CORPORATION

Revised Corporation Code of the Philippines

R.A. No. 11232
 Introduction
The Revised Corporation Code of the Philippines, Act No. 11232 (the
“Revised Corp. Code” or the “Law”) became effective on February 23, 2019
following its publication in 2 newspapers of general circulation, as declared by
the Securities and Exchange Commission (SEC) on February 28, 2019. President
Rodrigo Duterte signed the Law on February 20, 2019 after it was passed by the
Senate and the House of Representatives on November 28, 2018. It was also
earlier published in the Official Gazette on February 21, 2019 but the SEC did not
consider this as the effectivity date.
In its Repealing Clause, the Revised Corp. Code expressly repealed the
1980 Corporation Code (the “Old Corp. Code”) which had no amendments for
almost 39 years.
 Corporation
◈ Definition:
An ARTIFICIAL BEING created by OPERATION OF LAW, having the RIGHT of
SUCCESSION and the POWERS, ATTRIBUTES, and PROPERTIES EXPRESSLY AUTHORIZED
BY LAW or INCIDENTAL TO ITS EXISTENCE (Sec.2)
⮚ Four Attributes of Corporation:
A duly registered corporation shall have a juridical personality from date of the issuance of the
SEC Certificate of Incorporation and thereupon the Incorporators, Stockholders/members and
their successors shall constitute a body politic and corporate under the name stated in the
articles of incorporation and having the following inherent attributes:
1. AN ARTIFICIAL BEING (“Capacity to Contract and Transact Business”)
2. CREATED BY OPERATION OF LAW (“Creature of the law”)
3. WITH RIGHT OF SUCCESSION
4. HAVING SUCH POWERS, ATTRIBUTES AND PROPERTIES EXPRESSLY AUTHORIZED
BY LAW OR INCIDENT TO ITS EXISTENCE (“Doctrine of Limited Capacity)
 Theories on the Formation of a
Corporation
I. Concession Theory
states that a corporation is an artificial creature without any existence until it has received the
imprimatur of the state acting according to law, through the Securities and Exchange
Commission (Tayang vs Benguet Consolidated Inc., 26 SCRA 242)
Philippine jurisprudence has formally adopted this theory as the underlying basis for the
existence and powers of corporate entities in instances where the issues is between the State and
the corporation
II. Theory of corporate enterprise or economic unit
states that the corporation is not merely an artificial being, but more of an aggregation of
persons doing business, or an underlying economic unit called the “business enterprise”
The doctrine recognizes that, apart from the issue of whether there was a duly constituted juridical
person, the existence of the business enterprise by which several contracts and transaction were
pursued requires the protection of the commercial expectations of the public who dealt in good
faith with the apparent corporation
 DOCTRINE OF SEPARATE
PERSONALITY
◈ A Corporation has a juridical personality separate and distinct from that of its
stockholders or members.
◈ Under this doctrine, a corporation has a legal personality separate and distinct from
its individual stockholders or members and from any other legal entity by which it
may be incorporated. By virtue of this doctrine, stockholders of a corporation enjoy
limited liability such that the corporation debt is not the debt of the stockholder
◈ What is the Limited Liability Rule(LLR)?
A stockholder is personally liable for the financial obligations of the
corporation only to the extent of his subscription. While stockholders are generally not
liable to satisfy corporate debts with their own property, the stockholders may be held
liable if they have not fully paid the subscription price, to the extent of the amount unpaid.
 Consequences/Significance of the
Corporation’s separate personality
1. Liability for acts or contracts
Obligations incurred by a corporation, acting through its authorized agents, are its sole
liabilities. Similarly, a corporation may not generally be made to answer for acts or liabilities
of its stockholders or members or those of the legal entities to which it may be connected
2. Right to bring Actions
It may bring civil and criminal actions on its own name in the same manner as natural
persons (Civil code Art.46)
3. Separate Properties
The properties of the corporation are not the properties of its shareholders, members, or
officers. In the same manner properties of the shareholders, members or officers are not the
properties of the corporation.
