INTRODUCED BY REPRESENTATIVE XAVIER JESUS D. ROMUALDO

EXPLANATORY NOTE

Batas Pambansa Big. 68, otherwise known as the Corporate Code of the Philippines, was enacted in
1980. Commentators have noted that while some of the Corporation Code’s provisions continue to be a
g00d law, many provisions have become antiquated and are no longer compatible with the world and
business environment we live in today. Hence, this bill seeks to provide for a Revised Corporation Code
based on international best practices and standards but tailored specifically to address and meet the
needs and realities of business in the Philippines. The proposed Revised Corporation Code is envisioned
to encourage new business and entrepreneurship, contribute to ease of doing business, promote and
strengthen good corporate governance, deter corporate fraud and abuse, better protection of the rights
of stockholders, and rationalize the authority of the Securities and Exchange Commission.

‘Accordingly, the support of the Members of Congress for the prompt and timely passage of this measure

is earnestly sought.
Pia Pew

XAVIER JESUS D. ROMUALDO


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

SEVENTEENTH CONGRESS:

Second Regular Session

HOUSE BILL NO. 7245

INTRODUCED BY CONGRESSMAN XAVIER JESUS D. ROMUALDO

AN ACT
PROVIDING FOR THE REVISED CORPORATION CODE OF THE PHILIPPINES

Be tt enacted by the Senate and House of Representatives of the Philippines in Congress assembled.

TITLEL
GENERAL PROVISIONS

Definitions and Classifications

Section 1. Title of the Code. ~ This Code shall be known as “The REVISED Corporation Code of the

Philippines.”

See. 2. Corporation defined. — corporation is an artificial being created by operation of Inw, having the
right of succession and the powers, attributes and properties expressly authorized by law or incident to its

existence,

See. 3. Classes of corporations. ~ Corporations formed or organized under this Code may be stock or non-
stock corporations. STOCK CORPORATIONS ARE THOSE [Corporations] which have capital stock
divided into shares and are authorized to distribute to the holders of such shares dividends or allotments of the
surplus profits on the basis of the shares held fare stock corporations}, All other corporations are non-stock

corporations

Sec. 4. Corporations created by special laws or charters. ~ Corporations created by special laws or charters
shall be governed primarily by the provisions of the special law or charter creating them or applicable to

them, supplemented by the provisions of this Code, insofar as they arc applicable


20
21
22

24
25
26
27
28
29

30

Sec. 5. Corporators and incorporators, stockholders and members. ~ Corporators are those who compose a
corporation, whether as stockholders OR SHAREHOLDERS IN A STOCK CORPORATION or as
members IN A NON-STOCK CORPORATION. Incorporators are those stockholders or members
mentioned in the articles of incorporation as originally forming and composing the corporation and who are

signatories thereof,

[Corporators in a stock corporation are called stockholders or sharcholders. Corporators in a non-stock

corporation are called members |

See. 6. Classification of shares. - THE CLASSIFICATION OF SHARES, THEIR CORRESPONDING
RIGHTS, PRIVILEGES, OR RESTRICTIONS, AND THEIR STATED PAR VALUE, IF ANY,
MUST BE INDICATED IN THE ARTICLES OF INCORPORATION, EACH SHARE SHALL BE
EQUAL IN ALL RESPECTS TO EVERY OTHER SHARE, EXCEPT AS OTHERWISE PROVIDED

IN THE ARTICLES OF INCORPORATION AND IN THE CERTIFICATE OF STOCK.

‘The shares [of stock of] IN 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]. N[njo 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 ot series of shares {which have] WITH complete

voting rights.

HOLDERS OF NON-VOTING SHARES SHALL NEVERTHELESS BE ENTITLED TO VOTE ON

THE FOLLOWING MATTERS:

1. AMENDMENT OF THE ARTICLES OF INCORPORATION;

2. ADOPTION AND AMENDMENT OF BY-LAWS;

3. SALE, LEASE, EXCHANGE, MORTGAGE, PLEDGE, OR OTHER DISPOSITION OF ALL OR
SUBSTANTIALLY ALL OF THE CORPORATE PROPERTY;

4. INCURRING, CREATING OR INCREASING BONDED INDEBTEDNESS;

5. INCREASE OR DECREASE OF CAPITAL STOCK;

6. MERGER OR CONSOLIDATION OF THE CORPORATION WITH ANOTHER

CORPORATION OR OTHER CORPORATIONS;


24
25
26
27
28
29

uM

7. INVESTMENT OF CORPORATE FUNDS IN ANOTHER CORPORATION OR BUSINESS IN
ACCORDANCE WITH THIS CODE; AND
8. DISSOLUTION OF THE CORPORATION.

EXCEPT AS PROVIDED IN THE IMMEDIATELY PRECEDING PARAGRAPH, THE VOTE
REQUIRED UNDER THIS CODE TO APPROVE A PARTICULAR CORPORATE ACT SHALL BE
DEEMED TO REFER ONLY TO STOCKS WITH VOTING RIGHTS.

[Any or all of] T]t}he shares or series of shares may OR MAY NOT have a par value [or have no par value
as may be provided for in the articles of incorporation: Provided, however,| EXCEPT That banks, trust
{companies}, insurance [companies], AND PRE-NEED COMPANIES, public utilities, [and] building and
loan associations, AND OTHER CORPORATIONS AUTHORIZED TO OBTAIN OR ACCESS
FUNDS 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 alny| corporation may be given preference in the distribution of
DIVIDENDS and IN THE DISTRIBUTION OF CORPORATE {the} assets in case of liquidation [of the
corporation and in the distribution of dividends}, o 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 (HEREINAFTER REFERRED TO AS “COMMISSION”).

‘Shares of capital stock issued without par value shall be deemed fully paid and non-assessable and the holder
of such shares shall not be liable to the corporation or to its creditors in respect theretof:]: Provided, That
[shares without] NO-par value SHARES [may not] MUST be issued for a consideration [less than the value]
of AT LEAST five PESOS (PS.00) [pesos] per share: Provided, further, That the entire consideration
received by the corporation for its no-par value [of] shares shall be treated as capital and shall not be
available for distribution as dividends


20
2
22

24
25
26
27
28
29
30
3

A corporation may further |more,] classify its shares for the purpose of [iJEnsuring compliance with

constitutional or legal requirements

[Except as otherwise provided in the articles of incorporation and stated in the certificate of stock, each share
shall be equal in all respects to every other share
Where the articles of incorporation provide for non-voting shares in the cases allowed by this Code, the
holders of such shares shall be entitled to vote on the following matters:

1. Amendment of the articles of incorporation,

2. Adoption and amendment of by-laws;

3. Sale, lease, exchange, mortgage, pledge, or other disposition of all or substantially all of the corporate

Property,

4. Incurring, creating or increasing bonded indebtedness;

5. Increase or decrease of capital stock;

6. Merger o consolidation of the corporation with another corporation or other corporations;

7. Investment of corporate funds in another corporation or business in accordance with this Code; and

8. Dissolution of the corporation.
Except as provided in the immediately preceding paragraph, the vote necessary to approve a particular
corporate act as provided in this Code shall be deemed to refer only to stocks with voting rights |

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 [subject to the] FROM THE DATE OF [approval of the Securities and
Exchange Commission. The five-year period shall commence from the date of the aforesaid approval of the
Securities and Exchange Commission,| INCORPORATION OR APPROVAL OF INCREASE OF
ADDITIONAL AUTHORIZED CAPITAL STOCK: PROVIDED, THAT SUCH EXCLUSIVE RIGHT
SHALL NOT BE ALLOWED IF ITS EXERCISE WILL VIOLATE COMMONWEALTH ACT NO.
108, OTHERWISE KNOWN AS THE ANTI-DUMMY LAW, REPUBLIC ACT NO. 7042,
OTHERWISE KNOWN AS THE FOREIGN INVESTMENTS ACT, AND OTHER PERTINENT
LAWS.


24
25
26
27
28
29
30
31
32

See. 8. Redeemable shares. — Redcemable shares ARE SHARES {may be issued by the corporation when
expressly so provided in the articles of incorporation. They} WHICH may be purchased [or taken up] by the
corporation FROM THE HOLDERS OF SUCH SHARES upon the expiration of a fixed period, regardless
of the existence of unrestricted retained earnings in the books of the corporation, and upon such other terms
and conditions fas may be] stated in the articles of incorporation [,which terms and conditions must also be
stated in] AND the certificate of stock representing said shares[.], SUBJECT TO RULES AND

REGULATIONS ISSUED BY THE COMMISSION.

Sec. 9, Treasury shares. - Treasury shares are shares of stock which have been issued and fully paid for, but
subsequently reacquired by the issuing corporation [by] THROUGH purchase, redemption, donation or
[through] some other lawful means. Such shares may again be disposed of for a reasonable price fixed by the
board of directors.

TITLE

INCORPORATION AND ORGANIZATION OF PRIVATE CORPORATIONS

Sec. 10, Number and qualifications of incorporators.— {Any number of natural 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] ANY PERSON, PARTNERSHIP,
ASSOCIATION OR CORPORATION, SINGLY OR JOINTLY WITH OTHERS BUT NOT MORE
THAN FIFTEEN (15) IN NUMBER, MAY ORGANIZE A CORPORATION FOR ANY LAWFUL
PURPOSE OR PURPOSES; PROVIDED, THAT, NATURAL PERSONS WHO ARE LICENSED TO
PRACTICE A PROFESSION, AND PARTNERSHIPS OR ASSOCIATIONS ORGANIZED FOR
‘THE PURPOSE OF PRACTICING A PROFESSION SHALL NOT BE ALLOWED TO ORGANIZE
AS A CORPORATION. INCORPORATORS WHO ARE NATURAL PERSONS MUST BE OF

LEGAL AGE.

Each [of the] incorporator|s] of a stock corporation must awn or be a subscriber to at least one (1) share of
the capital stock fof the corporation}

A CORPORATION WITH A SINGLE STOCKHOLDER SHALL BE CONSIDERED A ONE
PERSON CORPORATION, SUBJECT TO TITLE XUl, CHAPTER Il OF THIS ACT.


20
2
22

24
25
26
27
28
29

30

Sec. 11. Corporate term. — [A corporation shall exist for a period not exceeding fifty (50) years from the date
of incorporation unless sooner dissolved or unless said period is 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) A
CORPORATION SHALL HAVE PERPETUAL EXISTENCE UNLESS ITS CERTIFICATE OF
INCORPORATION PROVIDES OTHERWISE. A CORPORATE TERM FOR A SPECIFIC
PERIOD MAY BE EXTENDED OR SHORTENED BY AMENDING THE ARTICLES OF
INCORPORATION; Provided, That no extension [can] MAY 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).

A CORPORATION WHOSE TERM HAS EXPIRED MAY, AT ANY TIME, APPLY FOR A
REVIVAL OF ITS CORPORATE EXISTENCE, TOGETHER WITH ALL THE RIGHTS AND
PRIVILEGES UNDER ITS CERTIFICATE OF INCORPORATION AND SUBJECT TO ALL OF
ITS DUTIES, DEBTS AND LIABILITIES EXISTING PRIOR TO THE EXPIRATION OF ITS
CORPORATE TERM. UPON APPROVAL BY THE COMMISSION, THE CORPORATION SHALL
BE DEEMED REVIVED AND AN AMENDED CERTIFICATE OF INCORPORATION SHALL BE
ISSUED, GIVING IT PERPETUAL EXISTENCE UNLESS ITS APPLICATION FOR REVIVAL

PROVIDES OTHERWISE.

Sec. 12. Minimum capital stock required of stock corporations. ~ Stock corporations [incorporated under
this Code} shall not be required to have fany| A minimum authorized capital stock, except as otherwise

specifically provided [for] by special law, and subject to the provisions of the following section,

Sec. 13. Amount of capital stock to be subscribed and paid for [the] purposes of incorporation. ~ At least
twenty-five [(25%)] percent (25%) 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 (25%) of the VALUE OF THE total subscription must be paid upon subscription, the

balance to be payable on a date or dates fixed in the contract of subscription without need of call, or in the


20

21

29
30
31
32

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 SHALL NOT be less than five thousand (P5,000,00) pesos

See. 14, Contents of the Articles of Incorporation. ~ All corporations [organized under this Code] shall file

with the [Securities and Exchange] Commission, articles of incorporation in any of the official languages,

duly signed and acknowledged OR AUTHENTICATED, IN SUCH FORM AND MANNER AS MAY BE.

ALLOWED BY THE COMMISSION, [by all of the incorporators}, containing substantially the following,

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

1
2

‘The name of the corporation;

‘The specific purpose or purposes for which the corporation is being [incorporated] FORMED.

Where a corporation has more than ane stated purpose, the articles of incorporation shall [state which
is|INDICATE the primary purpose and [which is/are] the secondary purpose or purposes: Provided,
That a non-stock corporation may not include a purpose which would change or contradict its nature
as such;

‘The place where the principal office of the corporation is to be located, which must be within the
Philippines;

The term for which the corporation is to exist, IF THE CORPORATION HAS NOT ELECTED
PERPETUAL EXISTENCE,

‘The names, nationalities and [residences] RESIDENCE ADDRESSES of the incorporators;

‘The number of directors or trustees, which shall not be [less than five (5) nor] more than fifteen (15);

‘The names, nationalities and [residences] RESIDENCE ADDRESSES of persons who shall act as
directors or trustees until the first regular directors or trustees are duly elected and qualified in
accordance with this Code;

If it be a stock corporation, the amount of its authorized capital stock [in lawful money of the
Philippines, the}, number of shares into which it is divided, [and in case the share are par value
shares,] the par value of cach, [the] names, nationalities and [residences] RESIDENCE
ADDRESSES of the original subscribers, fand the] amount subscribed and paid by cach on his OR
HER subscription, and A STATEMENT THAT [if] some or all of the shares are without par
value, IF APPLICABLE|such fact must be stated};

IFit bea non-stock corporation, the amount of its capital, the names, nationalities and residence[s}
ADDRESSES of the contributors, and {the} amount contributed by each; fand}

IF IT BE A STOCK CORPORATION, A CERTIFICATION OF THE TREASURER, WHO
SHALL BE AN INCORPORATOR, THAT AT LEAST TWENTY-FIVE PERCENT (25%) OF


20
21

‘THE NUMBER OF SHARES IN THE CORPORATION'S AUTHORIZED CAPITAL STOCK
HAS BEEN SUBSCRIBED, AND AT LEAST TWENTY-FIVE PERCENT (25%) OF THE
VALUE OF THE TOTAL SUBSCRIPTION HAS BEEN FULLY PAID IN ACTUAL CASH
AND/OR IN PROPERTY, THE FAIR VALUATION OF WHICH IS EQUAL TO AT LEAST
TWENTY-FIVE PERCENT (25%) OF THE VALUE OF THE SAID SUBSCRIPTION, THE
PAID-UP CAPITAL BEING AT LEAST FIVE THOUSAND PESOS (PS,000.00); AND

10. Such other matters fas are not injconsistent with law and which the incorporators may deem necessary

and convenient.

[The Securities and Exchange Commission shall not accept the articles of incorporation of any stock
corporation unless accompanied by a sworn 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 (PS,000,00) pesos.|

‘THE ARTICLES OF INCORPORATION AND APPLICATIONS FOR AMENDMENTS THERETO.
MAY BE FILED WITH THE COMMISSION IN THE FORM OF AN ELECTRONIC DOCUMENT,
IN ACCORDANCE WITH THE COMMISSION'S RULES AND REGULATIONS ON

ELECTRONIC FILING.

Sec. 15. Form(s} of articles of incorporation]; Filing.] — Unless otherwise prescribed by special law, the
ticles 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'|


‘The undersigned incorporators, all of legal age and [a majority of whom are residents of the
Philippines,| have this day voluntarily agreed to form a (stock) (non-stock) corporation under the laws

of the Republic of the Philippines AND CERTIFY THE FOLLOWING:|,)

FIRST: That the name of said corporation shall be“ INC., for] CORPORATION

OR OPC";

SECOND: That the purpose or purposes for which such corporation is incorporated are: (If there is

more than one purpose, indicate primary and secondary purposes);

THIRD: That the principal office of the corporation is located in the City/Municipality of

» Province of Philippines,
FOURTH: That the [term for which the corporation is to exist is | CORPORATION SHALL
HAVE PERPETUAL EXISTENCE OR [FOR] A TERM OF years from [and

after] the date of issuance of the certificate of incorporation;

FIFTH: That the names, nationalities and residence|s] ADDRESSES of the incorporators of the

corporation are as follows:
NAME NATIONALITY RESIDENCE
xxx
SIXTH: That the number of directors or trustees of the corporation shall be and

the names, nationalities and residences] ADDRESSES of the first directors or trustees of the

corporation are as follows:

NAME NATIONALITY RESIDENCE



26
27
28
29
30
31
32
33
4

[ex
SEVENTH: That the authorized capital stock of the corporation is _@.
PESOS |in lawful money of the Philippines}, divided into shares with the par value of

(P_____) PESOS each] per share.

(In case all the shares are without par value): ‘That the capital stock of the corporation is
shares without par value

{In case some shares have par value and some are without par value): That the capital stock of said

corporation consists. of, shares, of which
shares HAVE A Jare of the} par value of PESOS
we each, and of which shares are without par value

EIGHTH: That at least twenty five PERCENT (25%) [percent] of the NUMBER OF SHARES OF
‘THE authorized capital stock above stated has been subscribed as follows:

Name of Subscriber Nationality No. of Shares Subscribed Amount Subscribed

foo]

NINTH: That the above-named subscribers have paid at least twenty five PERCENT (25%)
percent] of the VALUE OF THE total subscription as follows:

Name of Subscriber Amount Subscribed Total Paid-In

(Modify Nos. 8 and 9 if shares are with no par value. In case the corporation is non-stock, Nos. 7, &
and 9 of the above articles may be modified accordingly, and it is sufficient if the articles state the


19
20
21
22
2B
4
25
26
7
28

30
31
32

amount of capital or money contributed or donated by specified persons, stating the names,
nationalities and residence[s}] ADDRESSES of the contributors or donors and the respective amount

stiven by each )

TENTH: That has been elected by the subscribers as Treasurer of the
Corporation to act as such until his OR HER successor is duly elected and qualified in accordance
with the by-laws, {and} that as [such] Treasurer, he OR SHE has been authorized to receive [for and}
in the name and for the benefit of the corporation, all subscriptionS, [(or fees) or] contributions or
donations paid or given by the subscribers or members, THAT HE OR SHE CERTIFIES THE
INFORMATION SET FORTH IN THE SEVENTH, EIGHTH AND NINTH CLAUSES

ABOVE, AND THAT HE OR SHE HAS RECEIVED THE PAID-UP PORTION OF THE

BSCRIPTION IN CASH AND/OR PROPERTY FOR THE BENEFIT AND CREDIT OF
‘THE CORPORATION.

ELEVENTH: THAT THE INCORPORATORS UNDERTAKE TO CHANGE THE NAME OF
THE CORPORATION IMMEDIATELY UPON RECEIPT OF NOTICE FROM THE
COMMISSION THAT ANOTHER CORPORATION, PARTNERSHIP OR PERSON HAS
ACQUIRED A PRIOR RIGHT TO THE USE OF SUCH NAME, THAT THE NAME HAS

BEEN DECLARED NOT DISTIN

UISHABLE FROM A [REGISTERED] NAME.
ALREADY REGISTERED OR RESERVED FOR THE USE OF ANOTHER
CORPORATION, OR THAT IT IS CONTRARY TO LAW, PUBLIC MORALS, GOOD
CUSTOMS OR PUBLIC POLICY.

TWELFTH: (Corporations which will engage in any business or activity reserved for Filipino
citizens shall provide the following)

“No transfer of stock or interest which shall reduce the ownership of Filipino citizens to less than the
required percentage of capital stock as provided by existing laws shall be allowed or permitted to be
recorded in the proper books of the corporation and this restriction shall be indicated in all stock
certificates issued by the corporation.”

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


Bone

(Names and signatures of the ineorporators)

(NAME AND SIGNATURE OF TREASURER)
[(Notarial Acknowledgment)]

[TREASURER’S AFFIDAVIT
REPUBLIC OF THE PHILIPPINES)
CITY/MUNICIPALITY OF ) SS
PROVINCE OF)
1, being duly swom, depose and say
‘That I have been elected by the subscribers of the corporation as Treasurer thereof, to act as such
until my successor has been duly elected and qualified in accordance with the by-laws of the
corporation, and that as such Treasurer, I hereby certify under oath that at least 25% of the authorized
capital stock of the corporation has been subscribed and at least 25% of the total subscription has
been paid, and received by me, in cash or property, in the amount of not less than PS,000.00, in
accordance with the Corporation Code

(Signature of Treasurer)

SUBSCRIBED AND SWORN to before me, a Notary Public, for and in the City/Municipality of

this day of . 19 by

with Res. Cert. No. issued at

on 19,

NOTARY PUBLIC

My commission expires on 19

Page No
Book No.
Series of 19 |


20
21

23
24
25
26
27
28
29
30
31
32

Sec. 16. Amendment of Articles of Incorporation. — Unless atherwise prescribed by this Code or by special
law, and for legitimate purposes, any provision or matter stated in the articles of incorporation may be
amended by a majority vote of the board of directors or trustees and the vote or written assent of the
stockholders representing at least two-thirds (2/3) of the outstanding capital stock, without prejudice to the
appraisal right of dissenting stockholders in accordance with the provisions of this Code: THE ARTICLES
OF INCORPORATION OF A NON-STOCK CORPORATION MAY BE AMENDED BY |, or| the

vote or written assent of at least two-thirds (2/3) of the members. [if it be a non-stock corporation. |

The original and amended articles together shall contain all provisions required by law to be set out in the
articles of incorporation. [Such articles, as amended] AMENDMENTS TO THE ARTICLES shall be
indicated by underscoring the change or changes made, and a copy thereof duly certified under oath by the
corporate secretary and a majority of the directors or trustees, [stating the fact] WITH A STATEMENT
THAT [that said amendment or] THE amendments have been duly approved by the required vote of the

stockholders or members, shall be submitted to the [Securities and Exchange] Commission.

‘The amendments shall take effect upon their approval by the [Securities and Exchange] Commission or from
the date of filing with the said Commission if not acted upon within six (6) months from the date of filing for

‘a cause not attributable to the corporation.

See. 17. Grounds when articles of incorporation or amendment may be [rejected or} disapproved. ~ The
[Sccurities and Exchange] Commission may DISAPPROVE [reject] the articles of incorporation ot
disapprove} any amendment thereto if the same is not {in compliance] COMPLIANT with the requirements
of this Code: Provided, That the Commission shall give the incorporators, DIRECTORS, TRUSTEES OR
OFFICERS a reasonable time [TEN (10) DAYS] FROM RECEIPT OF THE DISAPPROVAL within
which to [correct or] modify the objectionable portions of the articles or amendment. ‘The following are
grounds for such [rejection of] disapproval
1. ‘That t]he articles of incorporation or any amendment thereto is not substantially in accordance
with the form prescribed hercin;
2. ‘That t]he purpose of purposes of the corporation are patently unconstitutional, illegal, immoral
or contrary to government rules and regulations;
3. ‘That t]he CERTIFICATION [Treasurer’s Affidavit] concerning the amount of capital stock

subscribed and/or paid is false, AND


3
24
25
26
27
28
29
30

3

4 ‘That t]he REQUIRED percentage of FILIPINO ownership of the capital stock [be owned by
citizens of the Philippines] {has not been complied with as required] UNDER [by] cxisting laws
or the Constitution HAS NOT BEEN COMPLIED WITH.

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, insurance

companies, public utilities, educational institutions, and other corporations governed by special laws] PRE-

NEED, INSURANCE AND TRUST COMPANIES, NON STOCK SAVINGS AND LOAN

ASSOCIATIONS (NSSLAs), PAWNSHOPS, AND OTHER FINANCIAL INTERMEDIARIES 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.

Sec. 18. Corporate name. ~ No corporate name |may| SHALL be allowed by the [Securities and Exchange]
Commission if [proposed name] IT is [identical or deceptively or confusingly similar] NOT
DISTINGUISHABLE to that of any existing] FROM THAT ALREADY RESERVED OR
REGISTERED FOR THE USE OF ANOTHER corporation, or [to any other] IF SUCH name IS already
protected by law, or WHEN ITS USE is [patently deceptive, confusing or] contrary to existing Inw, RULES
AND REGULATIONS

A NAME IS NOT DISTINGUISHABLE EVEN IF IT CONTAINS ONE OR MORE OF THE
FOLLOWING:
|. THE WORD “CORPORATION™, “COMPANY”, “INCORPORATED”, “LIMITED”,
“LIMITED LIABILITY", OR AN ABBREVIATION OF ONE OF SUCH WORDS;
2. PUNCTUATIONS, ARTICLES, CONJUNCTIONS, CONTRACTIONS,
PREPOSITIONS, ABBREVIATIONS, DIFFERENT TENSES, SPACING, OR NUMBER
OF THE SAME WORD OR PHRASE.

THE COMMISSION, UPON DETERMINATION THAT THE CORPORATE NAME IS: A) NOT
DISTINGUISHABLE FROM A NAME ALREADY RESERVED OR REGISTERED FOR THE USE
OF ANOTHER CORPORATION; B) ALREADY PROTECTED BY LAW, C) OR CONTRARY TO
LAW, RULES AND REGULATIONS, MAY SUMMARILY ORDER THE CORPORATION TO
IMMEDIATELY CEASE AND DESIST FROM USING SUCH NAME AND REQUIRE THE

CORPORATION TO REGISTER A NEW ONE. THE COMMISSION SHALL ALSO CAUSE THE


25
26
27
28

REMOVAL OF ALL VISIBLE SIGNAGES, MARKS, ADVERTISEMENTS, LABELS, PRINTS AND
OTHER EFFECTS BEARING SUCH CORPORATE NAME. [When [a change in] the NEW corporate
ame is approved, the Commission shall issue an amended certificate of incorporation under the amended
name] UPON THE APPROVAL OF THE NEW CORPORATE NAME, THE COMMISSION SHALL

ISSUE A CERTL

‘ATE OF INCORPORATION UNDER THE AMENDED NAME,

IF THE CORPORATION FAILS TO COMPLY WITH THE COMMISSION'S ORDER, THE
COMMISSION MAY HOLD THE CORPORATION AND ITS RESPONSIBLE DIRECTORS OR
OFFICERS IN CONTEMPT AND/OR HOLD THEM ADMINISTRATIVELY, CIVILLY AND/OR
CRIMINALLY LIABLE UNDER THIS CODE AND OTHER APPLICABLE LAWS AND/OR
REVOKE THE REGISTRATION OF THE CORPORATION,

See. 19. 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 FROM A NAME ALREADY RESERVED OR

REGISTERED FOR THE USE OF ANOTHER CORPORATION, NOT PROTECTED BY LAW

AND NOT CONTRARY TO LAW, RULES AND REGULATIONS,

NAME SHALL BE
RESERVED IN FAVOR OF THE INCORPORATORS, THE INCORPORATORS SHALL THEN

SUBMIT TE

ARTICLES OF INCORPORATION|,] AND BY-LAWS TO THE COMMISSION,

IF THE COMMISSION FINDS THAT THE SUBMITTED DOCUMENTS AND INFORMATION
ARE FULLY COMPLIANT WITH THE REQUIREMENTS OF THIS CODE, [AND] OTHER
RELEVANT LAWS, RULES AND REGULATIONS, THE COMMISSION SHALL ISSUE THE

CERTIFICATE OF INCORPORATION.

