Corporation Code

Highlights of the Revised Corporation Code
Lecture by Atty. Nilo Divina,

Dean, University of Santo Tomas Faculty of Civil Law
Philippine Association of Law Schools
Historical background of the Revised Corporation Code

Republic Act No. 11232, otherwise known as the Revised Corporation Code (hereafter referred to as
“RCC”), was approved by Congress on February 20, 2019. It was signed into law by President Rodrigo R.
Duterte on February 21, 2019 and took effect on February 23, 2019, upon completion of its publication
in Manila Bulletin and Business Mirror, two newspapers of general circulation. Effective upon its
publication on February 21, 2019 an It repealed the 38-year-old Batas Pambansa 68 otherwise known as
the Corporation Code of the Philippines (hereafter referred to as “OCC”)
The law promotes ease of doing business, hence, the provisions, among others, on one
person corporation, the option of the corporation to have perpetual existence and the
elimination of the minimum subscription requirement upon incorporation.
It also adopted best practices on good corporate governance. For instance, the RCC requires
certain items to be contained in the bylaws, minutes and agenda of regular stockholders’ meetings all
aimed at fostering transparency.
The RCC also afforded greater protection to minority stockholders. Thus, it expanded the list of
books and records required to be kept by the corporation available for examination and expanded the
remedies available in case of violation of stockholders’ right of inspection
It also codified internationally- accepted practices and norms on conducting business.

Allowing the right to vote through electronic communication and sending notices of meeting
electronically and provisions for arbitration mechanism to resolve disputes within the corporation are
good examples.
Finally, it strengthened the powers of the Securities and Exchange Commission (hereafter
“SEC”) to be able to fully exercise its regulatory authority over corporations. Specifically, it
enumerated enforcement provisions and authorized the SEC to administer, investigate and prosecute
violation of the RCC provisions.
Sec. 7 Founder’s Shares
1. The RCC made it clear that exclusive right of the holders of the founders shares to vote and be
voted as directors shall not be allowed if its exercise will violate Commonwealth Act No. 108
(Anti-Dummy Law), Republic Act No. 7042 (Foreign Investments Act of 1991), and other
pertinent laws.
PALS Lecture: Revised Corporation Code | 1

2. The five-year limitation is counted from date of incorporation and not from SEC’s approval.
Notes
Is the 1:10 voting rights ratio for founder’s shares subject to a limited period not to exceed
five (5) years provided under section 7 of the RCC
The voting rights ratio for Founder’s shares is not subject to the limited period not to exceed five (5)
years provided under Section 7 of the RCC since this provision only applies to the exclusive rights to vote
and to be voted for in the election of directors (Close Holding Corporation: Founder’s Shares. SEC-
OGC Opinion No. 02-10 [January 16, 2010]
ABC Corporation is a public utility corporation, 60% owned by Filipinos and 40% by
foreigners. It has 10 directors as specified in the articles of incorporation. X and Z are
foreigners who hold founders shares with the right to be voted as directors of the
corporation for a period of five (5) years. Can X and Y be voted as directors together with 4
other foreigners whose collective shares are enough to be assured of four board seats?
No, the right granted to founders shares can not be exercised if it will violate the Anti-Dummy Law.
Foreigners can be elected to the board of directors of corporations engaged in partially nationalized
activities only in proportion to their actual foreign equity in the corporation. Foreigners are allowed to
own 40% of the equity of a public utility corporation. Therefore, they can only have four seats in the
board of directors. The right granted to X and Y to be voted as directors can not be exercised if it will
result in the foreigners having more than the number of seats allowed by law, in violation of the Anti-
Dummy Law and the Foreign Investment act.
Sec. 10 Number and Qualifications of Incorporators
1. Unlike the old Corporation Code, which required incorporators to be natural persons numbering
not less than five, the Code allows partnership, association or corporation to organize a
corporation without any minimum number of incorporators. In fact, there can be a corporation
with only one stockholder, other than a corporation sole, in the form of a one-person
corporation.
2. The RCC likewise eliminated the residency requirement for incorporators and expectedly,
retained the legal age requirement for natural persons-incorporators and ownership of at least
one share of stock of the corporation.
3. Natural persons who are licensed to practice a profession and partnerships or associations
organized for the purpose of practicing a profession may organize a corporation only if they are
allowed under special law.

Notes
State the requirement that must be complied with by the following incorporators
applying for registration of a corporation:
1. Partnership
2. Domestic Corporation or Association
3. Foreign Corporation
1. In the event that an SEC-recorded partnership is made an incorporator the application for
registration must be accompanied by a Part’s Affidavit, duly executed by all of the partners, to the
effect that they have authorized the partnership to invest in the corporation about to be formed and
that they have designated one of the partners to become a signatory to the incorporation
documents.
2. In the event that an SEC-registered domestic corporation or association is made an incorporator, its
investment in the new corporation must be approved by a majority of the board of directors or
trustees and ratified by the stockholders representing at least two-thirds (2/3) of the outstanding
capital stock, or by at least two-thirds (2/3) of the members in case of nonstock corporations, at a
meeting duly called for the purpose.
A Directors’/Trustees’ Certificate or Secretary’s Certificate, indicating the necessary approvals, as

well as the authorized signatory to the incorporation documents, shall be executed under oath and
submitted by the applicant.
3. In the event that a foreign corporation is made an incorporator, the application for registration must
be accompanied by a copy of a document (i.e., Board Resolution, Directors’ Certificate,
Secretary’s Certificate, or its equivalent), duly authenticated by a Philippine Consulate or with an
apostille affixed thereto, authorizing the foreign corporation to invest in the corporation formed and
specifically naming the designated signatory on behalf of the foreign corporation. 1
How should an individual sign the Articles of Incorporation (AOI) or Bylaws?
Each individual signing the AOI or Bylaws must indicate the capacity upon which he or she is affixing his
or her signature thereto.
An individual designated to sign the AOI or Bylaws on behalf of an incorporator, which is not a natural
person, must also indicate the corporate name of the entity being represented and for whom he or she
is executing the AOI or Bylaws. The taxpayer Identification Number (TIN) of the principal, as well as the
designated signatory, should both be indicated in the AOI.
1 Sec. 6, SEC Memorandum Circular No. 16 series of 2019, July 30, 2019.

The registration documents should reflect the TIN or passport number of all its foreign investors other
than foreign corporations which have not yet been issued a TIN. After incorporation, all the foreign
investors, natural or juridical, shall secure a TIN. All documents to be filed with the SEC after
incorporation shall not be accepted unless the TIN of all its foreign investors, natural or juridical resident
or non-resident, are indicated therein. 2
Can a person who signs the AOI on behalf of a juridical incorporator be named as director
or trustee?
No, an individual who sins the AOI on behalf of an incorporator, which is not a natural person, may not
be named as director or trustee in the same AOI, unless when the said individual is also the owner of at
least one (1) share of stock, or is also a member, of the corporation being formed. 3Other than a one-
person corporation, can a corporation have less than 5 incorporators?
Yes, because the RCC eliminated the minimum number of incorporators. Thus, a corporation can have
three incorporators for instance unless otherwise provided by special law.
Banks for example are required to have at least 5 and a maximum of 15 directors (section 15, RA 8791,
otherwise known as the General Banking law.
Sec. 11 Corporate Term

1. A corporation shall have perpetual existence unless its articles of incorporation provides
otherwise.
2. Corporations with certificates of incorporation issued prior to the effectivity of this Code, 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 SEC that it
elects to retain its specific corporate term pursuant to its articles of incorporation: Provided,
that any change in the corporate term under this section is without prejudice to the appraisal
right of dissenting stockholders.
3. The period to extend corporate term has been reduced from five to three years prior to the
original or subsequent expiry date(s).
4. Extension of the corporate term shall take effect only on the day following the original or
subsequent expiry date(s).
5. A corporation whose term has expired is not ipso facto dissolved but may apply for a revival of
its corporate existence. Upon approval by the SEC, the corporation shall be deemed revived and

a certificate of revival of corporate existence shall be issued, giving it perpetual existence, unless
its application for revival provides otherwise.
Notes
Since the automatic conversion of the corporate term to perpetual existence does not require an
amendment of the AOI, the 2/3 affirmative vote of the outstanding shares to amend the AOI would not
be required. (Re: Corporate Tem of Existing Corporation under the RCC, SEC-OGC opinion No. 28-
19 [July 22, 2019])
What is the remedy of the stockholder in view of the automatic conversion of the
corporate term to perpetual existence of the corporation organized prior to the effectivity
of the RCC?
In view of the automatic conversion of the corporate term to perpetual existence of a corporation
organized prior to the effectivity of the RCC, the stockholder may exercise appraisal right (Sec. 11, RCC),
meaning demand the payment of the fair value of their shares, unless the corporation, upon vote of its
stockholders representing majority of its outstanding capital stock, notifies the SEC that it elects to
retain its specific corporate term pursuant to its articles of incorporation (Sec. 11, ibid)
EXERCISE IT RIGHT AWAY

