option; and
stockholders or members of record at least two (2)
weeks prior to the date of the meeting, unless a (d) When the meeting is for the election of
different period is required under the bylaws, law directors or trustees, the requirements and
or regulation. procedure for nomination and election.

The right to vote of stockholders or members may All proceedings and any business transacted at a
be exercised in person, through a proxy, or when so meeting of the stockholders or members, if within
authorized in the bylaws, through remote the powers or authority of the corporation, shall be
communication or in absentia. The Commission valid even if the meeting is improperly held or
shall issue the rules and regulations governing called: Provided, That all the stockholders or
participation and voting through remote members of the corporation are present or duly
communication or in absentia, taking into account represented at the meeting and not one of them
the company’s scale, number of shareholders or expressly states at the beginning of the meeting
members, structure, and other factors consistent that the purpose of their attendance is to object to
with the protection and promotion of the transaction of any business because the
shareholders’ or member’s meetings. meeting is not lawfully called or convened.

SEC. 50. Place and Time of Meetings of SEC. 51. Quorum in Meetings. – Unless otherwise
Stockholders or Members. – Stockholders’ or provided in this Code or in the bylaws, a quorum
members’ meetings, whether regular or special, shall consist of the stockholders representing a
shall be held in the principal office of the majority of the outstanding capital stock or a
corporation as set forth in the articles of majority of the members in the case of nonstock
incorporation, or, if not practicable, in the city or corporations.
municipality where the principal office of the
corporation is located: Provided, That any city or SEC. 52. Regular and Special Meetings of
municipality in Metro Manila, Metro Cebu, Metro Directors or Trustees; Quorum. – Unless the
articles of incorporation or the bylaws provides for
a greater majority, a majority of the directors or SEC. 54. Right to Vote of Secured Creditors and
trustees as stated in the articles of incorporation Administrators. – In case a stockholder grants
shall constitute a quorum to transact corporate security interest in his or her shares in stock
business, and every decision reached by at least a corporations, the stockholder-grantor shall have
majority of the directors or trustees constituting a the right to attend and vote at meetings of
quorum, except for the election of officers which stockholders, unless the secured creditor is
shall require the vote of a majority of all the expressly given by the stockholder-grantor such
members of the board, shall be valid as a corporate right in writing which is recorded in the
act. appropriate corporate books.

Regular meetings of the board of directors or Executors, administrators, receivers, and other
trustees of every corporation shall be held legal representatives duly appointed by the court
monthly, unless the bylaws provide otherwise. may attend and vote in behalf of the stockholders
or members without need of any written proxy.
Special meetings of the board of directors or
trustees may be held at any time upon the call of SEC. 55. Voting in Case of Joint Ownership of
the president or as provided in the bylaws. Stock. – The consent of all the co-owners shall be
necessary in voting shares of stock owned jointly
Meetings of directors or trustees of corporations by two (2) or more persons, unless there is a written
may be held anywhere in or outside of the proxy, signed by all the co-owners, authorizing one
Philippines, unless the bylaws provide otherwise. (1) or some of them or any other person to vote
Notice of regular or special meetings stating the such share or shares: Provided, That when the
date, time and place of the meeting must be sent shares are owned in an “and/or” capacity by the
to every director or trustee at least two (2) days holders thereof, any one of the joint owners can
prior to the scheduled meeting, unless a longer vote said shares or appoint a proxy therefor.
time is provided in the bylaws. A director or trustee
may waive this requirement, either expressly or SEC. 56. Voting Right for Treasury Shares. –
impliedly. Treasury shares shall have no voting right as long
as such shares remain in the Treasury.
Directors or trustees who cannot physically attend
or vote at board meetings can participate and vote SEC. 57. Manner of Voting; Proxies. – Stockholders
through remote communication such as and members may vote in person or by proxy in all
videoconferencing, teleconferencing, or other meetings of stockholders or members.
alternative modes of communication that allow
them reasonable opportunities to participate. When so authorized in the bylaws or by a majority
Directors or trustees cannot attend or vote by of the board of directors, the stockholders or
proxy at board meetings. members of corporations may also vote through
remote communication or in
A director or trustee who has a potential interest in absentia: Provided, That the votes are received
any related party transaction must recuse from before the corporation finishes the tally of votes.
voting on the approval of the related party
transaction without prejudice to compliance with A stockholder or member who participates
the requirements of Section 31 of this Code. through remote communication or in absentia,
shall be deemed present for purposes of quorum.
SEC. 53. Who Shall Preside at Meetings. – The
chairman or, in his absence, the president shall The corporation shall establish the appropriate
preside at all meetings of the directors or trustees requirements and procedures for voting through
as well as of the stockholders or members, unless remote communication and in absentia, taking
the bylaws provide otherwise. into account the company’s scale, number of
shareholders or members, structure and other books and records in accordance with the
factors consistent with the basic right of corporate provisions of this Code.
suffrage. Proxies shall be in writing, signed and
filed, by the stockholder or member, in any form Any other stockholder may transfer the shares to
authorized in the bylaws and received by the the same trustee or trustees upon the terms and
corporate secretary within a reasonable time conditions stated in the voting trust agreement,
before the scheduled meeting. Unless otherwise and thereupon shall be bound by all the provisions
provided in the proxy form, it shall be valid only for of said agreement.
the meeting for which it is intended. No proxy shall
No voting trust agreement shall be entered into for
be valid and effective for a period longer than five
purposes of circumventing the laws against anti-
(5) years at any one time.
competitive agreements, abuse of dominant
SEC. 58. Voting Trusts. – One or more stockholders position, anti-competitive mergers and
of a stock corporation may create a voting trust for acquisitions, violation of nationality and capital
the purpose of conferring upon a trustee or requirements, or for the perpetuation of fraud.
trustees the right to vote and other rights
Unless expressly renewed, all rights granted in a
pertaining to the shares for a period not exceeding
voting trust agreement shall automatically expire
five (5) years at any time: Provided, That in the case
at the end of the agreed period. The voting trust
of a voting trust specifically required as a condition
certificates as well as the certificates of stock in the
in a loan agreement, said voting trust may be for a
name of the trustee or trustees shall thereby be
period exceeding five (5) years but shall
deemed cancelled and new certificates of stock
automatically expire upon full payment of the loan.
shall be reissued in the name of the trustors.
A voting trust agreement must be in writing and
notarized, and shall specify the terms and The voting trustee or trustees may vote by proxy or
conditions thereof. A certified copy of such in any manner authorized under the bylaws unless
agreement shall be filed with the corporation and the agreement provides otherwise.
with the Commission; otherwise, the agreement is
ineffective and unenforceable. The certificate or
certificates of stock covered by the voting trust
agreement shall be cancelled and new ones shall
be issued in the name of the trustee or trustees,
stating that they are issued pursuant to said
agreement. The books of the corporation shall
TITLE VII STOCKS AND
state that the transfer in the name of the trustee or STOCKHOLDERS
trustees is made pursuant to the voting trust
agreement. SEC. 59. Subscription Contract. – Any contract for
the acquisition of unissued stock in an existing
The trustee or trustees shall execute and deliver to
corporation or a corporation still to be formed shall
the transferors, voting trust certificates, which
be deemed a subscription within the meaning of
shall be transferable in the same manner and with
this Title, notwithstanding the fact that the parties
the same effect as certificates of stock.
refer to it as a purchase or some other contract.
The voting trust agreement filed with the
SEC. 60. Pre-incorporation Subscription. – A
corporation shall be subject to examination by any
subscription of shares in a corporation still to be
stockholder of the corporation in the same manner
formed shall be irrevocable for a period of at least
as any other corporate book or record: Provided,
six (6) months from the date of subscription, unless
That both the trustor and the trustee or trustees
all of the other subscribers consent to the
may exercise the right of inspection of all corporate
revocation, or the corporation fails to incorporate The issued price of no-par value shares may be
within the same period or within a longer period fixed in the articles of incorporation or by the board
stipulated in the contract of subscription. No pre- of directors pursuant to authority conferred by the
incorporation subscription may be revoked after articles of incorporation or the bylaws, or if not so
the articles of incorporation is submitted to the fixed, by the stockholders representing at least a
Commission. majority of the outstanding capital stock at a
meeting duly called for the purpose.
SEC. 61. Consideration for Stocks. – Stocks shall
not be issued for a consideration less than the par SEC. 62. Certificate of Stock and Transfer of
or issued price thereof. Consideration for the Shares. – The capital stock of corporations shall be
issuance of stock may be: divided into shares for which certificates signed by
the president or vice president, countersigned by
(a) Actual cash paid to the corporation; the secretary or assistant secretary, and sealed
with the seal of the corporation shall be issued in
(b)Property, tangible or intangible, actually
accordance with the bylaws. Shares of stock so
received by the corporation and necessary or
issued are personal property and may be
convenient for its use and lawful purposes at a
transferred by delivery of the certificate or
fair valuation equal to the par or issued value
certificates indorsed by the owner, his attorney- in-
of the stock issued;
fact, or any other person legally authorized to
(c) Labor performed for or services actually make the transfer. No transfer, however, shall be
rendered to the corporation; valid, except as between the parties, until the
transfer is recorded in the books of the corporation
(d) Previously incurred indebtedness of the showing the names of the parties to the
corporation; transaction, the date of the transfer, the number of
the certificate or certificates, and the number of
(e) Amounts transferred from unrestricted shares transferred. The Commission may require
retained earnings to stated capital; corporations whose securities are traded in trading
markets and which can reasonably demonstrate
(f) Outstanding shares exchanged for stocks in
their capability to do so to issue their securities or
the event of reclassification or conversion;
shares of stocks in uncertificated or scripless form
(g) Shares of stock in another corporation; in accordance with the rules of the Commission.
and/or
No shares of stock against which the corporation
(h) Other generally accepted form of holds any unpaid claim shall be transferable in the
consideration. books of the corporation.

