Revised Corporation Code of the Philippines

Law Summary

Incorporation and Corporate Organization

Up to 15 incorporators may organize a corporation; incorporators must be of legal age.
Natural persons practicing professions may only organize corporations if allowed by special laws.
Corporations have perpetual existence by default unless otherwise stated.
No minimum capital stock required except as provided by special laws.
Articles of incorporation must contain details such as corporate name, purposes, office location, term, incorporators, and stock or capital information.
Amendments to articles require majority approval by board and 2/3 vote by stockholders or members.
Grounds for disapproval include procedural defects, unlawful purposes, false certification of capital, and noncompliance with Filipino ownership requirements.
Corporate names must be distinguishable and not contrary to law or public policy; unauthorized use is subject to sanctions.
Corporate existence begins upon the issuance of a certificate of incorporation by the Commission.

Board of Directors/Trustees and Officers

The board manages corporate powers; directors serve one-year terms, trustees up to three years.
Independent directors are mandatory for corporations vested with public interest, forming at least 20% of the board.
Directors and trustees must meet qualifications; disqualified persons cannot serve.
Elections require majority presence, can be conducted by ballot, including remote or in absentia voting when authorized.
Officers such as president, treasurer, secretary must be elected post-director election; restrictions on concurrent roles.
Director removal requires 2/3 vote of stockholders or members, with due notice.
Vacancies may be filled by remaining board members or stockholders/members, with provisions for emergency action.
Directors' compensation is capped at 10% of net income; reasonable per diems allowed.
Directors/officers liable for unlawful acts, gross negligence, and conflicts of interest.
Contracts involving directors or officers are voidable unless prescribed conditions are met.

Powers and Capacities of Corporations

Corporations may sue and be sued, adopt seals, amend articles and bylaws, and issue stock or admit members.
Empowered to acquire, convey, lease, mortgage property; enter joint ventures; make donations; and establish employee plans.
Corporate term may be extended or shortened with appropriate stockholder approval.
Capital stock increase, decrease, or bonded indebtedness requires board approval and 2/3 vote by stockholders.
Preemptive rights exist for stockholders unless otherwise denied.
Sale or disposition of assets requires board approval; sale of all or substantial assets requires 2/3 stockholder approval.
Corporations may purchase their own shares only for legitimate corporate purposes.
Investments in other businesses require board approval and 2/3 stockholder consent unless necessary for primary purpose.
Dividends payable only from unrestricted retained earnings; certain limitations on retained surplus apply.
Management contracts require approval from both managing and managed corporations in prescribed circumstances.

Corporate Bylaws

Adoption requires majority vote of stockholders or members.
Bylaws contain provisions on meetings, notices, voting, director qualifications, and penalties.
Amendments require majority board and stockholder/member approval, with possibility of delegation to board.
Bylaws effective only upon Commission certification.

Meetings

Regular and special meetings of stockholders or members require proper notice and quorum.
Regular stockholders' meetings include specific information disclosures like minutes, financial reports, director profiles.
Meetings can be held in principal office or designated municipality; remote participation allowed if authorized.
Board meetings require majority quorum; remote participation permitted except voting by proxy.
Shareholders with security interests and legal representatives have special voting rights.
Proxy voting is permitted with specific validity rules.
Voting trusts allowed with formal agreement and are limited to five years typically.

Stocks and Stockholders

Subscription contracts for unissued stocks are binding.
Stock issuance must be at or above par value; valid forms of consideration包括 cash, property, services, or prior debts.
Stock certificates required, may be transferred upon recording in corporate books.
Directors liable for unauthorized issuance of watered stock.
Subscribers liable for interest on unpaid subscriptions.
Delinquent stock may be sold after due notice; delinquent shareholders lose voting rights.
Procedures for lost certificates include affidavit, publication, and possible issuance of replacement.

Corporate Books and Records

Corporations must keep articles, bylaws, ownership lists, minutes, business transactions, and reports.
Records open to inspection by directors, trustees, and stockholders, subject to confidentiality laws.
Abuse of inspection rights by stockholders penalized; refusal to allow inspection results in liability.
Stock and transfer books must be maintained and may be kept by a licensed transfer agent.
Financial statements must be furnished upon request.

