Revised Corporation Code of the 3.

Government-owned or controlled
Philippines (R.A. No. 11232) corporations – are those organized by
Year of revision: 2019 the government or corporations of
which the government is a majority
TITLE I AND II (Sections 1 to 21) stockholder.

TITLE I: GENERAL PROVISIONS (Sections 1 4. Domestic and Foreign Corporations –

to 9) Domestic corporation is one
A corporation is an artificial being incorporated under Philippine laws.
created by operation of law, having the Foreign corporation is one formed,
right of succession and the powers, organized, or existing under any laws
attributes, and properties expressly other than those of the Philippines.
authorized by law or incidental to its
existence. (SEC. 2) 5. Corporation Aggregate and
Corporation Sole – Corporation
aggregate is one composed of more
Characteristics of a Corporation: than one member or corporator.
Corporation sole consists of one
1. It is an artificial being; Just like a member or corporator and his
partnership, a corporation is a juridical successors.
person.
6. Religious Corporations, sole or
2. Created by operation of law; Before the aggregate – religious corporations are
existence of corporation, dapat mag- organized either as a corporation sole
comply sa law and requirements. It is or corporation aggregate.
not created through contract.
7. Ecclesiastical and lay corporations –
3. It has the right of succession; ecclesiastical corporation is one
Ownership interest can be passed to organized for religious purposes. Lay
others without the consent of the other corporation is one organized for a
stockholders. purpose other than religious.

4. It has the powers, attributes, and 8. Eleemosynary and civil corporations –

properties expressly authorized by law eleemosynary corporation is one
or incidental to its existence. The organized for charitable purposes. Civil
powers of corporation are covered by corporations are those than
LAW, not by stipulation. ecclesiastical and eleemosynary,
whether public or private.

Classes of Corporation 9. Close and open corporations- Close

corporation is one where all the
Corporations formed or organized under outstanding stock is owned by the
this Code may be stock or nonstock persons who are active in management
corporations. and conduct on the business. Open
corporation is one in which all the
Stock corporations are those which have members or corporations have a vote in
capital stock divided into shares and are the election of the directors and other
authorized to distribute to the holders of officers.
such shares, dividends, or allotments of
the surplus profits on the basis of the 10. Multi-national corporation – is one
shares held. // No contribution needed, having been created or organized in
only buy stocks to determine your interest one state conduct its business or
in a corporation. activities across national boundaries
and but subject to the legal sanctions
All other corporations are nonstock of the countries in which they operate.
corporations.
(SEC. 3) // Ex. family-owned corporations, 11. Non-profit corporations – are those
non-profit corporations, limited number of organized without contemplation of
owners. gains, profits, or dividends to their
members on invested capital.

Other Classes of Corporation 12. De jure corporation – is one created in

strict or substantial conformity with the
1. Quasi-Corporation – Some entities are statutory requirements for
not absolutely corporations but are incorporation.
considered as if they were.

2. Quasi-Public Corporations – is one Corporators and Incorporators,

engaged in rendering basic services of Stockholders and Members
such public importance as to entitle
them to certain privileges like eminent Corporators are those who compose a
domain or use of public property. corporation, whether as stockholders or
shareholders in a stock corporation or as
a member in a nonstock corporation.
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 3.2 Preferred as to dividends;
Stockholders are the owners of shares of 4. Shares of Escrow;
stock in a stock corporation. 5. Founder’s Shares;
6. Redeemable “Callable” Shares;
Members are the corporators of a non- 7. Treasury Shares;
stock corporation. 8. Other shares classified to comply with
constitutional or legal requirements.
Incorporators are those stockholders or
members mentioned in the articles of
incorporation as originally forming and TITLE II: INCORPORATION AND
composing the corporation and who are ORGANIZATION OF PRIVATE
signatories thereof. (SEC. 5) CORPORATIONS (Sections 10 to 21)

Steps in the creation of a corporation

Classification of Shares 1. Promotion – This includes activities
done by promoter for the founding and
The classification of shares, their organizing of the business or enterprise
corresponding rights, privileges, or of the issuer. // Promote para may mag-
restrictions, and their stated par value, if subscribe sa stocks mo.
any, must be indicated in the articles of
incorporation. Each share shall be equal 2. Incorporation
in all respects to every other share, except a. Execution of the articles of
as otherwise provided in the articles of the incorporation by the incorporators
incorporation and in the certificate of and other documents required for
stock. registration of the corporation.