Where the consideration is other than actual cash, SEC. 63. Issuance of Stock Certificates. – No
or consists of intangible property such as patents certificate of stock shall be issued to a subscriber
or copyrights, the valuation thereof shall initially until the full amount of the subscription together
be determined by the stockholders or the board of with interest and expenses (in case of delinquent
directors, subject to the approval of the shares), if any is due, has been paid.
Commission.
SEC. 64. Liability of Directors for Watered Stocks.
Shares of stock shall not be issued in exchange for – A director or officer of a corporation who: (a)
promissory notes or future service. The same consents to the issuance of stocks for a
considerations provided in this section, insofar as consideration less than its par or issued value; (b)
applicable, may be used for the issuance of bonds consents to the issuance of stocks for a
by the corporation. consideration other than cash, valued in excess of
its fair value; or (c) having knowledge of the be less than thirty (30) days nor more than sixty (60)
insufficient consideration, does not file a written days from the date the stocks become delinquent.
objection with the corporate secretary, shall be
liable to the corporation or its creditors, solidarily Notice of the sale, with a copy of the resolution,
with the stockholder concerned for the difference shall be sent to every delinquent stockholder
between the value received at the time of issuance either personally, by registered mail, or through
of the stock and the par or issued value of the other means provided in the bylaws. The same
same. shall be published once a week for two (2)
consecutive weeks in a newspaper of general
SEC. 65. Interest on Unpaid Subscriptions. – circulation in the province or city where the
Subscribers to stocks shall be liable to the principal office of the corporation is located.
corporation for interest on all unpaid subscriptions
from the date of subscription, if so required by and Unless the delinquent stockholder pays to the
at the rate of interest fixed in the subscription corporation, on or before the date specified for the
contract. If no rate of interest is fixed in the sale of the delinquent stock, the balance due on
subscription contract, the prevailing legal rate the former’s subscription, plus accrued interest,
shall apply. costs of advertisement and expenses of sale, or
unless the board of directors otherwise orders, said
SEC. 66. Payment of Balance of Subscription. – delinquent stock shall be sold at a public auction
Subject to the provisions of the subscription to such bidder who shall offer to pay the full
contract, the board of directors may, at any time, amount of the balance on the subscription
declare due and payable to the corporation unpaid together with accrued interest, costs of
subscriptions and may collect the same or such advertisement and expenses of sale, for the
percentage thereof, in either case, with accrued smallest number of shares or fraction of a share.
interest, if any, as it may deem necessary. The stock so purchased shall be transferred to such
purchaser in the books of the corporation and a
Payment of unpaid subscription or any percentage certificate for such stock shall be issued in the
thereof, together with any interest accrued shall be purchaser’s favor. The remaining shares, if any,
made on the date specified in the subscription shall be credited in favor of the delinquent
contract or on the date stated in the call made by stockholder who shall likewise be entitled to the
the board. Failure to pay on such date shall render issuance of a certificate of stock covering such
the entire balance due and payable and shall make shares.
the stockholder liable for interest at the legal rate
on such balance, unless a different interest rate is Should there be no bidder at the public auction
provided in the subscription contract. The interest who offers to pay the full amount of the balance on
shall be computed from the date specified, until the subscription together with accrued interest,
full payment of the subscription. If no payment is costs of advertisement, and expenses of sale, for
made within thirty (30) days from the said date, all the smallest number of shares or fraction of a
stocks covered by the subscription shall thereupon share, the corporation may, subject to the
become delinquent and shall be subject to sale as provisions of this Code, bid for the same, and the
hereinafter provided, unless the board of directors total amount due shall be credited as fully paid in
orders otherwise. the books of the corporation. Title to all the shares
of stock covered by the subscription shall be
SEC. 67. Delinquency Sale. – The board of directors vested in the corporation as treasury shares and
may, by resolution, order the sale of delinquent may be disposed of by said corporation in
stock and shall specifically state the amount due accordance with the provisions of this Code.
on each subscription plus all accrued interest, and
the date, time and place of the sale which shall not
SEC. 68. When Sale May be Questioned. – No which issued the same. The owner of such
action to recover delinquent stock sold can be certificate of stock shall also submit such other
sustained upon the ground of irregularity or defect information and evidence as may be deemed
in the notice of sale, or in the sale itself of the necessary; and
delinquent stock, unless the party seeking to
maintain such action first pays or tenders to the (b) After verifying the affidavit and other
party holding the stock the sum for which the same information and evidence with the books of the
was sold, with interest from the date of sale at the corporation, the corporation shall publish a notice
legal rate. No such action shall be maintained in a newspaper of general circulation in the place
unless a complaint is filed within six (6) months where the corporation has its principal office, once
from the date of sale. a week for three (3) consecutive weeks at the
expense of the registered owner of the certificate
SEC. 69. Court Action to Recover Unpaid of stock which has been lost, stolen or destroyed.
Subscription. – Nothing in this Code shall prevent The notice shall state the name of the corporation,
the corporation from collecting through court the name of the registered owner, the serial
action, the amount due on any unpaid number of the certificate, the number of shares
subscription, with accrued interest, costs and represented by such certificate, and shall state that
expenses. after the expiration of one (1) year from the date of
the last publication, if no contest has been
SEC. 70. Effect of Delinquency. – No delinquent presented to the corporation regarding the
stock shall be voted for, be entitled to vote, or be certificate of stock, the right to make such contest
represented at any stockholder’s meeting, nor shall be barred and the corporation shall cancel
shall the holder thereof be entitled to any of the the lost, destroyed or stolen certificate of stock in
rights of a stockholder except the right to its books. In lieu thereof, the corporation shall
dividends in accordance with the provisions of this issue a new certificate of stock, unless the
Code, until and unless payment is made by the registered owner files a bond or other security as
holder of such delinquent stock for the amount due may be required, effective for a period of one (1)
on the subscription with accrued interest, and the year, for such amount and in such form and with
costs and expenses of advertisement, if any. such sureties as may be satisfactory to the board of
directors, in which case a new certificate may be
SEC. 71. Rights of Unpaid Shares,
issued even before the expiration of the one (1)
Nondelinquent. – Holders of subscribed shares not
year period provided herein. If a contest has been
fully paid which are not delinquent shall have all
presented to the corporation or if an action is
the rights of a stockholder.
pending in court regarding the ownership of the
SEC. 72. Lost or Destroyed Certificates. – The certificate of stock which has been lost, stolen or
following procedure shall be followed by a destroyed, the issuance of the new certificate of
corporation in issuing new certificates of stock in stock in lieu thereof shall be suspended until the
lieu of those which have been lost, stolen or court renders a final decision regarding the
destroyed: ownership of the certificate of stock which has
been lost, stolen or destroyed.
(a) The registered owner of a certificate of stock in
a corporation or such person’s legal representative Except in case of fraud, bad faith, or negligence on
shall file with the corporation an affidavit in the part of the corporation and its officers, no
triplicate setting forth, if possible, the action may be brought against any corporation
circumstances as to how the certificate was lost, which shall have issued certificate of stock in lieu
stolen or destroyed, the number of shares of those lost, stolen or destroyed pursuant to the
represented by such certificate, the serial number procedure above-described.
of the certificate and the name of the corporation
 be taken on any motion or proposition, and a
record thereof carefully made. The protest of a
director, trustee, stockholder or member on any
action or proposed action must be recorded in full
upon their demand.
TITLE VIII CORPORATE
Corporate records, regardless of the form in which
BOOKS AND RECORDS they are stored, shall be open to inspection by any
director, trustee, stockholder or member of the
SEC. 73. Books to be Kept; Stock Transfer Agent. – corporation in person or by a representative at
Every corporation shall keep and carefully reasonable hours on business days, and a demand
preserve at its principal office all information in writing may be made by such director, trustee or
relating to the corporation including, but not stockholder at their expense, for copies of such
limited to: records or excerpts from said records. The
(a) The articles of incorporation and bylaws of the inspecting or reproducing party shall remain
corporation and all their amendments; bound by confidentiality rules under prevailing
laws, such as the rules on trade secrets or
(b) The current ownership structure and voting processes under Republic Act No. 8293, otherwise
rights of the corporation, including lists of known as the “Intellectual Property Code of the
stockholders or members, group structures, intra- Philippines”, as amended, Republic Act No. 10173,
group relations, ownership data, and beneficial otherwise known as the “Data Privacy Act of 2012”,
ownership; Republic Act No. 8799, otherwise known as “The
Securities Regulation Code”, and the Rules of
(c) The names and addresses of all the members of Court.
the board of directors or trustees and the executive
officers; A requesting party who is not a stockholder or
member of record, or is a competitor, director,
(d) A record of all business transactions; officer, controlling stockholder or otherwise
represents the interests of a competitor shall have
(e) A record of the resolutions of the board of no right to inspect or demand reproduction of
directors or trustees and of the stockholders or corporate records.
members;
Any stockholder who shall abuse the rights granted
(f) Copies of the latest reportorial requirements under this section shall be penalized under Section
submitted to the Commission; and 158 of this Code, without prejudice to the
(g) The minutes of all meetings of stockholders or provisions of Republic Act No. 8293, otherwise
members, or of the board of directors or trustees. known as the “Intellectual Property Code of the
Such minutes shall set forth in detail, among Philippines”, as amended, and Republic Act No.
others: the time and place of the meeting held, how 10173, otherwise known as the “Data Privacy Act of
it was authorized, the notice given, the agenda 2012”.
therefor, whether the meeting was regular or Any officer or agent of the corporation who shall
special, its object if special, those present and
refuse to allow the inspection and/or reproduction
absent, and every act done or ordered done at the of records in accordance with the provisions of this
meeting. Upon the demand of a director, trustee,
Code shall be liable to such director, trustee,
stockholder or member, the time when any
stockholder or member for damages, and in
director, trustee, stockholder or member entered addition, shall be guilty of an offense which shall be
or left the meeting must be noted in the minutes; punishable under Section 161 of this
and on a similar demand, the yeas and nays must
Code: Provided, That if such refusal is made be fixed by the Commission, which shall be
pursuant to a resolution or order of the board of renewable annually: Provided, That a stock
directors or trustees, the liability under this section corporation is not precluded from performing or
for such action shall be imposed upon the directors making transfers of its own stocks, in which case all
or trustees who voted for such refusal: Provided, the rules and regulations imposed on stock
further, That it shall be a defense to any action transfer agents, except the payment of a license fee
under this section that the person demanding to herein provided, shall be applicable: Provided,
examine and copy excerpts from the corporation’s further, That the Commission may require stock
records and minutes has improperly used any corporations which transfer and/or trade stocks in
information secured through any prior secondary markets to have an independent
examination of the records or minutes of such transfer agent.
corporation or of any other corporation, or was not
acting in good faith or for a legitimate purpose in SEC. 74. Right to Financial Statements. – A
making the demand to examine or reproduce corporation shall furnish a stockholder or member,
corporate records, or is a competitor, director, within ten (10) days from receipt of their written
officer, controlling stockholder or otherwise request, its most recent financial statement, in the
represents the interests of a competitor. form and substance of the financial reporting
required by the Commission.
If the corporation denies or does not act on a
demand for inspection and/or reproduction, the At the regular meeting of stockholders or
aggrieved party may report such to the members, the board of directors or trustees shall
Commission. Within five (5) days from receipt of present to such stockholders or members a
such report, the Commission shall conduct a financial report of the operations of the
summary investigation and issue an order corporation for the preceding year, which shall
directing the inspection or reproduction of the include financial statements, duly signed and
requested records. certified in accordance with this Code, and the
rules the Commission may prescribe.
Stock corporations must also keep a stock and
transfer book, which shall contain a record of all However, if the total assets or total liabilities of the
stocks in the names of the stockholders corporation is less than Six hundred thousand
alphabetically arranged; the installments paid and pesos (P600,000.00), or such other amount as may
unpaid on all stocks for which subscription has be determined appropriate by the Department of
been made, and the date of payment of any Finance, the financial statements may be certified
installment; a statement of every alienation, sale under oath by the treasurer and the president.
or transfer of stock made, the date thereof, by and
to whom made; and such other entries as the
bylaws may prescribe. The stock and transfer book
shall be kept in the principal office of the
corporation or in the office of its stock transfer
agent and shall be open for inspection by any TITLE IX MERGER AND
director or stockholder of the corporation at
reasonable hours on business days. CONSOLIDATION
A stock transfer agent or one engaged principally in SEC. 75. Plan of Merger or Consolidation. – Two (2)
the business of registering transfers of stocks in or more corporations may merge into a single
behalf of a stock corporation shall be allowed to corporation which shall be one of the constituent
operate in the Philippines upon securing a license corporations or may consolidate into a new single
from the Commission and the payment of a fee to
corporation which shall be the consolidated of appraisal in accordance with this
corporation. Code: Provided, That if after the approval by the
stockholders of such plan, the board of directors
The board of directors or trustees of each decides to abandon the plan, the right of appraisal
corporation, party to the merger or shall be extinguished.
consolidation, shall approve a plan of merger
or consolidation setting forth the following: Any amendment to the plan of merger or
consolidation may be made: Provided, That such
(a) The names of the corporations proposing to amendment is approved by a majority vote of the
merge or consolidate, hereinafter referred to as the respective boards of directors or trustees of all the
constituent corporations; constituent corporations and ratified by the
affirmative vote of stockholders representing at
(b) The terms of the merger or consolidation and
least two-thirds (2/3) of the outstanding capital
the mode of carrying the same into effect;
stock or of two-thirds (2/3) of the members of each
(c) A statement of the changes, if any, in the articles of the constituent corporations. Such plan,
of incorporation of the surviving corporation in together with any amendment, shall be considered
case of merger; and, in case of consolidation, all as the agreement of merger or consolidation.
the statements required to be set forth in the
SEC. 77. Articles of Merger or Consolidation. –
articles of incorporation for corporations
After the approval by the stockholders or members
organized under this Code; and
as required by the preceding section, articles of
(d) Such other provisions with respect to the merger or articles of consolidation shall be
proposed merger or consolidation as are deemed executed by each of the constituent corporations,
necessary or desirable. to be signed by the president or vice president and
certified by the secretary or assistant secretary of
SEC. 76. Stockholders’ or Members’ Approval. – each corporation setting forth:
Upon approval by a majority vote of each of the
board of directors or trustees of the constituent (a) The plan of the merger or the plan of
corporations of the plan of merger or consolidation;
consolidation, the same shall be submitted for
(b) As to stock corporations, the number of shares
approval by the stockholders or members of each
outstanding, or in the case of nonstock
of such corporations at separate corporate
corporations, the number of members;
meetings duly called for the purpose. Notice of
such meetings shall be given to all stockholders or (c) As to each corporation, the number of shares or
members of the respective corporations in the members voting for or against such plan,
same manner as giving notice of regular or special respectively;
meetings under Section 49 of this Code. The notice
shall state the purpose of the meeting and include (d) The carrying amounts and fair values of the
a copy or a summary of the plan of merger or assets and liabilities of the respective companies
consolidation. as of the agreed cut-off date;

The affirmative vote of stockholders representing (e) The method to be used in the merger or
at least two-thirds (2/3) of the outstanding capital consolidation of accounts of the companies;
stock of each corporation in the case of stock
corporations or at least two-thirds (2/3) of the (f) The provisional or pro forma values, as merged
members in the case of nonstock corporations or consolidated, using the accounting method; and
shall be necessary for the approval of such plan.
(g) Such other information as may be prescribed by
Any dissenting stockholder may exercise the right
the Commission.
SEC. 78. Effectivity of Merger or Consolidation. – and liabilities of a corporation organized under this
The articles of merger or of consolidation, signed Code;
and certified as required by this Code, shall be
submitted to the Commission for its (d) The surviving or the consolidated corporation
approval: Provided, That in the case of merger or shall possess all the rights, privileges, immunities
consolidation of banks or banking institutions, and franchises of each constituent corporation;
loan associations, trust companies, insurance and all real or personal property, all receivables
companies, public utilities, educational due on whatever account, including subscriptions
institutions, and other special corporations to shares and other choses in action, and every
governed by special laws, the favorable other interest of, belonging to, or due to each
recommendation of the appropriate government constituent corporation, shall be deemed
agency shall first be obtained. If the Commission is transferred to and vested in such surviving or
satisfied that the merger or consolidation of the consolidated corporation without further act or
corporations concerned is consistent with the deed; and
provisions of this Code and existing laws, it shall
(e) The surviving or consolidated corporation shall
issue a certificate approving the articles and plan
be responsible for all the liabilities and obligations
of merger or of consolidation, at which time the
of each constituent corporation as though such
merger or consolidation shall be effective.
surviving or consolidated corporation had itself
If, upon investigation, the Commission has reason incurred such liabilities or obligations; and any
to believe that the proposed merger or pending claim, action or proceeding brought by or
consolidation is contrary to or inconsistent with against any constituent corporation may be
the provisions of this Code or existing laws, it shall prosecuted by or against the surviving or
set a hearing to give the corporations concerned consolidated corporation. The rights of creditors or
the opportunity to be heard. Written notice of the liens upon the property of such constituent
date, time, and place of hearing shall be given to corporations shall not be impaired by the merger
each constituent corporation at least two (2) weeks or consolidation.
before said hearing. The Commission shall
thereafter proceed as provided in this Code.