A private corporation {formed or] organized under this Code commences ITS [to have] corporate existence
and jundical personality fand is deemed incorporated] from the date the [Sccuritics and Exchange}
Commission issues [a] THE cettificate of incorporation under its official seal and thereupon the
incorporators, stockholders/members and their successors shall constitute a body [politic and] corporate under
the name stated in the articles of incorporation for the period of time mentioned therein, unless said period is

extended or the corporation is sooner dissolved in accordance with law


20
21
2
2B
24
25
26
27
28
29
30
31
32

See. 20, De facto corporations. — The due incorporation of any corporation claiming in good faith to be a
corporation under this Code, and its right to exercise corporate powers, shall not be inquired into collaterally
in any private suit to which such corporation may be a party. Such inquiry may be made by the Solicitor

General in a quo warranto proceeding

Sce. 21. Corporation by estoppel. — All persons who assume to act as a corporation knowing it to be without
authority to do so shall be liable as general partners for all debts, liabilities and damages incurred or arising as
result thereof Provided, however, That when any such ostensible corporation is sued on any transaction
centered by it as a corporation or on any tort committed by it as such, it shall not be allowed to use [as a
defense] its lack of corporate personality AS A DEFENSE. OnE who assumes an obligation to an ostensible

corporation as such, cannot resist performance thereof on the ground that there was in fact no corporation

Sec. 22. Effects of non-use of corporate charter and continuous inoperation [of a corporation;]~\f a
corporation does not formally organize and commence [the transaction of] its business for the construction of
its works] within [two (2)] FIVE (5) years from the date of its incorporation, its [corporate powers cease and
the corporation) CERTIFICATE OF INCORPORATION shall be deemed [dissolved] REVOKED AS

OF THE DAY FOLLOWING THE END OF SAID FIVE-YEAR PERIOD.

However, if corporation has commenced the transaction of] its business but subsequently becomes
[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, PLACE THE CORPORATION
UNDER DELINQUENT STATUS.

THE COMMISSION SHALL GIVE A DELINQUENT CORPORATION A PERIOD OF TWO (2)
YEARS TO RESUME OPERATIONS AND COMPLY WITH ALL REQUIREMENTS THAT THE
COMMISSION SHALL PRESCRIBE. UPON COMPLIANCE BY THE CORPORATION, THE
COMMISSION SHALL ISSUE AN ORDER LIFTING THE DELINQUENT STATUS. FAILURE TO
COMPLY WITH THE REQUIREMENTS AND RESUME OPERATIONS WITHIN THE PERIOD
PRESCRIBED BY THE COMMISSION SHALL CAUSE THE REVOCATION OF THE
CORPORATION'S CERTIFICATE OF INCORPORATION.


26
27

28

29

30

THE COMMISSION SHALL GIVE REASONABLE NOTICE TO, AND COORDINATE WITH THE
APPROPRIATE REGULATORY AGENCY PRIOR TO THE SUSPENSION OR REVOCATION OF
THE CERTIFICATE OF INCORPORATION OF COMPANIES UNDER THEIR SPECIAL

REGULATORY JURISDICTION,

This provision shall not apply if the failure to organize, commence the transaction of its businesses or the
construction of its works, or to continuously operate is due to causes beyond the control of the corporation as

may be determined by the Securities and Exchange Commission}

TITLE

BOARD OF DIRECTORS, TRUSTEES, OFFICERS

Sec. 23. The board of directors or trustees; QUALIFICATION AND TERM. ~ Unless otherwise provided
in this Code, THE BOARD OF DIRECTORS OR TRUSTEES SHALL EXERCISE the corporate powers
[of all corporations formed under this Code shall be exercised], CONDUCT all business [conducted,}, and
CONTROL all [property] PROPERTIES of THE [such] corporation. [s controlled and held by the board of

dirctors or trustees}

DIRECTORS SHALL {to} be elected FOR A TERM OF ONE (1) YEAR from among the holders of
stocks REGISTERED IN THE CORPORATION'S BOOKS |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], WHILE TRUSTEES SHALL BE ELECTED FOR A TERM NOT EXCEEDING THREE
(3) YEARS FROM AMONG THE MEMBERS OF THE CORPORATION, EACH DIRECTOR AND
TRUSTEE SHALL HOLD OFFICE UNTIL HIS OR HER SUCCESSOR IS ELECTED AND
QUALIFIED, A DIRECTOR WHO CEASES TO OWN AT LEAST ONE (1) SHARE OF STOCK OR
A TRUSTEE WHO CEASES TO BE A MEMBER OF THE CORPORATION SHALL CEASE TO

BE SUCH.

THE BOARD OF THE FOLLOWING CORPORATIONS VESTED WITH PUBLIC INTEREST

SHALL HAVE AT LEAST TWO (2) INDEPENDENT DIRECTORS OR THE NUMBER OF THE


1
2

20
21

30
31
32

INDEPENDENT DIRECTORS MUST CONSTITUTE AT LEAST TWENTY PERCENT (20%) OF
SUCH BOARD, WHICHEVER IS LESS:

(A) CORPORATIONS COVERED BY SECTION 17.2 OF THE SECURITIES REGULATION
CODE, NAMELY THOSE WHOSE SECURITIES ARE REGISTERED WITH THE
COMMISSION, CORPORATIONS LISTED WITH AN EXCHANGE OR WITH
ASSETS OF AT LEAST FIFTY MILLION PESOS (P50,000,000) AND HAVING TWO.
HUNDRED (200) OR MORE HOLDERS OF SHARES, WITH AT LEAST ONE
HUNDRED (100) SHARES OF A CLASS OF ITS EQUITY SHARES;

(B) BANKS AND QUASI-BANKS, PRE-NEED, TRUST AND INSURANCE COMPANIES,
AND OTHER FINANCIAL INTERMEDIARIES; AND

(C) OTHER CORPORATIONS VESTED WITH PUBLIC INTEREST AS MAY BE
DETERMINED BY THE COMMISSION.

AN INDEPENDENT DIRECTOR IS A PERSON WHO, APART FROM HIS FEES AND
SHAREHOLDINGS, IS INDEPENDENT OF MANAGEMENT AND FREE FROM ANY BUSINESS
OR OTHER RELATIONSHIP WHICH COULD, OR COULD REASONABLY BE PERCEIVED TO,
MATERIALLY INTERFERE WITH HIS EXERCISE OF INDEPENDENT JUDGMENT IN
CARRYING OUT HIS RESPONSIBILITIES AS A DIRECTOR.

THESE DIRECTORS MUST BE ELECTED BY A MAJORITY OF THE TOTAL NUMBER OF
OUTSTANDING SHARES ENTITLED TO VOTE IN THE ELECTION OF DIRECTORS.
INDEPENDENT DIRECTORS SHALL BE SUBJECT TO RULES AND REGULATIONS
GOVERNING THEIR QUALIFICATIONS.

DISQUALIFICATIONS, VOTING REQUIREMENTS, DURATION OF TERM AND TERM LIMIT,
MAXIMUM NUMBER OF BOARD MEMBERSHIPS AND OTHER REQUIREMENTS THAT THE
COMMISSION WILL PRESCRIBE TO STRENGTHEN THEIR INDEPENDENCE AND ALIGN
WITH INTERNATIONAL BEST PRACTICES.

[Every director must own at feast one (1) share of the capital stock of the corporation of which he is a
director, which share shall stand in his name on the books of the corporation. Any 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 shall


2
2B
24
25
26
2
28
29
30
31
32

thereby cease to be a director. Trustees of non-stock corporations must be members thereof. A majority of the

directors or trustees of all corporations organized under this Code must be residents of the Philippines. |

Sec. 24, Election of directors or trustees. ~ EXCEPT 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 NONE OF THE DISQUALIFICATIONS SET

FORTH IN THIS CODE.

At all elections of directors or trustees, there must be present, cither in person or [by] THROUGH A
representative authorized to act by [written] proxy, the owners of [a] majority of the outstanding capital stock,
cr if there be no capital stock, a majority of the members entitled to vote. WHEN SO AUTHORIZED IN
‘THE BY-LAWS OR BY A MAJORITY OF THE BOARD OF DIRECTORS, THE STOCKHOLDERS
OR MEMBERS MAY ALSO VOTE THROUGH REMOTE COMMUNICATION OR IN ABSENTIA;
PROVIDED, THAT THE RIGHT TO VOTE THROUGH SUCH MODES MAY BE EXERCISED IN
CORPORATIONS VESTED WITH PUBLIC INTEREST, NOTWITHSTANDING THE ABSENCE
OF A PROVISION IN THE BY-LAWS OF SUCH CORPORATIONS. WHEN A STOCKHOLDER
OR MEMBER PARTICIPATES THROUGH REMOTE COMMUNICATION OR IN ABSENTIA, HE
OR SHE SHALL BE DEEMED PRESENT FOR PURPOSES OF QUORUM.

‘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 [in person or by proxy]
the number of shares of stock standing in his OR HER own name [on] IN the stock books of the corporation,
at the time fixed in the by-laws), in his OR HER own name fon] IN the stock books of the corporation, or
where the by-laws are silent, at the time of the election; and] THE, said stockholder may: (a) vote such
number of shares for as many persons as there are directors to be elected, [or he OR SHE may] (b) cumulate
said shares and give one candidate as many votes as the number of directors to be elected multiplied by the
number of his OR HER shares {shall equal}, or (c) [he OR SHE may]distribute them on the same principle
among as many candidates as he OR SHE shall see fit Provided, That the total number of votes cast by him
shall not excced the number of shares owned by him as shawn 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.


20
21
22
23
24
25
26
27
28
29
30
3
32

Unless otherwise provided in the articles of incorporation or in the by-laws, members of NON-STOCK
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. [Candidates receiving] NOMINEES FOR DIRECTORS OR

TRUSTEES RECEIVING the highest number of votes 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 dic or indefinitely] If |, for any reason] no election is held, or THE OWNERS OF
MAJORITY OF THE OUTSTANDING CAPITAL STOCK OR [THE] MAJORITY OF THE
MEMBERS ENTITLED TO VOTE |if there] are not present IN PERSON, [or represented] by proxy, OR
THROUGH REMOTE COMMUNICATION OR NOT VOTING IN ABSENTIA |, 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] SUCH MEETING MAY BE ADJOURNED AND THE

CORPORATION SHALL PROCEED IN ACCORDANCE WITH SECTION 26 OF THIS CODE.

THE DIRECTORS OR TRUSTEES ELECTED SHALL PERFORM THI

IR DUTIES AS
PRESCRIBED BY LAW, RULES OF GOOD CORPORATE GOVERNANCE, AND [THE] BY-LAWS.

OF THE CORPORATION.

Sec. 25. Corporate officers{. quorum. ]— Immediately after their election, the directors of a corporation must
formally organize [by the election of] AND ELECT [THE] a president, [who shall be a director, a], treasurer,
[who may or may not be a director, a} secretary, {who shall be a resident and citizen of the Philippines,] and
such other officers as may be provided for} in the by-laws |., PROVIDED, THAT, | IF THE
CORPORATION IS VESTED WITH PUBLIC INTEREST, THE BOARD SHALL ALSO ELECT A
COMPLIANCE OFFICER. [Any two (2) or more positions may be held concurrently by the same person}
‘THE SAME PERSON MAY HOLD TWO (2) OR MORE POSITIONS CONCURRENTLY, except that
no one shall act as president and sccretary or as president and treasurer at the same time UNLESS

OTHERWISE ALLOWED IN THIS CODE.

THE PRESIDENT AND THE TREASURER MUST BE DIRECTORS AND AT LEAST ONE (1) OF
‘THEM MUST BE A RESIDENT OF THE PHILIPPINES. THE CORPORATE SECRETARY MUST

BE A RESIDENT OF THE PHILIPPINES.


30
u

32

THE OFFICERS SHALL MANAGE THE CORPORATION AND PERFORM SUCH DUTIES AS
MAY BE PROVIDED IN THE BY-LAWS AND/OR AS RESOLVED BY THE BOARD OF
DIRECTORS, [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 o 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 meeting }

Sec. 26. 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 w the
[Securities and Exchange] Commission, the names, nationalities, SHAREHOLDINGS and tesidence|s]

ADDRESSES of the directors, trustees, and officers elected

THE NON-HOLDING OF ELECTIONS AND THE REASONS THEREFOR SHALL BE
REPORTED TO THE COMMISSION WITHIN THIRTY (30) DAYS FROM THE DATE OF THE
SCHEDULED ELECTION, THE REPORT SHALL SPECIFY A NEW DATE FOR THE
ELECTION, WHICH SHALL NOT BE LATER THAN SIXTY (60) DAYS FROM THE
SCHEDULED DATE.

IF NO NEW DATE HAS BEEN DESIGNATED, OR IF THE RESCHEDULED ELECTION IS
LIKEWISE NOT HELD, THE COMMISSION MAY, UPON THE APPLICATION OF A
STOCKHOLDER, MEMBER, DIRECTOR OR TRUSTEE, AND AFTER VERIFICATION OF THE
UNJUSTIFIED NON-HOLDING OF THE ELECTION, SUMMARILY ORDER THAT AN
ELECTION BE HELD, THE COMMISSION SHALL HAVE THE POWER TO ISSUE SUCH
ORDERS AS MAY BE APPROPRIATE, INCLUDING ORDERS DIRECTING THE ISSUANCE OF
A NOTICE STATING THE TIME AND PLACE OF THE ELECTION, DESIGNATED PRESIDING
OFFICER, AND THE RECORD DATE OR DATES FOR THE DETERMINATION OF
STOCKHOLDERS OR MEMBERS ENTITLED TO VOTE.


24
25
26
27
28

29

31

2

NOTWITHSTANDING ANY PROVISION OF THE ARTICLES OF INCORPORATION OR BY-
LAWS TO THE CONTRARY, THE SHARES OF STOCK OR MEMBERSHIP REPRESENTED AT
SUCH MEETING AND ENTITLED TO VOTE SHALL CONSTITUTE A QUORUM FOR
PURPOSES OF CONDUCTING AN ELECTION UNDER THIS SECTION.

Should a director, trustee or officer die, resign or in any manner cease to hold office, [his OR HER heirs in
case of his OR HER death,] the secretary, [or] any other officer of the corporation, or the director, trustee or
officer himself, OR IN CASE OF THE LATTER'S DEATH, HIS OR HER heirs, shall [immediately]
WITHIN SEVEN (7) DAYS FROM KNOWLEDGE THEREOF, report IN WRITING such fact to the

{Securities and Exchange] Commission.

See. 27. Disqualification of directors, trustees or officers. - A PERSON SHALL BE DISQUALIFIED
FROM BEING A DIRECTOR, TRUSTEE, OR OFFICER OF ANY CORPORATION IF WITHIN
FIVE (5) YEARS PRIOR TO HIS OR HER ELECTION OR APPOINTMENT HE OR SHE WAS
CONVICTED BY FINAL JUDGMENT:
1. [No person} [C[clonvicted by final judgment] of an offense punishable by imprisonment for a
period exceeding six (6) years, folr]OF a violation of this Code, OR OF REPUBLIC ACT
8799, OTHERWISE KNOWN AS THE SECURITIES REGULATIONS CODE]
[,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. FOR VIOLATING THIS CODE;
3. FOR VIOLATING REPUBLIC ACT NO. 8799, OTHERWISE KNOWN AS THE
SECURITIES REGULATIONS CODE; OR
4. FOUND ADMINISTRATIVELY LIABLE FOR ANY OFFENSE INVOLVING FRAUD,
THEFT, ESTAFA, COUNTERFEITING, MISAPPROPRIATION, FORGERY,
BRIBERY, FALSE OATH, PERJURY, AND OTHER FRAUDULENT ACTS OF A
FOREIGN COURT OR EQUIVALENT FOREIGN REGULATORY AUTHORITY OF
ACTS, VIOLATIONS OR MISCONDUCT SIMILAR TO THOSE ENUMERATED IN
PARAGRAPHS 1, AND] 2 AND 3 ABOVE.

THE FOREGOING SHAI

BE WITHOUT PREJUDICE TO QUALIFICATIONS OR OTHER
DISQUALIFICATIONS, WHICH THE COMMISSION MAY IMPOSE IN ITS PROMOTION OF


20
21

22
23
24
25
26
27
28
29
30
uv

GOOD CORPORATE GOVERNANCE OR AS A SANCTION IN ITS ADMINISTRATIVE
PROCEEDINGS.

Sec. 28. Removal of directors or trustees, — Any director or trustee of a corporation may be removed from
office by a vote of the stockholders holding or representing at least two-thirds (2/3) of the outstanding capital
stock, or [if the corporation be] IN 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 cither at a regular mecting of the
corporation or at a special meeting called for the purpose, and in cither 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 fof a corporation) for the purpose of [removal of] REMOVING
ANY director{s} or trustees , or any of them,] must be called by the secretary on order of the president or [on
the] UPON written demand of the stockholders representing or holding at least a majority of the outstanding
capital stock [,] oF [, if it be a non-stock corporation, on the written demand of] a majority of the members
entitled to vote IF THERE IS NO SECRETARY, OR [Should] IF the secretary, DESPITE DEMAND,
failS or refuscS to call the special meeting [upon such demand or fail or refuse to] OR TO give {the} notice
THEREOF, [or if there is no sceretary, the call for the meeting may be addressed directly to the stockholders
‘or members by any] THE stockholder or member of the corporation signing the demand MAY CALL FOR
THE MEETING BY DIRECTLY ADDRESSING THE STOCKHOLDERS OR MEMBERS. 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 24 of this Code

THE COMMISSION SHALL, MOTU PROPRIO OR UPON VERIFIED COMPLAINT, AND AFTER
DUE NOTICE AND HEARING, ORDER THE REMOVAL OF A DIRECTOR OR TRUSTEE
ELECTED DESPITE THE DISQUALIFICATION, OR WHOSE DISQUALIFICATION AROSE OR
1S DISCOVERED SUBSEQUENT TO ELECTION, THE REMOVAL OF A DISQUALIFIED
DIRECTOR SHALL BE WITHOUT PREJUDICE TO OTHER SANCTIONS THAT THE
COMMISSION MAY IMPOSE ON THE BOARD OF DIRECTORS OR TRUSTEES WHO, WITH
KNOWLEDGE OF THE DISQUALIFICATION, FAILED TO REMOVE SUCH DIRECTOR OR
TRUSTEE.


Sec. 29. Vacancies in the office of director or trustee; EMERGENCY BOARD. ~ Any vacancy occurring in
the board of directors or trustees other than by removal [by the stockholders or members] ar 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 TERM EXPIRATION, THE ELECTION SHALL BE HELD
NO LATER THAN THE DAY OF SUCH EXPIRATION AT A MEETING CALLED FOR THAT
PURPOSE. WHEN THE VACANCY ARISES AS A RESULT OF REMOVAL BY THE
STOCKHOLDERS OR MEMBERS, THE ELECTION MAY 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 THE TIME THE VACANCY
AROSE. A director or trustee [so] clected to fill a vacancy SHALL BE REFERRED TO AS
REPLACEMENT DIRECTOR OR TRUSTEE AND SHALL SERVE {shall be elected} only for the
unexpired term of his OR HER 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 CORPORATION,
THE VACANCY MAY BE TEMPORARILY FILLED FROM AMONG THE OFFICERS OF THE
CORPORATION BY UNANIMOUS VOTE OF THE REMAINING DIRECTORS OR TRUSTEES,
THE ACTION BY THE DESIGNATED DIRECTOR OR TRUSTEE SHALL BE LIMITED TO THE
EMERGENCY ACTION NECESSARY, AND HIS OR HER TERM SHALL CEASE WITHIN A
REASONABLE TIME FROM THE TERMINATION OF THE EMERGENCY OR UPON
ELECTION OF THE REPLACEMENT DIRECTOR OR TRUSTEE, WHICHEVER COMES
EARLIER. THE CORPORATION MUST NOTIFY THE COMMISSION WITHIN THREE (3) DAYS
FROM THE CREATION OF THE EMERGENCY BOARD, STATING THEREIN THE REASON

FOR ITS CREATION.

Any directorship or trusteeship to be filled by reason of an increase in the number of directors or trustees

shall be filled only by an election at a regular or at a special mecting of stockholders or members duly called


for the purpose, or in the same meeting authorizing the increase of directors or trustees if so stated in the

notice of the meeting

IN ALL ELECTIONS TO FILL VACANCIES UNDER THIS SECTION, THE PROCEDURE SET
FORTH IN SECTIONS 24 AND 26 SHALL APPLY

See. 30. Compensation of directors OR TRUSTEES. ~ in the absence of any provision in the by-laws fixing
their compensation, the directors OR TRUSTEES shall not receive any compensation [,as such directors OR
TRUSTEES,| IN THEIR CAPACITY AS SUCH, except for reasonable per diems: Provided, however,
‘That [any stich compensation other than per diems may be granted to directors by the vote of the stockholders
representing at least a majority of the outstanding capital stock at a regular or special stockholders meeting |
THE STOCKHOLDERS REPRESENTING AT LEAST A MAJORITY OF THE OUTSTANDING
CAPITAL STOCK OR MAJORITY OF THE MEMBERS MAY GRANT DIRECTORS OR
TRUSTEES WITH COMPENSATION AND APPROVE THE AMOUNT THEREOF AT A

REGULAR OR SPECIAL MEETING.

[ln no case shall the total yearly compensation of directors as such directors exceed ten (10%) percent of the
net income before income tax of the corporation during the preceding year |

NO DIRECTOR OR TRUSTEE SHALL PARTICIPATE IN THE DETERMINATION OF HIS OR

HER OWN PER DIEMS OR COMPENSATION.

CORPORATIONS VESTED WITH PUBLIC INTEREST SHALL SUBMIT TO ITS
SHAREHOLDERS AND THE COMMISSION, AN ANNUAL REPORT OF THE TOTAL

COMPENSATION OF EACH OF ITS DIRECTORS OR TRUSTEES.

See. 31, Liability of directors, trustees or officers. Directors or trustees who wilfully and knowingly vote
for or assent to patently unlawful acts of the corporation or who are guilty of gross negligence or bad faith in
directing the affairs of the corporation or acquire any personal of pecuniary interest in conflict with their duty
as such directors or trustees shall be liable jointly and severally for all damages resulting therefrom suffered

by the corporation, its stockholders or members and other persons.

When a dircctor, trustee or officer attempts to acquire or acquires, in violation of his duty, any interest


21
22

24
25
26
27
28
29
30
31

32

adverse to the corporation in respect of any matter which has been reposed in him in confidence, as to which,
equity imposes a disability upon him to deal in his own behalf, he shall be liable as a trustee for the
corporation and must account for the profits which otherwise would have accrued to the corporation.

Sec, 32, Dealings of directors, trustees or officers with the corporation. ~ contract of the corporation with
one or more of its directors, {or} trustees, [or] officers OR THEIR SPOUSES AND RELATIVES WITHIN
‘THE FOURTH CIVIL DEGREE OF CONSANGUINITY OR AFFINITY is voidable, at the option of
such corporation, unless all the following conditions are present

1. ‘Tyhat ¢Jhe presence of such director or trustee in the board meeting in which the contract was
approved was not necessary to constitute a quorum for such meeting;

2. "Thhat the vote of such director or trustee was not necessary for the approval of the contract;

3. ‘That tfhe contract is ftir and reasonable under the circumstances; [and]

4. IN CASE OF CORPORATIONS VESTED WITH PUBLIC INTEREST, MATERIAL
CONTRACTS ARE APPROVED BY AT LEAST TWO-THIRDS (2/3) OF THE ENTIRE
MEMBERSHIP OF THE BOARD, WITH AT LEAST A MAJORITY OF THE
INDEPENDENT DIRECTORS VOTING TO APPROVE THE MATERIAL
CONTRACT; AND

[4] 5. [That i}ln case of an officer, the contract has been previously authorized by the board of

directors;

Where any of the first [two] THREE conditions set forth in the preceding paragraph is absent, in the case of
contract with a director or trustee, such contract may be ratified by the vote of the stockholders representing,
at least two-thirds (2/3) of the outstanding capital stock or of at least two-thirds (2/3) af the members in a
meeting called for the purpose: Provided, That, full disclosure of the adverse interest of the directors or
trustees involved is made at such meeting [: Provided however. Thai] AND the contract is fair and

reasonable under the circumstances,

Sec. 33. Contracts between corporations with interlocking directors. — Except in cases of fraud, and
provided the contract is fair and reasonable under the circumstances, a contract between two or more
corporations having interlocking directors shall not be invalidated on that ground alone: Provided, That if the
interest of the interlocking director in one corporation is substantial and his interest in the other corporation or
corporations is merely nominal, [he] THE CONTRACT shall be subject to the provisions of the preceding

section insofar as the latter corporation or corporations are concerned


30
31
32

Stockholdings exceeding twenty (20%) percent of the outstanding capital stock shall be considered
substantial for purposes of interlocking directors

Sec. 34. Disloyalty of a director. ~ Where a director, by virtue of his office, acquires for himself a business
opportunity which should belong to the corporation, thereby obtaining profits to the prejudice of such
corporation, he must account FOR AND REFUND to the latter {for) all such profits [by refunding the same],
unless his act has been ratified by a vote of the stockholders owning or representing at least two-thirds (2/3)
Of the outstanding capital stock. This provision shall be applicable, notwithstanding the fact that the director

risked his own funds in the venture

See. 35, Executive, MANAGEMENT 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) IF THE BY-LAWS SO PROVIDE, THE BOARD MAY CREATE AN EXECUTIVE
COMMITTEE COMPOSED OF AT LEAST [NOT LESS THAN] THREE DIRECTORS, 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 Jon a] BY majority vote of the board, except with
respect to THE: (1) approval of any action for which shareholders” approval is also required: (2) {the} filLing
of vacancies in the board: (3) {the| amendment or repeal of by-laws or the adoption of new by-laws, (4) {the}
amendment or repeal of any resolution of the board which by its express terms is not [so Jamendable or
repealable; and (5) fal distribution of cash dividends to the shareholders.

THE BY-LAWS MAY AUTHORIZE THE BOARD OF DIRECTORS TO CREATE SPECIAL
COMMITTEES OF TEMPORARY OR PERMANENT NATURE AND TO DETERMINE THE
MEMBERS’ TERM, COMPOSITION, COMPENSATION, POWERS, AND RESPONSIBILITIES.

