Republic of the Philippines
HOUSE OF THE REPRESENTATIVES
SEN
Quezon City

SEVENTEENTH CONGRESS
First Regular Session

HOUSE BILL No. 528

Introduced by HON. RODEL M. BATOCABE, HON. ALFREDO A. GARBIN, Jr. and
HON. CHRISTOPHER S. CO

eee

EXPLANATORY NOTE

Enacted in 1980, the Corporation Code, while still good law for the most part, is
failing to keep up with the changing times. While other countries reap the benefits of a more
long-term focus and the acceptance of new business models, the Philippines lags behind,
remaining bound by express limitations in the Code on the life of corporations, who may
incorporate, and the form and manner of incorporation. Traditional procedures and
processes embedded in the Code, which were expedient and effective thirty years ago,
have been reduced to stumbling blocks for business struggling to thrive in an increasingly
fast-paced environment where communication and information exchange steadily
accelerate. The constant evolution and escalating prevalence of abuses and fraudulent
practices in the corporate scene, and the more technologically advanced ways of
propagating the same, have rendered once-effective safeguards in the Code grossly
inadequate.

In addition, the Philippines’ performance in international evaluations indicates a need
for reform. While garnering the distinction of “most improved” in the Ease of Doing
Business ranking of 2013 (after jumping 30 places to 108" of 189 countries), the
Philippines is still in the bottom half of the list, trailing far béhind several of its Southeast
Asian counterparts. In the 2012-2013 ASEAN corporate governance scorecard report and
assessment of its top 100 publicly listed companies, the Philippine PLCs merely scored an
average of 48.9%. Additionally, in the 2012 Civil Society Report by Transparency and
Accountability Network (presented to the Conference of the State Parties to the United
Nations Convention against Corruption in 2012), the Philippines was found as having only
partially complied with the standards and principles of the UN Convention Against
Corruption, indicating a vulnerability to “Napoles-like” scams.

Under this light, the proposed amendments incorporate international best standards
and practices, specifically tailored to address the needs and realities of the Philippine
corporate setting, and introduce new concepts and mechanisms to help the Philippines


keep up with the changing times. In the same manner, the amendments are geared
towards enabling the Philippines to move towards full compliance with the requirements of
international bodies and, in the process, make it more attractive to investors. Thus,
amendments have been introduced to, among others, encourage new businesses,
contribute to the ease of doing business, strengthen corporate governance, better protect
the rights of stockholders, minimize/deter corporate abuses and fraud, strengthen anti-
corruption measures, and fortify the regulatory authority of the Commission.

To encourage new business, the amendments include shifting to perpetuity,
removing the minimum number of incorporators, and allowing the formation of one person
corporations. Thus, corporations in general will have perpetual existence, enabling a more
long-term mindset that will foster sustainability; smaller businesses may reap the
advantages of the corporate vehicle with as few as two incorporators; and single
proprietors may protect their personal properties by setting up one person corporations.

To improve on the ease of doing business, the name verification process will be
simplified with the use of only “distinguishability” as a criterion, electronic submissions and
notices will be accepted, and the Commission will have the authority to develop new
systems such as online registration. Additionally, the amendments clarify the procedures
for dissolution, as well as give non-compliant corporations a grace period for compliance. In
lieu of immediate revocation, action on matters brought by delinquent corporations to the
Commission shall be withheld until full compliance is made

A good number of the amendments are proposed to strengthen corporate
governance, which will also better protect the rights of stockholders, and deter corporate
abuses and fraud as well as graft and corrupt practices. These amendments incorporate
into the Code most of the standards for good corporate governance found in the ASEAN
corporate governance scorecard. The Philippines would be the first to apply these
standards not only to publicly listed companies but to all corporations. Thus, provisions
have been introduced for increased disclosure and transparency, increased director
disqualifications, independent directors, allowing attendance at meetings by remote
communication, and allowing voting in absentia, among others. The concept of an
emergency board is also introduced to enable the board to act in an emergency even when

there is a failure of quorum

In addition, the amendments to improve corporate governance also protect
stockholders. Other amendments have likewise been introduced for this particular purpose,
including expressly extending the right of inspection to a stockholders counsel or
representative and providing a solution to the problem of perpetual holdovers. With respect
to the latter, the Commission will have the authority to direct the holding of a meeting upon
notice of a failure to hold the same, and will have access to corporate records necessary


for this purpose. The meeting called by the Commission will have a special measure of
quorum, i.e. whoever is in attendance, in order to compel attendance at the meeting and to
reduce instances of deliberate non-attendance to avoid quorum.

The proposed amendments for corporate governance are also intended to curb
corporate abuses and fraud, as well as strengthen anti-corruption measures. In the fight
against corporate abuses and fraud, and graft and corrupt practices, whistleblower
provisions have been included and a code of ethics/standards of conduct will be required in
the by-laws. These are in addition to the proposal to include criminal liability for the usage
of the corporate vehicle for fraud, and graft and corrupt practices whether done directly or
through an intermediary (including the dissolution of the corporation and the forfeiture of its
assets) and for retaliation against whistleblowers. In these instances, corporate criminal
liability shall be separate and distinct from the criminal liability of responsible officers and
directors.

The other amendments are intended to fortify the regulatory authority of the
Commission. Thus, provisions on the following, among others, have been included: the
harmonization of its powers with those in the Securities and Regulation Code, greater
visitorial powers, powers to remove signages of deregistered names, issuance of ex parte
cease and desist orders to prevent fraud or injury to the public, forfeiture of assets when
the corporate vehicle is used for fraud or graft and corrupt practices, and fiscal autonomy.

With the foregoing backdrop and objectives in mind, the urgency of the amendments

becomes apparent. It is hoped that these amendments will be given priority status so that
the vision of a globally competitive Philippines may be achieved.

>,

Z ~
RODEL M. BATOCABE


Page 1 of 63

Republic of the Philippines
HOUSE OF THE REPRESENTATIVES
Quezon City *

SEVENTEENTH CONGRESS
First Regular Session

HOUSE BILL No.__528

Introduced by HON. RODEL M. BATOCABE, HON. ALFREDO A. GARBIN, Jr. and
HON. CHRISTOPHER S. CO

AN ACT AMENDING BATAS PAMBANSA BLG. 68
OR THE CORPORATION CODE OF THE PHILIPPINES

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

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

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

“Sec. 6. Classification of shares. — The shares of stock of stock
corporations may be divided into classes or series of shares, or both, any of
which classes or series of shares may have such rights, privileges or restrictions
as may be stated in the articles of incorporation: Provided, That no share may be
deprived of voting rights except those classified and issued as “preferred” or
“redeemable” shares, unless otherwise provided in this Code: Provided further,
‘That there shall always be a class or series of shares [which have] WITH
complete voting rights. Any or all of the shares or series of shares may have a
par value or have no par value as may be provided for in the articles of
incorporation: Provided, however, That banks, trust companies, insurance
companies, PRE-NEED COMPANIES, public utilities, and building and loan
associations shall not be permitted to issue no-par value shares of stock.

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

XK XK xxx"

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


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“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 approval of the [Securities and
Exchange] Commission. The five-year period shall commence from the date of
the aforesaid approval by the [Securities and Exchange] Commission:
PROVIDED, THAT THE EXCLUSIVE RIGHT TO VOTE OR BE VOTED FOR
SHALL NOT BE ALLOWED IF ITS EXERCISE WILL VIOLATE THE RULES
‘AND REGULATIONS OF THE COMMISSION,COMMONWEALTH ACT NO.
408, AND REPUBLIC ACT 7042; PROVIDED, FURTHER, THAT THE SAID
RIGHT SHALL BE GRANTED ONLY ONCE.

AFTER THE LAPSE OF THE FIVE-YEAR PERIOD, THE SHARES
SHALL AUTOMATICALLY HAVE THE SAME VOTING RIGHTS AND
PRIVILEGES AS COMMON SHARES.”

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

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

EXCEPT AS PROVIDED IN THE IMMEDIATELY PRECEDING
PARAGRAPH, NO CORPORATION SHALL REDEEM, REPURCHASE OR
REACQUIRE ITS OWN SHARES OF WHATEVER CLASS, UNLESS IT HAS
SUFFICIENT UNRESTRICTED RETAINED EARNINGS TO FUND THE COST
OF SUCH REDEMPTION, REPURCHASE OR REACQUISITION; PROVIDED,
THAT SUCH REQUIREMENT SHALL NOT APPLY IF THE REDEMPTION,
REPURCHASE OR REACQUISITION IS MADE UNDER ANY OF THE
FOLLOWING CIRCUMSTANCES:

a) PURSUANT TO A CONVERSION RIGHT PROVIDED FOR IN THE
ARTICLES OF INCORPORATION;

b) TO EFFECT A DECREASE IN THE AUTHORIZED CAPITAL STOCK
OF THE CORPORATION AS APPROVED BY THE COMMISSION; AND

c) UPON INSTRUCTION TO A CLOSE CORPORATION BY THE
COMMISSION TO RESOLVE A DEADLOCK.”

