Rauwn ene

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oo) Senate
SIXTEENTH CONGRESS OF THE SEH UBlice of the Soeeetary
REPUBLIC OF THE PHILIPPINES }

Third Regular Session ‘15 SEP-8 P6227

SENATE RECEIVED BY:

S.B. No. 2945 0

PREPARED BY THE COMMITTEE ON TRADE, COMMERCE & ENTREPRENEURSHIP WITH SENATORS.
EJERCITO-ESTRADA, DEFENSOR SANTIAGO, ESCUDERO, BINAY, ANGARA AND AQUINO TV,
AS AUTHORS THEREOF

“AN ACT
AMENDING BATAS PAMBANSA BLG. 68
OTHERWISE KNOWN AS THE CORPORATION CODE OF THE PHILIPPINES”

Be it enacted by the Senate and House of Representatives of the Philippines in Congress
assembled:

SECTION 1. Section 6 of Batas Pambansa Big. 68 or The Corporation Code of the

Philippines (hereinafter, Code), is hereby amended to read as follows:

“Sec. 6. Classification of shares. — The shares of stock of stock
corporations may be divided into classes or series of shares, or both, any of which
classes or series of shares may have such rights, privileges or restrictions as may
be stated in the articles of incorporation: Provided, That no share may be deprived
of voting rights except those classified and issued as “preferred” or “redeemable”
shares, unless otherwise provided in this Code: Provided further, That there shall
always be a class or series of shares {which have] WITH complete voting rights.
Any or all of the shares or seties of shares may have a par value or have no par
value as may be provided for in the articles of incorporation: Provided, however,
‘That banks, trust companies, insurance companies, PRE-NEED COMPANIES,
public utilities, and building and loan associations AS WELL AS ALL OTHER
CORPORATIONS AUTHORIZED TO OBTAIN OR ACCESS FUNDS

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FROM THE PUBLIC, WHETHER PUBLICLY LISTED OR NOT, shall not

be permitted to issue no-par value shares of stock.

Preferred shares of stock issued by any corporation may be given
preference in the distribution of the assets of the corporation in case of liquidation
and in the distribution of dividends, or such other preferences as may be stated in
the articles of incorporation which are not violative of the provisions of this Code:
Provided, That preferred shares of stock may be issued only with a stated par
value. The board of directors, where authorized in the articles of incorporation,
may fix the terms and conditions of preferred shares of stock or any series
thereof: Provided, That such terms and conditions shall be effective upon [filing
of a certificate thereof with the Securities and Exchange Commission] THE
ISSUANCE BY THE SECURITIES AND EXCHANGE COMMISSION,
HEREINAFTER REFERRED TO AS THE “COMMISSION”, OF A
CERTIFICATE THAT THE TERMS AND CONDITIONS OF THE
PREFERRED SHARES ARE NOT INCONSISTENT WITH THE
PROVISIONS OF THIS CODE, THE CONSTITUTION OF THE
PHILIPPINES, AND OTHER EXISTING LAWS, RULES AND

REGULATIONS.
XXX XXX XXX”
SECTION 2. Section 7 of the Code is hereby amended to read as follows:

“Sec. 7, Founders’ shares, - Founders’ shares classified as such in the
articles of incorporation may be given certain rights and privileges not enjoyed by
the owners of other stocks, provided that where the exclusive right to vote and be
voted for in the election of directors is granted, it must be for a limited period not
to exceed five (5) years FROM THE DATE OF THE approval of the [Securities

and Exchange] Commission. PROVIDED, THAT THE EXCLUSIVE RIGHT

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TO VOTE OR BE VOTED FOR SHALL NOT BE ALLOWED IF ITS
EXERCISE WILL VIOLATE THE RULES AND REGULATIONS OF
THE COMMISSION, COMMONWEALTH ACT NO. 108, AND
REPUBLIC ACT 7042; PROVIDED, FURTHER, THAT THE SAID RIGHT

SHALL BE GRANTED ONLY ONCE.

AFTER THE LAPSE OF THE FIVE-YEAR PERIOD, THE
SHARES SHALL AUTOMATICALLY HAVE THE SAME VOTING

RIGHTS AND PRIVILEGES AS COMMON SHARES.”

SECTION 3. Section 8 of the Code is hereby amended to read as follows:

“Sec. 8. Redeemable shares. ~ Redeemable shares may be issued by the
corporation when expressly so provided in the articles of incorporation. [They
may be purchased or taken up by the corporation upon the expiration of a fixed
period, regardless of the existence of unrestricted retained eamings in the books
of the corporation, and upon such other terms and conditions as may be stated in
the articles of incorporation, which terms and conditions must also be stated in
the certificate of stock representing said shares.] THE CORPORATION MAY
REDEEM THE SAID SHARES ONLY IF, AFTER SUCH REDEMPTION,
IT SHALL STILL HAVE SUFFICIENT ASSETS IN ITS BOOKS TO
COVER LIABILITIES INCLUSIVE OF THE SUBSCRIBED CAPITAL
STOCK, AND SUCH REDEMPTION IS IN ACCORDANCE WITH THE
TERMS AND CONDITIONS STATED IN THE ARTICLES OF
INCORPORATION AND/OR THE CERTIFICATE OF STOCK
REPRESENTING SAID SHARES SUBJECT TO SUCH OTHER RULES

AND REGULATIONS THAT MAY BE ISSUED BY THE COMMISSION.

EXCEPT AS PROVIDED IN THE IMMEDIATELY PRECEDING

PARAGRAPH, NO CORPORATION SHALL REDEEM, REPURCHASE

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OR REACQUIRE ITS OWN SHARES OF WHATEVER CLASS, UNLESS,
AFTER SUCH REDEMPTION, REPURCHASE OR REACQUISITION, IT
HAS SUFFICIENT LIQUID ASSETS IN ITS BOOKS TO COVER
LIABILITIES INCLUSIVE OF THE SUBSCRIBED CAPITAL STOCK;
PROVIDED, THAT SUCH REQUIREMENT SHALL NOT APPLY IF THE
REDEMPTION, REPURCHASE OR REACQUISITION IS MADE UNDER

ANY OF THE FOLLOWING CIRCUMSTANCES:

A) PURSUANT TO A CONVERSION RIGHT PROVIDED FOR IN

THE ARTICLES OF INCORPORATION;

B) TO EFFECT A DECREASE IN THE AUTHORIZED CAPITAL
STOCK OF THE CORPORATION AS APPROVED BY THE

COMMISSION; AND

C) UPON INSTRUCTION TO A CLOSE CORPORATION BY THE

COMMISSION TO RESOLVE A DEADLOCK

D) A DACION EN PAGO IN FAVOR OF THE CORPORATION OR.
CONVEYANCE OF SHARES TO THE CORPORATION IN PAYMENT
OR SATISFACTION OF A DEBT OR LIABILITY TO THE

CORPORATION.”

SECTION 4. _ Section 10 of the Code is hereby amended to read as follows:

“Sec. 10. Number and qualifications of incorporators. - Any number of
PERSONS, natural OR JURIDICAL, [persons not less than five (5)] but not
more than fifteen (15), all of legal age, and a majority of whom are residents of the
Philippines}, may form a private corporation for any lawful purpose or purposes.
Each of the incorporators of a stock corporation must own or be a subscriber to at

least one (1) share of the capital stock of the corporation. PROVIDED THAT, A

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CORPORATION WITH ONLY A SINGLE STOCKHOLDER, WHETHER
NATURAL OR JURIDICAL, IS CONSIDERED A ONE PERSON
CORPORATION COVERED BY TITLE XII, CHAPTER II, AND A
CORPORATION WITH TOTAL ASSETS MORE THAN THREE
MILLION PESOS (PHP3,000,000.00) BUT NOT MORE THAN FIFTEEN
MILLION PESOS (PHP15,000,000.00), THE AMOUNTS OF WHICH MAY
BE REVISED BY THE COMMISSION, REGARDLESS OF THE NUMBER

OF INCORPORATORS IS CONSIDERED A SMALL CORPORATION.”

SECTION 5. _ Section 11 of the Code is hereby amended to read as follows:

“Sec. 11. Corporate term. - UNLESS SOONER DISSOLVED, a
corporation shall exist [for a period] PERPETUALLY, OR AS OTHERWISE
STATED IN THE ARTICLES OF INCORPORATION. A TERM LESS
THAN PERPETUAL [not exceeding fifty (50) years from the date of
incorporation unless sooner dissolved or unless said period is] MAY BE extended
[. The corporate term as originally stated in the articles of incorporation may be
extended for periods not exceeding fifty (50) years in any single instance] by an
amendment of the articles of incorporation, in accordance with this Code;
Provided, That no extension can be made earlier than [five (5)] THREE (3) years
prior to the original or subsequent expiry date(s) unless there are justifiable
reasons for an earlier extension as may be determined by the [Securities and
Exchange] Commission; PROVIDED, FURTHER, THAT SUCH
EXTENSION OF THE CORPORATE TERM SHALL TAKE EFFECT
ONLY ON THE DAY FOLLOWING THE ORIGINAL OR SUBSEQUENT

EXPIRY DATE(S).

THE CORPORATE TERM MAY BE SHORTENED OR
EXTENDED BY AN AMENDMENT OF THE ARTICLES OF

INCORPORATION IN ACCORDANCE WITH THIS CODE.

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A CORPORATION WHOSE TERM EXPIRED OR LAPSED
WITHIN TEN YEARS PRIOR TO THE EFFECTIVITY OF THIS CODE,
AND WHICH HAS NOT REINCORPORATED, MAY APPLY WITH THE
COMMISSION FOR THE REVIVAL OF ITS CERTIFICATE OF
INCORPORATION IF IT CAN SHOW THAT REINCORPORATION
WOULD BE DIFFICULT OR DELETERIOUS TO IT AND THAT IT
CONTINUES TO BE A GOING CONCERN OR CAN READILY REVIVE
ITS OPERATIONS. UPON APPROVAL BY THE COMMISSION AND
SUBJECT TO THE CORPORATION’S COMPLIANCE WITH THE
COMMISSION’S REQUIREMENTS OR CONDITIONS FOR REVIVAL
AND THE PAYMENT OF THE PRESCRIBED FEES, THE COMMISSION
SHALL REVIVE THE CORPORATION’S CERTIFICATE OF
INCORPORATION AND THE CORPORATION SHALL THENCEFORTH

EXIST IN ACCORDANCE WITH THIS SECTION.”

SECTION 6. A new section is hereby included as Section 12 in Title II,

Incorporation and Organization of Private Corporations, to be worded as follows:

“SEC. 12. REGULAR MONITORING. - A CORPORATION WITH A
PERPETUAL TERM OR A TERM EXCEEDING TWENTY-FIVE YEARS
SHALL BE SUBJECT TO A PERIODIC REVIEW BY THE COMMISSION
AND SHALL SUBMIT PROOF OF ITS INTENTION TO CONTINUE
OPERATIONS BY COMPLYING WITH THE REPORTORIAL
REQUIREMENTS THE COMMISSION MAY PRESCRIBE THEREFOR ON
THE TWENTY-FIFTH YEAR AND EVERY TWENTY-FIVE YEARS
THEREAFTER, OR AT SUCH INTERVALS AS THE COMMISSION MAY
LATER DETERMINE. THE COMMISSION SHALL CHARGE SUCH
PENALTIES AS IT MAY DEEM APPROPRIATE AND WITHHOLD

ACTION ON ANY MATTER BROUGHT BY THE CORPORATION,

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1 INCLUDING BUT NOT LIMITED TO APPLICATIONS FOR THE

2 AMENDMENT OF THE ARTICLES OF INCORPORATION AND/OR BY-

3 LAWS AND THE ISSUANCE OF CERTIFICATIONS OF GOOD STANDING

4 OR THOSE REQUIRED FOR TRANSACTIONS WITH OTHER

5 GOVERNMENT AGENCIES, UNTIL FULL COMPLIANCE WITH THE

6 COMMISSION’S REPORTORIAL REQUIREMENTS IS MADE.”

7

8 SECTION 7. Section 12 of the Code is hereby renumbered as Section 13 and

9 amended to read as follows:

10 “Sec. 13. Minimum capital stock required of stock corporations. -Stock
ist corporations incorporated under this Code shall [not be required to have any]
12 HAVE A minimum authorized capital stock OF ONE MILLION
2B (P1,000,000.00) PESOS [except as] OR SUCH AMOUNT AS MAY BE
14 DETERMINED BY THE COMMISSION AFTER DUE NOTICE TO THE
15 PUBLIC, UNLESS A DIFFERENT AMOUNT IS REQUIRED BY ANY
16 LAW [otherwise specifically provided for by special law], and subject to the
17 provisions of the following section[.]; PROVIDED, HOWEVER, THAT FOR
18 CORPORATIONS ISSUING NO PAR VALUE SHARES, THE MINIMUM
19 AUTHORIZED CAPITAL STOCK SHALL BE 200,000 SHARES; AND
20 PROVIDED, FURTHER, THAT WHERE CAPITAL CONSISTS OF BOTH
21 PAR AND NO-PAR VALUE SHARES, THE MINIMUM AUTHORIZED
22 CAPITAL STOCK SHALL BE ONE MILLION (P1,000,000.00) PESOS.”

2B SECTION 8. Section 13 of the Code is hereby renumbered as Section 14 and

24 — amended to read as follows:

25 “Sec. 14, Amount of capital stock to be subscribed and paid for purposes
26 of incorporation, - EXCEPT WITH RESPECT TO ONE PERSON
27 CORPORATIONS AND SMALL CORPORATIONS WHOSE CAPITAL

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STOCK SHALL BE PAID IN FULL UPON SUBSCRIPTION, at least
twenty-five (25%) percent of the NUMBER OF SHARES OF THE authorized
capital stock as stated in the articles of incorporation must be subscribed at the
time of incorporation, and at least twenty-five (25%) percent of the VALUE OF
THE total subscription must be paid upon subscription, the balance to be payable
on a date ot dates fixed in the contract of subscription without need of call, or in
the absence of a fixed date or dates, upon call for payment by the board of
directors: Provided, however, That in no case shall the paid-up capital be less than
[five thousand (P5,000.00) pesos. SIXTY TWO THOUSAND FIVE
HUNDRED (P62,500.00) PESOS, OR SUCH AMOUNT AS MAY BE
DETERMINED BY THE COMMISSION OR REQUIRED IN OTHER
LAWS; PROVIDED, HOWEVER, THAT WITH RESPECT TO NO PAR
VALUE SHARES, AT LEAST TWENTY-FIVE PERCENT (25%) OF SAID
SHARES OF THE AUTHORIZED CAPITAL STOCK MUST BE

SUBSCRIBED AND FULLY PAID UPON SUBSCRIPTION.”

SECTION 9. Section 14 of the Code is hereby renumbered as Section 15 and

amended to read as follows:

“Sec. 15. Contents of articles of incorporation. - All corporations
organized under this Code sball file with the [Securities and Exchange]
Commission articles of incorporation in any of the official languages, duly signed
and acknowledged by all of the incorporators, containing substantially the

following matters, except as otherwise prescribed by this Code or by special law:

1. The name of the corporation;

XXX XXX__XXX

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3. [The place where the principal office of the corporation is to be located,
which must be within the Philippines] THE SPECIFIC ADDRESS, WHICH.
SHALL INCLUDE, WHERE APPLICABLE, THE STREET NUMBER,
STREET NAME, BARANGAY, CITY OR MUNICIPALITY, AND
PROVINCE OF THE PRINCIPAL OFFICE OF THE CORPORATION,

WHICH MUST BE WITHIN THE PHILIPPINES;

4, [The term for which the corporation is to exist] A PROVISION
LIMITING THE DURATION OF THE CORPORATION'S EXISTENCE
TO A SPECIFIED DATE; OTHERWISE, THE CORPORATION SHALL

HAVE PERPETUAL EXISTENCE;

XXX XxX XXX

9, If it be a non-stock corporation, [the amount of its capital,] the names,
nationalities and residences of the contributors and {the amount contributed by
each] THE TOTAL AMOUNT OF CONTRIBUTED CAPITAL BY THE

INCORPORATORS AND MEMBERS THEREOF; [and]

10. IF IT BE A STOCK CORPORATION, A STATEMENT OF THE
TREASURER, WHO SHALL BE AN INCORPORATOR, THAT AT
LEAST TWENTY-FIVE PERCENT (25%) OF THE NUMBER OF
SHARES IN THE AUTHORIZED CAPITAL STOCK OF THE
CORPORATION HAS BEEN SUBSCRIBED AND AT LEAST TWENTY-
FIVE PERCENT (25%) OF THE TOTAL SUBSCRIPTION HAS BEEN
FULLY PAID TO HIM IN ACTUAL CASH AND/OR IN PROPERTY THE
FAIR VALUATION OF WHICH IS EQUAL TO AT LEAST TWENTY-
FIVE (25%) PERCENT OF THE SAID SUBSCRIPTION, SUCH PAID-UP
CAPITAL BEING NOT LESS THAN SIXTY TWO THOUSAND FIVE

HUNDRED PESOS (P62,500.00) ;” AND

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[The Securities and Exchange Commission shall not accept the articles of
incorporation of any stock corporation unless accompanied by a swom statement
of the Treasurer elected by the subscribers showing that at least twenty-five
(25%) percent of the authorized capital stock of the corporation has been
subscribed, and at least twenty-five (25%) of the total subscription has been fully
paid to him in actual cash and/or in property the fair valuation of which is equal
to at least twenty-five (25%) percent of the said subscription, such paid-up capital

being not less than five thousand (P5,000.00) pesos.]

ARTICLES OF INCORPORATION OR AMENDMENTS
THERETO MAY BE FILED IN THE FORM OF AN ELECTRONIC
DOCUMENT, IN ACCORDANCE WITH THE RULES AND
REGULATIONS OF THE COMMISSION ON THE USE OF

ELECTRONIC DATA MESSAGES.”

SECTION 10. Section 15 of the Code is hereby renumbered as Section 16 and

amended to delete the form on the Treasurer’s Affidavit and to read as follows:

“Sec. 16. Form|s] of articles of incorporation; Filing. - Unless otherwise
prescribed by special law, articles of incorporation of all domestic corporations

shall comply substantially with the following form:

ARTICLES OF INCORPORATION
OF

(Name of Corporation)

KNOW ALL [MEN] PERSONS BY THESE PRESENTS:

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XXX XXX XXX

TENTH: That has been elected by the subscribers as
Treasurer of the Corporation to act as such until his successor is duly elected and
qualified in accordance with the by-laws, [and] that as such Treasurer, he has
been authorized to receive for and in the name and for the benefit of the
corporation, all subscription (or fees) or contributions or donations paid or given
by the subscribers or members, THAT HE CERTIFIES THE
INFORMATION SET FORTH IN THE SEVENTH, EIGHT AND NINTH
CLAUSES ABOVE, AND THAT HE HAS RECEIVED THE PAID-UP
PORTION OF THE SUBSCRIPTION IN CASH OR PROPERTY FOR

THE BENEFIT AND CREDIT OF THE CORPORATION.

ELEVENTH: THAT THE INCORPORATORS UNDERTAKE TO
CHANGE THE NAME OF THE CORPORATION AS HEREIN
PROVIDED, OR AS AMENDED THEREAFTER, IMMEDIATELY UPON
RECEIPT OF NOTICE OR DIRECTIVE FROM THE SECURITIES AND
EXCHANGE COMMISSION THAT ANOTHER CORPORAITON,
PARTNERSHIP OR PERSON HAS ACQUIRED A PRIOR RIGHT TO
THE USE OF THAT NAME OR THAT THE NAME HAS BEEN
DECLARED MISLEADING, DECEPTIVE, CONFUSINGLY SIMILAR
TO A REGISTERED NAME, OR CONTRARY TO PUBLIC MORALS,

GOOD CUSTOMS OR PUBLIC POLICY.

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IN WITNESS WHEREOF, we have hereunto signed these Articles of

Incorporation, this .. day of .. » [19] 20.......... in the

City/Municipality of Province of

.» Republic of the Philippines.

XXX XXX XXX

[TREASURER'S AFFIDAVIT

XXX XXX XXX

NOTARY PUBLIC

My commission expires on ... a 1D.

Doc. No. ....

Page No.

Book No.

Series of 19

SECTION 11. Section 16 of the Code is hereby renumbered as Section 17 and
amended to delete “Securities and Exchange” from “Securities and Exchange Commission” in

each instance.

SECTION 12. Section 17 of the Code is hereby renumbered as Section 18 and

amended to read as follows:

“Sec. 18. Grounds when articles of incorporation or amendment may be
rejected or disapproved. ~ The [Securities and Exchange} Commission may reject
the articles of incorporation or disapprove any amendment thereto if the same is
not in compliance with the requirements of this Code: Provided, That the

Commission shall give the incorporators, DIRECTORS, TRUSTEES OR

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OFFICERS a reasonable time within which to correct or modify the objectionable
portions of the articles or amendment. The following are grounds for such

rejection or disapproval:

1. That the articles of incorporation or any amendment thereto is not

substantially in accordance with the form prescribed herein;

No articles of incorporation or amendment to articles of incorporation of banks,
banking and quasi-banking institutions, building and loan associations, trust
companies and other financial intermediaries and insurance companies shall be
accepted or approved by the Commission unless accompanied by a favorable
recommendation of the appropriate government agency to the effect that such

articles or amendment is in accordance with law.

THE COMMISSION MAY REQUIRE AN ENDORSEMENT OR
FAVORABLE RECOMMENDATION FROM OTHER APPROPRIATE

GOVERNMENT AGENCIES.

SECTION 13. Section 18 of the Code is hereby amended to read as follows:

“Sec. 18. Corporate name. - No corporate name may be allowed by the
[Securities and Exchange] Commission if the proposed name is [identical or
deceptively or confusingly similar] NOT DISTINGUISHABLE [to that of]
FROM THAT ALREADY RESERVED OR REGISTERED IN FAVOR OF
any existing corporation or to any other name already protected by law, or
WHEN THE SAME is [patently deceptive, confusing or] contrary to existing

laws.

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THE COMMISSION SHALL DETERMINE WHETHER A NAME
IS DISTINGUISHABLE FROM ANOTHER NAME FOR PURPOSES OF
THIS CODE. WITHOUT EXCLUDING OTHER NAMES WHICH MAY
NOT CONSTITUTE DISTINGUISHABLE NAMES AS DETERMINED BY
THE COMMISSION, AND SUBJECT TO THE RULES OR GUIDELINES
THE COMMISSION MAY SET WITH RESPECT THERETO, A NAME IS
NOT CONSIDERED DISTINGUISHABLE FOR PURPOSES OF THIS
CODE SOLELY BECAUSE IT CONTAINS ONE OR MORE OF THE

FOLLOWING:

1 THE WORD 'CORPORATION", "COMPANY",
"INCORPORATED", OR "LIMITED", "LIMITED
LIABILITY" OR AN ABBREVIATION OF ONE OF SUCH

worDs;

2. PUNCTUATIONS, ARTICLES, CONJUNCTIONS,
CONTRACTIONS, ABBREVIATIONS, DIFFERENT TENSES,

SPACING OR NUMBER OF THE SAME WORD OR PHRASE.

THE FACT THAT A CORPORATE NAME COMPLIES WITH
THIS SECTION DOES NOT CREATE SUBSTANTIVE RIGHTS TO THE
USE OF THAT CORPORATE NAME. THE COMMISSION SHALL
HAVE THE AUTHORITY TO SUMMARILY REMOVE FROM
REGISTRATION OR RESERVATION ANY NAME WHICH IT LATER

DETERMINES TO BE NOT DISTINGUISHABLE AS STATED ABOVE.

WHEN A CORPORATE NAME IS REMOVED FROM
REGISTRATION, THE CORPORATION SHALL IMMEDIATELY
CEASE FROM USING THE SAME AND APPLY FOR THE

REGISTRATION OF A NEW CORPORATE NAME. SIMILARLY, A

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1 CORPORATION DIRECTED BY FINAL JUDGMENT TO CHANGE ITS.

2 CORPORATE NAME SHALL NOT USE THE SAME IN ITS
3 OPERATIONS OR IN ANY OTHER WAY, EVEN AFTER ITS
4 DISSOLUTION OR REVOCATION AS A CORPORATION.

5 When a change in the corporate name is approved, the Commission shall
6 issue an amended certificate of incorporation under the amended name.

7 IF A CORPORATION USES OR CONTINUES TO USE A
8 CORPORATE NAME ALREADY REMOVED FROM REGISTRATION
9 OR RESERVATION, OR WHICH HAS BEEN DIRECTED TO BE
10 CHANGED BY FINAL JUDGMENT, THE COMMISSION SHALL DULY

tI NOTIFY SAID CORPORATION AND REQUIRE IT TO IMMEDIATELY

12 CEASE AND DESIST FROM THE CONTINUED USE OF SUCH
13 CORPORATE NAME. IF THE CORPORATION FAILS TO COMPLY
14 WITH THE COMMISSION’S ORDER IMMEDIATELY OR WITHIN
15 THE PERIOD STATED IN THE ORDER, THE COMMISSION MAY
16 HOLD THE CORPORATION AND/OR ITS RESPONSIBLE DIRECTORS
17 OR OFFICERS IN CONTEMPT, AND/OR CAUSE THE REMOVAL OF
18 ALL VISIBLE SIGNAGES, MARKS, ADVERTISEMENTS, LABELS,
19 PRINTS AND OTHER EFFECTS BEARING SUCH CORPORATE NAME
20 IN THEIR POSSESSION. LIABILITY UNDER THIS SECTION SHALL
21 BE WITHOUT PREJUDICE TO THE CORPORATION’S AND/OR ITS
22 RESPONSIBLE DIRECTORS’ OR OFFICERS’ LIABILITY FOR OTHER:
23 ADMINISTRATIVE, CIVIL, OR CRIMINAL SANCTIONS UNDER THIS.
24 CODE AND OTHER LAWS.”

25 SECTION 14. Section 19 of the Code is hereby renumbered as Section 20 and

26 amended to read as follows:

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“Sec. 20. REGISTRATION, INCORPORATION AND commencement of
corporate existence, - A PERSON OR GROUP OF PERSONS DESIRING
TO INCORPORATE SHALL SUBMIT THE INTENDED CORPORATE
NAME TO THE COMMISSION FOR VERIFICATION. IF THE
COMMISSION FINDS THAT THE NAME IS DISTINGUISHABLE, THE
NAME SHALL BE RESERVED IN FAVOR OF THE INCORPORATORS.
THE INCORPORATORS SHALL THEN: (A) SUBMIT, AS MAY BE
APPLICABLE, THEIR ARTICLES OF INCORPORATION, THEIR BY-
LAWS, AND SUCH OTHER DOCUMENTS AND/OR INFORMATION AS.
MAY BE REQUIRED BY THE COMMISSION; AND (B) PAY THE

PRESCRIBED FEES.

INCORPORATORS SHALL HAVE THE OPTION OF
RESERVING A CORPORATE NAME, SUBMITTING THE
REQUIREMENTS FOR INCORPORATION AND PAYING THE
PRESCRIBED FEES EITHER THROUGH THE MANUAL PROCESS AT
THE OFFICE OF THE COMMISSION OR THROUGH ANY OTHER
SYSTEM OF REGISTRATION AND INCORPORATION WHICH THE
COMMISSION MAY ESTABLISH, SUBJECT TO THE
CORRESPONDING RULES AND PROCEDURES THE COMMISSION

SHALL PRESCRIBE THEREFOR.

IF THE COMMISSION FINDS THAT THE SUBMITTED
DOCUMENTS, INFORMATION AND PAYMENT ARE COMPLETE
AND IN FULL COMPLIANCE OF THE REQUIREMENTS UNDER THIS
CODE AND THE RULES OF THE COMMISSION, AND THERE IS NO
OTHER GROUND TO REJECT OR DISAPPROVE ANY OF THE

SUBMISSIONS, THE COMMISSION SHALL ISSUE THE

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1 CORRESPONDING CERTIFICATE OF INCORPORATION AND

2 REGISTER THE CORPORATE NAME EARLIER RESERVED.

3 A private corporation formed or organized under this Code commences to
4 have corporate existence and juridical personality and is deemed incorporated
5 from the date the [Securities and Exchange} Commission issues [a] THE
6 certificate of incorporation under its official seal; PROVIDED, THAT THE
7 COMMISSION MAY ISSUE THE CERTIFICATE OF INCORPORATION
8 IN THE FORM OF AN ELECTRONIC DOCUMENT, IN ACCORDANCE
9 WITH THE RULES AND REGULATIONS OF THE COMMISSION ON
10 THE USE OF ELECTRONIC DATA MESSAGES; and thereupon the
ul incorporators, stockholders/members and their successors shall constitute a body
12 politic and corporate under the name stated in the articles of incorporation for the
13 period of time mentioned therein, unless said period is extended or the
14 corporation is sooner dissolved in accordance with law.