SEC. 79. Effects of Merger or Consolidation. –

The merger or consolidation shall have the
following effects: TITLE X APPRAISAL
(a) The constituent corporations shall become a
single corporation which, in case of merger, shall
RIGHT
be the surviving corporation designated in the plan SEC. 80. When the Right of Appraisal May Be
of merger; and, in case of consolidation, shall be Exercised. – Any stockholder of a corporation shall
the consolidated corporation designated in the have the right to dissent and demand payment of
plan of consolidation; the fair value of the shares in the following
(b) The separate existence of the constituent instances:
corporations shall cease, except that of the (a) In case an amendment to the articles of
surviving or the consolidated corporation; incorporation has the effect of changing or
(c) The surviving or the consolidated corporation restricting the rights of any stockholder or class of
shares, or of authorizing preferences in any respect
shall possess all the rights, privileges, immunities,
and powers and shall be subject to all the duties superior to those of outstanding shares of any
class, or of extending or shortening the term of stockholder shall forthwith transfer the shares to
corporate existence; the corporation.

(b) In case of sale, lease, exchange, transfer, SEC. 82. Effect of Demand and Termination of
mortgage, pledge or other disposition of all or Right. – From the time of demand for payment of
substantially all of the corporate property and the fair value of a stockholder’s shares until either
assets as provided in this Code; the abandonment of the corporate action involved
or the purchase of the said shares by the
(c) In case of merger or consolidation; and corporation, all rights accruing to such shares,
including voting and dividend rights, shall be
(d) In case of investment of corporate funds for any
suspended in accordance with the provisions of
purpose other than the primary purpose of the
this Code, except the right of such stockholder to
corporation.
receive payment of the fair value thereof: Provided,
SEC. 81. How Right is Exercised. – The dissenting That if the dissenting stockholder is not paid the
stockholder who votes against a proposed value of the said shares within thirty (30) days after
corporate action may exercise the right of the award, the voting and dividend rights shall
appraisal by making a written demand on the immediately be restored.
corporation for the payment of the fair value of
SEC. 83. When Right to Payment Ceases. – No
shares held within thirty (30) days from the date on
demand for payment under this Title may be
which the vote was taken: Provided, That failure to
withdrawn unless the corporation consents
make the demand within such period shall be
thereto. If, however, such demand for payment is
deemed a waiver of the appraisal right. If the
withdrawn with the consent of the corporation, or
proposed corporate action is implemented, the
if the proposed corporate action is abandoned or
corporation shall pay the stockholder, upon
rescinded by the corporation or disapproved by
surrender of the certificate or certificates of stock
the Commission where such approval is necessary,
representing the stockholder’s shares, the fair
or if the Commission determines that such
value thereof as of the day before the vote was
stockholder is not entitled to the appraisal right,
taken, excluding any appreciation or depreciation
then the right of the stockholder to be paid the fair
in anticipation of such corporate action.
value of the shares shall cease, the status as the
If, within sixty (60) days from the approval of the stockholder shall be restored, and all dividend
corporate action by the stockholders, the distributions which would have accrued on the
withdrawing stockholder and the corporation shares shall be paid to the stockholder.
cannot agree on the fair value of the shares, it shall
SEC. 84. Who Bears Costs of Appraisal. – The costs
be determined and appraised by three (3)
and expenses of appraisal shall be borne by the
disinterested persons, one of whom shall be
corporation, unless the fair value ascertained by
named by the stockholder, another by the
the appraisers is approximately the same as the
corporation, and the third by the two (2) thus
price which the corporation may have offered to
chosen. The findings of the majority of the
pay the stockholder, in which case they shall be
appraisers shall be final, and their award shall be
borne by the latter. In the case of an action to
paid by the corporation within thirty (30) days after
recover such fair value, all costs and expenses shall
such award is made: Provided, That no payment
be assessed against the corporation, unless the
shall be made to any dissenting stockholder unless
refusal of the stockholder to receive payment was
the corporation has unrestricted retained earnings
unjustified.
in its books to cover such
payment: Provided, further, That upon payment by SEC. 85. Notation on Certificates; Rights of
the corporation of the agreed or awarded price, the Transferee. – Within ten (10) days after demanding
payment for shares held, a dissenting stockholder
shall submit the certificates of stock representing
the shares to the corporation for notation that such
shares are dissenting shares. Failure to do so shall,
at the option of the corporation, terminate the
rights under this Title. If shares represented by the CHAPTER I MEMBERS
certificates bearing such notation are transferred,
and the certificates consequently cancelled, the SEC. 88. Right to Vote. – The right of the members
rights of the transferor as a dissenting stockholder of any class or classes to vote may be limited,
under this Title shall cease and the transferee shall broadened, or denied to the extent specified in the
have all the rights of a regular stockholder; and all articles of incorporation or the bylaws. Unless so
dividend distributions which would have accrued limited, broadened, or denied, each member,
on such shares shall be paid to the transferee. regardless of class, shall be entitled to one (1) vote.

Unless otherwise provided in the articles of

incorporation or the bylaws, a member may vote
by proxy, in accordance with the provisions of this
Code. The bylaws may likewise authorize voting
through remote communication and/or in
TITLE XI NONSTOCK absentia.
CORPORATION SEC. 89. Nontransferability of Membership. –
Membership in a nonstock corporation and all
SEC. 86. Definition. – For purposes of this Code and rights arising therefrom are personal and non-
subject to its provisions on dissolution, a nonstock transferable, unless the articles of incorporation or
corporation is one where no part of its income is the bylaws otherwise provide.
distributable as dividends to its members,
trustees, or officers: Provided, That any profit SEC. 90. Termination of Membership. –
which a nonstock corporation may obtain Membership shall be terminated in the manner
incidental to its operations shall, whenever and for the causes provided in the articles of
necessary or proper, be used for the furtherance of incorporation or the bylaws. Termination of
the purpose or purposes for which the corporation membership shall extinguish all rights of a member
was organized, subject to the provisions of this in the corporation or in its property, unless
Title. otherwise provided in the articles of incorporation
or the bylaws.
The provisions governing stock corporations,
when pertinent, shall be applicable to nonstock
corporations, except as may be covered by specific
provisions of this Title.

SEC. 87. Purposes. – Nonstock corporations may

be formed or organized for charitable, religious, CHAPTER II TRUSTEES AND OFFICERS
educational, professional, cultural, fraternal,
literary, scientific, social, civic service, or similar SEC. 91. Election and Term of Trustees. – The
purposes, like trade, industry, agricultural and like number of trustees shall be fixed in the articles of
chambers, or any combination thereof, subject to incorporation or bylaws which may or may not be
the special provisions of this Title governing more than fifteen (15). They shall hold office for not
particular classes of nonstock corporations. more than three (3) years until their successors are
elected and qualified. Trustees elected to fill
vacancies occurring before the expiration of a which condition occurs by reason of the
particular term shall hold office only for the dissolution, shall be returned, transferred or
unexpired period. conveyed in accordance with such requirements;

Except with respect to independent trustees of (c) Assets received and held by the corporation
nonstock corporations vested with public interest, subject to limitations permitting their use only for
only a member of the corporation shall be elected charitable, religious, benevolent, educational or
as trustee. similar purposes, but not held upon a condition
requiring return, transfer or conveyance by reason
Unless otherwise provided in the articles of of the dissolution, shall be transferred or conveyed
incorporation or the bylaws, the members may to one (1) or more corporations, societies or
directly elect officers of a nonstock corporation. organizations engaged in activities in the
Philippines substantially similar to those of the
SEC. 92. List of Members and Proxies, Place of
dissolving corporation according to a plan of
Meetings. – The corporation shall, at all times,
distribution adopted pursuant to this Chapter;
keep a list of its members and their proxies in the
form the Commission may require. The list shall be (d) Assets other than those mentioned in the
updated to reflect the members and proxies of preceding paragraphs, if any, shall be distributed
record twenty (20) days prior to any scheduled in accordance with the provisions of the articles of
election. The bylaws may provide that the incorporation or the bylaws, to the extent that the
members of a nonstock corporation may hold their articles of incorporation or the bylaws determine
regular or special meetings at any place even the distributive rights of members, or any class or
outside the place where the principal office of the classes of members, or provide for distribution;
corporation is located: Provided, That proper and
notice is sent to all members indicating the date,
time and place of the meeting: Provided, further, (e) In any other case, assets may be distributed to
That the place of meeting shall be within Philippine such persons, societies, organizations or
territory. corporations, whether or not organized for profit,
as may be specified in a plan of distribution
adopted pursuant to this Chapter.

SEC. 94. Plan of Distribution of Assets. – A plan

providing for the distribution of assets, consistent
with the provisions of this Title, may be adopted by
CHAPTER III DISTRIBUTION OF ASSETS IN a nonstock corporation in the process of
NONSTOCK CORPORATIONS dissolution in the following manner:

SEC. 93. Rules of Distribution. – The assets of a a) The board of trustees shall, by majority vote,
nonstock corporation undergoing the process of adopt a resolution recommending a plan of
dissolution for reasons other than those set forth in distribution and directing the submission thereof
Section 139 of this Code, shall be applied and to a vote at a regular or special meeting of
distributed as follows: members having voting rights;

(a) All liabilities and obligations of the corporation b) Each member entitled to vote shall be given a
shall be paid, satisfied and discharged, or written notice setting forth the proposed plan of
adequate provision shall be made therefor; distribution or a summary thereof and the date,
time and place of such meeting within the time and
(b) Assets held by the corporation upon a condition in the manner provided in this Code for the giving
requiring return, transfer or conveyance, and of notice of meetings; and
c) Such plan of distribution shall be adopted upon (a) A classification of shares or rights, the
approval of at least two-thirds (2/3) of the qualifications for owning or holding the same, and
members having voting rights present or restrictions on their transfers, subject to the
represented by proxy at such meeting. provisions of the following section;

(b) A classification of directors into one (1) or more

classes, each of whom may be voted for and
elected solely by a particular class of stock; and

(c) Greater quorum or voting requirements in

TITLE XII CLOSE meetings of stockholders or directors than those
provided in this Code.
CORPORATIONS
The articles of incorporation of a close corporation
SEC. 95. Definition and Applicability of Title. – A may provide that the business of the corporation
close corporation, within the meaning of this Code, shall be managed by the stockholders of the
is one whose articles of incorporation provides corporation rather than by a board of directors. So
that: (a) all the corporation’s issued stock of all long as this provision continues in effect, no
classes, exclusive of treasury shares, shall be held meeting of stockholders need be called to elect
of record by not more than a specified number of directors: Provided, That the stockholders of the
persons, not exceeding twenty (20); (b) all the corporation shall be deemed to be directors for the
issued stock of all classes shall be subject to one or purpose of applying the provisions of this Code,
more specified restrictions on transfer permitted unless the context clearly requires
by this Title; and (c) the corporation shall not list in otherwise: Provided, further, That the stockholders
any stock exchange or make any public offering of of the corporation shall be subject to all liabilities
its stocks of any class. Notwithstanding the of directors.
foregoing, a corporation shall not be deemed a
close corporation when at least two-thirds (2/3) of The articles of incorporation may likewise provide
its voting stock or voting rights is owned or that all officers or employees or that specified
controlled by another corporation which is not a officers or employees shall be elected or appointed
close corporation within the meaning of this Code. by the stockholders, instead of by the board of
directors.
Any corporation may be incorporated as a close
corporation, except mining or oil companies, stock SEC. 97. Validity of Restrictions on Transfer of
exchanges, banks, insurance companies, public Shares. – Restrictions on the right to transfer
utilities, educational institutions and corporations shares must appear in the articles of incorporation,
declared to be vested with public interest in in the bylaws, as well as in the certificate of stock;
accordance with the provisions of this Code. otherwise, the same shall not be binding on any
purchaser in good faith. Said restrictions shall not
The provisions of this Title shall primarily govern be more onerous than granting the existing
close corporations: Provided, That other Titles in stockholders or the corporation the option to
this Code shall apply suppletorily, except as purchase the shares of the transferring stockholder
otherwise provided under this Title. with such reasonable terms, conditions or period
stated. If, upon the expiration of said period, the
SEC. 96. Articles of Incorporation. – The articles of existing stockholders or the corporation fails to
incorporation of a close corporation may provide exercise the option to purchase, the transferring
for: stockholder may sell their shares to any third
person.
SEC. 98. Effects of Issuance or Transfer of Stock in if the close corporation has amended its articles of
Breach of Qualifying Conditions. – incorporation in accordance with this Title.