There is no appraisal right for non-stock corporation.
The law is silent on whether a meeting should be conducted where a stockholder can express his dissent
against the conversion from fixed term to perpetual existence. But, since the conversion is automatic, a
stockholder can therefore exercise at any time his appraisal right, unless the stockholders, by at least
majority of the outstanding capital stock, elect to retain their specific term of the corporation.
What are the remedies of a corporation whose term has expired?
A Corporation whose term has expired may apply for a revival of its corporate existence, together with
all the rights and privileges under its certificate of incorporation and subject to all f its duties and
liabilities existing prior to its revival. Upon approval by the SEC, the corporation shall be deemed revived
and a certificate of revival of corporate existence shall be issued, giving it perpetual existence, unless its
application for revival proved otherwise.
No application for revival of certificate of incorporation of banks, banking and quasi-banking institutions,
preneed, insurance and trust companies, non-stock savings and loan Associations (NSSLAs), pawnshops,
corporations engaged in money service business, and other financial intermediaries shall be approved
by the SEC unless accompanied by a favorable recommendation of the appropriate government agency.
(Sec. 11, RCC)

The corporation may also decide to reincorporate particularly if it has no intention to liquidate and
wind-up its corporate affairs. (Chung Ka Bio vs. Intermediate Appellate Court, 163 SCRA 534,
1988) Thus, the stockholders of the defunct corporation may organize a new corporation. It may even
adopt the name of the dissolved corporation with the approval of the last stockholders representing at
least majority of the outstanding capital stock. (Indian Chamber of Commerce Phils., Inc. vs.
Filipino Indian Chamber of Commerce in the Philippines, Inc..; G.R. No. 184008, August 3,
2016)
The old and the new corporation may have identical incorporators, directors and officers. The assets of
the dissolved corporation are not, however, automatically transferred to the new corporation. However,
the stockholders may assign the right to the properties of the dissolved corporation in favor of the new
corporation as consideration for the subscription to the shares of the latter (Chung Ka Bio, ibid)
For practical consideration, the corporation should determine which option is more cost efficient.
Application for revival of the corporate existence entails payment of penalties, fines and liabilities.
Reincorporation does not require payment of such penalties but entails payment of filing fees and
documentary stamp tax for the issuance of new shares of stock.
If the defunct corporation has assets, it is more cost-efficient to apply for revival, otherwise, assets shall
be liquidated and taxes will have to be paid.
Sec. 12 Minimum Capital stock Not required of Stock Corporations
1. The RCC dispensed with the minimum subscription and paid-up capital requirement except as
otherwise provided by special law.
2. After incorporation, however, in case of increase of capital stock, at least 25% of the increase in
capital stock must be subscribed and at least 25% of the amount subscribed should be paid in
cash or property the valuation of which is equivalent to at least 25% of the subscription.
Sec. 13 Articles of Incorporation
1. Arbitration agreement may be provided in the articles of incorporation.
2. Filing of the articles of incorporation or amendments thereto may be in the form of an electronic
document in accordance with the rules on electronic filing of the SEC.
3. The articles of incorporation should include an undertaking to change corporate name

immediately upon receipt of notice from the SEC that another corporation, partnership or
person has acquired a prior right to the use of such name, that the name has been declared not
distinguishable from a name already registered or reserved for the use of another corporation,
or that it is contrary to law, public morals, good customs or public policy.

4. It provides that the corporation shall have perpetual existence or a fixed term as may be
indicated in the articles of incorporation.
5. There is no need to state that at least twenty-five (25%) per cent of the authorized capital stock
above stated has been subscribed and that at least twenty-five (25%) percent of the total
subscription have been paid as this double 25% requirement under the OCC has been deleted.
6. There is a requirement of certification of receipt of paid-up portion of subscription by the

Corporate Treasurer.
Sec. 17 Corporate Name
1. Detailed guidelines and more requirements for a corporate name were added.
2. The SEC is also granted the power to summarily order the corporation to cease and desist from
using a corporate name which did not observe the guidelines set under the RCC. The liability of
the corporation and its responsible officers is also provided in case of failure to comply with the
Commission’s order.
3. The primary basis for not allowing corporate name is that it is not distinguishable from another
corporate name which is reserved or registered for the use of another corporation whereas
under the OCC it is identical or confusingly similar with a previously reserved or registered
corporate name.
Notes
The following are the guidelines in the registration of corporate name:
1. The corporate name shall contain the word “Corporation” or “Incorporated” or the
abbreviations “Corp.” or “Inc.”
In case of a One-Person Corporation, the corporate name shall contain the word “OPC” either
below or at the end of its corporate name.
The corporate name of a foundation shall use the word “Foundation”
The corporate name of all non-stock, non-profit corporations, including nongovernmental

organization and foundations, engaging in microfinance activities shall use the word
“Microfinance” or “Microfinancing”.
2. A term that describes the business of a corporation in its name should refer to its primary
purpose. If there are two such terms, the first should refer to the primary purpose and second to
the secondary purpose.
3. If the name applied for its similar to that of a registered corporation or partnership, the
applicant shall add one or more distinctive words to the proposed name to remove the similarity
or differentiate it from the registered name. however, the addition of one or more distinctive

words shall not be allowed if the registered name is coined or unique, unless the board of
directors of the subject corporation gives its consent to the applied name.
4. Business or trade name which is different from the corporate name shall be
indicated in the articles of incorporation or partnership. A company may have
more than one business or trade name.
5. Trade name or trademark registered with the Intellectual Property Office may be used as part of
the corporate name of a party other than its owner if the latter gives its consent to such use.
6. The full name or surname of a person may be used in a corporate name if he or she is a
stockholder or member of said entity and has consented to such use; if the person is already
deceased, the consent shall be given by his or her estate.
7. A single stockholder or a One-Person Corporation (OPC) may use his or her name; provided, that
said name shall be accompanied with descriptive words aside from suffix OPC.
8. The single stockholder may also use the name of another person provided consent was given by
said person or if deceased, his estate. Provided that the name shall be accompanied by the
descriptive words other than OPC.
9. Pursuant to existing laws, the following words and phrases can be used in the corporate or
partnership name in the manner enumerated below:
a. “Finance Company,” “Financing Company,” “Finance and Leasing Company,” and

“Leasing company,” “Investment Company,” “Investment House” by entities engaged in
the financing or investment house business (RA 8556 and Pres. Decree
129)
b. “Lending Company” and “Lending Investor” by lending Companies (RA 9474) or
“Pawnshop” by entities authorized to operate pawnshop (PD 114)
c. “Bank,” “Banking,” “Banker,” “Savings and Loan Association” (RA 8367), “Trust
Corporation,” “Trust Company” or words of similar meaning by entities engaged in the
banking or trust business (RA 8791)
d. “United Nations,” “UN” in full or abbreviated form exclusively by the United
Nations and its attached agencies (RA 226)
e. “Bonded” by entities with licensed warehouses (RA 247)
f. “SPV-AMC” by corporations authorized to act as special purpose vehicle (RA 9182);
g. The name of an international governmental organization, such as “International
Criminal Police Organization” (INTERPOL), “International Monetary Fund” (IMF)
“International Labour Organization” (ILO) may not be used as part of a corporate or
partnership name unless when duly authorized or allowed by the commission; and
h. ASEAN (protected under Article 6ter of the Paris Convention for the protection of
Industrial Property, adopted in 1883 and revised in Stockholm in 1967)

10. Unless otherwise authorized by the commission, the words and phrases enumerated below can
be used only by the entities mentioned:
a. “investment(s)” or “Capital” organized as investment house or investment company;

b. “Capital” by entities organized as investment house, investment company or holding
company;
c. “Asset/Investment/Fund/Financial Management,” or
“Asset/Investment/Fund/Financial Adviser,” or any similar words or phrases by entities
organized as investment company adviser or holder of investment management
activities (IMA) License from the Bangko Sentral ng Pilipinas;
d. “National,” “Bureau,” “Commission,” “State,” and other similar words, acronyms,
abbreviations that have gained wide acceptance in the Philippines by entities that
perform governmental functions;
e. “Association” and “Organization” or similar words which pertain to non-stock
corporations by entities primarily engaged in non-profit activities; and
f. “Stock exchange/Futures Exchange/Derivatives Exchange,” “Stock Broker/Securities
Broker/Derivatives Broker,” “Commodity/Financial Futures Merchant/Broker,”
“Securities Clearing Agency/Stock Clearing Agency,” “Plans” or any similar words or
phrases by entities organized as an exchange, broker dealer, commodity futures broker,
clearing agency, or pre-need company under the Securities regulation code (RA 8799)
11. Pursuant to Republic Act 10530, or “The Act defining the Use and Procetion of the Red Cross,
Red Crescent and Red Crystal Emblems,” the use of the words “Red Cross,” “Red Crescent,” or
“Red Crystal” or their translation in any official language and dialect cannot be used or
registered as part of a corporate name, unless with the consent of Philippine Red Cross.
12. The name of a corporation that has been dissolved or whose registration has been
revoked shall not be used by another corporation within five (5) years from
approval of dissolution or five (5) years from the date of revocation, unless its use

