Summary Outline of Revised corporation code

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Duller, Leigh Yrielle - It is an artificial being; (Doctrine
M. BSA of corporate personality)
A corporation is a legal or juridical person,
OUTLINE: Republic Act 11232 (Revised separate and distinct from its shareholders. Its
Corporation Code of the Philippines) corporate name may take, hold, or dispose
property under its corporate capacity. May
enter a contract, can sue and be sued on court.
As a consequence:
Sec 1. Title of the code
a. Liability for acts or contracts – Utang ng
The code shall be known as the “Revised
corporation kanya lang, utang ng
Corporation Code of the Philippines”
stockholders kanya lang. walang
- An act providing for the revised damayan (general rule) Exception:
corporation code of the Doctrine of piercing the veil of
Philippines corporate entity – It is when the
- Enacted on February 20, corporate entity is being used as a cloak
or cover for fraud or illegality, or to
2019 Scope of the code defeat public convenience, justify
wrong, protect fraud, or defend crime.
1. Provide incorporation, organization, and Instances: Where a corporation is
regulation of private corporations, both dissolved and its assets are transferred
stock and non-stock, including to another corporation to avoid a
educational and religious corporations. financial liability of the first
2. Defines their power and provides corporation.
for their dissolution
b. Right to acquire and possess property
3. Fixes the duties and liabilities of
– acquire any property. Claims of
directors or trustees and other ownership: but residual interest only.
officers
4. Declares the rights and liabilities c. Property acquired by the corporation is
of stockholders and members owned by corporation and not of
5. Prescribes the conditions under stockholders
which corporations including foreign
d. All contracts entered into in its name
corporations may transact business
by its regular appointed officers or
6. Provides penalties for violations of agents of contracts and not those of
the code stockholders, belong to the partnership.
7. Repeals all laws and parts of laws
conflict and inconsistent with the e. The tax exemption granted to
code corporation is not extended to
dividends paid.

Sec. 2 CORPORATION DEFINED. f. Corporation has no personality to bring

Definition of Corporation (The definition refers action in behalf of its stockholders
only to private corporations or to corporations
organized under the corporation code) g. Changes in stockholders will not change
the partnership
Attributes of Corporation:
1. An artificial being; - It is created by operation of Law;
2. Created by operation of law; or created by law
3. Having the right to succession;
4. has the powers, attributes, and properties
expressly authorized by law or incidental to
its existence.

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 a. A corporation require special member is where they get their capital.
authority or grant from the state. BOT
(GOCC: GSIS, SSS) • Corporations created by special laws
b. Created by operation of law – A special or charters – This Corporation shall
incorporation law which directly creates be governed primarily by the
the corporation. May ginawang law na provisions of the special law or charter.
act as a guide lang or had provided the GOCC
regulatory ways on how to create a
corporation for those individual desiring Sec. 5 CORPORATORS – are those who
to be and act as a corporation. compose a corporation, whether as:
• Stockholders in a stock corporation
- It has the right of succession • Members in a non-stock corporation
a. A corporation has a capacity of INCORPORATORS - are those stockholders
continuous existence irrespective of the or members mentioned in the articles of
death, withdrawal, insolvency, or incorporation as originally forming and
incapacity of a stockholders, and composing the corporation and who are
regardless of the transfer their interest signatories thereof.
or share of stock. (perpetual existence
unless stipulated in AOI)
b. 50 years renewable in the old law:
batas pambansa bilang 68 Sec. 6 CLASSIFICATION OF SHARES
c. Corporations created by special laws • The rights, privileges, or restrictions,
have the right of successions for the and their stated par value must be
term provided in the laws creating indicated in the articles of
them. incorporation.
• Each share shall be equal to other
- It has only the powers, attributes and share, except provided in the articles of
properties expressly authorized by incorporation and in the certificate of
law or incident to its existence. stock.
a. A corporation, being purely a creation
of law, may exercise only such powers Par value shares – One in which a specific value
granted by the law of its creation. if fixed in the articles of incorporation and
b. Express grant – power nakalagay sa law appearing in the certificate of stock.
pag created by law, pag created by
operation of law yung mga nakalagay No-par value shares – One without any value
sa AOI. appearing on the face of the certificate of stock.
c. Implied power- mga hindi
nakalagay, mga kailangan lang • It must be issued for a consideration
gagawin. of at least 5 pesos per share.
• 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
Sec. 3&4 DIFFERENT TYPES dividends.
OF CORPORATION • (banks, trust, insurance, and preneed
companies, public utilities, building and
• Stock Corporations – Corporations that
have capital stock divided into shares loan associations, and other
that are authorized to be distributed. corporations authorized to obtain or
BOD access funds from the public, whether
• Non-stock Corporations – publicly listed or not, shall not be
Corporations that are not stock permitted to issue no par value
corporations. Contribution of the shares of stock.)