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

“Sec. 10. Number and qualifications of incorporators. - Any number of
PERSONS,naturalOR JURIDICAL, [persons not less than five (5)] but not more
than fifteen (15), [all of legal age] and a majority of whom are residents of the


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Philippines}, may form a private corporation for any lawful purpose or purposes.
Each of the incorporators of a stock corporation must own or be a subscriber to at
least one (1) share of the capital stock of the corporation.”

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

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

THE CORPORATE TERM MAY BE SHORTENED BY AN AMENDMENT
OF THE ARTICLES OF INCORPORATION IN ACCORDANCE WITH THIS
CODE.

REGARDLESS OF THE TERM, ALL CORPORATIONS SHALL REMAIN
UNDER THE SUPERVISION AND REVIEW OF THE COMMISSION. A
CORPORATION WITH A PERPETUAL TERM OR A TERM EXCEEDING
TWENTY-FIVE YEARS SHALL COMPLY WITH THE RENEWAL
REQUIREMENTS THE COMMISSION MAY PRESCRIBE THEREFOR ON THE
TWENTY-FIFTH YEAR AND EVERY TWENTY-FIVE YEARS THEREAFTER,
OR AT SUCH INTERVALS AS THE COMMISSION MAY LATER DETERMINE.
THE COMMISSION SHALL CHARGE SUCH PENALTIES AS IT MAY DEEM
APPROPRIATE AND WITHHOLD ACTION ON ANY MATTER BROUGHT BY A
RENEWING CORPORATION, INCLUDING BUT NOT LIMITED TO
APPLICATIONS FOR THE AMENDMENT OF THE ARTICLES OF
INCORPORATION AND/OR BY-LAWS AND THE ISSUANCE OF
CERTIFICATIONS OF GOOD STANDING OR THOSE REQUIRED FOR
TRANSACTIONS WITH OTHER GOVERNMENT AGENCIES, UNTIL FULL
COMPLIANCE WITH THE COMMISSION’S RENEWAL REQUIREMENTS IS
MADE.

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


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SECTION 6. Section 12 of the Code is hereby amended to read as follows:

“Sec. 12. Minimum capital stock required ‘of stock corporations. ~Stock
corporations incorporated under this Code shall [not be required to have
anyJHAVE A = minimum authorized capital stock OF ONE MILLION
(P1,000,000.00) PESOS [except as] OR SUCH AMOUNT AS MAY BE
DETERMINED BY THE COMMISSION AFTER DUE NOTICE TO THE PUBLIC,
UNLESSA DIFFERENT AMOUNT IS REQUIRED BY ANY LAW[otherwise
specifically provided for by special law}, and subject to the provisions of the
following sectionf[.]; PROVIDED, HOWEVER, THAT FOR CORPORATIONS
ISSUING NO PAR VALUE SHARES, THE MINIMUM AUTHORIZED CAPITAL
STOCK SHALL BE 200,000 SHARES; AND PROVIDED, FURTHER, THAT
WHERE CAPITAL CONSISTS OF BOTH PAR AND NO-PAR VALUE
SHARES, THE MINIMUM AUTHORIZED CAPITAL STOCK SHALL BE ONE
MILLION (P1,000,000.00) PESOS.”

SECTION 7. Section 13 of the Code is hereby amended to read as follows:

“Sec. 13. Amount of capital stock to be subscribed and paid for purposes
of incorporation-EXCEPT WITH RESPECT TO ONE PERSON
CORPORATIONS AND SMALL CORPORATIONS WHOSE CAPITAL STOCK
SHALL BE PAID IN FULL UPON SUBSCRIPTION, at least twenty-five (25%)
percent of the NUMBER OF SHARES OF THE authorized capital stock as stated
in the articles of incorporation must be subscribed at the time of incorporation,
and at least twenty-five (25%) percent of the VALUE OF THE total subscription
must be paid upon subscription, the balance to be payable on a date or dates
fixed in the contract of subscription without need of call, or in the absence of a
fixed date or dates, upon call for payment by the board of directors: Provided,
however, That in no case shall the paid-up capital be less than[five thousand
(P5,000.00) pesos.]SIXTY TWO THOUSAND FIVE HUNDRED (P62,500.00)
PESOS, OR SUCH AMOUNT AS MAY BE DETERMINED BY THE
COMMISSION OR REQUIRED IN OTHER LAWS; PROVIDED, HOWEVER,
THAT WITH RESPECT TO NO PAR VALUE SHARES, AT LEAST TWENTY-
FIVE PERCENT (25%) OF SAID SHARES OF THE AUTHORIZED CAPITAL
STOCK MUST BE SUBSCRIBED AND FULLY PAID UPON SUBSCRIPTION.”

SECTION 8. Section 14 of the Code is hereby amended to read as follows:

"Sec. 14. Contents of 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 by all of the incorporators, containing substantially the
following matters, except as otherwise prescribed by this Code or by special law.

41, The name of the corporation;
XXX KKK

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


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4. [The term for which the corporation is to exist] A PROVISION

1
2 LIMITING THE DURATION OF THE CORPORATION'S EXISTENCE TO A
3 SPECIFIED DATE; OTHERWISE, THE CORPORATION SHALL HAVE
4 PERPETUAL EXISTENCE;
5 2x 2x 20x
6 9. If it be a non-stock corporation, [the amount of its capital,] the names,
7 nationalities and residences of the contributors and [the amount contributed by
8 each] THE TOTAL AMOUNT OF CONTRIBUTED CAPITAL BY THE
9 INCORPORATORS AND MEMBERS THEREOF: [and]
10 10. iF IT BE A STOCK CORPORATION, A STATEMENT OF THE
u TREASURER, WHO SHALL BE AN INCORPORATOR, THAT AT LEAST
12 TWENTY-FIVE PERCENT (25%) OF THE NUMBER OF SHARES IN THE
13 AUTHORIZED CAPITAL STOCK OF THE CORPORATION HAS BEEN
14 SUBSCRIBED AND AT LEAST TWENTY-FIVE PERCENT (25%) OF THE
15 TOTAL SUBSCRIPTION HAS BEEN FULLY PAID TO HIM IN ACTUAL CASH
16 ANDIOR IN PROPERTY THE FAIR VALUATION OF WHICH IS EQUAL TO AT
17 LEAST TWENTY-FIVE (25%) PERCENT OF THE SAID SUBSCRIPTION,
18 SUCH PAID-UP CAPITAL BEING NOT LESS THAN SIXTY TWO THOUSAND
19 FIVE HUNDRED PESOS (P62,500.00) ;"AND
20 2x xxx 20%
21 [The Securities and Exchange Commission shall not accept the articles of
2 incorporation of any stock corporation unless accompanied by a sworn statement
23 of the Treasurer elected by the subscribers showing that at least twenty-five
24 (25%) percent of the authorized capital stock of the corporation has been
25 subscribed, and at least twenty-five (25%) of the total subscription has been fully
26 paid to him in actual cash and/or in property the fair valuation of which is equal to
21 at least twenty-five (25%) percent of the said subscription, such paid-up capital
28 being not less than fivethousand (P5,000.00) pesos.)
29 ARTICLES OF INCORPORATION OR AMENDMENTS THERETO MAY
30 BE FILED IN THE FORM OF AN ELECTRONIC DOCUMENT, IN
31 ACCORDANCE WITH THE RULES AND REGULATIONS OF THE
32 COMMISSION ON THE USE OF ELECTRONIC DATA MESSAGES.”
33 SECTION 9. Section 15 is hereby amended to delete the form on the Treasurer's

34 Affidavit and to read as follows:

35 "Sec. 15. Form[sjof articles of incorporation; Filing. - Unless otherwise
36 prescribed by special law, articles of incorporation of all domestic corporations
37 shall comply substantially with the following form:

38 ARTICLES OF INCORPORATION

39 OF

40 od

41 (Name of Corporation)

8 KNOW ALL [MEN] PERSONSBY THESE PRESENTS:

44

45 2X KKK

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

XXX XKK XK

IN WITNESS WHEREOF, we have hereunto signed these Articles of
Incorporation, this ...... . day of 419}20........ im the
City/Municipality of Province of

| Republic of the Philippines.
OK XK XK

[TREASURERS AFFIDAVIT
HK OOK XK

NOTARY PUBLIC

My commission expires on .. 1 ND.

Doc. No. ...

Page No.
Book No

Series of 19

SECTION 10. Section 16 of the Code is hereby amended to delete “Securities and
Exchange’ from “Securities and Exchange Commission” in each instance.

SECTION 14. Section 17 of the Code is hereby amended to read as follows:

“Sec. 17. Grounds when articles of incorporation or amendment may be
rejected or disapproved. - The [Securities and Exchange] Commission may reject
the articles of incorporation or disapprove any amendment thereto if the same is
ot in compliance with the requirements of this Code: Provided, That the
Commission shall give the incorporators, DIRECTORS, TRUSTEES OR
OFFICERS a reasonable time within which to correct or modify the objectionable
portions of the articles or amendment. The following are grounds for such
rejection or disapproval:

4. That the articles of incorporation or any amendment thereto is not
substantially in accordance with the form prescribed herein;

ood 1K bos

[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


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utilities, educational institutions, and other corporations governed by special laws
shall be accepted or approved by the Commission unless accompanied by a
favorable recommendation of the appropriate government agency to the effect
that such articles or amendment is in accordance with law.]