(a) If a stock of a close corporation is issued or (f) The term “transfer”, as used in this section, is
transferred to any person who is not eligible to be not limited to a transfer for value.
a holder thereof under any provision of the articles
of incorporation, and if the certificate for such (g) The provisions of this section shall not impair
stock conspicuously shows the qualifications of any right which the transferee may have to either
the persons entitled to be holders of record rescind the transfer or recover the stock under any
thereof, such person is conclusively presumed to express or implied warranty.
have notice of the fact of the ineligibility to be a
SEC. 99. Agreements by Stockholders. –
stockholder.
(a) Agreements duly signed and executed by and
(b) If the articles of incorporation of a close
among all stockholders before the formation and
corporation states the number of persons, not
organization of a close corporation shall survive
exceeding twenty (20), who are entitled to be
the incorporation and shall continue to be valid
stockholders of record, and if the certificate for
and binding between such stockholders, if such be
such stock conspicuously states such number, and
their intent, to the extent that such agreements are
the issuance or transfer of stock to any person
consistent with the articles of incorporation,
would cause the stock to be held by more than
irrespective of where the provisions of such
such number of persons, the person to whom such
agreements are contained, except those required
stock is issued or transferred is conclusively
by this Title to be embodied in said articles of
presumed to have notice of this fact.
incorporation.
(c) If a stock certificate of a close corporation
(b) A written agreement signed by two (2) or more
conspicuously shows a restriction on transfer of
stockholders may provide that in exercising any
the corporation’s stock and the transferee acquires
voting right, the shares held by them shall be voted
the stock in violation of such restriction, the
as provided or as agreed, or in accordance with a
transferee is conclusively presumed to have notice
procedure agreed upon by them.
of the fact that the stock was acquired in violation
of the restriction. (c) No provision in a written agreement signed by
the stockholders, relating to any phase of
(d) Whenever a person to whom stock of a close
corporate affairs, shall be invalidated between the
corporation has been issued or transferred has or
parties on the ground that its effect is to make
is conclusively presumed under this section to
them partners among themselves.
have notice of: (1) the person’s ineligibility to be a
stockholder of the corporation; or (2) that the (d) A written agreement among some or all of the
transfer of stock would cause the stock of the stockholders in a close corporation shall not be
corporation to be held by more than the number of invalidated on the ground that it relates to the
persons permitted under its articles of conduct of the business and affairs of the
incorporation; or (3) that the transfer violates a corporation as to restrict or interfere with the
restriction on transfer of stock, and the discretion or powers of the board of
corporation may, at its option, refuse to register directors: Provided, That such agreement shall
the transfer in the name of the transferee. impose on the stockholders who are parties
thereto the liabilities for managerial acts imposed
(e) The provisions of subsection (d) shall not be
on directors by this Code.
applicable if the transfer of stock, though contrary
to subsections (a), (b) or (c), has been consented to
by all the stockholders of the close corporation, or
(e) Stockholders actively engaged in the incorporation which seeks to delete or remove any
management or operation of the business and provision required by this Title or to reduce a
affairs of a close corporation shall be held to strict quorum or voting requirement stated in said
fiduciary duties to each other and among articles of incorporation shall require the
themselves. The stockholders shall be personally affirmative vote of at least two-thirds (2/3) of the
liable for corporate torts unless the corporation outstanding capital stock, whether with or without
has obtained reasonably adequate liability voting rights, or of such greater proportion of
insurance. shares as may be specifically provided in the
articles of incorporation for amending, deleting or
SEC. 100. When a Board Meeting is Unnecessary or removing any of the aforesaid provisions, at a
Improperly Held. – Unless the bylaws provide meeting duly called for the purpose.
otherwise, any action taken by the directors of a
close corporation without a meeting called SEC. 103. Deadlocks. – Notwithstanding any
properly and with due notice shall nevertheless be contrary provision in the close corporation’s
deemed valid if: articles of incorporation, bylaws, or stockholders’
agreement, if the directors or stockholders are so
(a) Before or after such action is taken, a written divided on the management of the corporation’s
consent thereto is signed by all the directors; or business and affairs that the votes required for a
corporate action cannot be obtained, with the
(b) All the stockholders have actual or implied
consequence that the business and affairs of the
knowledge of the action and make no prompt
corporation can no longer be conducted to the
objection in writing; or
advantage of the stockholders generally, the
(c) The directors are accustomed to take informal Commission, upon written petition by any
action with the express or implied acquiescence of stockholder, shall have the power to arbitrate the
all the stockholders; or dispute. In the exercise of such power, the
Commission shall have authority to make
(d) All the directors have express or implied appropriate orders, such as: (a) cancelling or
knowledge of the action in question and none of altering any provision contained in the articles of
them makes a prompt objection in writing. incorporation, bylaws, or any stockholder’s
agreement; (b) cancelling, altering or enjoining a
An action within the corporate powers taken at a resolution or act of the corporation or its board of
meeting held without proper call or notice, is directors, stockholders, or officers; (c) directing or
deemed ratified by a director who failed to attend, prohibiting any act of the corporation or its board
unless after having knowledge thereof, the director of directors, stockholders, officers, or other
promptly files his written objection with the persons party to the action; (d) requiring the
secretary of the corporation. purchase at their fair value of shares of any
stockholder, either by the corporation regardless
SEC. 101. Preemptive Right in Close
of the availability of unrestricted retained earnings
Corporations. – The preemptive right of
in its books, or by the other stockholders; (e)
stockholders in close corporations shall extend to
appointing a provisional director; (f) dissolving the
all stock to be issued, including reissuance of
corporation; or (g) granting such other relief as the
treasury shares, whether for money, property or
circumstances may warrant.
personal services, or in payment of corporate
debts, unless the articles of incorporation provide A provisional director shall be an impartial person
otherwise. who is neither a stockholder nor a creditor of the
corporation or any of its subsidiaries or affiliates,
SEC. 102. Amendment of Articles of
and whose further qualifications, if any, may be
Incorporation. – Any amendment to the articles of
determined by the Commission. A provisional
director is not a receiver of the corporation and
does not have the title and powers of a custodian
or receiver. A provisional director shall have all the
rights and powers of a duly elected director, TITLE XIII SPECIAL
including the right to be notified of and to vote at
meetings of directors until removed by order of the CORPORATIONS
Commission or by all the stockholders. The
compensation of the provisional director shall be
determined by agreement between such director
and the corporation, subject to approval of the
Commission, which may fix the compensation CHAPTER I EDUCATIONAL CORPORATIONS
absent an agreement or in the event of
disagreement between the provisional director SEC. 105. Incorporation. – Educational
and the corporation. corporations shall be governed by special laws and
by the general provisions of this Code.
SEC. 104. Withdrawal of Stockholder or
Dissolution of Corporation. – In addition and SEC. 106. Board of Trustees. –Trustees of
without prejudice to other rights and remedies educational institutions organized as nonstock
available under this Title, any stockholder of a corporations shall not be less than five (5) nor more
close corporation may, for any reason, compel the than fifteen (15): Provided, That the number of
corporation to purchase shares held at fair value, trustees shall be in multiples of five (5).
which shall not be less than the par or issued value,
when the corporation has sufficient assets in its Unless otherwise provided in the articles of
books to cover its debts and liabilities exclusive of incorporation or bylaws, the board of trustees of
capital stock: Provided, That any stockholder of a incorporated schools, colleges, or other
close corporation may, by written petition to the institutions of learning shall, as soon as organized,
Commission, compel the dissolution of such so classify themselves that the term of office of
corporation whenever any of acts of the directors, one-fifth (1/5) of their number shall expire every
officers, or those in control of the corporation is year. Trustees thereafter elected to fill vacancies,
illegal, fraudulent, dishonest, oppressive or occurring before the expiration of a particular
unfairly prejudicial to the corporation or any term, shall hold office only for the unexpired
stockholder, or whenever corporate assets are period. Trustees elected thereafter to fill vacancies
being misapplied or wasted. caused by expiration of term shall hold office for
five (5) years. A majority of the trustees shall
constitute a quorum for the transaction of
business. The powers and authority of trustees
shall be defined in the bylaws.

For institutions organized as stock corporations,

the number and term of directors shall be
governed by the provisions on stock corporations.
 (d) The manner by which any vacancy occurring in
the office of chief archbishop, bishop, priest,
minister, rabbi, or presiding elder is required to be
CHAPTER II RELIGIOUS CORPORATIONS filled, according to the rules, regulations or
discipline of the religious denomination, sect or
SEC. 107. Classes of Religious Corporations. – church; and
Religious corporations may be incorporated by
one or more persons. Such corporations may be (e) The place where the principal office of the
classified into corporations sole and religious corporation sole is to be established and located,
societies. which place must be within the territory of the
Philippines.
Religious corporations shall be governed by this
Chapter and by the general provisions on nonstock The articles of incorporation may include any other
corporations insofar as applicable. provision not contrary to law for the regulation of
the affairs of the corporation.
SEC. 108. Corporation sole. – For the purpose of
administering and managing, as trustee, the SEC. 110. Submission of the Articles of
affairs, property and temporalities of any religious Incorporation. – The articles of incorporation must
denomination, sect or church, a corporation sole be verified, by affidavit or affirmation of the chief
may be formed by the chief archbishop, bishop, archbishop, bishop, priest, minister, rabbi, or
priest, minister, rabbi, or other presiding elder of presiding elder, as the case may be, and
such religious denomination, sect, or church. accompanied by a copy of the commission,
certificate of election or letter of appointment of
SEC. 109. Articles of incorporation. – In order to such chief archbishop, bishop, priest, minister,
become a corporation sole, the chief archbishop, rabbi, or presiding elder, duly certified to be
bishop, priest, minister, rabbi or presiding elder of correct by any notary public.
any religious denomination, sect or church must
file with the Commission articles of incorporation From and after filing with the Commission of the
setting forth the following: said articles of incorporation, verified by affidavit
or affirmation, and accompanied by the
(a) That the applicant chief archbishop, bishop, documents mentioned in the preceding
priest, minister, rabbi, or presiding elder paragraph, such chief archbishop, bishop, priest,
represents the religious denomination, sect, or minister, rabbi, or presiding elder shall become a
church which desires to become a corporation corporation sole and all temporalities, estate and
sole; properties of the religious denomination, sect or
church theretofore administered or managed as
(b) That the rules, regulations and discipline of the such chief archbishop, bishop, priest, minister,
religious denomination, sect or church are rabbi, or presiding elder shall be personally held in
consistent with becoming a corporation sole and trust as a corporation sole, for the use, purpose,
do not forbid it; exclusive benefit and on behalf of the religious
denomination, sect or church, including hospitals,
(c) That such chief archbishop, bishop, priest,
schools, colleges, orphan asylums, parsonages,
minister, rabbi, or presiding elder is charged with
and cemeteries thereof.
the administration of the temporalities and the
management of the affairs, estate and properties SEC. 111. Acquisition and Alienation of Property. –
of the religious denomination, sect or church A corporation sole may purchase and hold real
within the territorial jurisdiction, so described estate and personal property for its church,
succinctly in the articles of incorporation; charitable, benevolent, or educational purposes,
and may receive bequests or gifts for such
purposes. Such corporation may sell or mortgage SEC. 113. Dissolution. – A corporation sole may be
real property held by it by obtaining an order for dissolved and its affairs settled voluntarily by
that purpose from the Regional Trial Court of the submitting to the Commission a verified
province where the property is situated upon proof declaration of dissolution, setting forth:
that the notice of the application for leave to sell or
mortgage has been made through publication or as (a) The name of the corporation;
directed by the Court, and that it is in the interest
(b) The reason for dissolution and winding up;
of the corporation that leave to sell or mortgage be
granted. The application for leave to sell or (c) The authorization for the dissolution of the
mortgage must be made by petition, duly verified, corporation by the particular religious
by the chief archbishop, bishop, priest, minister, denomination, sect or church; and
rabbi, or presiding elder acting as corporation sole,
and may be opposed by any member of the (d) The names and addresses of the persons who
religious denomination, sect or church are to supervise the winding up of the affairs of the
represented by the corporation sole: Provided, corporation.
That in cases where the rules, regulations, and
discipline of the religious denomination, sect or Upon approval of such declaration of dissolution
church, religious society, or order concerned by the Commission, the corporation shall cease to
represented by such corporation sole regulate the carry on its operations except for the purpose of
method of acquiring, holding, selling, and winding up its affairs.
mortgaging real estate and personal property,
SEC. 114. Religious Societies. – Unless forbidden
such rules, regulations and discipline shall govern,
by competent authority, the Constitution,
and the intervention of the courts shall not be
pertinent rules, regulations, or discipline of the
necessary.
religious denomination, sect or church of which it
SEC. 112. Filling of Vacancies. – The successors in is a part, any religious society, religious order,
office of any chief archbishop, bishop, priest, diocese, synod, or district organization of any
minister, rabbi, or presiding elder in a corporation religious denomination, sect or church, may, upon
sole shall become the corporation sole on their written consent and/or by an affirmative vote at a
accession to office and shall be permitted to meeting called for the purpose of at least two-
transact business as such upon filing a copy of their thirds (2/3) of its membership, incorporate for the
commission, certificate of election, or letters of administration of its temporalities or for the
appointment, duly certified by any notary public management of its affairs, properties, and estate
with the Commission. by filing with the Commission, articles of
incorporation verified by the affidavit of the
During any vacancy in the office of chief presiding elder, secretary, or clerk or other
archbishop, bishop, priest, minister, rabbi, or member of such religious society or religious order,
presiding elder of any religious denomination, sect or diocese, synod, or district organization of the
or church incorporated as a corporation sole, the religious denomination, sect or church, setting
person or persons authorized by the rules, forth the following:
regulations or discipline of the religious
denomination, sect or church represented by the (a) That the religious society or religious order, or
corporation sole to administer the temporalities diocese, synod, or district organization is a
and manage the affairs, estate, and properties of religious organization of a religious denomination,
the corporation sole shall exercise all the powers sect or church;
and authority of the corporation sole during such
(b) That at least two-thirds (2/3) of its membership
vacancy.
has given written consent or has voted to
incorporate, at a duly convened meeting of the chartered government-owned and -controlled
body; corporations may not incorporate as One Person
Corporations: Provided, further, That a natural
(c) That the incorporation of the religious society or person who is licensed to exercise a profession
religious order, or diocese, synod, or district may not organize as a One Person Corporation for
organization is not forbidden by competent the purpose of exercising such profession except as
authority or by the Constitution, rules, regulations otherwise provided under special laws.
or discipline of the religious denomination, sect or
church of which it forms part; SEC. 117. Minimum Capital Stock Required for
One Person Corporation. – A One Person
(d) That the religious society or religious order, or Corporation shall not be required to have a
diocese, synod, or district organization desires to minimum authorized capital stock except as
incorporate for the administration of its affairs, otherwise provided by special law.
properties and estate;
SEC. 118. Articles of Incorporation. – A One Person
(e) The place within the Philippines where the Corporation shall file articles of incorporation in
principal office of the corporation is to be accordance with the requirements under Section
established and located; and 14 of this Code. It shall likewise substantially
contain the following:
(f) The names, nationalities, and residence
addresses of the trustees, not less than five (5) nor (a) If the single stockholder is a trust or an estate,
more than fifteen (15), elected by the religious the name, nationality, and residence of the trustee,
society or religious order, or the diocese, synod, or administrator, executor, guardian, conservator,
district organization to serve for the first year or custodian, or other person exercising fiduciary
such other period as may be prescribed by the laws duties together with the proof of such authority to
of the religious society or religious order, or of the act on behalf of the trust or estate; and
diocese, synod, or district organization.
(b) Name, nationality, residence of the nominee
and alternate nominee, and the extent, coverage
and limitation of the authority.