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Voting Shares – Issued with the right to vote 2. Partnerships or associations organized for
BOD and officers the purpose of practicing a profession.
(Unless otherwise provided by special laws)
Non-voting shares – issued without the right to
vote BOD and officers NUMBER OF INCORPORATORS:
Ordinary shares – These shares entitle the holder • Not more than 15.
to an equal pro-rata division of profits without • Note: RCC removed the minimum number of
any preference. incorporators.

Preference shares – These shares entitle the QUALIFICATIONS OF INCORPORATORS

holder to certain advantages over the holders of 1. Natural persons
ordinary shares. 2. Legal age; and
3. Must own or be a subscriber to at least 1
• Issued only with stated par value share of the capital stock.
Promotion shares – Those issued to promoters as Sec. 11 CORPORATE TERM
compensation in promoting the incorporation of
a corporation. Corporate term shall have a perpetual existence.
Unless the corporation, upon a vote of its
Treasury shares – A stock that has been issued
stockholders representing a majority of its
by the corporation as fully paid and later
outstanding capital stock, notifies the
reacquired but not retired.
Commission that it elects to retain its specific
Convertible shares – A stock which is corporate term pursuant to its AoI.
convertible from one class to another class.
Dissenting stockholder – yung umayaw sa
Founder’s share - Founders’ shares may be amendment of AOI tsaka extension of
given certain rights and privileges not enjoyed term(appraisal rights) isauli ang share na lang
by the owners of other stocks.
Redeemable shares – These are shares which EXTENSION OF CORPORATE TERM
may be purchased by the corporation from the A corporate term for a specific period may
holders of such shares. be extended or shortened by amending the
AOI, provided that:
• May be issued by the corporations 1. No extension may be made earlier than
when expressly provided in the 3 years prior to the expiration;
article of corporation. 2. If there are justifiable reasons; or
3. Such extension shall take effect only on
the day following the original or
TITLE II subsequently expiry date(s).
Sec. 10 NUMBER AND QUALIFICATIONS
OF INCORPORATORS RULE ON CORPORATION WHOSE TERM
EXPIRED
Any person, partnership, association or 1. They may apply for a revival of its
corporation, singly or jointly with others but not existence together with:
more than 15 in number, may organize a
corporation. a. All rights & privileges under its
certificate; and
Following persons not allowed to organize as b. All of its duties, debt & liabilities
a corporation: existing prior to its revival.
1. Natural persons who are licensed to practice
a profession; and