THE COMMISSION MAY REQUIRE AN ENDORSEMENT OR
FAVORABLE RECOMMENDATION FROM ANOTHER APPROPRIATE
GOVERNMENT AGENCY.

SECTION 12. Section 18 of the Code is hereby amended to read as follows:

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

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

4 THE WORD "CORPORATION", "COMPANY",
INCORPORATED", OR "LIMITED", "LIMITED LIABILITY" OR AN
ABBREVIATION OF ONE OF SUCH WORDS;

2. PUNCTUATIONS, ARTICLES, CONJUNCTIONS,
CONTRACTIONS, ABBREVIATIONS, DIFFERENT TENSES,
SPACING OR NUMBER OF THE SAME WORD OR PHRASE.

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

WHEN A CORPORATE NAME IS REMOVED FROM REGISTRATION,
THE CORPORATION SHALL IMMEDIATELY CEASE FROM USING THE
SAME AND APPLY FOR THE REGISTRATION OF A NEW CORPORATE
NAME. SIMILARLY, A CORPORATION DIRECTED BY FINAL JUDGMENT TO
CHANGE ITS CORPORATE NAME SHALL NOT USE THE SAME IN ITS
OPERATIONS OR IN ANY OTHER WAY, EVEN AFTER ITS DISSOLUTION
OR REVOCATION AS A CORPORATION.

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


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IF A CORPORATION USES OR CONTINUES TO USE A CORPORATE
NAME ALREADY REMOVED FROM REGISTRATION OR RESERVATION, OR
WHICH HAS BEEN DIRECTED TO BE CHANGED BY FINAL JUDGMENT,
THE COMMISSION SHALL DULY NOTIFY SAID CORPORATION AND
REQUIRE IT TO CEASE AND DESIST FROM THE CONTINUED USE OF
SUCH CORPORATE NAME WITHIN A PERIOD OF FIVE (5) DAYS. IF THE
CORPORATION FAILS TO COMPLY WITH THE COMMISSION'S ORDER
WITHIN THE FIVE-DAY PERIOD, THE COMMISSION MAY HOLD THE
CORPORATION AND/OR ITS RESPONSIBLE DIRECTORS OR OFFICERS IN
CONTEMPT, AND/OR CAUSE THE REMOVAL OF ALL VISIBLE SIGNAGES,
MARKS, ADVERTISEMENTS, LABELS, PRINTS AND OTHER EFFECTS
BEARING SUCH CORPORATE NAME IN THEIR POSSESSION. LIABILITY
UNDER THIS SECTION SHALL BE WITHOUT PREJUDICE TO THE
CORPORATION'S AND/OR ITS RESPONSIBLE DIRECTORS’ OR OFFICERS’
LIABILITY FOR OTHER ADMINISTRATIVE, CIVIL, OR CRIMINAL
SANCTIONS UNDER THIS CODE AND OTHER LAWS.”

SECTION 13. Section 19 of the Code is hereby amended to read as follows:

“Sec. 19. REGISTRATION, INCORPORATION AND commencement of
corporate existence-A PERSON OR GROUP OF PERSONS DESIRING TO
INCORPORATE SHALLSUBMIT THE INTENDED CORPORATE NAME TO
THE COMMISSION FOR VERIFICATION. IF THE COMMISSION FINDS THAT
THE NAME IS DISTINGUISHABLE, THE NAME SHALL BE RESERVED IN
FAVOR OF THE INCORPORATORS. THE INCORPORATORS SHALL
THEN:(A) SUBMIT, AS MAY BE APPLICABLE, THEIR ARTICLES OF
INCORPORATION, THEIR BY-LAWS,AND SUCH OTHER DOCUMENTS
AND/OR INFORMATION AS MAY BE REQUIRED BY THE COMMISSION;
AND (B) PAY THE PRESCRIBED FEES.

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

IF THE COMMISSION FINDS THAT THE SUBMITTED DOCUMENTS,
INFORMATION AND PAYMENT ARE COMPLETE AND IN FULL
COMPLIANCE OF THE REQUIREMENTS UNDER THIS CODE AND THE
RULES OF THE COMMISSION, AND THERE IS NO OTHER GROUND TO
REJECT OR DISAPPROVE ANY OF THE SUBMISSIONS, THE COMMISSION
SHALL ISSUE THE CORRESPONDING CERTIFICATE OF INCORPORATION
AND REGISTER THE CORPORATE NAME EARLIER RESERVED.

‘A private corporation formed or organized under this Code commences to
have corporate existence and juridical personality and is deemed incorporated
from the date the [Securities and Exchange] Commission issues [a]
THEcertificate of incorporation under its official seal; PROVIDED, THAT THE
COMMISSION MAY ISSUE THE CERTIFICATE OF INCORPORATION IN THE
FORM OF AN ELECTRONIC DOCUMENT, IN ACCORDANCE WITH THE
RULES AND REGULATIONS OF THE COMMISSION ON THE USE OF
ELECTRONIC DATA MESSAGES; and thereupon the incorporators,
stockholdersimembers and their successors shall constitute a body politic and
corporate under the name stated in the articles of incorporation for the period of


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time mentioned therein, unless said period is extended or the corporation is
sooner dissolved in accordance with law.
\

SECTION 14. Section 22 of the Code is hereby amended to read as follows:

“Sec. 22. Effects of non-use of corporate charter and continuous
inoperation of a corporation; DELINQUENCY AND REVOCATION. - If a
corporation does not formally organize and commence [the transaction of] its
businessor the construction of its works within [two (2)] FIVE (5)yearsfrom 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,
WITHOUT NEED OF FURTHER ACTION BY THE COMMISSION.

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

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

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

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


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

[The provision shall not apply if the failure to organize, commence the
transaction of its business or the construction of its works, or to continuously
operate is due to causes beyond the control of the corporation as may be
determined by the Securities and Exchange Commission].”

SECTION 15. Section 23 of the Code is hereby amended to read as follows:

"Sec, 23. The board of directors or trustees. - Unless otherwise provided
in this Code, the corporate powers of all corporations formed under this Code
shall be exercised, all business conducted and all property of such corporations
controlled and held by the board of directors or trustees [to be elected from
among the holders of stocks, or where there is no stock, from among the
members of the corporation,] who shall hold office for one (1) year until their
successors are elected and qualified

ONE PERSON CORPORATIONS SHALL HAVE ONLY ONE (1)
DIRECTOR OR TRUSTEE. SMALL CORPORATIONS SHALL HAVE AS
MANY DIRECTORS AS THERE ARE INCORPORATORS, NOT EXCEEDING
THREE (3). A CORPORATION SHALL BE DEEMED TO BE A SMALL
CORPORATION WHEN IT HAS ONLY TWO (2)OR THREE (3)
INCORPORATORS AND ITS TOTAL ASSETS DO NOT EXCEED FIVE
MILLION PESOS (PHP5,000,000.00)

CORPORATIONS WITH TEN (10) OR MORE MEMBERS, AS WELL AS
THOSE WITH TEN (10) OR MORESTOCKHOLDERS AND WITH TOTAL
ASSETS OF AT LEAST ONE HUNDRED MILLION PESOS (P100,000,000.00),
OR SUCH NUMBER AND AMOUNT AS MAY BE LATER SET BY THE
COMMISSION,SHALL HAVE AT LEAST ONE (1) INDEPENDENT DIRECTOR
OR TRUSTEE, OR SUCH OTHER MINIMUM NUMBER WHICH THE
COMMISSION MAY DETERMINE AS NECESSARY FOR GOOD CORPORATE
GOVERNANCE. THE COMMISSION SHALL PRESCRIBE THE MINIMUM
STANDARDS OR CRITERIA IN DETERMINING THE INDEPENDENCE OF A
DIRECTOR.

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

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


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A majority of the directors or trustees of all corporations organized under
this Code, INCLUSIVE OF INDEPENDENT DIRECTORS OR TRUSTEES, must
be residents of the Philippines. ‘

IT SHALL BE THE DUTY OF ALL DIRECTORS OR TRUSTEES TO
ATTEND ALL MEETINGS OF THE BOARD AND OF THE STOCKHOLDERS
OR MEMBERS AND THEIR ABSENCE MAY BE EXCUSED ONLY FOR
JUSTIFIABLE REASONS. WHEN RELATED PARTY TRANSACTIONS OR
SELF-DEALINGS OF A DIRECTOR ARE TAKEN UP, THE CONCERNED
DIRECTOR SHALL ABSENT HIMSELF FROM THE MEETING AND HIS
ABSENCE SHALL NOT BE COUNTED AGAINST HIM. DIRECTORS AND
TRUSTEES SHALL HAVE SUCH OTHER DUTIES AND RESPONSIBILITIES
PROVIDED IN THE CORPORATION'S BY-LAWS AND AS MAY BE
PRESCRIBED BY THE COMMISSION FOR GOOD CORPORATE
GOVERNANCE.