SEC. 119. Bylaws. – The One Person Corporation is

not required to submit and file corporate bylaws.
CHAPTER III ONE PERSON CORPORATIONS
SEC. 120. Display of Corporate Name. – A One
SEC. 115. Applicability of Provisions to One Person Corporation shall indicate the letters “OPC”
Person Corporations. – The provisions of this Title either below or at the end of its corporate name.
shall primarily apply to One Person Corporations.
Other provisions of this Code apply suppletorily, SEC. 121. Single Stockholder as Director,
except as otherwise provided in this Title. President. – The single stockholder shall be the
sole director and president of the One Person
SEC. 116. One Person Corporation. – A One Person Corporation.
Corporation is a corporation with a single
stockholder: Provided, That only a natural person, SEC. 122. Treasurer, Corporate Secretary, and
trust, or an estate may form a One Person Other Officers. – Within fifteen (15) days from the
Corporation. issuance of its certificate of incorporation, the One
Person Corporation shall appoint a treasurer,
Banks and quasi-banks, pre-need, trust, insurance, corporate secretary, and other officers as it may
public and publicly-listed companies, and non-
deem necessary, and notify the Commission manage the corporation’s affairs. The articles of
thereof within five (5) days from appointment. incorporation shall state the names, residence
addresses and contact details of the nominee and
The single stockholder may not be appointed as alternate nominee, as well as the extent and
the corporate secretary. limitations of their authority in managing the
affairs of the One Person Corporation.
A single stockholder who is likewise the self-
appointed treasurer of the corporation shall give a The written consent of the nominee and alternate
bond to the Commission in such a sum as may be nominee shall be attached to the application for
required: Provided, That the said incorporation. Such consent may be withdrawn in
stockholder/treasurer shall undertake in writing to writing any time before the death or incapacity of
faithfully administer the One Person Corporation’s the single stockholder.
funds to be received as treasurer, and to disburse
and invest the same according to the articles of SEC. 125. Term of Nominee and Alternate
incorporation as approved by the Commission. The Nominee. – When the incapacity of the single
bond shall be renewed every two (2) years or as stockholder is temporary, the nominee shall sit as
often as may be required. director and manage the affairs of the One Person
Corporation until the stockholder, by self
SEC. 123. Special Functions of the Corporate determination, regains the capacity to assume
Secretary. – In addition to the functions such duties.
designated by the One Person Corporation, the
corporate secretary shall: In case of death or permanent incapacity of the
single stockholder, the nominee shall sit as
(a) Be responsible for maintaining the minutes director and manage the affairs of the One Person
book and/or records of the corporation; Corporation until the legal heirs of the single
stockholder have been lawfully determined, and
(b) Notify the nominee or alternate nominee of the
the heirs have designated one of them or have
death or incapacity of the single stockholder,
agreed that the estate shall be the single
which notice shall be given no later than five (5)
stockholder of the One Person Corporation.
days from such occurrence;
The alternate nominee shall sit as director and
(c) Notify the Commission of the death of the single
manage the One Person Corporation in case of the
stockholder within five (5) days from such
nominee’s inability, incapacity, death, or refusal to
occurrence and stating in such notice the names,
discharge the functions as director and manager of
residence addresses, and contact details of all
the corporation, and only for the same term and
known legal heirs; and
under the same conditions applicable to the
(d) Call the nominee or alternate nominee and the nominee.
known legal heirs to a meeting and advise the legal
SEC. 126. Change of Nominee or Alternate
heirs with regard to, among others, the election of
Nominee. – The single stockholder may, at any
a new director, amendment of the articles of
time, change its nominee and alternate nominee
incorporation, and other ancillary and/or
by submitting to the Commission the names of the
consequential matters.
new nominees and their corresponding written
SEC. 124. Nominee and Alternate Nominee. – The consent. For this purpose, the articles of
single stockholder shall designate a nominee and incorporation need not be amended.
an alternate nominee who shall, in the event of the
SEC. 127. Minutes Book. – A One Person
single stockholder’s death or incapacity, take the
Corporation shall maintain a minutes book which
place of the single stockholder as director and shall
shall contain all actions, decisions, and resolutions burden of affirmatively showing that the
taken by the One Person Corporation. corporation was adequately financed.

SEC. 128. Records in Lieu of Meetings. – When Where the single stockholder cannot prove that the
action is needed on any matter, it shall be sufficient property of the One Person Corporation is
to prepare a written resolution, signed and dated independent of the stockholder’s personal
by the single stockholder, and recorded in the property, the stockholder shall be jointly and
minutes book of the One Person Corporation. The severally liable for the debts and other liabilities of
date of recording in the minutes book shall be the One Person Corporation.
deemed to be the date of the meeting for all
purposes under this Code. The principles of piercing the corporate veil applies
with equal force to One Person Corporations as
SEC. 129. Reportorial Requirements. – The One with other corporations.
Person Corporation shall submit the following
within such period as the Commission may SEC. 131. Conversion from an Ordinary
prescribe: Corporation to a One Person Corporation. – When
a single stockholder acquires all the stocks of an
(a) Annual financial statements audited by an ordinary stock corporation, the latter may apply
independent certified public for conversion into a One Person Corporation,
accountant: Provided, That if the total assets or subject to the submission of such documents as
total liabilities of the corporation are less than Six the Commission may require. If the application for
Hundred Thousand Pesos (P600,000.00), the conversion is approved, the Commission shall
financial statements shall be certified under oath issue a certificate of filing of amended articles of
by the corporation’s treasurer and president. incorporation reflecting the conversion. The One
Person Corporation converted from an ordinary
(b) A report containing explanations or comments stock corporation shall succeed the latter and be
by the president on every qualification, legally responsible for all the latter’s outstanding
reservation, or adverse remark or disclaimer made liabilities as of the date of conversion.
by the auditor in the latter’s report;
SEC. 132. Conversion from a One Person
(c) A disclosure of all self-dealings and related Corporation to an Ordinary Stock Corporation. –
party transactions entered into between the One A One Person Corporation may be converted into
Person Corporation and the single stockholder; an ordinary stock corporation after due notice to
and the Commission of such fact and of the
circumstances leading to the conversion, and after
(d) Other reports as the Commission may require.
compliance with all other requirements for stock
For purposes of this provision, the fiscal year of a corporations under this Code and applicable rules.
One Person Corporation shall be that set forth in its Such notice shall be filed with the Commission
articles of incorporation or, in the absence thereof, within sixty (60) days from the occurrence of the
the calendar year. circumstances leading to the conversion into an
ordinary stock corporation. If all requirements
The Commission may place the corporation under have been complied with, the Commission shall
delinquent status should the corporation fail to issue a certificate of filing of amended articles of
submit the reportorial requirements three (3) incorporation reflecting the conversion.
times, consecutively or intermittently, within a
period of five (5) years. In case of death of the single stockholder, the
nominee or alternate nominee shall transfer the
SEC. 130. Liability of Single Shareholder. – A sole shares to the duly designated legal heir or estate
shareholder claiming limited liability has the within seven (7) days from receipt of either an
affidavit of heirship or self-adjudication executed no newspaper is published in such place, in a
by a sole heir, or any other legal document newspaper of general circulation in the
declaring the legal heirs of the single stockholder Philippines.
and notify the Commission of the transfer. Within
sixty (60) days from the transfer of the shares, the A verified request for dissolution shall be filed with
legal heirs shall notify the Commission of their the Commission stating: (a) the reason for the
decision to either wind up and dissolve the One dissolution; (b) the form, manner, and time when
Person Corporation or convert it into an ordinary the notices were given; (c) names of the
stock corporation. stockholders and directors or members and
trustees who approved the dissolution; (d) the
The ordinary stock corporation converted from a date, place, and time of the meeting in which the
One Person Corporation shall succeed the latter vote was made; and (e) details of publication.
and be legally responsible for all the latter’s
outstanding liabilities as of the date of conversion. The corporation shall submit the following to the
Commission: (1) a copy of the resolution
authorizing the dissolution, certified by a majority
of the board of directors or trustees and
countersigned by the secretary of the corporation;
(2) proof of publication; and (3) favorable
recommendation from the appropriate regulatory
TITLE XIV DISSOLUTION agency, when necessary.

SEC. 133. Methods of Dissolution. – A corporation Within fifteen (15) days from receipt of the verified
formed or organized under the provisions of this request for dissolution, and in the absence of any
Code may be dissolved voluntarily or involuntarily. withdrawal within said period, the Commission
shall approve the request and issue the certificate
SEC. 134. Voluntary Dissolution Where No
of dissolution. The dissolution shall take effect only
Creditors are Affected. – If dissolution of a
upon the issuance by the Commission of a
corporation does not prejudice the rights of any certificate of dissolution.
creditor having a claim against it, the dissolution
may be effected by majority vote of the board of No application for dissolution of banks, banking
directors or trustees, and by a resolution adopted and quasi-banking institutions, preneed,
by the affirmative vote of the stockholders owning insurance and trust companies, NSSLAs,
at least majority of the outstanding capital stock or pawnshops, and other financial intermediaries
majority of the members of a meeting to be held shall be approved by the Commission unless
upon the call of the directors or trustees. accompanied by a favorable recommendation of
the appropriate government agency.
At least twenty (20) days prior to the meeting,
notice shall be given to each shareholder or SEC. 135. Voluntary Dissolution Where Creditors
member of record personally, by registered mail, are Affected; Procedure and Contents of Petition.
or by any means authorized under its bylaws – Where the dissolution of a corporation may
whether or not entitled to vote at the meeting, in prejudice the rights of any creditor, a verified
the manner provided in Section 50 of this Code and petition for dissolution shall be filed with the
shall state that the purpose of the meeting is to Commission. The petition shall be signed by a
vote on the dissolution of the corporation. Notice majority of the corporation’s board of directors or
of the time, place, and object of the meeting shall trustees, verified by its president or secretary or
be published once prior to the date of the meeting one of its directors or trustees, and shall set forth
in a newspaper published in the place where the all claims and demands against it, and that its
principal office of said corporation is located, or if dissolution was resolved upon by the affirmative
vote of the stockholders representing at least two- SEC. 136. Dissolution by Shortening Corporate
thirds (2/3) of the outstanding capital stock or at Term. – A voluntary dissolution may be effected by
least two-thirds (2/3) of the members at a meeting amending the articles of incorporation to shorten
of its stockholders or members called for that the corporate term pursuant to the provisions of
purpose. The petition shall likewise state: (a) the this Code. A copy of the amended articles of
reason for the dissolution; (b) the form, manner, incorporation shall be submitted to the
and time when the notices were given; and (c) the Commission in accordance with this Code.
date, place, and time of the meeting in which the
vote was made. The corporation shall submit to the Upon the expiration of the shortened term, as
Commission the following: (1) a copy of the stated in the approved amended articles of
resolution authorizing the dissolution, certified by incorporation, the corporation shall be deemed
a majority of the board of directors or trustees and dissolved without any further proceedings, subject
countersigned by the secretary of the corporation; to the provisions of this Code on liquidation.
and (2) a list of all its creditors.
In the case of expiration of corporate term,
If the petition is sufficient in form and substance, dissolution shall automatically take effect on the
the Commission shall, by an order reciting the day following the last day of the corporate term
purpose of the petition, fix a deadline for filing stated in the articles of incorporation, without the
objections to the petition which date shall not be need for the issuance by the Commission of a
less than thirty (30) days nor more than sixty (60) certificate of dissolution.
days after the entry of the order. Before such date,
SEC. 137. Withdrawal of Request and Petition for
a copy of the order shall be published at least once
Dissolution. – A withdrawal of the request for
a week for three (3) consecutive weeks in a
dissolution shall be made in writing, duly verified
newspaper of general circulation published in the
by any incorporator, director, trustee, shareholder,
municipality or city where the principal office of
or member and signed by the same number of
the corporation is situated, or if there be no such
incorporators, directors, trustees, shareholders, or
newspaper, then in a newspaper of general
members necessary to request for dissolution as
circulation in the Philippines, and a similar copy
set forth in the foregoing sections. The withdrawal
shall be posted for three (3) consecutive weeks in
shall be submitted no later than fifteen (15) days
three (3) public places in such municipality or city.
from receipt by the Commission of the request for
Upon five (5) days’ notice, given after the date on dissolution. Upon receipt of a withdrawal of
which the right to file objections as fixed in the request for dissolution, the Commission shall
order has expired, the Commission shall proceed withhold action on the request for dissolution and
to hear the petition and try any issue raised in the shall, after investigation: (a) make a
objections filed; and if no such objection is pronouncement that the request for dissolution is
sufficient, and the material allegations of the deemed withdrawn; (b) direct a joint meeting of
petition are true, it shall render judgment the board of directors or trustees and the
dissolving the corporation and directing such stockholders or members for the purpose of
disposition of its assets as justice requires, and ascertaining whether to proceed with dissolution;
may appoint a receiver to collect such assets and or (c) issue such other orders as it may deem
pay the debts of the corporation. appropriate.