has been allowed at the time of the dissolution or revocation by the stockholders
or members who represent a majority of the outstanding capital stock or
membership of the dissolved corporation or partnership, as the case may be.
13. A corporate or partnership name, which was previously used but become the subject of
amendment, shall not be re-registered or used by another corporation for a period of three (3)
years from the date of the approval of the adoption of the new corporate name. An earlier
period may be allowed for the registration or use of the former corporate or partnership name
provided that the corporation or partnership, which previously owned the used corporate or
partnership name, gives its consent.
14. Names of absorbed/constituent corporations may not be used unless it is the surviving
corporation intending to use the said absorbed/constituent corporate name.
15. The reservation or notice of availability of a name shall not constitute an approval
of the use of such name or an application for a change of name
16. Appeals from or opposition to the approval of corporate names of new companies,
or complaints against proposed new names of existing companies, shall be
resolved by the Company Registration and Monitoring Department (CRMD) may
be appealed to the SEC En Banc through the Office of the General Counsel.
17. At the time of its registration, a corporation shall submit an affidavit containing an
unqualified undertaking to change its change name immediately upon receipt of
notice from the SEC that another corporation, partnership or person has acquired
a prior right to the use of such name, that the name has been declared not
distinguishable from a name already registered or reserved for the use of another
corporation, or that it is contrary to law, public morals, good customs or public
policy. The affidavit shall be signed by at least two incorporators in the form
prescribed by the SEC. this affidavit shall not be required if the undertaking is
already included as one of the provisions of the Articles of Incorporation of the
registrant.4
Can the name of a corporation or partnership that has been dissolved or whose
registration has been revoked be used by another corporation?
The name of a corporation or partnership that has been dissolved or whose registration has been
revoked shall not be used by another corporation or partnership within five (5) years from the approval
of dissolution or five (5) years from the date of revocation, unless its used has been allowed at the time
of the dissolution or revocation by the stockholders, members or partners who represent a majority of
the outstanding capital stock or membership of the dissolved corporation or partnership, as the case
may be.
No application for re-registration of the expired corporation, however, shall be processed by the
Commission unless the application is accompanied by the following documents:
4 SEC Memorandum Circular No. 13 Series of 2019 June 21, 2019.
10
i. Board Resolution, executed and signed under oath by the hold-over board of directors/trustees
of the expired corporation, attesting that:
a. The applicant for re-registration is a new corporation intending to use the name of the
expired corporation (specially identifying the corporate name and registration number);
b. The re-registration is approved by the majority vote of the directors or trustees and vote
of the stockholders representing the majority of the outstanding capital stock or
membership;
c. They shall include a statement in the articles of incorporation of the new corporation
that the same is using the name of the expired corporation; and
d. If applicable, they will no longer file a petition to set aside the order of revocation.
ii. Latest general information sheet of the expired corporation, stamped “received” by the
commission; and
iii. Affidavit, executed under oath by hold-over corporate secretary, attesting that:
a. There are no properties owned by the dissolved/revoked corporation due for
liquidation, or in case there are properties owned by the expired corporation no
property is transferred to the new corporation or, in case of stock corporations, used for
subscription payment without undergoing corporate liquidation process;
b. There is no pending intra-corporate dispute or claim involving the expired corporation
(**provision from mc. no. 14 2017)
c. That the expired corporation has no derogatory information with the commission at the
time of its application for re-registration.
Upon Approval of the re-registration, the certificate of registration to be issued to the new corporation
shall indicate its new SEC registration number and pre-generated Tax Identification Number (TIN) as
conformation that the same is a separate and distinct entity from the expired corporation. 5
What are the requirements for another corporation to use the names of
absorbed/constituent corporation?
1. Consent from the surviving corporation;

2. Directors’ certificate of the surviving corporation permitting the usage of said
absorbed/constituent corporation by another corporation; and
3. Secretary’s Certificate of non-existence of intra-corporate dispute of the Corporation from the
Surviving Corporation.6
What are the remedies available to a corporation against the unauthorized use of its
corporate name?
The remedies are as follows:
5 Sec. 14 SEC Memorandum Circular No. 13 Series of 2019 June 21, 2019.
6
Sec. 16 SEC Memorandum Circular No. 13 Series of 2019 June 21, 2019.
PALS Lecture: Revised Corporation Code |

11
1. File a petition with the SEC to compel the other corporation to change it. Court action is not
necessary. The SEC may not order change of corporate name based on its authority under the
RCC and the undertaking of the corporation contained in its articles of incorporation to change
its corporate name if it is not distinguishable from that already reserved or registered for the use
of another corporation
2. File a complaint against the unauthorized use of the corporate name under Sec. 159 of the RCC.
3. If the corporate name is used as a tradename, file a complaint for infringement of tradename
Are “Lyceum” and “De La Salle” generic words which can not be appropriated and adopted
as part of the corporate name?
Lyceum is a generic word to refer to a school or institution of learning. It can not be appropriated by any
school or similar institution of others. De La Salle is fanciful, whimsical and arbitrary because there is no
connection between the words la sale and education. Even though la sale means classroom in French,
imagination is required in order to associate the term with an educational institution and its particular
brand of service. Being arbitrary, it can be appropriated and the first one to acquire a prior right over
such name can legally object to its use by another school or similar institution (De La Salle
Montessori International of Malolos vs. De La Salle Brothers, et. Al, G.R. No. 205548,
February 7, 2018)
Sec. 21 Effects of Non-use of Corporate Charter and Continuous Inoperation
1. The period to organize and commence business is fixed at five years from incorporation. Under
the OCC, the corporation must organize within two years from incorporation.
2. The SEC is given the authority to place a corporation under delinquent status but only after due
notice and hearing, that is, if a corporation has commenced its business but subsequently
becomes inoperative for a period of at least five (5) consecutive years.
3. A delinquent corporation shall have a period of two (2) years to resume operations and comply
with all requirements that the SEC shall prescribe. Upon compliance by the corporation, the SEC
shall issue an order lifting the delinquent status. Failure to comply with the requirements and
resume operations within the period given by the SEC shall cause the revocation of the
corporation’s certificate of incorporation.
4. The SEC shall also give reasonable notice to, and coordinate with the appropriate regulatory
agency prior to the suspension or revocation of the certificate of incorporation of companies
under their special regulatory jurisdiction.
Notes
When is a corporation considered to have formally organized and commenced its
business?
12
It can be said that a corporation has organized and commenced business if the conditions subsequent to
the registration have been complied with, to wit:
1. It should adopt and file its by-laws;

2. The board of directors should meet, elect a set of officers, adopt pertinent board resolutions and
submit information sheet regarding its officers to the SEC;
3. It should register its corporate name or business name with the Department of Trade and
Industry;
4. It should register itself with the Bureau of Internal Revenue and Social Security System and
secure municipal or city license to operate its business; and
5. It should be established an office and start its business operations. (Non-use of Charter;
Continuous Inoperation of a Corporation, SEC_OGC Opinion No. 23-07, [December 4,
2007])
What is the consequences if a corporation is placed in delinquent status?
A delinquent corporation shall have a period of two (2) years to resume operations and comply with all
requirements that the SEC shall prescribe. Upon compliance by the corporation, the SEC shall issue an
order lifting the delinquent status. Failure to comply with the requirements and resume operations
within the period given by the SEC shall cause revocation of the corporation’s certificate of
incorporation.
Sec. 22 The Board of Directors or Trustees of a Corporation; Qualification and Term
1. The term of a trustee was modified for a period not exceeding three years from its term of one
year in the Old Corporation Code.
2. There is no residence requirement for the members of the Board.
3. The RCC requires the election of independent directors for corporation vested with public
interest who should constitute at least twenty percent (20%) of such board.
4. The RCC enumerated the corporations that are vested with public interest; to wit,
a. Corporations covered by Section 17.2 of Republic Act No. 8799 (The Securities
Regulation Code), namely those whose securities are registered with the SEC,
corporations listed with an exchange or with assets of at least Fifty million pesos
(₱50,000,000.00) 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;
b. Banks and quasi-banks, NSSLAs, pawnshops, corporations engaged in money service

business, preneed, trust and insurance companies, and other financial intermediaries;
and
c. Other corporations engaged in businesses vested with public interest similar to the
above, as may be determined by the SEC, 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.
5. It defines an independent director as 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.
Notes
What if you only have 5 directors?
Is the segregate casting of votes for regular and independent directors sanctioned by the
Corporation Code?
The Segregate casting of votes for regular and independent directors is not contrary to the Corporation
Code. The segregation of the voting for the regular directors and independent ones is a practical device
in order to ensure that at least two independent directors are elected to the CMCI’s member Board of
Directors in accordance with SRC Rule 38. (Procedure for Election of Directors, SEC-OGC Opinion No.
19-11 [March 23, 2011])
Sec. 23 Election of Directors or Trustees
1. The right of each stockholder or member to nominate any director or trustee is subject to the
exclusive right reserved for holders of founders’ shares to be voted as directors.
2. When so authorized in the bylaws or by a majority of the board of directors, the stockholders or
members may also vote through remote communication or in absentia: Provided, That the
right to vote through such modes may be exercised in corporations vested with public interest,
notwithstanding the absence of a provision in the bylaws of such corporations.
3. A stockholder or member who participates through remote communication or in absentia,

shall be deemed present for purposes of quorum.
Notes
Although the RCC now allows voting via remote communication or in absentia in the stockholders or
members meeting provided that the same is in the bylaws, said provision is not self-executory as it
requires the SEC to issue rules and regulations for the same. As of date, the SEC has not issued any rule,
regulation, circular or guideline for this matter and thus, the proportion of said provision can not be
enforced yet. (SEC-OGC OPINION 56-19 November 28, 2019)
For corporation vested with public interest though, it can be enforced even though it is not provided for
in the bylaws.
Holders of founder shares the right to be voted as directors regardless of shareholdings