SECTION 16. Section 24 of the Code is hereby amended to read as follows:

“Sec. 24. Election of directors or trustees. - OTHER THAN IN
INSTANCES WHEN THE EXCLUSIVE RIGHT IS WITHHELD 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 OR IN THE
RULES OF THE COMMISSION.

EXCEPT AS PROVIDED IN SECTION 26 OF THIS CODE, at all
elections of directors or trustees, there must be present, either in person, BY
REMOTE COMMUNICATION, or by representative authorized to act by written
proxy, the owners of a majority of the outstanding capital stock, or if there be no
capital stock, a majority of the members entitled to vote; PROVIDED THAT
WHEN A VOTE IS CASTIN ABSENTIA, THE STOCKHOLDER OR MEMBER
WHO CAST THE VOTE SHALL BE DEEMED PRESENT FOR PURPOSES OF
QUORUM.

EACH STOCKHOLDER OR MEMBER SHALL HAVE THE RIGHT TO
VOTE IN PERSON,BY REMOTE COMMUNICATION, BY PROXY, AND/OR IN
ABSENTIA; PROVIDED THAT VOTING BY REMOTE COMMUNICATION OR
IN ABSENTIA MAY BE RESORTED TO ONLY WHEN ALLOWED EITHER BY
THE BY-LAWS OF THE CORPORATION OR BY A MAJORITY OF THE
BOARD OF DIRECTORS AND WHEN THE CORPORATION HAS INSTITUTED
REASONABLE MEASURESTO VERIFY THAT THE PERSON PERMITTED TO
PARTICIPATE OR VOTE BY REMOTE COMMUNICATION OR IN ABSENTIA
1S A STOCKHOLDER OR MEMBER, OR A HOLDER OF A PROXY FROM A
STOCKHOLDER OR MEMBER, AND TO RECORD ALL VOTES AND OTHER
ACTIONS TAKEN AT THE MEETING. WHEN ATTENDANCE AT THE
MEETING IS BY REMOTE COMMUNICATION, THE CORPORATION SHALL
PROVIDE THE STOCKHOLDER OR MEMBER, OR PROXY-HOLDER, A
REASONABLE OPPORTUNITY TO PARTICIPATE IN THE MEETING, HEAR
OR SEE THE PROCEEDINGS AS WELL AS BE HEARD OR SEEN BY OTHER
STOCKHOLDERS OR MEMBERS, AND TO CAST THEIR VOTE
SUBSTANTIALLY CONCURRENTLY WITH SUCH PROCEEDINGS. WHEN
VOTING IN ABSENTIA, IS ALLOWED, THE CORPORATION SHALL
INSTITUTE REASONABLE MEASURES TOTIMELY PROVIDE THE
STOCKHOLDER OR MEMBER WITH INFORMATION ON THE NOMINEES
AND GIVE THEM A REASONABLE OPPORTUNITY TO ASK QUESTIONS
BEFORE CASTING THEIR VOTES. THE COMMISSION SHALL PRESCRIBE


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THE MINIMUM STANDARDS OR GUIDELINES TO MAKE ATTENDANCE BY
REMOTE COMMUNICATION AND VOTING /N ABSENTIA EFFICIENT AND
ACCESSIBLE FORA FOR STOCKHOLDERS OR'MEMBERS.

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

In stock corporations, every stockholder entitled to vote shall have the
right to vote [in personor by proxy] the number of shares of stock standing, at the
time fixed in the by-laws, in his own name [on] IN the stock books of the
corporation, or where the by-laws are silent, at the time of the election; and said
stockholder may vote such number of shares for as many persons as there are
directors to be elected or he may cumulate said shares and give one candidate
as many votes as the number of directors to be elected multiplied by the number
of his shares shall equal, or he may distribute them on the same principle among
as many candidates as he shall see fit: Provided, That the total number of votes
cast by him shall not exceed the number of shares owned by him as shown in
the books of the corporation multiplied by the whole number of directors to be
elected: Provided, however, That no delinquent stock shall be voted. Unless
otherwise provided in the articles of incorporation or in the by-laws, members of
corporations which have no capital stock may cast as many votes as there are
trustees to be elected but may not cast more than one vote for one candidate.
Candidates 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 die or indefinitely} If, for
any reason, no election is held, or if there are not present or represented by
proxy, at the meeting, the owners of a majority of the outstanding capital stock,
or if there be no capital stock, a majority of the members entitled to vote, THE
MEETING MAY BE ADJOURNED AND THE CORPORATION SHALL
PROCEED IN ACCORDANCE WITH SECTION 26 OF THIS CODE.”

SECTION 17. ‘Section 25 of the Code is hereby amended to read as follows:

“Sec. 25. Corporate officers; quorum. - immediately after their election,
the directors of a corporation must formally organize by the election of a
presidentOR CHIEF EXECUTIVE OFFICER, who shall be a director, a treasurer
OR CHIEF FINANCIAL OFFICER,who may or may not be a director, a secretary
who shall be a resident and citizen of the Philippines, A COMPLIANCE
OFFICER WHO SHALL REPORT DIRECTLY TO THE CHAIRMAN OF THE
BOARD, and such other officers as may be provided for in the by-laws. Any two
(2) or more positionsOTHER THAN THAT OF THE COMPLIANCE OFFICER
may be held concurrently by the same person, except that no one shall act as
president and secretary or as president and treasurer at the same time

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

[Directors or trustees cannot attend or vote by proxy at board
meetings]; HOWEVER, WHEN ALLOWED BY THE BY-LAWS, THEY CAN


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ATTEND BOARD MEETINGS THROUGH REMOTE COMMUNICATION SUCH
AS VIDEOCONFERENCING, TELECONFERENCING OR OTHER
TECHNOLOGY THAT ALLOWS THEM A REASONABLE OPPORTUNITY TO
PARTICIPATE.”

SECTION 18. Section 26 of the Code is hereby amended to read as follows:

“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 to the
[Securities and Exchange] Commission, the names, nationalities,
SHAREHOLDINGS and residences of the directors, trustees, and officers
elected.

THE NON-HOLDING OF ANY ELECTIONAND THE REASONS
THEREFOR, SHALL BE REPORTED TO THE COMMISSION WITHIN THREE
(3) DAYS FROM THE DATE OF THE SCHEDULED ELECTION; PROVIDED
THAT, THE NOTICE OF NON-HOLDING MAY BE SUBMITTED IN THE FORM
OF AN ELECTRONIC DOCUMENT, IN ACCORDANCE WITH THE RULES
AND REGULATIONS OF THE COMMISSION ON THE USE OF ELECTRONIC
DATA MESSAGES.

WHEN PERTAINING TO THE ORIGINAL SCHEDULE, THE REPORT
OF NON-HOLDING SHALL FURTHER SPECIFYA NEW DATE FOR THE
ELECTION, WHICH SHALL NOT BE LATER THAN THIRTY DAYS FROM THE
ORIGINAL DATE.

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

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

Should a director, trustee or officer die, resign or in any manner cease to
hold office, his heirs in case of his death, the secretary, or any other officer of the


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corporation, or the director, trustee or officer himself, shall [immediately] report
such fact to the [Securities and Exchange] Commission IN WRITINGWITHIN
THREE (3) DAYS FROM CESSATION FROM ‘OFFICE, PROVIDED THAT
SUCH NOTICE MAY GIVEN IN THE FORM OF AN ELECTRONIC
DOCUMENT, IN ACCORDANCE WITH THE RULES AND REGULATIONS OF
THE COMMISSION ON THE USE OF ELECTRONIC DATA MESSAGES.

IN ELECTING DIRECTORS OR TRUSTEES TO FILL VACANCIES,
THE PROCEDURE SET FORTH IN SECTION 24 AND IN THIS SECTION
SHALL APPLY."

SECTION 19. Section 27 of the Code is hereby amended to read as follows:

“Sec. 27. Disqualification of directors, trustees or officers. - THE
FOLLOWING PERSONS SHALL BE DISQUALIFIED FROM BEING ELECTED
AS DIRECTOR, TRUSTEE OR OFFICER OF ANY CORPORATION:

4. [No person] THOSE WHO HAVE BEEN convicted by final judgment of
an offense punishable by imprisonment for a period exceeding six (8) years, or a
violation of this Code OR REPUBLIC ACT 8799 [, committed} within five (5)
years prior to the date of his election or appointment[,shall qualify as a director,
trustee or officer of any corporation];

2. THOSE WHO, BY FINAL JUDGMENT, ARE CONVICTED OF, OR
FOUND ADMINISTRATIVELY LIABLE FOR, ANY OFFENSE INVOLVING
MORAL TURPITUDE, FRAUD, EMBEZZLEMENT, THEFT, ESTAFA,
COUNTERFEITING, MISAPPROPRIATION, FORGERY, BRIBERY, FALSE
OATH, PERJURY AND OTHER FRAUDULENT ACTS;

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

4. THOSE WHO HAVE BEEN CONVICTED BY FINAL JUDGMENT
OF ANY THREE OF THE OFFENSES AND/OR VIOLATIONS IN
PARAGRAPHS 1 TO 3 ABOVE, REGARDLESS OF WHEN THE JUDGMENTS
BECAME FINAL.