The shares in stock corporations may be b. Filing of the articles of incorporation

divided into classes or series of shares, or with the SEC together with the
both. treasurer’s affidavit.

No share may be deprived of voting rights 3. Formal Organization and

except those classified and issued as Commencement of Business
“preferred” or “redeemable” shares, unless Transactions.
otherwise provided in this Code: Provided,
that there shall always be a class or series
of shares with complete voting rights. Number and Qualifications of
(SEC. 6) Incorporators

Holders of non-voting shares shall be Any person, partnership, association or

nevertheless be entitled to vote on the corporation, singly or jointly with others
following matters: but not more than fifteen (15) in number,
may organize a corporation for any lawful
1. Amendment of the articles of purpose or purposes: Provided, that
incorporation; natural persons who are licensed to
2. Adoption and amendment of bylaws; practice a profession, and partnerships or
3. Sale, lease, exchange, mortgage, associations organized for the purpose of
pledge, or other disposition of all or practicing a profession, shall not be
substantially all of the corporate allowed to organize as a corporation
property; unless otherwise provided under special
4. Incurring, creating, or increasing laws.
bonded indebtedness;
5. Increase or decrease of authorized -Incorporators who are natural persons
capital stock; must be of legal age.
6. Merger or consolidation of the
corporation with another corporation -Each incorporator of a stock corporation
or other corporations; must own or be a subscriber to at least
7. Investment of corporate funds in one (1) share of the capital stock.
another corporation or business in
accordance with this Code; and -A corporation with a single stockholder is
8. Dissolution of the corporation. considered a One Person Corporation
as described in Title XIII, Chapter III of
Except as provided in the immediately this Code. (SEC.10)
preceding paragraph, the vote required
under this Code to approve a particular
corporate act shall be deemed to refer Corporate Term
only to stocks with voting rights.
A corporation shall have perpetual
existence unless its articles of
Classes or Series of Shares incorporation provide otherwise.

1. Voting and non-voting shares; A corporate term for a specific period may
2. Par Value and No-par value Shares; be extended or shortened by amending
3. Common and Preferred Shares. the articles of incorporation: Provided,
3.1 Preferred as to asset that no extension may be made earlier
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 than three (3) years prior to the original or
subsequent expiry date(s) unless there are
justifiable reasons for an earlier extension Grounds when Articles of Incorporation or
as may be determined by the Commission Amendment may be Disapproved
(SEC.11)
(a) The articles of incorporation or any
amendment thereto is not substantially
Contents of the Articles of Incorporation in accordance with the form prescribed
(a) The name of corporation; herein;

(b) The specific purpose or purposes for (b) The purpose or purposes of the
which the corporation is being formed. corporation are patently
Where a corporation has more than unconstitutional, illegal, immoral or
one stated purpose, the articles of contrary to government rules and
incorporation shall indicate the primary regulations;
purpose and the secondary purpose or
purposes: Provided, that a nonstock (c) The certification concerning the
corporation may not include a purpose amount of capital stock subscribed
which would change or contradict its and/or paid is false; and
nature as such;
(d) The required percentage of Filipino
(c) The place where the principal office of ownership of the capital stock under
the corporation is to be located, which existing laws or the Constitution has
must be within the Philippines; not been complied with.