Merger and Consolidation

Corporations may merge or consolidate upon approval of boards and 2/3 stockholder votes.
Articles of merger/consolidation must detail the plan, asset valuation, voting results, and accounting methods.
Commission approval is required for effectivity, with prior government agency recommendation for special corporations.
Effects include the vesting of all assets, liabilities, and rights in the surviving or consolidated corporation.

Appraisal Rights

Stockholders may demand fair value payment upon certain corporate actions like amendments restricting rights, asset disposition, mergers, or fund investments.
Process involves written demand within 30 days, appraisal by three disinterested persons if no agreement.
Rights and voting privileges suspended until payment or abandonment of corporate action.

Nonstock Corporations

Nonstock corporations do not distribute income as dividends.
Organized for charitable, religious, educational, or similar purposes.
Voting rights of members and membership may be limited or nontransferable.
Trustees elected from members; meetings can be held outside principal office.
Rules for asset distribution upon dissolution prescribed.

Close Corporations

Defined as corporations with no more than 20 stockholders, with restrictions on transfer, and no public listing.
Articles may provide for management by stockholders instead of a board.
Transfer restrictions must appear in articles, bylaws, and certificate of stock.
Stockholders may execute agreements governing voting and management.
Provisions for deadlock resolution by the Commission, including appointment of provisional directors.
Withdrawal or dissolution rights for stockholders in certain cases.

Special Corporations: Educational and Religious

Educational corporations follow general provisions and special laws.
Religious corporations include corporation sole and religious societies.
Corporation sole managed by religious leaders; may acquire and dispose of property subject to court permission.
Procedures for incorporation, vacancy fillings, and dissolution described.

One Person Corporations (OPC)

Single stockholder corporation; certain entities excluded.
No minimum capital stock required unless special law provides.
Single stockholder acts as sole director and president.
Must appoint treasurer and secretary; secretary cannot be the stockholder.
Nominee and alternate nominee designated for succession.
Must maintain minutes book and submit annual reports.
Limited liability may be pierced if corporate form is abused.
Procedures for conversion to and from ordinary stock corporation.

Dissolution

Corporations may be dissolved voluntarily or involuntarily.
Procedures and requirements vary depending on whether creditors are affected.
Notice, publication, and filing with the Commission required.
Grounds for involuntary dissolution include non-use or fraud.
Corporate existence continues for three years after dissolution for winding up.
Distribution of assets provided with escheatment to the government if owners unknown.

Foreign Corporations

Defined as corporations formed under foreign laws allowing reciprocal business.
Must secure license to transact business in the Philippines.
Application requires extensive documentation; resident agent mandatory.
Allowed to deposit securities for creditors' protection.
Remain bound by laws applicable to domestic corporations, except those on formation and dissolution.
Amendments, mergers, and withdrawal procedures specified.
Transacting without license denies right to maintain suits.
License can be revoked for noncompliance.

Investigations, Offenses, and Penalties

Commission empowered to investigate violations, issue orders, and impose sanctions.
Cease and desist orders may be issued, including ex parte orders.
Contempt fines for disobedience of lawful orders.
Various fines for offenses such as unauthorized use of corporate names, disqualification violations, certification fraud, and corporate fraud.
Liability extends to officers, directors, employees, and aiders.
Penalties escalate if offenses harm public.

Miscellaneous

Definitions such as outstanding capital stock clarified.
Nonstock or special corporations may designate governing boards with different names.
Fees collected form a fund for Commission operations and modernization.
NEDA monitors stock ownership for anti-competitive abuses.
Corporations must file annual reports, including compensation and appraisal reports for vested corporations.
Commission has visitorial powers and confidentiality provisions.
Commission empowered to regulate corporate governance, issue opinions, impose sanctions, and enforce laws.
Electronic filing and monitoring systems to be implemented.
Arbitration agreements in arti