THE MAXIMUM NUMBER OF BOARD REPRESENTATIONS ANY
INDEPENDENT DIRECTOR OR TRUSTEE SHALL HAVE IN OTHER
CORPORATIONS SHALL BE FIVE (5), OR SUCH LOWER NUMBER AS MAY
BE PROVIDED IN THE BY-LAWS OF THE CORPORATION OR AS THE
COMMISSION MAY LATER PRESCRIBE.

THE FOREGOING IS WITHOUT PREJUDICE TO QUALIFICATIONS
OR OTHER DISQUALIFICATIONS WHICH THE COMMISSION MAY IMPOSE
IN ITS PROMOTION OF, AMONG OTHERS, GOOD CORPORATE
GOVERNANCE.”

SECTION 20. Section 28 of the Code is hereby amended to read as follows:
“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


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corporation be a non-stock corporation, by a vote of at least two-thirds (2/3) of
the members entitled to vote: Provided, That such removal shall take place either
at a regular meeting of the corporation or at a sbecial meeting called for the
purpose, and in either case, after previous notice to stockholders or members of
the corporation of the intention to propose such removal at the meeting. A
special meeting of the stockholders or members of a corporation for the purpose
of removal of directors or trustees, or any of them, must be called by the
secretary on order of the president or on the written demand of the stockholders.
representing or holding at least a majority of the outstanding capital stock, or, if it
be a non-stock corporation, on the written demand of a majority of the members
entitled to vote. Should the secretary fail or refuse to call the special meeting
upon such demand or fail or refuse to give the notice, or if there is no secretary,
the call for the meeting may be addressed directly to the stockholders or
members by any stockholder or member of the corporation signing the demand.
Notice of the time and place of such meeting, as well as of the intention to
propose such removal, must be given by publication or by written notice
prescribed in this Code. Removal may be with or without cause: Provided, That
removal without cause may not be used to deprive minority stockholders or
members of the right of representation to which they may be entitled under
Section 24 of this Code.

THE COMMISSION SHALL, MOTU PROPRIO OR UPON VERIFIED
COMPLAINT AND AFTER DUE NOTICE AND HEARING, ORDER THE
REMOVAL OF ANY DISQUALIFIED DIRECTOR OR TRUSTEE ELECTED
DESPITE THE DISQUALIFICATION, OR WHOSE DISQUALIFICATION IS
DISCOVERED OR AROSE SUBSEQUENT TO ELECTION. THE REMOVAL
OF ANY DISQUALIFIED DIRECTOR SHALL BE WITHOUT PREJUDICE TO
OTHER SANCTIONS THE COMMISSION MAY IMPOSE IN ACCORDANCE
WITH THIS CODE, UPON SHOWING OF A WILLFUL OR DELIBERATE
CONCEALMENT OF THE DISQUALIFICATION. "

SECTION 21. Section 29 of the Code is hereby amended to read as follows:

“Sec. 29. Vacancies in the office of director or trustee. - Any vacancy
occurring in the board of directors or trustees [other than by removal by the
stockholders or members or by expiration of term, may be filled by the vote of at
least a majority of the remaining directors or trustees, if still constituting a
quorum; otherwise, said vacancies} must be filled by the stockholders in a
regular or special meeting called for that purpose.

WHEN THE VACANCY IS DUE TO EXPIRATION OF TERM, THE
ELECTION SHALL BE HELD NO LATER THAN THE DAY OF SUCH
EXPIRATION OF TERM AT A MEETING CALLED FOR THAT PURPOSE.
WHEN THE VACANCY ARISES AS A RESULT OF REMOVAL BY THE
STOCKHOLDERS OR MEMBERS, THE ELECTION MUST BE HELD ON THE
SAME DAY OF THE MEETING AUTHORIZING THE REMOVAL AND THIS
FACT MUST BE SO STATED IN THE AGENDA AND NOTICE OF SAID
MEETING. IN ALL OTHER CASES, THE ELECTION MUST BE HELD NO
LATER THAN FORTY-FIVE (45) DAYS FROM WHEN THE VACANCY
ARISES. A director or trustee 80 elected to fill a vacancy shall be elected only for
the unexpired term of his predecessor in office.

HOWEVER, WHEN THE VACANCY PREVENTS THE REMAINING
DIRECTORS FROM CONSTITUTING A QUORUM AND EMERGENCY
ACTION IS REQUIRED TO PREVENT GRAVE, SUBSTANTIAL AND
IRREPARABLE LOSS OR DAMAGE TO THE CORPORATION, THE
VACANCY MAY BE TEMPORARILY FILLED BY UNANIMOUS VOTE OF THE


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REMAINING DIRECTORS OR TRUSTEESFROM AMONG THE OFFICERS OF
THE CORPORATION, PROVIDED THAT ACTION BY THE APPOINTED
DIRECTOR OR TRUSTEE SHALL BE LIMITED TO THE EMERGENCY
ACTION NECESSARY TO PREVENT GRAVE, SUBSTANTIAL OR
IRREPARABLE LOSS TO THE COMPANY AND HIS TERM SHALL NOT
CONTINUE FOR LONGER THAN REASONABLY NECESSARY AFTER THE
TERMINATION OF THE EMERGENCY.

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 meeting 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.”

SECTION 22. Section 30 of the Code is hereby amended to read as follows:

“Sec. 30. Compensation of directors. -In the absence of any provision in
the by-laws fixing THE PARAMETERS Of their compensation, the directorsOR
TRUSTEES shall not receive any compensation] as such directorsOR
TRUSTEES except for reasonable per diems: Provided, however, That any such
compensation other than per diems may be granted to directors OR
TRUSTEESby the vote of the stockholders representing at least a majority of the
outstanding capital stock OR BY MAJORITY OF THE MEMBERS at a regular or
special meeting,

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

In no case shall the total yearly compensation of directorsOR
TRUSTEES, as such directorsOR TRUSTEES, exceed ten (10%) percent of the
net income before income tax of the corporation during the preceding year.

THE CORPORATION SHALL SUBMIT AN ANNUAL REPORT ON THE
COMPENSATION OF DIRECTORS OR TRUSTEES AS PRESCRIBED UNDER
THIS CODE.”

SECTION 23. ‘Section 35 of the Code is hereby amended to read as follows:

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


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express terms is not so amendable or repealable; and (5) a distribution of cash
dividends to the shareholders.

FOR MERITORIOUS REASONS, THE BOARD MAY, UPON DUE
AMENDMENT OF THE BY-LAWS, ORDER THE FORMATION OF OTHER
SPECIAL COMMITTEES AND DETERMINE THE MEMBERS’ TERM,
COMPENSATION, POWERS AND RESPONSIBILITIES.

WHEN NECESSARY TO ENSURE GOOD CORPORATE
GOVERNANCE ANDIOR COMBAT GRAFT AND CORRUPT PRACTICES, OR
WHEN THE PARAMOUNT INTEREST OF THE PUBLIC OTHERWISE
REQUIRES, THE COMMISSION SHALL HAVE THE POWER TO REQUIRE
THE FORMATION OF OTHER COMMITTEES AND DESIGNATE THEIR
POWERS AND RESPONSIBILITIES; PROVIDED THAT THE TERM AND
COMPENSATION OF SUCH COMMITTEES SHALL BE DETERMINED BY
THE BOARD AND THE CORPORATION’S BY-LAWS SHALL BE AMENDED
ACCORDINGLY WITHIN THE PERIOD PRESCRIBED BY THE COMMISSION.”

SECTION 24. Section 36 of the Code is hereby amended to read as follows:

“Sec. 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;

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

3900000000

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

XX KX"
SECTION 25. Section 37 of the Code is hereby amendéd to read as follows:

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


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dissenting stockholder may exercise his appraisal right under the conditions
provided in this code.”

SECTION 26. Section 38 of the Code is hereby amended to read as follows:

“Sec. 38. Power to increase or decrease capital stock; incur, create or
increase bonded indebtedness. ~ xxx Xxx 1x

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

YOK 200K 900

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

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

YOK XK KK

Bonds issued by a corporation shall be registered with the [Securities and
Exchange] Commission, which shall have the authority to determine the
sufficiency of the terms thereof.”

SECTION 27. Section 40 of the Code is hereby amended to read as follows:

“Sec, 40. Sale or other disposition of assets. - Subject to the provisions of
existing laws on illegal combinations and monopoliesAND SUBJECT,
FURTHER, TO SEC. 81 OF THIS CODE ON DE FACTO MERGERS, a


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

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

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

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

After such authorization or approval by the stockholders or members, the
board of directors or trustees may, nevertheless, 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 of business of
said corporation or if the proceeds of the sale or other disposition of such
property and assets be appropriated for the conduct of its remaining business.

[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.]”