15 SECTION 15. Section 20 and 21 of the Code are hereby renumbered as Section 21

16 and 22, respectively.

17 SECTION 16. Section 22 of the Code is hereby renumbered as Section 23 and

18 amended to read as follows:

19 “Sec. 23. Effects of non-use of corporate charter and continuous
20 inoperation of a corporation; DELINQUENCY AND REVOCATION. - If a
ai corporation does not formally organize and commence [the transaction of] its
2 business or the construction of its works within [two (2)] FIVE (5) years from the
23 date of its incorporation, its [corporate powers cease and the corporation]
24 CERTIFICATE OF INCORPORATION shall be deemed [dissolved]
25 REVOKED AS OF THE DAY FOLLOWING THE END OF SAID FIVE-

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YEAR PERIOD, WITHOUT NEED OF FURTHER ACTION BY THE

COMMISSION.

However, if a corporation [has] commenced [the transaction of] its
business but subsequently [becomes] BECAME [continuously] inoperative for a
period of at least five (5) CONSECUTIVE years, {the same shall be a ground for
the suspension or revocation of its corporate franchise or certificate of
incorporation] THE COMMISSION MAY, AFTER DUE NOTICE AND
HEARING, EITHER REVOKE THE CORPORATION’S CERTIFICATE
OF INCORPORATION OR PLACE THE CORPORATION UNDER
DELINQUENCY STATUS. THE CORPORATION’S FAILURE TO
COMPLY WITH THE REPORTORIAL REQUIREMENTS UNDER
SECTION 180 SHALL RENDER IT INOPERATIVE FOR PURPOSES OF

THIS CODE.

THE COMMISSION SHALL GIVE A  DELINQUENT
CORPORATION A PERIOD OF TWO YEARS WITHIN WHICH IT
MUST RESUME OPERATIONS, COMPLY WITH ALL
REQUIREMENTS, AND PAY ALL FINES THE COMMISSION SHALL
PRESCRIBE. THE COMMISSION SHALL CHARGE SUCH PENALTIES
AS IT MAY DEEM APPROPRIATE AND WITHHOLD ACTION ON ANY
MATTER BROUGHT BY A _ DELINQUENT CORPORATION,
INCLUDING BUT NOT LIMITED TO APPLICATIONS FOR THE
AMENDMENT OF THE ARTICLES OF INCORPORATION AND/OR BY-
LAWS AND THE ISSUANCE OF CERTIFICATIONS OF GOOD
STANDING OR THOSE REQUIRED FOR TRANSACTIONS WITH
OTHER GOVERNMENT AGENCIES, UNTIL FULL COMPLIANCE
WITH THE COMMISSION’S REQUIREMENTS AND PAYMENT OF

ALL FINES AND PENALTIES ARE MADE.

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ONCE COMPLIANCE WITH THE COMMISSION’S
REQUIREMENTS AND PAYMENT OF FINES AND PENALTIES ARE
COMPLETED, THE COMMISSION SHALL ISSUE AN ORDER LIFTING
‘THE DELINQUENCY STATUS. FAILURE TO RESUME OPERATIONS,
COMPLY WITH THE COMMISSION’S REQUIREMENTS, AND PAY
THE PENALTIES PRESCRIBED WITHIN THE PERIOD GIVEN BY
THE COMMISSION OR ANY EXTENSION GRANTED BY IT,
HOWEVER, SHALL RENDER THE CORPORATION’S CERTIFICATE
OF INCORPORATION REVOKED AS OF THE LAPSE OF SAID
PERIOD WITHOUT NEED OF FURTHER ACTION BY THE

COMMISSION.

THE COMMISSION SHALL REVOKE THE CERTIFICATE OF
INCORPORATION OF A CORPORATION WHEN DIRECTED BY
FINAL JUDGMENT OF A COMPETENT COURT OR WHEN, AFTER
DUE NOTICE AND HEARING, THE COMMISSION DETERMINES
THAT THE CORPORATION COMMITTED VIOLATIONS OF THIS
CODE OR ITS RULES WHICH WARRANT THE REVOCATION OF ITS

CERTIFICATE OF INCORPORATION.

ONCE THE REVOCATION BECOMES FINAL, LE. AFTER THE
LAPSE OF FIFTEEN DAYS FROM THE DATE OF REVOCATION, THE
CORPORATION SHALL BE BANNED FROM ANY FURTHER USE OF
THE CORPORATE NAME AND SHALL BE DISSOLVED IN
ACCORDANCE WITH THE PROVISIONS ON DISSOLUTION UNDER

TITLE XIV OF THIS CODE.

[The provision shall not apply if the failure to organize, commence the

transaction of its business or the construction of its works, or to continuously

Page 19 of 129


10

a

12

20
21
22
23
24

25

operate is due to causes beyond the control of the corporation as may be

determined by the Securities and Exchange Commission].”

SECTION 17. Section 23 of the Code is hereby renumbered as Section 24 and

amended to read as follows:

“Sec. 24. The board of directors or trustees. - Unless otherwise provided
in this Code, the corporate powers of all corporations formed under this Code
shall be exercised, all business conducted and all property of such corporations
controlled and held by the board of directors or trustees [to be elected from
among the holders of stocks, or where there is no stock, from among the members
of the corporation,] who shall hold office for one (1) year until their successors

are elected and qualified.

ONE PERSON CORPORATIONS SHALL HAVE ONLY ONE (1)
DIRECTOR OR TRUSTEE. SMALL CORPORATIONS SHALL HAVE AS.
MANY DIRECTORS AS THERE ARE INCORPORATORS, NOT
EXCEEDING THREE (3). A CORPORATION SHALL BE DEEMED TO
BE A SMALL CORPORATION WHEN IT HAS ONLY TWO (2) OR
THREE (3) INCORPORATORS AND ITS TOTAL ASSETS DO NOT
EXCEED FIFTEEN MILLION PESOS (PHP15,000,000.00) OR SUCH

OTHER AMOUNT THAT THE COMMISSION MAY DETERMINE.

CORPORATIONS IMBUED WITH PUBLIC INTEREST, AS MAY
BE DEFINED BY THE COMMISSION,SHALL HAVE AT LEAST ONE (1)
INDEPENDENT DIRECTOR OR TRUSTEE, OR SUCH OTHER
MINIMUM NUMBER WHICH THE COMMISSION MAY DETERMINE
AS NECESSARY FOR GOOD CORPORATE GOVERNANCE. THE

COMMISSION SHALL FURTHER PRESCRIBE THE MINIMUM

Page 20 of 129


17

18
19
20
21
22
23
24
25
26

STANDARDS OR CRITERIA IN DETERMINING THE INDEPENDENCE

OF A DIRECTOR.

EXCEPT WITH RESPECT TO INDEPENDENT DIRECTORS,
DIRECTORS SHALL BE ELECTED FROM AMONG THE HOLDERS OF
STOCKS [Every director] AND must EACH own at least one (1) share of the
capital stock of the corporation of which he is a director, which share shall stand
in his name [on] IN the books of the corporation. [Any] IF ANY SUCH director
[who] ceases to be the owner of at least one (1) share of the capital stock of the

corporation, [of which he is a director] HE shall thereby cease to be a director.

‘Trustees of non-stock corporations [must be members thereof], OTHER
THAN INDEPENDENT TRUSTEES, SHALL BE ELECTED FROM
AMONG THE MEMBERS OF THE CORPORATION. IF ANY SUCH
TRUSTEE CEASES TO BE A MEMBER OF THE CORPORATION, HE

SHALL THEREBY CEASE TO BE A TRUSTEE.

A majority of the directors or trustees of all corporations organized under
this Code, INCLUSIVE OF INDEPENDENT DIRECTORS OR TRUSTEES,

must be residents of the Philippines.

IT SHALL BE THE DUTY OF ALL DIRECTORS OR TRUSTEES
TO ATTEND ALL MEETINGS OF THE BOARD AND OF THE
STOCKHOLDERS OR MEMBERS AND THEIR ABSENCE MAY BE
EXCUSED ONLY FOR JUSTIFIABLE REASONS. WHEN RELATED
PARTY TRANSACTIONS OR SELF-DEALINGS OF A DIRECTOR ARE
TAKEN UP, THE CONCERNED DIRECTOR SHALL ABSENT HIMSELF
FROM THE MEETING AND HIS ABSENCE SHALL NOT BE COUNTED
AGAINST HIM. DIRECTORS AND TRUSTEES SHALL HAVE SUCH

OTHER DUTIES AND RESPONSIBILITIES PROVIDED IN THE

Page 21 of 129


20

21
22
23
24
25
26

CORPORATION’S BY-LAWS AND AS MAY BE PRESCRIBED BY THE

COMMISSION FOR GOOD CORPORATE GOVERNANCE.

SECTION 18. Section 24 of the Code is hereby renumbered as Section 25 and

amended to read as follows:

“Sec, 25. Election of directors or trustees. - OTHER THAN IN
INSTANCES WHEN THE EXCLUSIVE RIGHT IS RESERVED FOR
HOLDERS OF FOUNDERS’ SHARES UNDER SECTION 7, EACH
STOCKHOLDER OR MEMBER SHALL HAVE THE RIGHT TO
NOMINATE ANY DIRECTOR OR TRUSTEE WHO POSSESSES ALL OF

THE QUALIFICATIONS AND

INE OF THE DISQUALIFICATIONS
SET FORTH IN THIS CODE OR IN THE RULES OF THE

COMMISSION.

EXCEPT AS PROVIDED IN SECTION 27 OF THIS CODE, at all
elections of directors or trustees, there must be present, either in person, BY
REMOTE COMMUNICATION, or by representative authorized to act by
written proxy, the owners of a majority of the outstanding capital stock, or if there
be no capital stock, a majority of the members entitled to vote; PROVIDED
THAT WHEN A VOTE IS CAST IN ABSENTIA, THE STOCKHOLDER
OR MEMBER WHO CAST THE VOTE SHALL BE DEEMED PRESENT

FOR PURPOSES OF QUORUM.

EACH STOCKHOLDER OR MEMBER SHALL HAVE THE
RIGHT TO VOTE IN PERSON, BY REMOTE COMMUNICATION, BY
PROXY, AND/OR IN ABSENTIA; PROVIDED THAT VOTING BY
REMOTE COMMUNICATION OR IN ABSENTIA MAY BE RESORTED
TO ONLY WHEN ALLOWED EITHER BY THE BY-LAWS OF THE

CORPORATION OR BY A MAJORITY OF THE BOARD OF

Page 22 of 129


20

21

22

23

24

25

26

27

DIRECTORS AND WHEN THE CORPORATI

HAS INSTITUTED
REASONABLE MEASURES TO VERIFY THAT THE PERSON
PERMITTED TO PARTICIPATE OR VOTE BY REMOTE
COMMUNICATION OR IN ABSENTIA IS A STOCKHOLDER OR
MEMBER, OR A HOLDER OF A PROXY FROM A STOCKHOLDER OR
MEMBER, AND TO RECORD ALL VOTES AND OTHER ACTIONS
TAKEN AT THE MEETING. WHEN ATTENDANCE AT THE MEETING
IS BY REMOTE COMMUNICATION, THE CORPORATION SHALL
PROVIDE THE STOCKHOLDER OR MEMBER, OR PROXY-HOLDER,
A REASONABLE OPPORTUNITY TO PARTICIPATE IN THE
MEETING, HEAR OR SEE THE PROCEEDINGS AS WELL AS BE
HEARD OR SEEN BY OTHER STOCKHOLDERS OR MEMBERS, AND
TO CAST THEIR VOTE SUBSTANTIALLY CONCURRENTLY WITH
SUCH PROCEEDINGS. WHEN VOTING IN ABSENTIA, IS ALLOWED,
THE CORPORATION SHALL INSTITUTE REASONABLE MEASURES
TO TIMELY PROVIDE THE STOCKHOLDER OR MEMBER WITH
INFORMATION ON THE NOMINEES AND GIVE THEM A
REASONABLE OPPORTUNITY TO ASK QUESTIONS BEFORE
CASTING THEIR VOTES. THE COMMISSION SHALL PRESCRIBE
THE MINIMUM STANDARDS OR GUIDELINES TO MAKE
ATTENDANCE BY REMOTE COMMUNICATION AND VOTING IN
ABSENTIA EFFICIENT AND ACCESSIBLE FORA FOR

STOCKHOLDERS OR MEMBERS.

The election must be by ballot if requested by any voting stockholder or

member.

In stock corporations, every stockholder entitled to vote shall have the

right to vote fin person or by proxy] the number of shares of stock standing, at the

Page 23 of 129


20

21

22
23
24
25,

26

time fixed in the by-laws, in his own name [on] IN the stock books of the
corporation, or where the by-laws are silent, at the time of the election; and said
stockholder may vote such number of shares for as many persons as there are
directors to be elected or he may cumulate said shares and give one candidate as
many votes as the number of directors to be elected multiplied by the number of
his shares shall equal, or he may distribute them on the same principle among as
many candidates as he shall see fit: Provided, That the total number of votes cast
by him shall not exceed the number of shares owned by him as shown in the
books of the corporation multiplied by the whole number of directors to be
elected: Provided, however, That no delinquent stock shall be voted. Unless
otherwise provided in the articles of incorporation or in the by-laws, members of
corporations which have no capital stock may cast as many votes as there are

trustees to be elected but may not cast more than one vote for one candidate.

IT SHALL BE UNDERSTOOD THAT CANDIDATES FOR
DIRECTOR OR TRUSTEE receiving the highest number of votes FROM
AMONG THE NOMINEES FOR REGULAR DIRECTORS OR
TRUSTEES shall be declared elected AND THAT, IN THE ELECTION OF
INDEPENDENT DIRECTORS, THE CANDIDATE FOR INDEPENDENT
DIRECTOR RECEIVING THE HIGHEST NUMBER OF VOTES FROM.
AMONG THE NOMINEES FOR INDEPENDENT DIRECTORS SHALL

BE DECLARED ELECTED.

[Any meeting of the stockholders or members called for an election may
adjourn from day to day or from time to time but not sine die or indefinitely] If,
for any reason, no election is held, or if there are not present or represented by
proxy, at the meeting, the owners of a majority of the outstanding capital stock, or

if there be no capital stock, a majority of the members entitled to vote, THE

Page 24 of 129


17
18
19
20
21

B
24

25
26

MEETING MAY BE ADJOURNED AND THE CORPORATION SHALL

PROCEED IN ACCORDANCE WITH SECTION 26 OF THIS CODE.”

SECTION 19. Section 25 of the Code is hereby renumbered as Section 26 and

amended to read as follows:

“See. 26. Corporate officers; quorum. - Immediately after their election,
the directors of a corporation must formally organize by the election of a
president OR CHIEF EXECUTIVE OFFICER, who shall be a director, a
treasurer OR CHIEF FINANCIAL OFFICER, who SHALL be a director, a
secretary who shall be a tesident and citizen of the Philippines, AND, IF THE
CORPORATION IS IMBUED WITH PUBLIC INTEREST, A
COMPLIANCE OFFICER, WHO SHALL REPORT DIRECTLY TO A
COMPLIANCE COMMITTEE COMPOSED OF AT LEAST THREE (3)
DIRECTORS, and such other officers as may be provided for in the by-laws.
Any two (2) or more positions may be held concurrently by the same person,
except that no one shall act as president and secretary or as president and

treasurer at the same time.

[The directors or trustees and officers to be elected shall perform the
duties enjoined on them by law and by the by-laws of the corporation.| Unless the
articles of incorporation or the by-laws provide for a greater majority, a majority
of the number of directors or trustees as fixed in the articles of incorporation shall
constitute a quorum for the transaction of corporate business, and every decision
of at least a majority of the directors or trustees present at a meeting at which
there is a quorum shall be valid as a corporate act, except for the election of

officers which shall require the vote of a majority of all the members of the board.

[Directors or trustees cannot attend or vote by proxy at board meetings];

HOWEVER, WHEN ALLOWED BY THE BY-LAWS, THEY CAN

Page 25 of 129


19

20

21

22

23

24

ATTEND BOARD MEETINGS THROUGH REMOTE
COMMUNICATION SUCH AS VIDEOCONFERENCING,
TELECONFERENCING OR OTHER TECHNOLOGY THAT ALLOWS

‘THEM A REASONABLE OPPORTUNITY TO PARTICIPATE.”

SECTION 20. Section 26 of the Code is hereby renumbered as Section 27 and

amended to read as follows:

“Sec. 27. Report of election of directors, trustees and officers], NON-
HOLDING OF ELECTION AND CESSATION FROM OFFICE. - Within
thirty (30) days after the election of the directors, trustees and officers of the
corporation, the secretary, or any other officer of the corporation, shall submit to
the [Securities and Exchange] Commission, the names, nationalities,
SHAREHOLDINGS and residences of the directors, trustees, and officers

elected.

THE NON-HOLDING OF ANY ELECTION AND THE REASONS
THEREFOR, SHALL BE REPORTED TO THE COMMISSION WITHIN
TEN (10) DAYS FROM THE DATE OF THE SCHEDULED ELECTION;
PROVIDED THAT, THE NOTICE OF NON-HOLDING MAY BE
SUBMITTED IN THE FORM OF AN ELECTRONIC DOCUMENT, IN
ACCORDANCE WITH THE RULES AND REGULATIONS OF THE

COMMISSION ON THE USE OF ELECTRONIC DATA MESSAGES.

WHEN PERTAINING TO THE ORIGINAL SCHEDULE, THE
REPORT OF NON-HOLDING SHALL FURTHER SPECIFY A NEW
DATE FOR THE ELECTION, WHICH SHALL NOT BE LATER THAN

THIRTY DAYS FROM THE ORIGINAL DATE.

Page 26 of 129


20

21

22

23

24

25

26

IF NO NEW DATE HAS BEEN DESIGNATED, OR IF THE
NEWLY-SCHEDULED ELECTION BE LIKEWISE NOT HELD, THE
COMMISSION MAY, MOTU PROPRIO OR UPON THE APPLICATION
OF ANY STOCKHOLDER, MEMBER, DIRECTOR OR TRUSTEE AND
AFTER VERIFICATION OF THE NON-HOLDING OF THE ELECTION
OF DIRECTORS OR TRUSTEES, REQUIRE THE CORPORATE
SECRETARY ON RECORD TO IMMEDIATELY ISSUE A LIST OF
STOCKHOLDERS OR MEMBERS, THEIR ADDRESSES AND
CONTACT NUMBERS AND SIMILAR INFORMATION, AND
SUMMARILY ORDER THAT THE ELECTION BE HELD. IN THIS
REGARD, THE COMMISSION SHALL HAVE THE POWER TO ISSUE
SUCH ORDERS AS MAY BE APPROPRIATE, INCLUDING, WITHOUT
LIMITATION, ORDERS DESIGNATING THE TIME AND PLACE OF
THE ELECTION, THE RECORD DATE OR DATES FOR
DETERMINATION OF STOCKHOLDERS OR MEMBERS ENTITLED
TO NOTICE OF THE ELECTION AND TO VOTE THEREAT, AND THE

FORM OF NOTICE OF SUCH ELECTION.

THE SHARES OF STOCK OR MEMBERSHIP REPRESENTED
AT SUCH MEETING AND ENTITLED TO VOTE THEREAT, EITHER
IN PERSON, BY REMOTE COMMUNICATION, IN ABSENTIA, OR BY
PROXY, SHALL CONSTITUTE A QUORUM FOR THE PURPOSE OF
SUCH MEETING, NOTWITHSTANDING ANY PROVISION OF THE
ARTICLES OF INCORPORATION OR BY-LAWS TO THE CONTRARY.
THE MEETING SCHEDULED BY THE COMMISSION AND THE
ELECTION HELD THEREAT SHALL HAVE THE SAME EFFECT OF A

VALID MEETING AND ELECTION OF THE CORPORATION.

Page 27 of 129


20

21

22

23

24

25

Should a director, trustee or officer die, resign or in any manner cease to
hold office, his heirs in case of his death, the secretary, or any other officer of the
corporation, or the director, trustee or officer himself, shall [immediately] report
such fact to the [Securities and Exchange] Commission IN WRITING WITHIN
THREE (3) DAYS FROM CESSATION FROM OFFICE, PROVIDED
THAT SUCH NOTICE MAY GIVEN IN THE FORM OF AN
ELECTRONIC DOCUMENT, IN ACCORDANCE WITH THE RULES
AND REGULATIONS OF THE COMMISSION ON THE USE OF

ELECTRONIC DATA MESSAGES.

IN ELECTING DIRECTORS OR TRUSTEES TO FILL
VACANCIES, THE PROCEDURE SET FORTH IN SECTION 25 AND IN

THIS SECTION SHALL APPLY.”

SECTION 21. Section 27 of the Code is hereby renumbered as Section 28 and

amended to read as follows:

“Sec. 28. Disqualification of directors, trustees or officers. - THE
FOLLOWING PERSONS SHALL BE DISQUALIFIED FROM BEING
ELECTED AS DIRECTOR, TRUSTEE OR OFFICER OF ANY

CORPORATION:

1. [No person] THOSE WHO HAVE BEEN convicted by final
judgment of an offense punishable by imprisonment for a period exceeding six
(© years, or a violation of this Code OR REPUBLIC ACT 8799 |, committed]
within five (5) years prior to the date of his election or appointment{, shall qualify

as a director, trustee or officer of any corporation];

2. THOSE WHO, BY FINAL JUDGMENT, ARE CONVICTED OF,

OR FOUND ADMINISTRATIVELY LIABLE FOR, ANY OFFENSE

Page 28 of 129


1 INVOLVING MORAL TURPITUDE, FRAUD, EMBEZZLEMENT,

2 THEFT, ESTAFA, COUNTERFEITING, MISAPPROPRIATION,
3 FORGERY, BRIBERY, FALSE OATH, PERJURY AND OTHER
4 FRAUDULENT ACTS;

5 3. THOSE CONVICTED BY FINAL JUDGMENT OF A FOREIGN
6 COURT OR EQUIVALENT REGULATORY AUTHORITY OF ACTS,
7 VIOLATIONS OR MISCONDUCT THE SAME AS OR SIMILAR TO
8 THOSE ENUMERATED IN PARAGRAPHS 1 AND 2 ABOVE; AND

9 4. THOSE WHO HAVE BEEN CONVICTED BY FINAL
10 JUDGMENT OF ANY THREE OF THE OFFENSES AND/OR

1 VIOLATIONS IN PARAGRAPHS 1 TO 3 ABOVE, REGARDLESS OF

12 ‘WHEN THE JUDGMENTS BECAME FINAL.

13 THE MAXIMUM NUMBER OF BOARD REPRESENTATIONS
14 ANY INDEPENDENT DIRECTOR OR TRUSTEE SHALL HAVE IN
15 OTHER CORPORATIONS SHALL BE FIVE (5), OR SUCH LOWER
16 NUMBER AS MAY BE PROVIDED IN THE BY-LAWS OF THE
17 CORPORATION OR AS THE COMMISSION MAY LATER PRESCRIBE.
18 THE FOREGOING IS WITHOUT PREJUDICE TO
19 QUALIFICATIONS OR OTHER DISQUALIFICATIONS WHICH THE
20 COMMISSION MAY IMPOSE IN ITS PROMOTION OF, AMONG
21 OTHERS, GOOD CORPORATE GOVERNANCE.”

22 SECTION 22. Section 28 of the Code is hereby renumbered as Section 29 and

23 amended to read as follows:

24 “Sec, 29, Removal of directors or trustees. - Any director or trustee of a

25 corporation may be removed from office by a vote of the stockholders holding or

Page 29 of 129


14

15

16

20

21

22

23

24

25

26

27

28

representing at least two-thirds (2/3) of the outstanding capital stock, or if the
corporation be a non-stock corporation, by a vote of at least two-thirds (2/3) of
the members entitled to vote: Provided, That such removal shall take place either
at a regular meeting of the corporation or at a special meeting called for the
purpose, and in either case, after previous notice to stockholders or members of
the corporation of the intention to propose such removal at the meeting. A special
meeting of the stockholders or members of a corporation for the purpose of
removal of directors or trustees, or any of them, must be called by the secretary
on order of the president or on the written demand of the stockholders
representing or holding at least a majority of the outstanding capital stock, ot, if it
be a non-stock corporation, on the written demand of a majority of the members
entitled to vote. Should the secretary fail or refuse to call the special meeting
upon such demand or fail or refuse to give the notice, or if there is no secretary,
the call for the meeting may be addressed directly to the stockholders or members
by any stockholder or member of the corporation signing the demand, Notice of
the time and place of such meeting, as well as of the intention to propose such
removal, must be given by publication or by written notice prescribed in this
Code. Removal may be with or without cause: Provided, That removal without
cause may not be used to deprive minority stockholders or members of the right

of representation to which they may be entitled under Section 25 of this Code.

THE COMMISSION SHALL, MOTU PROPRIO OR UPON
‘VERIFIED COMPLAINT AND AFTER DUE NOTICE AND HEARING,
ORDER THE REMOVAL OF ANY DISQUALIFIED DIRECTOR OR
TRUSTEE ELECTED DESPITE THE DISQUALIFICATION, OR WHOSE
DISQUALIFICATION IS DISCOVERED OR AROSE SUBSEQUENT TO
ELECTION. THE REMOVAL OF ANY DISQUALIFIED DIRECTOR
SHALL BE WITHOUT PREJUDICE TO OTHER SANCTIONS THE

COMMISSION MAY IMPOSE IN ACCORDANCE WITH THIS CODE,

Page 30 of 129


20

21

22

23

24

25

26

UPON SHOWING OF A WILLFUL OR DELIBERATE CONCEALMENT

OF THE DISQUALIFICATION. ”

SECTION 23. Section 29 of the Code is hereby renumbered as Section 30 and

amended to read as follows:

“Sec. 30. Vacancies in the office of director or trustee. - Any vacancy
occurring in the board of directors or trustees other than by removal by the
stockholders or members or by expiration of term, may be filled by the vote of at
least a majority of the remaining directors or trustees, if still constituting a
quorum; otherwise, said vacancies must be filled by the stockholders in a regular

or special meeting called for that purpose.

WHEN THE VACANCY IS DUE TO EXPIRATION OF TERM,
THE ELECTION SHALL BE HELD NO LATER THAN THE DAY OF
SUCH EXPIRATION OF TERM AT A MEETING CALLED FOR THAT
PURPOSE. WHEN THE VACANCY ARISES AS A RESULT OF
REMOVAL BY THE STOCKHOLDERS OR MEMBERS, THE
ELECTION MUST BE HELD ON THE SAME DAY OF THE MEETING
AUTHORIZING THE REMOVAL AND THIS FACT MUST BE SO
STATED IN THE AGENDA AND NOTICE OF SAID MEETING. IN ALL
OTHER CASES, THE ELECTION MUST BE HELD NO LATER THAN
FORTY-FIVE (45) DAYS FROM WHEN THE VACANCY ARISES. A
director or trustee so elected to fill a vacancy shall be elected only for the

unexpired term of his predecessor in office.

HOWEVER, WHEN THE VACANCY PREVENTS THE
REMAINING DIRECTORS FROM CONSTITUTING A QUORUM AND
EMERGENCY ACTION IS REQUIRED TO PREVENT GRAVE,

SUBSTANTIAL AND IRREPARABLE LOSS OR DAMAGE TO THE

Page 31 of 129


1 CORPORATION, THE VACANCY MAY BE TEMPORARILY FILLED

2 BY UNANIMOUS VOTE OF THE REMAINING DIRECTORS OR
3 ‘TRUSTEES FROM AMONG THE OFFICERS OF THE CORPORATION,
4 PROVIDED THAT ACTION BY THE APPOINTED DIRECTOR OR
5 TRUSTEE SHALL BE LIMITED TO THE EMERGENCY ACTION
6 NECESSARY TO PREVENT GRAVE, SUBSTANTIAL OR
7 IRREPARABLE LOSS TO THE COMPANY AND HIS TERM SHALL
8 NOT CONTINUE FOR LONGER THAN REASONABLY NECESSARY
9 AFTER THE TERMINATION OF THE EMERGENCY.