4. Acquisition by court of Jurisdiction
Service of summons may be made on the president, general manager, corporate secretary,
treasurer, or in-house counsel
 Consequences/Significance of the
Corporation’s separate personality
5. Changes in individual membership
Corporation remains unchanged and unaffected in its identity by changes in its individual
membership
6. Liability for Torts
A corporation can be held liable for tort, if the tortious act is committed by an officer as an
agent under the express direction or authority from the stockholders or members acting as
body or from the directors as the governing body
Note: For close corporations and corporations by estoppel, the corporate officer/s who caused
the tortuous act to be committed in the name of the corporation shall also personally be liable
to the victims as joint tortfeasors
7. Liability for Crimes
A corporation cannot be held liable for a crim since it lacks the essential element of malice.
Moreover, the difficulty, if not the impossibility, of imposing the penal sanction of
imprisonment on a corporation, would undermine the criminal law system of the country
Exception: if the corporation itself Is held criminally liable by express provision of law
 Consequences/Significance of the
Corporation’s separate personality
8. Non entitlement to recovery of moral damages
As a general rule, a juridical person is not entitled to moral damages
because, unlike a natural person, it cannot experience physical suffering or
such sentiments as wounded feelings, serious anxiety, mental anguish or
moral shock. However, Article 2219 of the Civil Code (which provides for
cases when moral damages may be awarded: (7)Libel, slander, oral
defamation) does not qualify whether the plaintiff is natural or juridical
person. Therefore a juridical person such as a corporation can validly
complain for libel or any other form of defamation and claim for moral
damages for damage of its goodwill.
 DOCTRINE OF PIERCING THE
CORPORATE VEIL
◊ Under this doctrine, the court looks at the corporation as a mere collection of individuals or an
aggregation of persons undertaking business as a group, disregarding the separate juridical
personality of the corporation unifying the group.
◊ Another formulation of this doctrine is that when two business enterprises are owned,
conducted, and controlled by the same parties, both law an equity will, when necessary,
protect the rights of third parties, disregard the legal fiction that two corporations are distinct
entities and treat them as identical or as one and the same.
◊ NOTE: For the separate juridical personality of a corporation to be disregarded, the wrongdoing
must clearly and convincingly established. It cannot be presumed. Mere ownership by a single
stockholder or by another corporation of all or nearly all of the capital stock of a corporation is
not in itself sufficient ground for disregarding the separate corporate personality.
 DOCTRINE OF PIERCING THE
CORPORATE VEIL
◊ Example:
AJL Corporation, owned by Mr. Ariel, owed its workers. Then it ceased
operations. The following day, AJL was succeeded by, and its assets were turned over
to, LJA Corporation, 90% of the subscribed shares of which were also owned by Mr. Ariel.
The workers of AJL sued LJA for payment of their claims. LJA raises the defense that it
has a personality separate and distinct from AJL.
LJA Corporation is liable to the workers. Under the doctrine of piercing the
veil of corporate entity, the separate personality of a corporation will be disregarded if it
is used to commit fraud. It is clear from the facts that LJA took over the operations and
assets of AJL to avoid the payment of the latter’s obligations to its workers, both
operations being in legal effect, owned by the same person, Mr. Ariel
 DOCTRINE OF PIERCING THE
CORPORATE VEIL
◊ The doctrine of piercing the corporate veil applies
1. When the corporate fiction is used to DEFEAT PUBLIC CONVENIENCE or
evade an existing obligation;
2. When the corporate fiction is used to JUSTIFY WRONG
3. When the corporate fiction is used to PROTECT FRAUD
4. When the corporate fiction is used to DEFEND A CRIME; or
5. In ALTER EGO CASES, where the corporation is so organized and its
affairs are so conducted as to make it merely an instrumentality,
agency, conduit, or adjunct of another person or corporation
 Corporation vs Partnership

◊ Similarities:
1. Both have a separate juridical personality
2. Both are artificial persons, i.e., they have no bodily existence, and can
only act through agents.