What is the procedure for voting if the corporation is required to have independent
directors or trustees?
The election of independent directors for stock corporation must be made together with the election for
regular directors. The manner of voting will also be the same. The stockholder may vote such number of
shares registered in his name in the books of the corporation multiplied by number of directors to be
elected inclusive of independent directors. He can cumulate his votes for regular directors alone, for
independent directors alone, or for a combination of both regular and independent directors as long as
his votes will not exceed the shares of stock he owns multiplied by the total number of directors to be
elected.
For example, a corporation vested with public interest has 10 directors under its articles of
incorporation, with eight (8) regular directors and two independent directors. There are a total eighteen
(18) candidates for regular directors and five (5) candidates for independent directors. The votes for
regular directors should be segregated from the votes for independent directors. The top eight
candidates who obtained the highest number of the votes among the 18 nominees shall be considered
elected as regular directors. The top two (2) candidates, in turn, for independent directors will then be
considered elected even if said nominees obtained less votes than the nominees for regular directors.
See Procedure for Election of Directors, SEC-OGC Opinion No. 19-11 [March 23, 2011]
The same procedure may likewise be applied for non-stock corporation whether
cumulative method of voting is allowed or not. The candidates who obtained the highest
number of votes among all the nominees for regular trustees and independent trustees,
respectively, shall be duly elected as such trustees.
What happens if no election is held, or the owners of majority of the outstanding capital
stock of majority of the members entitled to vote are not present in person, by proxy, or
through remote communication or not voting in absentia at the meeting?
The meeting may be adjourned and the outgoing directors or trustees shall serve in a hold-over capacity
(section 23, RCC)
The non-holding of elections and reasons therefore shall be reported to the SEC within thirty (30) days
from the date of the scheduled election. The report shall specify a new date for the election, which shall
not be later than sixty (60) days from the scheduled date.
If no new date has been designated, or if the rescheduled election is likewise not held, the SEC may,
upon the application of a stockholder, member, director or trustee, and after verification of the
unjustified non-holding of election, summarily order that an election be held. The SEC shall have the
power to issue such orders as may be appropriate, including the orders directing the issuance of a notice
stating the time and place of the election, designated presiding officer, and the record date or dates for
the determination of stockholders or member entitled to vote.
Notwithstanding any provision of the articles of incorporation or bylaws to the contrary, the shares of
stock or membership represented at such meeting and entitled to vote shall constitute a quorum for
purposes of conducting an election under this section. (section 25, RCC)

Sec. 24 Corporate Officers
1. The treasurer is required to be a resident.
2. It requires the appointment of a compliance officer for those corporations vested with public
interest.
Notes
What are the qualifications of the president, secretary and treasurer?
The President must be a director and as such, should also be a stockholder. He must not concurrently
hold the position of Secretary or Treasurer.
The Secretary must be a citizen and resident of the Philippines.
The Treasurer should be a resident.
All of them must also possess all of the qualifications and none of the disqualifications under the bylaws
of the corporation.
Thus, a provision in the by-laws that not all officers are required to be stockholders is void because the
President, being required to be a director, must also be a stockholder of the corporation.
May a foreigner be elected President, Secretary and treasurer?
Only Corporate Secretary is required to be a Filipino Citizen. The President, treasurer and other officers
of the corporation are not required to be citizens of the Philippines. Therefore, a Foreigner may be
elected as president or treasurer, but not as Secretary.
For publicly-listed companies, the Chair and the Chief executive officer should be held by separate
individuals and each should have clearly defined responsibilities. This is intended to avoid conflict or a
split board and to foster an appropriate balance of power, increased accountability and better capacity
for decision-making (SEC Memorandum Circular no. 19 series of 2016 or the Code of
Corporate Governance for Publicly-Listed Companies) Can the by-laws of the corporation
designate three (3) corporate officers as President/s?
The Supreme Court ruled in the case of People Aircargo and Warehousing Co. Inc. v. CA that:
“Inasmuch as corporate president is often given general supervision and control over corporate
operations, the strict rule that said officer has no inherent power to act for the corporation is slowly
giving way to realization that such officer has certain limited powers in the transaction of the usual and
ordinary business of the corporation. In the absence of a charter or bylaw provision to the contrary, the
president is presumed to have authority to act within the domain of the general objectives of its
business and within the scope of his or her usual duties.”
Because of the importance of his position, the law prescribes some qualifications/disqualifications of a
President, among are that (1) he must be a director of the corporation; and (2) he must not concurrently
hold the positions of Secretary or Treasurer.

Is the corporate secretary of a corporation required to be a lawyer?
Under the Corporation Code, the minimum requirement is that the corporate secretary is a resident and
citizen of the Philippines and need not be a lawyer. If the corporation, however, is covered by the
Revised Code of Corporate Governance, it is stated that if the corporate secretary also acts as a
Compliance Officer, it is preferred that the corporate secretary be a lawyer. As long as the corporate
secretary meets the minimum requirement provided under the applicable law and rules, it is beyond the
Securities and Exchange SEC to ban certain individuals from the position of a corporate secretary.
(Qualification of a Corporate Secretary; Revised Code of Corporate Governance, SEC_OGC Opinion
No. 17-10 [April 23, 2010])
Sec. 25 Report of Election of Directors, trustees and Officers
1. The non-holding of elections and the reasons therefor shall be reported to the SEC within thirty
(30) days from the date of the scheduled election. The report shall specify a new date for the
election, which shall not be later than sixty (60) days from the scheduled date.
2. If no new date has been designated, or if the rescheduled election is likewise not held, the SEC
may, upon the application of a stockholder, member, director or trustee, and after verification
of the unjustified non-holding of the election, summarily order that an election be held. The SEC
shall have the power to issue such orders as may be appropriate, including orders directing the
issuance of a notice stating the time and place of the election, designated presiding officer, and
the record date or dates for the determination of stockholders or members entitled to vote.
Notwithstanding any provision of the articles of incorporation or bylaws to the contrary, the shares
of stock or membership represented at such meeting and entitled to vote shall constitute a quorum
for purposes of conducting an election under this section. (This is referred to as the provision
on emergency quorum)
Notes
What is the concept of emergency quorum under the RCC?
Emergency quorum means that, in certain cases, stock or membership represented in a meeting called
by the SEC may constitute a quorum to elect directors of corporation even though the number of shares
or members present is less than majority of the outstanding capital stock or total members, or the
quorum required under the articles and bylaws of the corporation. (Sec. 25, RCC)
For purposes of Section 25 of the RCC, the attendants of the election, as summarily ordered by the SEC,
who are entitled to vote shall constitute a quorum regardless of the required number of attendants
stated in the Articles of Incorporation or bylaws of the corporation. (SEC-OGC OPINION 56-16,
November 28, 2019)
Despite written notices and publication, a substantial number of stockholders have not
been communication with or attending the stockholders’ meetings of the Philippine
Veterans Bank (PVB). Personal notices to the stockholders have been returned unopened
or they have not communicated with any of the veterans’ associations. No legal heir,
claimant or transferee has likewise come over to advise PVB of his/her right to the shares.

If these shares are not represented in the stockholders’ meeting, the PVB would not be
able to elect its Board of Directors. What is the available remedy of PVB under the RCC?
To solve the recurring problem of “no quorum-no meeting” and in this case, avoid the standstill of bank
operations, the RCC provides for an emergency quorum under paragraph 4, Section 25 of the RCC, for
purposes of conducting an election, to wit:
Based on this provision, if no election is held consecutive times, or if the non-holding of election is
unjustified, the SEC may, upon application of a stockholder or member, director, or officer and after
verification of the unjustified non-holding of the election, summarily order an election to be held. The
shares or members represented at such meeting and entitled to vote shall constitute a quorum for
conducting an election (Re: Mustering the Required Quorum; Representation of
Dormant/Inactive Stockholders, SEC-OGC Opinion No. 37-19 [September 13, 2019])
Sec. 27 Removal of Directors or Trustees
1. The SEC has been given the authority, motu proprio or upon verified complaint, and after due
notice and hearing, to order the removal of a director or trustee elected despite the
disqualification, or whose disqualification arose or is discovered subsequent to an election.
2. The removal of a disqualified director shall be without prejudice to other sanctions that the SEC
may impose on the board of directors or trustees who, with knowledge of the disqualification,
failed to remove such director or trustee.
Sec. 28 Vacancies in the Office of Director or Trustee; Emergency Board
There are now fixed periods within which the corporations must hold their elections to fill up vacancies
in the director or trustee positions, viz:
1. It also introduced the concept of emergency board.
The requisites are:
1. The vacancy prevents the remaining directors from constituting a quorum;
2. Emergency action is required to prevent grave, substantial, and irreparable loss or damage to
the corporation;
3. The vacancy may be temporarily filled from among the officers of the corporation;
4. The appointment must be made by unanimous vote of the remaining directors or trustees; and
5. The action by the designated director or trustee shall be limited to the emergency action
necessary, and the term shall cease within a reasonable time from the termination of the
emergency or upon election of the replacement director or trustee, whichever comes earlier.

