Question & AnswerQ&A (Act No. 1459)
The short title of this Act is "The Corporation Law."
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 incident to its existence.
Corporations may be public or private. Public corporations are those formed for government purposes, while private corporations are those formed for private purposes, further divided into stock corporations and nonstock corporations.
Five or more persons, not exceeding fifteen, a majority of whom are residents of the Philippines, may form a private corporation for lawful purposes by filing articles of incorporation with the Division of Archives, Patents, Copyrights, and Trade-Marks.
The articles must state the corporation's name, purpose, principal office location within the Philippines, term of existence (not exceeding 50 years), names and residences of incorporators, number of directors, capital stock and shares if stock corporation, amount subscribed and paid for shares, among other details.
It must be accompanied by a sworn statement of the treasurer elected by the subscribers showing at least 20% of the entire capital stock subscribed and 25% of the subscription paid for the benefit of the corporation.
Corporations have succession, can sue and be sued, conduct lawful business, make and use seals, acquire property, appoint officers, make by-laws, admit members, issue stock, and enter contracts necessary to their business.
The corporation forfeits all charters, grants, franchises, and concessions, and is guilty of an offense punishable by a fine of 20,000 pesos.
By approval of two-thirds of the entire subscribed capital stock at a meeting called for the purpose, with proper notice, and filing of a duplicate certificate signed by directors and stockholders; the change takes effect upon filing.
Directors may be removed by a two-thirds vote of members entitled to vote or stockholders holding two-thirds of subscribed capital stock, at a meeting called for the purpose with prior notice of the intention to propose removal.
They must secure a license from the Chief of the Division of Archives, upon order of the Secretary of Finance and Justice or Commerce and Police, after submitting a sworn statement of solvency, capital stock, and authorized resident agent in the Philippines.
It continues as a body corporate for three years to prosecute or defend suits, settle affairs, dispose property, and distribute capital stock but not to continue its usual business.
Directors may declare unpaid subscriptions due, give notice, and sell delinquent shares at public auction to collect the amount due with interest and costs. Legal title vests in the corporation if it bids at the sale.
They must file plans before construction, maintain crossings and telegraph lines, provide adequate mail transportation, establish schedules, limit speed in populated areas, and comply with safety regulations among others.
They must have capital stock of not less than 200,000 pesos fully subscribed and paid. Loans must be secured by first mortgages on real estate or gold/silver bullion within specified valuation limits, and loans cannot exceed certain percentages of collateral value.