(d) The term for which the corporation is to

exist, if the corporation has not elected Commencement of Corporation Existence
perpetual existence;
A private corporation organized under
(e) The names, nationalities, and residence this Code commences its corporate
address of the incorporators; existence and juridical personality from
the date the Commission issues the
(f) The number of directors, which shall CERTIFICATE OF INCORPORATION under
not be more than fifteen (15] or the its official seal thereupon the
number of trustees which may be more incorporators, stockholders/ members
than fifteen (15]; and their successors shall constitute a
body corporate under the name stated in
(g) The names, nationalities, and residence the articles of incorporation for the period
address of persons who shall act as of time mentioned therein, unless said
directors or trustees until the first period is extended or the corporation is
regular directors or trustees are duly sooner dissolved in accordance with law.
elected and qualified in accordance (SEC.18)
with this Code;

(h) if it be a stock corporation, the amount Effects of Non-Use of Corporate Charter

of its authorized capital stock, number and Continuous Inoperation
of shares into which it is divided, the
par value of each, names, nationalities, If a corporation does not formally
and subscribers, amount subscribed organize and commence its business
and paid by each on the subscription, within five (5) year from the date of its
and a statement that some or all of the incorporation, its certificate of
shares are without par value, if incorporation shall be deemed revoked as
applicable; of the day following the end of the five (5)
year period.
(i) If it be a nonstock corporation, the
amount of its capital, the names, However, if a corporation has commenced
nationalities, and residence address of its business but subsequently becomes
the contributors, and amount inoperative for a period of at least five (5)
contributed by each and consecutive years, the Commission may,
after due notice and hearing, place the
(j) Such other matters consistent with law corporation under delinquent status.
and which the incorporators may deem
necessary and convenient. A delinquent corporation shall have a
period of two (2) years to resume
An arbitration agreement may be operations and comply with all
provided in the articles of incorporation requirements that the Commission shall
pursuant to Section 181 of this Code. prescribed. Upon the compliance by the
corporation, the Commission shall issue
The Articles of incorporation and an order lifting the delinquent status.
applications for amendments thereto may Failure to comply with the requirements
be tiled with the Commission in the form of and resume operations within the period
an electronic document, in accordance given by the Commission shall cause the
with the Commission's rule and revocation of the corporation's certificate
regulations on electronic filing. (SEC.13) of incorporation.
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 pawnshops, corporations engaged in
The Commission shall give reasonable money service business, preneed, trust
notice to, and coordinate with the and insurance companies and other
appropriate regulatory agency prior to financial intermediaries; and
the suspension or revocation of the (c) Other corporations engaged in
certificate of incorporation of companies businesses vested with public interest
under their special regulatory similar to the above, as may be
jurisdiction. determined by the Commission, after
taking into account relevant factors which
TITLES III AND IV (Sections 22 to 44) are germane to the objective and purpose
of requiring the election of an
TITLE III: BOARD OF independent director, such as the extent
DIRECTORS/TRUSTEES AND OFFICERS of minority ownership, type of financial
(Sections 22 to 34) products or securities issued or offered to
investors, public interest involved in the
nature of business operations, and other
Board of Directors analogous factors.
The Board of Directors is the governing
body of the corporation.
Election of Directors/Trustees
A corporation’s board of directors is 1. The owners of majority of the
understood to be that body which outstanding capital stock or if there be
1. Exercises all powers provided for under no capital stock, a majority of the
the Corporation Code members entitled to vote, of the
2. Conducts all business of the corporation must be present, either in
corporation; and person or through a representative
3. Controls and holds all property of the authorized to act by written proxy;
corporation. (Sec. 22)
2. When so authorized in the bylaws or by
a majority of the board of directors, the
Qualifications of a Board of stockholders or members may also vote
Director/Trustee through remote communication or in
1. For a stock corporation, ownership of at absentia;
least 1 share of the capital stock of the
corporation in his own name. For a non- 3. The election must be by ballot, if
stock corporation, only members of the requested by any voting stockholder or
corporation can be elected; member;
2. Must be capacitated;
3. Must be of legal age; 4. In stock corporations, the total number
4. Other qualifications as may be of votes cast shall not exceed the