The dissolution shall take effect only upon the A withdrawal of the petition for dissolution shall be
issuance by the Commission of a certificate of in the form of a motion and similar in substance to
dissolution. a withdrawal of request for dissolution but shall be
verified and filed prior to publication of the order
setting the deadline for filing objections to the The Commission shall give reasonable notice to,
petition. and coordinate with, the appropriate regulatory
agency prior to the involuntary dissolution of
SEC. 138. Involuntary Dissolution. – A corporation companies under their special regulatory
may be dissolved by the Commission motu jurisdiction.
proprio or upon filing of a verified complaint by any
interested party. The following may be grounds for SEC. 139. Corporate Liquidation. – Except for
dissolution of the corporation: banks, which shall be covered by the applicable
provisions of Republic Act No. 7653, otherwise
(a) Non-use of corporate charter as provided under known as the “New Central Bank Act”, as amended,
Section 21 of this Code; and Republic Act No. 3591, otherwise known as the
Philippine Deposit Insurance Corporation Charter,
(b) Continuous inoperation of a corporation as
as amended, every corporation whose charter
provided under Section 21 of this Code;
expires pursuant to its articles of incorporation, is
(c) Upon receipt of a lawful court order dissolving annulled by forfeiture, or whose corporate
the corporation; existence is terminated in any other manner, shall
nevertheless remain as a body corporate for three
(d) Upon finding by final judgment that the (3) years after the effective date of dissolution, for
corporation procured its incorporation through the purpose of prosecuting and defending suits by
fraud; or against it and enabling it to settle and close its
affairs, dispose of and convey its property, and
(e) Upon finding by final judgment that the distribute its assets, but not for the purpose of
corporation: continuing the business for which it was
established.
(1) Was created for the purpose of committing,
concealing or aiding the commission of securities At any time during said three (3) years, the
violations, smuggling, tax evasion, money corporation is authorized and empowered to
laundering, or graft and corrupt practices; convey all of its property to trustees for the benefit
of stockholders, members, creditors and other
(2) Committed or aided in the commission of
persons in interest. After any such conveyance by
securities violations, smuggling, tax evasion,
the corporation of its property in trust for the
money laundering, or graft and corrupt practices,
benefit of its stockholders, members, creditors and
and its stockholders knew; and
others in interest, all interest which the
(3) Repeatedly and knowingly tolerated the corporation had in the property terminates, the
commission of graft and corrupt practices or other legal interest vests in the trustees, and the
fraudulent or illegal acts by its directors, trustees, beneficial interest in the stockholders, members,
officers, or employees. creditors or other persons-in-interest.

If the corporation is ordered dissolved by final Except as otherwise provided for in Sections 93 and
judgment pursuant to the grounds set forth in 94 of this Code, upon the winding up of corporate
subparagraph (e) hereof, its assets, after payment affairs, any asset distributable to any creditor or
of its liabilities, shall, upon petition of the stockholder or member who is unknown or cannot
Commission with the appropriate court, be be found shall be escheated in favor of the national
forfeited in favor of the national government. Such government.
forfeiture shall be without prejudice to the rights of
Except by decrease of capital stock and as
innocent stockholders and employees for services
otherwise allowed by this Code, no corporation
rendered, and to the application of other penalty
shall distribute any of its assets or property except
or sanction under this Code or other laws.
upon lawful dissolution and after payment of all its (c) The name and address of its resident agent
debts and liabilities. authorized to accept summons and process in all
legal proceedings and all notices affecting the
corporation, pending the establishment of a local
office;

(d) The place in the Philippines where the

corporation intends to operate;
TITLE XV FOREIGN
(e) The specific purpose or purposes which the
CORPORATIONS corporation intends to pursue in the transaction of
its business in the Philippines: Provided, That said
SEC. 140. Definition and Rights of Foreign purpose or purposes are those specifically stated
Corporations. – For purposes of this Code, a in the certificate of authority issued by the
foreign corporation is one formed, organized or appropriate government agency;
existing under laws other than those of the
Philippines’ and whose laws allow Filipino citizens (f) The names and addresses of the present
and corporations to do business in its own country directors and officers of the corporation;
or State. It shall have the right to transact business
in the Philippines after obtaining a license for that (g) A statement of its authorized capital stock and
purpose in accordance with this Code and a the aggregate number of shares which the
certificate of authority from the appropriate corporation has authority to issue, itemized by
government agency. class, par value of shares, shares without par value,
and series, if any;
SEC. 141. Application to Existing Foreign
Corporations. – Every foreign corporation which, (h) A statement of its outstanding capital stock and
on the date of the effectivity of this Code, is the aggregate number of shares which the
authorized to do business in the Philippines under corporation has issued, itemized by class, par
a license issued to it shall continue to have such value of shares, shares without par value, and
authority under the terms and conditions of its series, if any;
license, subject to the provisions of this Code and
other special laws. (i) A statement of the amount actually paid in; and