SECTION 28. Section 43 of the Code is hereby amended to read as follows:

“Sec. 43. Power to declare dividends. - The board of directors of a stock
corporation may declare dividends out: of the unrestricted retained earings
whichSHALL BE DETERMINEDIN ACCORDANCE WITH = THE


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GUIDELINESSET BY THE COMMISSION ON UNREALIZED EARNINGS AND
LOSSES.SUCH DIVIDENDSshail 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 unpaid subscription is fully
paid: Provided, further, That no stock dividend shall be issued without the
approval of stockholders representing not less than two-thirds (2/3) of the
outstanding capital stock at a regular or special meeting duly called for the
purpose.

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

SECTION 29. Section 46 of the Code is hereby amended to read as follows:

“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 inconsistent with this Code. For
the adoption of by-laws by the corporation the affirmative vote of the
stockholders representing at least a majority of the outstanding capital stock, or
of at least a majority of the members in case of non-stock corporations, shall be
necessary. The by-laws shall be signed by the stockholders or members voting
for them and shall be kept in the principal office of the corporation, subject to the
inspection of the stockholders or members during office hours. A copy thereof,
duly certified to by a majority of the directors or trustees countersigned by the
secretary of the corporation, shall be filed with the [Securities and Exchange]
Commission which shall be attached to the original articles of incorporation.

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

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

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

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


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accompanied by a certificate of the appropriate government agency to the effect
that such by-laws or amendments are in accordance with law.”

SECTION 30. Section 47 of the Code is hereby amended to read as follows:

“Sec. 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] SHALL provide 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 of the stockholders or members, PROVIDED THAT THE BY-LAWS
SHALL CONTAIN NO PROVISION SUPPRESSING OR OTHERWISE
LIMITING IN ANY MANNER THE RIGHT OF ANY MEMBER OR
STOCKHOLDER TO PROPOSE THE HOLDING OF MEETINGS AND THE
ITEMS FOR DISCUSSION IN THE AGENDA;

HK XK XXX

5. The qualifications, duties AND RESPONSIBILITIES, and THE
PARAMETERS OR GUIDELINES TO CONSIDER IN SETTING THE
compensation, of directors or trustees AND[] officers [and employees], AS
WELL AS THE MAXIMUM NUMBER OF OTHER BOARD
REPRESENTATIONS AN INDEPENDENT DIRECTOR OR TRUSTEE MAY
HAVE WHICH SHALL, IN NO CASE, BE MORE THAN FIVE (5) OR SUCH
OTHER NUMBER THE COMMISSION MAY LATER PRESCRIBE;

XXX XK KK

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

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

41. A CODE OF ETHICS OR STANDARDS OF CONDUCT FOR THE
CORRECT, HONORABLE AND PROPER PERFORMANCE OF A
CORPORATION’S BUSINESS AND ITS DEALINGS, DIRECT OR INDIRECT,
WITH THE GOVERNMENT AND ITS AGENCIES, AS WELL AS MECHANISMS
TO ENFORCE SUCH CODE OF ETHICS OR STANDARDS OF CONDUCT,
WHIGH SHALL CONTAIN THE MINIMUM REQUIREMENTS THE
COMMISSION MAY PROVIDE;

42. INTERNAL PROCEDURES TO PROVIDE AVENUES OF
COMMUNICATION BY, TO PROTECT THE IDENTITY AND SECURITY OF
TENURE/COMPENSATION OF, AND TO PROVIDE PROTECTION FROM
RETALIATION BEFORE AND AFTER EMPLOYMENT OF: (A) THOSE WHO
REPORT VIOLATIONS OF THE CORPORATION'S CODE OF ETHICS OR
STANDARDS OF CONDUCT, GRAFT AND CORRUPT PRACTICES,
IMPROPRIETIES IN MATTERS OF FINANCIAL REPORTING,OR OTHER


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UNLAWFUL OR ILLEGAL CONDUCT COMMITTED BY THE CORPORATION
OR ANY OF ITS DIRECTORS, TRUSTEES, OFFICERS, EMPLOYEES OR
AGENTS; (B) THOSE WHOREPORT INSTRUCTIONS OR PRESSURE FROM
HIERARCHICAL SUPERIORS TO COMMIT ANY OF THE ACTS IN (A);
AND/OR (C) THOSE WHO RAISE CONCERNS ABOUT THREATS OF OR
POSSIBLE ACTS CONSTITUTING ANY OF THE ACTS IN (A) ABOVE;

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

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

THE COMMISSION SHALL FORMULATE AND MAKE AVAILABLE
‘SAMPLE BY-LAWS WITH THE FOREGOING REQUIREMENTS.”

SECTION 31. Section 48 of the Code is hereby amended to read as follows:

Section 48. Amendment to by-laws. ~ The board of directors or trustees,
by a majority vote thereof, and the owners of at least [a majority]TWO-THIRDS
(2/3) of the outstanding capital stock, or at least [a majority] TWO-THIRDS (2/3)
of the members of a non-stock corporation, at a regular or special meeting duly
called for the purpose, may amend or repeal any by-laws or adopt new by-laws.
The owners of two-thirds (2/3) of the outstanding capital stock or two-thirds (2/3)
of the members in a non-stock corporation may delegate to the board of directors
or trustees the power to amend or repeal any by-laws or adopt new by-laws:
Provided, That any power delegated to the board of directors or trustees to
amend or repeal any 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, INCLUDING THE
STOCKHOLDERS’ OR MEMBERS’ RESOLUTION ON THE DELEGATION OF
THE POWER TO AMEND OR ADOPT NEW BY-LAWS OR ON THE
REVOCATION OF SUCH DELEGATION, IF ANY, shall be filed with the
[Securities and Exchange] Commission the same to be attached to the original
articles of incorporation and original by-laws.

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 are
not inconsistent with this Code.”

SECTION 32. Section 50 of the Code is hereby amended to read as foliows:

“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 in April of every year as
determined by the board of directors or trustees.: Provided, That written notice of


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regular meetings shall be sent to all stockholders or members of record at least
{two (2)] THREE(3)weeks prior to the meeting, unless a [different] LONGER
period is required by the by-lawsOR BY ANY RELEVANT LAW OR
REGULATION, AND IN SUCH A MANNER AS TO BE RECEIVED AT LEAST
FIVE DAYS BEFORE THE SCHEDULED MEETING

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

a. THE MINUTES OF THE MOST RECENT REGULAR
MEETING WHICH SHALL INCLUDE, AMONG OTHERS:

10) A DESCRIPTION OF THE VOTING AND VOTE
TABULATION PROCEDURES USED AND TO BE USED IN THE
CURRENT MEETING,

(ii) THE OPPORTUNITY GIVEN TO
STOCKHOLDERS OR MEMBERS TO ASK QUESTIONS, AS
WELL AS A RECORD OF THE QUESTIONS THEY ASKED AND
THE ANSWERS RECEIVED,

(iii) = THE MATTERS DISCUSSED AND
RESOLUTIONS REACHED,

(iv) A RECORD OF THE VOTING RESULTS FOR
EACH AGENDA ITEM, AND

(v) A LIST OF THE DIRECTORS OR TRUSTEES,
OFFICERS AND STOCKHOLDERS OR MEMBERS WHO
ATTENDED THE MEETING;

b. A MEMBERS’ LIST FOR NON-STOCK CORPORATIONS
AND,FOR STOCK CORPORATIONS, MATERIAL INFORMATION ON
THE CURRENT STOCK OWNERSHIPSTRUCTURE AND VOTING
RIGHTS, INCLUDING GROUP STRUCTURES, INTRA-GROUP
RELATIONS, OWNERSHIP DATA, AND BENEFICIAL OWNERSHIP
WITH SPECIFIC DISCLOSURES ON THE DIRECT AND INDIRECT
STOCKHOLDINGS OF DIRECTORS AND OFFICERS;

c. A DETAILED, DESCRIPTIVE, BALANCED AND
COMPREHENSIBLE ASSESSMENT OF THE CORPORATION'S
PERFORMANCE WHICH SHALL INCLUDE INFORMATION ON THE
CHANGES IN THE CORPORATION OR ITS BUSINESS AND ITS
STRATEGY;

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


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

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

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

h. A BOARD APPRAISAL OR PERFORMANCE REPORT
AND THE STANDARDS OR CRITERIA AND PROCEDURE USED TO
ASSESS THE BOARD;

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

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

k. DIRECTOR DISCLOSURES ON SELF-DEALINGS AND
RELATED PARTY TRANSACTIONS;

1 THE PROFILES OF DIRECTORS NOMINATED OR
SEEKING ELECTION OR RE-ELECTION;

m. THE COMPENSATION/BENEFITS OF EMPLOYEES
WHO ARE IMMEDIATE FAMILY MEMBERS OF A DIRECTOR OR
TRUSTEE OR ANY OFFICER OF THE CORPORATION OR WHOSE
EMPLOYMENT WAS MADE WITH THEIR ENDORSEMENT; AND

n DETAILS OF THE ORIENTATION PROGRAM FOR NEW
DIRECTORS.