10 Any directorship or trusteeship to be filled by reason of an increase in the
ul number of directors or trustees shall be filled only by an election at a regular or at
12 a special meeting of stockholders or members duly called for the purpose, or in
13 the same meeting authorizing the increase of directors or trustees if so stated in
14 the notice of the meeting.

15 IN ALL ELECTIONS TO FILL VACANCIES UNDER THIS
16 SECTION, THE PROCEDURE SET FORTH IN SECTIONS 25 AND 27
17 SHALL APPLY.”

18 SECTION 24. Section 30 of the Code is hereby renumbered as Section 31 and

19 amended to read as follows:

20 “Soc. 31. Compensation of directors, — In the absence of any provision in
2 the by-laws fixing THE PARAMETERS OF their compensation, the directors
22 OR TRUSTEES shall not receive any compensation[,| as such directors OR
2B TRUSTEES, except for reasonable per diems: Provided, however, That any such
24 compensation other than per diems may be granted to directors OR TRUSTEES
25 by the vote of the stockholders representing at least a majority of the outstanding

Page 32 of 129


19

20
2
22
2B
24
25

capital stock OR BY MAJORITY OF THE MEMBERS at a regular or special

meeting.

NO DIRECTOR OR TRUSTEE SHALL PARTICIPATE IN THE
DETERMINATION OF HIS OWN PER DIEMS OR COMPENSATION.
PER DIEMS OR COMPENSATION GRANTED TO DIRECTORS OR
TRUSTEES SHALL LIKEWISE BE APPROVED BY THE VOTE OF THE
STOCKHOLDERS REPRESENTING AT LEAST A MAJORITY OF THE
OUTSTANDING CAPITAL STOCK OR BY MAJORITY OF THE

MEMBERS AT A REGULAR OR SPECIAL MEETING.

In no case shall the total yearly compensation of directors OR
TRUSTEES, as such directors OR TRUSTEES, exceed ten (10%) percent of the

net income before income tax of the corporation during the preceding year.

THE CORPORATION SHALL SUBMIT AN ANNUAL REPORT
ON THE COMPENSATION OF DIRECTORS OR TRUSTEES AS

PRESCRIBED UNDER THIS CODE.”

SECTION 25. Sections 31 to 34 are hereby renumbered as Sections 32 to 35,

respectively.

SECTION 26. Section 35 of the Code is hereby renumbered as Section 36 and

amended to read as follows:

“Sec. 36. Executive committee AND OTHER SPECIAL COMMITTEES.
- The by-laws of a corporation may create an executive committee, composed of
not less than three members of the board, to be appointed by the board. Said
committee may act, by majority vote of all its members, on such specific matters
within the competence of the board, as may be delegated to it in the by-laws or on
‘a majority vote of the board, except with respect to: (1) approval of any action for

Page 33 of 129


1 which sharcholders' approval is also required; (2) the filling of vacancies in the

2 board; (3) the amendment or repeal of by-laws or the adoption of new by-laws;

3 (4) the amendment or repeal of any resolution of the board which by its express
4 terms is not so amendable or repealable; and (5) a distribution of cash dividends
5 to the sharcholders.
6 FOR MERITORIOUS REASONS, THE BOARD MAY, UPON DUE
7 AMENDMENT OF THE BY-LAWS, ORDER THE FORMATION OF
8 OTHER SPECIAL COMMITTEES AND DETERMINE THE MEMBERS?
9 TERM, COMPENSATION, POWERS AND RESPONSIBILITIES.

10 WHEN NECESSARY TO ENSURE GOOD CORPORATE

u GOVERNANCE AND/OR COMBAT GRAFT AND CORRUPT

12 PRACTICES, OR WHEN THE PARAMOUNT INTEREST OF THE

13 PUBLIC OTHERWISE REQUIRES, THE COMMISSION SHALL HAVE

4 THE POWER TO REQUIRE THE FORMATION OF OTHER

15 COMMITTEES AND DESIGNATE THEIR POWERS AND

16 RESPONSIBILITIES; PROVIDED THAT THE TERM AND

17 COMPENSATION OF SUCH COMMITTEES SHALL BE DETERMINED

18 BY THE BOARD AND THE CORPORATION’S BY-LAWS SHALL BE

19 AMENDED ACCORDINGLY WITHIN THE PERIOD PRESCRIBED BY

20 THE COMMISSION.”

21 SECTION 27. Section 36 of the Code is hereby renumbered as Section 37 and

22 amended to read as follows:

23 “Sec, 37. Corporate powers and capacity. - Every corporation
24 incorporated under this Code has the power and capacity:
25 1. To sue and be sued in its corporate name;

Page 34 of 129


20
21
22
23
24
25

2. Of PERPETUAL succession by its corporate name [for the],
UNLESS A LIMITED period of time IS stated in the articles of incorporation

and the certificate of incorporation;

XXX XXX XXX

8. [To enter into merger or consolidation with other corporations as
provided in this Code] TO ENTER INTO A JOINT VENTURE OR OTHER.
COMMERCIAL AGREEMENT WITH PERSONS, JURIDICAL OR
OTHERWISE, AND MERGE OR CONSOLIDATE WITH OTHER

CORPORATIONS.

XXX XXX XXX”

SECTION 28. Section 37 of the Code is hereby renumbered as Section 38 and

amended to read as follows:

“Sec, 37. Power to extend or shorten corporate term. - A private
corporation may extend or shorten its term as stated in the articles of
incorporation when approved by a majority vote of the board of directors or
trustees and ratified at a meeting by the stockholders representing at least two-
thirds (2/3) of the outstanding capital stock or by at least two-thirds (2/3) of the
members in case of non-stock corporations. Written notice of the proposed action
and of the time and place of the meeting shall be addressed to each stockholder or
member at his place of residence as shown on the books of the corporation and
deposited to the addressee in the post office with postage prepaid, [or] served
personally[.], OR, WHEN ALLOWED IN THE BY-LAWS OR DONE WITH
THE CONSENT OF THE CONCERNED STOCKHOLDER, NOTICE
UNDER THIS SECTION MAY BE GIVEN IN THE FORM OF AN

ELECTRONIC DOCUMENT, IN ACCORDANCE WITH THE RULES

Page 35 of 129


10

20
21

23

24

25

AND REGULATIONS OF THE COMMISSION ON THE USE OF
ELECTRONIC DATA MESSAGES: Provided, That in case of extension of
corporate term, any dissenting stockholder may exercise his appraisal right under

the conditions provided in this code.”

SECTION 29. Section 38 of the Code is hereby renumbered as Section 39 and

amended to read as follows:

“Sec. 39. Power to increase or decrease capital stock; incur, create or

increase bonded indebtedness. — XXX XXX XXX

[(S) The actual indebtedness of the corporation on the day of the meeting;]

XXX XXX XXX

Any increase or decrease in the capital stock or the incurring, creating or
increasing of any bonded indebtedness shall require prior approval of the
[Securities and Exchange} Commission. THE FILING OF THE
APPLICATION WITH THE COMMISSION SHALL BE MADE WITHIN
THREE (3) MONTHS FROM THE DATE OF APPROVAL BY THE
BOARD OF DIRECTORS AND STOCKHOLDERS. PRIOR TO THE
COMMISSION'S APPROVAL, THE RECOGNITION OF THE
SUBSCRIPTION TO MEET THE REQUIRED PAID-UP CAPITAL
SHALL BE IN ACCORDANCE WITH REQUIREMENTS SET BY THE
COMMISSION. NON-PAYMENT OF THE ADDITIONAL PAID-UP
CAPITAL WITHIN ONE (1) YEAR FROM THE DATE OF THE BOARD
OF DIRECTORS AND STOCKHOLDERS’ APPROVAL SHALL RENDER

‘THE PROPOSAL ABANDONED AND INEFFECTIVE.

One of the duplicate certificates shall be kept on file in the office of the

corporation and the other shall be filed with the [Securities and Exchange]

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Commission and attached to the original articles of incorporation. From and after
approval by the [Securities and Exchange] Commission and the issuance by the
Commission of its certificate of filing, the capital stock shall stand increased or
decreased and the incurring, creating or increasing of any bonded indebtedness
authorized, as the certificate of filing may declare: Provided, That the [Securities
and Exchange] Commission shall not accept for filing any certificate of increase
of capital stock unless accompanied by the sworn statement of the treasurer of the
corporation lawfully holding office at the time of the filing of the certificate,
showing that at least twenty-five (25%) percent of [such increased] THE
INCREASE IN capital stock has been subscribed and that at least twenty-five
(25%) percent of the amount subscribed has been paid either in actual cash to the
corporation or that there has been transferred to the corporation property the
valuation of which is equal to twenty-five (25%) percent of the subscription:
Provided, further, ‘That no decrease of the capital stock shall be approved by the

Commission if its effect shall prejudice the rights of corporate creditors.

XX XXX XXX,

Bonds issued by a corporation shall be registered with the [Securities and
Exchange] Commission, which shall have the authority to determine the

sufficiency of the terms thereof.”

SECTION 30. Section 39 is hereby renumbered as Section 40.

SECTION 31. Section 40 of the Code is hereby renumbered as Section 41 and

amended to read as follows:

“Seo. 41. Sale or other disposition of assets. - Subject to the provisions of
existing laws on illegal combinations and monopolies AND SUBJECT,

FURTHER, TO SEC. 81 OF THIS CODE ON DE FACTO MERGERS, a

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corporation may, by a majority vote of its board of directors or trustees, sell,
lease, exchange, mortgage, pledge or otherwise dispose of [all or substantially all
of] its property and assets, including its goodwill, upon such terms and conditions
and for such consideration, which may be money, stocks, bonds or other
instruments for the payment of money or other property or consideration, as its

board of directors or trustees may deem expedient,

WHEN THE SALE IS OF ALL OR SUBSTANTIALLY ALL OF
THE CORPORATION’S PROPERTY AND ASSETS, IT MUST BE [when]
authorized by the vote of the stockholders representing at least two-thirds (2/3) of
the outstanding capital stock, or in case of non-stock corporation, by the vote of at
least to two-thirds (2/3) of the members, in a stockholder's or member's meeting.
duly called for the purpose. In non-stock corporations where there are no
members with voting rights, the vote of at least a majority of the trustees in office
will be sufficient authorization for the corporation to enter into any transaction

authorized by this section.

Written notice of the proposed action and of the time and place of the
meeting shall be addressed to each stockholder or member at his place of
residence as shown on the books of the corporation and deposited to the addressee
in the post office with postage prepaid, or served personally: Provided, That any
dissenting stockholder may exercise his appraisal right under the conditions
provided in this Code.

IA sale or other disposition shall be deemed to cover substantially all the
corporate property and assets if thereby the corporation would be rendered
incapable of continuing the business or accomplishing the purpose for which it

was incorporated]

Page 38 of 129


1 After such authorization or approval by the stockholders or members, the

2 board of directors or trustees may, nevertheless, in its discretion, abandon such

3 sale, lease, exchange, mortgage, pledge or other disposition of property and

4 assets, subject to the rights of third parties under any contract relating thereto,

5 without further action or approval by the stockholders or members.

6 Nothing in this section is intended to restrict the power of any corporation,

7 without the authorization by the stockholders or members, to sell, lease,

8 exchange, mortgage, pledge or otherwise dispose of any of its property and assets

9 if the same is necessary in the usual and regular course of business of said

10 corporation or if the proceeds of the sale or other disposition of such property and

n assets be appropriated for the conduct of its remaining business.

12 [In non-stock corporations where there are no members with voting rights,

13 the vote of at least a majority of the trustees in office will be sufficient

14 authorization for the corporation to enter into any transaction authorized by this

15 section.]”

16 SECTION 32. Section 41 and 42 are hereby renumbered as Section 42 and 43,
17 respectively.

18 SECTION 33. Section 43 of the Code is hereby renumbered as Section 44 and

19 amended to read as follows:

20 “See. 44. Power to declare dividends. - The board of directors of a stock
2 corporation may declare dividends out of the unrestricted retained earnings which
22 SHALL BE DETERMINED IN ACCORDANCE WITH THE
23 GUIDELINES SET BY THE COMMISSION ON UNREALIZED
24 EARNINGS AND LOSSES. SUCH DIVIDENDS shall be payable in cash, in
25 property, or in stock to all stockholders on the basis of outstanding stock held by

Page 39 of 129


them: Provided, That any cash dividends due on delinquent stock shall first be
applied to the unpaid balance on the subscription plus costs and expenses, while
stock dividends shall be withheld from the delinquent stockholder until his unpaid
subscription is fully paid: Provided, further, That no stock dividend shall be
issued without the approval of stockholders representing not less than two-thirds
(2/3) of the outstanding capital stock at a regular or special meeting duly called

for the purpose.

Stock corporations are prohibited from retaining surplus profits in excess
of one hundred (100%) percent of their paid-in capital stock, except: (1) when
justified by definite corporate expansion projects or programs approved by the
board of directors; or (2) when the corporation is prohibited under any loan
agreement with any financial institution or creditor, whether local or foreign,
from declaring dividends without its/his consent, and such consent has not yet
been secured; or (3) when it can be clearly shown that such retention is necessary
under special circumstances obtaining in the corporation, such as when there is

need for special reserve for probable contingencies.”

SECTION 34. Section 44 and 45 are hereby renumbered as Section 45 and 46,

respectively.

SECTION 35. Section 46 of the Code is hereby renumbered as Section 47 and

amended to read as follows:

21

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25

26

“Sec. 47. Adoption of by-laws. - Every corporation formed under this
Code must, within one (1) month after receipt of official notice of the issuance of
its certificate of incorporation by the [Securities and Exchange] Commission,
adopt a code of by-laws for its government not inconsistent with this Code. For
the adoption of by-laws by the corporation the affirmative vote of the

stockholders representing at least a majority of the outstanding capital stock, or of

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at least a majority of the members in case of non-stock corporations, shall be
necessary. The by-laws shall be signed by the stockholders or members voting for
them and shall be kept in the principal office of the corporation, subject to the
inspection of the stockholders or members during office hours. A copy thereof,
duly certified to by a majority of the directors or trustees countersigned by the
seoretary of the corporation, shall be filed with the [Securities and Exchange]

Commission which shall be attached to the original articles of incorporation.

Notwithstanding the provisions of the preceding paragraph, by-laws may
be adopted and filed prior to incorporation; in such case, such by-laws shall be
approved and signed by all the incorporators and submitted to the [Securities and

Exchange] Commission, together with the articles of incorporation.

BY-LAWS OR AMENDMENTS THERETO MAY BE FILED IN
THE FORM OF AN ELECTRONIC DOCUMENT, IN ACCORDANCE
WITH THE RULES AND REGULATIONS OF THE COMMISSION ON

‘THE USE OF ELECTRONIC DATA MESSAGES.

In all cases, by-laws shall be effective only upon the issuance by the
[Securities and Exchange] Commission of a certification that the by-laws are not

inconsistent with this Code.

The [Securities and Exchange] Commission shall not accept for filing the
by-laws or any amendment thereto of any bank, banking institution, building and
loan association, trust company, insurance company, public utility, educational
institution or other special corporations governed by special laws, unless
accompanied by a certificate of the appropriate government agency to the effect

that such by-laws or amendments are in accordance with law.”

Page 41 of 129


1 SECTION 36. Section 47 of the Code is hereby renumbered as Section 48 and

2 amended to read as follows:

3 “Sec. 48. Contents of by-laws. - Subject to the provisions of the
4 Constitution, this Code, other special laws, and the articles of incorporation, a
5 private corporation {may] SHALL provide in its by-laws for:

6 1. The time, place and manner of calling and conducting regular or special
7 meetings of the directors or trustees;

8 2. The time and manner of calling and conducting regular or special
9 meetings of the stockholders or members, PROVIDED THAT THE BY-LAWS

10 SHALL CONTAIN NO PROVISION SUPPRESSING OR OTHERWISE
u LIMITING IN ANY MANNER THE RIGHT OF ANY MEMBER OR
12 STOCKHOLDER TO PROPOSE THE HOLDING OF MEETINGS AND
13 THE ITEMS FOR DISCUSSION IN THE AGENDA;

14 XXX XK AK
15 5. The qualifications, duties AND RESPONSIBILITIES, and THE
16 PARAMETERS OR GUIDELINES TO CONSIDER IN SETTING THE
17 compensation, of directors or trustees AND [,] officers {and employees], AS
18 WELL AS THE MAXIMUM NUMBER OF OTHER BOARD
19 REPRESENTATIONS AN INDEPENDENT DIRECTOR OR TRUSTEE

20 MAY HAVE WHICH SHALL, IN NO CASE, BE MORE THAN FIVE (5)

21 OR SUCH OTHER NUMBER THE COMMISSION MAY LATER

2 PRESCRIBE;

23 XXK XXX XK

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9. In the case of stock corporations, the manner of issuing stock

certificates; [and]

10. THE TIME AND MANNER BY WHICH ACCURATE AND
TIMELY INFORMATION SHALL BE GIVEN TO STOCKHOLDERS OR
MEMBERS ON MATTERS AFFECTING THE CORPORATION, WHICH
MAY INCLUDE BUT SHALL NOT BE LIMITED TO THE
PUBLICATION OF SUCH INFORMATION ON THE CORPORATION’S

WEBSITE;

11, A CODE OF ETHICS OR STANDARDS OF CONDUCT FOR
THE CORRECT, HONORABLE AND PROPER PERFORMANCE OF A
CORPORATION’S BUSINESS AND ITS DEALINGS, DIRECT OR
INDIRECT, WITH THE GOVERNMENT AND ITS AGENCIES, AS
WELL AS MECHANISMS TO ENFORCE SUCH CODE OF ETHICS OR
STANDARDS OF CONDUCT, WHICH SHALL CONTAIN THE

MINIMUM REQUIREMENTS THE COMMISSION MAY PROVIDE;

12. INTERNAL PROCEDURES TO PROVIDE AVENUES OF
COMMUNICATION BY, TO PROTECT THE IDENTITY AND
SECURITY OF TENURE/COMPENSATION OF, AND TO PROVIDE
PROTECTION FROM RETALIATION BEFORE AND AFTER
EMPLOYMENT OF: (A) THOSE WHO REPORT VIOLATIONS OF THE
CORPORATION’S CODE OF ETHICS OR STANDARDS OF CONDUCT,
GRAFT AND CORRUPT PRACTICES, IMPROPRIETIES IN MATTERS
OF FINANCIAL REPORTING, OR OTHER UNLAWFUL OR ILLEGAL
CONDUCT COMMITTED BY THE CORPORATION OR ANY OF ITS.
DIRECTORS, TRUSTEES, OFFICERS, EMPLOYEES OR AGENTS; (B)
THOSE WHO REPORT INSTRUCTIONS OR PRESSURE FROM

HIERARCHICAL SUPERIORS TO COMMIT ANY OF THE ACTS IN

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(A); AND/OR (C) THOSE WHO RAISE CONCERNS ABOUT THREATS
OF OR POSSIBLE ACTS CONSTITUTING ANY OF THE ACTS IN (A)

ABOVE;

13. A SYSTEM, INCLUDING THE APPOINTMENT OF A
COMPLIANCE OFFICER, THAT WILL MONITOR COMPLIANCE
WITH THE RULES AND REGULATIONS ON GOOD CORPORATE

GOVERNANCE; AND

[10] 14. Such other matters as may be necessary for the proper or
convenient transaction of its corporate business and affairs OR AS MAY BE
DEEMED NECESSARY BY THE COMMISSION FOR THE
PROMOTION OF GOOD GOVERNANCE AND/OR ITS POLICY

AGAINST GRAFT AND CORRUPTION.

THE COMMISSION SHALL FORMULATE AND MAKE
AVAILABLE SAMPLE BY-LAWS WITH THE FOREGOING

REQUIREMENTS.”

SECTION 37, Section 48 of the Code is hereby renumbered as Section 49 and

amended to read as follows:

Section 49, Amendment to by-laws. ~ The board of directors or trustees,
by a majority vote thereof, and the owners of at least [a majority] TWO-
THIRDS (2/3) of the outstanding capital stock, or at least [a majority] TWO-
THIRDS (2/3) of the members of a non-stock corporation, at a regular or special
meeting duly called for the purpose, may amend or repeal any by-laws or adopt
new by-laws. The owners of two-thirds (2/3) of the outstanding capital stock or
two-thirds (2/3) of the members in a non-stock corporation may delegate to the

board of directors or trustees the power to amend or repeal any by-laws or adopt

Page 44 of 129


1 new by-laws: Provided, That any power delegated to the board of directors or

2 trustees to amend or repeal any by-laws or adopt new by-laws shall be considered
3 as revoked whenever stockholders owning or representing a majority of the
4 outstanding capital stock or a majority of the members in non-stock corporations,
5 shall so vote at a regular or special meeting.

6 Whenever any amendment or new by-laws are adopted, such amendment
7 or new by-laws shall be attached to the original by-laws in the office of the
8 corporation, and a copy thereof, duly certified under oath by the corporate
9 secretary and a majority of the directors or trustees, INCLUDING THE

10 STOCKHOLDERS’ OR MEMBERS’ RESOLUTION ON THE

ul DELEGATION OF THE POWER TO AMEND OR ADOPT NEW BY-

12 LAWS OR ON THE REVOCATION OF SUCH DELEGATION, IF ANY,

13 shall be filed with the [Securities and Exchange] Commission the same to be

14 attached to the original articles of incorporation and original by-laws.

15 The amended or new by-laws shall only be effective upon the issuance by

16 the [Securities and Exchange] Commission of a certification that the same are not

17 inconsistent with this Code.”

18 SECTION 38. Section 49 is hereby renumbered as Section 50.

19 SECTION 39. Section 50 of the Code is hereby renumbered as Section 51 and

20 amended to read as follows:

21 “Sec. 51. Regular and special meetings of stockholders or members. -
2 Regular meetings of stockholders or members shall be held annually on a date
23 fixed in the by-laws, or if not so fixed, on any date in April of every year as
24 determined by the board of directors or trustees.: Provided, That written notice of
25 regular meetings shall be sent to all stockholders or members of record at least

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[two (2)] THIRTY (30) DAYS prior to the meeting, unless a [different]
LONGER period is required by the by-laws OR BY ANY RELEVANT LAW.
OR REGULATION, AND IN SUCH A MANNER AS TO BE RECEIVED

AT LEAST FIVE DAYS BEFORE THE SCHEDULED MEETING.

AT EACH REGULAR MEETING OF STOCKHOLDERS OR
MEMBERS, THE BOARD OF DIRECTORS OR TRUSTEES SHALL,
AMONG OTHERS, PRESENT TO SUCH STOCKHOLDERS OR
MEMBERS THE FOLLOWING:

a. THE MINUTES OF THE MOST RECENT REGULAR,

MEETING WHICH SHALL INCLUDE, AMONG OTHERS:

@ A DESCRIPTION OF THE VOTING AND
VOTE TABULATION PROCEDURES USED AND TO BE

USED IN THE CURRENT MEETING,

Gi) THE OPPORTUNITY GIVEN TO
STOCKHOLDERS OR MEMBERS TO ASK QUESTIONS,
AS WELL AS A RECORD OF THE QUESTIONS THEY

ASKED AND THE ANSWERS RECEIVED,

Gi) ~=THE MATTERS DISCUSSED AND

RESOLUTIONS REACHED,

(iv) A RECORD OF THE VOTING RESULTS FOR

EACH AGENDA ITEM, AND

(v) | ALIST OF THE DIRECTORS OR TRUSTEES,
OFFICERS AND STOCKHOLDERS OR MEMBERS WHO

ATTENDED THE MEETING;

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b. A MEMBERS’ LIST FOR NON-STOCK
CORPORATIONS AND, FOR STOCK CORPORATIONS,
MATERIAL INFORMATION ON THE CURRENT STOCK
OWNERSHIP STRUCTURE AND VOTING RIGHTS, INCLUDING
GROUP STRUCTURES, INTRA-GROUP —_ RELATIONS,
OWNERSHIP DATA, AND BENEFICIAL OWNERSHIP WITH
SPECIFIC DISCLOSURES ON THE DIRECT AND INDIRECT

STOCKHOLDINGS OF DIRECTORS AND OFFICERS;

© A DETAILED, DESCRIPTIVE, BALANCED AND
COMPREHENSIBLE ASSESSMENT OF THE CORPORATION’S
PERFORMANCE WHICH SHALL INCLUDE INFORMATION ON
THE CHANGES IN THE CORPORATION OR ITS BUSINESS

AND ITS STRATEGY;

d. A FINANCIAL REPORT OF THE OPERATIONS OF
THE CORPORATION FOR THE PRECEDING YEAR, WHICH
SHALL INCLUDE FINANCIAL STATEMENTS DULY SIGNED
AND CERTIFIED IN ACCORDANCE WITH THIS CODE AND
THE RULES THE COMMISSION MAY PRESCRIBE, A
STATEMENT ON THE ADEQUACY OF THE CORPORATION’S
INTERNAL CONTROLS OR RISK MANAGEMENT SYSTEMS,
AND A STATEMENT OF ALL EXTERNAL AUDIT AND NON-

AUDIT FEES;

e. AN EXPLANATION OF THE DIVIDEND POLICY
AND THE FACT OF PAYMENT OF DIVIDENDS OR THE

REASONS FOR NON-PAYMENT THEREOF;

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f. DIRECTOR OR TRUSTEE PROFILES WHICH
SHALL INCLUDE, AMONG OTHERS, THEIR QUALIFICATIONS
AND RELEVANT EXPERIENCE, LENGTH OF SERVICE IN THE
CORPORATION, THE TRAININGS AND CONTINUING
EDUCATION THEY ATTENDED, AND THE NUMBER OF THEIR

BOARD REPRESENTATIONS IN OTHER CORPORATIONS;

g A DIRECTOR OR TRUSTEE ATTENDANCE
REPORT, INDICATING THE ATTENDANCE OF EACH
DIRECTOR OR TRUSTEE AT EACH OF THE MEETINGS OF
THE BOARD AND ITS COMMITTEES AND IN REGULAR OR,

SPECIAL STOCKHOLDER MEETINGS;

h. A BOARD APPRAISAL OR PERFORMANCE
REPORT AND THE STANDARDS OR CRITERIA AND

PROCEDURE USED TO ASSESS THE BOARD;

i A DIRECTOR OR TRUSTEE APPRAISAL OR
PERFORMANCE REPORT AND THE STANDARDS OR
CRITERIA AND PROCEDURE USED TO ASSESS EACH

DIRECTOR OR TRUSTEE;

i A DIRECTOR OR TRUSTEE COMPENSATION
REPORT PREPARED IN ACCORDANCE WITH THIS CODE

AND THE RULES THE COMMISSION MAY PRESCRIBE;

k. DIRECTOR DISCLOSURES ON SELF-DEALINGS

AND RELATED PARTY TRANSACTIONS;

L THE PROFILES OF DIRECTORS NOMINATED OR

SEEKING ELECTION OR RE-ELECTION;

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m THE COMPENSATION/BENEFITS OF
EMPLOYEES WHO ARE IMMEDIATE FAMILY MEMBERS OF
A DIRECTOR OR TRUSTEE OR ANY OFFICER OF THE
CORPORATION OR WHOSE EMPLOYMENT WAS MADE

‘WITH THEIR ENDORSEMENT; AND

n DETAILS OF THE ORIENTATION PROGRAM FOR

NEW DIRECTORS.

ANY DIRECTOR, TRUSTEE, STOCKHOLDER OR MEMBER
MAY PROPOSE ANY OTHER MATTER FOR DISCUSSION OR
INCLUSION IN THE AGENDA AT ANY REGULAR MEETING OF

STOCKHOLDERS OR MEMBERS.

SUBJECT TO THE RIGHT OF ANY MEMBER OR
STOCKHOLDER TO PROPOSE THE HOLDING OF SPECIAL
MEETINGS AND THE ITEMS FOR DISCUSSION IN THE AGENDA
THEREOF, special meetings of stockholders or members shall be held at any
time deemed necessary or as provided in the by-laws: Provided, however, That at
least [one (1) week] written notice shall be sent to all stockholders or members
AT LEAST THREE (3) WEEKS PRIOR TO THE MEETING, unless
[otherwise] A LONGER PERIOD IS provided in the by-laws OR BY ANY
RELEVANT LAW OR REGULATION, AND IN SUCH A MANNER AS
TO BE RECEIVED AT LEAST FIVE DAYS BEFORE THE SCHEDULED

MEETING.