prescribed in the bylaws of the number of shares owned by the
corporation. stockholder as shown in the books of
the corporation multiplied by the whole
number of directors to be elected.
Independent Director Provided that no delinquent stock shall
An independent director is a person who be voted.
apart from shareholdings and fees
received from any business or other 5. In nonstock corporations, the members
relationship which could, or could of nonstock corporations may cast as
reasonably be received to materially many votes as there are trustees to be
interfere with the exercise of independent elected but may not cast more than one
judgement in carrying out the vote for one candidate;
responsibilities as a director.
6. Nominees for directors or trustees
The board of the following corporations receiving the highest number of votes
vested with public interest shall have shall be declared elected.
independent directors constituting at
least twenty percent (20%) of such board:
Corporate Officers
(a) Corporations covered by Section 17.2 of
Republic Act No. 8799, otherwise known as President
"The Securities Regulation Code", namely - (Requirement) Must be a director
those whose securities are registered with - Must be a stockholder of record of
the Commission, corporations listed with at least 1 share
an exchange or with assets of at least Fifty - (Citizenship) Need not be a Filipino
million pesos (50,000,000.00) and having citizen
two hundred (200) or more holders of - (Residence) Need not be a resident
shares, each holding at least one hundred of the Philippines
(100) shares of a class of its equity
shares; // Kailangan ng independent Secretary
director. - (Requirement) May or may not be a
director
(b) Banks and quasi-banks, Non-stock - (Citizenship) Must be a Filipino
Savings and Loan Association (NSSLAs), Citizen
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 - (Residence) Must be a resident of arose or is discovered subsequent to an
the Philippines election. The removal of a disqualified
director shall be without prejudice to
Treasurer other sanctions that the Commission may
- May or may not be a director impose on the board of directors or
- Need not be a Filipino Citizen trustees who, with knowledge of the
- Must be resident of the Philippines disqualification, failed to remove such
director or trustee. (Sec. 27)
Compliance Officer
- If the corporation is vested with
public interest // If may Dealings of Directors, Trustees or Officers
independent director, dapat may with the Corporation
compliance officer. A contract of the corporation with one (1)
or more of its directors, trustees, officers
Other Officers or their spouses and relatives within the
- Qualification may be provided for in fourth civil degree of consanguinity or
the bylaws. affinity is voidable, at the option of such
corporation, unless all the following
Note: Any 2 or more positions may be held conditions are present:
concurrently by the same person, except,
that no one shall act as president and (a) The presence of such director or trustee
secretary or as president and treasurer at in the board meeting in which the contract
the same time. was approved was not necessary to
constitute a quorum (majority of the BoD
present) for such meeting:
Disqualification of Directors, Trustees or (b) The vote of such director or trustee was
Officers not necessary for the approval of the
A person shall be disqualified from being contract;
a director, trustee or officer of any (c) The contract is fair and reasonable under
corporation if, within five (5) years prior to the circumstances;
the election or appointment as such, the (d) In case of corporations vested with public
person was: interest, material contracts are approved
by at least a majority of the independent
(a) Convicted by final judgement: directors voting to approved the material
[1] Of an offense punishable by contract; and
imprisonment for a period exceeding six (e) In case of an officer, the contract has
(6) years; been previously authorized by the board
[2] For violating this Code; and of directors.
[3] For violating Republic Act No. 8799,
otherwise known as. "The Securities Where any of the first three (3) conditions
Regulation Code"; set forth in the preceding paragraph is
absent, in the case of a contract with a
(b) Found administratively liable for any director or trustee, such contract may be
offense involving fraudulent acts; and ratified by the vote of the stockholders
representing at least two-thirds (2/3) of the
(c) By a foreign court or equivalent foreign outstanding capital stock or of at least
regulatory authority for acts, violations or two-thirds (2/3) of the members in a
misconduct similar to those enumerated meeting called for the purpose: Provided,
in paragraphs (a) and [b) above. that full disclosure of the adverse interest
of the directors or trustees involved is
The foregoing is without prejudice to made at such meeting and the contract is
qualifications or other disqualifications, fair and reasonable under the
which the Commission, the primary circumstances.
regulatory agency, or Philippine
Competition Commission may impose in TITLE IV: POWERS OF THE
its promotion of good corporate CORPORATIONS (Sections 35 to 44)
governance or as a sanction in its
administrative proceedings. (Sec. 25) Corporate Powers and Capacity