3. Both are composed of a group of persons with the exception of
corporation that is formed by a single person
4. A partnership, with the exception of a General Professional Partnership,
is taxed as a corporation
5. Both have an indefinite life, except when a partnership is with a term
 Corporation vs Partnership
Distinctio
CORPORATION PARTNERSHIP

Created by operation of law

ns
MANNER OF CREATION
Created by mere agreement of the
partners
NUMBER OF ORGANIZERS
Formed singly or jointly with others not May be formed by two or more persons
more that fifteen (15) in number
RIGHT OF SUCCESSION
Has the right of succession Has no such right
POWERS
Can exercise only the powers expressly May exercise any power provided it is
authorized by law or incident to its authorized by the partners and it is not
existence contrary to law, morals, good customs,
public order and public policy
 Corporation vs Partnership
Distinctio
CORPORATION PARTNERSHIP
ns
Acts through its board of directors
MANAGEMENT
Acts through all the general partners each
one of whom is considered as agent of the
partnership unless otherwise agreed
LIABILITY OF MEMBERS FOR DEBTS
The stockholders are not liable for the General partners are liable with their
obligations of a corporation separate assets for partnership debts
COMMENCEMENT OF EXISTENCE
Commences to have juridical personality Commences to have juridical personality
on the date of the issuance of its upon the execution of the partnership
certificate of incorporation contract unless a different date is set by
the partners
 Corporation vs Partnership
Distinctio
CORPORATION ns
TRANSFERABILITY OF INTEREST
PARTNERSHIP

A stockholder can transfer his shares to A partner cannot transfer his interests to a
another person without the consent of the third person without the consent of the
other stockholders. other partners by reason of the element of
delectus personae which is inherent in a
partnership contract
DISSOLUTION
Cannot be dissolved without the consent of May be dissolved by the partners.
the STATE
 Classification of Corporations
◈ As to whether shares of stock are issued or not
1. Stock Corporation – one that has capital stock divided into shares and is
authorized to distribute dividends or allotments of the surplus profits on the
basis of shares held.
2. Non-Stock corporation – all other corporations not a stock corporation. One
no part of the income which is distributable as dividends to its members,
trustees or officers.
◈ As to the state or country under whose laws it was created
1. Domestic Corporation – one incorporated under Philippine laws
2. Foreign Corporation – one formed, organized and existing under any laws
other than those of the Philippines and whose laws allow Filipino citizens and
corporations to do business in its own country
Test to Determine NATIONALITY of a Corporation:
a) Incorporation Test – the nationality of a corporation follows that of the
country under whose laws it was incorporated. This is the test applied in
our jurisdiction.
b) Control Test – the nationality of a corporation follows that of the
stockholders owning the controlling interest. Accordingly, even if the
corporation was formed under our jurisdiction, it shall be considered a
foreign corporation if controlled by foreigners.
The “Grandfather Rule”
shall be applied only if there are questions about compliance with
Filipino ownership requirements.
This is a method by which the percentage of Filipino equity in
corporations engaged in nationalized and/or partly nationalized areas of
activities, provided for under the Constitution and other nationalization laws, is
accurately computed, and the diminution of said equity prevented.
Application of the “Grandfather Rule”
The rule applies with respect to the
registration of the subsidiary if the capital
structure of both the parent corporation
and its subsidiary do not comply with the
60%-40% Filipino to foreign ratio.
Illustration:
If a Philippine corporation (owned Filipino equity in new
55% by Filipinos, and 45% by Foreigners) Corporation - 55% x 70% =
invest in 70% of the capital stock of 38.5%
Foreign equity in new
another Philippine Corporation which is Corporation
partly nationalized, with the remaining From Filipino Corp -45% x 70%=
30% subscribed by foreigners, the 31.5%
application of the rule would diminish the From Foreign Investor =
30.0%
equity of Filipinos computed as follows:
Total Foreign equity in new corp
61.5%
 Classification of Corporations
◈ As to number of persons composing them:
1. Corporation Aggregate – one that is composed of more than one corporator
2. One Person Corporation– composed of only one person (The suffix “OPC” must be added
to the end of the corporation’s name)
◈ As to whether its purpose is public or private
1. Public Corporation – one that is organized for the government of a portion of the State,
like provinces, cities, municipalities and barangays
2. Private Corporation – one that is formed for a private purpose or end, like Jollibee Foods
Corp.
The classification includes the following:
a. Government-owned or controlled corporation – these refer to corporations created under a special law
other than those for the government of a portion of the State, such as Landbank, GSIS and those
formed under the Corporation Code where the government owns at least a majority of its outstanding
voting capital stock.
b. Quasi-public Corporations – Those organized for profit which are granted a franchise by the State to
perform public service, such as Maynilad Water Services and Meralco
 Classification of Corporations
◈ As to whether its purpose is religious or not
1. Ecclesiastical or religious corporation – one formed for a religious purpose
2. Lay corporation – one formed for a purpose other than ecclesiastical or
religious
◈ As to whether its purpose is charitable or not
1. Eleemosynary corporation – one organized for public charity
2. Civil Corporation – one organized for business or profit
◈ As to their legal right to corporate existence
1. De jure Corporation – one that has been created in strict compliance with
all the legal requirements and whose right to exist as a corporation
cannot be successfully attacked in a direct proceeding for that purpose by
the State.