TITLE IV
POWERS OF CORPORATIONS

See. 36. Corporate powers and capacity. — Every corporation incorporated under this Code has the power
and capacity
1. To sue and be sued in its corporate name,


20
21

2B
py

26
27
28
29
30
3
32

2 TO HAVE PERPETUAL EXISTENCE UNLESS THE CERTIFICATE OF
INCORPORATION PROVIDES OTHERWISE |Of succession by its corporate name for the,
period of time stated in the articles of incorporation and the certificate of incorporation];

3. Toadopt and use a corporate seal:

4. To amend its articles of incorporation in accordance with the provisions of this Code,

5. To.adopt by-laws, not contrary to law, morals or public policy, and to amend or repeal the same
in accordance with this Code;

6. _ In case of stock corporations, to issue or sell stocks to subscribers and fo sell treasury stocks in
accordance with the provisions of this Code; and to admit members to the corporation if it be a
non-stock corporation,

7. To purchase, receive, take or grant, hold, convey, sell, lease, pledge, mortgage and otherwise
deal with such real and personal property, including securities and bonds of other corporations,
as the transaction of the lawful business of the corporation may reasonably and necessarily
require, subject to the limitations prescribed by law and the Constitution;

8 Tocnter into A PARTNERSHIP, JOINT VENTURE, merger [or], consolidation [with other
corporations], OR ANY OTHER COMMERCIAL AGREEMENT WITH NATURAL AND.
JURIDICAL PERSONS |as provided under this Code];

9, To make reasonable donations, including those for the public welfare or for hospital, charitable,
cultural, scientific, civic, or similar purposes: Provided, That no FOREIGN corporation,
[domestic or foreign,| shall give donations in aid of any political party or candidate or for
purposes of partisan political activity,

10, Toestablish pension, retirement, and other plans for the benefit of its directors, trustees, officers,
and employees; and

11 To exercise such other powers as may be essential or necessary to carry out its purpose or

purposes as stated in the articles of incorporation

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
tusices, and ratified at a meeting by the stockholders OR MEMBERS represcnting at least two-thirds (2/3)
of the outstanding capital stock or [by at least two-thirds (2/3)| of ITS [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] SENT to cach stockholder or member at his OR HER place of residence as shown [on] IN the


20
2
22
23
24
25

18a

27
28
29
30
3)
32

books of the corporation, and MUST EITHER BE deposited to the addressee in the post office with postage
prepaid, for] served personally|.|, OR WHEN ALLOWED [BY] IN THE BY-LAWS OR DONE WITH
THE CONSENT OF THE STOCKHOLDER, SENT ELECTRONICALLY IN ACCORDANCE
WITH THE RULES AND REGULATIONS OF THE COMMISSION ON THE USE OF
ELECTRONIC DATA MESSAGES. [Provided, That in] IN case of extension of corporate term, any] A
dissenting stockholder may exercise his OR HER appraisal right under the conditions provided in this [c]
Code

Sec. 38. Power to increase or decrease capital stock; incur, create or increase bonded indebtedness, No
corporation shall increase or decrease its capital stock or incur, create or increase any bonded indebtedness
tunless approved by a majority vote of the board of directors andj, at a stockholder’s mecting duly called for
the purpose,| BY two-thirds (2/3) of the outstanding capital stock AT A STOCKHOLDERS’ MEETING
DULY CALLED FOR THE PURPOSE {shall favor the increase or diminution of the capital stock or of the
incurring, creating, or increasing of any bonded indebtedness}. Written notice of the TIME AND PLACE
OF THE STOCKHOLDERS’ MEETING AND THE PURPOSE FOR SAID MEETING {proposed
increase or diminution of the capital stock or of the incurring, creating, of increasing of any bonded
indebtedness and of the time and place of the stockholder’s meeting at which the proposed increase or
diminution of the capital stock or the incurring or increasing of any bonded indebtedness is to be considered, |
‘muist be [addressed to] SENT TO cach stockholder at his OR HER place of residence as shown fon} IN the
books of the corporation and [deposited to the addressee] SERVED ON THE STOCKHOLDER [in the
post office with postage prepaid] PERSONALLY, OR THROUGH ELECTRONIC MEANS
RECOGNIZED IN THE CORPORATION'S BY-LAWS AND/OR THE COMMISSION'S RULES AS
A VALID MODE FOR SERVICE OF NOTICES [or served personally ON THE STOCKHOLDER}

A certificate in duplicate must be signed by a majority of the directors of the corporation and countersigned
by the chairman and secretary of the stockholders’ meeting, setting forth:
1. "That the requirements of this section have been complied with;
2. ‘The amount of the increase or diminution of the capital stock;
3. If-an increase of the capital stock, the amount of capital stock or number of shares of no-par
stock thereof actually subscribed, the names, nationalities and [residences] ADDRESSES of the
persons subscribing, the amount of capital stock or number of no-par stock subscribed by each,

and the amount paid by cach on his subscription in cash or property, or the amount of capital


23
24
25
26
27
28
29
30

31

stock or number of shares of no-par stock allotted to each stock-holder if such increase is for the
purpose of making effective stock dividend therefor authorized;
4. Any bonded indebtedness to be incurred, created or increased;

{(5) The actual indebtedness of the corporation on the day of the mecting;|

5. {(6)] The amount of stock represented at the meeting; and

6. [(7)| The vote authorizing the increase or diminution of the capital stock, or the incurring, creating

or increasing of any bonded indebtedness

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, AND
WHERE APPROPRIATE, OF THE PHILIPPINE COMPETITION COMMISSION, THE
APPLICATION WITH THE COMMISSION SHALL BE MADE WITHIN SIX (6) MONTHS
FROM THE DATE OF APPROVAL OF THE BOARD OF DIRECTORS AND

STOCKHOLDERS, WHICH PERIOD MAY BE EXTENDED FOR JUSTIFIABLE REASONS.

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] Commission and attached to the original articles of incorporation.
[From and a] After approval by the [Securities and Exchange] Commission and the issuance by the
Commission of its certificate of filing, the capital stock shall BE DEEMED 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 utiles accompanied by [the] A 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
PERCENT (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]PROPERTY, THE VALUATION OF WHICH IS EQUAL TO TWENTY-
FIVE PERCENT (25%) OF THE SUBSCRIPTION, 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 IN of the} capital stock shall be approved by the Commission if its effect shall prejudice the rights

of corporate creditors

Non-stock corporations may incur, [or] create, OR INCREASE bonded indebtedness], or increase the same, }


19
20
21

24
25
26
2
28
29
30
3
32

WHEN APPROVED [with the approval] by a majority [vote] of the board of trustees and of at least two-
thirds (2/3) of the members in a meeting duly called for the purpose

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.

Sec. 39. Power to deny pre-emptive right. ~ All stockholders of a stock corporation shall enjoy pre-emptive
right to subscribe to all issues or disposition of shares of any class, in proportion to their respective
sharcholdings, unless such right is denied by the articles of incorporation or an amendment thereto: Provided,
‘That such pre-emptive right shall not extend to shares |to be] issued in compliance with laws requiring stock
offerings or minimum stock ownership by the public; or to shares {to be] issued in good faith with the
approval of the stockholders representing two-thirds (2/3) of the outstanding capital stock, in exchange for
property needed for corporate purposes or in payment of a previously contracted debt

Sec. 40. Sale or other disposition of assets. ~ Subject to the provisions of REPUBLIC ACT NO. 10667
OTHERWISE KNOWN AS THE PHILIPPINE COMPETITION ACT AND OTHER RELATED
LAWS, [existing laws on illegal combinations and monopolies}, a corporation may, by a majority vote of its
board of directors or trustees, sell, lease, exchange, mortgage, pledge, or otherwise dispose of fall 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.

A SALE OF ALL OR SUBSTANTIALLY ALL OF THE CORPORATION'S PROPERTIES AND
ASSETS, INCLUDING ITS GOODWILL 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 stockholders’ or members’ 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


24
25

26

28
29

30

THE DETERMINATION OF WHETHER OR NOT THE SALE INVOLVES ALL OR
SUBSTANTIALLY ALL OF THE CORPORATION'S PROPERTIES AND ASSETS MUST BE
COMPUTED BASED ON ITS NET ASSET VALUE, AS SHOWN IN ITS LATEST FINANCIAL
STATEMENTS. A 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.

Written notice of the proposed action and of the time and place [of] FOR the meeting shall be addressed to
each stockholder or member at his OR HER place of residence as shown fon] IN the books of the
corporation and deposited to the addressee in the post office with postage prepaid, [or | served personally.
OR WHEN ALLOWED BY THE BY-LAWS OR DONE WITH THE CONSENT OF THE
STOCKHOLDER, SENT ELECTRONICALLY: Provided, That any dissenting stockholder may exercise

his OR HER 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 |

Afr such authorization or approval by the stockholders or members, the board of directors or trustees may.
novertheless, in its discretion, abandon such sale, lease, exchange, mortgage, pledge, or other disposition of
property and assets, subject to the rights of third parties under any contract relating thereto, without further

action or approval by the stockholders or members

Nothing in this section is intended to restrict the power of any corporation, without the authorization by the
stockholders or members, to sell, lease, exchange, mortgage, pledge, or otherwise dispose of any of its
property and assets if the same is necessary in the usual and regular course af business of said corporation or
if the proceeds of the sale or other disposition of such property and assets SHALL be appropriated for the

conduct of its remaining business,


20

2

23
24
2s
26
27
28
29
30
3
32

[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.)

See 41. Power to acquire own shares. - PROVIDED THAT THE CORPORATION HAS
UNRESTRICTED RETAINED EARNINGS IN ITS BOOKS TO COVER THE SHARES TO BE
PURCHASED OR ACQUIRED, [A] a stock corporation shall have the power to purchase or acquire its
own shares for a legitimate corporate purpose of purposes, including but not limited to the following cases:
[Provided, That the corporation has unrestricted retained camings in its books to cover the shares to be
purchased or acquired]

1, ‘Tocliminate fractional shares arising out of stock dividends;

2. To collect or compromise an indebtedness to the corporation, arising out of unpaid subscription,

in a delinqueney sale, and to purchase delinquent shares sold during said sale; and
3. To pay dissenting or withdrawing stockholders entitled to payment for their shares under the

provisions of this Code

Sec. 42. Power to invest corporate funds in another corporation or business or for any other purpose. —
Subject to the provisions of this Code, a private corporation may invest its funds in any other corporation, [or]
business, or for any purpose other than the primary purpose for which it was organized, when approved by a
majority of the board of directors or trustees and ratified 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 the case of non-stock
corporations, at a |stockholder’s or member's} meeting duly called for the purpose. Written notice of the
proposed investment and the time and place of the meeting shall be addressed to each stockholder or member
at his place of residence as shown fo[In the books of the corporation and deposited to the addressee in the
post office with postage prepaid, for] served personally, OR SENT ELECTRONICALLY IN
ACCORDANCE WITH THE RULES AND REGULATIONS OF THE COMMISSION ON THE USE
OF ELECTRONIC DATA MESSAGE, WHEN ALLOWED BY THE BY-LAWS OR DONE WITH
THE CONSENT OF THE STOCKHOLDERS: Provided. That any dissenting stockholder shall have
appraisal right as provided in this Code: Provided, however, That where the investment by the corporation is
reasonably necessary to accomplish its primary purpose as stated in the articles of incorporation, the approval

of the stockholders or members shall not be necessary


24
2s
26
27

28

Sec. 43. Power to declare dividends. — The board of directors of a stock corporation may declare dividends
out of the unrestricted retained earings which shall be payable in cash, [in property, or in stock to all
stockholders on the basis of outstanding stock held by 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 OR HER unpaid subscription is
fully paid: Provided, further, ‘That no stock dividend shall be issued without the approval of stockholders
representing {not less than] AT LEAST 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 PERCENT (100%)
Ipercent] 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

See. 44. Power to enter into management contract, ~ No corporation shall conclude a management contract
with another corporation unless such contract {shall have been] IS approved by the board of directors and by
stockholders owning at least the majority of the outstanding capital stock, or by at least a majority of the
members in the case of a non-stock corporation, of both the managing and the managed corporation, at a
‘meeting duly called for the purpose: Provided, That (1) where a stockholder or stockholders representing the
same interest of both the managing and the managed corporations own of control more than one-third (1/3) of
the total outstanding capital stock entitled to vote of the managing corporation; or (2) where a majority of the
members of the board of directors of the managing corporation also constitute a majority of the members of
the board of directors of the managed corporation, then the management contract must be approved by the
stockholders of the managed corporation owning at least two-thirds (2/3) of the total outstanding capital stock
entitled to vote, or by at least two-thirds (2/3) of the members in the case of a non-stock corporation, No

management contract shall be entered into for a period longer than five years for any one term.

‘The provisions of the next preceding paragraph shall apply to any contract whereby a corporation undertakes
to manage or operate all or substantially all of the business of another corporation, whether such contracts are


24
25
26
27
28
29
30
31
32

called service contracts, operating agreements or otherwise: Provided, however, That such service contracts
‘or operating agreements which relate to the exploration, development, exploitation or utilization of natural

resources may be entered into for such periods as may be provided by the pertinent laws or regulations,

See. 45. Ultra vires acts of corporations. — No corporation [under this Code} shall possess or exercise {any}
corporate powers [except] OTHER THAN those conferred by this Code or by its articles of incorporation

and except |such] as fare] necessary or incidental to the exercise of the powers [so] conferred,

TITLEV

BY-LAWS.

Sec. 46. 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 in consistent 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 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 tmistees AND countersigned by the
secretary of the corporation, shall be filed with the [Securities and Exchange] Commission {which shall be}

AND 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.

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] IN ACCORDANCE 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


30

a”

A certificate of the appropriate government agency to the effect that such by-laws or amendments are in

accordance with law.

See. 47, Contents of by-laws. ~ {Subject to the provisions of the Constitution, this Code, other special laws,
and the articles of incorporation,| A private corporation may provide THE FOLLOWING in its by-laws
{for}

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

2. The time and manner of calling and conducting regular or special meetings AND MODE OF
NOTIFYING THE STOCKHOLDERS OR MEMBERS THEREOF [of the stockholders or
members};

3, The required quorum in meetings of stockholders or members and the manner of voting
therein;

4. THE MODES BY WHICH A STOCKHOLDER, MEMBER, DIRECTOR, OR TRUSTER
MAY ATTEND MEETINGS AND CAST THEIR VOTES;

5. [4]. The form for proxies of stockholders and members and the manner of voting them,

6. [5]. The DIRECTORS’ OR TRUSTEES’ qualifications, duties. AND RESPONSIBILITIES,

Jand] THE GUIDELINES FOR SETTING THE compensation of directors or trustees AND
[,| officers Jand employees), AND THE MAXIMUM NUMBER OF OTHER BOARD
REPRESENTATIONS THAT AN INDEPENDENT DIRECTOR OR TRUSTEE MAY
HAVE WHICH SHALL, IN NO CASE, BE MORE THAN THE NUMBER PRESCRIBED
BY THE COMMISSION;

7. [6] The time for holding the annual election of directors of trustees and the mode or manner of

siving notice thereof,

8 [7] The manner of election or appointment and the term of office of all officers other than directors

or trustees,

9, [8] The penalties for violation of the by-laws,

10. [9] In the case of stock corporations, the manner of issuing stock certificates; [and]

11, [10] 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


23
24
25
26
27
28

29

31

32

COMMISSION] FOR THE PROMOTION OF GOOD GOVERNANCE AND ANTI-

GRAFT AND CORRUPTION MEASURES.

Sec. 48. Amendment to by-laws. ~ MAJORITY OF [T|the board of directors or trustees, [by a majority vote
thercof,] and the owners of at least a majority of the outstanding capital stock, or at least a majority of the

members of a non-stock corporation, at

regular or special meeting duly called for the purpose, may amend
oF repeal [any] THE 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 nan-stock corporation may delegate to the board of directors or
trustees the power to amend or repeal {any} THE by-laws or adopt new by-laws: Provided, That any power
delegated to the board of directors or trustees to amend or repeal {any} THE by-laws or adopt new by-laws
shall be considered as revoked whenever stockholders owning or representing a majority of the outstanding
capital stock or [a] majority of the members in non-stock corporations,| shall so vote at a regular or special

meeting,

[Whenever any amendment or new by-laws are adopted, such amendment or new by-laws shall be attached to
the original by-laws in the office of the corporation, and a copy thereof, duly certified under oath by the
corporate secretary and a majority of the directors or trustees, shall be filed with the Securities and Exchange

‘Commission the same to be attached to the original articles of incorporation and original by-laws.}

WHENEVER THE BY-LAWS ARE AMENDED OR NEW BY-LAWS ARE ADOPTED, THE
CORPORATION SHALL FILE WITH THE COMMISSION SUCH AMENDED OR NEW BY-
LAWS AND, IF APPLICABLE, THE STOCKHOLDERS’ OR MEMBERS’ RESOLUTION
AUTHORIZING THE DELEGATION OF THE POWER TO AMEND AND/OR ADOPT NEW BY-
LAWS, DULY CERTIFIED UNDER OATH BY THE CORPORATE SECRETARY AND A

MAJORITY OF THE DIRECTORS OR TRUSTEES.

‘The amended or new by-laws shall only be effective upon the issuance by the [Securities and Exchange]
Commission of a certification that the same IS [are not] in [consistent] ACCORDANCE with this Code

AND OTHER RELEVANT LAWS.

TITLE VI

MEETINGS


24
25
26
27
28
29

30

Sec. 49. Kinds of meetings. ~ Mectings of directors, trustees, stockholders, or members may be regular or

special

Sec. 50. Regular and special meetings of stockholders or members. ~ Regular meetings of stockholders or
members shall be held annually on a date fixed in the by-laws, or if not so fixed, on any date AFTER fin}
April 15 of every year as determined by the board of directors or trustees: Provided, That written notice of
regular meetings shall be sent to all stockholders or members of record at least {two (2) weeks] TWENTY

(20) DAYS prior to the meeting, unless a [different] LONGER period is required [by] IN the by-laws, LAW

OR REGULATION] ]; PROVIDED FURTHER, THAT WRITTEN NOTICE OF REGULAR
MEETINGS MAY BE SENT TO ALL STOCKHOLDERS OR MEMBERS OF RECORD THROUGH
ELECTRONIC MAIL OR SUCH OTHER MANNER AS THE COMMISSION SHALL ALLOW

UNDER ITS GUIDELINES,

AT EACH REGULAR MEETING OF STOCKHOLDERS OR MEMBERS, THE BOARD OF
DIRECTORS OR TRUSTEES SHALL ENDEAVOR TO PRESENT TO 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;
(i) A DESCRIPTION OF THE OPPORTUNITY GIVEN TO STOCKHOLDERS
OR MEMBERS TO ASK QUESTIONS AND A RECORD OF THE
QUESTIONS ASKED AND ANSWERS GIVEN;
(iii) “THE MATTERS DISCUSSED AND RESOLUTIONS REACHED;
(iv) A RECORD OF THE VOTING RESULTS FOR EACH AGENDA ITEM; [AND]
(%) A LIST OF THE DIRECTORS OR TRUSTEES, OFFICERS AND
STOCKHOLDERS OR MEMBERS WHO ATTENDED THE MEETING; AND.
(vi) SUCH OTHER ITEMS THAT THE COMMISSION MAY REQUIRE IN THE
INTEREST OF GOOD CORPORATE GOVERNANCE AND THE
PROTECTION OF MINORITY STOCKHOLDERS.


19
20
2
22
23
24
25
26
27
28
29
30

a)

b.

A MEMBERS’ LIST FOR NON-STOCK CORPORATIONS AND, FOR STOCK
CORPORATIONS, MATERIAL INFORMATION ON THE CURRENT
STOCKHOLDERS AND THEIR VOTING RIGHTS;

A DETAILED, DESCRIPTIVE, BALANCED AND COMPREHENSIBLE ASSESSMENT
OF THE CORPORATION'S PERFORMANCE WHICH SHALL INCLUDE
INFORMATION ON ANY MATERIAL CHANGE IN THE CORPORATION'S
BUSINESS, STRATEGY, AND OTHER AFFAIRS;

A FINANCIAL REPORT 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;

AN EXPLANATION OF THE DIVIDEND POLICY AND THE FACT OF PAYMENT OF
DIVIDENDS OR THE REASONS FOR NON-PAYMENT THEREOF;

DIRECTOR OR TRUSTEE PROFILES WHICH SHALL INCLUDE, AMONG OTHERS,
THEIR QUALIFICATIONS AND RELEVANT EXPERIENCE, LENGTH OF SERVICE
IN THE CORPORATION, TRAININGS AND CONTINUING EDUCATION
ATTENDED, AND [NUMBER OF] THEIR BOARD REPRESENTATIONS IN OTHER
CORPORATIONS;

A DIRECTOR OR TRUSTEE ATTENDANCE REPORT, INDICATING THE
ATTENDANCE OF EACH DIRECTOR OR TRUSTEE AT EACH OF THE MEETINGS
OF THE BOARD AND [TS COMMITTEES AND IN REGULAR OR SPECIAL
STOCKHOLDER MEETINGS;

APPRAISALS AND PERFORMANCE REPORTS FOR THE BOARD AND THE
CRITERIA AND PROCEDURE FOR ASSESSMENT;

A DIRECTOR OR TRUSTEE COMPENSATION REPORT PREPARED IN
ACCORDANCE WITH THIS CODE AND THE RULES THE COMMISSION MAY
PRESCRIBE;

DIRECTOR DISCLOSURES ON SELF-DEALINGS AND RELATED PARTY

TRANSACTIONS AND/OR;


20
2
22
23
24
25
26
27
28
29

30

k. THE PROFILES OF DIRECTORS NOMINATED OR SEEKING ELECTION OR RE-

ELECTION,

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

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 TWO (2) WEEKS PRIOR TO THE MEETING, unless otherwise] A LONGER
PERIOD IS provided in the by-laws, LAW OR REGULATION

A STOCKHOLDER OR MEMBER SHALL HAVE THE RIGHT TO PROPOSE THE HOLDING OF
A SPECIAL MEETING AND ITEMS TO BE INCLUDED IN THE AGENDA,

Notice of any mecting 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 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 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 [been] chosen fone of their

number as] FROM AMONG THEMSELVES, A presiding officer

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

THE SCHEDULED DATE OF THE MEETING.


23
24
25
26
27

29

30

IN CASE OF POSTPONEMENT OF STOCKHOLDERS’ OR MEMBERS’ REGULAR 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 UNDER THE BY-

LAWS, LAW OR REGULATION,

THE RIGHT TO VOTE MAY BE EXERCISED IN PERSON, THROUGH A PROXY, OR WHEN SO
WHEN SO AUTHORIZED IN THE BY-LAWS OR BY A MAJORITY OF THE MEMBERS OF THE
BOARD OF DIRECTORS, THE STOCKHOLDERS OR MEMBERS MAY ALSO VOTE THROUGH
REMOTE COMMUNICATION OR IN ABSENTIA, THE COMMISSION SHALL ISSUE THE
RULES AND REGULATIONS GOVERNING PARTICIPATION AND VOTING THROUGH
REMOTE COMMUNICATION OR IN ABSENTIA TAKING INTO ACCOUNT THE COMPANY'S
SCALE. NUMBER OF SHAREHOLDERS OR MEMBERS, STRUCTURE, AND OTHER FACTORS
CONSISTENT WITH THE PROTECTION AND PROMOTION OF SHAREHOLDERS’ OR
MEMBER'S MEETING

Sec. 51. Place and time of meetings of stockholders or members. — Stockholders’ or members’ 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 affice
of the corporation}, Provided, That Metro Manila, METRO CEBU, METRO DAVAO, AND OTHER

METROPOLITAN AREAS shall, for purposes of this section, be considered a city or municipality.

[Notice of meetings shall be in writing, and the time and place thereof stated therein.| WRITTEN NOTICE.
OF MEETINGS SHALL BE SENT THROUGH THE MEANS OF COMMUNICATION PROVIDED
IN THE BY-LAWS, WHICH NOTICE SHALL STATE THE TIME, PLACE AND PURPOSE OF
THE MEETINGS.

EACH NOTICE OF MEETING SHALL FURTHER BE ACCOMPANIED BY THE FOLLOWING:

(A) ‘THE AGENDA FOR THE MEETING;


26
27
28
29
30
ety
32

(B) A PROXY FORM WHICH SHALL BE SUBMITTED TO THE
CORPORATE SECRETARY WITHIN A REASONABLE TIME PRIOR TO
THE MEETING;

(C) WHEN ATTENDANCE, PARTICIPATION AND VOTING ARE ALLOWED.
BY REMOTE COMMUNICATION OR JN ABSENTIA, THE
REQUIREMENTS AND PROCEDURES TO BE FOLLOWED WHEN A
STOCKHOLDER OR MEMBER ELECTS EITHER OPTION: AND

(D) WHEN THE MEETING IS FOR THE ELECTION OF DIRECTORS OR
TRUSTEES. THE REQUIREMENTS AND PROCEDURE FOR

NOMINATION.

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 {beJIS improperly held or
called:|,] Plplrovided, THAT all the stockholders or members of the corporation are present or duly
represented at the meeting AND NONE OF THEM EXPRESSLY STATES AT THE 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

Sec. $2. Quorum in meetings. — Unless otherwise provided [for] in this Code or in the by-laws, a quorum
shall consist of the stockholders representing a majority of the outstanding capital stock or a majority of the

memibers in the case of non-stock corporations.

Sec. 53. Regular and special meetings of directors or trustees; QUORUM ~ UNLESS THE ARTICLES
OF INCORPORATION OR THE BY-LAWS PROVIDES FOR A GREATER MAJORITY. A
MAJORITY OF THE DIRECTORS OR TRUSTEES AS STATED IN THE ARTICLES OF
INCORPORATION SHALL CONSTITUTE A QUORUM TO TRANSACT CORPORATE
BUSINESS, AND EVERY DECISION REACHED BY [OF] AT LEAST A MAJORITY OF THE
DIRECTORS OR TRUSTEES CONSTITUTING 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.


24
25
26
27
28
29

32

Reaular mectines of the board of directors or trustees of every corporation shall be held monthlv. unless the

by-laws provide otherwise

Special mectings of the board of directors or trustees may be held at any time upon the call of the president or

as orovided in the by-laws.

Mectings of directors or trustees of corporations may be held anywhere in or outside of the Philippines,
unless the by-laws provide{S} otherwise. Notice of regular or special meetings stating the date, time and place
of the meeting must be sent to every director or trustce at least fone (1) day] [FIVE (5)] TWO (2) DAYS
Prior to the scheduled meeting, unless [otherwise] A LONGER TIME IS provided [by) IN 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. THEY CAN PARTICIPATE AND VOTE THROUGH REMOTE COMMUNICATION
SUCH AS VIDEO-CONFERENCING, TELECONFERENCING OR OTHER ALTERNATIVE
MODES OF COMMUNICATION THAT ALLOW THEM REASONABLE OPPORTUNITY TO

PARTICIPATE,

A DIRECTOR OR TRUSTEE WHO HAS A POTENTIAL INTEREST IN ANY RELATED PARTY
TRANSACTION MUST RECUSE HIMSELF OR HERSELF FROM VOTING ON THE APPROVAL
OF THE RELATED PARTY TRANSACTION. WITHOUT PREJUDICE TO COMPLIANCE WITH
THE REQUIREMENTS OF SECTION 32 OF THIS CODE.

Sec. $4. Who shall preside at meetings. ~ The president shall preside at all meetings of the directors or

trustee as well as of the stockholders or members. unless the by-laws provide otherwise.

Sec. 55. Right to vote of pledgors, mortgagors, and administrators. — In case of pledged or mortgaged shares
in stock corporations, the pledgor or mortgagor shall have the right to attend and vote at meetings of
stockholders, unless the pledge or mortgages is expressly given by the pledgor or mortgagor such right in

writing which is recorded [0] in the appropriate corporate books.