The corporation must notify the SEC within three (3) days from the creation of the emergency board,
stating therein the reason for its creation.
Sec. 29 Compensation of Directors or Trustees
1. Section 29 of the RCC clarified that directors or trustees shall not participate in the determination
of their own per diems or compensation.
Notes
Either in the bylaws or prospective
Per diem allowance of GOCC
Per diem allowance of big corporation
2. It imposed an annual reportorial requirement in relation to the total compensation of each of the
directors or trustees for corporations vested with public interest.
Sec. 31 Dealings of Directors, Trustees or Officers with the Corporation
1. It expands the coverage of self-dealing provision to spouses and relatives within the fourth civil
degree of consanguinity or affinity of the directors, trustees, officers.
2. In case of corporations vested with public interest, material contracts are approved by at least
two-thirds (2/3) of the entire membership of the board, with at least a majority of the
independent directors voting to approve the material contract.
Sec. 35 Corporate Powers and Capacity
1. Corporations are now expressly allowed to enter into a partnership, join venture or any other
commercial agreement with natural and juridical persons.
2. It appears that there is no more prohibition for domestic corporations to donate in favor of
political party or candidate.
Sec. 37 Power to Increase or Decrease Capital Stock; Incur, Create or Increase Bonded
Indebtedness.
1. The RCC prescribed a period – six (6) months from date of approval of the board and stockholders,
to file the application with the SEC. Such period may be extended provided there are justifiable
reasons for such extension.
Sec. 39 Sale or Other Disposition of Assets
1. Approval of the Philippine Competition SEC should be obtained for sale and purchase transactions
covered by the provisions of Republic Act No. 10667 (Philippine Competition Act).
Notes
For Publicly-listed Companies, when can a sale be considered as sale of all or
substantially all of corporate property and assets?

The sale of disposal of corporate property and assets amounting to at least 51% of the corporation’s
total assets shall be considered as sale of all or substantially all of corporate property and assets,
whether such sale accrued in a single transaction or in several transactions taking place within one (1)
year from the date of the first transaction (aggregate sale transactions.) 6
The determination of whether or not the sale amounts to at least 51% of the corporation’s assets must
be computed based on its total assets shown in its latest audited financial statements, provided that the
computation may also be based on the latest quarterly financial statement or a special purpose financial
statement prepared in connection with the execution of the transaction. 7
On march 1, 2019, the Philippine Competition SEC issued a Resolution8 adjusting the thresholds for
compulsory merger and acquisition notification from PHP 5 Billion to PHP 5.6 to 6 Billion for the Size of
Person and from PHP 2 Billion to PHP 2.2 Billion to 2.4 Billion for the Size of Transaction.
On February 11, 2020, the amounts were further increased to Php 6 billion for the Size of the Person
and Php 2.4 Billion for the Size of Transaction. If these test concur compulsory notification must be given
to the PCC, otherwise the transaction shall be void.
PCC Memorandum Circular No. 18-001 issued in 2018 established the automatic annual adjustment of
the merger thresholds based on the nominal gross domestic product grown of the previous year
rounded up to the nearest hundred million. This ensures that the thresholds maintain their real value
over time and relative to the size of the economy.
Sec. 46 Contents of Bylaws
1. It removed the option of adopting and submitting the bylaws of the corporation to the SEC
within a period of one month from the former’s incorporation but, nevertheless, allows filing of
the bylaws after incorporation.
2. On the contents of the bylaws, it included provisions on mode of notice to stockholders or

members thereof; modes of attendance of stockholder, member, director or trustee during
meetings and casting their votes; the maximum number of other board representations that an
independent director or trustee may have which shall, in no case, be more than the number
prescribed by the SEC; and, promotion of good governance and anti-graft measures.
3. It also allows the inclusion of an arbitration agreement in the bylaws.
Notes
If there is arbitration agreement, intra-corporate disputes are subject thereto otherwise, prematurity of
cause of action.
Sec. 48 Kinds of Meetings. – Meetings of directors, trustees, stockholders, or members

may be regular or special.
6 SEC Memorandum Circular No. 12 series of 2020, April 7, 2020.
7 SEC Memorandum Circular No. 12 series of 2020, April 7, 2020.
8 Philippine Competition SEC, SEC Resolution No. 03-2019. Adjusting the Merger Notification Thresholds
Pursuant to Memorandum Circular 18-001.

1. It specified that if the bylaws is silent, the regular stockholders’ meeting shall be held on any
date after April 15 of every year.
2. Written notice of regular meetings shall now be sent at least 21 days prior to the meeting,
compared to two weeks prior under the old Code.
3. Written notice of regular meetings may be sent to all stockholders or members of record
through electronic mail or such other manner as the Commission shall allow under its guidelines.
4. At each regular meeting of stockholders or members, the board of directors or trustees shall
endeavor to present to stockholders or members the following:
a. The minutes of the most recent regular meeting which shall include, among others:
i. A description of the voting and vote tabulation procedures used in the previous
meeting;
ii. A description of the opportunity given to stockholders or members to ask questions
and a record of the questions asked and answers given;
iii. The matters discussed and resolutions reached; iv. A record of the voting results for
each agenda item;
v. A list of the directors or trustees, officers and stockholders or members who
attended the meeting; and
vi. Such other items that the Commission may require in the interest of good corporate
governance and the protection of minority stockholders;
b. A members’ list for nonstock corporations and, for stock corporations, material information
on the current stockholders, and their voting rights;
c. A detailed, descriptive, balanced and comprehensible assessment of the corporation’s
performance, which shall include information on any material change in the corporation’s
business, strategy, and other affairs;
d. A financial report for the preceding year, which shall include financial statements duly
signed and certified in accordance with this Code and the rules the Commission may
prescribe, a statement on the adequacy of the corporation’s internal controls or risk
management systems, and a statement of all external audit and non-audit fees;
e. An explanation of the dividend policy and the fact of payment of dividends or the reasons
for nonpayment thereof;
f. Director or trustee profiles which shall include, among others, their qualifications and
relevant experience, length of service in the corporation, trainings and continuing education
attended, and their board representations in other corporations;
g. A director or trustee attendance report, indicating the attendance of each director or
trustee at each of the meetings of the board and its committees and in regular or special
stockholder meetings;
h. Appraisals and performance reports for the board and the criteria and procedure for
assessment;

i. A director or trustee compensation report prepared in accordance with this Code and the
rules the Commission may prescribe;
j. Director disclosures on self-dealings and related party transactions; and/or
k. The profiles of directors nominated or seeking election or reelection.
5. The right to vote of stockholders or members may be exercised in person, through a proxy, or
when so authorized in the bylaws, through remote communication or in absentia. The
Commission shall issue the rules and regulations governing participation and voting through
remote communication or in absentia, taking into account the company’s scale, number of
shareholders or members, structure, and other factors consistent with the protection and
promotion of shareholders’ or members’ meetings.
Sec. 61 Consideration for stocks
1. The RCC added shares of stock in another corporation and other generally accepted form of
consideration in the enumeration of consideration for stocks.
2. Stockholders can now participate in the determination of valuation of a consideration other than
actual cash.
Sec. 73 Books to be Kept; Stock Transfer Agent
1. It required all information about the corporation to be preserved, and expanded the list of
records required to be kept by the corporation in its principal office.
Notes
a) The articles of incorporation and bylaws of the corporation and all their amendments;
b) The current ownership structure and voting rights of the corporation, including the list
of stockholders or members, group structures, intra-group relations, ownership data,
and beneficial ownership;
c) The names and addresses of all the members of the board of directors or trustees and
the executive officers;
d) A record of all business transactions;
e) A record of the resolutions of the board of directors or trustees and of the stockholders
or members;
f) Copies of the latest reportorial requirements submitted to the SEC; and
g) The minutes of all meetings of stockholders or members of the board of directors or
trustees. Such minutes shall set forth in detail, among others: the time and place of the
meeting held, how it was authorized, the notice given, the agenda therefore, whether
the meeting is regular or special, its object if special, those present and absent, and
every act done or ordered done at the meeting. Upon demand of a director, trustee,
stockholder or member, the time when any director, trustee, stockholder or member
entered or left the meeting must 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 demand (Section 73, RCC)

h) The books of account, original and duplicate originals of invoices and receipts for goods
and services purchased (Section 237 of the Tax Code, as amended by TRAIN law)
i) Records as may be required under the applicable laws
2. Inspecting/reproducing party is bound by confidentiality rules. However, a person who is not a

stockholder or member of record, a competitor, or who represents interests of a competitor is
prohibited to inspect/reproduce corporate records.
Notes GOKONGWEI CASE, EPCIB CASE;
3. A stockholder who shall abuse the right to inspect/reproduce shall be penalized under the
provisions of the following laws:
a) RCC
b) Intellectual Property Code of the Philippines;
c) Data Privacy Act of 2012.
4. The SEC may require presence of an independent transfer agent in case the stock transfer
corporation transfers or trades stocks in secondary markets.
5. It expanded the remedies available to a stockholder exercising his right of inspection in that if
the corporation denies or does not act on a demand for inspection and/or reproduction, the
aggrieved party may report such denial or inaction to the SEC. Within five (5) days from receipt
of such report, the SEC shall conduct a summary investigation and issue an order directing the
inspection or reproduction of the requested records.
Notes
Did the RCC de-criminalize the violation of stockholder’s right of inspection?
The RTC did not de-criminalize the violation of stockholder’s right of inspection. It only removed
the penalty of imprisonment and limited the penalty to monetary fines.
What are the remedies of a stockholder if the corporation denies or does not act
on his demand for inspection?
His remedies are as follows:
1. If the corporation denies or does not act on a demand for inspection and/or reproduction,
the aggrieved party may report such denial or inaction to the SEC. within five (5) days from
receipt of such report, the SEC shall conduct a summary investigation and issue an order
directing the inspection or reproduction of the requested records (Sec. 73, RCC)
2. He may file with a criminal complaint for violation of his right of inspection (Section 73 and
161, RCC)
3. He may file a petition for inspection of corporate records (Rule 7 of the Rules of Procedure
for Intra-Corporate Controversies)
Sec. 75 Plan of Merger or Consolidation