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2. Such revival must be approved by the SEC, or all of the shares are without par value, if
and shall only be deemed revived upon applicable.
issuance of certificate of revival of corporate
existence. 9. (Non-stock Corp) amount of its capital,
names, nationalities and residence addresses
Sec. 12. MINIMUM CAPITAL STOCK of the contributors, and amount contributed by
SHALL NOT BE REQUIRED OF STOCK each; and
CORPORATION.
• Otherwise provided by special law 10. Other matters consistent and
which incorporators may deem
necessary and convenient.
Sec. 13 CONTENTS OF ARTICLES OF
CORPORATION 11. Arbitration agreement – (not mandatory,
as the word in the code provided that such
All corporations shall file with the SEC the agreement “may be provided” in the articles.
AoI, in any of the official languages, duly
signed and acknowledged or authenticated, in
such form and manner as be allowed by the FILING OF ARTICLES OF
Commission. INCORPORATION
The articles of incorporation and applications for
SUBSTANTIAL CONTENTS OF amendments may be filed with the SEC in the
ARTICLES OF form of an electronic document, in accordance
INCORPORATION with the SEC’s rules and regulations on
1. Name of the corporation. electronic filing.
2. Specific purpose or purposes for which is Sec. 15 AMMENDMENT OF ARTICLES OF
being formed. Where a corporation has INCORPORATION
more than one state purpose, it shall indicate • Any provision or matter stated in the
the following: articles of incorporation may be
a. Primary purpose; amended by a majority vote of the
b. Secondary purpose(s). board of directors or trustees and the
vote or written assent of the
3. Principal office of the corporation, must stockholders representing at least two-
be located within the Philippines; thirds (2/3) of the outstanding capital
stock, without prejudice to the
4. Term of the corporation, if such has appraisal right of dissenting
not elected perpetual existence; stockholders in accordance with the
provisions of this Code. Unless
5. Names, nationalities, and residence otherwise prescribed by this Code or by
addresses of the incorporators; special law, and for legitimate
purposes,
6. Number of directors/trustees, which shall • The articles of incorporation of a non-
not be more than 15. stock corporation may be amended by
the vote or written assent of majority
7. Names, nationalities, and residence of the trustees and at least two-thirds
addresses of persons who shall act as directors (2/3) of the members.
or trustees; • The amendments shall take effect
upon their approval by the
8. (For stock corporation) amount of its Commission or from the date of filing
authorized capital stock, number of shares with the said Commission if not acted
which is divided, par value of each, names, upon within six (6) months from the
nationalities, and residence addresses of the date of filing
original subscription, and a statement that some

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 for a cause not attributable to the If the corporation fails to comply with the SEC’s
corporation. order:
Sec. 16 The commission may disapprove the 1. SEC may hold the corporation and its
articles of incorporation or any amendment responsible directors or officers in
thereto if the same is not compliant with contempt;
requirements of this code. 2. May hold them administratively, civilly,
and/or criminally liable under this Code
Sec. 17. CORPORATE NAME. and other applicable laws; and/or
No corporate name shall be allowed by the SEC 3. Revoke the registration of the corporation.
if it is not distinguishable from that already
reserved or registered for the use of another
corporation, or if such name is already protected SEC. 18. REGISTRATION,
by law, or when its use is contrary to existing INCORPORATION AND
law, rules and regulations. COMMENCEMENT OF CORPORATION
EXISTENCE
A NAME IS NOT DISTINGUISHABLE, PROCEDURE ON REGISTRATION
WHEN: 1. A person or group of persons desiring to
1. The word “corporation”, “company”, incorporate shall submit the intended
“incorporate”, “limited”, “limited liability”, corporate name to the SEC for verification.
an abbreviation of one of such words; and
2. If the SEC finds that the name is
2. Punctuations, articles, conjunctions, distinguishable (provided the requirements for
contractions, prepositions, abbreviations, corporate name are followed), the name shall
different tenses, spacing, or number of the be reserved in favor of the incorporators.
same word or phrase. 3. Incorporators shall submit their articles
of incorporation and by-laws to the SEC.
INVALID CORPORATE NAMES
1. Not distinguishable from a name already 4. If SEC finds that the submitted documents
reserved or registered for the use of and information are fully compliant with the
another corporation; requirements of this Code, SEC shall issue
2. Protected by law; or the certificate of incorporation.
3. Contrary to law & rules and regulations.
COMMENCEMENT OF CORPORATE
RULES ON CORPORATE NAMES EXISTENCE
1. If the corporate name is one of the invalid A private corporations commences its corporate
corporate names mentioned above, the Sec may existence and juridical personality from the date
summarily order the corporation to the Commission issues the certificate of
immediately cease and desist from using such incorporation under its official seal.
name and require the corporation to register a
new one. Sec. 21 EFFECTS OF NON-USE OF
CHARTER AND CONTINUOS
2. SEC shall also cause the removal of all INOPERATION
visible signage, marks, advertisements, labels,
• If a corporation does not formally
prints and other effects bearing such corporate
organize and commence its business
name.
within five (5) years from the date of
3. If the change of corporate name is its incorporation, its certificate of
approved, SEC shall issue a certificate of incorporation shall be deemed
incorporation under the amended name. revoked as of the day following the
end of the five-year period.
EFFECT OF FAILURE TO COMPLY