Executors, administrators, recetvers, and other legal representatives duly appointed by the court may attend


20
2
2
23
24
2s
26
27
28
29
30
31
32

and vote in behalf of the stockholders or members without need of any written proxy.

Sec. 56, Voting in case of joint ownership of stock ~ THE CONSENT OF ALL THE CO-OWNERS
SHALL BE NECESSARY IN VOTING [In case of] shares of stock owned jointly by two or more persons],
in order to vote the same, the consent of all the co-owners shall be necessary], unless there is a written proxy,
signed by all the co-owners, authorizing one or some of them or any other person to vote such share or
shares: Provided, That when the shares are owned in an “and/or” capacity by the holders thereof, any one of

the joint owners can vote said shares or appoint a proxy therefor

Sec. 87. Voting right for treasury shares. Treasury shares shall have no voting right as long as such shares

remain in the Treasury

Sec. 58. MANNER OF VOTING; Proxies. ~ Stockholders and members may vote in person or by proxy in

all meetings of stockholders or members

WHEN SO AUTHORIZED IN THE BY-LAWS OR BY A MAJORITY OF THE BOARD OF
DIRECTORS, THE STOCKHOLDERS OR MEMBERS OF CORPORATIONS MAY ALSO VOTE
THROUGH REMOTE COMMUNICATION OR IN ABSENTIA: PROVIDED, THAT, THE RIGHT
TO VOTE THROUGH SUCH MODES MAY BE EXERCISED IN CORPORATIONS VESTED
WITH PUBLIC INTEREST, NOTWITHSTANDING THE ABSENCE OF A PROVISION IN THE
BY-LAWS OF THE CORPORATION: PROVIDED, FURTHER, THAT THE VOTES ARE

RECEIVED BEFORE THE CORPORATION FINISHES THE TALLY OF VOTES.

WHEN A STOCKHOLDER OR MEMBER PARTICIPATES THROUGH REMOTE
COMMUNICATION OR IN ABSENTIA, HE OR SHE SHALL BE DEEMED PRESENT FOR

PURPOSES OF QUORUM.

THE CORPORATION SHALL ESTABLISH THE APPROPRIATE REQUIREMENTS AND
PROCEDURES FOR VOTING THROUGH REMOTE COMMUNICATION AND IN ABSENTIA,
TAKING INTO ACCOUNT THE COMPANY'S SCALE, NUMBER OF SHAREHOLDERS OR
MEMBERS, STRUCTURE AND OTHER FACTORS CONSISTENT WITH THE BASIC RIGHT
CORPORATE SUFFRAGE.


20
21
2
2B
24
23

Proxies shall be [in writing.) signed AND FILED, by the stockholder or member, IN ANY FORM
AUTHORIZED IN THE BY-LAWS and [filed] RECEIVED BY THE CORPORATE SECRETARY
WITHIN A REASONABLE TIME before the scheduled meeting [with the corporate secretary). Unless
‘otherwise provided in the proxy FORM, it shall be valid only for the meeting for which it is intended. No
proxy shall be valid and effective for a period longer than five (5) years at any one time.

Section 59. 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, 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 t] The books of the corporation |, it] shall STATE [be noted] that the

transfer in the name of the trustee or trustees is made pursuant to said voting trust agreement

‘The trustee or trustees shall execute and deliver to the transferors, voting trust certificates, which shall be

transferable in the same manner and with the same effect as certificates of stock.

‘The voting trust agreement filed with the corporation shall be subject to examination by any stockholder of
the corporation in the same manner as any other corporate book or record: Provided, That both the transferor
and the trustee or trustees may exercise the right of inspection of all corporate books and records in

accordance with the provisions of this Code.

Any other stockholder may transfer his OR HER shares to the same trustee or trustees upon the terms and
conditions stated in the voting trust agreement, and thereupon shall be bound by all the provisions of said

agreement,


24
25
26
27
28

29

si
32

No voting trust agreement shall be entered into for [the] purposeS of circumventing the law against
[monopolies and illegal combinations in restraint of trade] ANTI-COMPETITIVE AGREEMENTS,
ABUSE OF DOMINANT POSITION, ANTI-COMPETITIVE MERGERS AND ACQUISITIONS,
VIOLATION OF NATIONALITY AND CAPITAL REQUIREMENTS, OR Jor used for purposes of
fraud | | FOR THE PERPETUATION OF FRAUD.

Unless expressly renewed, all rights granted in a voting trust agreement shall automatically expire at the end
of the agreed period, and the voting trust certificates as well as the certificates of stock in the name of the
trustee or trustees shall thereby be deemed cancelled and new certificates of stock shall be reissued in the

name of the transferors.

‘The voting trustee or trustees may vote by proxy OR IN ANY MANNER AUTHORIZED UNDER THE
BY-LAWS unless the agreement provides otherwise.
TITLE VII
STOCKS AND STOCKHOLDERS

Sce. 60, Subscription contract. ~ Any contract for the acquisition of unissued stock in an existing corporation
‘oF a corporation still to be formed shall be deemed a subscription within the meaning of this Title,

‘notwithstanding the fact that the parties refer to it as a purchase or some other contract.

Sce. 61. Pre-incorporation subscription. — A subscription OF [for] shares {of stock of] IN a corporation still
to be formed shall be irrevocable for a period of at least six (6) months from the date of subscription, unless
all of the other subscribers consent to the revocation, or furiless] the [incorporation of said] corporation fails
to [materialize] INCORPORATE within THE SAME said] period or within [a] A longer period [as may
be] stipulated in the contract of subscription,|: Provided, That n]No pre-incorporation subscription may be
revoked after [the submission off the articles of incorporation IS SUBMITTED to the [Securities and
Exchange} Commission

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:

1. Actual eash paid to the corporation;


24
25
26
27
28
29
30
ci)

32

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

6 Outstanding shares exchanged for stocks in the event of reclassification or conversion]. Jj

7. SHARES OF STOCK IN ANOTHER CORPORATION; AND/OR

8. OTHER GENERALLY ACCEPTED FORM OF CONSIDERATION.

Where the consideration is other than actual cash, or consists of intangible property such as patents [of] OR
copyrights, the valuation thereof shall initially be determined by the incorporators or the board of directors,
subject to THE approval [by] OF the [Securities and Exchange] Commission

Shares of stock shall not be issued in exchange for promissory notes or future service, The same
considerations provided {for] in this section, insofar as [they may be] applicable, may be used for the issuance

of bonds by the corporation

‘The issued price of no-par value shares may be fixed in the articles of incorporation or by the board of
directors pursuant to authority conferred [upon it} by the articles of incorporation or the by-laws, or fin the
absence thereof] IF NOT SO FIXED, by the stockholders representing at least a majority of the outstanding

capital stock at a meeting duly called for the purpose

Sec. 63, Certificate of stock and transfer of shares, ~The capital stock of {stock} corporations shall be
divided into shares for which certificates signed by the president or vice president, countersigned by the
secretary or assistant secretary, and sealed with the seal of the corporation shall be issued in accordance with
the by-laws. Shares of stock so issued are personal property and may be transferred by delivery of the
certificate or certificates indorsed by the owner, for] his attomey-in-fact, or ANY other person legally
authorized to make the transfer No transfer, however, shall he valid, except as between the parties, until the
transfer is recorded in the books of the corporation showing the names of the parties to the transaction, the
date of the transfer, the number of the certificate or certificates, and the number of shares transferred. THE
COMMISSION MAY REQUIRE CORPORATIONS WHOSE SECURITIES ARE TRADED IN
TRADING MARKETS AND WHICH CAN REASONABLY DEMONSTRATE THEIR


19
20
21
22
23
24
25
26
27
28
29

30

CAPABILITY TO DO SO TO ISSUE THEIR SECURITIES OR SHARES OF STOCKS IN
UNCERTIFICATED OR SCRIPLESS FORM, IN ACCORDANCE WITH THE RULES OF THE
COMMISSION.

fxxx xxx xxx]
No shares of stock against which the corporation holds any unpaid claim shall be transferable in the books of

the corporation.

Sce 64. Issuance of stock certificates. ~ No certificate of stock shall be issued to a subscriber until the full
amount of his OR HER subscription together with interest and expenses (in case of delinquent shares), ifany

is duc. has been paid.

Sec. 65. Liability of directors for watered stocks. ~ A|ny| director or officer of a corporation WHO: a)
consentS ing] to the issuanee of stocks for a consideration Jess than its par or issued value; b) consents to the
ISSUANCE OF STOCKS for] FOR A CONSIDERATION fin any form} other than cash, valued in excess
of its fair value; OR ¢) [or who,] having knowledge OF THE INSUFFICIENT CONSIDERATION
[thereof], does not [forthwith] FILE express} his OR HER WRITTEN objection [in writing and file the

same] with the corporate secretary. shall be |solidarily,| li

le TO THE CORPORATION OR ITS
CREDITORS, SOLIDARILY with the stockholder concerned {to the corporation and its creditors) for the
difference between the [fair] value received at the time of issuance of the stock and the par or issued value of

the same.

Sco. 66. Interest on unpaid subscriptions. ~ Subscribers {for} TO stockS shall BE LIABLE [pay] to the
corporation FOR interest on all unpaid subscriptions from the date of subscription, if so required by, and at
the rate of interest fixed in the by-laws. If no rate of interest is fixed in the by-laws, [such rate shall be

deemed to be} the PREVAILING legal rate SHALL APPLY

Scc 67. Payment of balance of subscription. ~ Subject to the provisions of the {contract of] subscription
CONTRACT, the board of directors fof any stock corporation} may at any time, declare due and payable to
the corporation unpaid subscriptions [to the capital stock] and may collect the same or such percentage

thereof. in either case. with accrued interest. if any, as it may deem necessary,

Payment of [any] unpaid subscription or any percentage thereof. together with [the] ANY interest accrued, if


24

26
27
28
29
30
3
32

any,] shall be made on the date specified in the [contract of] subscription CONTRACT or on the date stated
in the call made by the board, Failure to pay on such date shall render the entire balance duc and payable and
shall make the stockholder liable for interest at the legal rate on such balance, unless a different {rate off
interest RATE is provided in the by-laws.|,] THE INTEREST SHALL BE computed from [such] THE
date SPECIFIED, until full payment OF THE SUBSCRIPTION. If NO PAYMENT IS MADE within
thirty (30) days from the said date, [no payment is made,] all stocks covered by said subscription shall
thereupon become delinquent and shall be subject to sale as hereinafter provided. unless the board of

directors orders otherwise.

Scc. 68. Delinquency sale. ~The board of directors may, by resolution, order the sale of delinquent stock and
shall specifically state the amount due on each subscription plus all accrued interest, and the date, time and
place of the sale which shall not be less than thirty (30) days nor more than sixty (60) days from the date the
stocks become delinquent

Notice of said sale, with a copy of the resolution, shall be sent to every delinquent stockholder cither
personally, for] by registered mail, OR THROUGH OTHER MEANS PROVIDED IN THE BY-LAWS.
‘The same shall [furthermore] be published once a week for two (2) consecutive weeks in a newspaper of
general circulation in the province or city where the principal office of the corporation is located.

Unless the delinquent stockholder pays to the corporation, on or before the date specified for the sale of the
delinquent stock, the balance duc on his OR HER subscription, plus accrued interest, costs of advertisement
and expenses of sale, or unless the board of directors otherwise orders, said delinquent stock shall be sold at
A public auction to such bidder who shall offer to pay the full amount of the balance on the subscription
together with accrued interest, costs of advertisement and expenses of sale, for the smallest number of shares
ot fraction of a share. The stock so purchased shall be transferred to such purchaser in the books of the
corporation and a certificate for such stock shall be issued in his OR HER favor. The remaining shares, if
any, shall be credited in favor of the delinquent stockholder who shall likewise be entitled to the issuance of a

certificate of stock covering such shares

‘Should there be no bidder at the public auction who offers to pay the fill amount of the balance on the
subscription together with accrued interest, costs of advertisement and expenses of sale, for the smallest
number of shares or fraction of a share, the corporation may, subject to the provisions of this Code, bid for


20
2
22

24

the same, and the total amount due shall be credited as [paid in] fullY PAID in the books of the corporation,
Title to all the shares of stock covered by the subscription shall be vested in the corporation as treasury shares

and may be disposed of by said corporation in accordance with the provisions of this Code

Sec. 69. When sale may be questioned. ~ No action to recover delinquent stock sold can be sustained upon
the ground of irregularity or defect in the notice of sale, or in the sale itself of the delinquent stock, unless the
party seeking to maintain such action first pays or tenders to the party holding the stock the sum for which the
same was sold, with interest from the date of sale at the legal rate; and no such action shall be maintained

unless [it is commenced by the filing of] a complaint IS FILED within six (6) months from the date of sale.

Sec. 70. Court action to recover unpaid subscription. — Nothing in this Code shall prevent the corporation
from collecting [by action in a court of proper jurisdiction] THROUGH COURT ACTION, the amount duc

‘on any unpaid subscription, with acerued interest, casts and expenses.

Sco. 11. Effect of delinquency, ~ No delinquent stock shall be voted for, for] be entitled to vote, or |to] BE:
representED at any stockholder’s mecting, nor shall the holder thereof be entitled to any’ of the rights of a
stockholder except the right to dividends in accordance with the provisions of this Code, until and unless he
pays the amount due on his OR HER subscription with accrued interest, and the costs and expenses of

advertisement, if any,

Sec. 72. Rights of unpaid shares, NON-DELINQUENT. ~ Holders of subscribed shares not fully paid which
are not delinquent shall have all the rights of a stockholder

See. 73, Lost or destroyed certificates. ~ The following procedure shall be followed BY A CORPORATION
[for] IN [the] issuNGlance by a corporation of] new certificates of stock in lieu of those which have been

Jost, stolen or destroyed:

1. The registered owner of a certificate of stack in a corporation or his OR HER legal representative
shall file with the corporation an affidavit in triplicate setting forth, if possible, the circumstances as
to how the certificate was lost, stolen or destroyed, the mumber of shares represented by such
certificate, the serial number of the certificate and the name of the corporation which issued the same

He OR SHE shall also submit such other information and evidence which he OR SHE may deem


21
22
a
24

26
27
28
29

30

2. After verifying the affidavit and other information and evidence with the books of the corporation, said
corporation shall publish a notice in a newspaper of general circulation published in the place where the
corporation has its principal office, once a week for three (3) consecutive weeks at the expense of the
registered owner of the certificate of stock which has been lost, stolen or destroyed. The notice shall state the
name of said corporation, the name of the registered owner, [and] the serial number of said certificate, [and]
the number of shares represented by such certificate, and SHALL STATE that after the expiration of one (1)
year from the date of the last publication, if no contest has been presented to THE |said) corporation
regarding said certificate of stock, the right to make such contest shall be barred and [said] THE corporation
shall cancel THE LOST, DESTROYED OR STOLEN [in its books the] certificate of stock IN ITS
BOOKS [which has been Jost, stolen or destroyed and). fissueltn liew thereof, THE CORPORATION
SHALL ISSUE A new certificate of stock, unless the registered owner files a bond or other security [in liew
thereof] as may be required, effective for a period of one (1) year, for such amount and in such form and with
such sureties as may be satisfactory to the board of directors, in which ease a new certificate may be issued
‘even before the expiration of the one (1) year period provided herein,|- Provided, That iJlf'a contest has been
presented to said corporation or if an action is pending in court regarding the ownership of said certificate of
stock which has been lost, stolen or destroyed, the issuance of the new certificate of stock in lieu thercof shall
be suspended until the final decision by the court regarding the ownership of said certificate of stock which

hhas been lost, stolen or destroyed.

Except in case of fraud, bad faith, or negtigence on the part af the corporation and its officers, no action may
be brought against any corporation which shall have issued certificate of stock in lieu of those lost, stolen or

destroyed pursuant to the procedure above-described.

TITLE Vil
CORPORATE BOOKS AND RECORDS

Sec. 74. Books to be kept; stock transfer agent, ~ Every corporation shall keep and carefully preserve at its
principal office ALL INFORMATION RELATING TO THE CORPORATION INCLUDING, BUT

NOT LIMITED TO.


23
24
25
26
27
28
29
30
31

32

6

THE ARTICLES OF INCORPORATION AND BY-LAWS OF THE CORPORATION
AND ALL THEIR AMENDMENTS;

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;

THE NAMES AND ADDRESSES OF ALL THE MEMBERS OF THE BOARD OF

DIRECTORS OR TRUSTE)

'S AND THE EXECUTIVE OFFICERS;

IAL A record of all business transactions:

A RECORD OF THE RESOLUTIONS OF THE BOARD OF DIRECTORS OR
TRUSTEES AND OF THE STOCKHOLDERS OR MEMBERS;

COPIES OF THE LATEST REPORTORIAL REQUIREMENTS SUBMITTED TO THE
COMMISSION; and

THE minutes of all meetings of stockholders or members, or of the board of directors or
trustees|,], SUCH MINUTES fin which} shall {be} set forth in detail, AMONG OTHERS: the
time and place of {holding} the meeting HELD, how IT WAS authorized, the notice given,
THE AGENDA THEREFOR, whether the mecting was regular or special, {if special,) its
object IF SPECIAL, those present and absent, and every act done or ordered done at the
meeting. Upon the demand of afny| director, trustee, stockholder or member, the time when any
director, trustee, stockholder or member entered or teft 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 afny} director, trustee,
stockholder or member on any action or proposed action must be recorded in full on his OR

HER demand

[The] CORPORATE records, fof 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 A

REPRESENTATIVE at reasonable hours on business days, and he OR SHE may demand |, in writing, AT

HIS OR HER EXPENSE, for [a copy of] COPIES of SUCH RECORDS OR excerpts from said records

for minutes, at his expense]. THE INSPECTING OR REPRODUCING PARTY SHALL REMAIN

BOUND BY CONFIDENTIALITY RULES UNDER PREVAILING LAWS, SUCH AS REPUBLIC

ACT NO. 10173, OTHERWISE KNOWN AS THE DATA PRIVACY ACT, RULES ON TRADE


ao

2

23
24
25
26
27
28
29

30

SECRETS OR PROCESSES, REPUBLIC ACT NO. 8799, OTHERWISE KNOWN AS THE

SECURITIES REGULATION CODE, AND THE RULES OF COURT.

THERE IS NO RIGHT TO INSPECT AND/OR REPRODUCE CORPORATE RECORDS IF THE
REQUESTING PARTY IS NOT A STOCKHOLDER OR MEMBER OF RECORD, OR IS A
COMPETITOR, DIRECTOR, OFFICER, CONTROLLING STOCKHOLDER OR OTHERWISE

REPRESENTS THE INTERESTS OF A COMPETITOR.

ANY STOCKHOLDER WHO SHALL ABUSE THE RIGHTS GRANTED UNDER THIS SECTION
SHALL BE PENALIZED UNDER SECTION 171 OF THIS CODE.

Any officer or agent of the corporation who shall refuse to allow [any director, tnistee, 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
Cotle, 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 [144] 162 of this Code: Provided, That if such
refusal is made pursuant to 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 trustces 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 OR HER demand, OR
IS A COMPETITOR, DIRECTOR, OFFICER, CONTROLLING STOCKHOLDER OR
OTHERWISE REPRESENTS THE INTERESTS OF A COMPETITOR.

IF THE CORPORATION DENIES OR DOES NOT ACT [UPON] ON A DEMAND FOR INSPECTION
ANDIOR REPRODUCTION, THE AGGRIEVED PARTY MAY REPORT SUCH TO THE
COMMISSION. WITHIN FIVE (5) DAYS FROM RECEIPT OF SUCH REPORT, THE
COMMISSION SHALL CONDUCT A SUMMARY INVESTIGATION AND ISSUE AN ORDER
DIRECTING THE INSPECTION OR REPRODUCTION OF THE REQUESTED RECORDS.


Stock corporations must also keep a [book to be known as the} stock and transfer book, fin | which [must be
kept] SHALL CONTAIN a record of all stocks in the names of the stockholders alphabetically arranged; the
installments paid and unpaid on all stockS 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 OR SHE 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]; PROVIDED, FURTHER, THAT
THE COMMISSION MAY REQUIRE STOCK CORPORATIONS WHICH TRANSFER AND/OR
TRADE STOCKS IN SECONDARY MARKETS TO HAVE AN INDEPENDENT TRANSFER

AGENT.

Sec. 75. Right to financial statements. — Within ten (10) days from receipt of a written request FROM [of
any] A stockholder or member, the corporation shall furnish [to] him OR HER 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 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,


wn =

23
24
25
26
27
28
29
30

31

However, if the {paid-up capital] TOTAL ASSETS OR TOTAL LIABILITIES of the corporation is less
than [P50,000] P600,000.00, OR SUCH OTHER AMOUNT AS MAY BE DETERMINED
APPROPRIATE BY THE DEPARTMENT OF FINANCE, the financial statements may be certified
under oath by the treasurer Jor any responsible officer of the corporation. | AND THE CORPORATION'S
PRESIDENT.

TITLE IX

MERGER AND CONSOLIDATION

Sec. 76. Plan for] OF merger [of] OR consolidation. — Two of more corporations may merge into-a single
corporation which shall be one of the constituent corporations or may consolidate into a new single
corporation which shall be the consolidated corporation.

The board of directors or trustees of cach corporation, party to the merger or consolidation, shall approve a
plan of merger or consolidation setting forth the following:
1. The names of the corporations proposing to merge or consolidate, hereinafter referred to as the
‘constituent corporations;
2. ‘The terms of the merger or consolidation and the mode of carrying the same into effect:
3A statement of the changes, if any, in the articles of incorporation of the surviving corporation in case
of merger; and, [with respect to the consolidated corporation) in case of consolidation, all the
statements required to be set forth in the articles of incorporation for corporations organized under
this Code, and
4. Such other provisions with respect to the proposed merger or consolidation as are deemed necessary
or desirable

Sec. 77. Stockholdder[‘}s’ or member]'Js" approval. — Upon approval by majority vote of each of the board of
directors o 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 mectings shall be given to all stockholders or members
of the respective corporations IN THE SAME MANNER AS GIVING NOTICE OF REGULAR OR
SPECIAL MEETINGS UNDER SECTION 50 OF THIS CODE. |, at least two (2) weeks prior to the date


20
21

of the meeting, either personally or by registered mail | Said notice shall state the purpose of the meeting and

[shall] include a copy or a summary of the plan of merger or consolidation

‘The affirmative vote of stockholders representing at least two-thirds (2/3) of the outstanding capital stock of
each corporation in the case of stock corporations or at least two-thirds (2/3) of the members in the case of
non-stock corporations shall be necessary for the approval of such plan. Any dissenting stockholder [in stock
corporations} may exercise his appraisal night in accordance with the Code: Provided, That if after the
approval by the stockholders of such plan, the board of directors decides to abandon the plan, the appraisal
right shall be extinguished

Any amendment to the plan of merger or consolidation may be made, provided such amendment is approved
by majority vote of the respective boards of directors or trustees of all the constituent corporations and
ratified by the affirmative vote of stockholders representing at least two-thirds (2/3) of the outstanding capital
stock or of two-thirds (2/3) of the members of each of the constituent corporations, Such plan, together with

any amendment, shall be considered as the agreement of merger or consolidation

Sec. 78, 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 af
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
{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. Asto each corporation, the number of shares or members voting for {and] OR against such plan,
respectively 1:
4, THE CARRYING AMOUNTS AND FAIR VALUES OF THE ASSETS AND
LIABILITIES OF THE RESPECTIVE COMPANIES AS OF THE AGREED CUT-OFF
DATE |AGREED BY THE PARTIES];
5. THE METHOD TO 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

7. SUCH OTHER INFORMATION AS MAY BE PRESCRIBED BY THE COMMISSION.


233
24
25
26
27
28
29
0
3
32

Section 79, Effectivity of merger or consolidation. - The articles of merger or of consolidation, signed and
certified as {herein above] required BY THE CODE, 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. If the Commission is satisfied
that the merger or consolidation of the corporations concerned is not inconsistent with the provisions of this
Code and existing laws, it shall issue a certificate APPROVING THE ARTICLES AND PLAN OF merger
or of consolidation, at which time the merger or consolidation shall be effective; PROVIDED, THAT, TF
THE MERGER OR CONSOLIDATION REQUIRES THAT THE PHILIPPINE COMPETITION
COMMISSION BE NOTIFIED PURSUANT TO REPUBLIC ACT NO. 10667, OTHERWISE
KNOWN AS THE PHILIPPINE COMPETITION ACT, AND ITS IMPLEMENTING RULES AND
REGULATIONS, THE MERGER OR CONSOLIDATION SHALL BECOME EFFECTIVE ONLY

AFTER THE PHILIPPINE COMPETITION COMMISSION HAS CONCLUDED ITS REVIEW OF

‘THE TRANSACTION.

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 concerned the opportunity to be heard. Written notice of the date, time
and place of hearing shall be given to cach constituent corporation at least two (2) weeks before said hearing,

‘The Commission shall thereafter proceed as provided in this Code.