 Classification of Corporations
2. De facto Corporation – one that is defectively created but there is an
exercise of corporate rights and franchise resulting from an attempt in
good faith to incorporate on the part of its members. It has all the
powers of a de jure corporation but is due existence can be attacked
directly in a quo warranto proceeding.
Its due existence cannot be attacked collaterally or as
an incident to a proceeding
For a de facto corporation to exist the following
conditions must be present
1) There must be a valid law under which it is incorporated
2) There must be an attempt in good faith to incorporate
3) There must be an actual exercise of corporate powers
4) A certificate of incorporation is issued despite defect in its incorporation
 Classification of Corporations
◈ As to their relation to another corporation or other corporations
1. Parent or holding corporation – one which owns the shares of
another corporation and having power, directly or indirectly, over
the latter including the election of the directors thereof
2. Subsidiary corporation – one whose shares of stock are owned by
another corporation, called the parent corporation, which has the
power to elect its directors
◈ As to whether its shares may be held by the public or not
1. Close corporation – one whose shares are limited to a few, restricted
as to their transfer and not listed in any stock exchange
2. Open corporation – one whose shares are open to the public such as
those whose shares are listed in the stock exchanges.
 Classification of Corporations
◈ Other Classifications:
1. Corporation by Estoppel – one which is in reality not a corporation but is
considered as one with respect to those who are precluded by their
admission or conduct from denying its existence.
Liability of persons assuming to act as a corporation and those dealing with it:
a. 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 arising as result thereof
When any such ostensible corporation is sued on any transaction entered by it as a
corporation or on tort committed by it as such, it shall not be allowed to use as a defense
its lack of corporate personality
b. Any person who assumes an obligation to an ostensible corporation as
such, cannot resist performance thereof on the ground that there was in
fact no corporation
 Components of a Corporation
1. Corporators – those who compose the corporation whether as a
stockholder or members.
2. Incorporator – those stockholders or members mentioned in the
articles of incorporation as originally forming and composing the
corporation and who are signatories of such document.
3. Stockholders – the corporators of a stock corporation
4. Members – the corporators of non-stock corporation
 Capital Stock and other terms
1. Capital Stock – the amount specified in the articles of incorporation
paid in, or procured to be paid in for carrying on of the business of the
Corporation
a. Authorized Capital Stock – this is the total amount of shares which a
corporation is allowed to issue if the shares have a par-value. If the shares
do not have par value, the corporation does not have an authorized number
of shares which it may use. Once issued, the corporation shall have a capital
stock but not an authorized capital stock
b. Subscribed Capital stock – this is the part of the capital stock which is
subscribed, whether paid or unpaid.
c. Outstanding capital stock – this refers to the total shares of stock issued
to subscribers or stock-holders, whether or not fully or partially paid, except
treasury shares
 Capital Stock and other terms
d. Paid-up Capital Stock– the part of the subscribed capital stock paid to the
corporation
e. Unissued Capital Stock - that part of the capital stock which is not issued or
subscribed
2. Legal Capital – refers to the total par value of all issued par value shares, or
the total cash or consideration received for all issued no par value shares
3. Stated Capital – this refers to the capital with which a corporation whose
shares are without par value commences its business and increased or
diminished by subsequent capital transactions.