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 • If a corporation has commenced its b. Banks and quasi-banks, nonstock savings and
business but subsequently becomes loan associations, pawnshops, corporations,
inoperative for a period of at least
engaged in money service business, preneed,
five (5) consecutive years, the
trust and insurance companies, and other
Commission may, after due notice
and hearing, place the corporation financial intermediaries; and
under delinquent status. c. Other corporations engaged in business
vested with public interest.
TITLE III ELECTION OF INDEPENDENT
Sec. 22 THE BOARD OF DIRECTORS OR DIRECTORS
TRUSTEES OF A CORPORATION; It must be elected by shareholders present or
QUALIFICATIONS AND TERM entitled to vote in absentia during the election of
directors.
ROLE OF BOARD OF DIRECTORS /
TRUSTEES Sec. 23. ELECTION OF DIRECTORS OR
TRUSTEES
• They shall exercise the corporate
powers, conduct all business, and Each stockholder or member shall have the right
control all properties of the to nominate any director or trustee who
corporation. possesses all of the qualifications and none of
the disqualifications in this Code. Unless when
TERM OF BOARD OF DIRECTORS /
the exclusive rights is reserved for holders of
TRUSTEES
founders’ shares under Sec. 7 of this Code.
1. Directors shall be elected for a term of 1
year from among the holders of stock RULE ON PROXY (IES)
registered in the corporation’s books; 1. At all elections of directors or trustees, there
must be present, either in person or through a
2. Trustees shall be elected for a term not representative authorized to act by written
exceeding 3 years from among the members proxy, the owners of majority of the outstanding
of the corporation. capital stock, or if there be no capital stock, a
majority of the members entitled to vote.
3. A director who ceases to own at least one
(1) share of stock or a trustee who ceases to be 2. When so authorized in the by-laws or by a
a member of the corporation shall cease to be majority of the board of directors, the
such. stockholders or member may also vote
through remote communications or in
INDEPENDENT DIRECTORS - A person absentia.
who is independent of management and free
from any business or other relationship which • Provided that the right to vote through
could, or could reasonably be perceived to such modes may be exercised in
materially interfere with the exercise of corporations vested with public
independent judgment in carrying out the interest, notwithstanding the absence of
responsibilities as a director. a provision in the by-laws of such
corporations.
Board of the following corporations vested
with public interest shall have independent • Stockholders or members who
directors constituting at least 20% of such participates through remote
board: communication or in absentia shall be
deemed present for purposes of
a. Corporations covered by Sec. 17.2 of RA quorum.
8799 (Securities Regulation Code),