The articles of merger should now include:
1. The carrying amounts and fair values of the assets and liabilities of the respective companies as
of the agreed cut-off date;
2. The method to be used in the merger or consolidation of accounts of the companies; and
3. The provisional or proforma values, as merged or consolidated, using the accounting method;
Sec. 87 Purposes
1. It provides that non-stock corporations shall, at all times, keep a list of its members and their
proxies in the form the SEC may require. Further, the list shall be updated to reflect the
members and proxies of record twenty (20) days prior to any scheduled election.
2. It deleted the holding of office by the trustees for 3 batches or on staggered basis and allowed
nonmembers to become an independent trustee in case of nonstock corporations vested with
public interest.
TITLE XIV
Dissolution
1. The affirmative votes of stockholders needed to effect a dissolution (where no creditors are
affected) were decreased from two-thirds (2/3) to a mere majority of the outstanding capital
stock or majority of the members of the meeting.
2. To apply for dissolution with the Commission, a verified request for dissolution must be filed by
the Corporation, in addition to a certified and countersigned copy of the resolution, proof of
publication, and favorable recommendation from the appropriate regulatory agency, when
necessary. The Commission must also act within fifteen (15) days from receipt of the request.
3. It imposed additional documentary requirements for dissolution
4. It distinguished the effectivity of dissolution in case of expiration of shortened term and

expiration of the original term. Upon the expiration of the shortened term, as stated in the
approved amended articles of incorporation, the corporation shall be deemed dissolved without
any further proceedings, subject to the provisions of this Code on liquidation. In the case of
expiration of corporate term, dissolution shall automatically take effect on the day following the
last day of the corporate term stated in the articles of incorporation, without the need for the
issuance by the Commission of a certificate of dissolution.
Notes
This is without prejudice to revive corporate term
5. It includes a provision for withdrawal of request for dissolution. The withdrawal shall be
submitted no later than fifteen (15) days from receipt by the SEC of the request for dissolution.
Upon receipt of a withdrawal of request for dissolution, the SEC shall withhold action on the
request for dissolution and shall, after investigation:

a. make a pronouncement that the request for dissolution is deemed withdrawn;
b. direct a joint meeting of the board of directors or trustees and the stockholders or
members for the purpose of ascertaining whether to proceed with dissolution; or
c. issue such other orders as it may deem appropriate
Notes
Discuss the right of incorporator, director, trustee, shareholder or member to
withdraw the request for dissolution of the corporation (in case where creditors
are not affected).
The request for dissolution should be verified by any incorporator, director, trustee,
shareholder, or member but should be signed by the same number of incorporators, directors,
trustees, shareholders, or members necessary to request for dissolution (Section 137, RCC) This
means that the request should be signed by at least majority of the board of directors or
trustees and by the stockholders representing at least majority of the outstanding capital stock
or majority of the members in non-stock corporation (Section 134, RCC)
The withdrawal should be submitted no later than fifteen (15) days from receipt by the SEC of
the request for dissolution. Upon receipt of a withdrawal of request for dissolution, the SEC
shall withhold action on request for dissolution and shall, after investigation: (a) make a
pronouncement that the request for dissolution is deemed withdrawn; (b) direct a joint meeting
of the board of directors or trustees and the stockholders or members for the purpose of
ascertaining whether to proceed with dissolution; or (c) issue such other orders as it may deem
appropriate. (Section 137, RCC)
6. It expanded the grounds for involuntary dissolution to include:
a. Upon receipt of a lawful court order dissolving the corporation;
b. Upon finding by final judgment that the corporation procured its incorporation through
fraud;
c. Upon finding by final judgment that the corporation:
i. Was created for the purpose of committing, concealing or aiding the

commission of securities violations, smuggling, tax evasion, money laundering,
or graft and corrupt practices;
ii. Committed or aided in the commission of securities violations, smuggling, tax

evasion, money laundering, or graft and corrupt practices, and its stockholders
knew; and
7. Repeatedly and knowingly tolerated the commission of graft and corrupt practices or other
fraudulent or illegal acts by its directors, trustees, officers, or employees.

8. It allows the SEC to dissolve the corporation motu proprio or upon filing of verified complaint by
any interested party for any of the involuntary grounds for dissolution.
It allows for forfeiture of assets of those corporations dissolved involuntarily for commission of fraud
and other specified offenses.
Notes
What are the grounds for involuntary dissolution?
A corporation may be dissolved by the SEC motu proprio or upon filing of a verified complaint by any
interested party. The following may be grounds for dissolution of the corporation:
a) Non-use of corporate charter as provided under Section 21 of this Code;
b) Continuous inoperation of a corporation as provided under Section 21 of this Code;
Under Section 21 of the RCC, if a corporation does not formally organize and commence its business
within five (5) years from the date of its incorporation, its certificate of incorporation shall be deemed
revoked as of the day following the end of the five (5) year period.
However, if a corporation has commenced its business but subsequently becomes inoperative for a
period of at least five (5) consecutive years, the SEC 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
the requirements that the SEC shall prescribe. Upon compliance by the corporation, the SEC shall issue
an order lifting the delinquent status. Failure to comply with the requirements and resume operations
within the period given by the SEC shall cause the revocation of the corporation
The grounds under (a) and (b) will lead to the dissolution of the corporation unless the corporation files
a petition to set aside its delinquency status and the SEC grants it.
c) Upon receipt of a lawful order dissolving the corporation;
This may involve or arise from a quo warranto proceeding involving a de facto corporation
(Section 19, RCC) or a liquidation proceeding involving an insolvent debtor under FRIA (infra).
d) Upon filing by final judgement that the corporation procured its incorporation through fraud;
This may happen when the corporation misrepresented its purpose of incorporation and/or the
incorporators use fictitious names.
e) Upon finding by final judgement that the corporation
1. Was created for the purpose of committing, concealing or aiding the SEC of securities
violations, smuggling, tax evasion, money laundering, or graft and corrupt practices;
2. Committed or aided in the SEC of securities violations, smuggling, tax evasion, money
laundering, or graft and corrupt practices, and its stockholders knew of the same; and

3. Repeatedly and knowingly tolerated the SEC of graft and corrupt practices or other
fraudulent or illegal acts by its directors, trustees, officers, or employees.
If the corporation is ordered dissolved by final judgement pursuant to the grounds set forth in
subparagraph (e) hereof, its assets, after payment of its liabilities, shall, upon petition of the SEC with
the appropriate court, be forfeited in favor of the national government. Such forfeiture shall be without
prejudice to the rights of innocent stockholders and employees for services rendered, and to the
application of other penalty or sanction under this Code or other laws.
The SEC shall give reasonable notice, and coordinate with, the appropriate, regulatory agency prior to
the involuntary dissolution of companies under their special regulatory jurisdiction (section 138, RCC)
Note that it is only in the grounds specified in paragraph (e) that the SEC may file a petition with the
appropriate court that the assets be forfeited in favor of the national government but without prejudice
to the rights of innocent stockholders and employees for services rendered.
Are there other grounds to dissolve the corporation upon order of the SEC?
The SEC may also suspend or revoke, after proper notice ad hearing, the certificate of private
corporation upon any of the following grounds:
1. Fraud in procuring its certificate of incorporation

2. Serious misrepresentation as to what the corporation can do or is doing to the great prejudice of
or damage to the general public;
3. Refusal to comply or defiance of any lawful order of the SEC restraining commission of acts
which amount to a grave violation of its franchise;
4. Failure to file bylaws
5. Failure to file required reports in appropriate forms as determined by the SEC within the
prescribed period (PD No. 902-A Section 6(i))
UST CASE
Under the section 158 of the RCC, if after due notice and hearing, the SEC finds that any provision of this
Code, rules or regulations, or any of its orders has been violated, the SEC may impose any or all of the
following sanctions, taking into consideration the extent of participation, nature, effects, frequency and
seriousness of the violation:
a) Imposition of a fine ranging from Five thousand pesos (P5, 000.00) to Two million pesos (P2,
000, 000.00), and not more than One thousand pesos (P1, 000.00) for each day of continuing
violation but in no case to exceed Two million pesos (P2, 000, 000.00)
b) Issuance of a permanent cease and desist order;
c) Suspension or revocation of the certificate of incorporation; and
d) Dissolution of the corporation and forfeiture of its assets under the conditions in Title XIV of the
RCC
The SEC may also order the dissolution of a close corporation when there is deadlock in the
management affairs (Section 103) or upon petition of a stockholder whenever any acts of the directors,
officers, or those in control of the corporation is illegal, fraudulent, dishonest, oppressive or unfairly

