QuestionsQuestions (Republic Act No. 11232)
A corporation is an artificial being created by operation of law, having the right of succession and the powers, attributes, and properties expressly authorized by law or incidental to its existence (Sec. 2).
Corporations may be stock or nonstock (Sec. 3). Stock corporations have capital stock divided into shares and may distribute dividends/allotments to holders based on shareholdings; all other corporations are nonstock.
They are governed primarily by their special law or charter, supplemented by the Revised Corporation Code provisions insofar as applicable (Sec. 4).
Corporators are those who compose the corporation (stockholders/shareholders in stock corporations or members in nonstock). Incorporators are the stockholders or members named in the articles of incorporation as originally forming and composing the corporation and who are signatories (Sec. 5).
Voting rights may not be deprived except for preferred or redeemable shares (Sec. 6). Also, there must always be a class or series with complete voting rights; nonvoting shares are still entitled to vote on enumerated major matters (Sec. 6).
Nonvoting shares may vote on: (a) amendment of articles; (b) adoption/amendment of bylaws; (c) disposition of all/substantially all property; (d) incurring/creating/increasing bonded indebtedness; (e) increase/decrease of authorized capital stock; (f) merger or consolidation; (g) investment of corporate funds in another corporation/business as allowed; and (h) dissolution (Sec. 6).
Banks, trust, insurance, and pre-need companies, public utilities, building and loan associations, and other corporations authorized to obtain/access funds from the public are not permitted to issue no-par value shares (Sec. 6).
No-par value shares must be issued for a consideration of at least P5.00 per share (Sec. 6).
Treasury shares are shares issued and fully paid but later reacquired by the corporation through purchase, redemption, donation, or other lawful means; they may be disposed of again for a reasonable price fixed by the board (Sec. 9).
Any person/partnership/association/corporation may organize singly or jointly with others but not more than 15 incorporators (Sec. 10). Natural persons licensed to practice a profession, and partnerships/associations organized for practicing a profession, cannot organize as a corporation unless otherwise provided by special law (Sec. 10).
A corporation has perpetual existence unless its articles provide otherwise (Sec. 11). A specific term may be extended or shortened by amending the articles, but extension cannot be earlier than 3 years prior to expiry unless justified and determined by the Commission; extension takes effect only on the day following the expiry date (Sec. 11).
Its certificate of incorporation is deemed revoked as of the day following the end of the 5-year period (Sec. 21).
After due notice and hearing, the Commission may place the corporation under delinquent status (Sec. 21). The corporation has two (2) years to resume operations and comply with SEC requirements; failure results in revocation (Sec. 21).
The articles must substantially state: corporate name; purpose(s) (primary and secondary where applicable); principal office location in the Philippines; corporate term or perpetual existence; names/nationalities/residence addresses of incorporators; number of directors (not more than 15) or trustees; names/nationalities/residence addresses of first directors/trustees; capital structure details for stock/nonstock; and other matters consistent with law (Sec. 13).
It commences corporate existence and juridical personality on the date the Commission issues the certificate of incorporation under its official seal (Sec. 18).
Unless otherwise prescribed, amendments require legitimate purposes and: (1) board/directors approval by majority vote of the board; and (2) stockholders’ vote or written assent representing at least two-thirds (2/3) of outstanding capital stock (Sec. 15). Nonstock corporations require majority of trustees and at least two-thirds (2/3) of members (Sec. 15).
Disapproval may be for noncompliance with Code requirements, including: (a) not substantially in the prescribed form; (b) purpose patently unconstitutional, illegal, immoral, or contrary to government rules/regulations; (c) false certification on subscribed/paid capital; and (d) failure to comply with required Filipino ownership percentage (Sec. 16).