Every corporation incorporated under this

Removal of Director or Trustees Code has the power and capacity: (Sec. 35)
- Any director or trustee of a corporation
may be removed from office by a vote of
the stockholders holding or representing (a) To sue and be sued in its corporate name;
at least two-thirds (2/3) of the outstanding
capital stock, or in a nonstock (b) To have perpetual existence unless the
corporation, by a vote of at least two- certificate of incorporation provides
thirds (2/3) of the member entitled to vote. otherwise;
- The Commission shall, motu propio (on its
own volition/voluntarily) or upon verified (c) To adopt and use a corporate seal;
complaint, and after due notice and
hearing, order the removal of a director or (d) To amend its articles of incorporation in
trustee elected despite the accordance with the provisions of this
disqualification, or whose disqualification Code;
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 (e) To adopt bylaws, not contrary to law, shareholdings, unless such right is denied
morals or public policy, and to amend or by the articles of incorporation or an
repeal the same in accordance with this amendment thereto: Provided, that such
Code; preemptive right shall not extend to shares
issued in compliance with laws requiring
(f) In case of stock corporations, to issue or stock offerings or minimum stock ownership
sell stocks to subscribers and to sell by the public; or to shares issued in good
treasury stocks in accordance with the faith with the approval of the stockholders
provisions off this Code; and to admit representing two-thirds (2/3) of the
members to the corporation if it be a outstanding capital stock in exchange for
nonstock corporation property needed for corporate purposes or
in payment of previously contracted debt.
(g) To purchase, receive, take or grant, hold,
convey, sell, lease, pledge, mortgage, and 4. SALE OR OTHER DISPOSITION OF ASSETS
otherwise deal with such real and (SEC.39) - A sale of all or substantially all of
personal property, including securities the corporation's properties and assets,
and bonds of other corporations, as the including its goodwill, must be authorized
transaction of the lawful business of the by the vote of stockholders representing at
corporation may reasonably and least two-thirds (2/3) of the outstanding
necessarily require, subject to the capital stuck, or at least two-thirds (2/3) of
limitations prescribed by law and the the members, meeting duly called fur tie
constitution; purpose.