Notice of any meeting may be waived, expressly or impliedly, by any
stockholder or member[.]; PROVIDED THAT GENERAL WAIVERS OF
NOTICE IN THE ARTICLES OF INCORPORATION OR THE BY-LAWS

SHALL NOT BE ALLOWED; PROVIDED, FURTHER, THAT

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2
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ATTENDANCE AT A MEETING SHALL CONSTITUTE A WAIVER OF
NOTICE OF SUCH MEETING, EXCEPT WHEN THE PERSON
ATTENDS A MEETING FOR THE EXPRESS PURPOSE OF
OBJECTING AT THE BEGINNING OF THE MEETING, TO THE
TRANSACTION OF ANY BUSINESS BECAUSE THE MEETING IS NOT

LAWFULLY CALLED OR CONVENED.

‘Whenever, for any cause, there is no person authorized to call a meeting,
the [Securities and Exchange] Commission, upon petition of a stockholder or
member on a showing of good cause therefor, may issue an order to the
petitioning stockholder or member directing him to call a meeting of the
corporation by giving proper notice required by this Code or by the by-laws. The
petitioning stockholder or member shall preside thereat until at least a majority of
the stockholders or members present have chosen one of their number as

presiding officer.

UNLESS THE BY-LAWS PROVIDE FOR A LONGER PERIOD,
‘THE STOCK AND TRANSFER BOOK/MEMBERSHIP BOOK SHALL BE
CLOSED AT LEAST TWENTY (20) DAYS BEFORE THE SCHEDULED

DATE OF THE MEETING.

IN CASE OF POSTPONEMENT OF STOCKHOLDERS’ OR
MEMBERS’ MEETINGS, WRITTEN NOTICE THEREOF AND THE
REASON THEREFOR SHALL BE SENT TO ALL STOCKHOLDERS OR
MEMBERS OF RECORD AT LEAST TWO (2) WEEKS PRIOR TO THE
DATE OF THE MEETING, UNLESS A DIFFERENT PERIOD IS
REQUIRED BY THE BY-LAWS OR BY ANY RELEVANT LAW OR
REGULATION, AND IN SUCH A MANNER AS TO BE RECEIVED AT

LEAST FIVE DAYS BEFORE THE DATE OF THE MEETING.”

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SECTION 40. Section 51 of the Code is hereby renumbered as Section 52 and

amended to read as follows:

Sec. 52. Place and time of meetings of stockholders of members. -
Stockholder's or member's meetings, whether regular or special, shall be held in
the PRINCIPAL OFFICE OF THE CORPORATION AS SET FORTH IN
THE ARTICLES OF INCORPORATION, OR, IF NOT PRACTICABLE,
IN THE city or municipality where the principal office of the corporation is
located [, and if practicable in the principal office of the corporation: Provided,
That Metro Manila shall, for purposes of this section, be considered a city or

municipality.

WHEN ALLOWED BY THE BY-LAWS OR BY A MAJORITY OF
THE BOARD OF DIRECTORS OR TRUSTEES, ATTENDANCE AT
REGULAR OR SPECIAL MEETINGS MAY BE BY REMOTE
COMMUNICATION AND VOTING MAY BE MADE IN ABSENTIA.
WHEN ATTENDANCE BY REMOTE COMMUNICATION IS
ALLOWED, THE CORPORATION SHALL PROVIDE THE
STOCKHOLDER OR MEMBER, OR  PROXY-HOLDER, A
REASONABLE OPPORTUNITY TO PARTICIPATE IN THE MEETING,
TO HEAR OR SEE THE PROCEEDINGS AS WELL AS BE HEARD OR
SEEN BY OTHER STOCKHOLDERS OR MEMBERS, AND TO CAST
THEIR vore SUBSTANTIALLY CONCURRENTLY WITH SUCH
PROCEEDINGS. WHEN VOTING IN ABSENTIA, IS ALLOWED, THE
CORPORATION SHALL INSTITUTE REASONABLE MEASURES TO
TIMELY PROVIDE THE STOCKHOLDER OR MEMBER WITH
INFORMATION ON THE MATTERS TO BE TAKEN UP AT THE
MEETING AND GIVE THEM A REASONABLE OPPORTUNITY TO

ASK QUESTIONS BEFORE CASTING THEIR VOTES. THE

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COMMISSION SHALL PRESCRIBE THE MINIMUM STANDARDS OR
GUIDELINES TO MAKE ATTENDANCE BY REMOTE
COMMUNICATION AND VOTING IN ABSENTIA EFFICIENT AND

ACCESSIBLE FORA FOR STOCKHOLDERS OR MEMBERS.

Notice of meetings shall be in writing, and the time and place thereof
stated therein, EACH NOTICE OF MEETING SHALL FURTHER STATE

OR BE ACCOMPANIED BY THE FOLLOWING:

(A) THE AGENDA FOR THE MEETING;

(B) A PROXY FORM;

© WHEN ATTENDANCE IS ALLOWED BY REMOTE
COMMUNICATION, THE FACT THEREOF AND THE
REQUIREMENTS AND PROCEDURES TO BE
FOLLOWED WHEN A STOCKHOLDER OR MEMBER

ELECTS SUCH OPTION;

@) ‘WHEN VOTING IS ALLOWED IN ABSENTIA, THE FACT
THEREOF AND THE REQUIREMENTS AND
PROCEDURES TO BE FOLLOWED WHEN A

STOCKHOLDER OR MEMBER ELECTS SUCH OPTION;

©) WHEN THE MEETING IS FOR THE ELECTION OF
DIRECTORS OR TRUSTEES, THE REQUIREMENTS
AND PROCEDURE FOR NOMINATING AND THE
CURRICULUM VITAE OR OTHER RELEVANT
INFORMATION OF THOSE ALREADY NOMINATED

INCLUDING, BUT NOT LIMITED TO, SUCH NOMINEES’

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OTHER EXECUTIVE FUNCTIONS OR MEMBERSHIP IN

OTHER BOARDS;

(F) OTHER EXPLANATORY MATERIALS OR A
STATEMENT THAT SUCH EXPLANATORY
MATERIALS ARE AVAILABLE FOR INSPECTION
DURING OFFICE HOURS AT THE CORPORATION’S
PRINCIPAL OFFICE AND/OR ONLINE AT THE
CORPORATION’S WEBSITE, OR THAT SOFT COPIES
THEREOF MAY BE SENT TO A STOCKHOLDER OR

MEMBER UPON HIS REQUEST; AND

(G) THE PROCEDURE FOR MAKING INQUIRIES OR
SOLICITING ADDITIONAL INFORMATION ABOUT

THE AGENDA ITEMS BEFORE THE MEETING.

WHEN ALLOWED BY THE BY-LAWS OF THE CORPORATION,
NOTICES OF MEETING MAY BE SENT ELECTRONICALLY,
PROVIDED THAT THE SAME IS DONE IN ACCORDANCE WITH THE
RULES OF THE COMMISSION AND, PROVIDED FURTHER, THAT
ANY STOCKHOLDER OR MEMBER MAY, AT ANY TIME, OPT OUT
OF RECEIVING NOTICE BY ELECTRONIC COMMUNICATION AND
REQUEST THAT WRITTEN NOTICE BE SENT IN A TRADITIONAL

MANNER, LE. BY PERSONAL SERVICE, BY POST OR BY COURIER.

All proceedings had and any business transacted at any meeting of the
stockholders or members, if within the powers or authority of the corporation,
shall be valid even if the meeting be improperly held or called, provided all the
stockholders or members of the corporation are present or duly represented at the

meeting AND NONE OF THEM EXPRESSLY STATE AT THE

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BEGINNING OF THE MEETING THAT THE PURPOSE OF THEIR
ATTENDANCE IS TO OBJECT TO THE TRANSACTION OF ANY
BUSINESS BECAUSE THE MEETING IS NOT LAWFULLY CALLED

OR CONVENED.”

SECTION 41. Section 52 is hereby renumbered as Section 53.

SECTION 42. Section 53 of the Code is hereby renumbered as Section 54 and

amended to read as follows:

“Sec. 54. Regular and special meetings of directors or trustees. - Regular
meetings of the board of directors or trustees of every corporation shall be held

monthly, unless the by-laws provide otherwise.

Special meetings of the board of directors or trustees may be held at any

time upon the call of the president or as provided in the by-laws.

‘Meetings of directors or trustees of corporations may be held anywhere in
or outside of the Philippines, unless the by-laws provide otherwise. Notice of
regular or special meetings stating the date, time and place of the meeting must be
sent to every director or trustee at least [one (1) day] FIVE (5) DAYS prior to the
scheduled meeting, unless [otherwise] A LONGER TIME IS. provided by the
by-laws. A director or trustee may waive this requirement, either expressly or

impliedly.

DIRECTORS OR TRUSTEES CANNOT ATTEND OR VOTE BY
PROXY AT BOARD MEETINGS; HOWEVER, WHEN ALLOWED BY
THE BY-LAWS, THEY CAN ATTEND BOARD MEETINGS THROUGH
REMOTE COMMUNICATION SUCH AS VIDEOCONFERENCING,
‘'TELECONFERENCING OR OTHER TECHNOLOGY THAT ALLOWS

THEM A REASONABLE OPPORTUNITY TO PARTICIPATE.

Page 54 of 129


1 SECTION 43. Sections 54 to 57 are hereby renumbered as Section 55 to 58,

2 respectively.

3 SECTION 44, Section 58 of the Code is hereby renumbered as Section 59 and

4 amended to read as follows:

5 Sec. 59, MANNER OF VOTING; Proxies. - Stockholders and members
6 may vote in person, IN ABSENTIA or by proxy in all meetings of stockholders
7 or members. VOTING DONE WHEN ATTENDANCE IS BY REMOTE
8 COMMUNICATION SHALL BE EQUIVALENT TO VOTING IN
9 PERSON. A STOCKHOLDER OR MEMBER MAY VOTE WITHOUT

10 ATTENDING THE MEETING FOR AS LONG AS THE VOTE IS CAST

u AND RECEIVED ON OR BEFORE THE TALLY OF VOTES IS

12 COMPLETED AT THE MEETING, AND THE VOTE IS MADE IN

13 ACCORDANCE WITH THE CORPORATION’S REQUIREMENTS AND

4 PROCEDURES FOR VOTING IN ABSENTIA. THE COMMISSION

15 SHALL PRESCRIBE THE MINIMUM STANDARDS AND GUIDELINES

16 FOR VOTING WHEN ATTENDANCE IS DONE BY REMOTE

17 COMMUNICATION OR WHEN VOTING IS IN ABSENTIA.

18 Proxies shall be in writing, signed by the stockholder or member and filed

19 before the scheduled meeting with the corporate secretary. Unless otherwise

20 provided in the proxy, it shall be valid only for the meeting for which it is

a intended. No proxy shall be valid and effective for a period longer than five (5)

22 years at any one time.”

23 SECTION 45. Section 59 of the Code is hereby renumbered as Section 60 and

24 — amended to read as follows:

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Section 60. Voting Trusts. — One or more stockholders of a stock
corporation may create a voting trust for the purpose of conferring upon a trustee
or trustees the right to vote and other rights pertaining to the shares for a period
not exceeding five (5) years at any time: Provided, That in the case of a voting
trust specifically required as a condition in a loan agreement, said voting trust
may be for a period exceeding five (5) years but shall automatically expire upon
full payment of the loan. A voting trust agreement must be in writing and
notarized, and shall specify the terms and conditions thereof. A certified copy of
such agreement shall be filed with the corporation and with the [Securities and
Exchange] Commission [; otherwise, said agreement is ineffective and
unenforceable] AND SHALL BE EFFECTIVE AND ENFORCEABLE
ONLY UPON APPROVAL THEREOF BY THE COMMISSION. The
certificate or certificates of stock covered by the voting trust agreement shall be
cancelled and new ones shall be issued in the name of the trustee or trustees
stating that they are issued pursuant to said agreement. In the books of the
corporation, it shall be noted that the transfer in the name of the trustee or trustees

is made pursuant to said voting trust agreement.

SECTION 46. — Section 60 is hereby renumbered as Section 61.

SECTION 47. Section 61 of the Code is hereby renumbered as Section 62 and

amended to delete “Securities and Exchange” from “Securities and Exchange Commission”.

SECTION 48. Section 62 of the Code is hereby renumbered as Section 63 and

amended to read as follows:

“Sec. 62. Consideration for stocks. - Stocks shall not be issued for a
consideration less than the par or issued price thereof. Consideration for the
issuance of stock may be any or a combination of any two or more of the

following:

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1, Actual cash paid to the corporation;

2. Property, tangible or intangible, actually received by the
corporation and necessary or convenient for its use and lawful purposes at a fair

valuation equal to the par or issued value of the stock issued;

3. Labor performed for or services actually rendered to the

corporation;

4. Previously incurred indebtedness of the corporation;

5. Amounts transferred from unrestricted retained earnings to stated

capital; [and]

6. Outstanding shares exchanged for stocks in the event of

reclassification or conversion[.J5

7 SHARES OF STOCK OF ANOTHER CORPORATION;

8. SUCH OTHER FORM OF CONSIDERATION THAT THE
‘COMMISSION MAY DETERMINE TO BE ACCEPTABLE SUBJECT TO

‘THE PROVISIONS OF THE CODE.

Where the consideration is other than actual cash, or consists of intangible
property such as patents of copyrights, the valuation thereof shall initially be
determined by the incorporators or the board of directors, WHO SHALL THEN
SUBMIT SUCH DETERMINATION, WITH SUPPORTING
DOCUMENTS AS THE COMMISSION MAY PRESCRIBE, FOR THE

[subject to] approval [by] OF the [Securities and Exchange] Commission.

XXX XXX XXX”

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1 SECTION 49. Section 63 of the Code is hereby renumbered as Section 64 and

2 amended to read as follows:

3 “Sec. 64. Certificate of stock and transfer of shares. - The capital stock of
4 stock corporations shall be divided into shares for which certificates signed by the
5 president or vice president, countersigned by the secretary or assistant secretary,
6 and sealed with the seal of the corporation shall be issued in accordance with the
1 by-laws. Shares of stock so issued are personal property and may be transferred
8 by delivery of the certificate or certificates indorsed by the owner or his attorney-
9 in-fact or other person legally authorized to make the transfer. No transfer,

10 however, shall be valid, except as between the parties, until the transfer is

il recorded in the books of the corporation so as to show the names of the parties to

12 the transaction, the date of the transfer, the number of the certificate or certificates

B and the number of shares transferred; THE COMMISSION MAY REQUIRE

14 CORPORATIONS WHOSE SECURITIES ARE TRADED IN AN

15 EXCHANGE OR OTHER AUTHORIZED TRADING MARKETS TO

16 ISSUE ITS SECURITIES OR SHARES OF STOCKS IN

7 UNCERTIFICATED OR SCRIPLESS FORM BY VIRTUE OF, AND IN

18 ACCORDANCE WITH, THE RULES OF THE COMMISSION,

19 XXX —-XXX_—XXX”

20 SECTION 50. Sections 64 to Section 73 of the Code are hereby renumbered as

21 — Sections 65 to Section 74, respectively.

22 SECTION 51. Section 74 of the Code is hereby renumbered as Section 75 and

23 amended to read as follows:

24 “See. 75. Books to be kept; stock transfer agent. - Every corporation shall

25 keep and carefully preserve at its principal office ALL INFORMATION

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RELATIVE TO THE CORPORATION INCLUDING, BUT NOT LIMITED
TO: (a) THE ARTICLES OF INCORPORATION AND BY-LAWS OF THE
CORPORATION AND ALL THEIR AMENDMENTS, (b) THE CURRENT
OWNERSHIP STRUCTURE AND VOTING RIGHTS OF THE
CORPORATION, INCLUDING LISTS OF STOCKHOLDERS OR
MEMBERS, GROUP STRUCTURES, INTRA-GROUP RELATIONS,
OWNERSHIP DATA, AND BENEFICIAL OWNERSHIP, (c) THE NAMES
AND ADDRESSES OF ALL THE MEMBERS OF THE BOARD OF
DIRECTORS OR TRUSTEES AND OF THE EXECUTIVE OFFICERS, (d)
a record of all business transactions, (e) A RECORD OF THE RESOLUTIONS
OF THE BOARD OF DIRECTORS OR TRUSTEES AND OF THE
STOCKHOLDERS OR MEMBERS, (f) COPIES OF THE LATEST
REPORTORIAL REQUIREMENTS SUBMITTED TO THE
COMMISSION, and (g) THE minutes of all meetings of stockholders or
members, or of the board of directors or trustees{,]. SUCH MINUTES [in
which} shall [be] set forth in detail, AMONG OTHERS: the time and place of
holding the meeting, how authorized, the notice given, THE AGENDA
THEREFOR, whether the meeting was regular or special, if special its object,
those present and absent, THE VOTING AND VOTE TABULATION
PROCEDURES USED AND THE RESULTS OF ALL VOTING DONE,
THE OPPORTUNITY GIVEN TO STOCKHOLDERS OR MEMBERS TO
ASK QUESTIONS, AS WELL AS A RECORD OF THE QUESTIONS
THEY ASKED AND THE ANSWERS RECEIVED, and every act done or
ordered done at the meeting. Upon the demand of any director, trustee,
stockholder or member, the time when any director, trustee, stockholder or
member entered or left the meeting must be noted in the minutes; and on a similar
demand, the yeas and nays must be taken on any motion or proposition, and a
record thereof carefully made. The protest of any director, trustee, stockholder or

member on any action or proposed action must be recorded in full on his demand.

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20.

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‘The FOREGOING records SHALL BE RETAINED FOR SUCH
PERIODS AS THE COMMISSION MAY PRESCRIBE BY RULE AND, [of
all business transactions of the corporation and the minutes of any meetings}
REGARDLESS OF THE FORM IN WHICH THEY ARE STORED, shall be
open to inspection by any director, trustee, stockholder or member of the
corporation, IN PERSON OR BY COUNSEL OR OTHER
REPRESENTATIVE POSSESSING AND EXHIBITING DUE
AUTHORITY, at reasonable hours on business days and he may demand, in
writing, for [a copy of] COPIES of SUCH RECORDS OR excerpts from said
records [or minutes] at his expense. © THE INSPECTING OR
REPRODUCING PARTY UNDER THIS SECTION SHALL REMAIN

BOUND BY CONFIDENTIALITY UNDER PREVAILING LAWS.

IF A REQUEST FOR INSPECTION AND/OR REPRODUCTION IS.
DENIED, THE AGGRIEVED PARTY MAY REPORT THE DENIAL TO
THE COMMISSION. WITHIN FIVE (5) DAYS FROM RECEIPT OF
SUCH REPORT, THE COMMISSION SHALL CONDUCT A SUMMARY
INVESTIGATION AND ISSUE AN ORDER EITHER DIRECTING THE
INSPECTION/REPRODUCTION REQUESTED OR FINDING THAT
THE REQUESTING PARTY, NOT BEING A STOCKHOLDER OR

MEMBER OF RECORD, IS NOT ENTITLED TO THE RIGHT.

Any officer or agent of the corporation who shall refuse to allow [any
director, trustee, stockholder or member of the corporation to examine and/OR
copy excerpts from its records or minutes,] THE INSPECTION AND/OR
REPRODUCTION OF RECORDS in accordance with the provisions of this
Code, shall be liable to such director, trustee, stockholder or member for
damages, and in addition, shall be guilty of an offense which shall be punishable

under Section 163 of this Code: Provided, That if such refusal is made pursuant to

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a resolution or order of the board of directors or trustees, the liability under this
section for such action shall be imposed upon the directors or trustees who voted
for such refusal: and [Provided, further, That it shall be a defense to any action
under this section that the person demanding to examine and copy excerpts from
the corporation's records and minutes has improperly used any information
secured through any prior examination of the records or minutes of such
corporation or of any other corporation, or was not acting in good faith or for a

legitimate purpose in making his demand.]

THE DIRECTOR, TRUSTEE, STOCKHOLDER OR MEMBER
WHOSE RIGHT TO INSPECTION AND/OR REPRODUCTION OF
RECORDS WAS DENIED MAY FILE, BEFORE A COURT OF
COMPETENT JURISDICTION, AN ACTION TO COMPEL
INSPECTION OF CORPORATE RECORDS SHOWING THAT, DESPITE
THE LAPSE OF FIVE (5) DAYS FROM RECEIPT OF HIS WRITTEN
REQUEST OR DEMAND AND DESPITE HAVING BEEN ORDERED BY
THE COMMISSION TO DO SO, THE CORPORATION, OR AN
OFFICER OR AGENT THEREOF, REFUSED TO ALLOW THE
INSPECTION AND/OR REPRODUCTION OR FAILED TO REPLY TO
THE WRITTEN REQUEST OR DEMAND OR THE ORDER OF THE
COMMISSION. THE COURT MAY, AFTER SUMMARY
PROCEEDINGS, ORDER THE CORPORATION TO PERMIT THE
INSPECTION AND/OR REPRODUCTION OR ISSUE ANY SUCH
OTHER OR FURTHER RELIEF AS IT MAY DEEM JUST AND

PROPER.

Stock corporations must also keep a book to be known as the "stock and
transfer book", in which must be kept a record of all stocks in the names of the

stockholders alphabetically arranged; the installments paid and unpaid on all

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stock for which subscription has been made, and the date of payment of any
installment; a statement of every alienation, sale or transfer of stock made, the
date thereof, and by and to whom made; and such other entries as the by-laws
may prescribe. The stock and transfer book shall be kept in the principal office of
the corporation or in the office of its stock transfer agent and shall be open for
inspection by any director or stockholder of the corporation at reasonable hours

on business days.

No stock transfer agent or one engaged principally in the business of
registering transfers of stocks in behalf of a stock corporation shall be allowed to
operate in the Philippines unless he secures a license from the [Securities and
Exchange] Commission and pays a fee as may be fixed by the Commission,
which shall be renewable annually: Provided, That a stock corporation is not
precluded from performing or making transfers of its own stocks, in which case
all the rules and regulations imposed on stock transfer agents, except the payment
of a license fee herein provided, shall be applicable[.J; PROVIDED,
FURTHER, THAT THE COMMISSION MAY REQUIRE AN
INDEPENDENT TRANSFER AGENT IN THE CASE OF STOCK
CORPORATIONS WHICH TRANSFER AND/OR TRADE STOCKS IN

SECONDARY MARKETS.”

SECTION 52. Section 75 of the Code is hereby renumbered as Section 76 and

amended to read as follows:

“Sec. 76. Right to financial statements, - Within ten (10) days from receipt
of a written request of any stockholder or member, the corporation shall furnish to
him its most recent financial statement, IN THE FORM AND SUBSTANCE
OF THE FINANCIAL REPORTING REQUIRED BY THE COMMISSION,

{which shall include a balance sheet as of the end of the last taxable year and a

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profit or loss statement for said taxable year, showing in reasonable detail its

assets and liabilities and the result of its operations. ]

At the regular meeting of stockholders or members, the board of directors
or trustees shall present to such stockholders or members a financial report of the
operations of the corporation for the preceding year, which shall include financial
statements, duly signed and certified [by an independent certified public
accountant] IN ACCORDANCE WITH THIS CODE AND THE RULES

‘THE COMMISSION MAY PRESCRIBE.

However, if the [paid-up capital] TOTAL ASSETS OR TOTAL
LIABILITIES of the corporation [is] ARE less than [P50,000.00] P500,000.00
OR SUCH HIGHER AMOUNT AS MAY BE LATER SET BY THE
COMMISSION, the financial statements shall be certified under oath by the
CORPORATION’S treasurer OR CHIEF FINANCIAL OFFICER AND

PRESIDENT OR CHIEF EXECUTIVE OFFICER.

SECTION 53. _ Section 76 of the Code is hereby renumbered as Section 77.

SECTION 54. Section 77 of the Code is hereby renumbered as Section 78 and

amended to read as follows:

Sec. 78. Stockholder's or member's approval. - Upon approval by majority
vote of each of the board of directors or trustees of the constituent corporations of
the plan of merger or consolidation, the same shall be submitted for approval by
the stockholders or members of each of such corporations at separate corporate
meetings duly called for the purpose. Notice of such meetings shall be given to all
stockholders or members of the respective corporations IN THE SAME
MANNER AS NOTICE OF REGULAR OR SPECIAL MEETINGS UNDER

SECTION 51. [, at least two (2) weeks prior to the date of the meeting, either

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personally or by registered mail.] Said notice shall state, IN ADDITION TO.
THE REQUIREMENTS FOR NOTICE OF REGULAR OR SPECIAL
MEETINGS UNDER SECTION 51, the purpose of the meeting and shall

include a copy or a summary of the plan of merger or consolidation.

XXX XXX XXX”

SECTION 55. Section 78 of the Code is hereby renumbered as Section 79 and

amended to read as follows:

“Sec. 79. Articles of merger or consolidation. - After the approval by the
stockholders or members as required by the preceding section, articles of merger
or articles of consolidation shall be executed by each of the constituent
corporations, to be signed by the president or vice-president and certified by the

secretary or assistant secretary of each corporation setting forth:

1 The plan of the merger or the plan of consolidation;

2. As to stock corporations, the number of shares outstanding,

or in the case of non-stock corporations, the number of members; [and]

3. As to each corporation, the number of shares or members

voting for and against such plan, respectively[.Js

4, THE CARRYING AMOUNTS AND FAIR VALUES
OF THE ASSETS AND LIABILITIES OF THE RESPECTIVE
COMPANIES AS OF CUT-OFF DATE AGREED BY THE

PARTIES;

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5. THE METHOD THAT WILL BE USED IN THE
MERGER OR CONSOLIDATION OF ACCOUNTS OF THE

COMPANIES;

6. THE PROVISIONAL OR PRO-FORMA VALUES, AS
MERGED OR CONSOLIDATED, USING THE ACCOUNTING

METHOD; AND

“A SUCH OTHER INFORMATION AS MAY BE
PRESCRIBED BY THE COMMISSION.

SECTION 56. Section 79 of the Code is hereby renumbered as Section 80 and

amended to read as follows:

“Seo. 80. Effectivity of merger or consolidation. - The articles of merger
or of consolidation, signed and certified as herein above required, shall be
submitted to the [Securities and Exchange] Commission in quadruplicate for its
approval: Provided, That in the case of merger or consolidation of banks or
banking institutions, building and loan associations, trust companies, insurance
companies, public utilities, educational institutions and other special corporations
governed by special laws, the favorable recommendation of the appropriate
government agency shall first be obtained[.]; PROVIDED, FURTHER, THAT
THE SUBMISSION OF ARTICLES OF MERGER OR CONSOLIDATION,
IN THE FORM OF AN ELECTRONIC DOCUMENT, SHALL BE IN
ACCORDANCE WITH THE RULES AND REGULATIONS OF THE
COMMISSION ON THE USE OF ELECTRONIC DATA MESSAGES. If
the Commission is satisfied that the merger or consolidation of the corporations
concemed is not inconsistent with the provisions of this Code and existing laws, it
shall issue a certificate of merger or of consolidation, at which time the merger or

consolidation shall be effective.