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SEC. 24. CORPORATE OFFICERS cause. Provided, that w/out cause may
Board of directors, after their election, must not be used to deprive.
formally organize and elect the following
officers: • SEC shall motu proprio, (out of their
own will) or upon verified complaint,
a. President, who must be a director; and after due notice and hearing,
order the removal of a director or
b. Treasurer, must be a resident of trustee elected despite the
the Philippines; disqualification, or whose
disqualification arose or is discovered
c. Secretary, must be a resident of subsequent to an election.
the Philippines; and
Requisites for removal of directors or
d. Other officers as may be provided in the trustees:
by- laws.
• The removal must “take place
e. If the corporation vested with public interest either in a general meeting or in a
– compliance officer. special meeting called for the
purpose.”
SEC. 26. DISQUALIFICATION OF • There must be “previous notice to the
DRECTORS, TRUSTEES stockholders or members of the
OR OFFICERS. corporation of the intention to
A person shall be disqualified from being a propose such removal at the
director, trustee, or officer of any corporation if, meeting”
within 5 years prior to the election or • Director or trustee may be removed
appointment as such, the person was: by a vote of stockholders holding or
representing at least 2/3 of the
1. Convicted by final judgment: outstanding capital or 2/3 of the
a. Offense punishable by vote of members in a non-stock
imprisonment for a period exceeding 6 years; corp.
b. Violating this code; and A director or trustee can be removed from
c. Violating RA 8799 office but he cannot be removed a
(Securities Regulation stockholders of the corporation, depriving
Code; him of his ownership of shares, without due
process.
2. Found administratively liable for any
offense involving fraudulent t acts; and SEC. 28 VACANCIES FOR REMOVAL OF
DIRECTORS OR TRUSTEES
3. By a foreign court or equivalent foreign
regulatory authority for acts, violations, QUORUM – IS THE MINIMUM
or misconduct similar to those REQUIREMENT NUMBER OF PERSONS
enumerated in paragraphs (a) and (b) IN A MEETING TO MAKE A MEETING
above. VALID, WILL CONSTITUTE THE
MAJORITY OR ALL OF BOD OR BOT.
SEC. 27. REMOVAL DIRECTORS
OR TRUSTEES. . • Any vacancy in board, other than
because of removal or by expiration
• If the secretary refuses, the of term, the remaining of the boards
stockholders or members, holding the can fill the vacancy, constituting the
majority of capital stock or majority of quorum.
members, signing the demand can • The stockholders or members can
initiate the meeting for the removal fill if there is no quorum.
with or without • When the vacancy is because of the
expiration of term, the election
shall held no later than the day of
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such

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 expiration. (july 1 nag expire dapat • He wilfully and knowing fully votes
july 1 may na elect na) on a meeting or assents to patently unlawful acts of
called for that purpose. the corporations
• When the vacancy is due of • He is guilty of gross negligence, or
removal, the election for the bad faith in directing the affairs of the
vacancy may happen at the same corporation.
day of the removal and must be • He acquires any personal or
stated in the agenda of the meeting. pecuniary interest I conflict with
• The election, in all other cases must his duty as such director or officer
be held no later than 45 days from the or trustee.
time the vacancy arose.
• The substitute or new elect shall
serve only the remaining years left. SEC. 31. DEALINGS OF DIRECTORS,
• When in emergency, and a meeting TRUSTEES, OR OFFICERS WITH THE
that needs a quorum. The vacancies CORPORATION
can be filled by the officers
temporarily. Emergencies that A contract of the corporation with 1 or more of
require grave, substantial, and its directors, trustees, officers, or their spouses
irreplaceable loss or damage to the and relatives within the 4thPAGE 5 OF 5 civil
corporation. Shall notify the degree of consanguinity or affinity is voidable,
commission within 3 days from the at the option of such corporation. Unless all the
creation. following conditions are present:
• Increase of BOD or BOT shall only
be filled by an election during a 1. The presence of such director or trustee in
meeting. the board meeting in which the contract was
approved was not necessary to constitute a
quorum for such meeting;
SEC. 29. COMPENSATION OF
DIRECTORS OR TRUSTEES. 2. The vote of such director or trustee was
not necessary for the approval of the contract;
• In absence of any provision in the
AOI or bylaws, there will be no 3. The contract is fair and reasonable under
compensation, except for the circumstances;
reasonable per diems (allowances).
• The stockholders holding the majority 4. In case of corporations vested with public
of the capital stock or majority of interest, material contracts are approved by at
members may grant compensation least 2/3 of the entire membership of the board,
and approve amount at a meeting. with at least a majority of the independent
• Not exceeding 10% of the net income directors voting to approve the material
before income tax. contract; and
SEC. 30. LIABILITY OF A DIRECTORS, 5. In case of an officer, the contract has been
TRUSTEES, OR OFICERS. previously authorized by the board of
directors.
• Solidarily obligations (jointly and
severally) – each debtor is liable to EFFECT; WHERE ANY OF THE FIRST 3
the entire obligations, each creditor is CONDITIONS ARE
entitled to the entire obligation. ABSENT
Where any of the set forth in the preceding
Cases when directors/trustees or paragraph is absent, in the case of director or
officers liable damages: trustee, such contract may be ratified by the vote
of the stockholders representing at least two-