(h) To enter into a partnership, joint venture, 5. POWER TO ACQUIRE OWN SHARES (SEC.
merger, consolidation, or any other 40) - Provided, That the corporation has
commercial agreement with natural and unrestricted retained earnings in its books
juridical persons; to cover the shares to be purchased or
acquired, a stock corporation shall have
(i) To make reasonable donations, including the power to purchased or acquired, a
those for the public welfare or for hospital, stock corporation shall have the power to
charitable, cultural, scientific, civic, or purchase or acquire its own shares for a
similar purposes; Provided, that no foreign legitimate corporate purpose or purposes,
corporation shall give donations in aid of including the following cases:
any political party or candidate or for
purpose s of partisan political activity; (a) To eliminate fractional shares arising
out of stock dividends;
(j) To establish pension, retirement, and other (b) To collect or compromise an
plans for the benefit of its directors, indebtedness to the corporation, arising
trustees, officers, and employees; and out of unpaid subscription, in a
delinquency sale, and to purchase
(k) To exercise such other powers as may be delinquent shares sold during said sale:
essential or necessary to carry out its and
purpose or purposes as stated in the (c) To pay dissenting or withdrawing
articles of incorporation. stockholders entitled to payment for their
shares under the provisions of this Code.
Other Powers and Capacity
6. POWER TO INVEST CORPORATE FUNDS IN
1. POWER TO EXTEND OR SHORTEN ANOTHER CORPORATION OR BUSINESS OR
CORPORATE TERM (SEC. 36) - A private FOR ANY OTHER PURPOSE. (SEC. 41) -
corporation may extend or shorten its term Subject to the provisions of this Code, a
as stated in the articles of incorporation private corporation may invest its funds in
when approved by a majority vote of the any other corporation, business, or for any
board of directors or trustees, and ratified purpose other than the primary purpose for
at a meeting by the stockholders or which it was organized, when approved by a
members representing at least two-thirds majority of the board of directors or trustees
(2/3) of the outstanding capital stock or of and ratified by the stockholders
its members. representing at least two-thirds (2/3) of the
outstanding capital stock, or by at least two-
2. POWER TO INCREASE OR DECREASE thirds (2/3) of the outstanding capital stock,
CAPITAL STOCK; INCUR, CREATE OR or by at least two-thirds (2/3) of the members
INCREASE BONDED INDEBTEDNESS. (SEC. in the case of nonstock corporations at a
37) - No corporation shall increase or meeting duly called for the purpose.
decrease its capital stock or incur, create or
increase any bonded indebtedness unless 7. POWER TO DECLARE DIVIDENDS (SEC. 42)
approved by a majority vote of the board of - The board of directors of a stock
directors and by two-thirds (2/3) of the corporation may declare dividends out of
outstanding capital stock at a stockholders' the unrestricted retained earnings which
meeting duly called for the purpose. shall be payable in cash, property, or in
stock to all stockholders on the basis of
3. POWER TO DENY PREEMPTIVE RIGHT (SEC. outstanding stock held by them: Provided,
38) - All stockholders of a stock corporation that any cash dividends due on delinquent
shall enjoy preemptive right to subscribe to stock shall be first be applied to the unpaid
all issues or disposition of shares of any balance on the subscription plus costs and
class, in proportion to their respective expenses, while stock holders until their
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unpaid subscription is fully paid: Provided, incorporation.
further, that no stock dividend shall be
issued without the approval of stockholders
representing at least two-thirds (2/3) of the
outstanding capital stock at a regular or Content of Bylaws
special meeting duly called for the purpose.
A private corporation may provide the
8. POWER TO ENTER INTO MANAGEMENT following in its bylaws;
CONTRACT (SEC. 43) - No corporation shall
conclude a management contract with [a] The time, place and manner of calling
another corporation unless such contract is and conducting regular or special meetings
approved by the board of directors and by of the directors or trustees;
the stockholders owning at least the majority
of the outstanding capital stock, or by at [b] The time and manner of calling and
least a majority of the members in the case of conducting regular or special meetings and
a nonstock corporation, or both the mode of notifying the stockholders or
managing and the managed corporation, at members thereof;
a meeting duly called for the purpose.
[c] The required quorum in meetings of
No management contracts shall be entered stockholders or members and the manner of
into for period longer that five (5) years for voting therein;
any one term.
(d) The modes by which a stockholder,
ULTRA VIRES ACTS OF THE CORPORATION member, director or trustees may attend
meetings and cast their votes;
No corporation shall possess or exercise
corporate powers other than those conferred [e] The form for proxies of stockholders and
by this Code or by its articles of members and the manner of voting them;
incorporation and except as necessary or
incidental to the exercise of the powers (f) The directors' or trustees' qualifications,
conferred. (Sec. 44) duties and responsibilities, the guidelines for
setting the compensation of directors or
trustees and officers, and the maximum
number of other board representations that
TITLE V: BYLAWS (Sections 45 to 47) an independent director or trustee may have
which shall, in no case, be more than the
Definition number prescribed by the Commission;

By-laws signifies the rules and regulations or (g) The time for holding the annual election
private laws enacted by the corporation to of directors or trustees and the mode or
regulate, govern and control its own actions, manner of giving notice thereof;
affairs and concerns, and its stockholders or
members and directors and officers with [h)The manner of election or appointment
relation thereto and among themselves in and the term of officers other than directors
their relation to it. or trustees;

- Guidelines to order the conduct of (I) The penalties for violation of the bylaws;
stockholders and board of directors.
() In the case of stock corporations, the
Adoption of Bylaws manner of Issuing stock certificates; and