prejudicial to the corporation or any stockholder, or whenever corporate assets are being misapplied or
wasted. (section 104, RCC)
SECTION 139. Corporate Liquidation.
1. It provided that the liquidation of banks shall be covered by the New Central Bank Act and the
Philippine Deposit Insurance Corporation Charter.
Notes
This provision of the RCC is based on the Supreme court decision in the case of In Re: Petition
for Assistance in the Liquidation of the Rural Bank of Bokod (BENGUET) vs. Bureau of Internal
Revenue, G.R. No. 158261, December 18, 2006. In that case, the BIR argued that the PDIC could
not proceed with the dissolution and liquidation of the bank without first securing tax clearance
as required under the Tax Code and its agreement with the SEC. it was held that Section 30 of
the New Central Bank Act lays down the proceedings for receivership and liquidation of bank.
The said provision is silent as regards the securing of a tax clearance from the BIR. The omission,
nonetheless, cannot compel this Court to apply be analogy the tax clearance requirement of the
SEC, as stated in Section 52(C) of the Tax Code of 1997 and BIR-SEC Regulations No. 1, since,
again, the dissolution of a corporation by the SEC is a totally different proceeding from the
receivership and liquidation of a bank by the BSP. This Court cannot simply replace any
reference by Section 52(C) of the Tax Code of 1997 and the provisions of the BIR-SEC
Regulations no. 1 to the “SEC” with the “BSP.” To do so would be to read into the law and the
regulations something that is simply not there, and would tantamount to judicial legislation.
There are substantial differences in the procedure for involuntary dissolution and liquidation of
a corporation under the Corporation Code, and that of a banking corporation under the New
Central Bank Act, so that the requirements in one cannot simply be imposed in the other.
2. In case of escheat, the properties shall revert to the national government based on RCC. The Old
Code, however, previously provided that such properties will be escheated to the city or
municipality where such are located.
TITLE XV
Foreign Corporations
1. A foreign corporation, except if it is a foreign banking or insurance corporation, is required to
deposit shares of stock, debt securities or any financial instrument determined suitable by the
Commission within sixty (60) days after the issuance of the license to transact business in the
Philippines.
2. The actual market value of the deposit requirement was increased from ₱100,000.00 to
₱500,000.00. The threshold within which the foreign corporation must deposit additional
securities was also increased from ₱5 Million to ₱10 Million.
Notes
2% of the amount by which the gross income exceeds 10 m
3. If the resident agent is a domestic corporation, it must also be of sound financial standing and
must provide a certification from the Commission that it is in good standing

RCC Penalizes the following Acts
PROVISION CONTENT PENALTY
The unauthorized use of a corporate name

SECTION 159. Fine for unauthorized use
shall be punished with a fine
of a corporate name. T
ranging from Ten thousand pesos
Unauthorized Use
( ₱ 10,000.00) to Two hundred
of Corporate he fine amounts to ₱10,000.00
thousand pesos ( ₱
Name; Penalties. to ₱200,000.00.
200,000.00) .
When, despite the knowledge of the • Penalty for willfully

existence of a ground for disqualification as holding office despite
provided in Section 26 of this Code, a disqualification or willfully
director, trustee or officer willfully holds concealing such
office, or willfully conceals such disqualification.
disqualification, such director, trustee or
officer shall be punished with a fine ranging The fine ranges from
SECTION 160. from Ten thousand pesos ₱10,000.00 to ₱200,000.00 and
(₱10,000.00) to Two hundred thousand at the discretion of the court,
Violation of pesos (₱200,000.00) at the discretion of the and shall be
Disqualification court, and shall be permanently permanently disqualified from
Provision; disqualified from being a director, being a director, trustee or
Penalties. trustee or officer of any corporation . officer of any corporation.
When the violation of this provision is
injurious or detrimental to the public, the • If the violation is
penalty shall be a fine ranging from injurious or detrimental to
Twenty thousand pesos ( ₱ the public.
20,000.00) to Four hundred thousand
pesos The fine ranges from
( ₱ 400,000.00). ₱20,000.00 to ₱400,000.00.

SECTION 161. The unjustified failure or refusal by the Penalty for unjustified
corporation, or by those responsible for failure or refusal to keep,
Violation of Duty to keeping and maintaining corporate maintain, and allow
Maintain records, to comply with Sections 45, 73, inspection or reproduction
Records, to Allow 92, 128, 177 and other pertinent rules and of records.
their Inspection provisions of this Code on inspection and
or Reproduction; reproduction of records shall be punished The fine ranges from
Penalties. with a fine ranging from Ten thousand pesos ₱10,000.00 to ₱400,000.00,
(₱10,000.00) to Two hundred without prejudice to the
thousand pesos (₱200,000.00), at the contempt powers of the SEC.
discretion of the court, taking into
consideration the seriousness of the
violation and its implications. When the
violation of this provision is injurious or
detrimental to the public, the penalty is a
fine ranging from Twenty thousand
pesos ( ₱ 20,000.00) to Four
hundred thousand pesos ( ₱
400,000.00) .
The penalties imposed under this section

shall be without prejudice to the SEC’s
exercise of its contempt powers under
Section 157 hereof.
Any person who willfully certifies a report

required under this Code, knowing that
the same contains incomplete, inaccurate, • Fine for willfully
false, or misleading information or certifying erroneous
SECTION 162. statements, shall be punished with a fine reports.
ranging from Twenty thousand pesos
Willful
( ₱ 20,000.00) to Two hundred The fine ranges from
Certification of
thousand pesos ( ₱ 200,000.00) . ₱20,000.00 to ₱200,000.00.
Incomplete,
When the wrongful certification is injurious
Inaccurate, False or
or • When the wrongful
Misleading
detrimental to the public, the auditor or the certification is injurious or
Statements or
responsible person may also be detrimental to the public.
Reports; punished with a fine ranging from Forty
Penalties. The fine ranges from
thousand pesos ( ₱ 40,000.00) to
Four ₱40,000.00 to ₱400,000.00.
hundred thousand pesos
( ₱ 400,000.00) .

An independent auditor who, in collusion
with the corporation’s directors or
representatives, certifies the corporation’s
financial statements despite its
incompleteness or inaccuracy, its failure
to give a fair and accurate presentation of
the corporation’s condition, or despite
SECTION 163. containing false or misleading statements,
shall be punished with a fine ranging from Fine for colluding
independent auditors.
Independent Eighty thousand pesos ( ₱
Auditor 80,000.00) to
The fine ranges from
Collusion; Five hundred thousand pesos
₱80,000.00 to ₱600,000.00.
Penalties. ( ₱ 500,000.00) . When the statement or
report certified is fraudulent, or has the
effect of causing injury to the general
public, the auditor or responsible officer
may be punished with a fine ranging from
One hundred thousand pesos
(₱100,000.00) to Six hundred thousand
pesos (₱600,000.00).
SECTION 164. Fine for fraudulent
Those responsible for the formation of a incorporation.
Obtaining corporation through fraud, or who assisted
Corporate directly or indirectly therein, The fine ranges from
shall be punished with a fine ranging from

Two hundred thousand pesos
( ₱ 200,000.00) to Two million pesos
Registration ( ₱ 2,000,000.00) . When the violation of
Through Fraud; this provision is injurious or detrimental ₱200,000.00 to ₱5 Million.
Penalties. to the public, the penalty is a fine ranging
from Four hundred thousand Pesos
( ₱ 400,000.00) to Five million pesos
( ₱ 5,000,000.00) .

A corporation that conducts its business • Fine for fraudulent
through fraud shall be punished with a fine conduct of business.
ranging from Two hundred
SECTION 165. thousand pesos ( ₱ 200,000.00) to The fine ranges from
Two million pesos ( ₱ 2,000,000.00) . ₱200,000.00 to ₱2 Million.
Fraudulent
When
Conduct of • If violation is
the violation of this provision is injurious
Business; injurious or detrimental to
or detrimental to the public, the penalty is a the public.
Penalties.
fine ranging from Four hundred
thousand pesos ( ₱ 400,000.00) to The fine ranges from
Five million pesos ( ₱ 5,000,000.00) . ₱400,000.00 to ₱5 Million.
A corporation used for fraud, or for

committing or concealing graft and
corrupt practices as defined under
pertinent statutes, shall be liable for a fine
ranging from One hundred thousand
pesos ( ₱ 100,000.00) to Five million
SECTION 166. pesos ( ₱ 5,000,000.00) . When there is
Fine for using the
a finding that any of its directors, officers,
corporation for fraud or for
Acting as employees, agents, or representatives are
committing or concealing
engaged in graft and corrupt practices, the
Intermediaries for graft and corrupt practices.
corporation’s failure to install:
Graft and Corrupt
Practices; The fine ranges from
a. safeguards for the transparent and
Penalties. ₱100,000.00 to ₱5 Million.
lawful delivery of services; and
b. policies, code of ethics, and

procedures against graft and
corruption shall be prima facie
evidence of corporate liability under this
section.
SECTION 167. Fine for appointing an

Engaging A corporation that appoints an intermediary to engage in
intermediary who engages in graft and graft and corrupt practices

Intermediaries for corrupt practices for the corporation’s for the benefit of the
Graft and Corrupt benefit or interest shall be punished with a corporation.
Practices; fine ranging from One hundred
Penalties. thousand pesos ( ₱ 100,000.00) to The fine ranges from
One million pesos ( ₱ 1,000,000.00) . ₱100,000.00 to ₱1 Million.