4. Capital – refers to actual property of the corporation in money and property
Illustration:

The Articles of Incorporation of AJL Corporation provide for an authorized capital stock of
P1,000,000.00 divided into 10,000 shares each having par value of P100.00. At the time of
incorporation, 25% of the authorized capital stock was subscribed of which 25% was paid. In its first
year of operations, the corporation obtained a loan of P300,000.00 which it used to buy equipment
of the same amount. During the same period, the Corporation posted a net profit of P100,000.00

Authorized Capital Stock P 1,000,000.00

Subscribed Capital stock (P1,000,000 x 25%) 250,000.00
Outstanding Capital Stock 250,000.00
Unissued Capital Stock (P1,000,000.00 – 750,000.00
250,000.00)
Paid-up Capital Stock (P250,000 x 25%) 62,500.00
Capital (250,000 + 300,000 + 100,000) 650,000.00
Legal Capital 250,000.00
 Classes of Shares of stock under
Corporation Code
1. Common Stock – the ordinary stock of a corporation which entitles the
holder to a pro rata division of the dividends, without any preference or
advantage over any other stockholders
2. Preferred Stock – one which entitles the holder to certain preference over
other shareholders. Such preferences may be as follows:
a. Preferred Stock as to asset – one which entitles the holder to preference in the
distribution of assets over common stock upon the liquidation of the
corporation.
b. Preferred as to Dividends – one that entitles the holder to preference in the
distribution of dividends over common stock
“preferred shares of stock may be issued only with a stated par value. The
board of directors, where authorized in the articles of incorporation, may fix the
terms and conditions of preferred shares of stock or any series thereof”
 Classes of Shares of stock under
Corporation Code
3. Par value stock – one the nominal value of which appears on the stock certificate
“Stock Certificate” is the written acknowledgment by the corporation of the stockholder’s
interest in the Corporation and its property.
4. No par value stock – one without any nominal value or par value appearing on the
stock certificate. No-par value shares must be issued for a consideration of at least
Five pesos (P5.00) per share: That the entire consideration received by the corporation
for its no-par value shares shall be treated as capital and shall not be available for
distribution as dividends.
5. Redeemable Shares - are shares which may be purchased by the corporation from
the holders of such shares upon the expiration of a fixed period, regardless of the
existence of unrestricted retained earnings in the books of the corporation, and upon
such other terms and conditions stated in the articles of incorporation and the
certificate of stock representing the shares, subject to rules and regulations issued by
the Commission
 Classes of Shares of stock under
Corporation Code
Rules on Redeemable Shares:
a) They may be issued by the Corporation only if expressly provided
in the Articles of Incorporation
b) May be deprived of Voting rights
c) They may be purchased or taken up by the corporation upon the
expiration of a fixed period, regardless of the existence of an
unrestricted retained earnings in the books of the corporation
d) The terms and conditions stated in the articles of incorporation and
the certificate of stock representing the shares, subject to rules
and regulations issued by the Commission
 Classes of Shares of stock under
Corporation Code
6. Founder’s shares – those that grant to the founders certain rights and
privileges not enjoyed by other shares
Rules on Founder’s shares
a) Founder’s shares must be classified as such in the Articles of Incorporation
b) They may be given rights and privileges not enjoyed by other shares
subject to the following limitations:
1) If the exclusive right to vote or be voted for in the election of directors is granted, it
must be for a limited period not exceeding 5 years
2) The 5 year period begins from the date of incorporation
3) That such exclusive right shall not be allowed if its exercise will violate
Commonwealth Act No. 108, otherwise known as the “Anti-Dummy Law”; Republic Act
No. 7042, otherwise known as the “Foreign Investments Act of 1991”; and other
pertinent laws.
 Classes of Shares of stock under
Corporation Code
7. Treasury Shares – Those which have been issued and fully paid for,
but subsequently reacquired by the issuing corporation by purchase,
redemption, donation or through some other lawful means
Rules on Treasury Shares:
a) They shall have no voting rights as long as they remain in the Treasury
b) Although they are part of the subscribed stock, they are not considered
outstanding shares
c) Being owned by the corporation, they are not entitled to dividends
d) They may again be disposed of for a reasonable price fixed by the Board
of directors
 Classes of Shares of stock under
Corporation Code
8. Watered stock – those issued without consideration or with no
adequate consideration
9. Voting shares – those entitle to vote in the meetings of the
corporation
10.Non-voting shares – those without voting rights, except certain
cases.
 Power of A Corporation to classify its own
share and limitations thereto (Sec.6)
1. A corporation may divide its shares into classes or series of shares, or
both. Such classification may include:
a) Voting and non-voting shares
b) Common and preferred shares
c) Par value and no par value shares
d) Classification to ensure compliance with constitutional or legal requirements
2. Any of which classes or series of shares may have such rights, privileges or
restrictions as may be stated in the articles of incorporation.
3. Each share shall be equal in all respects to every other share, except as
otherwise provided in the articles of incorporation and in the certificate of
stock.