Sec. £0. Effects of merger or consolidation. ~ The merger or consolidation shall have the following effects
1. The constituent corporations shall become a single corporation which, in case of merger, shall be the
surviving corporation designated in the plan of merger; and, in case of consolidation, shall be the
consolidated corporation designated in the plan of consolidation,
2. The separate existence of the constituent corporations shall cease, except that of the surviving or the
consolidated corporation,
3. The surviving or the consolidated corporation shall possess all the rights, privileges, immunities and
powers and shall be subject to all the duties and liabilitics of a corporation organized under this Code;
4, The surviving or the consolidated corporation shall {thereupon and thereafter] possess all the rights,


18
19
20
2
2
23
m4
25
26
27
28
29
30
3
32

Privileges, immunities and franchises of each fof the} constituent corporation|s}; and all REAL OR
PERSONAL property, {real or personal, [and] all receivables duc on whatever account, including
subscriptions to shares and other choses in action, and fall and] every other interest of, for} belonging
to, or due to cach constituent corporation, shall be deemed transferred to and vested in such surviving,
or consolidated corporation without further act or deed; and

5. The surviving or consolidated corporation shall be responsible [and liable) for all the liabilities and
obligations of each fof the} constituent corporation|s in the same manner] as [if] THOUGH such
surviving or consolidated corporation had itself incurred such liabilities or obligations; and any
pending claim, action or proceeding brought by or against any fof such} constituent corporation|s}
may be prosecuted by or against the surviving or consolidated corporation. The rights of creditors of
liens upon the property of {any of] such constituent corporations shall not be impaired by [such] THE

merger or consolidation,

TITLE X
APPRAISAL RIGHT

See. 81, Instances of appraisal right — Any stockholder of a corporation shall have the right to dissent and
demand payment of the fair value of his OR HER shares in the following instances:

1. Incase an [y] 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. In case 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,

See. 82. How right is exercised — [The appraisal right may be exercised by any stockholder who shall have
voted against the proposed corporate action, by making a written demand on the corporation within thirty
(30) days after the date on which the vote was taken for payment of the fair value of his shares: THE
DISSENTING STOCKHOLDER WHO VOTES AGAINST A PROPOSED CORPORATE ACTION
MAY EXERCISE HIS OR HER APPRAISAL RIGHT BY MAKING A WRITTEN DEMAND ON
THE CORPORATION FOR THE PAYMENT OF THE FAIR VALUE OF HIS OR HER SHARES
WITHIN THIRTY (30) DAYS FROM THE DATE ON WHICH THE VOTE WAS TAKEN: Provided,


20
21

22
23
24
2s
26
27
28
29

That failure to make the demand within such period shall be deemed a waiver of the appraisal right If the
proposed corporate action is implemented [or affected), the corporation shall pay {to such] THE stockholder,
‘upon surrender of the certificate or certificates of stock representing his OR HER shares, the fair value
thereofas of the day [prior to the date on which} BEFORE the vote was taken, excluding any appreciation or

depreciation in anticipation of such corporate action,

If within [a period of] sixty (60) days from the [date the] APPROVAL OF THE corporate action [was
approved] by the stockholders, the withdrawing stockholder and the corporation cannot agree on the fair
value of the shares, it shall be determined and appraised by three (3) disinterested persons, one of whom shall
be named by the stockholder, another by the corporation, and the third by the two thus chosen. The findings
of the majority of the appraisers shall be final, and their award shall be paid by the corporation within thirty
(30) days after such award is made: Provided, That no payment shall be made to any dissenting stockholder
‘unless the corporation has unrestricted retained earnings in its books to cover such payment: and Provided,
further, That upon payment by the comparation of the agreed or awarded price, the stockholder shall forthwith

transfer his OR HER shares to the corporation,

Sco. 83. Effect of demand and termination of right. ~ From the time of demand for payment of the fair value
of a stockholder’s shares until cither the abandonment of the corporate action involved or the purchase of the
said shares by the corporation, all rights accruing to such shares, including voting and dividend rights, shall
be suspended in accordance with the provisions of this Code, except the tight of such stockholder to receive
payment of the ftir value thereof: Provided, ‘That if the dissenting stockholder is not paid the value af his OR
HER shares within THIRTY 30 days after the award, his OR HER voting and dividend rights shall
immediately be restored

Sco 84. When right to payment ceases. ~ No demand for payment under this Title may be withdrawn unless
the corporation consents thereto. If, however, such demand for payment is withdrawn with the consent of the
corporation, oF if the proposed corporate action is abandoned or rescinded by the corporation or disapproved
by the [Securities and Exchange] Commission where such approval is necessary, or if the [Securities and
Exchange] Commission determines that stich stockholder is not entitled to the appraisal right, then the right
of said stockholder to be paid the fair value of his OR HER shares shall cease, his OR HER status as a
stockholder shall [thereupon] be restored, and all dividend distributions which would have accrued on his OR
HER shares shall be paid to him OR HER.


24
25
26
27
28
29
30
31

Sec. 85. Who bears costs of appraisal. ~ The costs and expenses of appraisal shall be bore by the
corporation, unless the fair value ascertained by the appraisers is approximately the same as the price which
the corporation may have offered to pay the stockholder, in which case they shall be bore by the latter. In the
case of an action to recover such fair value, all costs and expenses shall be assessed against the corporation,

unless the refiusal of the stockholder to receive payment was unjustified.

Sec. 86, Notation on certificates; rights of transferee. ~ Within ten (10) days after demanding payment for
his OR HER shares, a dissenting stockholder shall submit the certificates of stock representing his OR HER
shares to the corporation for notation {thereon} that such shares are dissenting shares. His OR HER failure to
do so shall, at the option of the corporation, terminate his OR HER rights under this Title If shares
represented by the certificates bearing such notation are transferred, and the certificates consequently
cancelled, the rights of the transferor as a dissenting stockholder under this Title shall cease and the transferee
shall have all the rights of a regular stockholder; and all dividend distributions which would have accrued on

such shares shall be paid to the transferee.

‘TITLE XI.
NON-STOCK CORPORATION

See. 87. Definition. — For |the} purposes of this Code AND SUBJECT TO ITS PROVISIONS ON
DISSOLUTION, a non-stock corporation is one where no part of its income is distributable as dividends to
its members, trustees, or officers, [subject to the provisions of this Code on dissolution]: Provided, That any
profit which a non-stock corporation may obtain fas an} incident to its operations shall, whenever necessary
‘or proper, be used for the firtherance of the purpose or purposes for which the corporation was organized,

subject to the provisions of this Title

The provisions governing stock corporationS, when pertinent, shall be applicable to non-stock corporations,

except as may be covered by specific provisions of this Title.

Sce 88 Purposes. — Non-stock corporations may be formed or organized for charitable, religious,
educational, professional, cultural, fraternal, literary, scientific, social, civic service, or similar purposes, like

trade, industry, agricultural and like chambers, or any combination thereof, subject to the special provisions


20
21

22
oe)
24
25
26
27
28
29
30,

au

of this Title governing particular classes of non-stock corporations.

CHAPTER IT

MEMBERS
Sec. 89. Right to vote. ~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.

Unless otherwise provided in the articles of incorporation or the by-laws, a member may vote by proxy, in

accordance with the provisions of this Code. THE BY-LAWS MAY LIKEWISE AUTHORIZE VOTIN
THROUGH REMOTE COMMUNICATION ANDIOR IN ABSENTIA.

[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 |

Sec. 90. Non-transferability of membership, ~ Membership in a non-stock corporation and all rights arising
therefrom are personal and non-transferable, unless the articles of incorporation or the by-laws otherwise

provide

See. 91. Termination of membership. ~ Membership shall be terminated in the manner and for the causes
provided in the articles of incorporation or the by-laws. Termination of membership shall {have the effect of]
extinguishing} all rights of a member in the corporation or in its property, unless otherwise provided in the
atticles of incorporation or the by-laws.

CHAPTER IL

TRUSTEES AND OFFICERS

See. 92. Election and term of trustees. ~ (Unless otherwise provided in the articles of incorporation or the
by-laws,| The NUMBER OF TRUSTEES [board of trustees of non-stock corporations} SHALL BE
FIXED IN THE ARTICLES OF INCORPORATION OR BY-LAWS BUT SHALL NOT EXCEED [,

which may be more than] fifteen (15) [in number as may be fixed in their articles of incorporation or by-laws,


19a
2

2

22
3
24
25
26
27
28
29
30

3

shall). THEY SHALL HOLD OFFICE FOR NOT MORE THAN THREE (3) YEARS 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 clected 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.

EXCEPT WITH RESPECT TO INDEPENDENT TRUSTEES OF NON-STOCK CORPORATIONS
VESTED WITH PUBLIC INTEREST, [Njno person shall be clected as trustee unless he OR SHE 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] THE MEMBERS MAY DIRECTLY ELECT OFFICERS OF A
NON-STOCK CORPORATION

Sec. 93. LIST OF MEMBERS AND PROXIES, Place of meetings ~ THE CORPORATION SHALL, AT
ALL TIMES, KEEP A LIST OF ITS MEMBERS AND THEIR PROXIES IN THE FORM THE
COMMISSION MAY REQUIRE}. [WHICH] THE LIST SHALL BE UPDATED TO REFLECT THE
MEMBERS AND PROXIES OF RECORD TWENTY (20) 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 meetings at any place even outside the place where the principal affice of the corporation is
located: Provided, That proper notice is sent to all members indicating the date, time and place of the

meeting: and Providedf.J further, That the place of meeting shall be within the Philippines.

Chapter 11
DISTRIBUTION OF ASSETS IN NON-STOCK CORPORATIONS

Sec. 94. 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 139 [(4)}

(5). its assets shall be applied and distributed as follows


21
22
23
24
25
26
27
28
29

30

1 All liabilities and obligations of the corporation shall be paid, satisfied and discharged, or
adequate provision shall be made therefore};

2. Assets held by the corporation upon a condition requiring return, transfer or conveyance, and
which condition occurs by reason of the dissolution, shall be returned. transferred or conveyed in
accordance with such requirements;

3. Assets received and held by the corporation subject to limitations permitting their use only for
charitable, religious, benevolent, educational or similar purposes, but not held upon a condition
requiring return, transfer or conveyance by reason of the dissolution, shall be transferred or
conveyed to one of more corporations, societies or organizations engaged in activities in the
Philippines substantially similar to those of the dissolving corporation according to a plan of
distribution adopted pursuant to this Chapter,

4. Assets other than those mentioned in the preceding paragraphs, if any, shall be distributed in
accordance with the provisions of the articles of incorporation or the by-laws, to the extent that
the articles of incorporation or the by-laws, determine the distributive rights of members, or any

class or classes of members, or provide for distribution; and

5. In any other case, assets may be distributed to such persons, societies, organizations or
corporations, whether or riot organized for profit, as ray be specified in a plan of distribution
adopted pursuant to this Chapter

Sec. 95. Plan of distribution of assets. ~ A plan providing for the distribution of assets, {not in}consistent
with the provisions of this Title, may be adopted by a non-stock corporation in the process of dissolution in

the following manner

‘The board of trustees shall, by majority vote, adopt resolution recommending a plan of distribution and

directing the submission thereof to a vote at

regular or special meeting of members having voting rights,
EACH MEMBER ENTITLED TO VOTE SHALL BE GIVEN A [Wjwritten notice setting forth the
proposed plan of distribution or a summary thereof and the date, time and place of such meeting [shall be
xziven to each member entitled to vote,| within the time and in the manner provided in this Code for the giving
of notice of meetings {to members) Such plan of distribution shall be adopted upon approval of at least two-
thirds (2/3) of the members having voting rights present or represented by proxy at such meeting,


24
2s
26
27
28
29
30
3
32

TITLE XH
‘CLOSE CORPORATIONS

See. 96, Definition and applicability of Title — close corporation, within the meaning of this Code, is one
whose articles of incorporation provideS that: (1) All the corporation's issued stock of all classes, exclusive
of treasury shares, shall be held of record by not more than a specified number of persons, not exceeding
twenty (20); (2) all the issued stock of all classes shall be subject to one or more specified restrictions on
transfer permitted by this Title, and (3) The corporation shall not list in any stock exchange or make any
public offering of Jany off its stockS of any class. Notwithstanding the foregoing. a corporation shall not be
deemed a close corporation when at least two-thirds (2/3) of its voting stock or voting rights is owned or
controlled by another corporation which is not a close corporation within the meaning of this Code

Any corporation may be incorporated as a close corporation, except mining or oil companies, stock
exchanges, banks, insurance companics, public utilities, educational institutions and corporations declared to
be vested with public interest in accordance with the provisions of this Code.

‘The provisions of this Title shall primarily govern close corporations{y]: Provided, That |the provisions of}

other Titles IN Jof] this Code shall apply suppletorily, except [insofar as this Title] AS otherwise provideD{s}
UNDER THIS TITLE.

See. 97. Articles of incorporation, ~ The articles of incorporation of a close corporation may provide FOR
1. [For a] A classification of shares or rights fand), the qualifications for owning or holding the
same, and restrictions on their transfers [as may be stated therein), subject to the provisions of
the following section,
2. [For] A classification of directors into one or more classes, each of whom may be voted for and
elected solely by a particular class of stock: and
3. [For a g| Greater quorum or voting requirements in meetings of stockholders or directors than

those provided in this Code.

‘The articles of incorporation of a close corporation may provide that the business of the corporation shall be
managed by the stockholders of the corporation rather than by a board of directors. So long as this provision

continues in effect


20
21
2
23
24
25
26
27
28
29
30
31
32

No meeting of stockholders need be called to elect directors;

[Unless the context clearly requires otherwise, the] THE stockholders of the corporation shall be
deemed to be directors for the purpose of applying the provisions of this Code, UNLESS THE
CONTEXT CLEARLY REQUIRES OTHERWISE; and

The stockholders of the corporation shall be subject to all liabilities of directors,

‘The articles of incorporation may likewise provide that all officers or employees or that specified officers or

employees shall be elected or appointed by the stockholders, instead of by the board of directors

Sco 98 Validity of restrictions on transfer of shares. ~ Restrictions on the right to transfer shares must

appear in the articles of incorporation, [and] in the by-laws, as well as in the certificate of stock,|;] otherwise,

the same shall not be binding on any purchaser [thereof] in good faith. Said restrictions shall not be more

onerous than granting the existing stockholders or the corporation the option to purchase the shares of the

‘transferring stockholder with such reasonable terms, conditions or period stated [therein]. If upon the

expiration of said period, the existing stockholders or the corporation fails to exercise the option to purchase,

the transferring stockholder may sell his OR HER shares to any third person.

See. 99,
1

Effects of Issuance or transfer of stock in breach of qualifying conditions. ~
IF A stock of a close corporation is issued or transferred to any person who is not ELIGIBLE
[entitled under any provision of the articles of incorporation} to be a holder fof record of its
stock] THEREOF UNDER ANY PROVISION OF THE ARTICLES OF
INCORPORATION, and if the certificate for such stock conspicuously shows the
qualifications of the persons entitled to be holders of record thereof, such person is conclusively
presumed to have notice of the fact of his ineligibility to be a stockholder.
Ifthe articles of incorporation of a close corporation states the number of persons, not exceeding,
twenty (20), who are entitled to be STOCKholders of record [of its stock}, and if the certificate
for such stock conspicuously states such number, and [if] the issuance or transfer of stock to any
person would cause the stock to be held by more than such number of persons, the person to
whom such stock is issued or transferred is conclusively presumed to have notice of this fact.
If a stock certificate of alny] close corporation conspicuously shows a restriction on transfer of
[stock of] the corporation’S STOCK AND THE TRANSFEREE ACQUIRES THE STOCK
IN VIOLATION OF SUCH RESTRICTION, the transferee [of the stock} is conclusively


23
24
25
26
27
28
29
30
uM

presumed to have notice of the fact that he OR SHE has acquired THE stock in violation of the
restriction|, if such acquisition violates the restriction]

Whenever a[ny| person to whom stock of a close corporation has been issued or transferred has,
or is conclusively presumed under this section to have, notice either THAT: (a) [that] he OR
SHE is a person [not] INeligible to be a STOCKholder of [stock of] the corporation, or (b)
[that] transfer of stock to him OR HER would cause the stock of the corporation to be held by
more than the number of persons permitted [by|UNDER its articles of incorporation |to hold
stock of the corporation] or (c) [that] the transfer [of stock is in] violatESfion of] a restriction on
transfer of stock, the corporation may, at its option, refuse to register the transfer fof stock] in the
name of the transferee.

‘The provisions of subsection (4) shall not be applicable if the transfer of stock, though contrary
to subsections (1), (2) or (3), has been consented to by all the stockholders of the close
corporation, or if the close corporation has amended its articles of incorporation in accordance
with this Title

‘The term “transfer”, as used in this section, is not limited to a transfer for value.

‘The provisions of this section shall not impair any right which the transferee may have to
EITHER rescind the transfer or {to} recover THE STOCK under any [applicable] EXPRESS

OR IMPLIED warranty}, express or implied]

See. 100, Agreements by stockholders. -

‘Agreements [by and amang stockholders} DULY SIGNED AND executed BY AND AMONG
ALL STOCKHOLDERS before the formation and organization of a close corporation |, signed
by all stockholders,| shall survive the incorporation fof such corporation] and shall continue to
be valid and binding between [and among} such stockholders, if such be their intent, to the
extent that such agreements are {not in}consistent with the articles of incorporation, irrespective
of where the provisions of such agreements are contained, except those required by this Title to
be embodied in said articles of incorporation,

Alu] WRITTEN agreement [between] SIGNED BY two ot more stockholders, [if in writing
and signed by the parties thereto,) may provide that in exercising any voting rights, the shares
held by them shall be voted as [therein] provided [,or] as {they may] agreeD, or fas determined]
in accordance with a procedure agreed upon by them

No provision in afny! written agreement signed by the stockholders, relating to any phase of the


29
30
3
32

corporate affairs, shall be invalidated as between the parties, on the ground that its effect is to
‘make them partners among themselves

4, A written agreement among some or all of the stockholders in a close corporation shall not be
invalidated on the ground that it [0] relates to the conduct of the business and affairs of the
corporation as to restrict or interfere with the discretion or powers of the board of directors:
Provided, That such agreement shall impose on the stockholders who are parties thereto the
liabilities for managerial acts imposed by this Code on directors.

5. [To the extent that the] S[s]tockholders [are] actively’ engaged in the management or operation of
the business and affairs of a close corporationl, the stockholders] shall he held to strict fiduciary
duties to cach other and among themselves. Said stockholders shall be personally liable for

corporate torts unless the corporation has obtained reasonably adequate liability insurance.

See. 101. When board meeting is unnecessary or improperly held. — Unless the by-laws provide otherwise,
any action by the directors of a close corporation without a meeting shall nevertheless be deemed valid if
1 Before or after such action is taken, written consent thereto is signed by all the directors; or
2. All the stockholders have actual or implied knowledge of the action and make no prompt
objection {thereto} in writing; or
3. The directors are accustomed to take informal action with the express or implied acquiescence of
all the stockholders; or
4. Alll the directors have express or implied knowledge of the action in question and none of them

‘makes prompt objection [thereto] in writing

AN ACTION WITHIN THE CORPORATE POWERS TAKEN AT A MEETING [If a director's
meeting is] held without proper call or notice, fan action taken therein within the corporate powers} is deemed
ratified by a director who failed to attend, unless AFTER HAVING KNOWLEDGE THEREOF, he OR
SHE promptly files his written objection with the secretary of the corporation Jafter having knowledge
thereof]

Scc. 102. Preemptive right in close corporations ~ The pre-cmptive right of stockholders in close
corporations shall extend to all stock to be issued, including reisswance of treasury shares, whether for money.
Property or personal services, or in payment of corporate debts, untess the articles of incorporation provide
otherwise


23
24
25
26
27
28
29
30
31
2

Sec. 103. Amendment of articles of incorporation. — Any amendment to the articles of incorporation which
secks to delete or remove any provision required by this Title |to be contained in the articles of incorporation)
oF to reduce a quorum or voting requirement stated in said articles of incorporation shall [not be valid or
effective unless approved by] REQUIRE the affirmative vote of at least two-thirds (2/3) of the outstanding
capital stock, whether with or without voting rights, or of such greater proportion of shares as may be
specifically provided in the articles of incorporation for amending. deleting or removing any of the aforesaid
provisions, at a mecting duly called for the purpose.

‘Sec. 104. Deadlocks. — Notwithstanding any contrary provision in the CLOSE CORPORATION'S articles
of incorporation, [or] by-laws, or [agreement of] stockholders’ AGREEMENT [of a close corporation], if the
directors or stockholders are so divided [respecting] ON the management of the corporation's business and
affairs that the votes required for a{ny] corporate action cannot be obtained, with the consequence that the
business and affairs of the corporation can no longer be conducted to the advantage of the stockholders
generally, the [Securities and Exchange} Commission, upon written petition by any stockholder, shall have
the power to arbitrate the dispute. In the exercise of such power, the Commission shall have authority to make
Isuch order as it deems appropriate, including an] APPOPRIATE onderS, SUCH AS: (1) cancelling or
altering any provision contained in the articles of incorporation, by-laws, or any stockholder’s agreement: (2)
cancelling, altering of enjoining a{ny] resolution or act of the corporation or its board of directors,
stockholders, or officers; (3) directing or prohibiting any act of the corporation or its board of directors,
stockholders, officers, or other persons party to the action; (4) requiring the purchase at their fair value of
shares of any stockholder. cither by the corporation regardless of the availability of unrestricted retained
eamings in its books, or by the other stockholders; (5) appointing a provisional director; (6) dissolving the
corporation; or (7) granting such other relief as the circumstances may warrant

A provisional director shall be an impartial person who is neither a stockholder nor a creditor of the
corporation or Jof] any OF ITS subsidiarTES{y] or affiliateS Jof the corporation}, and whose further
qualifications, if any, may be determined by the Commission. A provisional director is not a receiver of the
corporation and does not have the title and powers of a custodian of receiver A provisional director shall
have all the rights and powers of a duly clected director [of the corporation), including the right to [notice]
BE NOTIFIED of and to vote at meetings of directors, until [such time as he shall be] HE OR SHE IS.
removed by order of the Commission or by all the stockholders. [His] THE compensation OF THE
PROVISIONAL DIRECTOR shall be determined by agreement between [him] SUCH DIRECTOR and


25
26
27
28
29
30
Bi
2

the corporation, subject to approval of the Commission, which may fix his] THE compensation fin the
absence of] ABSENT AN agreement or in the event of disagreement between the provisional director and the

corporation.

Sec 105. Withdrawal of stockholder or dissolution of corporation, — \n addition and without prejudice to
other rights and remedies available [to a stockholder] under this Title, any stockholder of a close corporation
may, for any reason, compel the [said] corporation to purchase his shares at {their} fair value, which shall not
be less than theJir] par or issued valuc, when the corporation has sufficient assets in its books to cover its
debts and liabilities exclusive of capital stock: Provided, That any stockholder of a close corporation may, by
written petition to the [Sccurities and Exchange] Commission, compel the dissolution of such corporation
whenever any of acts of the directors, officers or those in control of the corporation is illegal, for] fraudulent,
lor} dishonest, for] oppressive or unfairly prejudicial to the corporation or any stockholder, or whenever

corporate assets are being misapplied or wasted.

TITLE XH
SPECIAL CORPORATIONS
‘Chapter I —- EDUCATIONAL CORPORATIONS

Sec 106. Incorporation. — Educational corporations shall be governed by special laws and by the general

provisions of this Code

[Scc. 107. Pre-requisites to incorporation Except upon favorable recommendation of the Ministry of
Education and Culture, the Securities and Exchange Commission shall not accept or approve the articles of

incorporation and by-laws of any educational institution |

See. [108] 107, Hoard of trustees. Trustees of educational institutions organized as non-stock corporations
shall not be less than five (5) nor more than fifteen (15). Provided, however. That the number of trustees shall

‘be in multiples of five (5).

Unless otherwise provided in the articles of incorporation oR {n the} by-laws, the board of trustees of
incorporated schools, colleges. or other institutions of leaning shall, as soon as organized, so classify

themselves that the term of office of one-fifth (1/5) of their number shall expire every year. Trustees


thereafter elected to fill vacancies, occurring before the expiration of a particular term, shall hold office only
for the unexpired period. Trustees elected thereafter to fill vacancies caused by expiration of term shall hold
office for five (5) years. A majority of the trustees shall constitute a quorum for the transaction of business
‘The powers and authority of trustees shall be defined in the by-laws,

For institutions organized as stock corporations, the number and term of directors shall be governed by the

provisions on stock corporations

Chapter 1
RELIGIOUS CORPORATIONS

Sec. {109} 108, Classes of religious corporations. ~ Religious corporations may be incorporated by one or
‘more persons, Such corporations may be classified into corporations sole and religious societies

Religious corporations shall be governed by this Chapter and by the general provisions on non-stock

corporations insofar as {they may be} applicable

See [110] 109. Corporation sole — For the purpose of administering and managing, as trustee, the affairs,
property and temporalitics of any religious denomination, sect or church, a corporation sole may be formed
by the chief archbishop, bishop, priest, minister, rabbi or other presiding elder of such religions
denomination, sect ar church

See. [111] 110, Articles of incorporation. — In order to become a corporation sole, the chief archbishop,
bishop, priest, minister, rabbi or presiding elder of any religious denomination, sect or church must file with
the [Securities and Exchange} Commission articles of incorporation setting forth the following:
1 That he OR SHE is the chief archbishop, bishop, priest, minister, rabbi or presiding elder of his
OR HER religious denomination, sect or church and that he OR SHE desires to become a
corporation sale;
2. That the rules, regulations and discipline of his OR HER religious denomination, sect or church
are {not inconsistent with his OR HER becoming a corporation sole and do not forbid it;
3. That as such chief archbishop, bishop, priest, minister, rabbi or presiding elder, he OR SHE is

charged with the administration of the temporalities and the management of the affairs, estate


30
31
32

and properties of his OR HER religious denomination, sect or church within his OR HER
territorial jurisdiction, describing such territorial jurisdiction;

4. The manner [in] BY which any vacancy occurring in the office of chief archbishop, bishop,
priest, minister, rabbi of presiding elder is required to be filled, according to the rules,
regulations or discipline of the religious denomination, sect or church to which he OR SHE
belongs; and

5 The place where the principal office of the corporation sole is to be established and located,
which place must be within the Philippines

‘The articles of incorporation may include any other provision not contrary to law for the regulation of the

affairs of the corporation.

Sco. [112] 111. Submission of the articles of incorporation. ~The articles of incorporation must be verified,
Ibefore filing,| by affidavit or affirmation of the chief archbishop, bishop, priest, minister, rabbi or presiding
elder, as the case may be, and accompanied by a copy of the commission, certificate of election or letter of
appointment of such chief archbishop, bishop, priest, minister, rabbi or presiding elder, duly certified to be
correct by any notary public

From and after [the] filing with the [Securities and Exchange] Commission of the said articles of
incorporation, verified by affidavit or affirmation, and accompanied by the documents mentioned in the
preceding paragraph, such chief archbishop, bishop, priest, minister, rabbi or presiding elder shall become a
corporation sole and all temporalities, estate and properties of the religious denomination, sect or church
theretofore administered or managed by him as such chief archbishop, bishop, priest, minister, mbbi or
presiding elder shall be held in trust by him as a corporation sole, for the use, purpose, [behalf and) sole
benefit [of] AND ON BEHALF OF his OR HER religious denomination, sect or church, including

hospitals, schools, colleges, orphan asylums, parsonages and cemeteries thereof

Sco. [113] 112. Acquisition and alienation of property. ~ M|ny| corporation sole may purchase and hold real
cesttte and personal property for its church, charitable, benevolent or educational purposes, and may receive
bequests or gifts for such purposes. Such corporation may sell or mortgage real property held by it by
obtaining an order for that purpose from the [Court of First Instance] REGIONAL TRIAL COURT of the
province where the property is situated upon proof THAT THE NOTICE OF THE APPLICATION FOR


LEAVE TO SELL OR MORTGAGE HAS BEEN MADE THROUGH PUBLICATION OR AS
DIRECTED BY THE COURT, {made to the satisfaction of the court that notice of the application for leave
to sell or mortgage has been given by publication or otherssise in such manner and for such time as said court
may have directed, and that itis [to] IN the interest of the corporation that leave to sell or mortgage [should]
be granted. The application for leave to sell or mortgage must be made by petition, duly verified, by the chief
archbishop, bishop, priest, minister, rabbi or presiding elder acting as corporation sole, and may be opposed
by any member of the religious denomination, sect or church represented by the corporation sole: Provided,
‘That in cases where the rules, regulations, and discipline of the religious denomination, sect or church,
religious society or order concerned represented by such corporation sole regulate the method of acquiring,
holding, selling and mortgaging real estate and personal property, such rules, regulations and discipline shall

control, and the intervention of the courts shall not be necessary

Sco [114] 113. Filling of vacancies ~The successors in office of any chief archbishop, bishop, priest,
minister, rabbi or presiding elder in a corporation sole shall become the corporation sole on their accession to
office and shall be permitted to transact business as such UPon {the} filing A COPY OF THEIR
COMMISSION, CERTIFICATE OF ELECTION, OR LETTERS OF APPOINTMENT, DULY
CERTIFIED BY ANY NOTARY PUBLIC with the [Securities and Exchange] Commission [of a copy of

their commission, certificate of election, or letters of appointment, duly certified by any notary public}

During any vacancy in the office of chief archbishop, bishop, priest, minister, rabbi or presiding elder of any
religious denomination, sect or church incorporated as a corporation sole, the person or persons authorized
land empowered] by the rules, regulations or discipline of the religious denomination, sect or church
represented by the corporation sole to administer the temporalitics and manage the affairs, estate and
properties of the corporation sole {during the vacancy] shall exercise all the powers and authority of the

corporation sole during such vacancy.