For the adoption of bylaws by the (k) Such other matters as may be necessary
corporation, the affirmative vote of the for the proper or convenient transaction of
stockholders representing at least a majority its corporate affairs for the promotion of
of the outstanding capital stock (majority good governance and anti-graft and
vote), or of at least a majority of the members corruption measures.
in case of nonstock corporations, shall be
necessary. The bylaws shall be signed by the Amendment to Bylaws
stockholders or members voting for them and
shall be kept in the principal office of the A majority of the board of directors or
corporation, subject to the inspection of the trustees, and the owners of at least a
stockholders or members during office hours. majority of the outstanding capital stock or
A copy thereof, duly certified by a majority of at least a majority of the members of a
the directors or trustees and countersigned nonstock corporation, at a regular or special
by the secretary of the corporation, shall be meeting duly called for the purpose, may
filed with the Commission and attached to amend or repeal the bylaws or adopt new
the original articles of incorporation. bylaws.

Notwithstanding the provisions of the The owner of two-thirds (2/3) of the

preceding paragraph, bylaws may be outstanding capital stock or two-third (2/3)
adopted and filed prior to incorporation (pre- of the members in a nonstock corporation
incorporation): in such case, such bylaws may delegate to the board of directors or
shall be approved and signed by all trustees the power to amend or repeal the
incorporators and submitted to the bylaws or adopt new bylaws: Provided, that
Commission, together with the articles of any power delegated to the board of
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 directors or trustee to amend or repeal the meeting. Unless otherwise provided in the
bylaws or adopt new bylaws shall be proxy form, it shall be valid only for the
considered as revoke whenever stockholders meeting for which it is intended. No proxy
owning or representing a majority of the shall be valid and effective for a period
outstanding capital stock or majority of the longer than five (5) years at any one time.
members shall so vote at a regular or special
meeting. Meetings of Director/Trustees

