Question & AnswerQ&A (Republic Act No. 11232)
The Revised Corporation Code of the Philippines is Republic Act No. 11232, enacted on February 20, 2019, which provides for the general provisions, regulations, and governance of corporations in the Philippines.
A corporation is defined as an artificial being created by operation of law, having the right of succession and the powers, attributes, and properties expressly authorized by law or incidental to its existence.
Corporations may be stock or nonstock corporations. Stock corporations have capital stock divided into shares and may distribute dividends, while nonstock corporations do not have capital stock and may have members.
Corporators are individuals who compose a corporation as stockholders or members. Incorporators are the original stockholders or members named in the articles of incorporation who signed to form the corporation.
Founders' shares may have special rights, including exclusive voting rights, but such exclusive voting rights must not exceed five years from incorporation and must comply with laws such as the Anti-Dummy Law and Foreign Investments Act.
An OPC is a corporation with a single stockholder who may be a natural person, trust, or estate, allowed to form a corporation alone subject to certain exclusions like banks and publicly-listed companies.
The articles must include the corporate name, specific purposes, principal office location, corporate term, incorporators' details, number and names of directors or trustees, capital stock details (for stock corporations), and other lawful provisions.
By a majority vote of the board and approval of at least two-thirds (2/3) of the outstanding capital stock for stock corporations, or two-thirds (2/3) of members for nonstock corporations, subject to compliance with filing and approval by the SEC.
The corporation has powers such as suing and being sued, perpetual existence, adopting a seal and bylaws, issuing stocks, owning property, entering partnerships, making donations, establishing employee plans, and other powers necessary to carry out its purposes.
Sanctions include fines from P5,000 to P2,000,000, issuance of permanent cease and desist orders, suspension or revocation of certificates of incorporation, dissolution of the corporation, and penalties on officers and directors found liable.
A foreign corporation must obtain a license from the Securities and Exchange Commission (SEC), comply with filing of articles and bylaws, appoint a resident agent, deposit securities as required, and comply with applicable Philippine laws and regulations.
Dissolution may be approved by a majority of the board and stockholders/members, with proper notices sent and publication made. A verified request must be filed with the SEC, which will approve and issue a certificate of dissolution.
Stocks cannot be issued below par or issued value. Consideration may be cash, property, labor, or other acceptable forms but not promissory notes or future services. Pre-incorporation subscriptions are irrevocable for at least six months.
Delinquent shares are those with unpaid subscriptions after the board's call. Holders lose voting rights and rights at meetings, but may still be entitled to dividends after payment. Delinquent stocks may be sold by the corporation to recover unpaid amounts.
Close corporations limit stockholders to a maximum of 20 persons, restrict stock transfer, may provide for management by stockholders without directors, and stockholders have preemptive rights to all stock issuances unless articles provide otherwise.