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thirds (2/3) of the outstanding capital stock or
of at least two-thirds (2/3) of the members in a 10. To establish pension, retirement, and
meeting called for the purpose: other plans for the benefit of its directors,
trustees, officers, and employees; and
Provided, that full disclosure of the adverse
interest of the directors or trustees involved is 11. To exercise such other powers as may be
made at such meeting and the contract is fair essential to necessary to carry out its purpose
and reasonable under the circumstances. or purposes as stated in the articles of
incorporation.
.
TITLE IV SEC. 36. POWER TO EXTEND OR
POWERS OF CORPORATION SHORTEN CORPORATE
SEC. 35. CORPORATE POWERS TERM.
AND CAPACITY Notice can also be allowed through by-laws, or
done with the consent of the stockholder, sent
1. To sue and be sued in its corporate name; electronically in accordance with the rules and
regulations of the Commission on the use of
2. To have perpetual existence unless the electronic data messages.
certificate of incorporation provides
otherwise;

3. Adopt and use a corporate seal; TITLE V

4. Amend its articles of incorporation in BY-LAWS
accordance with the provisions of this
Code; SEC. 45. ADOPTION OF BY-LAWS.
• The one-month period to adopt by-laws
5. To adopt bylaws, not contrary to law, was deleted.
morals or public policy, and to amend or
repeal the same in accordance with this Code;
SEC. 46. CONTENTS OF BY-LAWS
6. In case of stock corporations, to issue or sell (a) The time, place and manner of calling
stocks to subscribers and to sell treasury stocks and conducting regular or special meetings
in accordance with the provisions of this Code; of the directors or trustees;
and to admit members to the corporation if it (b) The time and manner of calling and
be a non-stock corporation; conducting regular or special meetings and
mode of notifying the stockholders or
7. To purchase, receive, take or grant, hold, members thereof;
convey, sell, lease, pledge, mortgage, and (c) The required quorum in meetings of
otherwise deal with such real and personal stockholders or members and the manner
property, including securities and bonds of of voting therein; (d)
other corporations. The modes by which a stockholder, member,
director, or trustee may attend meetings and cast
8. To enter into a partnership, joint venture, their votes;
merger, consolidation, or any other (e) The form for proxies of stockholders and
commercial agreement with natural and members and the manner of voting them;
juridical persons; (f) The directors’ or trustees’ qualifications,
duties and responsibilities, the guidelines for
9. To make reasonable donations, including setting the compensation of directors or
those for the public welfare or for hospital, trustees and officers, and the maximum number
charitable, cultural, scientific, civic, or similar of other board representations that an
purposes; Provided, that no foreign independent director or trustee may have which
corporation shall give donations in aid of any shall, in no
political party or candidate or for purposes
of partisan political activity;

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case, be more than the number prescribed by
the Commission;
(g) The time for holding the annual election of
directors or trustees and the mode or manner
of giving notice thereof;
(h) The manner of election or appointment and
the term of office of all officers other than
directors or trustees;
(i) The penalties for violation of the bylaws;
(j) In the case of stock corporations, the
manner of issuing stock certificates; and
(k) Such other matters as may be necessary
for the proper or convenient transaction of its
corporate affairs for the promotion of good
governance and anti-graft and corruption
measures.

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