TITLE VI: MEETINGS (Sections 48 to 58) Regular Meetings

Kinds of meetings - Schedule: Regular meetings of the board

of directors or trustees of every
Meetings of Director/Trustees corporation shall be held monthly, unless
1. Regular the bylaws provide otherwise.
2. Special
Meetings of Stockholders/Members Special Meetings
1. Regular
2. Special - Schedule: Special meetings of the board
of directors or trustees may be held at any
Meetings of Stockholders/Members time upon the call of the president or as
provided in the bylaws.
Regular Meetings - Place and Time: Meetings of directors or
trustees of corporations may be held
Schedule: Regular meetings of stockholders anywhere in or outside the Philippines,
or members shall be held annually on a date unless the bylaws provide otherwise.
fixed in the bylaws, or if not so fixed in the Notice of regular or special meetings
bylaws, or if not so fixed, on any date after stating the date, time and place of the
April 15 of every year as determined by the meeting must be sent to every director or
board of directors or trustees. (Sec. 49) trustee at least two (2) days prior to the
scheduled meeting, unless a longer time is
- After April 15 kasi na-isubmit na ang Income provided in the bylaws. A director or
Tax ng corporation. Iyon din ang madalas i- trustee may waive this requirement, either
discuss sa regular meetings like the contents expressly or impliedly.
of financial statements.
Note: Directors or trustees who cannot
Special Meetings physically attend or cote at board
meetings can participate and vote
Schedule: Special meetings of stockholders through remote communication such as
or members shall be held at any time videoconferencing, teleconferencing, or
deemed necessary or as provided in the other alternative modes of communication
bylaws. (Emergency meeting) that allow them reasonable opportunities
to participate. Directors or trustees
Place and Time: Stockholders’ or members’ cannot attend or vote by proxy at board
meetings, whether regular or special, shall meetings.
be held in the principal office of the
corporation as set forth in the articles of Voting Trusts
incorporation, or if not practicable, in the
city or municipality where the principal office One or more stockholders of stock
of the corporation is located: Provided, that corporation may create a voting trust for
any city of municipality in Metro Manila, the purpose of conferring upon a trustee or
Cebu, Metro Davao, and other Metropolitan trustees the right to vote and other rights
areas shall, for purposes of this section, be pertaining to the shares for a period not
considered a city or municipality. (Sec. 50) exceeding five (5) years at any time:
Provided, that in the case of a voting trust
Manner of Voting specially required as a condition in a loan
agreement, said voting trust may be for a
- Stockholders and members may vote in period exceeding five (5) years but shall
person or proxy in all meetings of automatically expire upon full payment of
stockholders or members the load. A voting trust agreement must be
- When so authorized in the bylaws or by a in writing and notarized, and shall specify
majority of the board of directors, the the terms and conditions thereof.
stockholders or members of corporations
may also vote through remote TITLE VII: STOCKS AND STOCKHOLDERS
communication or in absentia: Provided, that (Sections 59 to 72)
the votes are received before the
corporation finishes the tally of votes. Shares of Stock VS. Certificate of Stock
- A stockholder or member who participates
through remote communication or in Shares of Stock
absentia shall be deemed present for the
purposes of quorum. 1. Unit of interest in a corporation.
- Proxies shall be in writing, signed and filed, 2. Intangible personal property
by the stockholder or member, in any form 3. May be issued by the corporation even if
authorized in the bylaws and received by the subscription is not fully paid.
the corporate secretary within a
reasonable time before the scheduled Certificate of Stock
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1. Evidence of the holder’s ownership of the Delinquency Sale
stock and of his right as a shareholder
2. Tangible personal property Delinquent Stock – unpaid subscription.
3. May be issued only if the subscription is
fully paid. The board of directors may, by resolution,
order the sale of delinquent stock and shall
Consideration for Stocks specifically state the amount due on each
subscription plus all accrued interest, and
Stocks shall not be issued for a consideration the date, time and place of the sale which
less than the par or issued price thereof shall not be less than thirty (30) days nor
(Watered stock - issued stock less than its par more than sixty (60) days from the date the
value). Consideration for the issuance of stock become delinquent.
stock may be:
Should there be no bidder at the public
(a) Actual cash paid to the corporation; auction who offers to pay the full amount of
the balance on the subscription together with
(b) Property, tangible or intangible, actually accrued interest, costs of advertisement, and
received by the corporation and expenses of sale, for the smallest number of
necessary or convenient for its use and shares or fraction of a share, the corporation
lawful purposes at a fair valuation equal may, subject to the provisions of this Code,
to the par or issued value of the stock bid for the same, and the total amount due
issued; shall be credited as fully paid in the books of
the corporation. Title to all the shares of
(c] Labor performed for or services actually stock covered by the subscription shall be
rendered to the corporation; vested in the corporation as treasury shares
and may be disposed of by said corporation
(d] Previously incurred indebtedness of the in accordance with the provisions of this
corporation; Code.

(e) Amounts transferred from unrestricted - If no one bought the stock, corporation
retained earnings to stated capital; can acquire the stock and fall under
treasury shares.
(f) Outstanding shares exchanged for stocks
in the event of reclassification or Effect of Delinquency
conversion;
No delinquent stock shall be voted for, be
(g) Shares of stock in another corporation; entitled to vote, or be represented at any
and/or stockholder's meeting, nor shall the holder
thereof be entitled to any of the rights of a
(h] Other generally accepted form of stockholder except the right to dividends in
consideration. accordance with the provisions of this Code,
until and unless payment is made by the
Where the consideration is other than actual holder of such delinquent stock for the
cash, or consists of intangible property such amount due on the distribution with accrued
as patents or copyrights, the valuation interest, and the costs and expenses of
thereof shall initially be determined by the advertisement, if any.
stockholders or the board of directors,
subject to the approval of the Commission.

Shares of stock shall not be issued in

exchange for promissory notes or future
service. The same considerations provided in
this section, insofar as applicable, may be
used for the issuance or bonds by the
corporation.

Liability of Directors for Watered Stocks

A director or officer of a corporation who:

(a) consents to the issuance of stocks for a

consideration less than its par or issued
value:
(b) consents to the issuance of stocks for the
consideration other than cash, valued in
excess of its fair value; or
(c) Having knowledge of the insufficient
consideration, does not file a written
objection with the corporate secretary,
shall be liable to the corporation or its
creditors, solidarily with the stockholder
concerned for the difference between the
value received at the time of issuance of
the stock and the par or issued value of
the same.
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