See. [115] 114. Dissolution, — A corporation sole may be dissolved and its affairs settled voluntarily by
submitting to the [Securities and Exchange} Commission a verified declaration of dissolution, | ‘The
declaration of dissolution shall] SETTING forth:

1 ‘The name of the corporation;

2. The reason for dissolution and winding up;

3 ‘The authorization for the dissolution of the corporation by the particular religious denomination,


21
22

24
25
26
27
28
29
30
31
2

sect or church;
4 ‘The names and addresses of the persons who are to supervise the winding up of the affairs of the

corporation.

Upon approval of such declaration of dissolution by the [Sccuritics and Exchange] Commission, the
corporation shall cease to carry on its operations except for the purpose of winding up its affairs.

Sec. [116] 115. Religious socieries. - UNLESS FORBIDDEN BY COMPETENT AUTHORITY, THE
CONSTITUTION, PERTINENT RULES, REGULATIONS, OR DISCIPLINE OF THE RELIGIOUS
DENOMINATION, SECT OR CHURCH OF WHICH IT IS A PART, [A] any religious society, Jor]
religious order, for any} diocese, synod, or district organization of any religious denomination, sect or church,
[unless forbidden by the constitution, rules, regulations, or discipline of the religious denomination, sect or
church of which it is a part, or by competent authority.| may, upon written consent and/or by an affirmative
vote at a meeting called for the purpose of at least two-thirds (2/3) of its membership, incorporate for the
administration of its temporalities or for the management of its affairs, properties and estate by filing with the
[Sccurities and Exchange] Commission, articles of incorporation verified by the affidavit of the presiding
elder, secretary, or clerk or other member of such religious society or religious order, or diocese, synod, or
district organization of the religious denomination, sect or church, setting forth the following:

1 ‘That the religious society or religious order, or diocese, synod, or district organization is a
religious organization of a religious denomination, sect or church;

2. That at least two-thirds (2/3) of its membership haS{ve] given [their] written consent or haS[vel
voted to incorporate, at a duly convened meeting of the body:

3. That the incorporation of the religious society or religious order, [or] diocese, synod, or district
organization [desiring to incorporate] is not forbidden by competent authority or by the
constitution, rules, regulations or discipline of the religious denomination, sect, or church of
which it forms fa] part;

4. That the religious society or religious order, Jor] diocese. synod, or district organization desires
to incorporate for the administration of its affairs, properties and estate;

5. ‘The place WITHIN THE PHILIPPINES where the principal office of the corporation is to be
cstablished and located], which place must be within the Philippines}, and

6 The names, nationalities, and residence[s] ADDRESSES of the trustees, NOT LESS THAN
FIVE (5) NOR MORE THAN FIFTEEN (15), clected by the religious society or religious


25

26

28
29

30

order, oF the diocese, synod, or district organization to serve for the first year or such other
period as may be prescribed hy the laws of the religious society or religious order, or of the
diocese, synod, or district organization|, the board of trustees to be not less than five (5) nor

more than fifteen (15)]

CHAPTER HII
ONE PERSON CORPORATIONS:

SEC. [117] 116. APPLICABILITY OF PROVISIONS TO ONE PERSON |STOCK] CORPORATIONS, ~ THE
PROVISIONS OF THIS TITLE SHALL PRIMARILY APPLY TO ONE PERSON
CORPORATIONS. OTHER PROVISIONS OF THIS CODE APPLY SUPPLETORILY, EXCEPT AS
OTHERWISE PROVIDED IN THIS TITLE,

SEC. [118] 117, ONE PERSON CORPORATION. ~ A ONE PERSON CORPORATION IS A
CORPORATION WITH A SINGLE STOCKHOLDER: PROVIDED, THAT, ONLY A NATURAL

PERSON, TRUST OR AN ESTATE MAY FORM A ONE PERSON CORPORATION,

BANKS AND QUASI-BANKS, PRE-NEED, TRUST, INSURANCE, PUBLIC AND PUBLICLY -
LISTED COMPANIES, AND NON-CHARTERED GOVERNMENT-OWNED AND CONTROLLED

CORPORATIONS MAY NOT INCORPORATE AS ONE PERSON CORPORATIONS: PROVIDED,

FURTHER, THAT A NATURAL PERSON WHO IS LICENSED TO EXERCISE A PROFESSION
MAY NOT ORGANI

f AS A ONE PERSON CORPORATION FOR THE PURPOSE OF
EXERCISING SUCH PROFESSION EXCEPT AS OTHERWISE PROVIDED UNDER SPECIAL.

LAWS,

‘SEC, [119] 118. MINIMUM CAPITAL STOCK REQUIRED FOR ONE PERSON CORPORATION. ~ A
ONE PERSON CORPORATION SHALL NOT BE REQUIRED TO HAVE A MINIMUM
AUTHORIZED CAPITAL STOCK EXCEPT AS OTHERWISE PROVIDED BY SPECIAL LAW.

SEC, [120] 119, ARTICLES OF INCORPORATION, -A ONE PERSON CORPORATION SHALL

FILE ARTICLES OF INCORPORATION IN ACCORDANCE WITH THE REQUIREMENTS


30

31

UNDER SECTION 14 OF THIS CODE. IT SHALL LIKEWISE SUBSTANTIALLY CONTAIN

[SUBSTANTIALLY] THE FOLLOWING:

1.1. IF THE SINGLE STOCKHOLDER IS A TRUST OR AN ESTATE, THE NAME,
NATIONALITY, AND RESIDENCE OF THE TRUSTEE, ADMINISTRATOR, EXECUTOR,
GUARDIAN, CONSERVATOR, CUSTODIAN, OR OTHER PERSON EXERCISING
FIDUCIARY DUTIES TOGETHER WITH THE PROOF OF SUCH AUTHORITY TO ACT
ON BEHALF OF THE TRUST OR ESTATE; AND

2. NAME, NATIONALITY, RESIDENCE OF THE NOMINEE AND ALTERNATE NOMINEE,

AND THE EXTENT, COVERAGE AND LIMITATION OF THE AUTHORITY.

SEC, [121] 120. BY-LAWS. — THE ONE PERSON CORPORATION IS NOT REQUIRED TO
SUBMIT AND FILE CORPORATE BY-LAWS.

SEC. [122] 121. DISPLAY OF CORPORATE NAME. - A ONE PERSON CORPORATION SHALL
INDICATE THE LETTERS “OPC” EITHER BELOW OR AT THE END OF ITS CORPORATE

NAME.

SEC. [123] 122. SINGLE STOCKHOLDER AS DIRECTOR, PRESIDENT. - THE SINGLE
STOCKHOLDER SHALL BE THE SOLE DIRECTOR AND PRESIDENT OF THE ONE PERSON
CORPORATION.

SEC. [124] 123. TREASURER, CORPORATE SECRETARY, AND OTHER OFFICERS. — WITHIN
FIFTEEN (15) DAYS FROM THE ISSUANCE OF ITS CERTIFICATE OF INCORPORATION,
THE ONE PERSON CORPORATION SHALL APPOINT A TREASURER, CORPORATE
SECRETARY, AND OTHER OFFICERS AS IT MAY DEEM NECESSARY, AND NOTIFY THE

COMMISSION THEREOF WITHIN FIVE (5) DAYS FROM APPOINTMENT.

THE SINGLE STOCKHOLDER MAY NOT BE APPOINTED AS THE CORPORATE

SECRETARY.


19

20

IN CASE THE SINGLE STOCKHOLDER APPOINTS HIMSELF AS THE TREASURER, HE
SHALL GIVE BOND TO THE COMMISSION, IN SUCH SUM AS MAY BE REQUIRED, AND

SUBJECT TO ITS APPROVAL, UPON THE CONDITION THAT HE WILL FAITHFULLY

ADMINISTER THE ONE PERSON CORPORATION'S FUNDS COMING INTO HIS HANDS AS
TREASURER, AND DISBURSE AND INVEST THE SAME ACCORDING TO THE ARTICLES OF
INCORPORATION AS APPROVED BY THE COMMISSION, WHICH BOND SHALL BE

RENEWED EVERY TWO YEARS OR AS OFTEN AS MAY BE REQUIRED,

SEC. [125] 124, SPECIAL FUNCTIONS OF THE CORPORATE SECRETARY. ~1N ADDITION TO

THE FUNC

IONS DE!

NATED BY THE ONE PERSON CORPORATION, THE CORPORATE.
SECRETARY SHALL:

1, BE RESPONSIBLE FOR MAINTAINING THE MINUTES BOOK AND/OR RECORDS.
OF THE CORPORATION;

2, NOTIFY THE NOMINEE OR ALTERNATE NOMINEE OF THE DEATH OR
INCAPACITY OF THE SINGLE STOCKHOLDER, WHICH NOTICE SHALL BE
GIVEN NO LATER THAN FIVE (5) DAYS FROM SUCH OCCURRENCE;

3. NOTIFY THE COMMISSION OF THE DEATH OF THE SINGLE STOCKHOLDER
WITHIN FIVE (5) DAYS FROM SUCH OCCURRENCE AND STATING IN SUCH
NOTICE THE NAMES, RESIDENCE|S| ADDRESSES, AND CONTACT DETAILS OF
ALL

NOWN L

ALE

S; AND

4 CALL THE NOMINEE OR ALTERNATE NOMINEE AND THE KNOWN LEGAL

HEIRS TO A MEE AND ADVISE THE LEGAL HEIRS WITH REGARD TO,
AMONG OTHERS, THE ELECTION OF A NEW DIRECTOR, AMENDMENT OF THE
ARTICLES OF INCORPORATION, AND OTHER ANCILLARY AND/OR

CONSEQUENTIAL MATTERS,

SEC. [126] 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, TAKE THE PLACE OF
THE SINGLE STOCKHOLDER AS DIRECTOR AND SHALL MANAGE THE CORPORATION'S:

AFFAIRS.


26
oF
28
29

30

THE ARTICLES OF INCORPORATION SHALL STATE THE NAMES, RESIDENCE ADDRESSES
AND CONTACT DETAILS OF THE NOMINEE AND ALTERNATE NOMINEE, AS WELL AS
THE EXTENT AND LIMITATIONS OF THEIR AUTHORITY IN MANAGING THE AFFAIRS OF

THE ONE PERSON CORPORATION.

THE WRITTEN CONSENT OF THE NOMINEE AND ALTERNATE NOMINEE SHALL BE

ATTACHED TO THE APPLICATION FOR INCORPORATION. SUCH CONSENT MAY BE

WITHDRAWN IN WRITING ANYTIME BEFORE THE DEATH OR INCAPACITY OF THE
SINGLE STOCKHOLDER.

KE AND ALTERNATE NOMINE]

SEC. [127] 126, TERM OF NOMI WHEN THE INCAPACITY
OF THE SINGLE STOCKHOLDER IS TEMPORARY, THE NOMINEE SHALL SIT AS

DIRECTOR AND MANAGE THE AFFAIRS OF THE ONE PERSON CORPORATION UNTIL THE

STOCK R, BY HIS OR HER OWN DETERMINATION, REGAINS HIS OR HER
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 UNTIL THE LEGAL HEIRS OF THE SINGLE STOCKHOLDER HAVE BI

LAWFULLY DETERMINED, AND THE[Y] HEIRS HAVE DESIGNATED ONE OF THEM OR

HAVE AGREED THAT THE ESTATE [IS TO] SHALL BE TH

GLE STOCKHOLDER OF

THE ONE PERSON CORPORATION,

THE ALTERNATE NOMINEE

ALL SIT AS DIRECTOR AND MANAGE THE ONE PERSON
CORPORATION IN CASE OF THE NOMINI

INABILITY, INCAPACITY, DEATH, OR
REFUSAL TO DISCHARGE HIS OR HER FUNCTIONS, AND ONLY FOR THE SAME TERM.

AND UNDER THE SAME CONDITIONS APPLICABLE TO THE NOMINEE.

SEC. [128] 127. CHANGE OF NOMINEE OR ALTERNATE NOMINEE, ~ THE SINGLE

STOCKHOLDER MAY, AT ANY TIME, CHANGE ITS NOMINEE AND ALTERNATE NOMINEE

BY SUBMITTING TO THE COMMISSION THE NAMES OF THE NEW NOMINEES AND THEIR


20
21
22

23

27
28
29

30

CORRESPONDING WRITTEN CONSENT|S]. FOR THIS PURPOSE, THE ARTICLES OF

INCORPORATION NEED NOT BE AMENDED.

SEC. [129] 128. RECORDS IN LIEU OF MEETINGS. - WHEN ACTION IS NEEDED ON ANY
MATTER, IT SHALL BE SUFFICIENT TO PREPARE A WRITTEN RESOLUTION, SIGNED AND
DATED BY THE SINGLE STOCKHOLDER, AND RECORDED IN THE MINUTES|-/BOOK OF
‘THE ONE PERSON CORPORATION. THE DATE OF RECORDING IN THE MINUTES|-] BOOK
SHALL BE DEEMED TO BE THE DATE OF THE MEETING FOR ALL PURPOSES UNDER THIS

CODE.

SEC. [130] 129. MINUTES/-] BOOK. ~ A ONE PERSON CORPORATION SHALL MAINTAIN A
MINUTES}-|, BOOK WHICH SHALL CONTAIN ALL ACTIONS, DECISIONS, AND

RESOLUTIONS TAKEN BY THE ONE PERSON CORPORATION.

SEC. [131] 130, REPORTORIAL REQUIREMENTS. - THE ONE PERSON CORPORATION SHALL
SUBMIT THE FOLLOWING WITHIN SUCH PERIOD AS THE COMMISSION MAY
PRESCRIBE:

1. ANNUAL FINANCIAL STATEMENTS AUDITED BY AN INDEPENDENT CERTIFIED
PUBLIC ACCOUNTANT: PROVIDED, THAT IF THE TOTAL ASSETS OR TOTAL
LIABILITIES OF THE CORPORATION ARE LESS THAN THREE MILLION PESOS
{P3,000,000.00] THE FINANCIAL STATEMENTS SHALL BE CERTIFIED UNDER
OATH BY THE CORPORATION'S TREASURER AND THE PRESIDENT.

2, A REPORT CONTAINING EXPLANATIONS OR COMMENTS BY THE PRESIDENT
ON EVERY QUALIFICATION, RESERVATION, OR ADVERSE REMARK OR
DISCLAIMER MADE BY THE AUDITOR IN HIS OR HER REPORT;

3. A DISCLOSURE OF ALL SELF-DEALINGS AND RELATED PARTY
TRANSACTIONS ENTERED INTO BETWEEN THE ONE PERSON CORPORATION
AND THE SINGLE STOCKHOLDER; AND

4. OTHER REPORTS AS THE COMMISSION MAY REQUIRE.


2
23
24
2s

26

28

29

30

32

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.

THE COMMISSION MAY PLACE THE CORPORATION UNDER DELINQUENT STATUS

SHOULD THE CORPORATION FAIL TO S

JBMIT THE REPORTORIAL REQUIREMENTS
THREE (3) TIMES, CONSECUTIVELY OR INTERMITTENTLY, WITHIN A PERIOD OF FIVE

(5) YEARS.

SEC. [132] 131 LIABILITY OF SINGLE SHAREHOLDER.~ A SOLE. —- SHAREHOLDER
CLAIMING LIMITED LIABILITY HAS THE BURDEN OF AFFIRMATIVELY SHOWING THAT
‘THE CORPORATION WAS ADEQUATELY FINANCED.

WHERE THE SINGLE STOCKHOLDER CANNOT PROVE THAT THE PROPERTY OF THE
ONE PERSON CORPORATION IS INDEPENDENT OF HIS OWN PROPERTY, HE OR SHE

SHALL BE JOINTLY AND SE’

ERALLY LIABLE FOR THE DEBTS AND OTHER LIABILITIES

OF THE ONE PERSON CORPORATION,

‘THE PRINCIPLES OF PIERCING THE CORPORATE VEIL APPLIES WITH EQUAL FORCE TO

ONE PERSON CORPORATIONS AS WITH OTHER CORPORATIONS.

SEC. [133] 132. CONVERSION FROM AN ORDINARY CORPORATION TO A ONE PERSON
CORPORATION. ~ WHEN A SINGLE STOCKHOLDER ACQUIRES ALL THE STOCKS OF AN
ORDINARY STOCK CORPORATION, THE LATTER MAY APPLY FOR CONVERSION INTO A
ONE PERSON CORPORATION, SUBJECT TO THE SUBMISSION OF SUCH DOCUMENTS AS
THE COMMISSION MAY REQUIRE. IF THE APPLICATION FOR CONVERSION IS
APPROVED, THE COMMISSION SHALL ISSUE AN AMENDED CERTIFICATE OF
INCORPORATION REFLECTING THE CONVERSION. THE ONE PERSON CORPORATION
CONVERTED FROM AN ORDINARY STOCK CORPORATION SHALL SUCCEED THE
LATTER AND BE LEGALLY RESPONSIBLE FOR ALL THE LATTER'S OUTSTANDING
LIABILITIES AS OF THE DATE OF CONVERSION.


9
20
2
22
23
24
25
26
27
28
29
30
al

32

SEC. [134] 133. CONVERSION FROM A ONE PERSON CORPORATION TO AN ORDINARY STOCK
CORPORATION. — A ONE PERSON CORPORATION MAY BE CONVERTED INTO AN
ORDINARY STOCK CORPORATION AFTER DUE NOTICE TO THE COMMISSION OF SUCH
FACT AND OF THE CIRCUMSTANCES LEADING TO THE CONVERSION, AND AFTER
COMPLIANCE WITH ALL OTHER REQUIREMENTS FOR STOCK CORPORATIONS UNDER
THIS CODE AND APPLICABLE RULES. SUCH NOTICE SHALL BE FILED WITH THE
COMMISSION WITHIN SIXTY (60) DAYS FROM THE OCCURRENCE OF THE
CIRCUMSTANCES LEADING TO THE CONVERSION INTO AN ORDINARY STOCK
CORPORATION. IF ALL REQUIREMENTS HAVE BEEN COMPLIED WITH, THE
COMMISSION SHALL ISSUE AN AMENDED CERTIFICATE OF INCORPORATION
REFLECTING THE CONVERSION.

IN CASE OF DEATH OF THE SINGLE STOCKHOLDER, THE NOMINEE OR ALTERNATE
NOMINEE SHALL TRANSFER THE SHARES TO THE DULY DESIGNATED L.

AL HEIR OR
ESTATE WITHIN SEVEN (7) DAYS FROM RECEIPT OF EITHER AN AFFIDAVIT OF
HEIRSHIP OR SELF-ADJUDICATION EXECUTED BY A SOLE HEIR, OR ANY OTHER LEGAL
DOCUMENT DECLARING THE LEGAL HEIRS OF THE SINGLE STOCKHOLDER AND
NOTIFY THE COMMISSION OF THE TRANSFER. WITHIN SIXTY (60) DAYS FROM THE
TRANSFER OF THE SHARES, THE LEGAL HEIRS SHALL NOTIFY THE COMMISSION OF
THEIR DECISION TO EITHER WIND UP AND DISSOLVE THE ONE PERSON CORPORATION
OR CONVERT IT INTO AN ORDINARY STOCK CORPORATION.

THE ORDINARY STOCK CORPORATION CONVERTED FROM A ONE PERSON
CORPORATION SHALL SUCCEED THE LATTER AND BE LEGALLY RESPONSIBLE FOR

ALL THE LATTER'S OUTSTANDING LIABILITIES AS OF THE DATE OF CONVERSION,

TITLE XIV

DISSOLUTION

See. [117] 134. Methods of dissolution. — A corporation formed or organized under the provisions of this

Code may be dissolved voluntarily or involuntarily


30
3
32

See. [118] 135, Voluntary dissolution where no creditors are affected, ~ \f dissolution of a corporation 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 MAJORITY [two-thirds (2/3)] of the outstanding capital stock] or
MAJORITY of [at least two-thirds (2/3) of] the members of a meeting to be held upon the call of the

directors or trustees.

AT LEAST TWENTY (20) DAYS PRIOR TO THE MEETING, NOTICE SHALL BE GIVEN TO
EACH SHAREHOLDER OR MEMBER OF RECORD PERSONALLY, BY REGISTERED MAIL,
OR BY ANY MEANS AUTHORIZED UNDER ITS BY-LAWS 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 publication of the notice] NOTICE of THE time, place, and object of
the meeting SHALL BE PUBLISHED ONCE [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
Jocated,|; andJOR 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}

A VERIFIED REQUEST FOR DISSOLUTION SHALL BE FILED WITH THE COMMISSION
STATING: (a) THE REASON FOR THE DISSOLUTION; (b) THE FORM, MANNER, AND TIME
WHEN THE NOTICES WERE GIVEN; (c) NAMES OF THE STOCKHOLDERS AND DIRECTORS.
OR TRUSTEES, WHO APPROVED THE DISSOLUTION; (d) THE DATE, PLACE, AND TIME OF
‘THE MEETING IN WI

'H THE VOTE WAS MADE; AND (e) DETAILS OF PUBLICATION.

THE CORPORATION SHALL SUBMIT THE FOLLOWING TO THE COMMISSION: (a) A COPY
OF THE RESOLUTION AUTHORIZING THE DISSOLUTION, CERTIFIED BY A MAJORITY OF
THE BOARD OF DIRECTORS OR TRUSTEES AND COUNTERSIGNED BY THE SECRETARY

OF THE CORPORATION; AND (b) PROOF OF PUBLICATION.

IA copy of the resolution authorizing the dissolution shall be certified by a majority of the board of directors

or trustees and countersigned by the secretary of the corporation. |


24

2s
26
27
28
29

3
32

WITHIN FIFTEEN (15) DAYS FROM RECEIPT OF THE VERIFIED REQUEST FOR
DISSOLUTION, AND IN THE ABSENCE OF ANY WITHDRAWAL WITHIN SAID PERIOD, [The
Securities and Exchange] THE Commission shall APPROVE THE REQUEST AND [thereupon] issue the
certificate of dissolution THE DISSOLUTION SHALL TAKE EFFECT ONLY UPON THE

ISSUANCE BY THE COMMISSION OF A CERTIFICATE OF DISSOLUTION,

Sec. {119]136. 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 fits] THE CORPORATION'S board
of directors or trustees [or other officers having the management of its affairs), verified by its president or
secretary oF 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 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 CORPORATION SHALL SUBMIT TO THE
COMMISSION THE FOLLOWING: (a) A COPY OF THE RESOLUTION AUTHORIZING THE,
DISSOLUTION, 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 DEADLINE FOR FILING OBJECTIONS TO THE PETITION [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


20
2
22
23
2
25
26
27
28
29
30
a

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 issuc [made] RAISED [by] IN the
objections filed, and if no such objection is sufficient, and the material allegations of the petition are truc, it
shall render judgment dissolving the corporation and directing such disposition of its asscts as justice
requires, and may appoint a receiver to collect such assets and pay the debts of the corporation

‘THE DISSOLUTION SHALL TAKE EFFECT ONLY UPON THE ISSUANCE BY THE

COMMISSION OF A CERTIFICATE OF DISSOLUTION,

Section |120] 137. Dissolution by shortening corporate term. ~ 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, fas the case
may be] AS STATED IN THE APPROVED AMENDED ARTICLES OF INCORPORATION, the
corporation shall be deemed dissolved without any further proceedings, subject to the provisions of this Code

on liquidation

IN THE CASE OF EXPIRATION OF CORPORATE TERM, DISSOLUTION SHALL
AUTOMATICALLY TAKE EFFECT ON THE DAY FOLLOWING THE LAST DAY OF THE
CORPORATE TERM STATED IN THE ARTICLES OF INCORPORATION, WITHOUT THE

NEED FOR THE ISSUANCE BY THE COMMISSION OF A CERTIFICATE OF DISSOLUTION.

SECTION 13& WITHDRAWAL OF REQUEST AND PETITION FOR DISSOLUTION. - A
WITHDRAWAL OF THE REQUEST FOR DISSOLUTION SHALL BE MADE IN WRITING,
DULY VERIFIED BY ANY INCORPORATOR, DIRECTOR, SHAREHOLDER, OR MEMBER AND
SIGNED BY THE SAME NUMBER OF INCORPORATORS, DIRECTORS, SHAREHOLDERS, OR
MEMBERS NECESSARY TO REQUEST FOR A DISSOLUTION AS SET FORTH IN THE
FOREGOING SECTIONS. THE WITHDRAWAL SHALL BE SUBMITTED NO LATER THAN
FIFTEEN (15) DAYS FROM [THE] RECEIPT BY THE COMMISSION OF THE REQUEST FOR
DISSOLUTION. UPON RECEIPT OF A WITHDRAWAL OF REQUEST FOR DISSOLUTION,

THE COMMISSION SHALL WITHHOLD ACTION ON THE REQUEST FOR DISSOLUTION


23
24
25
26
27
28
29
30
31

AND SHALL, AFTER INVESTIGATION: (a) MAKE A PRONOUNCEMENT THAT THE
REQUEST FOR DISSOLUTION IS DEEMED WITHDRAWN; (b) DIRECT A JOINT MEETING
OF THE BOARD OF DIRECTORS OR TRUSTEES AND THE STOCKHOLDERS OR MEMBERS
FOR THE PURPOSE OF ASCERTAINING WHETHER TO PROCEED WITH DISSOLUTION; OR
(c) ISSUE SUCH OTHER ORDERS AS IT MAY DEEM APPROPRIATE.

A WITHDRAWAL OF THE PETITION FOR DISSOLUTION SHALL BE IN [A] THE FORM OF A
MOTION AND SIMILAR IN SUBSTANCE TO A WITHDRAWAL OF REQUEST FOR
DISSOLUTION BUT SHALL BE VERIFIED AND FILED PRIOR TO PUBLICATION OF THE

ORDER SETTING THE [DATE] DEADLINE FOR FILING OBJECTIONS TO THE PETITION.

Sec. [121] 139. Involuntary dissolution. — A corporation may be dissolved by the [Securities and Exchange]
Commission MOTU PROPRIO OR upon filing of a verified complaint BY ANY INTERESTED PARTY
[and after proper notice and hearing on the grounds provided by existing laws, rules and regulations. | THE
FOLLOWING MAY BE GROUNDS FOR DISSOLUTION OF THE CORPORATION:
1. NON-USE OF CORPORATE CHARTER AS PROVIDED UNDER SECTION 22 OF
THIS CODE;
2. CONTINUOUS INOPERATION OF A CORPORATION AS PROVIDED UNDER
SECTION 22 OF THIS CODE;
3. UPON RECEIPT OF A LAWFUL COURT ORDER DISSOLVING THE

CORPORATIO!