A director, trustee, or officer who knowingly
fails to sanction, report, or file the
appropriate action with proper
SECTION 168. agencies, allows or tolerates the graft and
corrupt practices or fraudulent acts
Tolerating Graft committed by a corporation’s directors, Fine for knowingly
and Corrupt trustees, officers, or employees shall be tolerating graft and corrupt
Practices; punished with a fine ranging from Five practices or fraudulent
Penalties. hundred thousand pesos acts.
( ₱ 500,000.00) to One million pesos
( ₱ 1,000,000.00) . The fine ranges from
₱500,000.00 to ₱1 Million.
A whistleblower refers to any person who
provides truthful information relating to
the SEC or possible SEC of any offense or
violation under this Code. Any person who,
knowingly and with intent to
SECTION 169. Fine for retaliatory acts
retaliate, commits acts detrimental to a
against whistleblowers.
whistleblower such as interfering with the
Retaliation
lawful employment or livelihood of the
Against The fine ranges from
whistleblower, shall, at the discretion of the
Whistleblowers. court, be punished with a fine ₱100,000.00 to ₱1 Million.
ranging from One hundred
thousand pesos ( ₱ 100,000.00) to
One million pesos ( ₱
1,000,000.00) .
SECTION 170. Violations of any of the other provisions of Fine for other violations.
this Code or its amendments not
Other Violations of otherwise specifically penalized therein shall The range of fines was
the Code; be punished by a fine of not less increased from ₱1,000.00 –
Separate Liability. than Ten thousand pesos ( ₱ ₱10,000.00 (Corporation Code
10,000.00) of the Philippines) to
but not more than One million pesos ₱10,000.00 – ₱1 Million.
( ₱ 1,000,000.00) . If the violation is The penalty of imprisonment
committed by a corporation, the same may, was also removed.
after notice and hearing, be
dissolved n appropriate proceedings before
the SEC: Provided, that such

dissolution shall not preclude the
institution of appropriate action against the
director, trustee, or officer of the
corporation responsible for said violation:
Provided, further, That nothing in this
section shall be construed to repeal the
other causes for dissolution of a
corporation provided in this Code.
Liability for any of the foregoing offenses
shall be separate from any other
administrative, civil, or criminal liability
under this Code and other laws.
The RCC shows the clear legislative intent to consider the foregoing acts as criminal offense.
Under the CC, only the violation of the right of inspection was considered a criminal offense. While
section 133 of the CC provided that any other violation of the CC shall be punishable by fine or
imprisonment, it was held in the case of James IENT vs. Tullett Prebon, G.R. Nos. 189158 and 189530,
January 11, 2017, (supra), that the sanction under this section encompasses administrative penalties
and not criminal in nature, in absence of clear legislative intent to criminalize the violation.
Are the enumerated acts considered criminal offenses if penalty is only a fine and not
imprisonment?
Yes, under Article 26 of the Revised Penal Code, a fine, whether imposed as a single or as an alternative
penalty, shall be considered an afflictive penalty, if it exceeds One million two hundred thousand pesos
(P1, 200, 000.00); a correctional penalty, if it does not exceed One million two hundred thousand pesos
(P1, 200, 000.00) but is not less than Forty thousand (p40, 000.00); and a light penalty, if be less than
Forty thousand pesos (P40, 000.00)
There are, in fact, various criminal offenses under the Revised Penal Code and special laws when the
penalty for the criminal offense consists only of monetary fines such as: Occupation of real property or
usurpation of real rights in property under Article 312 of the Revised Penal Code, Reckless acts of
imprudence and negligence resulting in damage of property of another under Article 365 of the Revised
Penal Code, violation of RA 10054 or Motorcycle Helmet Act of 2009, violation of RA 8750 or Seat Belt
Use Act of 1999, violation of RA 10913 or the Anti-Distracted Driving Act, violation of certain provisions
of RA11313 or the Safe Space Act of , violation of – or the Tobacco Regulation Act of 2003.
Note however that there are violations under the RCC that are not criminal in nature
because of the absence of a clear legislative intent to criminalize these acts. For instance:
a) acquiring an interest in conflict with his duty as director or officer (section 30)
b) acquiring opportunity which belongs to the corporation (Section 34)
c) issuance of watered stocks (section 64)
d) failure to pay interest on subscription (section 65)
e) failure to pay balance of subscription (section 66)
f) foreign corporation engaging in business without license (section 150)
ONE-PERSON CORPORATION

Characteristics
A One-Person Corporation has the following characteristics:
1. It has a single stockholder;
2. It is not required to have a minimum authorized capital stock except as otherwise provided by
special law. Further, no portion of the authorized capital is required to be paid up at the time of
the incorporation, unless otherwise required by applicable laws or regulations. (Sec. 117 of the
RCC and Sec. 8 of MC No. 7);
3. It is not required to submit and file corporate bylaws. (Section 119, RCC);
4. It is required to indicate the letters “OPC” either below or at the end of its corporate name
(Section 120, RCC);
5. The single stockholder shall be the sole director and president of the One Person Corporation
(Section 121, RCC);
6. The single stockholder is required to designate a nominee and an alternate nominee who shall,
in the event of the single stockholder’s death or incapacity, take the place of the single
stockholder as director and shall manage the corporation’s affairs (Section 124, RCC);
7. The liability of the single stockholder shall be limited to his subscription to the corporation;
provided that the corporation is adequately financed;
8. He must prove that the property of the One Person Corporation is independent of the
stockholder’s personal property; and,
9. There is no ground to pierce the veil of corporate fiction Otherwise, the sole stockholder shall be
jointly and severally liable for the debts and other liabilities of the One Person Corporation.
(Section 130, RCC)
Distinguish Sole Proprietorship from one-person corporation.
Sole proprietorship has no separate legal personality from the proprietor conduction the business
whereas a one-person corporation has legal personality separate and distinct from the sole stockholder
of the corporation.
The assets of the sole proprietorship are similarly owned by the proprietor conducting the business
whereas in one-person corporation, the assets of the one-person corporation are not owned by its sole
stockholder unless the one-person corporation is not adequately-financed and/or the assets.
The obligations that the sole proprietorship incurred in conducting the business may be enforced
against the proprietor whereas on one-person corporation, the obligations of the corporation can not be

enforced against its sole stockholder unless the situation warrants the piercing the veil of the corporate
fiction.
Sole proprietorship is registered with the DTI while one-person corporation is registered with the SEC.
Can a person organize more than one OPC?
Yes, as long as it is for a legitimate purpose.

Corporation Code

Uploaded by

Copyright:

Available Formats

Corporation Code

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Corporation Code

Uploaded by

Copyright:

Available Formats

Highlights of the Revised Corporation Code

Lecture by Atty. Nilo Divina,

Historical background of the Revised Corporation Code

It also codified internationally- accepted practices and norms on conducting business.

Sec. 7 Founder’s Shares

PALS Lecture: Revised Corporation Code | 1

Sec. 10 Number and Qualifications of Incorporators

PALS Lecture: Revised Corporation Code | 2

A Directors’/Trustees’ Certificate or Secretary’s Certificate, indicating the necessary approvals, as

How should an individual sign the Articles of Incorporation (AOI) or Bylaws?

PALS Lecture: Revised Corporation Code | 3

Sec. 11 Corporate Term

PALS Lecture: Revised Corporation Code | 4

EXERCISE IT RIGHT AWAY

What are the remedies of a corporation whose term has expired?

PALS Lecture: Revised Corporation Code | 5

Sec. 12 Minimum Capital stock Not required of Stock Corporations

Sec. 13 Articles of Incorporation

1. Arbitration agreement may be provided in the articles of incorporation.

3. The articles of incorporation should include an undertaking to change corporate name

PALS Lecture: Revised Corporation Code | 6

6. There is a requirement of certification of receipt of paid-up portion of subscription by the

Sec. 17 Corporate Name

The corporate name of a foundation shall use the word “Foundation”

The corporate name of all non-stock, non-profit corporations, including nongovernmental

PALS Lecture: Revised Corporation Code | 7

a. “Finance Company,” “Financing Company,” “Finance and Leasing Company,” and

PALS Lecture: Revised Corporation Code | 8

a. “investment(s)” or “Capital” organized as investment house or investment company;

PALS Lecture: Revised Corporation Code | 9

1. Consent from the surviving corporation;

The remedies are as follows:

PALS Lecture: Revised Corporation Code |

Sec. 21 Effects of Non-use of Corporate Charter and Continuous Inoperation

1. It should adopt and file its by-laws;

What is the consequences if a corporation is placed in delinquent status?

Sec. 22 The Board of Directors or Trustees of a Corporation; Qualification and Term

2. There is no residence requirement for the members of the Board.

b. Banks and quasi-banks, NSSLAs, pawnshops, corporations engaged in money service

PALS Lecture: Revised Corporation Code | 13

Sec. 23 Election of Directors or Trustees

3. A stockholder or member who participates through remote communication or in absentia,

Holders of founder shares the right to be voted as directors regardless of shareholdings

PALS Lecture: Revised Corporation Code | 14

PALS Lecture: Revised Corporation Code | 15

1. The treasurer is required to be a resident.

The Secretary must be a citizen and resident of the Philippines.

The Treasurer should be a resident.

May a foreigner be elected President, Secretary and treasurer?

PALS Lecture: Revised Corporation Code | 16

Sec. 25 Report of Election of Directors, trustees and Officers

PALS Lecture: Revised Corporation Code | 17

Sec. 27 Removal of Directors or Trustees

Sec. 28 Vacancies in the Office of Director or Trustee; Emergency Board

1. It also introduced the concept of emergency board.

The requisites are:

1. The vacancy prevents the remaining directors from constituting a quorum;

PALS Lecture: Revised Corporation Code | 18

Sec. 29 Compensation of Directors or Trustees

Sec. 31 Dealings of Directors, Trustees or Officers with the Corporation