SEC. 142. Application for a License. – A foreign (j) Such additional information as may be
corporation applying for a license to transact necessary or appropriate in order to enable the
business in the Philippines shall submit to the Commission to determine whether such
Commission a copy of its articles of incorporation corporation is entitled to a license to transact
and bylaws, certified in accordance with law, and business in the Philippines, and to determine and
their translation to an official language of the assess the fees payable.
Philippines, if necessary. The application shall be Attached to the application for license shall be a
under oath and, unless already stated in its articles certificate under oath duly executed by the
of incorporation, shall specifically set forth the authorized official or officials of the jurisdiction of
following: its incorporation, attesting to the fact that the laws
(a) The date and term of incorporation; of the country or State of the applicant allow
Filipino citizens and corporations to do business
(b) The address, including the street number, of the therein, and that the applicant is an existing
principal office of the corporation in the country or corporation in good standing. If the certificate is in
State of incorporation; a foreign language, a translation thereof in English
under oath of the translator shall be attached to Government of the Philippines, its political
the application. subdivisions and instrumentalities, or of
government-owned or -controlled corporations
The application for a license to transact business in and entities, shares of stock or debt securities that
the Philippines shall likewise be accompanied by a are registered under Republic Act No. 8799,
statement under oath of the president or any other otherwise known as “The Securities Regulation
person authorized by the corporation, showing to Code”, shares of stock in domestic corporations
the satisfaction of the Commission and when listed in the stock exchange, shares of stock in
appropriate, other governmental agencies that the domestic insurance companies and banks, any
applicant is solvent and in sound financial financial instrument determined suitable by the
condition, setting forth the assets and liabilities of Commission, or any combination thereof with an
the corporation as of the date not exceeding one actual market value of at least Five hundred
(1) year immediately prior to the filing of the thousand pesos (P500,000.00) or such other
application. amount that may be set by the
Commission: Provided, however, That within six (6)
Foreign banking, financial, and insurance
months after each fiscal year of the licensee, the
corporations shall, in addition to the above
Commission shall require the licensee to deposit
requirements, comply with the provisions of
additional securities or financial instruments
existing laws applicable to them. In the case of all
equivalent in actual market value to two percent
other foreign corporations, no application for
(2%) of the amount by which the licensee’s gross
license to transact business in the Philippines shall
income for that fiscal year exceeds Ten million
be accepted by the Commission without previous
pesos (P10,000,000.00). The Commission shall also
authority from the appropriate government
require the deposit of additional securities or
agency, whenever required by law.
financial instruments if the actual market value of
SEC. 143. Issuance of a License. – If the the deposited securities or financial instruments
Commission is satisfied that the applicant has has decreased by at least ten percent (10%) of their
complied with all the requirements of this Code actual market value at the time they were
and other special laws, rules and regulations, the deposited. The Commission may, at its discretion,
Commission shall issue a license to transact release part of the additional deposit if the gross
business in the Philippines to the applicant for the income of the licensee has decreased, or if the
purpose or purposes specified in such license. actual market value of the total deposit has
Upon issuance of the license, such foreign increased by more than ten percent (10%) of their
corporation may commence to transact business actual market value at the time they were
in the Philippines and continue to do so for as long deposited. The Commission may, from time to
as it retains its authority to act as a corporation time, allow the licensee to make substitute
under the laws of the country or State of its deposits for those already on deposit as long as the
incorporation, unless such license is sooner licensee is solvent. Such licensee shall be entitled
surrendered, revoked, suspended, or annulled in to collect the interest or dividends on such
accordance with this Code or other special laws. deposits. In the event the licensee ceases to do
Within sixty (60) days after the issuance of the business in the Philippines, its deposits shall be
license to transact business in the Philippines, the returned, upon the licensee’s application and upon
licensee, except foreign banking or insurance proof to the satisfaction of the Commission that
corporations, shall deposit with the Commission the licensee has no liability to Philippine residents,
for the benefit of present and future creditors of including the Government of the Republic of the
the licensee in the Philippines, securities Philippines. For purposes of computing the
satisfactory to the Commission, consisting of securities deposit, the composition of gross
bonds or other evidence of indebtedness of the
income and allowable deductions therefrom shall Whenever such service of summons or other
be in accordance with the rules of the Commission. process is made upon the Commission, the
Commission shall, within ten (10) days thereafter,
SEC. 144. Who May be a Resident Agent. – A transmit by mail a copy of such summons or other
resident agent may be either an individual residing legal process to the corporation at its home or
in the Philippines or a domestic corporation principal office. The sending of such copy by the
lawfully transacting business in the Commission shall be a necessary part of and shall
Philippines: Provided, That an individual resident complete such service. All expenses incurred by the
agent must be of good moral character and of Commission for such service shall be paid in
sound financial standing: Provided, further, That in advance by the party at whose instance the service
case of a domestic corporation who will act as a is made.
resident agent, it must likewise be of sound
financial standing and must show proof that it is in It shall be the duty of the resident agent to
good standing as certified by the Commission. immediately notify the Commission in writing of
any change in the resident agent’s address.
SEC. 145. Resident Agent; Service of Process. – As
a condition to the issuance of the license for a SEC. 146. Law Applicable. – A foreign corporation
foreign corporation to transact business in the lawfully doing business in the Philippines shall be
Philippines, such corporation shall file with the bound by all laws, rules and regulations applicable
Commission a written power of attorney to domestic corporations of the same class, except
designating a person who must be a resident of the those which provide for the creation, formation,
Philippines, on whom summons and other legal organization or dissolution of corporations or
processes may be served in all actions or other those which fix the relations, liabilities,
legal proceedings against such corporation, and responsibilities, or duties of stockholders,
consenting that service upon such resident agent members, or officers of corporations to each other
shall be admitted and held as valid as if served or to the corporation.
upon the duly authorized officers of the foreign
corporation at its home office. Such foreign SEC. 147. Amendments to Articles of
corporation shall likewise execute and file with the Incorporation or Bylaws of Foreign
Commission an agreement or stipulation, Corporations. – Whenever the articles of
executed by the proper authorities of said incorporation or bylaws of a foreign corporation
corporation, in form and substance as follows: authorized to transact business in the Philippines
are amended, such foreign corporation shall,
“The (name of foreign corporation) hereby within sixty (60) days after the amendment
stipulates and agrees, in consideration of being becomes effective, file with the Commission, and in
granted a license to transact business in the the proper cases, with the appropriate government
Philippines, that if the corporation shall cease to agency, a duly authenticated copy of the amended
transact business in the Philippines, or shall be articles of incorporation or bylaws, indicating
without any resident agent in the Philippines on clearly in capital letters or underscoring the
whom any summons or other legal processes may change or changes made, duly certified by the
be served, then service of any summons or other authorized official or officials of the country or
legal process may be made upon the Commission in State of incorporation. Such filing shall not in itself
any action or proceeding arising out of any business enlarge or alter the purpose or purposes for which
or transaction which occurred in the Philippines and such corporation is authorized to transact business
such service shall have the same force and effect as in the Philippines.
if made upon the duly authorized officers of the
corporation at its home office.” SEC. 148. Amended License. – A foreign
corporation authorized to transact business in the
Philippines shall obtain an amended license in the SEC. 151. Revocation of License. – Without
event it changes its corporate name, or desires to prejudice to other grounds provided under special
pursue other or additional purposes in the laws, the license of a foreign corporation to
Philippines, by submitting an application with the transact business in the Philippines may be
Commission, favorably endorsed by the revoked or suspended by the Commission upon
appropriate government agency in the proper any of the following grounds:
cases.
(a) Failure to file its annual report or pay any
SEC. 149. Merger or Consolidation Involving a fees as required by this Code;
Foreign Corporation Licensed in the Philippines. –
One or more foreign corporations authorized to (b) Failure to appoint and maintain a resident
transact business in the Philippines may merge or agent in the Philippines as required by this
consolidate with any domestic corporation or Title;
corporations if permitted under Philippine laws
(c) Failure, after change of its resident agent or
and by the law of its incorporation: Provided, That
address, to submit to the Commission a
the requirements on merger or consolidation as
statement of such change as required by this
provided in this Code are followed.
Title;
Whenever a foreign corporation authorized to
(d) Failure to submit to the Commission an
transact business in the Philippines shall be a party
authenticated copy of any amendment to its
to a merger or consolidation in its home country or
articles of incorporation or bylaws or of any
State as permitted by the law authorizing its
articles of merger or consolidation within the
incorporation, such foreign corporation shall,
time prescribed by this Title;
within sixty (60) days after the effectivity of such
merger or consolidation, file with the Commission, (e) A misrepresentation of any material matter
and in proper cases, with the appropriate in any application, report, affidavit or other
government agency, a copy of the articles of document submitted by such corporation
merger or consolidation duly authenticated by the pursuant to this Title;
proper official or officials of the country or State
under whose laws the merger or consolidation was (f) Failure to pay any and all taxes, imposts,
effected: Provided, however, That if the absorbed assessments or penalties, if any, lawfully due to
corporation is the foreign corporation doing the Philippine Government or any of its
business in the Philippines, the latter shall at the agencies or political subdivisions;
same time file a petition for withdrawal of its
license in accordance with this Title. (g) Transacting business in the Philippines
outside of the purpose or purposes for which
SEC. 150. Doing Business Without a License. – No such corporation is authorized under its
foreign corporation transacting business in the license;
Philippines without a license, or its successors or
assigns, shall be permitted to maintain or (h) Transacting business in the Philippines as
intervene in any action, suit or proceeding in any agent of or acting on behalf of any foreign
court or administrative agency of the Philippines; corporation or entity not duly licensed to do
but such corporation may be sued or proceeded business in the Philippines; or
against before Philippine courts or administrative
(i) Any other ground as would render it unfit to
tribunals on any valid cause of action recognized
transact business in the Philippines.
under Philippine laws.
SEC. 152. Issuance of Certificate of Revocation. –
Upon the revocation of the license to transact
business in the Philippines, the Commission shall The Commission may publish its findings, orders,
issue a corresponding certificate of revocation, opinions, advisories, or information concerning
furnishing a copy thereof to the appropriate any such violation, as may be relevant to the
government agency in the proper cases. general public or to the parties concerned, subject
to the provisions of Republic Act No. 10173,
The Commission shall also mail the notice and otherwise known as the “Data Privacy Act of 2012”,
copy of the certificate of revocation to the and other pertinent laws.
corporation, at its registered office in the
Philippines. The Commission shall give reasonable notice to
and coordinate with the appropriate regulatory
SEC. 153. Withdrawal of Foreign Corporations. – agency prior to any such publication involving
Subject to existing laws and regulations, a foreign companies under their special regulatory
corporation licensed to transact business in the jurisdiction.
Philippines may be allowed to withdraw from the
Philippines by filing a petition for withdrawal of SEC. 155. Administration of Oaths, Subpoena of
license. No certificate of withdrawal shall be issued Witnesses and Documents. – The Commission,
by the Commission unless all the following through its designated officer, may administer
requirements are met: oaths and affirmations,
issue subpoena and subpoena duces tecum, take
(a) All claims which have accrued in the testimony in any inquiry or investigation, and may
Philippines have been paid, compromised or perform other acts necessary to the proceedings or
settled; to the investigation.
(b) All taxes, imposts, assessments, and SEC. 156. Cease and Desist Orders. – Whenever the
penalties, if any, lawfully due to the Philippine Commission has reasonable basis to believe that a
Government or any of its agencies or political person has violated, or is about to violate this
subdivisions, have been paid; and Code, a rule, regulation, or order of the
Commission, it may direct such person to desist
(c) The petition for withdrawal of license has
from committing the act constituting the violation.
been published once a week for three (3)
consecutive weeks in a newspaper of general The Commission may issue a cease and desist
circulation in the Philippines. order ex parte to enjoin an act or practice which is
fraudulent or can be reasonably expected to cause
significant, imminent, and irreparable danger or
injury to public safety or welfare. The ex
parte order shall be valid for a maximum period of
twenty (20) days, without prejudice to the order
TITLE XVI being made permanent after due notice and
hearing.
INVESTIGATIONS,
Thereafter, the Commission may proceed
OFFENSES, AND administratively against such person in
accordance with Section 158 of this Code, and/or
PENALTIES transmit evidence to the Department of Justice for
preliminary investigation or criminal prosecution
SEC. 154. Investigation and Prosecution of and/or initiate criminal prosecution for any
Offenses. – The Commission may investigate an violation of this Code, rule, or regulation.
alleged violation of this Code, or of rule, regulation,
or order of the Commission.
SEC. 157. Contempt. – Any person who, without trustee or officer shall be punished with a fine
justifiable cause, fails or refuses to comply with any ranging from Ten thousand pesos (P10,000.00) to
lawful order, decision, or subpoena issued by the Two hundred thousand pesos (P200,000.00) at the
Commission shall, after due notice and hearing, be discretion of the court, and shall be permanently
held in contempt and fined in an amount not disqualified from being a director, trustee or officer
exceeding Thirty thousand pesos (P30,000.00). of any corporation. When the violation of this
When the refusal amounts to clear and open provision is injurious or detrimental to the public,
defiance of the Commission’s order, decision, the penalty shall be a fine ranging from Twenty
or subpoena, the Commission may impose a daily thousand pesos (P20,000.00) to Four hundred
fine of One thousand pesos (P1,000.00) until the thousand pesos (P400,000.00).
order, decision, or subpoena is complied with.
SEC. 161. Violation of Duty to Maintain Records,
SEC. 158. Administrative Sanctions. – If, after due to Allow their Inspection or Reproduction;
notice and hearing, the Commission finds that any Penalties. – The unjustified failure or refusal by the
provision of this Code, rules or regulations, or any corporation, or by those responsible for keeping
of the Commission’s orders has been violated, the and maintaining corporate records, to comply with
Commission may impose any or all of the following Sections 45, 73, 92, 128, 177 and other pertinent
sanctions, taking into consideration the extent of rules and provisions of this Code on inspection and
participation, nature, effects, frequency and reproduction of records shall be punished with a
seriousness of the violation: fine ranging from Ten thousand pesos (P10,000.00)
to Two hundred thousand pesos (P200,000.00), at
(a) Imposition of a fine ranging from Five thousand the discretion of the court, taking into
pesos (P5,000.00) to Two million pesos consideration the seriousness of the violation and
(P2,000,000.00), and not more than One thousand its implications. When the violation of this
pesos (P1,000.00) for each day of continuing provision is injurious or detrimental to the public,
violation but in no case to exceed Two million the penalty is a fine ranging from Twenty thousand
pesos (P2,000,000.00); pesos (P20,000.00) to Four hundred thousand
pesos (P400,000.00).
(b) Issuance of a permanent cease and desist order;
The penalties imposed under this section shall be
(c) Suspension or revocation of the certificate of
without prejudice to the Commission’s exercise of
incorporation; and
its contempt powers under Section 157 hereof.
(d) Dissolution of the corporation and forfeiture of
SEC. 162. Willful Certification of Incomplete,
its assets under the conditions in Title XIV of this
Inaccurate, False, or Misleading Statements or
Code.
Reports; Penalties. – Any person who willfully
SEC. 159. Unauthorized Use of Corporate Name; certifies a report required under this Code,
Penalties. – The unauthorized use of a corporate knowing that the same contains incomplete,
name shall be punished with a fine ranging from inaccurate, false, or misleading information or
Ten thousand pesos (P10,000.00) to Two hundred statements, shall be punished with a fine ranging
thousand pesos (P200,000.00). from Twenty thousand pesos (P20,000.00) to Two
hundred thousand pesos (P200,000.00). When the
SEC. 160. Violation of Disqualification Provision; wrongful certification is injurious or detrimental to
Penalties. – When, despite the knowledge of the the public, the auditor or the responsible person
existence of a ground for disqualification as may also be punished with a fine ranging from
provided in Section 26 of this Code, a director, Forty thousand pesos (P40,000.00) to Four
trustee or officer willfully holds office, or willfully hundred thousand pesos (P400,000.00).
conceals such disqualification, such director,
SEC. 163. Independent Auditor Collusion; When there is a finding that any of its directors,
Penalties. – An independent auditor who, in officers, employees, agents, or representatives are
collusion with the corporation’s directors or engaged in graft and corrupt practices, the
representatives, certifies the corporation’s corporation’s failure to install: (a) safeguards for
financial statements despite its incompleteness or the transparent and lawful delivery of services; and
inaccuracy, its failure to give a fair and accurate (b) policies, code of ethics, and procedures against
presentation of the corporation’s condition, or graft and corruption shall be prima facie evidence
despite containing false or misleading statements, of corporate liability under this section.
shall be punished with a fine ranging from Eighty
thousand pesos (P80,000.00) to Five hundred SEC. 167. Engaging Intermediaries for Graft and
thousand pesos (P500,000.00). When the Corrupt Practices; Penalties. – A corporation that
statement or report certified is fraudulent, or has appoints an intermediary who engages in graft and
the effect of causing injury to the general public, corrupt practices for the corporation’s benefit or
the auditor or responsible officer may be punished interest shall be punished with a fine ranging from
with a fine ranging from One hundred thousand One hundred thousand pesos (P100,000.00) to One
pesos (P100,000.00) to Six hundred thousand million pesos (P1,000,000.00).
pesos (P600,000.00).
SEC. 168. Tolerating Graft and Corrupt Practices;
SEC. 164. Obtaining Corporate Registration Penalties. – A director, trustee, or officer who
Through Fraud; Penalties. – Those responsible for knowingly fails to sanction, report, or file the
the formation of a corporation through fraud, or appropriate action with proper agencies, allows or
who assisted directly or indirectly therein, shall be tolerates the graft and corrupt practices or
punished with a fine ranging from Two hundred fraudulent acts committed by a corporation’s
thousand pesos (P200,000.00) to Two million pesos directors, trustees, officers, or employees shall be
(P2,000,000.00). When the violation of this punished with a fine ranging from Five hundred
provision is injurious or detrimental to the public, thousand pesos (P500,000.00) to One million pesos
the penalty is a fine ranging from Four hundred (P1,000,000.00).
thousand pesos (P400,000.00) to Five million pesos
SEC. 169. Retaliation Against Whistleblowers. – A
(P5,000,000.00).
whistleblower refers to any person who provides
SEC. 165. Fraudulent Conduct of Business; truthful information relating to the commission or
Penalties. – A corporation that conducts its possible commission of any offense or violation
business through fraud shall be punished with a under this Code. Any person who, knowingly and
fine ranging from Two hundred thousand pesos with intent to retaliate, commits acts detrimental
(P200,000.00) to Two million pesos to a whistleblower such as interfering with the
(P2,000,000.00). When the violation of this lawful employment or livelihood of the
provision is injurious or detrimental to the public, whistleblower, shall, at the discretion of the court,
the penalty is a fine ranging from Four hundred be punished with a fine ranging from One hundred
thousand pesos (P400,000.00) to Five million pesos thousand pesos (P100,000.00) to One million pesos
(P5,000,000.00). (P1,000,000.00).