 Power of A Corporation to classify its own
share and limitations thereto (Sec.6)
4. Limitations when shares are deprived of voting rights;
a. Only those classified as “redeemable” or “preferred” shares may be deprived of the voting
right, unless otherwise provided by the Corporation code.
b. There shall always be a series or class of shares that have complete voting rights
c. Holders of nonvoting shares shall nevertheless be entitled to vote on the following matters:
(a)Amendment of the articles of incorporation;
(b)Adoption and amendment of bylaws;
(c)Sale, lease, exchange, mortgage, pledge, or other disposition of all or substantially all of the corporate
property;
(d)Incurring, creating, or increasing bonded indebtedness;
(e)Increase or decrease of authorized capital stock;
(f)Merger or consolidation of the corporation with another corporation or other corporations;
(g)Investment of corporate funds in another corporation or business in accordance with this Code; and
(h)Dissolution of the corporation.
Power of A Corporation to classify its own
share and limitations thereto (Sec.6)
5. Limitations when no-par shares are issued:
a. Shares of capital stock issued without par value shall be deemed fully paid
and non-assessable and the holder of such shares shall not be liable to the
corporation or to its creditors in respect thereto
b. No-par value shares must be issued for a consideration of at least Five pesos
(P5.00) per share
c. The entire consideration received by the corporation for its no-par value
shares shall be treated as capital and shall not be available for distribution
as dividends.
d. That banks, trust, insurance, and preneed companies, public utilities,
building and loan associations, and other corporations authorized to obtain
or access funds from the public, whether publicly listed or not, shall not be
permitted to issue no par value shares of stock
Power of A Corporation to classify its own
share and limitations thereto (Sec.6)
6. Limitations when preferred shares are issued:
a. Preferred shares of stock issued by a corporation may be given
preference in the distribution of dividends and in the distribution of
corporate assets in case of liquidation, or such other preferences
b. Preferred shares of stock may be issued only with a stated par value.
c. The board of directors, where authorized in the articles of
incorporation, may fix the terms and conditions of preferred shares
of stock or any series thereof
d. Such terms and conditions shall be effective upon filing of a
certificate thereof with the Securities and Exchange Commission
 INCORPORATION AND
ORGANIZATION OF PRIVATE
CORPORATIONS
TITLE II
 Number and Qualifications of
Incorporators
Any person, partnership, association or corporation, singly or jointly with
others but not more than fifteen (15) in number, may organize a
corporation for any lawful purpose or purposes
Incorporators who are natural persons MUST be of LEGAL AGE
Natural persons who are licensed to practice a profession, and partnerships or
associations organized for the purpose of practicing a profession, shall not be
allowed to organize as a corporation unless otherwise provided under special
laws.
Each incorporator of a stock corporation must own or be a subscriber to at
least one (1) share of the capital stock.
A corporation with a single stockholder is considered a One Person Corporation
 Corporate Term
A corporation shall have PERPETUAL EXISTENCE unless its articles of
incorporation provides otherwise.
Corporations with certificates of incorporation issued prior to the effectivity of
RA 11232, and which continue to exist, shall have perpetual existence, unless the
corporation, upon a vote of its stockholders representing a majority of its
outstanding capital stock, notifies the Commission that it elects to retain its specific
corporate term pursuant to its articles of incorporation
A corporate term for a specific period may be extended or shortened by
amending the articles of incorporation:
1. no extension may be made earlier than three (3) years prior to the original or
subsequent expiry date(s) unless there are justifiable reasons for an earlier extension
as may be determined by the Commission
2. extension of the corporate term shall take effect only on the day following the original
or subsequent expiry date(s)
 Minimum Capital Stock of Stock
Corporations
Stock corporations shall not be required to have a minimum
capital stock, except as otherwise specifically provided by special
law
 Contents of the Articles of
Incorporation
Articles of incorporation are a set of formal documents filed
with a government body to legally document the creation of a
corporation. Articles of incorporation generally contain pertinent
information, such as the firm’s name, street address, agent for
service of process, and the amount and type of stock to be issued.