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

SUBJECT TO THE RIGHT OF ANY MEMBER OR STOCKHOLDER TO
PROPOSE THE HOLDING OF SPECIAL MEETINGS AND THE ITEMS FOR
DISCUSSION IN THE AGENDA THEREOF, special meetings of stockholders or
members shall be held at any time deemed necessary or as provided in the by-
laws: Provided, however, That at least fone (1)week] written notice shall be sent
to all stockholders or membersAT LEAST THREE (3) WEEKS PRIOR TO THE


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MEETING, unless [otherwise] A LONGER PERIOD IS provided in the by-
lawsOR BY ANY RELEVANT LAW OR REGULATION, AND IN SUCH A
MANNER AS TO BE RECEIVED AT LEAST FIVE DAYS BEFORE THE
SCHEDULED MEETING.

Notice of any meeting may be waived, expressly or impliedly, by any
stockholder or member[.]; PROVIDED THAT GENERAL WAIVERS OF NOTICE
IN THE ARTICLES OF INCORPORATION OR THE BY-LAWS SHALL NOT BE
ALLOWED; PROVIDED, FURTHER, THAT ATTENDANCE AT A MEETING
SHALL CONSTITUTE A WAIVER OF NOTICE OF SUCH MEETING, EXCEPT
WHEN THE PERSON ATTENDS A MEETING FOR THE EXPRESS PURPOSE
OF OBJECTING AT THE BEGINNING OF THE MEETING, TO THE
TRANSACTION OF ANY BUSINESS BECAUSE THE MEETING IS NOT
LAWFULLY CALLED OR CONVENED.

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

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

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

SECTION 33. Section 51 of the Code is hereby amended to read as follows:

Sec. 51. Place and time of meetings of stockholders of members. -
Stockholder's or member's meetings, whether regular or special, shall be held in
the PRINCIPAL OFFICE OF THE CORPORATION AS SET FORTH IN THE
ARTICLES OF INCORPORATION, OR, IF NOT PRACTICABLE, IN THEcity or
municipality where the principal office of the corporation is located [, and if
practicable in the principal office of the corporation]: Provided, That Metro Manila
shall, for purposes of this section, be considered a city or municipality.

WHEN ALLOWED BY THE BY-LAWS OR BY A MAJORITY OF THE
BOARD OF DIRECTORS OR TRUSTEES, ATTENDANCE AT REGULAR OR
SPECIAL MEETINGS MAY BE BY REMOTE COMMUNICATION AND VOTING
MAY BE MADE IN ABSENTIA. WHEN ATTENDANCE BY REMOTE
COMMUNICATION IS ALLOWED, THE CORPORATION SHALL PROVIDE
THE STOCKHOLDER OR MEMBER, OR PROXY-HOLDER, A REASONABLE
OPPORTUNITY TO PARTICIPATE IN THE MEETING, TO HEAR OR SEE THE
PROCEEDINGS AS WELL AS BE HEARD OR SEEN BY OTHER
STOCKHOLDERS OR MEMBERS, AND TO CAST THEIR VOTE


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SUBSTANTIALLY CONCURRENTLY WITH SUCH PROCEEDINGS. WHEN
VOTING IN ABSENTIA, IS ALLOWED, THE CORPORATION SHALL
INSTITUTE REASONABLE MEASURES TO‘ TIMELY PROVIDE THE
STOCKHOLDER OR MEMBER WITH INFORMATION ON THE MATTERS TO
BE TAKEN UP AT THE MEETING AND GIVE THEM A REASONABLE
OPPORTUNITY TO ASK QUESTIONS BEFORE CASTING THEIR VOTES.
THE COMMISSION SHALL PRESCRIBE THE MINIMUM STANDARDS OR
GUIDELINES TO MAKE ATTENDANCE BY REMOTE COMMUNICATION AND
VOTING IN ABSENTIA EFFICIENT AND ACCESSIBLE FORA FOR
STOCKHOLDERS OR MEMBERS.

Notice of meetings shall be in writing, and the time and place thereof
stated therein.EACH NOTICE OF MEETING SHALL FURTHER STATE OR BE
ACCOMPANIED BY THE FOLLOWING:

(A) THE AGENDA FOR THE MEETING;
(B) A PROXY FORM;

(C) WHEN ATTENDANCE IS ALLOWED BY REMOTE
COMMUNICATION, THE FACT THEREOF AND THE
REQUIREMENTS AND PROCEDURES TO BE FOLLOWED
WHEN A STOCKHOLDER OR MEMBER ELECTS SUCH
OPTION;

(D) WHEN VOTING IS ALLOWED IN ABSENTIA, THE FACT
THEREOF AND THE REQUIREMENTS AND PROCEDURES
TO BE FOLLOWED WHEN A STOCKHOLDER OR MEMBER
ELECTS SUCH OPTION;

(E) WHEN THE MEETING 1S FOR THE ELECTION OF DIRECTORS
OR TRUSTEES, THE REQUIREMENTS AND PROCEDURE
FOR NOMINATING AND THE CURRICULUM VITAE OR
OTHER RELEVANT INFORMATION OF THOSE ALREADY
NOMINATED INCLUDING, BUT NOT LIMITED TO,SUCH
NOMINEES’ OTHER EXECUTIVE FUNCTIONS OR
MEMBERSHIP IN OTHER BOARDS;

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

(G) THE PROCEDURE FOR MAKING INQUIRIES OR SOLICITING
ADDITIONAL INFORMATION ABOUT THE AGENDA ITEMS
BEFORE THE MEETING.

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


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BE SENT IN A TRADITIONAL MANNER, /.E. BY PERSONAL SERVICE, BY
POST OR BY COURIER.

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

SECTION 34, ‘Section 53 of the Code is hereby amended to read as follows:

“Sec. 53. Regular and special meetings of directors or trustees. - Regular
meetings of the board of directors or trustees of every corporation shall be held
monthly, unless the by-laws provide otherwise.

‘Special meetings of the board of directors or trustees may be held at any
time upon the call of the president or as provided in the by-laws.

Meetings of directors or trustees of corporations may be held anywhere in
or outside of the Philippines, unless the by-laws provide otherwise. Notice of
regular or special meetings stating the date, time and place of the meeting must
be sent to every director or trustee at least fone (1) day]FIVE (8) DAYS prior to
the scheduled meeting, unless [otherwise] A LONGER TIME IS_ provided by the
by-laws. A director or trustee may waive this requirement, either expressly or
impliedly.

DIRECTORS OR TRUSTEES CANNOT ATTEND OR VOTE BY PROXY
AT BOARD MEETINGS;HOWEVER, WHEN ALLOWED BY THE BY-LAWS,
THEY CAN ATTEND BOARD MEETINGS THROUGH REMOTE
COMMUNICATION SUCH AS VIDEOCONFERENCING,
TELECONFERENCING OR OTHER TECHNOLOGY THAT ALLOWS THEM A
REASONABLE OPPORTUNITY TO PARTICIPATE.

SECTION 35. Section 58 of the Code is hereby amended to read as follows:

Sec. 58. MANNER OF VOTING; Proxies. - Stockhplders and members
may vote in person, IN ABSENTIA or by proxy in all meetings of stockholders or
members. VOTING DONE WHEN ATTENDANCE IS BY REMOTE
COMMUNICATION SHALL BE EQUIVALENT TO VOTING IN PERSON. A
STOCKHOLDER OR MEMBER MAY VOTE WITHOUT ATTENDING THE
MEETING FOR AS LONG AS THE VOTE IS CAST AND RECEIVED ON OR
BEFORE THE TALLY OF VOTES IS COMPLETED AT THE MEETING, AND
THE VOTE IS MADE IN ACCORDANCE WITH THE CORPORATION'S
REQUIREMENTS AND PROCEDURES FOR VOTING IN ABSENTIA. THE
COMMISSION SHALL PRESCRIBE THE MINIMUM STANDARDS AND
GUIDELINES FOR VOTING WHEN ATTENDANCE IS DONE BY REMOTE
COMMUNICATIONOR WHEN VOTING IS IN ABSENTIA.

Proxies shall be in writing, signed by the stockholder or member and filed
before the scheduled meeting with the corporate secretary. Unless otherwise
provided in the proxy, it shall be valid only for the meeting for which itis intended
No proxy shall be valid and effective for a period longer than five (5) years at any
‘one time.”