4. UPON FINDING BY FINAL JUDGMENT THAT THE CORPORATION PROCURED
ITS INCORPORATION THROUGH FRAUD;
5. UPON FINDING BY FINAL JUDGMENT THAT THE CORPORATION:

i. WAS CREATED FOR THE PURPOSE OF COMMITTING, CONCEALING OR
AIDING THE COMMISSION OF SECURITIES VIOLATIONS, SMUGGLING,
TAX EVASION, MONEY LAUNDERING, OR GRAFT AND CORRUPT
PRACTICES;

ii, COMMITTED OR AIDED IN THE COMMISSION OF SECURITIES
VIOLATIONS, SMUGGLING, TAX EVASION, MONEY LAUNDERING, OR


26

27
28
29

30

GRAFT AND CORRUPT PRACTICES, AND ITS STOCKHOLDERS KNEW;
oR

iii, REPEATEDLY AND KNOWINGLY TOLERATED THE COMMISSION OF
GRAFT AND CORRUPT PRACTICES OR OTHER FRAUDULENT OR
ILLEGAL ACTS BY ITS DIRECTORS, TRUSTEES, OFFICERS, OR
EMPLOYEES.

IF THE CORPORATION IS ORDERED DISSOLVED BY FINAL JUDGMENT PURSUANT TO
THE GROUNDS SET FORTH IN NO. 5, ITS ASSETS, AFTER PAYMENT OF ITS LIABILITIES
SHALL, UPON PETITION OF THE COMMISSION WITH THE APPROPRIATE COURT, BE
FORFEITED IN FAVOR OF THE NATIONAL GOVERNMENT. SUCH FORFEITURE SHALL BE
WITHOUT PREJUDICE TO THE RIGHTS OF INNOCENT STOCKHOLDERS AND EMPLOYEES
FOR SERVICES RENDERED, AND TO THE APPLICATION OF OTHER PENALTY OR
SANCTION UNDER THIS CODE OR OTHER LAWS.

See. |122)140, Corporate liquidation ~ EXCEPT FOR BANKS, WHICH SHALL BE COVERED BY
THE APPLICABLE PROVISIONS OF REPUBLIC ACT NO. 7653, OTHERWISE KNOWN AS THE
NEW CENTRAL BANK ACT, AS AMENDED, AND REPUBLIC ACT NO. 3591, AS AMENDED,
[Elevery corporation whose charter expires [by its own limitation] PURSUANT TO ITS ARTICLES OF
INCORPORATION, [or] is annulled by forfeiture [or otherwise}, or whose corporate existence [for other
purposes] is terminated in any other manner, shall nevertheless {be continued) REMAIN as a body corporate
for three (3) years after the [time when it would have been so dissolved) EFFECTIVE DATE OF
DISSOLUTION, 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.

fro sexx xxx]

At any time during said three (3) years, the corporation is authorized and empowered to convey all of its
property to trustees for the benefit of stockholders, members, creditors, and other persons in interest. [From
and a] After any such conveyance by the corporation of its property in trust for the benefit of its stockholders,

members, creditors and others in interest, all interest which the corporation had in the property terminates, the


28

29

30

legal interest vests in the trustees, and the beneficial interest in the stockholders, members, creditors or other

persons-in-interest

EXCEPT AS OTHERWISE PROVIDED FOR IN SECTIONS 94 AND 95 OF THIS CODE, upon the
winding up of corporate affairs, any asset distributable to any creditor o 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.

fox xxx xan}

Except by decrease of capital stock and as otherwise allowed by this Code, no corporation shall distribute any

of its assets or property except upon lawful dissolution and after payment of all its debts and liabilities

TITLE XV FOREIGN CORPORATIONS

Sec. [123] 141, Definition and rights of foreign corporations. — For |the| purposes of this Code, a foreign
corporation is one formed, organized or existing under fany] laws other than [those of] the Philippines’ and
whose laws allow Filipino citizens and corporations to do business in its own country or state. It shall have
the right to transact business in the Philippines after {it shall have obtained] OBTAINING a license {to
transact business in this country] FOR THAT PURPOSE in accordance with this Code and,] a certificate of

authority from the appropriate government agency

See. [124] 142. Application 10 existing foreign corporations. — Every foreign corporation which on the date
of the effectivity of this Code is authorized to do business in the Philippines under a license [therefore] issued
to it, shall continue to have such authority under the terms and condition of its license, subject to the
provisions of this Code and other special laws.

See. [125] 143 Application for a license. — A foreign corporation applying for a license to transact business
in the Philippines shall submit to the [Securities and Exchange] Commission a copy of its articles of
incorporation and by-laws, certified in accordance with law, and their translation to an official language of
the Philippines, if necessary. The application shall be under oath and, unless already stated in its articles of
incorporation, shall specifically set forth the following:

1 The date and term of incorporation,

2. The address, including the street number, of the principal office of the corporation in the country

of state of incorporation,


24
25
26
27
28
29

3

32

3. ‘The name and address of its resident agent authorized to accept summons and process in all legal
proceedings and ALL NOTICES AFFECTING THE CORPORATION, pending the
establishment of a local office, all notices affecting the corporation};

4. ‘The place in the Philippines where the corporation intends to operate;

5. The specific purpose or purposes which the corporation intends to pursue in the transaction ofits
‘business in the Philippines: Provided, ‘That said purpose or purposes are those specifically stated
in the certificate of authority issued by the appropriate government agency,

6. The names and addresses of the present directors and officers of the corporation,

7. A statement of its authorized capital stock and the aggregate number of shares which the
corporation has authority to issue, itemized by classfes], par value of shares, shares without par
value, and series, ifany;

8. A statment of its outstanding capital stock and the aggregate number of shares which the
corporation has issued, itemized by classes], par value of shares, shares without par value, and
series, if'any;

9 A statement of the amount actually paid in; and

10. Such additional information as may be necessary or appropriate in order to enable the [Securities
and Exchange] Commission to determine whether such corporation is entitled to a license to

transact business in the Philippines, and to determine and assess the fees payable.

Aitached to the application for license shall be a [duly executed] certificate under oath DULY EXECUTED
by the authorized official or officials of the jurisdiction of its mcorporation, attesting to the fact that the laws:
of the country of state of the applicant allow Filipino citizens and corporations to do business therein, and that
the applicant is an existing corporation in good standing. If [such] THE certificate is in a foreign language, a
translation thereof in English under oath of the translator shall be attached [thereto] TO THE
APPLICATION

‘The application for a license to transact business in the Philippines shall likewise be accompanied by a
statement under oath of the president or any other person authorized by the corporation, showing to the
satisfaction of the Commission and WHEN APPROPRIATE, other governmental agenclESIy in the proper
cases} that the applicant is solvent and in sound financial condition, fand] setting forth the assets and
liabilities of the corporation as of the date not exceeding one (1) year immediately prior to the filing of the

application


20
2
2
2
24
25
26
27
28
29
Ww

3

Foreign banking, financial and insurance corporations shall, in addition to the above requirements, comply

with the provisions of existing laws applicable to them. In the case of all other foreign corporations, no

application for license to transact business in the Philippines shall be accepted by the [Securities and
Exchange] Commission without previous authority from the appropriate government agency, whenever

required by’ law

See. [126] 144. 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 TO THE
APPLICANT 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 license, 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 of stock in domestic corporations [registered] LISTED
in the stock exchange, for] shares of stock in domestic insurance companies and banks, ANY FINANCIAL
INSTRUMENT DETERMINED SUITABLE BY THE COMMISSION, or any combination THEREOF
Jof these kinds of securities.) with an actual market value of at least [one] FIVE hundred thousand
1(P100,000 | (PS00, 000.00) pesos OR SUCH OTHER AMOUNT THAT MAY BE SET BY THE
COMMISSION: Provided, however, That within six (6) months after cach fiscal year of the licensee, the
[Securities and Exchange} Commission shall require the licensee to deposit additional securitics 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 valuc of the DEPOSITED


23
a4
25
26
27
28
29

30

32

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, o if the actual market value of the total [securities on} deposit has increased, by more than ten
(10%) percent of theIR actual market value fof the securities] at the time they were deposited. The [Securities
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 licensce is solvent. Such licensee shall be entitled
0 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 licensce has no liability to Philippine residents, including the Government of the
Republic of the Philippines. 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.

See. [127] 145. Who may be a resident agent. ~ A resident agent may be either an individual residing in the
Philippines or a domestic corporation lawfully transacting business in the Philippines: Provided, That fin the
case of] an individual RESIDENT AGENT, he} must be of good moral character and of sound financial
standing,

Sec. [128.] 146. Resident agent; service of process. ~ [The Securities and Exchange Commission shall
tequire a] As a condition [precedent] to the issuance of the license FOR A FOREIGN CORPORATION to
transact business in the Philippines [by any foreign corporation that], such corporation SHALL file with the
[Securities and Exchange] Commission a written power of attomey designating some person who must be a
resident of the Philippines, on whom any summons and other legal processes may be served in all actions or
other legal proceedings against such corporation, and consenting that service upon such resident agent shall
bbe admitted and held as valid as if served upon the duly authorized officers of the foreign corporation at its
home office. [Any s]Such foreign corporation shall likewise execute and file with the [Securities and
Exchange] Commission an agreement or stipulation, executed by the proper authorities of said corporation, in
form and substance as follows

“The (name of foreign corporation) [does] hereby stipulates and agrees, in consideration of [its] being granted


Iby the Securities and Exchange Commission] a license to transact business in the Philippines, that if fat any
time said] THE corporation shall cease to transact business in the Philippines, or shall be without any
resident agent in the Philippines on whom any summons of other legal processes may’ be served, {then in any:
action or proceeding arising out of any business or transaction which occurred in the Philippines, THEN
service of any summons or other legal process may be made upon the [Securities and Exchange] Commission
IN ANY ACTION OR PROCEEDING ARISING OUT OF ANY BUSINESS OR TRANSACTION
WHICH OCCURRED IN THE PHILIPPINES and that} such service shall have the same foree and effect
as if made upon the duly-authorized officers of the corporation at its home office.”

Whenever such service of summons or other process [shall be] IS made upon the [Securities and Exchange]
Commission, the Commission shall, within ten (10) days thereafter, transmit by mail a copy of such summons
‘or other legal process to the corporation at its home or principal office. The sending of such copy by the
Commission shall be A necessary part of and shall complete such service All expenses incurred by the

Commission for such service shall be paid in advance by the party at whose instance the service is made,

[ln case of a change of address of the resident agent, it] IT shall be THE DUTY OF THE RESIDENT
AGENT [his or its duty| to immediately notify THE COMMISSION in writing OF ANY CHANGE IN

HIS OR HER ADDRESS [the Securities and Exchange Commission of the new address}

See. [129] 147. Law applicable — A{ny| foreign corporation lawfully doing business in the Philippines shall
be bound by all laves, rules and regulations applicable to domestic corporations of the same class, except
Isuch only as] THOSE WHICH provide for the creation, formation, organization or dissolution of
corporations or those which fix the relations, liabilities, responsibilities, or duties of stockholders, members,

or officers of corporations to each other or to the corporation

See. [130] 148.. Amendments 10 articles of incorporation or by-laws of foreign corporations. ~ Whenever
the articles of incorporation or by-laws of a foreign corporation authorized to transact business in the
Philippines are amended, such foreign corporation shall, within sixty (60) days afler the amendment becomes
effective, file with the [Securities and Exchange] Commission, and in the proper cases, with the appropriate
government agency, a duly authenticated copy of the AMENDED articles of incorporation or by-laws], as
amended], indicating clearly in capital letters or [by] underscoring the change or changes made, duly certified
by the authorized official or officials of the country or state of incorporation. [The] SUCH filing [thereof]

shall not fof] IN itself enlarge or alter the purpose or purposes for which such corporation is authorized to


23
24

26
27
28
29
30
uv

32

transact business in the Philippines,

See. [131] 149. Amended license. — A forcign corporation authorized to transact business in the Philippines
shall obtain an amended license in the event it changes its corporate name, or desires to pursue [in the
Philippines} other or additional purposes IN THE PHILIPPINES, by submitting an application [therefor to
the Securities and Exchange} WITH THE Commission, favorably endorsed by the appropriate government
‘ageney in the proper cases

Sec. [132] 150. Merger or consolidation involving a foreign corporation licensed in the Philippines. ~ One
‘or more foreign corporations authorized to transact business in the Philippines may merge or consolidate with
any domestic corporation or corporations if [such is] permitted under Philippine laws and by the law of its
incorporation: Provided, That the requirements on merger or consolidation as provided in this Code are
followed

Whenever a foreign corporation authorized to transact business in the Philippines shall be a party to a merger
oF consolidation in its home country or state as permitted by the law of its incorporation, such foreign
corporation shall, within sixty (60) days after THE EFFECTIVITY OF such merger or consolidation
[becomes effective, file with the [Securities and Exchange] Commission, and in proper cases, with the
appropriate government agency, a copy of the articles of merger or consolidation duly authenticated by the
proper official or officials of the country or state under [the] WHOSE laws fof which], THE memer or
consolidation was effected: Provided, however, That if the absorbed corporation is the foreign corporation
doing business in the Philippines, the latter shall at the same time file a petition for withdrawal of its license
in accordance with this Title

Sce. [133] 151. Doing business without a license ~ No forcign corporation transacting business in the
Philippines without a license, or its successors or assigns, shall be permitted to maintain or intervene in any
action, suit or proceeding in any court or administrative agency of the Philippines; but such corporation may
be sued or proceeded against before Philippine courts or administrative tribunals on any valid cause of action

recognized under Philippine laws.

Sec. [134] 152. Revocation of license. — Without prejudice to other grounds provided [by] UNDER special

laws, the license of a foreign corporation to transact business in the Philippines may be revoked or suspended


24
25
26
27

by the [Securities and Exchange] Commission upon any of the following grounds:

1

2

3

Failure to file its annual report or pay any fees as required by this Code:

Failure to appoint and maintain a resident agent in the Philippines as required by this Title,
Failure, after change of its resident agent or of his address, to submit to the [Securities and
Exchange] Commission a statement of such change as required by this Title,

Failure to submit to the [Securities and Exchange] Commission an authenticated copy of any
amendment to its articles of incorporation or by-laws or of any articles of merger ot
consolidation within the time prescribed by this Title;

A misrepresentation of any material matter in any application, report, affidavit or other
document submitted by stich corporation pursuant to this Title;

Failure to pay any and all taxes, imposts, assessments or penalties, if any, lawfully due to the
Philippine Government or any of its agencies or political subdivisions;

‘Transacting business in the Philippines outside of the purpose or purposes for which such
corporation is authorized under its license:

‘Transacting business in the Philippines as agent of or acting [for and iJOn behalf of any foreign
corporation of entity not duly licensed to do business in the Philippines; or

Any other ground as would render it unfit to transact business in the Philippines

See. [135] 153, Issuance of certificate of revocation. — Upon the revocation of {any such] THE license to

transact business in the Philippines, the |Securitics and Exchange] Commission shall issue a corresponding

centificate of revocation, fiumishing a copy thereof to the appropriate government agency in the proper cases.

‘The [Securities and Exchange] Commission shall also mail {to the corporation} THE NOTICE AND COPY

OF THE CERTIFICATE OF REVOCATION TO THE CORPORATION, at its registered office in the

Philippines [a notice of such revocation accompanied by a copy of the certificate of revocation]

Sec. [136] 14. Withdrawal of foreign corporations. ~ Subject to existing laws and regulations, a foreign

corporation licensed to transact business in the Philippines may be allowed to withdraw from the Philippines

by filing a petition for withdrawal of license. No certificate of withdrawal shall be issued by the [Securities

and Exchange] Commission unless all the following requirements are met;|

All claims which have accrued in the Philippines have been paid. compromised ar settled;

2. All taxes, imposts, assessments, and penalties, if any, lawfully duc to the Philippine Government or


20
21
2
23
24
25
26
27
28
29
30
31
32

any of its agencies or political subdivisions have been paid; and
3. The petition for withdrawal of license has been published once a week for three (3) consecutive

weeks in a newspaper of general circulation in the Philippines

‘TITLE XVI— INVESTIGATIONS, OFFENSES,
AND PENALTIES

See. 155. INVESTIGATION AND PROSECUTION OF OFFENSES. - THE COMMISSION MAY
INVESTIGATE AN ALLEGED VIOLATION OF THIS CODE, RULE, REGULATION, OR ORDER

OF THE COMMISSION.

THE COMMISSION MAY PUBLISH ITS FINDINGS, ORDERS, OPINIONS, ADVISORIES, OR
INFORMATION CONCERNING ANY SUCH VIOLATION, AS MAY BE RELEVANT TO THE
GENERAL PUBLIC OR TO THE PARTIES CONCERNED, SUBJECT TO THE PROVISIONS OF

‘THE DATA PRIVACY ACT AND OTHER PERTINENT LAWS.

SEC. 156. ADMINISTRATION OF OATHS, SUBPOENA OF WITNESSES AND DOCUMENTS. - THE
COMMISSION, THROUGH ITS DESIGNATED OFFICER, MAY ADMINISTER OATHS AND
AFFIRMATIONS, ISSUE SUBPOENA AND SUBPOENA DUCES TECUM, TAKE TESTIMONY IN
ANY INQUIRY OR INVESTIGATION, AND MAY PERFORM OTHER ACTS NECESSARY TO
THE PROCEEDINGS OR TO THE INVESTIGATION.

SECTION 157. CEASE AND DESIST ORDERS. — WHENEVER THE COMMISSION HAS
REASONABLE BASIS TO BELIEVE THAT A PERSON HAS VIOLATED, OR IS ABOUT TO
VIOLATE, THIS CODE, RULE, REGULATION, OR ORDER OF THE COMMISSION, IT MAY
DIRECT SUCH PERSON TO DESIST FROM COMMITTING THE ACT CONSTITUTING THE

VIOLATION.

THE COMMISSION MAY ISSUE A CEASE AND DESIST ORDER EX PARTE TO ENJOIN AN
ACT OR PRACTICE WHICH IS FRAUDULENT OR CAN BE REASONABLY EXPECTED TO
CAUSE SIGNIFICANT, IMMINENT, AND IRREPARABLE DANGER OR INJURY TO PUBLIC

SAFETY OR WELFARE. THE EX PARTE ORDER SHALL BE VALID FOR A MAXIMUM


29

30

31

PERIOD OF TWENTY (20) DAYS, WITHOUT PREJUDICE TO THE ORDER BEING MADE

PERMANENT AFTER DUE NOTICE AND HEARING.

THEREAFTER, THE COMMISSION MAY PROCEED ADMINISTRATIVELY AGAINST SUCH
PERSON IN ACCORDANCE WITH SECTION 159, AND/OR TRANSMIT EVIDENCE TO THE
DEPARTMENT OF JUSTICE FOR PRELIMINARY INVESTIGATION OR CRIMINAL
PROSECUTION AND/OR INITIATE CRIMINAL PROSECUTION FOR ANY VIOLATION OF

THIS CODE, RULE OR REGULATION.

SEC. 188. CONTEMPT. — ANY PERSON WHO, WITHOUT JUSTIFIABLE CAUSE, FAILS OR
REFUSES TO COMPLY WITH ANY LAWFUL ORDER, DECISION, OR SUBPOENA ISSUED BY
THE COMMISSION SHALL, AFTER DUE NOTICE AND HEARING, BE HELD IN CONTEMPT
AND FINED IN AN AMOUNT NOT EXCEEDING THIRTY THOUSAND PESOS (P30,000). WHEN
THE REFUSAL AMOUNTS TO CLEAR AND OPEN DEFIANCE OF THE COMMISSION'S
ORDER, DECISION, OR SUBPOENA, THE COMMISSION MAY IMPOSE A DAILY FINE OF
ONE THOUSAND PESOS (PHP1,000) UNTIL THE ORDER, DECISION, OR SUBPOENA IS

COMPLIED WITH.

SEC. 159. ADMINISTRATIVE SANCTIONS. ~ IF, AFTER DUE NOTICE AND HEARING, THE
COMMISSION FINDS THAT ANY PROVISION OF THIS CODE, RULES OR REGULATIONS,
OR ANY OF THE COMMISSION'S ORDERS HAS BEEN VIOLATED, THE COMMISSION MAY
IMPOSE ANY OR ALL OF THE FOLLOWING SANCTIONS, TAKING INTO CONSIDERATION
THE EXTENT OF PARTICIPATION, NATURE, EFFECTS, FREQUENCY AND SERIOUSNESS
OF THE VIOLATION:
1, IMPOSE A FINE RANGING FROM FIVE THOUSAND PESOS (PS5,000.00) TO TWO
MILLION PESOS (P2,000,000), AND NOT MORE THAN ONE THOUSAND PESOS
(P1,000) FOR EACH DAY OF CONTINUING VIOLATION BUT IN NO CASE TO
EXCEED TWO MILLION PESOS (P2,000,000.00);
2, ISSUE A PERMANENT CEASE AND DESIST ORDER;
3. ORDER THE SUSPENSION OR REVOCATION OF THE CERTIFICATE OF

INCORPORATION; AND


19
20

21

23
24
2s

26

4. ORDER THE DISSOLUTION OF THE CORPORATION AND FORFEITURE OF ITS
ASSETS UNDER THE CONDITIONS IN TITLE XIV OF THIS CODE.

SEC. 160, UNAUTHORIZED USE OF CORPORATE NAME; PENALTIES. ~ THE UNAUTHORIZED
USE OF A CORPORATE NAME SHALL BE PUNISHED WITH A FINE RANGING FROM [FIFTY]
TEN THOUSAND PESOS {(P50,000)| (P10,000) TO TWO HUNDRED THOUSAND PESOS

(P200,000),

See. 161. VIOLATION OF DISQUALIFICATION PROVISION; PENALTIES. - A DIRECTOR,
TRUSTEE, OR OFFICER WHO WILLFULLY HOLDS OFFICE DESPITE THE KNOWLEDGE OF
THE EXISTENCE OF A GROUND FOR HIS OR HER DISQUALIFICATION AS PROVIDED
UNDER SECTION 27, OR WHO WILLFULLY CONCEALS SUCH DISQUALIFICATION, SHALL
BE PUNISHED BY A FINE RANGING FROM TEN THOUSAND PESOS (P10,000) TO TWO

HUNDRED THOUSAND PESOS (200,000) AT THE DISCRETION OF THE COURT, AND SHALL.

BE PERMANENTLY DISQUALIFIED FROM BEING A DIRECTOR, TRUSTEE OR OFFICER OF
ANY CORPORATION, WHEN THE VIOLATION OF THIS PROVISION IS INJURIOUS OR
DETRIMENTAL TO THE PUBLIC, THE PENALTY IS A FINE RANGING FROM TWENTY

THOUSAND PESOS (P20,000) TO FOUR HUNDRED THOUSAND PESOS (P400,000).

Sec. 162, VIOLATION OF DUTY TO MAINTAIN RECORDS, TO ALLOW THEIR INSPECTION OR
REPRODUCTION; PENALTIES. — THE UNJUSTIFIED FAILURE OR REFUSAL BY THE
CORPORATION, OR BY THOSE RESPONSIBLE FOR KEEPING AND MAINTAINING
CORPORATE RECORDS, TO COMPLY WITH SECTIONS 46, 74, 93, [179] 130, 178 AND OTHER
PERTINENT RULES AND PROVISIONS OF THIS CODE ON RETENTION, INSPECTION JOR]
AND REPRODUCTION OF RECORDS SHALL BE PUNISHED WITH A FINE RANGING FROM.
TEN THOUSAND PESOS (P10,000) TO [ONE] TWO HUNDRED THOUSAND PESOS
[(PHP100,000)| (P200,000), AT THE DISCRETION OF THE COURT, TAKING INTO
CONSIDERATION THE SERIOUSNESS OF THE VIOLATION AND ITS IMPLICATIONS. WHEN
THE VIOLATION OF THIS PROVISION IS INJURIOUS OR DETRIMENTAL TO THE PUBLIC,
THE PENALTY IS A FINE RANGING FROM TWENTY THOUSAND PESOS (P20,000) TO FOUR
HUNDRED THOUSAND PESOS (P400,000).


THE PENALTIES IMPOSED UNDER THIS SECTION SHALL BE WITHOUT PREJUDICE TO
THE COMMISSION'S EXERCISE OF ITS CONTEMPT POWERS UNDER SECTION 158

HEREOF,

SEC. 163. WILLFUL CERTIFICATION OF INCOMPLETE, INACCURATE, FALSE, OR
MISLEADING STATEMENTS OR REPORTS; PENALTIES. ~ ANY PERSON WHO WILLFULLY
CERTIFIES A REPORT [OR MATTER] REQUIRED UNDER THIS CODE KNOWING THAT THE
SAME CONTAINS INCOMPLETE, INACCURATE, FALSE, OR MISLEADING INFORMATION

OR STATEM!

ENTS, SHALL BE PUNISHED WITH A FINE {OF NOT MORE THAN FIVE
HUNDRED THOUSAND PESOS (P500,000)]| RANGING FROM TWENTY THOUSAND PESOS
(P20,000.00) TO TWO HUNDRED THOUSAND PESOS (P200,000). WHEN THE WRONGFUL
CERTIFICATION IS INJURIOUS OR DETRIMENTAL TO THE PUBLIC, THE AUDITOR OR
THE RESPONSIBLE PERSON MAY ALSO BE PUNISHED WITH A FINE [FINED OF NOT MORE
THAN ONE MILLION PESOS (P1,000,000)] RANGING FROM FORTY THOUSAND PESOS
(P40,000) TO FOUR HUNDRED THOUSAND PESOS (P400,000).

SEC, 164, INDEPENDENT AUDITOR COLLUSION; PENALTIES, — AN INDE

ENDENT AUDITOR

WHO, IN COLLUSION WITH THE CORPORATION'S DIRECTORS OR REPRESENTATIVES,
CERTIFIES THE CORPORATION'S FINANCIAL STATEMENTS DESPITE ITS.

INCOMPLET!

ESS OR INACCURACY, FAILURE TO GIVE A FAIR AND ACCURATE

PRESENTATION OF THE CORPORATION'S CONDITION, OR DESPITE CONTAINING FALSE

OR MISLEADING STATEMENTS, SHALL BE PUNISHED WITH A FINE RANGING FROM.
EIGHTY THOUSAND PESOS (P80,000) TO FIVE HUNDRED THOUSAND PESOS (PS00,000),
WHEN THE STATEMENT OR REPORT CERTIFIED IS FRAUDULENT, OR HAS THE EFFECT
OF CAUSING INJURY TO THE GENERAL PUBLIC, THE AUDITOR OR RESPONSIBLE
OFFICER MAY BE PUNISHED WITH A FINE RANGING FROM ONE HUNDRED THOUSAND

PESOS (P100,000.00) TO SLX HUNDRED THOUSAND PESOS (P600,000),

SEC. 165, OBTAINING CORPORATE REGISTRATION THROUGH FRAUD; PENALTIES. - THOSE.
RESPONSIBLE FOR THE FORMATION OF A CORPORATION THROUGH FRAUD, OR WHO
ASSISTED DIRECTLY OR INDIRECTLY THEREIN, SHALL BE PUNISHED WITH A FINI

RANGING FROM TWO HUNDRED THOUSAND PESOS (200,000) TO TWO MILLION PESOS


2
23
24
25
26

27

(P2,000,000). WHEN THE VIOLATION OF THIS PROVISION IS INJURIOUS OR
DETRIMENTAL TO THE PUBLIC, THE PENALTY IS A FINE RANGING FROM FOUR

HUNDRED THOUSAND PESOS (P400,000) TO FIVE MILLION PESOS (PS5,000,000),

See. 166. FRAUDULENT CONDUCT OF BUSINESS; PENALTIES. — A CORPORATION THAT
CONDUCTS ITS BUSINESS [ITS] THROUGH FRAUD SHALL BE PUNISHED WITH A FINE.
RANGING FROM [FIVE HUNDRED THOUSAND PESOS (P500,000.00) TO TWO MILLION PESOS
(P2,000,000.00),] TWO HUNDRED THOUSAND PESOS (P200,000,00) TO TWO MILLION PESOS
(P2,000,000). WHEN THE VIOLATION OF THIS PROVISION IS INJURIOUS OR
DETRIMENTAL TO THE PUBLIC, THE PENALTY IS A FINE RANGING FROM FOUR
HUNDRED THOUSAND PESOS (P400,000) TO FIVE MILLION PESOS (P5,000,000).