SEC. 166. Acting as Intermediaries for Graft and SEC. 170. Other Violations of the Code; Separate
Corrupt Practices; Penalties. – A corporation used Liability. – Violations of any of the other provisions
for fraud, or for committing or concealing graft and of this Code or its amendments not otherwise
corrupt practices as defined under pertinent specifically penalized therein shall be punished by
statutes, shall be liable for a fine ranging from One a fine of not less than Ten thousand pesos
hundred thousand pesos (P100,000.00) to Five (P10,000.00) but not more than One million pesos
million pesos (P5,000,000.00). (P1,000,000.00). If the violation is committed by a
corporation, the same may, after notice and subscribers or stockholders, whether fully or
hearing, be dissolved in appropriate proceedings partially paid, except treasury shares.
before the Commission: Provided, That such
dissolution shall not preclude the institution of SEC. 174. Designation of Governing Boards. – The
appropriate action against the director, trustee, or provisions of specific provisions of this Code to the
officer of the corporation responsible for said contrary notwithstanding, nonstock or special
violation: Provided, further, That nothing in this corporations may, through their articles of
section shall be construed to repeal the other incorporation or their bylaws, designate their
causes for dissolution of a corporation provided in governing boards by any name other than as board
this Code. of trustees.

Liability for any of the foregoing offenses shall be SEC. 175. Collection and Use of Registration,
separate from any other administrative, civil, or Incorporation and Other Fees. – For a more
criminal liability under this Code and other laws. effective implementation of this Code, the
Commission is hereby authorized to collect, retain,
SEC. 171. Liability of Directors, Trustees, Officers, and use fees, fines, and other charges pursuant to
or Other Employees. – If the offender is a this Code and its rules and regulations. The
corporation, the penalty may, at the discretion of amount collected shall be deposited and
the court, be imposed upon such corporation maintained in a separate account which shall form
and/or upon its directors, trustees, stockholders, a fund for its modernization and to augment its
members, officers, or employees responsible for operational expenses such as, but not limited to,
the violation or indispensable to its commission. capital outlay, increase in compensation and
benefits comparable with prevailing rates in the
SEC. 172. Liability of Aiders and Abettors and private sector, reasonable employee allowance,
Other Secondary Liability. – Anyone who shall aid, employee health care services, and other
abet, counsel, command, induce, or cause any insurance, employee career advancement and
violation of this Code, or any rule, regulation, or professionalization, legal assistance, seminars,
order of the Commission shall be punished with a and other professional fees.
fine not exceeding that imposed on the principal
offenders, at the discretion of the court, after SEC. 176. Stock Ownership in Corporations. –
taking into account their participation in the Pursuant to the duties specified by Article XIV of the
offense. Constitution, the National Economic and
Development Authority (NEDA) shall, from time to
time, determine if the corporate vehicle has been
used by any corporation, business, or industry to
frustrate the provisions of this Code or applicable
laws, and shall submit to Congress, whenever
TITLE XVII deemed necessary, a report of its findings,
including recommendations for their prevention or
MISCELLANEOUS correction.

PROVISIONS The Congress of the Philippines may set maximum

limits for stock ownership of individuals or groups
SEC. 173. Outstanding Capital Stock Defined. – of individuals related to each other by
The term “outstanding capital stock”, as used in consanguinity, affinity, or by close business
this Code, shall mean the total shares of stock interests, in corporations declared to be vested
issued under binding subscription contracts to with public interest pursuant to the provisions of
this section, or whenever necessary to prevent
anti-competitive practices as provided in Republic The Commission may place the corporation under
Act No. 10667, otherwise known as the “Philippine delinquent status in case of failure to submit the
Competition Act”, or to implement national reportorial requirements three (3) times,
economic policies designed to promote general consecutively or intermittently, within a period of
welfare and economic development, as declared in five (5) years. The Commission shall give
laws, rules, and regulations. reasonable notice to and coordinate with the
appropriate regulatory agency prior to placing
In recommending to the Congress which under delinquent status companies under their
corporations, businesses and industries will be special regulatory jurisdiction.
declared as vested with public interest, and in
formulating proposals for limitations on stock Any person required to file a report with the
ownership, the NEDA shall consider the type and Commission may redact confidential information
nature of the industry, size of the enterprise, from such required report: Provided, That such
economies of scale, geographic location, extent of confidential information shall be filed in a
Filipino ownership, labor intensity of the activity, supplemental report prominently labelled
export potential, as well as other factors which are “confidential”, together with a request for
germane to the realization and promotion of confidential treatment of the report and the
business and industry. specific grounds for the grant thereof.

SEC. 177. Reportorial Requirements of SEC. 178. Visitorial Power and Confidential
Corporations. – Except as otherwise provided in Nature of Examination Results. – The Commission
this Code or in the rules issued by the Commission, shall exercise visitorial powers over all
every corporation, domestic or foreign, doing corporations, which powers shall include the
business in the Philippines shall submit to the examination and inspection of records, regulation
Commission: and supervision of activities, enforcement of
compliance, and imposition of sanctions in
(a) Annual financial statements audited by an accordance with this Code.
independent certified public
accountant: Provided, That if the total assets or Should the corporation, without justifiable cause,
total liabilities of the corporation are less than Six refuse or obstruct the Commission’s exercise of its
hundred thousand pesos (P600,000.00), the visitorial powers, the Commission may revoke its
financial statements shall be certified under oath certificate of incorporation, without prejudice to
by the corporation’s treasurer or chief financial the imposition of other penalties and sanctions
officer; and under this Code.

(b) A general information sheet. All interrogatories propounded by the Commission

and the answers thereto, as well as the results of
Corporations vested with public interest must also any examination made by the Commission or by
submit the following: any other official authorized by law to make an
examination of the operations, books, and records
(1) A director or trustee compensation report; and
of any corporation, shall be kept strictly
(2) A director or trustee appraisal or performance confidential, except when the law requires the
report and the standards or criteria used to assess same to be made public, when necessary for the
each director or trustee. Commission to take action to protect the public or
to issue orders in the exercise of its powers under
The reportorial requirements shall be submitted this Code, or where such interrogatories, answers
annually and within such period as may be or results are necessary to be presented as
prescribed by the Commission. evidence before any court.
SEC. 179. Powers, Functions, and Jurisdiction of the commission of, or in any manner furthering
the Commission. – The Commission shall have the securities violations, smuggling, tax evasion,
power and authority to: money laundering, graft and corrupt practices, or
other fraudulent or illegal acts;
(a) Exercise supervision and jurisdiction over all
corporations and persons acting on their behalf, (l) Issue writs of execution and attachment to
except as otherwise provided under this Code; enforce payment of fees, administrative fines, and
other dues collectible under this Code;
(b) Pursuant to Presidential Decree No. 902-A,
retain jurisdiction over pending cases involving (m) Prescribe the number of independent directors
intra-corporate disputes submitted for final and the minimum criteria in determining the
resolution. The Commission shall retain independence of a director;
jurisdiction over pending suspension of
payment/rehabilitation cases filed as of 30 June (n) Impose or recommend new modes by which a
2000 until finally disposed; stockholder, member, director, or trustee may
attend meetings or cast their votes, as technology
(c) Impose sanctions for the violation of this Code, may allow, taking into account the company’s
its implementing rules and orders of the scale, number of shareholders or members,
Commission; structure, and other factors consistent with the
basic right of corporate suffrage;
(d) Promote corporate governance and the
protection of minority investors, through, among (o) Formulate and enforce standards, guidelines,
others, the issuance of rules and regulations policies, rules and regulations to carry out the
consistent with international best practices; provisions of this Code; and

(e) Issue opinions to clarify the application of laws, (p) Exercise such other powers provided by law or
rules, and regulations; those which may be necessary or incidental to
carrying out the powers expressly granted to the
(f) Issue cease and desist orders ex parte to prevent Commission.
imminent fraud or injury to the public;
In imposing penalties and additional monitoring
(g) Hold corporations in direct and indirect and supervision requirements, the Commission
contempt; shall take into consideration the size, nature of the
business, and capacity of the corporation.
(h) Issue subpoena duces tecum and summon
witnesses to appear in proceedings before the No court below the Court of Appeals shall have
Commission; jurisdiction to issue a restraining order,
preliminary injunction, or preliminary mandatory
(i) In appropriate cases, order the examination,
injunction in any case, dispute, or controversy that
search and seizure of documents, papers, files and
directly or indirectly interferes with the exercise of
records, and books of accounts of any entity or
the powers, duties and responsibilities of the
person under investigation as may be necessary for
Commission that falls exclusively within its
the proper disposition of the cases, subject to the
jurisdiction.
provisions of existing laws;
SEC. 180. Development and Implementation of
(j) Suspend or revoke the certificate of
Electronic Filing and Monitoring System. – The
incorporation after proper notice and hearing;
Commission shall develop and implement an
(k) Dissolve or impose sanctions on corporations, electronic filing and monitoring system. The
upon final court order, for committing, aiding in Commission shall promulgate rules to facilitate
and expedite, among others, corporate name justice, or otherwise protect the rights of the
reservation and registration, incorporation, parties. A final arbitral award under this section
submission of reports, notices, and documents shall be executory after the lapse of fifteen (15)
required under this Code, and sharing of pertinent days from receipt thereof by the parties and shall
information with other government agencies. be stayed only by the filing of a bond or the
issuance by the appellate court of an injunctive
SEC. 181. Arbitration for Corporations. – An writ.
arbitration agreement may be provided in the
articles of incorporation or bylaws of an unlisted The Commission shall formulate the rules and
corporation. When such an agreement is in place, regulations, which shall govern arbitration under
disputes between the corporation, its stockholders this section, subject to existing laws on arbitration.
or members, which arise from the implementation
of the articles of incorporation or bylaws, or from SEC. 182. Jurisdiction Over Party-List
intra-corporate relations, shall be referred to Organizations. – The powers, authorities, and
arbitration. A dispute shall be nonarbitrable when responsibilities of the Commission involving party-
it involves criminal offenses and interests of third list organizations are transferred to the
parties. Commission on Elections (COMELEC).

The arbitration agreement shall be binding on the Within six (6) months after the effectivity of this Act,
corporation, its directors, trustees, officers, and the monitoring, supervision, and regulation of such
executives or managers. corporations shall be deemed automatically
transferred to the COMELEC.
To be enforceable, the arbitration agreement
should indicate the number of arbitrators and the For this purpose, the COMELEC, in coordination
procedure for their appointment. The power to with the Commission, shall promulgate the
appoint the arbitrators forming the arbitral corresponding implementing rules for the transfer
tribunal shall be granted to a designated of jurisdiction over the abovementioned
independent third party. Should the third party fail corporations.
to appoint the arbitrators in the manner and within
SEC. 183. Applicability of the Code. – Nothing in
the period specified in the arbitration agreement,
this law shall be construed as amending existing
the parties may request the Commission to
provisions of special laws governing the
appoint the arbitrators. In any case, arbitrators
registration, regulation, monitoring and
must be accredited or must belong to
supervision of special corporations such as banks,
organizations accredited for the purpose of
nonbank financial institutions and insurance
arbitration.
companies.
The arbitral tribunal shall have the power to rule on
Notwithstanding any provision to the contrary,
its own jurisdiction and on questions relating to
regulators such as the Bangko Sentral ng Pilipinas
the validity of the arbitration agreement. When an
and the Insurance Commission shall exercise
intra-corporate dispute is filed with a Regional
primary authority over special corporations such
Trial Court, the court shall dismiss the case before
as banks, nonbank financial institutions, and
the termination of the pretrial conference, if it
insurance companies under their supervision and
determines that an arbitration agreement is
regulation.
written in the corporation’s articles of
incorporation, bylaws, or in a separate agreement. SEC. 184. Effect of Amendment or Repeal of This
Code, or the Dissolution of a Corporation. – No
The arbitral tribunal shall have the power to grant
right or remedy in favor of or against any
interim measures necessary to ensure
corporation, its stockholders, members, directors,
enforcement of the award, prevent a miscarriage of
trustees, or officers, nor any liability incurred by
any such corporation, stockholders, members,
directors, trustees, or officers, shall be removed or
impaired either by the subsequent dissolution of
said corporation or by any subsequent
amendment or repeal of this Code or of any part
thereof.

SEC. 185. Applicability to Existing Corporation. –

A corporation lawfully existing and doing business
in the Philippines affected by the new
requirements of this Code shall be given a period of
not more than two (2) years from the effectivity of
this Act within which to comply.

SEC. 186. Separability Clause. – If any provision of

this Act is declared invalid or unconstitutional,
other provisions hereof which are not affected
thereby shall continue to be in full force and effect.

SEC. 187. Repealing clause. – Batas Pambansa Blg.

68, otherwise known as “The Corporation Code of
the Philippines”, is hereby repealed. Any law,
presidential decree or issuance, executive order,
letter of instruction, administrative order, rule or
regulation contrary to or inconsistent with any
provision of this Act is hereby repealed or modified
accordingly.

SEC. 188. Effectivity. – This Act shall take effect

upon completion of its publication in the Official
Gazette or in at least two (2) newspapers of general
circulation.

This Act which is a consolidation of Senate Bill No.

1280 and House Bill No. 8374 by the Senate and
House of Representatives on November 28, 2018.

Published in Manilrgl@ecodalpro.