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If, upon investigation, the [Securities and Exchange] Commission has
reason to believe that the proposed merger or consolidation is contrary to or
inconsistent with the provisions of this Code or existing laws, it shall set a hearing
to give the corporations concemed the opportunity to be heard. Written notice of
the date, time and place of hearing shall be given to each constituent corporation
at least two (2) weeks before said hearing. The Commission shall thereafter

proceed as provided in this Code.”
SECTION 57. _ Section 80 of the Code is hereby renumbered as Section 81.
SECTION 58. _A new provision is inserted in the Code as Section 82 as follows:

SEC. 82. DE FACTO MERGERS. - A SALE OF THE ASSETS OF A
CORPORATION, WHETHER EFFECTUATED THROUGH A SINGLE
OR A SERIES OF TRANSACTIONS, SHALL BE DEEMED A DE FACTO
MERGER AND TREATED AS A MERGER OR CONSOLIDATION
UNDER THIS CODE WHEN THE BUYER AND SELLER
CORPORATIONS ENGAGE IN THE SAME OR SIMILAR BUSINESS,
WHETHER WHOLE OR IN PART, AND THE ‘TRANSACTION Is
COUPLED WITH OR RESULTS IN ANY, SOME, OR ALL OF THE

FOLLOWING OR OTHER SIMILAR CIRCUMSTANCES:

1. THE SALE IS OF ALL OR SUBSTANTIALLY ALL OF THE
ASSETS OF THE CORPORATION. A SALE SHALL BE DEEMED TO
BE OF ALL OR SUBSTANTIALLY ALL OF THE ASSETS OF THE

CORPORATION WHEN:

a AT LEAST EIGHTY PERCENT (80%) OF THE
SELLER CORPORATION’S ASSETS ARE INCLUDED IN THE

SALE,

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b. THE SELLER CORPORATION IS LEFT WITH

ONLY BAD OR TOXIC ASSETS OR MASSIVE LIABILITIES,

a THE REMAINING ASSETS ARE NOT SUFFICIENT
FOR THE CONTINUATION OF THE SELLER CORPORATION’S

ORDINARY OPERATIONS, OR

d. UNDER CIRCUMSTANCES CONGRUOUS TO THE

FOREGOING.

2. THE TRANSACTION RESULTS IN THE CESSATION OF
THE ORDINARY BUSINESS OF THE SELLER CORPORATION. SUCH
CESSATION SHALL BE DEEMED TO EXIST DESPITE THE NON-

DISSOLUTION OF THE SELLER CORPORATION WHEN:

a. THE SELLER CORPORATION BECOMES

MERELY A SHELL CORPORATION,

b. THE SELLER CORPORATION HAS NO
OPERATIONS WHICH ARE BY THEMSELVES

ECONOMICALLY VIABLE,

e THE SELLER CORPORATION IS RENDERED
INCAPABLE OF DOING BUSINESS EXCEPT THROUGH THE

BUYER CORPORATION, OR

d. UNDER CIRCUMSTANCES CONGRUOUS TO THE

FOREGOING.

3. THERE IS AN INTEGRATION OF THE SELLER
CORPORATION’S PRODUCTIVE ASSETS AND OPERATIONS INTO
THE BUYER CORPORATION’S OWN BUSINESS OR A CONTINUITY
OF THE SELLER CORPORATION’S BUSINESS IN THE BUSINESS OF
THE BUYER CORPORATION. SUCH INTEGRATION OR

CONTINUITY SHALL BE DEEMED TO EXIST WHEN THE BUYER

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1 CORPORATION, WHETHER WHOLLY OR IN PART, CONTINUES

2 THE SELLER CORPORATION’S BUSINESS IN TERMS OF
3 MANAGEMENT, PERSONNEL, PHYSICAL LOCATION, ASSETS,
4 PROCESS, TECHNOLOGY ACTIVITIES, OR GENERAL BUSINESS
5 OPERATIONS, OR INTEGRATES AND COMBINES THESE ASPECTS
6 WITH ITS OWN BUSINESS MODEL, WHETHER OR NOT THERE IS A
7 COMPLETE IDENTITY OR UNIFORMITY IN EVERY MATERIAL
8 CHARACTERISTIC,

9 4. THERE IS AN ASSUMPTION BY THE BUYER
10 CORPORATION OF THE SELLER CORPORATION’S LIABILITIES
il WHICH WOULD ORDINARILY BE NECESSARY TO CONTINUE THE
12 SELLER CORPORATION’S BUSINESS OPERATIONS WITHOUT
13 INTERRUPTION.

14 5. THE BUYER CORPORATION PAYS FOR THE SELLER
15 CORPORATION’S ASSETS WITH SHARES OF ITS OWN STOCK.

16 6. UNDER THE TERMS OF THE SALE OF THE ASSETS,
7 THE SELLER CORPORATION IS PROHIBITED BY THE BUYER
18 CORPORATION FROM CONTINUING OR ENGAGING IN THE SAME
19 OR SIMILAR BUSINESS.
20 THIS PROVISION SHALL APPLY WHETHER THE BUYER
21 CORPORATION CARRIES OUT THE WHOLE OR A PART OF THE
22 TRANSACTION OR SERIES OF TRANSACTIONS IN ITS OWN NAME
23 OR THROUGH ANY OF ITS WHOLLY OWNED AND CONTROLLED
24 SUBSIDIARIES OR OTHER RELATED PARTIES.
25 SECTION 59. Section 81 of the Code is hereby renumbered as Section 83 and

26 amended to read as follows:

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Sec. [81]82. Instances of appraisal right; REMEDY AGAINST
OPPRESSIVE ACTS. - Any stockholder of a corporation shall have the right to
dissent and demand payment of the fair value of his shares in the following

instances:

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1. Incase any amendment to the articles of incorporation has
the effect of changing or restricting the rights of any stockholder or class
of shares, or of authorizing preferences in any respect superior to those of
outstanding shares of any class, or of extending or shortening the term of

corporate existence;

2. Incase of sale, lease, exchange, transfer, mortgage, pledge
or other disposition of all or substantially all of the corporate property and

assets as provided in the Code; [and]

3. Incase of merger or consolidation WHETHER DE JURE

OR DE FACTOL;

4, | WHEN THE CORPORATION SUBMITS FALSE OR
INACCURATE FINANCIAL STATEMENTS AND/OR
REPORTORIAL REQUIREMENTS OR WHEN THEY CONTAIN

MISSTATEMENTS OR MISREPRESENTATIONS;

5. | WHEN THE CORPORATION REFUSES TO HOLD
THE REGULAR MEETINGS OF STOCKHOLDERS OR UNDULY
PREVENTS ANY STOCKHOLDER FROM PARTICIPATING IN

MEETINGS HELD;

6. WHEN STOCKHOLDERS REPRESENTING A
MAJORITY APPOINT THEIR NOMINEES AS DIRECTORS,

WITHOUT HOLDING ELECTIONS;

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7. WHEN DIRECTORS AUTHORIZE PAYMENTS TO
ENTITIES RELATED TO THEM OR OTHERWISE ENGAGE IN

RELATED PARTY TRANSACTIONS,

8. WHEN DIRECTORS ENGAGE IN SELF-DEALING OR
THERE IS NO OR INADEQUATE DISCLOSURE OF MATERIAL

FACTS AND THEIR FINANCIAL IMPACT; AND

9. IN INSTANCES WHEN THE CORPORATION IS
VIOLATING THE PROVISIONS OF THIS CODE, ITS RULES, OR

OTHER LAWS.”

SECTION 60. Sections 82 and 83 of the Code are hereby renumbered as Sections 84

and 85, respectively.

SECTION 61. Section 84 of the Code is hereby renumbered as Section 86 and
amended to delete “Securities and Exchange” from “Securities and Exchange Commission” in

each instance.

SECTION 62. Sections 85 to 88 of the Code are hereby renumbered as Sections 87 to

90 accordingly.

SECTION 63. Section 89 of the Code is hereby renumbered as Section 91 and

amended to read as follows:

“Sec. [89]91. Right to vote. EXCEPT AS OTHERWISE PROVIDED
IN THIS CODE, the right of the members of any class or classes to vote may be
limited, broadened or denied to the extent specified in the articles of incorporation
or the by-laws. Unless so limited, broadened or denied, cach member, regardless

of class, shall be entitled to one vote.

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[Unless otherwise provided in the articles of incorporation or the by-laws,]
‘A member may vote IN PERSON, IN ABSENTIA, OR by proxy in accordance

with the provisions of this Code.

[Voting by mail or other similar means by members of non-stock
corporations may be authorized by the by-laws of non-stock corporations with the
approval of, and under such conditions which may be prescribed by, the

Securities and Exchange Commission.]”

SECTION 64. Sections 90 and 91 of the Code are hereby renumbered as Sections 92

and 93, respectively.

SECTION 65. Section 92 of the Code is hereby renumbered as Section 94 and

amended to read as follows:

“Sec. [92]94. Election and term of trustees. — [Unless otherwise provided
in the articles of incorporation or the by-laws,] The board of trustees of non-stock
corporations SHALL BE IN SUCH NUMBER AS MAY BE FIXED IN THE
ARTICLES OF INCORPORATION OR BY-LAWS [, which may be more
than] NOT EXCEEDING fifteen (15) [in number as may be fixed in their
articles of incorporation or by-laws, shall]. THEY SHALL HOLD OFFICE
FOR ONE YEAR UNTIL THEIR SUCCESSORS ARE ELECTED AND
QUALIFIED. {as soon as organized, so classify themselves that the term of
office of one-third (1/3) of their number shall expire every year ; and subsequent
elections of trustees comprising one-third (1/3) of the board of trustees shall be
held annually and trustees so elected shall have a term of three (3) years.)
Trustees [thereafter] elected to fill vacancies occurring before the expiration of a

particular term shall hold office only for the unexpired period.

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EXCEPT WITH RESPECT TO INDEPENDENT TRUSTEES

UNDER SECTION 24, no person shall be elected as trustee unless he is a

member of the corporation.

Unless otherwise provided in the articles of incorporation or the by-laws,

officers of a non-stock corporation may be directly elected by the members.”

SECTION 66. Section 93 of the Code is hereby renumbered as Section 95 and

amended to read as follows:

“Sec. [93]95. [Place of meetings] LIST OF MEMBERS AND PROXIES.

~ THE CORPORATION SHALL, AT ALL TIMES, KEEP A LIST OF ITS

MEMBERS AND THEIR PROXIES ON SITE AT ITS PRINCIPAL

OFFICE, IN THE FORM THE COMMISSION MAY REQUIRE, WHICH

LIST SHALL BE UPDATED IN A MANNER AS TO REFLECT THE

MEMBERS AND PROXIES OF RECORD AS OF TWENTY DAYS PRIOR

TO ANY SCHEDULED ELECTION. [The by-laws may provide that the

members of a non-stock corporation may hold their regular or special mectings at

any place even outside the place where the principal office of the corporation is

located: Provided, That proper notice is sent to all members indicating the date,

time and place of the meeting: and Provided, further, That the place of meeting

shall be within the Philippines.)

SECTION 67. Section 94 of the Code is hereby renumbered as Section 96 and

amended to read as follows:

“Sec. [94]96. Rules of distribution. - In case of dissolution of a non-stock

corporation in accordance with the provisions of this Code FOR REASONS

OTHER THAN THOSE SET FORTH IN SECTION 137 (4) (B) to (0, its

assets shall be applied and distributed as follows:

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XXX XXX XXX”

SECTION 68. Sections 95 to 103 of the Code are hereby renumbered as Sections 97

to 105 accordingly.

SECTION 69. Sections 104, 105, and 107 of the Code are hereby amended by
deleting “Securities and Exchange” from “Securities Exchange Commission” in each instance
and, in Section 107, changing “Ministry of Education and Culture” to “Department of Education
Culture and Sports”. Further Sections 104 to 107 are renumbered as Sections 106 to 109

accordingly.

SECTION 70. Section 108 of the Code is hereby deleted.

SECTION 71. Section 109 and 110 of the Code is hereby renumbered as Sections 110

and 111, respectively.

SECTION 72. Sections 111, 112, 113, 114, 115, and 116 of the Code are hereby
amended by deleting “Securities and Exchange” from “Securities Exchange Commission” in

each instance. Further Sections 111 to 116 are renumbered as Sections 112 to 117 accordingly.

SECTION 73. A new chapter is hereby added to Title XIII on Special Corporations

and the succeeding provisions are renumbered accordingly.

CHAPTER III

ONE PERSON CORPORATIONS

SEC. 118. APPLICABILITY OF PROVISIONS TO ONE PERSON
CORPORATIONS. —- THE PROVISIONS OF THIS CODE ARE

APPLICABLE TO ONE PERSON CORPORATIONS EXCEPT AS

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OTHERWISE PROVIDED IN THIS TITLE AND IN THE OTHER

SPECIFIC PROVISIONS OF THIS CODE.

SEC. 119. ONE PERSON CORPORATION. — A ONE PERSON
CORPORATION IS A CORPORATION WITH ONLY A SINGLE
STOCKHOLDER WHO JS A NATURAL PERSON OR A JURIDICAL

PERSON.

SEC. 120. SINGLE STOCKHOLDER. — FOR PURPOSES OF THIS
CODE, THE FOLLOWING SHALL BE DEEMED A SINGLE
STOCKHOLDER:

a, A NATURAL PERSON WHO WHOLLY OWNS THE SHARES

IN THE ONE PERSON CORPORATION;

b. A JURIDICAL PERSON WHO WHOLLY OWNS THE SHARES
IN THE ONE PERSON CORPORATION AND WHO ACTS AS
SINGLE STOCKHOLDER THROUGH A DULY AUTHORIZED

REPRESENTATIVE; AND

c. A TRUST, ESTATE OR ACCOUNT WHO WHOLLY OWNS
THE SHARES IN THE ONE PERSON CORPORATION AND
WHO SHALL ACT AS STOCKHOLDER THROUGH ITS
TRUSTEE, ADMINISTRATOR, EXECUTOR, GUARDIAN,
CONSERVATOR, CUSTODIAN OR OTHER PERSON
EXERCISING FIDUCIARY CAPACITIES AND DULY

AUTHORIZED AS SUCH.

SEC. 121. MINIMUM AMOUNT OF CAPITAL STOCK TO BE PAID
FOR PURPOSES OF INCORPORATION. —- THE MINIMUM AMOUNT OF

AUTHORIZED CAPITAL STOCK FOR A ONE PERSON

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CORPORATION IS ONE MILLION PESOS (PHP1,000,000.00), THE
PAYMENT OF WHICH SHALL BE MADE BY THE SINGLE
STOCKHOLDER IN ONE LUMP SUM AT THE TIME OF
INCORPORATION AND PHYSICALLY SEPARATED FROM THE

PERSONAL FUNDS OF THE SINGLE STOCKHOLDER.

SEC. 122, ARTICLES OF INCORPORATION; BY-LAWS NOT
REQUIRED. - INSOFAR AS APPLICABLE, A ONE PERSON
CORPORATION SHALL FILE ARTICLES OF INCORPORATION IN
ACCORDANCE WITH THE REQUIREMENTS UNDER SECTION 14 OF

THIS CODE, SUBJECT TO THE FOLLOWING:

(i) THERE SHALL BE A STATEMENT AS TO
WHETHER THE CAPITAL STOCK IS THE SOLE
INVESTMENT OF A NATURAL OR OF A JURIDICAL

PERSON, OR OF A TRUST, ESTATE OR ACCOUNT;

(@) IF THE SINGLE STOCKHOLDER IS A
JURIDICAL PERSON, IT SHALL CLEARLY INDICATE
THE NAME, NATIONALITY AND RESIDENCE OF THE
NATURAL PERSON AUTHORIZED TO ACT ON ITS

BEHALF AND ATTACH PROOF OF SUCH AUTHORITY;

(3) IF THE SINGLE STOCKHOLDER IS A
TRUST, ESTATE OR ACCOUNT, IT SHALL CLEARLY
INDICATE THE NAME, NATIONALITY AND RESIDENCE
OF THE TRUSTEE, ADMINISTRATOR, EXECUTOR,
GUARDIAN, CONSERVATOR, CUSTODIAN OR OTHER
PERSON EXERCISING FIDUCIARY CAPACITIES AND
ATTACH PROOF OF SUCH AUTHORITY TO ACT ON

BEHALF OF THE TRUST, ESTATE OR ACCOUNT;

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(4) IN ACCORDANCE WITH SECTION 127, IT
SHALL DESIGNATE A NOMINEE AND ALTERNATE
NOMINEE AND ATTACH THERETO THEIR PRIOR
WRITTEN CONSENT, AS WELL AS STATE THE
COMPENSATION THEY SHALL RECEIVE AND THE

EXTENT OF OR LIMITATIONS ON THEIR AUTHORITY;

(5) THE ARTICLES OF INCORPORATION
SHALL BE ACCOMPANIED BY A SWORN STATEMENT
BY THE STOCKHOLDER AS TO THE AMOUNT OF THE
CAPITAL STOCK AND THAT THE SAME HAS BEEN
PAID IN FULL AND MAINTAINED IN AN ACCOUNT

SEPARATE FROM THAT OF THE STOCKHOLDER;

(6) THERE SHALL BE ATTACHED TO THE
ARTICLES OF INCORPORATION A CODE OF ETHICS
OR STANDARDS OF CONDUCT AS SET FORTH IN

SECTION 47, SUBPARAGRAPH 11 OF THIS CODE; AND

(7) THERE SHALL BE ATTACHED TO THE
ARTICLES OF INCORPORATION INTERNAL
PROCEDURES FOR WHISTLEBLOWERS AS SET FORTH

IN SECTION 47, SUBPARAGRAPH 12 OF THIS CODE.

THE ONE PERSON CORPORATION SHALL BE EXEMPT FROM

THE FILING OF BY-LAWS.

SEC. 123, PROHIBITION AGAINST MULTIPLE ONE PERSON
CORPORATIONS. - ANY PERSON, TRUST, ESTATE OR ACCOUNT
MAY ONLY INCORPORATE AND MAINTAIN ONE ONE PERSON

CORPORATION AT ANY GIVEN INSTANCE. A ONE PERSON

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CORPORATION MAY NOT INCORPORATE A NEW ONE PERSON
CORPORATION.

SEC. 124. DISPLAY OF CORPORATE NAME. — A ONE PERSON
CORPORATION SHALL INDICATE EITHER BELOW OR AT THE END
OF ITS CORPORATE NAME, THE WORDS “ONE PERSON
CORPORATION” OR THE LETTERS “OPC”, WHEREVER ITS NAME

IS PRINTED, AFFIXED, ENGRAVED OR OTHERWISE PRESENTED.

SEC, 125. SINGLE STOCKHOLDER AS DIRECTOR, PRESIDENT
AND TREASURER. — THE SINGLE STOCKHOLDER SHALL BE THE
SOLE DIRECTOR, PRESIDENT (OR CHIEF EXECUTIVE OFFICER)
AND TREASURER (OR CHIEF FINANCE OFFICER) OF THE ONE

PERSON CORPORATION.

SEC. 126. CORPORATE SECRETARY AND OTHER OFFICERS. —
WITHIN FIFTEEN DAYS FROM THE ISSUANCE OF ITS
CERTIFICATE OF INCORPORATION, THE ONE PERSON
CORPORATION SHALL APPOINT A CORPORATE SECRETARY,
‘WHO SHALL BE OTHER THAN THE SINGLE STOCKHOLDER, AND
NOTIFY THE COMMISSION THEREOF WITHIN FIVE DAYS FROM

APPOINTMENT.

THE ONE PERSON CORPORATION MAY APPOINT SUCH

OTHER OFFICERS AS IT MAY DEEM NECESSARY.

SEC. 127. SPECIAL FUNCTIONS OF THE CORPORATE
SECRETARY. — IN ADDITION TO THE FUNCTIONS DESIGNATED BY
THE ONE PERSON CORPORATION AND REQUIRED ELSEWHERE IN

THIS CODE, THE CORPORATE SECRETARY SHALL:

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(a) BE RESPONSIBLE FOR MAINTAINING THE MINUTES-

BOOK OF THE CORPORATION;

(b) NOTIFY THE NOMINEE, OR ALTERNATE NO!

IINEE AS
THE CASE MAY BE, OF THE DEATH OR INCAPACITY
OF THE SINGLE STOCKHOLDER, WHICH NOTICE
SHALL BE GIVEN NOT LATER THAN FIVE (5) DAYS
FROM THE SINGLE STOCKHOLDER’S DEATH OR

INCAPACITY;

© NOTIFY THE COMMISSION OF THE DEATH OF THE
SINGLE STOCKHOLDER WITHIN A PERIOD OF FIVE (5)
DAYS FROM SUCH DEATH AND STATING IN SUCH
NOTICE THE NAMES, RESIDENCES AND CONTACT

DETAILS OF ALL KNOWN LEGAL HEIRS; AND

(a) CALL THE NOMINEE OR ALTERNATIVE NOMINEE TO
A MEETING WITH THE KNOWN LEGAL HEIRS AND
GIVE GUIDANCE ON THE OPTIONS OF THE LEGAL
HEIRS WITH REGARD TO THE ONE PERSON
CORPORATION, INCLUDING THE ELECTION OF A
NEW DIRECTOR, AMENDING THE ARTICLES OF
INCORPORATION AND OTHER ANCILLARY AND/OR

CONSEQUENTIAL MATTERS.

SEC. 128. NOMINEE AND ALTERNATE NOMINEE, - THE
SINGLE STOCKHOLDER SHALL DESIGNATE A NOMINEE AND AN
ALTERNATE NOMINEE WHO SHALL, IN THE EVENT OF THE
SINGLE STOCKHOLDER’S DEATH OR INCAPACITY AND AFTER
RECEIVING DUE NOTICE THEREOF FROM THE CORPORATE

SECRETARY, TAKE THE PLACE OF THE SINGLE STOCKHOLDER

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AS DIRECTOR AND MANAGE THE AFFAIRS OF THE
CORPORATION AS PROVIDED IN THE ARTICLES OF

INCORPORATION,

THE ARTICLES OF INCORPORATION SHALL STATE THE
NAMES, RESIDENCES AND CONTACT DETAILS OF THE NOMINEE
AND ALTERNATE NOMINEE, THE COMPENSATION THEY SHALL
BE ENTITLED TO RECEIVE, AS WELL AS THE EXTENT OF AND
LIMITATIONS ON THEIR AUTHORITY IN MANAGING THE AFFAIRS

OF THE ONE PERSON CORPORATION.

THE WRITTEN CONSENT OF THE NOMINEE AND
ALTERNATE NOMINEE SHALL BE SUBMITTED TO THE
COMMISSION TOGETHER WITH THE FILING OF THE ONE PERSON

CORPORATION’S ARTICLES OF INCORPORATIO! SUCH

CONSENT MAY BE WITHDRAWN IN WRITING BY FURNISHING
COPIES THEREOF TO THE SINGLE STOCKHOLDER AND THE
COMMISSION ANYTIME BEFORE THE DEATH OR INCAPACITY OF

THE SINGLE STOCKHOLDER.

THE NOMINEE SHALL, IN THE EVENT OF THE SINGLE
STOCKHOLDER’S DEATH OR INCAPACITY AND AFTER
RECEIVING DUE NOTICE THEREOF FROM THE CORPORATE
SECRETARY, TAKE THE PLACE OF THE SINGLE STOCKHOLDER
AS DIRECTOR AND MANAGE THE AFFAIRS OF THE ONE PERSON

CORPORATION.

SEC. 129, TERM OF NOMINEE AND ALTERNATE NOMINEE. —
WHEN THE INCAPACITY OF THE SINGLE STOCKHOLDER IS

TEMPORARY, THE NOMINEE SHALL SIT AS DIRECTOR AND

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MANAGE THE AFFAIRS OF THE ONE PERSON CORPORATION
ONLY UNTIL THE SINGLE STOCKHOLDER, BY HIS OWN
DETERMINATION, REGAINS HIS CAPACITY. IN CASE OF DEATH
OR PERMANENT INCAPACITY OF THE SINGLE STOCKHOLDER,
THE NOMINEE SHALL SIT AS DIRECTOR AND MANAGE THE
AFFAIRS OF THE ONE PERSON CORPORATION ONLY UNTIL THE
LEGAL HEIRS OF THE SINGLE STOCKHOLDER HAVE BEEN
LAWFULLY DETERMINED, THE SHARES ARE TRANSFERRED IN
THEIR NAME, AND/OR THEY HAVE DESIGNATED ONE OF THEM
TO ACT ON THEIR BEHALF AS THE SINGLE STOCKHOLDER OF

THE ONE PERSON CORPORATION.

THE ALTERNATE NOMINEE SHALL SIT AS DIRECTOR AND
MANAGE THE ONE PERSON CORPORATION IN CASE OF THE
NOMINEE’S INABILITY, INCAPACITY OR DEATH AND ONLY FOR
THE SAME TERM AND UNDER THE SAME CONDITIONS

APPLICABLE TO THE NOMINEE.

SEC. 130. CHANGE OF NOMINEE OR ALTERNATE NOMINEE. ~
THE SINGLE STOCKHOLDER MAY, AT ANY TIME, CHANGE THE
NAME OF THE NOMINEE OR ALTERNATE NOMINEE BY
SUBMITTING NEW NAMES AND NEW WRITTEN CONSENTS TO THE
COMMISSION, WHICH SHALL BE APPENDED TO THE ONE PERSON
CORPORATION’S ARTICLES OF INCORPORATION. THE ARTICLES
OF INCORPORATION NEED NOT BE AMENDED FOR SUCH CHANGE

IN NOMINEE OR ALTERNATE NOMINEE.

SEC. 131. RECORDS IN LIEU OF MEETINGS. — NO
STOCKHOLDERS MEETING NEED BE HELD IN A ONE PERSON

CORPORATION. WHEN ACTION IS NEEDED ON ANY MATTER, IT

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SHALL BE SUFFICIENT, FOR PURPOSES OF VALIDITY, IF THE
RESOLUTION THEREON IS MADE IN WRITING, SIGNED AND
DATED BY THE SINGLE STOCKHOLDER/DIRECTOR, AND
RECORDED IN THE MINUTES-BOOK OF THE ONE PERSON
CORPORATION. THE DATE RECORDED IN THE MINUTES-BOOK
SHALL BE DEEMED TO BE THE DATE OF THE MEETING FOR ALL

PURPOSES UNDER THIS CODE.

SEC. 132. MINUTES-BOOK. —- EACH ONE PERSON
CORPORATION SHALL MAINTAIN A MINUTES-BOOK IN WHICH
SHALL BE ENTERED IN WRITING ALL ACTIONS, DECISIONS,
RESOLUTIONS TAKEN BY THE ONE PERSON CORPORATION,
SIGNED AND DATED BY THE SINGLE STOCKHOLDER/DIRECTOR,

AT THE TIME THE ACTION, DECISION OR RESOLUTION IS MADE.

SEC. 133. CO-MINGLING OF PROPERTY. - WHERE THE
SINGLE STOCKHOLDER CANNOT PROVE THAT THE PROPERTY
OF THE ONE PERSON CORPORATION IS INDEPENDENT OF HIS
OWN PROPERTY, HE SHALL ASSUME THE JOINT AND SEVERAL
LIABILITY FOR THE DEBTS AND OTHER LIABILITIES OF THE ONE

PERSON CORPORATION.

SEC. 134. REPORTORIAL SUBMISSIONS. - THE ONE PERSON
CORPORATION SHALL SUBMIT THE FOLLOWING TO THE
COMMISSION ANNUALLY AND WITHIN SUCH PERIODS AS THE

COMMISSION MAY PRESCRIBE:

1. FINANCIAL STATEMENTS CERTIFIED BY THE CHIEF
EXECUTIVE OFFICER AND CORPORATE SECRETARY

AND DULY AUDITED BY AN INDEPENDENT CERTIFIED

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PUBLIC ACCOUNTANT ACCREDITED BY THE BOARD OF

ACCOUNTANCY;

2. A REPORT CONTAINING EXPLANATIONS OR COMMENTS
BY THE CHIEF EXECUTIVE DIRECTOR ON EVERY
QUALIFICATION, RESERVATION OR ADVERSE REMARK
OR DISCLAIMER MADE BY THE AUDITOR IN HIS

REPORT; AND

3. A DISCLOSURE OF ALL SELF-DEALINGS AND RELATED

PARTY TRANSACTIONS ENTERED INTO BETWEEN THE
ONE PERSON CORPORATION AND THE SINGLE

STOCKHOLDER.

FOR PURPOSES OF THIS PROVISION, THE FISCAL YEAR OF
A ONE PERSON CORPORATION SHALL BE THAT SET FORTH IN ITS.
ARTICLES OF INCORPORATION OR, IN THE ABSENCE THEREOF,

THE CALENDAR YEAR.