 Contents of the Articles of
Incorporation
(a)The name of the corporation;
(b)The specific purpose or purposes for which the corporation is being
formed. Where a corporation has more than one stated purpose, the articles
of incorporation shall indicate the primary purpose and the secondary
purpose or purposes: Provided, That a non-stock corporation may not
include a purpose which would change or contradict its nature as such;
(c)The place where the principal office of the corporation is to be located,
which must be within the Philippines;
(d)The term for which the corporation is to exist, if the corporation has not
elected perpetual existence;
(e)The names, nationalities, and residence addresses of the incorporators;
 Contents of the Articles of
Incorporation
(f)The number of directors, which shall not be more than fifteen (15) or the number of
trustees which may be more than fifteen (15);
(g)The names, nationalities, and residence addresses of persons who shall act as
directors or trustees until the first regular directors or trustees are duly elected and
qualified in accordance with this Code;
(h)If it be a stock corporation, the amount of its authorized capital stock, number of
shares into which it is divided, the par value of each, names, nationalities, and residence
addresses of the original subscribers, amount subscribed and paid by each on the
subscription, and a statement that some or all of the shares are without par value, if
applicable;
(i)If it be a nonstock corporation, the amount of its capital, the names, nationalities, and
residence addresses of the contributors, and amount contributed by each; and
(j)Such other matters consistent with law and which the incorporators may deem
necessary and convenient.
Articles of Incorporation, how filed?

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.
 Amendment of the Articles of
Incorporation
1. Purpose
Must be for a LEGITIMATE PURPOSE or purposes
2. Vote required
I. Majority vote of the Directors; and
II. The vote or written assent of 2/3 of the outstanding capital stock for a stock
corporations
III. The articles of incorporation of a nonstock corporation may be amended by the vote or
written assent of majority of the trustees and at least two-thirds (2/3) of the members.
3. Requirement for amendments
a. The original and the amended articles shall contain all provisions required by law to be
set out in the Articles of Incorporation
b. The amendment shall be indicated by underscoring the change or changes made
4. Effectivity
Upon approval of the SEC or from the date of filing with the Commission if not acted
upon within 6 months from date of filing for a cause not attributable to the corporation.
Grounds for the rejection or disapproval
of the AOI or any amendment thereto
(a) The articles of incorporation or any amendment thereto is not substantially
in accordance with the form prescribed herein;
(b) The purpose or purposes of the corporation are patently unconstitutional,
illegal, immoral or contrary to government rules and regulations;
(c) The certification concerning the amount of capital stock subscribed and/or
paid is false;
(d) The required percentage of Filipino ownership of the capital stock under
existing laws or the Constitution has not been complied with.; and
(e) Absence of favorable recommendation from appropriate government
agency in the case of banks, banking and quasi-banking institutions, preneed,
insurance and trust companies, NSSLAS, pawnshops, and other financial
intermediaries
 Corporate Name
No corporate name shall be allowed by the Commission if it is
not distinguishable from that already reserved or registered for the
use of another corporation, or if such name is already protected by
law, or when its use is contrary to existing law, rules and regulations.
A name is not distinguishable even if it contains one or more of the
following:
a. The word “corporation”, “company”, “incorporated”, “limited”,
“limited liability”, or an abbreviation of one of such words; and
b. Punctuations, articles, conjunctions, contractions, prepositions,
abbreviations, different tenses, spacing, or number of the same word
or phrase.
 Corporate Name
If the Corporate Name is:
(1) not distinguishable from a name already reserved or registered for the use
of another corporation;
(2) (2) already protected by law; or
(3) (3) contrary to law, rules and regulations,
The SEC may summarily order the corporation to immediately cease
and desist from using such name and require the corporation to register a new
one.
The Commission shall also cause the removal of all visible signages,
marks, advertisements, labels, prints and other effects bearing such corporate
name. Upon the approval of the new corporate name, the Commission shall
issue a certificate of incorporation under the amended name.
 Corporate Name
If the Corporation will not comply with the order of the SEC:
The Commission may hold the corporation and its responsible
directors or officers in contempt and/or hold them administratively,
civilly and/or criminally liable under this Code and other applicable
laws and/or revoke the registration of the corporation.
 Effect of non-use of corporate
charter for 5 years
If the Corporation does not formally organize and commence its
business within 5 years from Incorporation, its certificate of
incorporation shall be deemed revoked as of the day following
the end of the five-year period.