See. 167. ACTING AS INTERMEDIARIES FOR GRAFT AND CORRUPT PRACTICES; PENALTIES.
~ A CORPORATION USED FOR FRAUD, FOR COMMITTING OR CONCEALING GRAFT AND
CORRUPT PRACTICES SHALL BE LIABLE FOR A FINE RANGING FROM ONE HUNDRED
THOUSAND PESOS (100,000.00 TO FIVE MILLION PESOS (5,000,000.00).

WHEN COUPLED WITH A FINDING THAT ANY OF ITS DIRECTORS, OFFICER,
EMPLOYEES, AGENTS, OR REPRESENTATIVES ARE ENGAGED IN GRAFT AND CORRUPT
PRACTICES, THE CORPORATION'S FAILURE TO INSTALL: a) SAFEGUARDS FOR THE
TRANSPARENT AND LAWFUL DEI

VERY OF SERVICES; AND b) POLICIES, CODE OF
ETHICS, AND PROCEDURES AGAINST GRAFT AND CORRUPTION, [WHEN COUPLED WITH
A FINDING THAT ANY OF ITS DIRECTORS, OFFICER, EMPLOYEES, AGENTS, OR
REPRESENTATIVES ENGAGED IN GRAFT AND CORRUPT PRACTICES,] SHALL BE PRIMA

FACIE EVIDENCE OF CORPORATE LIABILITY UNDER THIS SECTION.

See. 168. ENGAGING INTERMEDIARIES FOR GRAFT AND CORRUPT PRACTICES; PENALTIES.
~ A CORPORATION THAT APPOINTS AN INTERMEDIARY WHO ENGAGES IN GRAFT AND
CORRUPT PRACTICES FOR THE CORPORATION'S BENEFIT OR INTEREST, SHALL BE

[FINED IN THE AMOUNT OF ONE MILLION PESOS (P1,000,000.) | PUNISHED WITH A FINE

RANGING FROM ONE HUNDRED THOUSAND PESOS (P100,000) TO ONE MILLION PESOS

(P1,000,000),


24
25
26

28
29

30

See. 169. TOLERATING GRAFT AND CORRUPT PRACTICES; PENALTIES, — A DIRECTOR,
TRUSTEE, OR OFFICER WHO KNOWINGLY FAILS TO SANCTION, REPORT OR FILE THE
APPROPRIATE ACTION WITH PROPER AGENCIES, ALLOWS OR TOLERATES THE GRAFT
AND CORRUPT PRACTICES OR FRAUDULENT ACTS COMMITTED BY A CORPORATION'S

DIRECTORS, TRUSTEES, OFFICERS, OR EMPLOYEES, SHALL BE PUNISHED WITH A FINE
RANGING FROM FIVE HUNDRED THOUSAND PESOS (PS00,000) TO ONE MILLION PESOS
(P1,000,000).

SEC. 170, LIATION AGAINST WHISTLEBLOWERS. ~ A WHISTLEBLOWER REFERS TO.

ANY PERSON WHO PROVIDES TRUTHFUL INFORMATION RELATING TO THE
COMMISSION OR POSSIBLE COMMISSION OF ANY OFFENSE OR VIOLATION UNDER THIS
CODE. ANY PERSON WHO, KNOWINGLY AND WITH INTENT TO RETALIATE, COMMITS
ACTS DETRIMENTAL TO A WHISTLEBLOWER SUCH AS INTERFERING WITH THE
LAWFUL EMPLOYMENT OR LIVELIHOOD OF THE WHISTLEBLOWER, SHALL, AT THE

DISCRI

ETION OF THE COURT, BE PUNISHED WITH A FINE RANGING FROM [FIVE
HUNDRED THOUSAND PESOS (PS00,000)| ONE HUNDRED THOUSAND PESOS (P100,000) TO

ONE MILLION PESOS (P1,000,000,00),

SEC. [144]171. OTHER violations of the code; SEPARATE LIABILITY. ~ Violations of any of the other
provisions of this code or its amendments tiot otherwise specifically penalized therein shall be punished by a
fine of not less than fone} TEN Thousand [P1,000.00] pesos (P10,000.00) but not more than ONE
MILLION [ten thousand (1°10,000,00)] Pesos (P1,000,000,00) for by imprisonment for not less than thirty
(30) days but not more than five (3) years, or both, in the discretion of the court}. Ifthe violation is committed
by a corporation, the same may, after notice and hearing, be dissolved in appropriate proceedings before the
[Sccurities and Exchange} Commission: Provided, (t{That such dissolution shall not preclude the institution
of appropriate action against the director, trustee, or officer of the corporation responsible for said violation
[pIProvided, further, [t]That nothing in this section shall be construed to repeal the other causes for

dissolution of a corporation provided in this {c}Code.

LIABILITY FOR ANY OF THE FOREGOING OFFENSES SHALL BE SEPARATE FROM ANY
OTHER ADMINISTRATIVE, CIVIL, OR CRIMINAL LIABILITY UNDER THIS CODE AND

OTHER Laws,


20
21
22

24
25
26
27
28
29

30

SEC. 172. 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. 173, LIABILITY OF AIDERS AND ABETTORS AND OTHER SECONDARY LIABILITY. —
ANYONE WHO SHALL ALD, ABET, COUNSEL, COMMAND, INDUCE, OR PROCURE ANY
VIOLATION OF THIS CODE, OR ANY RULE, REGULATION OR ORDER OF THE
COMMISSION SHALL BE PUNISHED WITH A FINE NOT EXCEEDING THAT IMPOSED ON
THE PRINCIPAL OFFENDERS, AT THE DISCRETION OF THE COURT, AFTER TAKING INTO.
ACCOUNT THEIR PARTICIPATION IN THE OFFENSE.

Title XVII: Miscellaneous Provisions

Sec. [137] 174. Outstanding capital stock defined. ~The term “outstanding capital stock”, as used in this
Code, means the total shares of stock issued under binding subscription agreements to subscribers or

stockholders, whether Jor not} fully or partially paid, except treasury shares

See. [138] 175, Designation of governing boards. — The provisions of specific provisions of this Code to the
contrary notwithstanding, non-stock or special corporations may, through their articles of incorporation or

their by-laws, designate their governing boards by any name other than as board of trustees.

See, [139] 176 COLLECTION AND USE OF REGISTRATION, Incorporation and other fees. ~ (The
Securities and Exchange Commission is hereby authorized to collect and receive fees as authorized by law or
by rules and regulations promulgated by the Commission] FOR A MORE EFFECTIVE
IMPLEMENTATION OF THIS CODE, THE COMMISSION IS HEREBY AUTHORIZED TO
COLLECT, RETAIN, AND USE FEES, FINES, AND OTHER CHARGES PURSUANT TO THIS
CODE AND ITS RULES AND REGULATIONS. THE AMOUNT COLLECTED SHALL BE
DEPOSITED AND MAINTAINED IN A SEPARATE ACCOUNT WHICH SHALL FORM A FUND
FOR ITS MODERNIZATION AND TO AUGMENT ITS OPERATIONAL EXPENSES SUCH AS,

BUT NOT LIMITED TO, CAPITAL OUTLAY, INCREASE IN COMPENSATION AND BENEFITS:


29
30

3

COMPARABLE WITH PREVAILING RATES IN THE PRIVATE SECTOR [CONSISTENT WITH
RA NO. 6758 OTHERWISE KNOWN AS “THE SALARY STANDARDIZATION LAW”, AS
AMENDED,| REASONABLE EMPLOYEE ALLOWANCE, EMPLOYEE HEALTH CARE
SERVICES AND OTHER INSURANCE, EMPLOYEE CAREER ADVANCEMENT AND
PROFESSIONALIZATION, LEGAL ASSISTANCE, SEMINARS AND OTHER PROFESSIONAL,
FEES.

See. [I40]177. NATIONALITY AND Stock ownership in [certain] corporations, — THE
COMMISSION SHALL DETERMINE THE NATIONALITY OF A CORPORATION IN
ACCORDANCE WITH THE CONSTITUTION, JURISPRUDENCE, AND APPLICABLE LAWS.

{Pursuant to the duties specified by Article XIV of the Constitution, the] THE National Economic and
Development Authority shall, from time to time, UPON THE RECOMMENDATION OF THE
COMMISSION OR OTHER APPROPRIATE GOVERNMENT AGENCIES, [make a determination |
DETERMINE IF [of] [whether] the corporate vehicle has been used by any corporation, [or by] business, or
industry to frustrate the provisions [thereof] OF THIS CODE or [of] applicable laws, and shall submit to the
[Batasang Pambansa] CONGRESS, whenever decmed necessary, a report of its findings, including

recommendations for their prevention or correction,

THE CONGRESS MAY SET [MJmaximum limits [by the Batasang Pambansa] for stock{holdings]
‘ownership of individuals or groups of individuals related to each other by consanguinity, affinity, ar by close
business interests, in corporations declared [by it] to be vested with [a] public interest pursuant to the
Provisions of this section, or whenever fit is] necessary to [achieve national objectives,| prevent ANTI-
COMPETITIVE PRACTICES AS PROVIDED IN REPUBLIC ACT NO. 10667, OTHERWISE
KNOWN AS “THE PHILIPPINE COMPETITION ACT®, or to implement national economic policies
designed to promote [the] general welfare and [foster] economic development, AS declared in laws, nules,

and regulations

‘The National Economic and Development Authority shall consider the type and nature of the industry, [the]
size of the enterprise, [the] economies of scale, [the] geographic location, {the} extent of Filipino ownership,
{the} labor intensity of the activity, [the] export potential, as well as other factors which are germane to the

realization and promotion of business and industry, in recommending to the [Batasang Pambansa)


29
30
31
32

CONGRESS which corporations, businesses, or industries [to] WILL be declared vested with public interest

and in formulating proposals for limitations on stock ownership.

Sco. [I41]178 [Annual report| REPORTORIAL REQUIREMENTS of corporations. ~ EXCEPT AS
OTHERWISE PROVIDED IN THIS CODE OR IN THE RULES ISSUED BY THE COMMISSION,
every corporation, domestic or foreign, {lawfully} doing business in the Philippines shall submit to the
[Sccurities and Exchange] Commission
{an annual report of its operations, together with a financial statement of its assets and liabilities, certified by
any independent certified public accountant in appropriate cases, covering the preceding fiscal year and such
other requirements as the Securities and Exchange Commission may require.|
1. ANNUAL FINANCIAL STATEMENTS AUDITED BY AN INDEPENDENT CERTIFIED
PUBLIC ACCOUNTANT; PROVIDED, THAT IF THE TOTAL ASSETS OR TOTAL
LIABILITIES OF THE CORPORATION ARE LESS THAN SIX HUNDRED
THOUSAND PESOS (P600,000.00) THE FINANCIAL STATEMENTS SHALL BE
CERTIFIED UNDER OATH BY the CORPORATION'S TREASURER OR CHIEF
FINANCIAL OFFICER; AND
2. A GENERAL INFORMATION SHEET, (;)

CORPORATIONS VESTED WITH PUBLIC INTEREST MUST ALSO SUBMIT THE
FOLLOWING:
1, A DIRECTOR OR TRUSTEE COMPENSATION REPORT;
2. A DIRECTOR OR TRUSTEE APPRAISAL OR PERFORMANCE REPORT AND THE.
STANDARDS OR CRITERIA USED TO ASSESS EACH DIRECTOR OR TRUSTEE.

{Such report] THE REPORTORIAL REQUIREMENTS shall be submitted ANNUALLY AND within

such period as may be prescribed by the [Securities and Exchange] Commission.

THE COMMISSION MAY PLACE THE CORPORATION UNDER DELINQUENT STATUS
[SHOULD THE CORPORATION] IN CASE OF FAILURE TO SUBMIT THE REPORTORIAL
REQUIREMENTS THREE (3) TIMES, CONSECUTIVELY OR INTERMITTENTLY, WITHIN A
PERIOD OF FIVE (5) YEARS.


23
24
25
26
27
28
29

30

ANY PERSON REQUIRED TO FILE ANY REPORT WITH THE COMMISSION MAY REMOVE
ANY CONFIDENTIAL INFORMATION FROM SUCH REQUIRED REPORT,: PROVIDED, THAT
HE OR SHE FILES WITH THE COMMISSION SUCH CONFIDENTIAL INFORMATION IN A
SUPPLEMENTAL REPORT PROMINENTLY LABELED “CONFIDENTIAL”, TOGETHER WITH
A REQUEST FOR CONFIDENTIAL TREATMENT OF THE REPORT AND THE SPECIFIC
GROUNDS FOR THE GRANT THEREOF.

See. [142]179. VISITORIAL POWER AND Confidential nature of examination results. — THE
COMMISSION SHALL EXERCISE VISITORIAL POWERS OVER ALL CORPORATIONS,
WHICH POWERS SHALL INCLUDE THE EXAMINATION AND INSPECTION OF RECORDS,
REGULATION AND SUPERVISION OF ACTIVITIES, ENFORCEMENT OF COMPLIANCE, AND

IMPOSITION OF SANCTIONS IN ACCORDANCE WITH THIS CODE.

SHOULD THE CORPORATION, WITHOUT JUSTIFIABLE CAUSE, REFUSE OR OBSTRUCT
THE COMMISSION'S EXERCISE OF ITS VISITORIAL POWERS, THE COMMISSION MAY
REVOKE ITS CERTIFICATE OF INCORPORATION. REVOCATION SHALL BE WITHOUT
PREJUDICE TO THE IMPOSITION OF OTHER PENALTIES AND SANCTIONS UNDER THIS
CODE.

All interrogatories propounded by the [Securities and Exchange] Commission and the answers thereto, as
well as the results of any examination made by the Commission or [by Jany other official authorized by law
to make an examination of the operations, books, and records of any corporation, shall be kept strictly
confidential, except [insofar as|WHEN the law {may} requireS the same to be made public, WHEN
NECESSARY FOR THE COMMISSION TO TAKE ACTION TO PROTECT THE PUBLIC OR TO
ISSUE ORDERS IN THE EXERCISE OF ITS POWERS UNDER THIS CODE, or where such

interrogatories, answers or results are necessary to be presented as evidence before any court

See. [143]180. /Rule-making power] POWERS, FUNCTIONS, [Securities and Exchange) AND
JURISDICTION of the Commission ~ The [Securities and Exchange] Commission shall have the power and

authority TO:


EXERCISE SUPERVISION AND JURISDICTION OVER ALL CORPORATIONS AND
PERSONS ACTING ON THEIR BEHALF, EXCEPT AS OTHERWISE PROVIDED
UNDER THIS CODE;

PURSUANT TO PRESIDENTIAL DECREE 902-A, THE COMMISSION SHALL
RETAIN JURISDICTION OVER PENDING CASES INVOLVING INTRACORPORATE
DISPUTES SUBMITTED FOR FINAL RESOLUTION. THE COMMISSION SHALL
RETA!

JURISDICTION OVER PENDING — SUSPENSION. OF
PAYMENT/REHABILITATION CASES FILED AS OF 30 JUNE 2000 UNTIL FINALLY
DISPOSED.

IMPOSE SANCTIONS FOR THE VIOLATION OF THIS CODE, ITS IMPLEMENTING
RULES, AND ORDERS OF THE COMMISSION:

PROMOTE CORPORATE GOVERNANCE THROUGH, AMONG OTHERS,
REQUIRING ADDITIONAL SUBMISSIONS TO THE COMMISSION;

ISSUE OPINIONS TO CLARIFY THE APPLICATION OF LAWS, RULES, AND
REGULATIONS;

{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 EX PARTE TO PREVENT IMMINENT FRAUD
OR INJURY TO THE PUBLIC.

HOLD CORPORATIONS IN DIRECT AND INDIRECT CONTEMPT,

ORDER THE CONDUCT OF STOCKHOLDERS’ OR MEMBERS’ MEETINGS UNDER
ITS SUPERVISION AND DETERMINE APPROPRIATE DETAILS, INCLUDING THE
TIME AND PLACE OF THE MEETING, THE RECORD DATE OR DATES TO
DETERMINE WHICH STOCKHOLDERS ARE ENTITLED TO NOTICE OF THE
ELECTION AND TO VOTE THEREAT, AND THE FORM OF NOTICE OF SUCH
ELECTION;

ISSUE SUBPOENA DUCES TECUM AND SUMMON WITNESSES TO APPEAR IN
PROCEEDINGS BEFORE THE COMMISSION;

IN APPROPRIATE CASES, ORDER THE EXAMINATION, SEARCH AND SEIZURE
OF DOCUMENTS, PAPERS, FILES AND RECORDS, AND BOOKS OF ACCOUNTS
OF ANY ENTITY OR PERSON UNDER INVESTIGATION AS MAY BE NECESSARY


23
24
25
26
27
28
29
30
31

32

FOR THE PROPER DISPOSITION OF THE CASES, SUBJECT TO THE PROVISIONS
OF EXISTING LAWS;

10. SUSPEND OR REVOKE THE CERTIFICATE OF INCORPORATION AFTER
PROPER NOTICE AND HEARING;

11. DISSOLVE OR IMPOSE SANCTIONS, UPON FINAL COURT ORDER, ON
CORPORATIONS 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;

12. ISSUE WRITS OF EXECUTION AND ATTACHMENT TO ENFORCE PAYMENT OF
FEES, ADMINISTRATIVE FINES, AND OTHER DUES COLLECTIBLE UNDER THIS
CODE;

13. PRESCRIBE THE NUMBER OF INDEPENDENT DIRECTORS AND THE MINIMUM
CRITERIA IN DETERMINING THE INDEPENDENCE OF A DIRECTOR;

14, 14, IMPOSE OR RECOMMEND NEW MODES BY WHICH A STOCKHOLDER,
MEMBER, DIRECTOR, OR TRUSTEE MAY ATTEND MEETINGS OR CAST THEIR
VOTES, AS TECHNOLOGY MAY ALLOW, TAKING INTO ACCOUNT THE
COMPANY'S SCALE, NUMBER OF SHAREHOLDERS OR MEMBERS, STRUCTURE.
AND OTHER FACTORS CONSISTENT WITH THE BASIC RIGHT OF CORPORATE
SUFFRAGE;

15. FORMULATE AND ENFORCE STANDARDS, GUIDELINES, POLICIES, RULES,
AND REGULATIONS TO CARRY OUT THE PROVISIONS OF THIS CODE; AND.

16, EXERCISE SUCH OTHER POWERS PROVIDED BY LAW OR THOSE, WHICH MAY
BE NECESSARY OR INCIDENTAL TO CARRYING OUT, THE POWERS
EXPRESSLY GRANTED TO THE COMMISSION.

IN IMPOSING PENALTIES AND ADDITIONAL MONITORING AND SUPERVISION

REQUIREMENTS, THE COMMISSION SHALL TAKE INTO CONSIDERATION THE SIZE,

NATURE OF THE BUSINESS, AND CAPACITY OF THE CORPORATION.

NO COURT BELOW THE COURT OF APPEALS SHALL HAVE JUI

ISDICTION TO ISSUE A
RESTRAINING ORDER, PRELIMINARY INJUNCTION, OR PRELIMINARY MANDATORY


22
23
24
25
26
27
28
29
30
31
32

INJUNCTION IN ANY CASE, DISPUTE, OR CONTROVERSY THAT|,] DIRECTLY OR
INDIRECTLY|,) INTERFERES WITH THE EXERCISE OF THE POWERS, DUTIES AND
RESPONSIBILITIES OF THE COMMISSION THAT FALLS EXCLUSIVELY WITHIN ITS

JURISDICTION.

SECTION [182] 181. DEVELOPMENT AND IMPLEMENTATION OF ELECTRONIC FILING AND
MONITORING SYSTEM. - THE COMMISSION SHALL DEVELOP AND IMPLEMENT AN
ELECTRONIC FILING AND MONITORING SYSTEM. THE COMMISSION SHALL
PROMULGATE RULES TO FACILITATE AND EXPEDITE, AMONG OTHERS, CORPORATE
NAME RESERVATION AND REGISTRATION, INCORPORATION, SUBMISSION OF REPORTS,
NOTICES, AND DOCUMENTS REQUIRED UNDER THIS CODE, AND SHARING OF
PERTINENT INFORMATION WITH OTHER GOVERNMENT AGENCIES.

SEC. [183] 182. ARBITRATION FOR UNLISTED CORPORATIONS. —- AN ARBITRATION
AGREEMENT MAY BE PROVIDED [FOR] IN THE ARTICLES OF INCORPORATION OR BY-
LAWS OF AN UNLISTED CORPORATION. WHEN SUCH AN AGREEMENT IS IN PLACE,
DISPUTES BETWEEN THE CORPORATION, ITS STOCKHOLDERS OR MEMBERS, WHICH
ARISE FROM THE IMPLEMENTATION OF THE ARTICLES OF INCORPORATION OR BY-
LAWS, OR FROM INTRACORPORATE RELATION, SHALL BE REFERRED TO
ARBITRATION. A DISPUTE SHALL BE NON-ARBITRABLE WHEN IT INVOLVES CRIMINAL
OFFENSES AND|,| INTERESTS OF THIRD PARTIES.

THE ARBITRATION AGREEMENT SHALL BE BINDING ON THE CORPORATION, ITS
DIRECTORS, TRUSTEES, OFFICERS, AND EXECUTIVES OR MANAGERS.

TO BE ENFORCEABLE, THE AGREEMENT SHOULD INDICATE THE NUMBER OF
ARBITRATORS AND THE PROCEDURE FOR THEIR APPOINTMENT. THE POWER TO
APPOINT THE ARBITRATORS FORMING THE ARBITRAL TRIBUNAL SHALL BE GRANTED
TO A DESIGNATED INDEPENDENT THIRD PARTY. SHOULD THE THIRD PARTY FAIL TO
APPOINT THE ARBITRATORS IN THE MANNER AND WITHIN THE PERIOD SPECIFIED IN
THE ARBITRATION AGREEMENT, THE PARTIES MAY REQUEST THE COMMISSION TO

APPOINT THE ARBITRATORS. IN ANY CASE, ARBITRATORS MUST BE ACCREDITED OR


20

21

23
24
25
26
27
28
29
30
31
32

MUST BELONG TO ORGANIZATIONS ACCREDITED BY THE COMMISSION.

THE ARBITRAL TRIBUNAL SHALL HAVE THE POWER TO RULE ON ITS OWN
JURISDICTION AND/OR ON QUESTIONS RELATING TO THE VALIDITY OF THE
ARBITRATION AGREEMENT. WHEN AN INTRACORPORATE DISPUTE IS FILED WITH A
REGIONAL TRIAL COURT, THE COURT SHALL DISMISS THE CASE BEFORE THE
TERMINATION OF THE PRETRIAL CONFERENCE, IF IT DETERMINES THAT AN
ARBITRATION AGREEMENT IS WRITTEN IN THE CORPORATION'S ARTICLES OF
INCORPORATION, BY-LAWS, OR IN A SEPARATE AGREEMENT.

THE ARBITRAL TRIBUNAL SHALL HAVE THE POWER TO GRANT INTERIM MEASURES
NECESSARY TO ENSURE ENFORCEMENT OF THE AWARD, PREVENT A MISCARRIAGE OF

JUSTICE, OR OTHERWISE PROTECT THE RIGHTS OF THE PARTIES.

A FINAL ARBITRAL AWARD UNDER THIS SECTION SHALL BE EXECUTORY AFTER 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.

SEC. [184] 183. JURISDICTION OVER [CORPORATIONS OF SPECIAL CHARACTER] PARTY-LIST
ORGANIZATIONS. — THE POWERS, AUTHORITIES, AND RESPONSIBILITIES OF THE
COMMISSION INVOLVING PARTY-LIST ORGANIZATIONS ARE TRANSFERRED TO THE
COMMISSION ON ELECTIONS (COMELEC).

WITHIN SIX (6) MONTHS AFTER THE EFFECTIVITY OF [THESE AMENDMENTS] THIS ACT,
THE MONITORING, SUPERVISION, AND REGULATION OF SUCH CORPORATIONS SHALL
BE DEEMED AUTOMATICALLY TRANSFERRED TO THE COMELEC.

FOR THIS PURPOSE, THE COMELEC, IN COORDINATION WITH THE COMMISSION, SHALL
PROMULGATE CORRESPONDING IMPLEMENTING RULES FOR THE TRANSFER OF
JURISDICTION OVER THE ABOVE-MENTIONED CORPORATIONS.


20
21

24
25
26
27
28
29
30
31
32

SEC. [185] 184. APPLICABILITY OF THE CODE. - NOTHING IN THIS LAW SHALL BE
CONSTRUED AS AMENDING EXISTING PROVISIONS OF SPECIAL LAWS GOVERNING THE
REGISTRATION, REGULATION, MONITORING AND SUPERVISION OF SPECIAL
CORPORATIONS SUCH AS BANKS, NON-BANK FINANCIAL INSTITUTIONS AND
INSURANCE COMPANIES.

NOTWITHSTANDING ANY PROVISION TO THE CONTRARY, REGULATORS SUCH AS THE
BANGKO SENTRAL NG PILIPINAS AND THE INSURANCE COMMISSION SHALL EXERCISE.
PRIMARY AUTHORITY OVER SPECIAL CORPORATIONS SUCH AS BANKS, NON-BANK
FINANCIAL INSTITUTIONS AND INSURANCE COMPANIES UNDER THEIR SUPERVISION
AND REGULATION.

SEC. 185. Implementing Rules and Regulations. - The Commission shall, UPON CONSULTATION
WITH THE CONCERNED STAKEHOLDERS, promulgate and/or amend the necessary rules and
regulations for the effective implementation of this Act

SEC. 186. Separability Clause — lf 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.

SEC. 187. Repealing Clause. - BATAS PAMBANSA 68 AND 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] ARE hereby repealed or modified accordingly.

SEC. 188. Applicability to existing corporations — A corporation lawfully existing and doing business in the
Philippines affected by the new requirements of this Code shall be given a period of not more than two (2)
years from the effectivity of [these amendments] THIS ACT within which to comply

SEC. 189. Effectivity Clause. ~ This Act shall take effect [fifteen (15) days after] upon completion of its
Publication in the Official Gazette or in at least two (2) newspapers of general circulation |, whichever date

comes earlier}.

Approved,