SEC. 135. CHANGE OF STATUS FROM A REGULAR STOCK
CORPORATION TO A ONE PERSON CORPORATION. - WHEN A
SINGLE STOCKHOLDER, AS DEFINED UNDER THIS TITLE,
ACQUIRES ALL THE STOCKS OF A REGULAR STOCK
CORPORATION, THE LATTER MAY APPLY FOR CONVERSION
INTO A ONE PERSON CORPORATION, SUBJECT TO THE
SUBMISSION OF SUCH DOCUMENTS THE SEC MAY REQUIRE. IF
THE APPLICATION FOR CONVERSION IS APPROVED, THE SEC
SHALL FORTHWITH ISSUE AN AMENDED CERTIFICATE OF
INCORPORATION REFLECTING THE CONVERSION. THE ONE
PERSON CORPORATION CONVERTED FROM A REGULAR STOCK

CORPORATION SHALL SUCCEED TO AND BE LEGALLY

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RESPONSIBLE FOR ALL THE LATTER’S OUTSTANDING

LIABILITIES AS OF THE DATE OF CONVERSION.

SEC. 136. CHANGE IN STATUS OF A ONE PERSON
CORPORATION. - A ONE PERSON CORPORATION MAY BE
CONVERTED INTO A REGULAR STOCK CORPORATION AFTER
DUE NOTICE TO THE SEC OF SUCH FACT, OF THE
CIRCUMSTANCES LEADING TO THE CONVERSION, AND OF
COMPLIANCE WITH ALL OTHER REQUIREMENTS FOR STOCK
CORPORATIONS UNDER THIS CODE AND APPLICABLE RULES.
SUCH NOTICE SHALL BE FILED WITH THE SEC WITHIN SIXTY (60)
DAYS FROM THE OCCURRENCE OF THE CIRCUMSTANCES
LEADING TO THE CONVERSION INTO A REGULAR STOCK
CORPORATION. IF ALL REQUIREMENTS HAVE BEEN DULY
COMPLIED WITH, THE SEC SHALL FORTHWITH ISSUE AN
AMENDED CERTIFICATE OF INCORPORATION REFLECTING THE

CONVERSION.

IN CASE OF DEATH OF THE SINGLE STOCKHOLDER, THE
NOMINEE OR ALTERNATE NOMINEE, AS THE CASE MAY BE,
SHALL TRANSFER THE SHARES IN THE NAME OF THE SINGLE
STOCKHOLDERS’ LEGAL HEIRS WITHIN SEVEN (7) DAYS FROM
RECEIPT OF EITHER AN AFFIDAVIT OF HEIRSHIP OR OF SELF-
ADJUDICATION BY A SOLE HEIR, OR ANY OTHER LEGAL
DOCUMENT DECLARING THE LEGAL HEIRS OF THE SINGLE
STOCKHOLDER AND, WITHIN THE SAME PERIOD, NOTIFY THE
SEC OF THE TRANSFER. WITHIN SIXTY (60) DAYS FROM THE
‘TRANSFER OF THE SHARES IN THEIR NAME, THE LEGAL HEIRS

SHALL NOTIFY THE SEC IF THEY DECIDE TO WIND UP AND

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DISSOLVE THE ONE PERSON CORPORATION OR CONVERT IT

INTO A REGULAR STOCK CORPORATION.

THE REGULAR STOCK CORPORATION CONVERTED FROM A
ONE PERSON CORPORATION SHALL SUCCEED TO AND BE
LEGALLY RESPONSIBLE FOR ALL THE LATTER’S OUTSTANDING

LIABILITIES AS OF THE DATE OF CONVERSION.

SECTION 74, Section 117 of the Code is hereby renumbered as Section 137 and

amended to read as follows:

“TITLE XIV — DISSOLUTION”

“Sec. [117]137. Methods of dissolution; EFFECTIVE DATE OF
DISSOLUTION. - A corporation formed or organized under the provisions of
this Code may be dissolved IN ANY OF THE FOLLOWING WAYS:

[voluntarily or involuntarily.)

1. AUTOMATICALLY BY EXPIRATION OF THE
CORPORATE TERM STATED IN THE ARTICLES OF
INCORPORATION, AS ORIGINALLY STATED, OR AS LENGTHENED
OR SHORTENED IN ACCORDANCE WITH THE PROVISIONS OF

THIS CODE.

2. BY ACTION OF A MAJORITY OF THE
INCORPORATORS OR A MAJORITY OF THE DIRECTORS OR

TRUSTEES WHEN THE CORPORATION:

a. HAS NOT COMMENCED BUSINESS,

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b. BEING A STOCK CORPORATION, HAS NOT

ISSUED SHARES,

ro HAS NO DEBTS OR OTHER LIABILITIES, AND.

a. HAS RECEIVED NO PAYMENTS, ON
SUBSCRIPTIONS FOR SHARES IN THE CASE OF STOCK
CORPORATIONS, OR CONTRIBUTIONS IN THE CASE OF
NON-STOCK CORPORATIONS, OR, HAVING RECEIVED
THEM, HAS RETURNED THEM TO THOSE ENTITLED
THERETO, LESS AMOUNTS DISBURSED FOR LAWFUL

EXPENSES.

3. BY ACTION OF THE BOARD OF DIRECTORS AND

STOCKHOLDERS, OR THE BOARD OF TRUSTEES AND MEMBERS

AS THE CASE MAY BE, WHEN:

a NOT QUALIFYING UNDER SECTION 137 (2)
ABOVE, THE CORPORATION FAILS TO COMMENCE OR
CONTINUE ITS BUSINESS OR THE CONSTRUCTION OF ITS
WORKS AND ITS CERTIFICATE OF INCORPORATION HAS
NOT YET BEEN REVOKED IN ACCORDANCE WITH SECTION

22 OF THIS CODE, OR

b. FOR ANY OTHER REASON PROPOSED AND
VOTED UPON BY THEM AT A MEETING CALLED

SPECIFICALLY FOR THAT PURPOSE.

4. BY ORDER OF THE COMMISSION WHEN THE

CORPORATION:

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a FAILED TO COMMENCE OR CONTINUE ITS
BUSINESS OR THE CONSTRUCTION OF ITS WORKS AND THE
REVOCATION OF ITS CERTIFICATE OF INCORPORATION
HAS ATTAINED FINALITY IN ACCORDANCE WITH SECTION

23 OF THIS CODE;

b. HAS BEEN FOUND TO HAVE PROCURED ITS
ORGANIZATION THROUGH FRAUD;

cs HAS BEEN FOUND TO HAVE BEEN CREATED
FOR THE PURPOSE OF COMMITTING OR CONCEALING, OR
AIDING IN THE COMMISSION OR CONCEALMENT OF,
SECURITIES VIOLATIONS, SMUGGLING, TAX EVASION,
MONEY LAUNDERING, OR GRAFT AND CORRUPT

PRACTICES;

d. HAS BEEN FOUND TO HAVE COMMITTED OR
AIDED IN THE COMMISSION OF SECURITIES VIOLATIONS,
SMUGGLING, TAX EVASION, MONEY LAUNDERING, OR
GRAFT AND CORRUPT PRACTICES, AND ITS
STOCKHOLDERS KNEW OR WERE IN A POSITION TO KNOW

ABOUT SUCH ILLEGAL ACTS;

e FOR THE PURPOSE OF SHIELDING ITSELF
FROM LIABILITY FOR GRAFT AND CORRUPT PRACTICES,
HAS BEEN FOUND TO HAVE ENGAGED THE SERVICES OF AN
INTERMEDIARY WHO COMMITS GRAFT AND CORRUPT
PRACTICES FOR THE CORPORATION’S BENEFIT OR IN ITS
INTEREST, AND ITS STOCKHOLDERS KNEW OR WERE IN A

POSITION TO KNOW ABOUT THE ENGAGEMENT;

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f. HAS BEEN FOUND TO HAVE REPEATEDLY AND
KNOWINGLY TOLERATED THE COMMISSION OF GRAFT
AND CORRUPT PRACTICES OR OTHER FRAUDULENT OR
ILLEGAL ACTS BY ITS DIRECTORS, TRUSTEES, OFFICERS,
OR EMPLOYEES, FAILING TO SANCTION THEM, REPORT
THEIR ACTIONS TO THE PROPER AGENCIES, AND/OR FILE

THE APPROPRIATE ACTION AGAINST THEM;

g- HAS BEEN FOUND TO HAVE REPEATEDLY AND
WILLFULLY EXCEEDED THE AUTHORITY CONFERRED

UPON IT BY LAW;

h. HAS BEEN FOUND TO HAVE REPEATEDLY AND
WILLFULLY FALSIFIED, MISSTATED OR OTHERWISE
MISREPRESENTED INFORMATION CONTAINED IN ITS

REPORTORIAL REQUIREMENTS;

i. HAS BEEN FOUND TO HAVE REPEATEDLY AND
WILLFULLY CONDUCTED ITS BUSINESS IN A FRAUDULENT

OR OTHERWISE UNLAWFUL MANNER; OR

i. HAS BEEN FOUND TO HAVE OTHERWISE

VIOLATED THE PROVISIONS OF THIS CODE.

5. BY ORDER OF THE COMMISSION WHEN, BY FINAL
JUDGMENT, A COURT ORDERS THE DISSOLUTION OF THE

CORPORATION.

IN THE CASE OF EXPIRATION OF CORPORATE TERM UNDER
SECTION 137 (1) ABOVE, DISSOLUTION SHALL AUTOMATICALLY

TAKE EFFECT ON THE DAY FOLLOWING THE LAST DAY OF THE

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CORPORATE TERM STATED IN THE ARTICLES OF
INCORPORATION, WITHOUT NEED FOR THE ISSUANCE BY THE
COMMISSION OF A CERTIFICATE OF DISSOLUTION. IN ALL
OTHER CASES, THE DISSOLUTION SHALL TAKE EFFECT ONLY
UPON AND AS OF THE ISSUANCE BY THE COMMISSION OF A
CERTIFICATE OF DISSOLUTION, AND SHALL BE WITHOUT

PREJUDICE TO SECTION 142 OF THIS CODE.”

SECTION 75. Section 118 of the Code is hereby renumbered as Section 138 and

amended to read as follows:

“Sec. [118]138. [Voluntary dissolution] DISSOLUTION where no
creditors are affected; PROCEDURE. - DISSOLUTION PURSUANT TO
SECTION 136 (2) OF THIS CODE MAY BE MADE BY FILING A

VERIFIED REQUEST FOR DISSOLUTION WITH THE COMMISSION:

a. | STATING THE NAME OF THE CORPORATION
AND THE NAMES AND ADDRESSES OF THE

INCORPORATORS AND DIRECTORS OR TRUSTEES;

b. STATING THE REASON FOR THE DISSOLUTION

OF THE CORPORATION;

ec ATTESTING TO THE EXISTENCE AND
CONCURRENCE OF ALL THE CONDITIONS SET FORTH IN

SECTION 137 (2) (A) TO (D) OF THIS CODE;

d. STATING THE NAMES OF THE
INCORPORATORS, OR OF THE DIRECTORS OR TRUSTEES,
CONSTITUTING A MAJORITY, WHO APPROVED THE

DISSOLUTION AND THE DATE, PLACE, AND TIME OF THE

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MEETING IN WHICH THE VOTE WAS MADE, WHICH
REQUIREMENT MAY BE DISPENSED WITH IF THE REQUEST

ITSELF IS DULY VERIFIED BY SUCH MAJORITY; AND

e. WHEN APPLICABLE, ATTACHING: (i) A LIST OF
THE NAMES AND ADDRESSES OF THE PERSONS ENTITLED
TO A RETURN OF PAID SUBSCRIPTIONS OR
CONTRIBUTIONS AS SET FORTH IN SECTION 137 (2) (D), (ii) A
SUMMARY OF THE AMOUNTS OF THEIR PAID
SUBSCRIPTIONS OR CONTRIBUTIONS, (ii) A SUMMARY OF
THE AMOUNTS DISBURSED FOR LAWFUL EXPENSES WITH
COPIES OF THE OFFICIAL RECEIPTS THEREFOR, AND (iv) A
SUMMARY OF THE AMOUNTS RETURNED WITH PROOF
THAT THEY WERE DULY RECEIVED BY THOSE ENTITLED

THERETO.

If dissolution of a corporation PURSUANT TO SECTION 137 3) OF
THIS CODE does not prejudice the rights of any creditor having a claim against
it, the dissolution may be effected by majority vote of the board of directors or
trustees, and by a resolution duly adopted by the affirmative vote of the
stockholders owning at least two-thirds (2/3) of the outstanding capital stock or of
at least two-thirds (2/3) of the members of a meeting to be held upon call of the

directors or trustees.

AT LEAST THIRTY (30) DAYS PRIOR TO THE MEETING, NOTICE
SHALL BE GIVEN TO EACH SHAREHOLDER OR MEMBER OF
RECORD, WHETHER OR NOT ENTITLED TO VOTE AT THE
MEETING, IN THE MANNER PROVIDED IN SECTION 50 OF THIS
CODE AND SHALL STATE THAT THE PURPOSE OF THE MEETING

IS TO VOTE ON THE DISSOLUTION OF THE CORPORATION. | [after

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publication of the notice] NOTICE of THE time, place and object of the meeting
SHALL LIKEWISE BE MADE BY PUBLICATION for three (3) consecutive
weeks PRIOR TO THE DATE OF THE MEETING in a newspaper published
in the place where the principal office of said corporation is located; and if no
newspaper is published in such place, then in a newspaper of general circulation

in the Philippines.

[ after sending such notice to each stockholder or member [either] by registered

mail or by personal delivery at least thirty (30) days prior to said meeting]

ONCE THE REQUIRED VOTES OF THE BOARD AND
SHAREHOLDERS OR MEMBERS ARE ACHIEVED, A VERIFIED
REQUEST FOR DISSOLUTION SHALL BE FILED WITH THE

COMMISSION

a. STATING THE NAME OF THE CORPORATION
AND THE NAMES AND ADDRESSES OF THE DIRECTORS OR

TRUSTEES;

b. STATING THE REASON FOR THE DISSOLUTION

OF THE CORPORATION:

ce, CERTIFYING THAT NO CREDITOR SHALL BE
PREJUDICED BY THE DISSOLUTION AND SUBSTANTIATING
THE SAME WITH FINANCIAL STATEMENTS AND OTHER

RECORDS;

da. STATING THE NAMES OF THE DIRECTORS OR
TRUSTEES, CONSTITUTING A MAJORITY, WHO APPROVED
THE DISSOLUTION AND THE DATE, PLACE, AND TIME OF

THE MEETING IN WHICH THE VOTE WAS MADE;

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e STATING WHEN THE NOTICES TO
SHAREHOLDERS OR MEMBERS WERE GIVEN, THE MANNER,
AND FORM IN WHICH THEY WERE GIVEN, THE DETAILS OF
PUBLICATION AND ATTACHING PROOF THEREOF, AND THE
DATE, PLACE, AND TIME OF THE MEETING IN WHICH THE

VOTE WAS MADE; AND

ATTACHING THERETO a copy of the resolution
authorizing the dissolution WHICH shall HAVE BEEN certified by a
majority of the board of directors or trustees and countersigned by the

secretary of the corporation.

WITHIN FIFTEEN (15) DAYS FROM RECEIPT OF THE VERIFIED
REQUEST FOR DISSOLUTION, AND IN THE ABSENCE OF ANY
WITHDRAWAL WITHIN SAID PERIOD, [The Sccurities and Exchange}
THE Commission shall APPROVE THE REQUEST AND thereupon issue the

certificate of dissolution.”

SECTION 76. Section 119 of the Code is hereby renumbered as Section 139 and

amended to read as follows:

“Sec, [119]139. [Voluntary dissolution] DISSOLUTION where creditors
are affected; PROCEDURE AND CONTENTS OF PETITION. - Where the
dissolution of a corporation may prejudice the rights of any creditor, [the petition]
A VERIFIED PETITION for dissolution shall be filed with the [Securities and
Exchange] Commission. The petition shall be signed by a majority of [its] THE
CORPORATION’S board of directors or trustees or other officers having the
management of its affairs, verified by its president or secretary or one of its
directors or trustees, and shall set forth all claims and demands against it, and that

its dissolution was resolved upon by the affirmative vote of the stockholders

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representing at least two-thirds (2/3) of the outstanding capital stock or by at least
two-thirds (2/3) of the members at a meeting of its stockholders or members
called for that purpose. THE PETITION SHALL LIKEWISE STATE: (a)
THE REASON FOR THE DISSOLUTION; (b) THE FORM, MANNER
AND TIME WHEN THE NOTICES WERE GIVEN; AND (c) THE DATE,
PLACE, AND TIME OF THE MEETING IN WHICH THE VOTE WAS
MADE. THE PETITION SHALL HAVE AS ANNEXES (a) A COPY OF
THE RESOLUTION AUTHORIZING THE DISSOLUTION, WHICH
SHALL HAVE BEEN CERTIFIED BY A MAJORITY OF THE BOARD
OF DIRECTORS OR TRUSTEES AND COUNTERSIGNED BY THE
SECRETARY OF THE CORPORATION; AND (b) A LIST OF ALL ITS

CREDITORS.

If the petition is sufficient in form and substance, the Commission shall,
by an order reciting the purpose of the petition, fix a date on or before which
objections thereto may be filed by any person, which date shall not be less than
thirty (30) days nor more than sixty (60) days after the entry of the order, Before
such date, a copy of the order shall be published at least once a week for three (3)
consecutive weeks in a newspaper of general circulation published in the
municipality or city where the principal office of the corporation is situated, or if
there be no such newspaper, then in a newspaper of general circulation in the
Philippines, and a similar copy shall be posted for three (3) consecutive weeks in

three (3) public places in such municipality or city.

Upon five (5) day's notice, given after the date on which the right to file
objections as fixed in the order has expired, the Commission shall proceed to hear
the petition and try any issue made by the objections filed; and if no such
objection is sufficient, and the material allegations of the petition are true, it shall

render judgment dissolving the corporation and directing such disposition of its

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assets as justice requires, and may appoint a receiver to collect such assets and

pay the debts of the corporation.”

SECTION 77. Section 120 of the Code is hereby renumbered as Section 140 and

amended to read as follows:

“See. [120]140. WITHDRAWAL OF REQUEST FOR Dissolution [by
shortening corporate term] AND WITHDRAWAL OF PETITION FOR
DISSOLUTION. — {A voluntary dissolution may be effected by amending the
articles of incorporation to shorten the corporate term pursuant to the provisions
of this Code. A copy of the amended articles of incorporation shall be submitted
to the Securities and Exchange Commission in accordance with this Code, Upon
approval of the amended articles of incorporation of the expiration of the
shortened term, as the case may be, the corporation shall be deemed dissolved
without any further proceedings, subject to the provisions of this Code on

liquidation]

A WITHDRAWAL OF THE REQUEST FOR DISSOLUTION

SHALL:

a. BE MADE IN WRITING;

b. BE DULY VERIFIED BY ANY INCORPORATOR,

DIRECTOR, SHAREHOLDER OR MEMBER;

c HAVE THE SIGNATURES OF THE SAME NUMBER
OF INCORPORATORS, DIRECTORS, SHAREHOLDERS OR
MEMBERS NECESSARY TO REQUEST FOR A DISSOLUTION

AS SET FORTH IN THE FOREGOING SECTIONS; AND

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da BE SUBMITTED WITHIN FIFTEEN (15) DAYS
FROM THE RECEIPT BY THE COMMISSION OF THE

REQUEST FOR DISSOLUTION.

UPON RECEIPT OF A DULY SUBMITTED WITHDRAWAL OF
REQUEST FOR DISSOLUTION, THE COMMISSION SHALL
WITHHOLD ACTION ON THE REQUEST FOR DISSOLUTION AND
SHALL, AFTER INVESTIGATION, ISSUE AN ORDER:

a. WITHHOLDING THE ISSUANCE OF THE
CERTIFICATE OF DISSOLUTION AND DEEMING THE

REQUEST FOR DISSOLUTION WITHDRAWN; OR

b. DIRECTING THAT A JOINT MEETING OF THE
BOARD AND OF THE STOCKHOLDERS BE HELD FOR THE
PURPOSE OF ASCERTAINING WHETHER OR NOT TO
PROCEED WITH DISSOLUTION.

THE COMMISSION SHALL HAVE THE POWER TO ISSUE
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SUCH ORDERS AS MAY BE APPROPRIATE, INCLUDING, WITHOUT
LIMITATION, ORDERS DESIGNATING THE TIME AND PLACE OF
THE JOINT MEETING, DIRECTING THE SENDING OF NOTICES,
AND SPECIFYING THE FORM OF SUCH NOTICE. THE CONDUCT OF
THE JOINT MEETING SHALL BE SUPERVISED BY THE
COMMISSION THROUGH A DULY AUTHORIZED REPRESENTATIVE
WHO SHALL, IMMEDIATELY AFTER THE JOINT MEETING,
CERTIFY ITS OUTCOME WITH A RECOMMENDATION AS TO
WHETHER THE CERTIFICATE OF DISSOLUTION SHOULD BE
ISSUED OR THE REQUEST FOR DISSOLUTION BE DEEMED

ABANDONED. THEREAFTER, THE COMMISSION SHALL ISSUE AN

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ORDER EITHER APPROVING THE WITHDRAWAL OF THE
REQUEST OR A CERTIFICATE OF DISSOLUTION OR PROCEEDING

TO ACT ON SUCH REQUEST,

A MOTION FOR THE WITHDRAWAL OF THE PETITION FOR
DISSOLUTION SHALL BE SIMILAR IN SUBSTANCE AS A
WITHDRAWAL OF REQUEST FOR DISSOLUTION BUT SHALL BE
VERIFIED AND FILED PRIOR TO PUBLICATION OF THE ORDER
SETTING THE DATE FOR OBJECTIONS TO THE PETITION. THE
COMMISSION SHALL RESOLVE THE MOTION WITHIN THE SAME
PROCEEDINGS AS THE PETITION AND ISSUE AN ORDER DEEMING
THE PETITION WITHDRAWN OR DENYING THE WITHDRAWAL

AND PROCEEDING TO HEAR OBJECTIONS ON THE PETITION.”

SECTION 78. Section 121 of the Code is hereby renumbered as Section 141 and

amended to read as follows:

“Sec, [121]141. [Involuntary dissolution] DISSOLUTION BY THE
COMMISSION. — [A corporation may be dissolved by the Securities and
Exchange] DISSOLUTION PROCEEDINGS PURSUANT TO THE
GROUNDS SET FORTH IN SECTION 137 (4) AND (5), SECTION 174, OR
WHEN PROVIDED IN OTHER LAWS, RULES AND REGULATIONS,
MAY BE COMMENCED BY THE Commission MOTU PROPRIO OR upon

filing of a verified complaint BY ANY INTERESTED PARTY. | and after]

AFTER proper notice and hearing, THE COMMISSION MAY
DISSOLVE THE CORPORATION OR ISSUE SUCH OTHER ORDER AS
IT MAY DEEM APPROPRIATE IN ACCORDANCE WITH THE
PROVISIONS OF THIS CODE OR THE RULES AND REGULATIONS

OF THE COMMISSION.

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IF THE CORPORATION IS DISSOLVED BY THE COMMISSION
PURSUANT TO ANY OF THE GROUNDS SET FORTH IN SECTION 136
(4) (B) TO (), ITS ASSETS, AFTER PAYMENT OF ITS OUTSTANDING
LIABILITIES, SHALL BE FORFEITED IN FAVOR OF THE NATIONAL
GOVERNMENT. SUCH FORFEITURE SHALL BE WITHOUT
PREJUDICE TO ANY OTHER PENALTY OR SANCTION FOR THOSE
LIABLE UNDER THIS CODE OR OTHER LAWS. [on the grounds provided

by existing laws, rules and regulations).”

SECTION 79. Section 122 of the Code is hereby renumbered as Section 142 and

amended to read as follows:

“Sec, [122]142. Corporate liquidation. - Every corporation whose charter
expires by its own limitation or is annulled by forfeiture or otherwise, or whose
corporate existence for other purposes is terminated in any other manner, shall
nevertheless be continued as a body corporate for three (3) years after the {time
when it would have been so dissolved) EFFECTIVE DATE OF
DISSOLUTION AS PROVIDED IN SECTION 137 OF THIS CODE, for the
purpose of prosecuting and defending suits by or against it and enabling it to
settle and close its affairs, to dispose of and convey its property and to distribute
its assets, but not for the purpose of continuing the business for which it was

established.

EXCEPT AS OTHERWISE PROVIDED FOR IN SECTIONS 95
AND 96 OF THIS CODE, upon the winding up of corporate affairs, any asset
distributable to any creditor or stockholder or member who is unknown or cannot
be found shall be escheated [to the city or municipality where such assets are

located] IN FAVOR OF THE NATIONAL GOVERNMENT.

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XXX XXX XXX”

SECTION 80. Section 125 is amended to delete “Securities and Exchange” from
“Securities and Exchange Commission” in each instance. Further, Sections 123, 124 and 125 of

the Code are hereby renumbered as Sections 143, 144 and 145, respectively.

SECTION 81. Section 126 of the Code is hereby renumbered as Section 146 and

amended to read as follows:

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“Sec. [126]146. Issuance of a license. - If the [Securities and Exchange]
Commission is satisfied that the applicant has complied with all the requirements
of this Code and other special laws, rules and regulations, the Commission shall
issue a license to the applicant to transact business in the Philippines for the
purpose or purposes specified in such license. Upon issuance of the license, such
foreign corporation may commence to transact business in the Philippines and
continue to do so for as long as it retains its authority to act as a corporation under
the laws of the country or state of its incorporation, unless such license is sooner
surrendered, revoked, suspended or annulled in accordance with this Code or other

special laws.

Within sixty (60) days after the issuance of the license to transact business
in the Philippines, the licensee, except foreign banking or insurance corporations,
shall deposit with the [Securities and Exchange] Commission for the benefit of
present and future creditors of the licensee in the Philippines, securities
satisfactory to the [Securities and Exchange] Commission, consisting of bonds or
other evidence of indebtedness of the Government of the Philippines, its political
subdivisions and instrumentalities, or of government-owned or controlled
corporations and entities, shares of stock OR DEBT SECURITIES THAT ARE
REGISTERED UNDER THE SECURITIES REGULATION CODE [in

“registered enterprises" as this term is defined in Republic Act No. 5186], shares

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of stock in domestic corporations [registered] LISTED in the stock exchange, [or]
shares of stock in domestic insurance companies and banks, OR ANY
FINANCIAL INSTRUMENT DETERMINED SUITABLE BY THE
COMMISSION, or any combination THEREOF [of these kinds of securities,] in
the actual market value of at least [one] FIVE hundred thousand [(P100,000.)]
(P500,000) pesos OR SUCH OTHER AMOUNT THAT MAY BE SET BY
THE COMMISSION; Provided, however, That within six (6) months after each
fiscal year of the licensee, the [Securities and Exchange] Commission shall require
the licensee to deposit additional securities OR FINANCIAL INSTRUMENTS
equivalent in actual market value to two (2%) percent of the amount by which the
licensee's gross income for that fiscal year exceeds [five] TEN million
{(P5,000,000.00)] (P10,000,000.00) pesos. The [Securities and Exchange]
Commission shall also require THE deposit of additional securities OR
FINANCIAL INSTRUMENTS if the actual market value of the securities OR
FINANCIAL INSTRUMENTS on deposit has decreased by at least ten (10%)
percent of their actual market value at the time they were deposited. The
[Securities and Exchange] Commission may at its discretion release part of the
additional [securities] deposit[ed with it] if the gross income of the licensee has
decreased, or if the actual market value of the total [securities on} deposit has
increased, by more than ten (10%) percent of theIR actual market value [of the
securities] at the time they were deposited. The [Sccurities and Exchange]
Commission may, from time to time, allow the licensee to MAKE substitute
DEPOSITS [other securities] for those already on deposit as long as the licensee
is solvent. Such licensee shall be entitled to collect the interest or dividends on
[the] SUCH [securities] depositS[ed]. In the event the licensee ceases to do
business in the Philippines, ITS [the securities] depositS[ed as aforesaid] shall be
returned, upon the licensee's application therefor and upon proof to the satisfaction
of the [Securities and Exchange] Commission that the licensee has no liability to

Philippine residents, including the Government of the Republic of the Philippines.

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FOR PURPOSES OF COMPUTING THE SECURITIES DEPOSIT, THE
COMPOSITION OF GROSS INCOME AND ALLOWABLE DEDUCTIONS
THEREFROM SHALL BE IN ACCORDANCE WITH THE RULES OF

THE COMMISSION.”