Formal organization includes the adoption of the by-laws and
filing the same with the SEC, election of directors, organizational
meeting of directors to elect the president, secretary, treasurer and
other officers provided by the by-laws
Effect of continuous non-operations
for 5 years
If a corporation has commenced its business but subsequently
becomes inoperative for a period of at least five (5) consecutive
years, the Commission may, after due notice and hearing, place the
corporation under delinquent status.
A delinquent corporation shall have a period of two (2) years
to resume operations and comply with all requirements that the
Commission shall prescribe. Upon compliance by the corporation, the
Commission shall issue an order lifting the delinquent status. Failure
to comply with the requirements and resume operations within the
period given by the Commission shall cause the revocation of the
corporation’s certificate of incorporation.
Board of Directors, Trustees and
Officers
 Concept and main Function
The BOARD OF DIRECTORS OR TRUSTEES is the governing body
of a corporation. Since a corporation is an artificial person it can only
act through individuals. However, these individuals cannot bind the
corporation separately as directors or trustees. They must act as a body.

The board of directors or trustees shall perform the duties

enjoined on them by law and by the by-laws of the corporation:
1. To exercise corporate powers
2. To conduct all business
3. To control all the corporate property
 Qualification of a Director or
Trustee
1. He must be an owner of at least one (1) share of stock which
shall stand in his name in the books of the corporation.
A director who ceases to own at least one (1) share of stock
or a trustee who ceases to be a member of the corporation shall
cease to be such.
2. Majority of the director or trustees must be residents of the Philippines
3. The number of directors shall not be more than fifteen (15) or the
number of trustees which may be more than fifteen (15);
4. Must not be disqualified under the Code
5. Other qualifications as may be provided in the by-laws
 Disqualifications of BOD or BOT
A person shall be disqualified from being a director, trustee, or officer
of any corporation if, within five (5) years prior to the election or appointment
as such, the person was:
1. Convicted by final judgment
a. Of an offense punishable by imprisonment for a period exceeding six (6) years;
b. For violating this Code; and
c. For violating Republic Act No. 8799, otherwise known as “The Securities
Regulation Code”;
2. Found administratively liable for any offense involving fraudulent acts;
3. By a foreign court or equivalent foreign regulatory authority for acts,
violations or misconduct similar to those enumerated in paragraphs (1)
and (2) above
 Term of Office
Directors shall be elected for a term of one (1) year from
among the holders of stocks registered in the corporation’s books,
while trustees shall be elected for a term not exceeding three (3)
years from among the members of the corporation.
Each director and trustee shall hold office until the successor is
elected and qualified.
 Independent Director
Who is an Independent Director?
a person who, apart from shareholdings and fees received from
the corporation, is independent of management and free from any
business or other relationship which could, or could reasonably be
perceived to materially interfere with the exercise of independent
judgment in carrying out the responsibilities as a director
How elected?
must be elected by the shareholders present or entitled to vote
in absentia during the election of directors
 Independent Director
Corporations that requires an Independent Director:
Corporations vested with public interest shall have independent
directors constituting at least twenty percent (20%) of such Board of
Directors/Trustees
The following are Corporations vested with public Interest which requires an
Independent Director:
a. Corporations covered by Section 17.2 of Republic Act No. 8799, otherwise
known as “The Securities Regulation Code”, namely those whose securities
are registered with the Commission, corporations listed with an exchange
or with assets of at least Fifty million pesos (P50,000,000.00) and having
two hundred (200) or more holders of shares, each holding at least one
hundred (100) shares of a class of its equity shares
 Independent Director
b. Banks and quasi-banks, NSSLAs, pawnshops, corporations
engaged in money service business, pre-need, trust and insurance
companies, and other financial intermediaries; and
c. Other corporations engaged in business vested with public interest
similar to the above, as may be determined by the Commission,
after taking into account relevant factors which are germane to
the objective and purpose of requiring the election of an
independent director, such as the extent of minority ownership,
type of financial products or securities issued or offered to
investors, public interest involved in the nature of business
operations, and other analogous factors.
 Title Lorem Ipsum

01 02 03
LOREM IPSUM NUNC VIVERRA PELLENTESQUE
DOLOR SIT AMET, IMPERDIET ENIM. HABITANT MORBI
CONSECTETUER FUSCE EST. TRISTIQUE
ADIPISCING ELIT. VIVAMUS A TELLUS. SENECTUS ET
MAECENAS NETUS ET
MALESUADA
FAMES.