SECTION 82. Sections 128, 130, 131, 132, 134, 135, and 136 of the Code are hereby
amended to delete “Securities and Exchange” from “Securities and Exchange Commission” in
each instance, Further, Sections 127 to 136 are hereby renumbered as Sections 147 to 156

accordingly.

SECTION 83. A new title is inserted in the Code containing Sections 157 to 176,

TITLE XVI — INVESTIGATIONS, OFFENSES

AND PENALTIES

“Sec. 157. INVESTIGATION AND PROSECUTION OF OFFENSES.
~ THE COMMISSION MAY, UPON COMPLAINT OR MOTU PROPRIO,
MAKE SUCH INVESTIGATIONS AS IT DEEMS NECESSARY TO
DETERMINE WHETHER ANY PERSON HAS VIOLATED OR IS ABOUT
TO VIOLATE ANY PROVISION OF THIS CODE, ANY RULE,
REGULATION OR ORDER THEREUNDER, AND MAY REQUIRE OR
PERMIT ANY PERSON TO FILE WITH IT A STATEMENT IN
WRITING, UNDER OATH OR OTHERWISE, AS THE COMMISSION
SHALL DETERMINE, AS TO ALL FACTS AND CIRCUMSTANCES

CONCERNING THE MATTER TO BE INVESTIGATED.

THE COMMISSION MAY PUBLISH INFORMATION
CONCERNING ANY SUCH VIOLATIONS, AND TO INVESTIGATE ANY

FACT, CONDITION, PRACTICE OR MATTER WHICH IT MAY DEEM.

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NECESSARY OR PROPER TO AID IN THE ENFORCEMENT OF THE
PROVISIONS OF THIS CODE, IN THE PRESCRIBING OF RULES AND
REGULATIONS THEREUNDER, OR IN SECURING INFORMATION TO.
SERVE AS A BASIS FOR RECOMMENDING FURTHER LEGISLATION
CONCERNING THE MATTERS TO WHICH THIS CODE RELATES:
PROVIDED, HOWEVER, THAT ANY PERSON REQUESTED OR
SUBPOENAED TO PRODUCE DOCUMENTS OR TESTIFY IN ANY
INVESTIGATION SHALL SIMULTANEOUSLY BE NOTIFIED IN
WRITING OF THE PURPOSE OF SUCH INVESTIGATION: PROVIDED,
FURTHER, THAT ALL CRIMINAL COMPLAINTS FOR VIOLATION OF
THIS CODE, AND THE IMPLEMENTING RULES AND REGULATIONS
ENFORCED OR ADMINISTERED BY THE COMMISSION SHALL BE
REFERRED TO THE DEPARTMENT OF JUSTICE FOR PRELIMINARY
INVESTIGATION AND PROSECUTION BEFORE THE PROPER
COURT: PROVIDED, FURTHERMORE, THAT IN INSTANCES WHERE
THE LAW ALLOWS INDEPENDENT CIVIL OR CRIMINAL
PROCEEDINGS OF VIOLATIONS ARISING FROM THE SAME ACT,
THE COMMISSION SHALL TAKE APPROPRIATE ACTION TO

IMPLEMENT THE SAME.

SEC. 158. ADMINISTRATION OF OATHS, AND SUBPOENA OF
WITNESSES AND DOCUMENTS. - FOR THE PURPOSE OF THE
INVESTIGATIONS IN THE PRECEDING SECTION, OR ANY OTHER
PROCEEDING UNDER THIS CODE, THE COMMISSION OR ANY
OFFICER DESIGNATED BY IT IS EMPOWERED TO ADMINISTER
OATHS AND AFFIRMATIONS, SUBPOENA WITNESSES, COMPEL
ATTENDANCE, TAKE EVIDENCE, REQUIRE THE PRODUCTION OF
ANY BOOK, PAPER, CORRESPONDENCE, MEMORANDUM, OR

OTHER RECORD WHICH THE COMMISSION DEEMS RELEVANT OR

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MATERIAL TO THE INQUIRY, AND TO PERFORM SUCH OTHER
ACTS NECESSARY IN THE CONDUCT OF SUCH INVESTIGATION OR
PROCEEDINGS.

SECTION 159. CEASE AND DESIST ORDERS. ~ WHENEVER IT
SHALL APPEAR TO THE COMMISSION THAT ANY PERSON HAS
ENGAGED OR IS ABOUT TO ENGAGE IN ANY ACT OR PRACTICE
CONSTITUTING A VIOLATION OF ANY PROVISION OF THIS CODE,
ANY RULE, REGULATION OR ORDER THEREUNDER, IT MAY ISSUE
AN ORDER FOR SUCH PERSON TO DESIST FROM COMMITTING
SUCH ACT OR PRACTICE. AFTER FINDING THAT SUCH PERSON
HAS ENGAGED IN ANY SUCH ACT OR PRACTICE AND THAT THERE.
IS A REASONABLE LIKELIHOOD OF SUCH PERSON CONTINUING
FURTHER OR FUTURE VIOLATIONS, THE COMMISSION MAY
ISSUE, EX PARTE A CEASE AND DESIST ORDER ENJOINING SUCH
PERSON FROM FURTHER OR FUTURE VIOLATIONS FOR A

MAXIMUM PERIOD OF TWENTY (20) DAYS.

THEREAFTER, THE COMMISSION MAY PROCEED
ADMINISTRATIVELY AGAINST SUCH PERSON IN ACCORDANCE
WITH SECTION 161, AND/OR TRANSMIT SUCH EVIDENCE AS MAY
BE AVAILABLE CONCERNING ANY VIOLATION OF ANY PROVISION
OF THIS CODE, OR ANY RULE, REGULATION OR ORDER
THEREUNDER, TO THE DEPARTMENT OF JUSTICE, WHICH MAY
INSTITUTE THE APPROPRIATE CRIMINAL PROCEEDINGS UNDER
THIS CODE, AND/OR TO THE PROPER COURT, TRIBUNAL, OR
QUASI-JUDICIAL AGENCY IN INSTANCES WHERE THE LAW
ALLOWS INDEPENDENT CIVIL OR CRIMINAL PROCEEDINGS OF

VIOLATIONS ARISING FROM THE SAME ACT.

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SEC. 160. CONTEMPT. - ANY PERSON WHO, WITHIN HIS
POWER BUT WITHOUT JUSTIFIABLE OR LAWFUL CAUSE, FAILS
OR REFUSES TO COMPLY WITH ANY LAWFUL ORDER, DECISION
OR SUBPOENA ISSUED BY THE COMMISSION SHALL, AFTER DUE
NOTICE AND HEARING, BE GUILTY OF CONTEMPT OF THE
COMMISSION, SUCH PERSON SHALL BE FINED IN SUCH AMOUNT
AS THE COMMISSION MAY DETERMINE. WHEN THE FAILURE OR
REFUSAL IS A CLEAR AND OPEN DEFIANCE OF THE
COMMISSION’S ORDER, DECISION OR SUBPOENA, THE PERSON
SHALL BE FINED ON A DAILY BASIS IN AN AMOUNT THE
COMMISSION MAY DETERMINE AND DETAINED UNDER AN
ARREST ORDER ISSUED BY THE COMMISSION UNTIL SUCH

ORDER, DECISION OR SUBPOENA IS COMPLIED WITH.

SEC. 161. ADMINISTRATIVE SANCTIONS. — IF, AFTER DUE
NOTICE AND HEARING INITIATED EITHER BY COMPLAINT OR
MOTU PROPRIO, THE COMMISSION FINDS THAT ANY PROVISION
OF THIS CODE, OR ANY OF THE COMMISSION’S RULES OR ORDERS
HAS BEEN VIOLATED, THE COMMISSION MAY IMPOSE ANY OR
ALL OF THE FOLLOWING SANCTIONS ON THOSE FOUND

RESPONSIBLE FOR THE VIOLATION:

(A) A FINE RANGING FROM FIVE THOUSAND PESOS
(PHPS5,000.00) TO TWO MILLION PESOS (PHP2,000,000.00) PLUS
NOT MORE THAN ONE THOUSAND PESOS (PHP1,000.00) FOR.
EACH DAY OF CONTINUING VIOLATION, IN NO CASE TO

EXCEED TWO MILLION PESOS (PHP2,000,000.00);

(B) ARREST AND DETENTION IN CONNECTION

‘WITH ITS CONTEMPT POWER UNDER SECTION 160;

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(C) SUSPENSION OR REVOCATION OF THE

CERTIFICATE OF INCORPORATION;

@) DISSOLUTION OF THE CORPORATION AND
FORFEITURE OF ITS ASSETS UNDER THE CONDITIONS IN

TITLE XV OF THIS CODE; AND

(©) OTHER PENALTIES WITHIN THE POWER OF
THE COMMISSION TO IMPOSE OR AS PRESCRIBED IN ITS

RULES AND REGULATIONS.

THE IMPOSITION OF THE FOREGOING ADMINISTRATIVE
SANCTIONS SHALL BE WITHOUT PREJUDICE TO THE FILING OF
CIVIL COMPLAINTS AND/OR CRIMINAL CHARGES UNDER THIS
CODE AND OTHER LAWS AGAINST THE CORPORATION AND/OR
THOSE RESPONSIBLE FOR THE VIOLATION, IN INSTANCES WHERE
THE LAW ALLOWS INDEPENDENT CIVIL OR CRIMINAL

PROCEEDINGS OF VIOLATIONS ARISING FROM THE SAME ACT.

SEC. 162. CONTINUED AND UNJUSTIFIED USE OF FORMER
CORPORATE NAME; PENALTIES. - A CORPORATION THAT
CONTINUES TO USE A CORPORATE NAME ALREADY PREVIOUSLY
REMOVED FROM REGISTRATION OR RESERVATION SHALL BE
PUNISHED WITH A FINE RANGING FROM FIFTY THOUSAND PESOS
(PHP50,000.00) TO TWO HUNDRED THOUSAND PESOS (PHP200,000.00)
AND/OR IMPRISONMENT OF SIX (6) MONTHS TO TWO (2) YEARS AT
THE DISCRETION OF THE COURT; PROVIDED THAT THE
CORPORATION MAY CLAIM THE DEFENSE THAT IT, OR ANY OF
ITS STOCKHOLDERS OR OTHER DIRECTORS/OFFICERS EXERTED

REASONABLE EFFORTS AGAINST THE CONTINUED AND

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UNJUSTIFIED USE OF THE FORMER CORPORATE NAME, IN WHICH
CASE ONLY THE RESPONSIBLE DIRECTORS/OFFICERS SHALL BE

HELD CRIMINALLY LIABLE UNDER THIS PROVISION.

See. 163. CONCEALMENT OF DISQUALIFICATION; PENALTIES.
- EACH WILLFUL OR DELIBERATE CONCEALMENT BY A
DIRECTOR OR TRUSTEE OF ANY DISQUALIFICATION UNDER
SECTION 28 ALREADY EXISTING AT THE TIME HE ACCEPTED THE
POST OR WHICH OCCURS WHILE HE HOLDS THE POST, SHALL BE
PUNISHED BY A FINE RANGING FROM FIFTY THOUSAND PESOS
(PHPS0,000.00) TO TWO HUNDRED THOUSAND PESOS (PHP200,000.00)
AND/OR IMPRISONMENT OF SIX (6) MONTHS TO TWO (2) YEARS AT
THE DISCRETION OF THE COURT, AND BY A PERMANENT
DISQUALIFICATION FROM FURTHER ACTING AS DIRECTOR OF
ANY CORPORATION. FOR PURPOSES OF THIS SECTION,
CONCEALMENT SHALL BE WILLFUL OR DELIBERATE WHEN,
DESPITE HAVING KNOWLEDGE OF THE EXISTENCE OF THE
DISQUALIFICATION, THE DIRECTOR OR TRUSTEE ACCEPTS OR

RETAINS THE POST.

Sec. 164. VIOLATION OF DUTY TO KEEP OR MAINTAIN
RECORDS AND/OR ALLOW THEIR INSPECTION OR REPRODUCTION;
PENALTIES. ~ THE UNJUSTIFIED FAILURE OR REFUSAL BY THE
CORPORATION, OR BY THOSE RESPONSIBLE FOR KEEPING AND
MAINTAINING THE CORPORATION’S RECORDS, TO COMPLY WITH
SECTIONS 47, 75, 95, 181 AND OTHER PROVISIONS OF THIS CODE
AND THE RULES OF THE COMMISSION WITH RESPECT TO THE
RETENTION, MAINTENANCE AND KEEPING OF RECORDS AND

ALLOWING THEIR INSPECTION OR REPRODUCTION, AS THE CASE

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MAY BE, SHALL BE PUNISHED WITH A FINE RANGING FROM FIFTY
THOUSAND PESOS (PHP50,000.00) TO FIVE HUNDRED THOUSAND
PESOS (PHP500,000.00) AND IMPRISONMENT OF THIRTY (30) DAYS

TO TWO (2) YEARS AT THE DISCRETION OF THE COURT.

THE PENALTIES IMPOSED UNDER THIS SECTION SHALL BE
IN ADDITION TO THE SANCTIONS IMPOSED BY THE COMMISSION
IN THE EXERCISE OF ITS CONTEMPT POWERS UNDER SECTION 160
TO COMPEL COMPLIANCE WITH THE DUTIES UNDER THE

MENTIONED PROVISIONS.

SEC. 165. KNOWING OR WILLFUL CERTIFICATION OF
INCOMPLETE, INACCURATE, FALSE OR MISLEADING STATEMENTS
OR REPORTS; PENALTIES. - ANY PERSON WHO CERTIFIES ANY
REPORT OR MATTER AS SET FORTH IN THIS CODE KNOWING, OR
BEING IN A POSITION TO KNOW, THAT THE SAME IS INCOMPLETE,
INACCURATE, OR CONTAINS FALSE OR MISLEADING
INFORMATION OR STATEMENTS SHALL BE PUNISHED WITH A
FINE RANGING FROM TWO HUNDRED THOUSAND PESOS
(PHP200,000.00) TO TWO MILLION PESOS (PHP2,000,000.00) AND/OR
IMPRISONMENT OF TWO (2) TO TEN (10) YEARS. WHEN THE
VIOLATION IS WILLFUL, THE PENALTY SHALL BE A FINE
RANGING FROM FOUR HUNDRED THOUSAND PESOS (PHP400,000.00)
TO FOUR MILLION PESOS (PHP4,000,000.00) = AND/OR

IMPRISONMENT OF FOUR (4) TO TWENTY (20) YEARS.

SEC. 166. INDEPENDENT AUDITOR COLLUSION; PENALTIES. —
WHEN AN INDEPENDENT AUDITOR COLLUDES WITH A
CORPORATION OR ITS REPRESENTATIVES AND CERTIFIES THE

CORPORATION’S FINANCIAL STATEMENTS WHICH ARE EITHER

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INCOMPLETE OR WHICH CONTAIN INACCURATE, FALSE OR
MISLEADING STATEMENTS OR REPORTS, OR WHICH DO NOT GIVE
A FAIR AND ACCURATE PRESENTATION OF THE CORPORATION’S
CONDITION, SUCH AUDITOR SHALL BE PUNISHED WITH A FINE
RANGING FROM FOUR HUNDRED THOUSAND PESOS (PHP400,000.00)
TO FOUR MILLION PESOS (PHP4,000,000.00) AND/OR

IMPRISONMENT OF FOUR (4) TO TWENTY (20) YEARS.

SEC. 167. PROCURING THE ORGANIZATION OF A
CORPORATION THROUGH FRAUD; PENALTIES. - THOSE
RESPONSIBLE FOR PROCURING THE ORGANIZATION OF A
CORPORATION THROUGH FRAUD, OR ASSISTING DIRECTLY OR
INDIRECTLY THEREIN, SHALL BE PUNISHED WITH A FINE
RANGING FROM FIVE HUNDRED THOUSAND PESOS (PHPS500,000.00)
TO TWO MILLION PESOS (PHP2,000,000.00) AND/OR IMPRISONMENT
OF TWO (2) TO TEN (10) YEARS AT THE DISCRETION OF THE

COURT.

Sec. 168. _ FRAUDULENT OR UNLAWFUL CONDUCT OF
BUSINESS; PENALTIES. - A CORPORATION THAT WILLFULLY
CONDUCTS ITS BUSINESS IN A FRAUDULENT OR OTHERWISE
UNLAWFUL MANNER SHALL BE PUNISHED WITH A FINE RANGING
FROM FIVE HUNDRED THOUSAND PESOS (PHP500,000.00) TO TWO
MILLION PESOS (PHP2,000,000.00) AND/OR IMPRISONMENT OF FIVE

(5) TO TEN (10) YEARS AT THE DISCRETION OF THE COURT.

Sec. 169. THEFT OF IDENTITY; PENALTIES. - ANY
CORPORATION WHO WILLFULLY OBTAINS ANY IDENTIFYING
INFORMATION OF A PERSON, WHETHER NATURAL OR JURIDICAL,

AND USES THAT INFORMATION FOR ANY UNLAWFUL PURPOSE,

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INCLUDING BUT NOT LIMITED TO OBTAINING, OR ATTEMPTING
TO OBTAIN, CREDIT, GOODS, SERVICES, OR REAL PROPERTY
WITHOUT THE CONSENT OF THAT PERSON, SHALL BE PUNISHED
WITH A FINE RANGING FROM ONE MILLION PESOS
(PHP1,000,000.00) TO FIVE MILLION PESOS (PHP5,000,000.00) AND
IMPRISONMENT OF TEN (10) YEARS. THE SAME PENALTY SHALL
BE IMPOSED WHEN THE OFFENDER IS A NATURAL PERSON, OR A
GROUP THEREOF, AND THE IDENTITY STOLEN IS THAT OF A

CORPORATION.

See. 170. ACTING AS INTERMEDIARIES FOR GRAFT AND
CORRUPT PRACTICES; PENALTIES. — A CORPORATION CREATED
FOR THE PURPOSE OF COMMITTING, OR AIDING IN THE
COMMISSION OF, GRAFT AND CORRUPT PRACTICES OR IN THE
CONCEALMENT THEREOF SHALL BE PUNISHED BY A FINE
RANGING FROM ONE MILLION (PHP1,000,000.00) TO FIVE MILLION

(PHPS,000,000.00) PESOS AND IMPRISONMENT OF TEN (10) YEARS.

THE CORPORATION’S FAILURE TO SHOW THAT IT HAS
INSTALLED SAFEGUARDS TO ENSURE THAT IT IS CARRYING OUT
ITS SERVICES IN A TRANSPARENT AND LAWFUL MANNER, AND
THAT IT HAS INSTALLED POLICIES, CODES OF ETHICS AND
PROCEDURES AGAINST GRAFT AND CORRUPTION, WHEN
COUPLED WITH A FINDING OF GRAFT AND CORRUPT PRACTICES
AGAINST ANY OF THEIR DIRECTORS, OFFICER, EMPLOYEES,
AGENTS, OR REPRESENTATIVES, SHALL BE PRIMA FACIE

EVIDENCE OF LIABILITY UNDER THIS SECTION.

Sec. 171. ENGAGING INTERMEDIARIES FOR GRAFT AND

CORRUPT PRACTICES; PENALTIES. — A CORPORATION THAT, FOR

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THE PURPOSE OF SHIELDING ITSELF FROM LIABILITY FOR
GRAFT AND CORRUPT PRACTICES, ENGAGES THE SERVICES OF
AN INTERMEDIARY WHO COMMITS GRAFT AND CORRUPT

PRACTICES FOR THE CORPORATION’S BENEFIT OR IN ITS

‘TEREST, SHALL BE PUNISHED BY A FINE OF ONE MILLION

PESOS (PHP1,000,000.00) AND IMPRISONMENT OF TEN (10) YEARS.

THE CORPORATION’S FAILURE TO SHOW THAT IT HAS USED
THE HIGHEST DEGREE OF DILIGENCE AND , CARE WHEN
ACQUIRING THE SERVICES OF AN INTERMEDIARY, THAT IT HAS
SUFFICIENT KNOWLEDGE AND HAS INSTALLED SAFEGUARDS TO
ENSURE THAT THE INTERMEDIARY IS CARRYING OUT THE
CONTRACTED SERVICES IN A TRANSPARENT AND LAWFUL
MANNER, AND THAT IT HAS INSTALLED POLICIES, CODES OF
ETHICS AND PROCEDURES DESIGNED TO PREVENT GRAFT AND
CORRUPTION, WHEN COUPLED WITH A FINDING OF GRAFT AND
CORRUPT PRACTICES AGAINST THE INTERMEDIARY, SHALL BE

PRIMA FACIE EVIDENCE OF LIABILITY UNDER THIS SECTION.

Sec. 172. TOLERATING GRAFT AND CORRUPT PRACTICES;
PENALTIES. — A DIRECTOR, TRUSTEE, OR OFFICER OF THE
CORPORATION WHO KNOWINGLY ALLOWS OR TOLERATES THE
COMMISSION OF GRAFT AND CORRUPT PRACTICES OR OTHER
FRAUDULENT ACTS BY ITS DIRECTORS, TRUSTEES, OFFICERS, OR
EMPLOYEES, FAILING TO SANCTION THEM, REPORT THEIR
ACTIONS TO THE PROPER AGENCIES, AND/OR FILE THE
APPROPRIATE ACTION AGAINST THEM, SHALL BE PUNISHED BY A
FINE OF ONE MILLION PESOS  (PHP1,000,000.00) AND

IMPRISONMENT TEN (10) YEARS.

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SEC. 173. RETALIATION AGAINST WHISTLEBLOWERS. -ANY
PERSON WHO, KNOWINGLY AND WITH THE INTENT TO
RETALIATE, TAKES ANY ACTION HARMFUL TO ANOTHER
PERSON, INCLUDING BUT NOT LIMITED TO INTERFERENCE WITH
THE LAWFUL EMPLOYMENT OR LIVELIHOOD OF ANY PERSON,
FOR PROVIDING ANY TRUTHFUL INFORMATION RELATING TO
THE COMMISSION OR POSSIBLE COMMISSION OF ANY OFFENSE
OR VIOLATION UNDER THIS CODE, SHALL BE PUNISHED WITH A
FINE RANGING FROM FIVE HUNDRED THOUSAND PESOS
(PHPS500,000.00) TO ONE MILLION PESOS (PHP1,000,000.00) AND/OR
IMPRISONMENT OF FIVE (5) TO TEN (10) YEARS, AT THE

DISCRETION OF THE COURT.

SEC. [144]174, OTHER VIOLATIONS OF THE CODE; SEPARATE
LIABILITY. - VIOLATIONS OF ANY OF THE OTHER PROVISIONS OF
THIS CODE OR ITS AMENDMENTS NOT OTHERWISE SPECIFICALLY
PENALIZED HEREIN SHALL BE PUNISHED BY A FINE OF NOT LESS
THAN [ONE] FIFTY THOUSAND [P1,000.00] (P50,000.00) PESOS BUT NOT
MORE THAN ONE MILLION (P1,000,000.00) [TEN THOUSAND
(P10,000.00)] PESOS AND/OR BY IMPRISONMENT [FOR] OF NOT LESS
THAN THIRTY (30) DAYS BUT NOT MORE THAN FIVE (5) YEARS, OR
BOTH, [IN] AT THE DISCRETION OF THE COURT. IF THE VIOLATION IS
COMMITTED BY A CORPORATION, THE SAME MAY, AFTER NOTICE
AND HEARING, BE DISSOLVED IN APPROPRIATE PROCEEDINGS
BEFORE THE [SECURITIES AND EXCHANGE] COMMISSION: PROVIDED,
THAT SUCH DISSOLUTION SHALL NOT PRECLUDE THE INSTITUTION
OF APPROPRIATE ACTION AGAINST THE DIRECTOR, TRUSTEE OR
OFFICER OF THE CORPORATION RESPONSIBLE FOR SAID VIOLATION:

PROVIDED, FURTHER, THAT NOTHING IN THIS SECTION SHALL BE

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CONSTRUED TO REPEAL THE OTHER CAUSES FOR DISSOLUTION OF A

CORPORATION PROVIDED IN THIS CODE.

LIABILITY FOR ANY OF THE FOREGOING OFFENSES SHALL
BE SEPARATE FROM AND WITHOUT PREJUDICE TO ANY OTHER
ADMINISTRATIVE CIVIL, CRIMINAL LIABILITY UNDER THIS CODE

AND OTHER LAWS.

SEC. 175. LIABILITY OF DIRECTORS, TRUSTEES, OFFICERS OR
OTHER EMPLOYEES. —\F THE OFFENDER IS A CORPORATION THE
PENALTY MAY, AT THE DISCRETION OF THE COURT, BE IMPOSED
UPON SUCH CORPORATION AND/OR UPON ITS DIRECTORS,
TRUSTEES, STOCKHOLDERS, MEMBERS, OFFICERS OR
EMPLOYEES RESPONSIBLE FOR THE VIOLATION OR

INDISPENSABLE TO ITS COMMISSION.

SEC. 176. LIABILITY OF AIDERS AND ABETTORS AND OTHER
SECONDARY LIABILITY, - ANYONE WHO SHALL AID, ABET,
COUNSEL, COMMAND, INDUCE OR PROCURE ANY VIOLATION OF
THIS CODE, OR ANY RULE, REGULATION OR ORDER OF THE
COMMISSION OR WHO SHALL ASSIST THE ACT OR OMISSION OF
ANY PERSON PRIMARILY LIABLE FOR THE VIOLATION, WITH
KNOWLEDGE OR IN RECKLESS DISREGARD THAT SUCH ACT OR
OMISSION IS WRONGFUL SHALL BE PUNISHED WITH A FINE
AND/OR IMPRISONMENT NOT EXCEEDING THAT IMPOSED ON THE
PRINCIPAL OFFENDERS, AT THE DISCRETION OF THE COURT
AFTER TAKING INTO ACCOUNT THEIR PARTICIPATION IN THE

OFFENSE.

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SECTION 84. Title XVI on Miscellaneous Provisions is hereby renumbered as Title

SECTION 85. Sections 137 and 138 of the Code are renumbered as Sections 177 and

178, respectively.

SECTION 86. Section 139 of the Code is hereby renumbered as Section 179 and

amended to read as follows:

“Sec. [139]179. COLLECTION AND USE OF REGISTRATION, Incorporation
and other fees. — {The Securities and Exchange] FOR A MORE EFFECTIVE
AND EXPEDITIOUS IMPLEMENTATION OF THIS CODE, THE
Commission is hereby authorized to collect, [and] receive AND RETAIN,
WITHOUT NEED OF SEPARATE APPROVAL FROM ANY
GOVERNMENT AGENCY, AND SUBJECT ONLY TO EXISTING
ACCOUNTING AND AUDITING RULES AND REGULATIONS, ALL fees,
FINES AND OTHER CHARGES, COLLECTED BY THE COMMISSION
PURSUANT TO THIS CODE AND ITS RULES AND REGULATIONS.
THIS AMOUNT, WHICH SHALL BE IN ADDITION TO THE
COMMISSION’S ANNUAL BUDGET, SHALL BE DEPOSITED AND
MAINTAINED IN A SEPARATE ACCOUNT OR FUND, WHICH MAY BE
USED AND DISBURSED DIRECTLY BY THE COMMISSION. [as

authorized by law or by rules and regulations promulgated by the Commission.]

THE COMMISSION SHALL USE SUCH RETENTION MONEY IN
ITS OPERATIONS IN THE MANNER IT SHALL DEEM FIT

INCLUDING, BUT NOT LIMITED TO:

(A) UPGRADING ITS FACILITIES AND EQUIPMENT

OUTLAY;

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(B) INCREASING THE COMPENSATION AND BENEFITS OF
ITS EMPLOYEES AS APPROVED BY THE COMMISSION EN
BANC, BASED ON JOB EVALUATION STUDIES AND
COMPENSATION SURVEYS AND CONSISTENT WITH THE
GENERAL PRINCIPLES LAID DOWN IN R.A. NO. 6758,
OTHERWISE KNOWN AS “THE SALARY STANDARDIZATION

LAW”;

(C) PROVIDING APPROPRIATE ALLOWANCES TO ITS
EMPLOYEES, PROVIDED THAT SAID ALLOWANCES SHALL
NOT EXCEED ONE HUNDRED PERCENT (100%) OF THEIR

BASIC SALARY;

(@) PROVIDING OTHER EMPLOYEE BENEFITS AND

PRIVILEGES SUCH AS

a MEDICAL AND HOSPITALIZATION BENEFITS TO

SUPPLEMENT STATUTORY HEALTH BENEFITS,

b. MANDATORY ANNUAL EXECUTIVE CHECK-UP
OF THE CHAIRPERSON, COMMISSIONERS, DIRECTORS

AND ASSISTANT DIRECTORS,

e ACCIDENT INSURANCE FOR EMPLOYEES FOR
TRAVELS DONE IN THE PERFORMANCE OF THEIR

OFFICIAL DUTIES AND FUNCTIONS, AND

d. A PROVIDENT FUND CONSISTING OF JOINT
CONTRIBUTIONS BY THE COMMISSION AND ITS

EMPLOYEES;

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(E) MAKING PROVISIONS FOR THE DEVELOPMENT OF
ITS EMPLOYEES’ KNOWLEDGE AND SKILLS AND/OR THE

ENHANCEMENT OF THEIR ACADEMIC GROWTH THROUGH

a. THE GRANT OF SCHOLARSHIPS TO DESERVING
EMPLOYEES, PROVIDED THAT SCHOLARS UNDER
THIS PROVISION SHALL BE SELECTED ON THE BASIS
OF COMPETITIVE EXAMINATION OR EVALUATION,
AND THEIR ATTENDANCE SHALL NOT IMPEDE IN THE
EFFICIENCY OF SERVICES RENDERED BY THE

COMMISSION

b THE COVERAGE OF REGISTRATION AND
INCIDENTAL COSTS FOR ATTENDANCE AT SEMINARS,
CONFERENCES AND WORKSHOPS WHETHER IN THE
PHILIPPINES OR ABROAD, PROVIDED THAT SUCH
ATTENDANCE SHALL NOT IMPEDE IN THE
EFFICIENCY OF SERVICES RENDERED BY THE

COMMISSION; AND

ALL OTHER REQUIREMENTS TO IMPROVE THE DELIVERY OF ITS
SERVICES UNDER THIS CODE TO THE PUBLIC, EVERY FIVE (5)
YEARS, THE COMMISSION SHALL DETERMINE WHETHER THE
FEES, FINES AND CHARGES COLLECTED ARE SUFFICIENT TO MEET
ITS BUDGETARY REQUIREMENTS FOR THE NEXT FIVE YEARS. IF
SO, THE COMMISSION SHALL RECEIVE NO FUNDS FROM THE
ANNUAL BUDGET OF THE NATIONAL GOVERNMENT FOR THAT
PERIOD; IF NOT, THE COMMISSION SHALL CONTINUE TO RECEIVE

ITS ANNUAL BUDGET UNTIL SUCH TIME AS THE FEES, FINES AND

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OTHER CHARGES FROM ITS COLLECTIONS ARE SUFFICIENT TO

FULLY FUND ITS OPERATIONS.”

SECTION 87. Section 140 of the Code is hereby renumbered as Section 180 and

amended to read as follows:

“Sec. [140]180. NATIONALITY AND Stock ownership QE [in certain]
DETERMINED BY COMPUTING THE REQUIRED PERCENTAGE OF
FILIPINO OWNERSHIP BASED ON BOTH (A) THE ENTIRE

OUTSTANDING CAPITAL STOCK, AND (b) THE VOTING STOCKS.

EXCEPT WHEN THE CORPORATION JS REQUIRED BY THE

CONSTITUTION OR BY STATUTE TO BE WHOLLY NATIONALIZED.

OR WHEN THE CORPORATION HAS A CORPORATE
STOCKHOLDER OWNING LESS THAN 60% OF BOTH ITS

QUISTANDING CAPITAL STOCK AND VOTING STOCKS, THE

CONTROL TEST SHALL BE APPLIED WHEN DETERMINING ITS

NATIONALITY.

THE CONSTITUTION OR OTHER LAWS, A CORPORATION SHALL

BE DEEMED A PHILIPPINE NATIONAL WHEN:

(A) IE IS ORGANIZED UNDER THE LAWS OF THE

PHILIPPINES AND AT LEAST SIXTY PERCENT (60%) OF

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THE CAPITAL STOCK OUTSTANDING AND ENTITLED

PROVIDED, THAT WHERE A

AND ms NON-FILIPINO

STOCKHOLDERS OWN STOCKS IN ANOTHER

CORPORATION, AT LEAST SIXTY PERCENT (60%) OF

LEAST SIXTY PERCENT (60%) OF THE MEMBERS OF

THE BOARD OF DIRECTORS OF BOTH

CORPORATIONS MUST BE CITIZENS OF THE

PHILIPPINES: OR

(B) ALTHOUGH ORGANIZED ABROAD, IT IS REGISTERED

AS DOING BUSINESS IN THE PHILIPPINES UNDER THIS

CAPITAL STOCK OUTSTANDING AND ENTITLED TO

VOTE IS WHOLLY OWNED BY FILIPINOS.

[Pursuant to the duties specified by Article XIV of the Constitution, the] THE
National Economic and Development Authority shall, from time to time, UPON
FINDING OR RECOMMENDATION FROM THE COMMISSION OR
FROM OTHER APPROPRIATE GOVERNMENT AGENCIES, make a
determination of whether the corporate vehicle has been used by any corporation
or by business or industry to frustrate the provisions thereof or of applicable laws,
and shall submit to the [Batasang Pambansa] CONGRESS, whenever deemed
necessary, a report of its findings, including recommendations for their prevention

or correction.

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2 Maximum limits may be set by the [Batasang Pambansa] CONGRESS for

3 stockholdings in corporations declared by it to be vested with a public interest
4 pursuant to the provisions of this section, belonging to individuals or groups of
5 individuals related to each other by consanguinity or affinity or by close business
6 interests, or whenever it is necessary to achieve national objectives, prevent
7 illegal monopolies or combinations in restraint or trade, or to implement national
8 economic policies declared in laws, rules and regulations designed to promote the
9 general welfare and foster economic development,

10

W In recommending to the [Batasang Pambansa] CONGRESS corporations,

12 businesses or industries to be declared vested with a public interest and in

13 formulating proposals for limitations on stock ownership, the National Economic

14 and Development Authority shall consider the type and nature of the industry, the

15 size of the enterprise, the economies of scale, the geographic location, the extent

16 of Filipino ownership, the labor intensity of the activity, the export potential, as

7 well as other factors which are germane to the realization and promotion of

18 business and industry.”

19 SECTION 88. Section 141 of the Code is hereby renumbered as Section 181 and

20 amended to read as follows:

21 “Sec, [141]181. [Annual report] REPORTORIAL REQUIREMENTS of
22 corporations. - EXCEPT AS OTHERWISE PROVIDED IN THIS CODE,
23 every corporation, domestic or foreign, [lawfully] doing business in the
24 Philippines shall submit to the [Securities and Exchange] Commission, IN THE
25 FORM AND SUBSTANCE PRESCRIBED BY IT:

26 {an annual report of its operations, together with a financial statement of
27 its assets and liabilities, certified by any independent certified public accountant

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in appropriate cases, covering the preceding fiscal year and such other

requirements as the Securities and Exchange Commission may require.]

1, ANNUAL FINANCIAL STATEMENTS DULY AUDITED BY
AN INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT WHO IS
ACCREDITED BY THE BOARD OF ACCOUNTANCY AND WHO
POSSESSES SUCH OTHER ACCREDITATION AS THE COMMISSION

MAY REQUIRE;

2. A GENERAL INFORMATION SHEET;

3. A DIRECTOR OR TRUSTEE COMPENSATION REPORT

WHICH SHALL CONTAIN, AMONG OTHERS, THE FOLLOWING:

a. THE CORPORATION’S POLICY ON DIRECTOR
OR TRUSTEE REMUNERATION, INCLUDING THE
FRAMEWORK FOR DETERMINING THE REMUNERATION

LEVELS FOR INDIVIDUAL DIRECTORS OR TRUSTEES;

b. A CLEAR, CONCISE AND EASILY
UNDERSTANDABLE STATEMENT OF ALL FIXED AND
VARIABLE COMPENSATION PAID AND ALL INCENTIVES,
AWARDS, AND/OR OPTIONS GIVEN, DIRECTLY OR
INDIRECTLY, TO DIRECTORS OR TRUSTEES DURING THE

PRECEDING FISCAL YEAR; AND

c A STATEMENT OF OTHER FORMS OF
REMUNERATION AND/OR COMPENSATION
ARRANGEMENTS NOT COVERED UNDER THE PRECEDING

SUB-PARAGRAPHS;

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4. A DIRECTOR OR TRUSTEE APPRAISAL OR
PERFORMANCE REPORT AND THE STANDARDS OR CRITERIA

USED TO ASSESS EACH DIRECTOR OR TRUSTEE;

5. A DIRECTOR OR TRUSTEE ATTENDANCE REPORT,
INDICATING THE ATTENDANCE OF EACH DIRECTOR OR TRUSTEE
AT EACH OF THE MEETINGS OF THE BOARD AND ITS

COMMITTEES;

6. A STATEMENT OF ALL EXTERNAL AUDIT AND Ni

AUDIT FEES;

7 SUCH OTHER REPORTS THAT THE COMMISSION MAY

REQUIRE BY RULE.

THE FOREGOING REPORTORIAL REQUIREMENTS SHALL
BE ACCOMPANIED BY A CERTIFICATION FROM THE CHAIRMAN
OF THE BOARD, THE PRESIDENT, THE TREASURER AND THE
CORPORATE SECRETARY (OR THEIR EQUIVALENT) TO WIT:

1. AS TO THE ANNUAL FINANCIAL STATEMENTS,
THAT THE INFORMATION CONTAINED THEREIN IS
COMPLETE, FAIRLY AND ACCURATELY PRESENTS, IN
ALL MATERIAL RESPECTS, THE FINANCIAL CONDITION
OF THE CORPORATION AND DOES NOT CONTAIN ANY
FALSE OR MISLEADING STATEMENT OR

MISREPRESENTATION;

2. AS TO THE GENERAL INFORMATION SHEET,
THAT THE INFORMATION CONTAINED THEREIN IS

COMPLETE, ACCURATE AND DOES NOT CONTAIN ANY

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FALSE OR MISLEADING STATEMENT OR

TION; AND

3. AS TO THE DIRECTOR OR TRUSTEE
COMPENSATION REPORT, THAT THE INFORMATION
CONTAINED THEREIN IS COMPLETE, FAIRLY AND
ACCURATELY PRESENTS, IN ALL MATERIAL RESPECTS,
THE CORPORATION’S POLICY ON DIRECTOR OR
TRUSTEE REMUNERATION, THE ACTUAL
REMUNERATIONS OF SUCH DIRECTORS OR TRUSTEES,
AND DOES NOT CONTAIN ANY FALSE OR MISLEADING

STATEMENT OR MISREPRES

‘ATION.

Such [report] REPORTORIAL REQUIREMENTS shall be submitted
ANNUALLY AND within such period as may be prescribed by the [Securities

and Exchange] Commission.

IF A CORPORATION FAILS TO SUBMIT ANY OF THE
FOREGOING REPORTORIAL REQUIREMENTS THREE TIMES,
WHETHER INTERMITTENTLY OR CONSECUTIVELY, WITHIN A
PERIOD OF FIVE YEARS, THE COMMISSION MAY, AFTER DUE
NOTICE AND HEARING, PUT THE CORPORATION ON
DELINQUENCY STATUS OR REVOKE ITS CERTIFICATE OF

INCORPORATION IN ACCORDANCE WITH SECTION 22.”

SECTION 89. Section 142 of the Code is hereby renumbered as Section 182 and

amended to read as follows:

“Sec. [142]182. VISITORIAL POWER AND Confidential nature of

examination results. — THE COMMISSION SHALL EXERCISE

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1 VISITORIAL POWERS OVER ALL CORPORATIONS REGISTERED

2 WITH IT. THESE VISITORIAL POWERS SHALL INCLUDE, BUT NOT
3 BE LIMITED TO EXAMINATION, INVESTIGATION, INSPECTION OF
4 RECORDS REGARDLESS OF THE FORM IN WHICH THE
5 INFORMATION IS CONTAINED, REGULATION AND SUPERVISION
6 OF ACTIVITIES, ENFORCING COMPLIANCE AND IMPOSING
7 SANCTIONS IN ACCORDANCE WITH THIS CODE.

8 ANY UNJUSTIFIED REFUSAL OR OBSTRUCTION BY A
9 CORPORATION, OR ANYONE UNDER ITS EMPLOY, IN THE
10 COMMISSION’S EXERCISE OF THE FOREGOING AUTHORITY
il SHALL, IN ADDITION TO THE IMPOSITION OF PENALTIES AND
12 SANCTIONS UNDER THIS CODE, CONSTITUTE A JUSTIFIABLE
13 GROUND FOR THE REVOCATION OF ITS CERTIFICATE OF
14 INCORPORATION.”

15 All interrogatories propounded by the [Securities and Exchange]
16 Commission and the answers thereto, as well as the results of any examination
17 made by the Commission or by any other official authorized by law to make an
18 examination of the operations, books and records of any corporation, shall be kept
19 strictly confidential, except insofar as the law may require the same to be made
20 public, WHEN NECESSARY FOR THE COMMISSION TO TAKE
21 ACTION OR ISSUE ORDERS IN THE EXERCISE OF ITS POWERS
22 UNDER THIS CODE, or where such interrogatories, answers or results are
23 necessary to be presented as evidence before any court.

24 SECTION 90. Section 143 of Code is hereby renumbered as Section 183 and

25 amended to read as follows:

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“Sec. [143]183. /Rule-making power] POWERS AND FUNCTIONS of
the [Securities and Exchange] Commission AND JURISDICTION OVER
ACTIONS. - CONSISTENT WITH AND IN ADDITION TO THE POWERS
AND FUNCTIONS PROVIDED IN PRESIDENTIAL DECREE NO. 902-A,
THE SECURITIES REGULATION CODE, THE INVESTMENT HOUSES
LAW, THE FINANCING COMPANY ACT AND OTHER LAWS, [The
Securities and Exchange] Commission shall have [the power and authority),

AMONG OTHERS, THE FOLLOWING POWERS AND FUNCTIONS:

1, HAVE JURISDICTION AND SUPERVISION OVER
ALL CORPORATIONS, REGISTERED WITH IT, EXCEPT AS

OTHERWISE PROVIDED UNDER THIS CODE;

2 FORMULATE POLICIES AND
RECOMMENDATIONS ON ISSUES PERTAINING TO THE
REGULATION AND SUPERVISION OF CORPORATIONS, AND

PROPOSE LEGISLATION AND AMENDMENTS THERETO;

3. APPROVE OR REJECT APPLICATIONS, ISSUE OR
REVOKE OTHER CERTIFICATIONS, REQUIRE ADDITIONAL

SUBMISSIONS OR AMENDMENTS THERETO;

4. REGULATE, INVESTIGATE, SUPERVISE THE
ACTIVITIES OF PERSONS TO ENSURE COMPLIANCE WITH

THIS CODE;

5. | IMPOSE SANCTIONS FOR THE VIOLATIONS OF
THIS CODE AND ITS RULES, REGULATIONS AND ORDERS OF

THE COMMISSION ISSUED PURSUANT THERETO;

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6. PROMOTE CORPORATE GOVERNANCE AND, IN
FURTHERANCE THEREOF, EXPAND OR ADD TO THE
REQUIREMENTS WITH RESPECT TO, AMONG OTHERS, THE
CONTENTS OF THE BY-LAWS, THE QUALIFICATIONS AND
DISQUALIFICATIONS OF DIRECTORS, AND THE RECORDS
THAT MUST BE ON HAND AT THE CORPORATION’S
ADDRESS OF RECORD AND THE ANNUAL REPORTS THAT

MUST BE SUBMITTED TO THE COMMISSION;

7. PREPARE, APPROVE, AMEND OR REPEAL
RULES, REGULATIONS AND ORDERS, AND ISSUE OPINIONS
AND PROVIDE GUIDANCE ON AND SUPERVISE COMPLIANCE
WITH SUCH RULES, REGULATIONS AND ORDERS

8. [to implement the provisions of this Code, and to
promulgate rules and regulations reasonably necessary to enable it to
perform its duties hereunder, particularly in the prevention of fraud and
abuses on the part of the controlling stockholders, members, directors,
trustees or officers] ISSUE CEASE AND DESIST ORDERS
WITHOUT THE NECESSITY OF A HEARING, TO PREVENT

FRAUD OR INJURY TO THE PUBLIC(.};

% PUNISH FOR CONTEMPT OF THE COMMISSION,

BOTH DIRECT AND INDIRECT;

10. COMPEL THE OFFICERS OF ANY REGISTERED
CORPORATION TO CALL MEETINGS OF STOCKHOLDERS
OR MEMBERS UNDER ITS SUPERVISION AND TO ISSUE SUCH
ORDERS AS MAY BE APPROPRIATE, INCLUDING, WITHOUT
LIMITATION, ORDERS DESIGNATING THE TIME AND PLACE

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OF THE ELECTION, THE RECORD DATE OR DATES FOR
DETERMINATION OF STOCKHOLDERS ENTITLED TO
NOTICE OF THE ELECTION AND TO VOTE THEREAT, AND

THE FORM OF NOTICE OF SUCH ELECTION;

11. ISSUE SUBPOENA DUCES TECUM AND SUMMON
WITNESSES TO APPEAR IN PROCEEDINGS BEFORE THE
COMMISSION AND IN APPROPRIATE CASES ORDER THE
EXAMINATION, SEARCH AND SEIZURE OF ALL
DOCUMENTS, PAPERS, FILES AND RECORDS, TAX RETURNS,
AND BOOKS OF ACCOUNTS OF ANY ENTITY OR PERSON
UNDER INVESTIGATION AS MAY BE NECESSARY FOR THE
PROPER DISPOSITION OF THE CASES BEFORE IT, SUBJECT

TO THE PROVISIONS OF EXISTING LAWS;

12. SUSPEND OR REVOKE, AFTER PROPER NOTICE
AND HEARING, THE CERTIFICATE OF INCORPORATION OF
CORPORATIONS UPON ANY OF THE GROUNDS PROVIDED
UNDER THIS CODE OR WHEN DIRECTED BY FINAL

JUDGMENT OF A COURT OF COMPETENT JURISDICTION;

13. DISSOLVE OR OTHERWISE SANCTION
CORPORATIONS CREATED FOR, COMMITTING, AIDING IN
THE COMMISSION OF, OR IN ANY MANNER FURTHERING
SECURITIES VIOLATIONS, SMUGGLING, TAX EVASION,
MONEY LAUNDERING, GRAFT AND CORRUPT PRACTICES

OR OTHER FRAUDULENT OR ILLEGAL ACTS;

14. ISSUE WRITS OF EXECUTION AND OF

ATTACHMENT TO ENFORCE PAYMENT OF THE FEES,

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ADMINISTRATIVE FINES AND OTHER DUES COLLECTIBLE

UNDER THIS CODE;

15, EXERCISE SUCH OTHER POWERS AS MAY BE
PROVIDED BY LAW AS WELL AS THOSE WHICH MAY BE
IMPLIED FROM, OR WHICH ARE NECESSARY OR
INCIDENTAL TO CARRYING OUT THE EXPRESS POWERS
GRANTED TO THE COMMISSION TO ACHIEVE THE
OBJECTIVES AND PURPOSES OF THIS CODE AND SUCH

OTHER LAWS.

NO COURT BELOW THE COURT OF APPEALS SHALL HAVE
JURISDICTION TO ISSUE ANY RESTRAINING ORDER,
PRELIMINARY INJUNCTION OR PRELIMINARY MANDATORY
INJUNCTION IN ANY CASE, DISPUTE OR CONTROVERSY THAT,
DIRECTLY OR INDIRECTLY, INTERFERES WITH THE
PERFORMANCE BY THE COMMISSION OF ITS DUTIES AND

RESPONSIBILITIES UNDER THIS CODE.”

SECTION 91. Section 144 of the Code is hereby deleted, amended and transferred to

Section 174.

SECTION 92. A new provision is inserted in the Code as Section 184:

SECTION 184. DEVELOPMENT OF OTHER SYSTEMS. - THE
COMMISSION SHALL, CONSIDERING ADVANCES IN TECHNOLOGY,
DEVELOP SUCH SYSTEMS AS IT MAY DEEM NECESSARY TO
FACILITATE AND EXPEDITE, AMONG OTHERS, CORPORATE NAME
RESERVATION AND REGISTRATION, INCORPORATION, AND THE

SUBMISSION OF REPORTS, NOTICES, DOCUMENTS AND OTHER

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PAPERS REQUIRED UNDER THIS CODE, AND PRESCRIBE THE
CORRESPONDING RULES AND REGULATIONS THEREFOR. THE
COMMISSION SHALL HAVE FULL DISCRETION TO DETERMINE
WHICH SYSTEM OR SYSTEMS ALLOW THE MOST EFFECTIVE
IMPLEMENTATION AND ENFORCEMENT OF THE PROVISIONS OF

THIS CODE

SECTION 93. _ A new provision is inserted in the Code as Section 185:

“SEC. 185. ARBITRATION. - WHEN THE ARTICLES OF
INCORPORATION OR BY-LAWS OF A DOMESTIC UNLISTED
CORPORATION SO PROVIDE, ANY OR ALL DISPUTES BETWEEN OR
AMONG THE CORPORATION, ITS STOCKHOLDERS OR MEMBERS,
AND DIRECTORS ARISING OUT OF THE IMPLEMENTATION OF
THEIR ARTICLES OF INCORPORATION OR BY-LAWS, AS WELL AS
OTHER CONTROVERSIES ARISING OUT OF THEIR
INTRACORPORATE RELATIONS, INCLUDING BUT NOT LIMITED TO
CONTROVERSIES IN THE ELECTION OR APPOINTMENT OF THE
CORPORATION’S DIRECTORS, TRUSTEES, OFFICERS OR
MANAGERS, SHALL BE REFERRED TO ARBITRATION. HOWEVER, A
DISPUTE SHALL NOT BE SUBMITTED TO ARBITRATION WHEN
SUCH WILL LIMIT OR PRECLUDE ANY RIGHT, ACTION OR
DETERMINATION BY THE COMMISSION THAT IT WOULD
OTHERWISE BE AUTHORIZED TO ADOPT, ADMINISTER OR
ENFORCE UNDER THIS CODE AND EXISTING LAWS. SUCH DISPUTE
SHALL BE DEEMED EXCLUDED FROM THE AGREEMENT TO
ARBITRATE, WHICH SHALL OTHERWISE REMAIN VALID AND

BINDING.

THE ARBITRATION AGREEMENT SHALL BE BINDING AGAINST

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THE CORPORATION’S DIRECTORS, TRUSTEES, OFFICERS OR

MANAGERS, UPON ACCEPTANCE OF THEIR POST.

TO BE VALID, THE AGREEMENT TO ARBITRATE IN THE
ARTICLES OF INCORPORATION OR THE BY-LAWS SHOULD
INDICATE THE NUMBER AND PROCEDURE FOR THE APPOINTMENT
OF ARBITRATORS AND GRANT TO A DESIGNATED THIRD,
INDEPENDENT, AND EXTERNAL PARTY OR BODY THE POWER TO
APPOINT THE ARBITRATORS. IF THE THIRD PARTY OR BODY FAILS
TO APPOINT THE ARBITRATORS IN THE MANNER AND WITHIN THE
PERIOD SPECIFIED IN THE AGREEMENT TO ARBITRATE, EACH
PARTY TO THE ARBITRATION MAY REQUEST THAT THE
APPOINTMENT OF THE ARBITRATORS BE MADE BY THE
COMMISSION. ARBITRATORS SHALL BE THOSE WHO ARE EITHER
DULY ACCREDITED BY THE COMMISSION OR MEMBERS OF

ORGANIZATIONS DULY-ACCREDITED BY THE COMMISSION.

THE ARBITRAL TRIBUNAL SHALL HAVE FULL AUTHORITY TO
RESOLVE ALL ISSUES RELATING TO ITS JURISDICTION AND/OR
THE VALIDITY OR EFFECTIVITY OF THE ARBITRATION
AGREEMENT. A REGIONAL TRIAL COURT BEFORE WHICH AN
INTRACORPORATE DISPUTE IS FILED SHALL, BEFORE THE
TERMINATION OF THE PRETRIAL CONFERENCE, DISMISS THE
CASE UPON DETERMINING THE EXISTENCE OF AN AGREEMENT TO
ARBITRATE IN THE ARTICLES OF INCORPORATION OR BY-LAWS
OF THE CORPORATION, ANY AMENDMENT THEREOF, OR IN A

SEPARATE AGREEMENT.

THE ARBITRAL TRIBUNAL SHALL HAVE THE POWER TO

GRANT INTERIM MEASURES NECESSARY TO ENSURE

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ENFORCEMENT OF THE AWARD, TO PREVENT A MISCARRIAGE OF
JUSTICE, OR TO OTHERWISE PROTECT THE RIGHTS OF THE

PARTIES.

A FINAL ARBITRAL AWARD UNDER THIS SECTION SHALL BE
EXECUTORY UPON THE LAPSE OF FIFTEEN (15) DAYS FROM
RECEIPT THEREOF BY THE PARTIES AND SHALL BE STAYED ONLY
BY THE FILING OF A BOND OR THE ISSUANCE BY THE APPELLATE
COURT OF AN INJUNCTIVE WRIT.

THE COMMISSION SHALL FORMULATE THE RULES AND
REGULATIONS WHICH SHALL GOVERN ARBITRATION UNDER THIS

SECTION.”

SECTION 94, A new provision is inserted in the Code as Section 186 and the

succeeding provisions are re-numbered accordingly and amended as follows:

“SEC. 186. JURISDICTION OVER CORPORATIONS OF SPECIAL
CHARACTER. - THE POWERS, AUTHORITIES AND
RESPONSIBILITIES THAT ARE VESTED IN THE COMMISSION UNDER.
THIS CODE AND PRESIDENTIAL DECREE 902-A INVOLVING
CORPORATIONS OF A SPECIAL CHARACTER ARE TRANSFERRED
TO THE COMMISSION ON ELECTIONS (COMELEC) WITH RESPECT
TO PARTY-LIST ORGANIZATIONS, TO THE HOUSING AND LAND USE
REGULATORY BOARD (HLURB) WITH RESPECT TO
NEIGHBORHOOD ASSOCIATIONS AND HOMEOWNERS’

ASSOCIATIONS.

THE MONITORING, SUPERVISION AND REGULATION OF
CORPORATIONS OF SUCH CHARACTER ABOVE-DESCRIBED

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20

21
22

23

PREVIOUSLY REGISTERED WITH THE COMMISSION SHALL
LIKEWISE BE TRANSFERRED TO THE SAID PERTINENT

GOVERNMENT AGENCIES, RESPECTIVELY.

FOR THIS PURPOSE, THE COMELEC, HLURB, AND DOTC, IN
COORDINATION WITH THE COMMISSION, SHALL PROMULGATE
THE CORRESPONDING IMPLEMENTING RULES AND/OR ENTER
INTO INTER-AGENCY AGREEMENTS.”

SECTION 95. A new provision is inserted in the Code as Section 187 and the

succeeding provisions are re-numbered accordingly and amended as follows:

“SEC 187. THE RULES AND REGULATIONS IN RELATION TO.
THE REGISTRATION, REGULATION AND MONITORING ISSUED BY
OTHER GOVERNMENT AGENCIES ACTING AS PRIMARY
REGULATORS OF SPECIAL CORPORATIONS, INSOFAR AS THEY
ARE NOT INCONSISTENT WITH THIS CODE AND ITS AMENDMENTS,
SHALL BE GIVEN EFFECT.”

SECTION 96. Implementing Rules and Regulations, - The Commission shall
promulgate and/or amend the necessary rules and regulations for the effective implementation of

this Act,

SECTION 97. Separability Clause. — If any provision of this Act is declared invalid
or unconstitutional, other provisions hereof which are not affected thereby shall continue to be in

full force and effect.

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SECTION 98. Repealing Clause. ~ Any law, presidential decree or issuance,
executive order, letter of instruction, administrative order, rule or regulation contrary to or

inconsistent with any provision of this Act is hereby repealed or modified accordingly.

SECTION 99. Effectivity Clause. ~ This Act shall take effect fifteen (15) days after
its publication in the Official Gazette or in at least two (2) newspapers of general circulation,

whichever date comes earlier,

Approved,

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