Page 28 of 63

SECTION 36. —_ Section 59 of the Code is hereby amended to read as follows:

2 Section 59. Voting Trusts. -One or more stockholders of a stock
3 corporation may create a voting trust for the purpose of conferring upon a trustee
4 or trustees the right to vote and other rights pertaining to the shares for a period
5 not exceeding five (5) years at any time: Provided, That in the case of a voting
6 trust specifically required as a condition in a loan agreement, said voting trust
7 may be for a period exceeding five (5) years but shall automatically expire upon
8 full payment of the loan. A voting trust agreement must be in writing and
9 notarized, and shall specify the terms and conditions thereof. A certified copy of
10 such agreement shail be filed with the corporation and with the [Securities and
i Exchange] Commission [; otherwise, said agreement is ineffective and
12 unenforceable] AND SHALL BE EFFECTIVE AND ENFORCEABLE ONLY
B UPON APPROVAL THEREOF BY THE COMMISSION. The certificate or
14 certificates of stock covered by the voting trust agreement shall be cancelled and
15 new ones shail be issued in the name of the trustee or trustees stating that they
16 are issued pursuant to said agreement. In the books of the corporation, it shall be
17 noted that the transfer in the name of the trustee or trustees is made pursuant to
18 said voting trust agreement
19 SECTION 37. Section 61 of the Code is hereby amended to delete “Securities and

20 Exchange” from “Securities and Exchange Commission’.

21 SECTION 38. Section 62 of the Code is hereby amended to read as follows:
2 “Sec.62. Consideration for stocks. - Stocks shall not be issued for a
2B consideration less than the par or issued price thereof. Consideration for the
24 issuance of stock may be any or a combination of any two or more of the
25 following:

26 1. Actual cash paid to the corporation;

21 2. Property, tangible or intangible, actually received by the
28 corporation and necessary or convenient for its use and lawful purposes at a fair
29 valuation equal to the par or issued value of the stock issued;

30 3. Labor performed for or services actually rendered to the
31 corporation;

32 4. Previously incurred indebtedness of the corporation;

33 5. Amounts transferred from unrestricted retained earnings to stated
34 capital; [and]

35 6 Outstanding shares exchanged for stocks in the event of
36 reclassification or conversion[.];

37 7. SHARES OF STOCK OF ANOTHER CORPORATION; AND

38 8. SUCH OTHER FORM OF CONSIDERATION THAT THE
39 COMMISSION MAY DETERMINE TO BE ACCEPTABLE SUBJECT TO THE
40 PROVISIONS OF THE CODE.

41 Where the consideration is other than actual cash, or consists of

42 intanaible property such as patents of copyrights, the valuation thereof shall


RENE

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initially be determined by the incorporators or the board of directors, WHO
SHALL THEN SUBMIT SUCH DETERMINATION, WITH SUPPORTING
DOCUMENTS AS THE COMMISSION MAY PRESCRIBE, FOR THE [subject
to] approval[by} OF the [Securities and Exchange] Commission

2x 00K 2000"
SECTION 39. —_ Section 63 of the Code is hereby amended to read as follows:

“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 or his attorney-in-fact or other person legally authorized to make the
transfer. No transfer, however, shall be valid, except as between the parties, until
the transfer is recorded in the books of the corporation so as to show 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 AN EXCHANGE OR OTHER AUTHORIZED TRADING MARKETS
TO ISSUE ITS SECURITIES OR SHARES OF STOCKS IN UNCERTIFICATED
OR SCRIPLESS FORM BY VIRTUE OF, AND IN ACCORDANCE WITH, THE
RULES OF THE COMMISSION.

XK XK XXX!
SECTION 40. Section 74 of the Code is hereby amended to read as follows:

“Sec. 74. Books to be kept; stock transfer agent. — Every corporation shall
keep and carefully preserve at its principal officeALLINFORMATION RELATIVE
TO THE CORPORATION INCLUDING, BUT NOT LIMITED TO: (a) THE
ARTICLES OF INCORPORATION AND BY-LAWS OF THE CORPORATION
AND ALL THEIR AMENDMENTS, (b) THE CURRENT OWNERSHIP
STRUCTURE AND VOTING RIGHTS OF THE CORPORATION, INCLUDING
LISTS OF STOCKHOLDERS OR MEMBERS, GROUP STRUCTURES, INTRA-
GROUP RELATIONS, OWNERSHIP DATA, AND BENEFICIAL OWNERSHIP,
(c) THE NAMES AND ADDRESSES OF ALL THE MEMBERS OF THE BOARD
OF DIRECTORS OR TRUSTEES AND OF THE EXECUTIVE OFFICERS, (d) a
record of all business transactions, (e) A RECORD OF THERESOLUTIONS OF
THE BOARD OF DIRECTORS OR TRUSTEES AND OF THE
STOCKHOLDERSOR MEMBERS, (f) COPIES OF THE LATEST
REPORTORIAL REQUIREMENTS SUBMITTED TO THE COMMISSION, and
(g) THE minutes of all meetings of stockholders or members, or of the board of
directors or trustees[,]. SUCH MINUTES [in which] shall [be] set forth in deta,
AMONG OTHERS:the time and place of holding the meeting, how authorized,
the notice given, THE AGENDA THEREFOR, whether the meeting was regular
or special, if special its object, those present and absent, THE VOTING AND
VOTE TABULATION PROCEDURES USED AND THE RESULTS OF ALL
VOTING DONE, THE OPPORTUNITY GIVEN TO STOCKHOLDERS OR
MEMBERS TO ASK QUESTIONS, AS WELL AS A RECORD OF THE
QUESTIONS THEY ASKED AND THE ANSWERS RECEIVED,and every act
done or ordered done at the meeting. Upon the demand of any director, trustee,
stockholder or member, the time when any director, trustee, stockholder or
member entered or left the meeting must be noted in the minutes; and on a


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similar demand, the yeas and nays must be taken on any motion or proposition,
and a record thereof carefully made. The protest of any director, trustee,
stockholder or member on any action or proposed action must be recorded in full
on his demand

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

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

Any officer or agent of the corporation who shall refuse to allow [any
director, trustee, stockholder or member of the corporationto examine and/OR
copy excerpts from its records or minutes] THE INSPECTION AND/OR
REPRODUCTION OF RECORDS in accordance with the provisions of this
Code, shall be liable to such director, trustee, stockholder or member for
damages, and in addition, shall be guilty of an offense which shall be punishable
under Section 163 of this Code: Provided, That if such refusal is made pursuant
to a resolution or order of the board of directors or trustees, the liability under this
section for such action shall be imposed upon the directors or trustees who voted
for such refusal: and [Provided, further, That it shall be a defense to any action
under this section that the person demanding to examine and copy excerpts from
the corporation's records and minutes has improperly used any information
secured through any prior examination of the records or minutes of such
corporation or of any other corporation, or was not acting jn good faith or for a
legitimate purpose in making his demand]

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


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‘Stock corporations must also keep a book to be known as the "stock and
transfer book”, in which must be kept a record of all stocks in the names of the
stockholders alphabetically arranged; the installmehts paid and unpaid on all
stock for which subscription has been made, and the date of payment of any
installment; a statement of every alienation, sale or transfer of stock made, the
date thereof, and by and to whom made; and such other entries as the by-laws
may prescribe. The stock and transfer book shall be kept in the principal office of
the corporation or in the office of its stock transfer agent and shall be open for
inspection by any director or stockholder of the corporation at reasonable hours
‘on business days.

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

SECTION 41. ‘Section 75 of the Code is hereby amended to read as follows:

“Sec. 75. Right to financial statements. - Within ten (10) days from receipt
of a written request of any stockholder or member, the corporation shall furnish
to him its most recent financial statement, IN THE FORM AND SUBSTANCE OF
THE FINANCIAL REPORTING REQUIRED BY THE COMMISSION, [which
shall include a balance sheet as of the end of the last taxable year and a profit or
loss statement for said taxable year, showing in reasonable detail its assets and
liablliies 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 operationsof the corporation for the preceding year, which shall include
financial statements, duly signed and certified[by an independent certified public
accountant] IN ACCORDANCE WITH THIS CODE AND THE RULES THE
COMMISSION MAY PRESCRIBE.

However, if the [paid-up capital] TOTAL ASSETS OR TOTAL
LIABILITIES of the corporation [is] AREless than [50,000.00] P500,000.00 OR
SUCH HIGHER AMOUNT AS MAY BE LATER SET BY THE COMMISSION,
the financial statements may be certified under oath by the CORPORATION'S
INTERNAL AUDITOR{treasurer or any responsible officer of the corporation),
AND SHALL BE ACCOMPANIED BY THE FURTHER CERTIFICATION BY
THE CORPORATION'S OFFICERS AS REQUIRED UNDER SECTION 180 OF
THIS CODE.

SECTION 42. Section 77 of the Code is hereby amended to read as follows:

Sec. 77. Stockholder's or member's approval. - Upon approval by majority
vote of each of the board of directors or trustees of the constituent corporations
of the plan of merger or consolidation, the same shall be submitted for approval
by the stockholders or members of each of such corporations at separate
corporate meetings duly called for the purpose. Notice of such meetings shall be


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given to all stockholders or members of the respective corporationsIN THE
SAME MANNER AS NOTICE OF REGULAR OR SPECIAL MEETINGS UNDER
SECTION 61. [, at least two (2) weeks prior to th date of the meeting, either
personally or by registered mail.] Said notice shall state, IN ADDITION TO THE
REQUIREMENTS FOR NOTICE OF REGULAR OR SPECIAL MEETINGS
UNDER SECTION 51, the purpose of the meeting and shall include a copy or a
summary of the plan of merger or consolidation.

XXX 0K 200"
SECTION 43. _. Section 78 of the Code is hereby amended to read as follows:

“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 of the constituent
corporations, to be signed by the president or vice-president and certified by the
secretary or assistant secretary of each corporation setting forth:

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

2. As to stock corporations, the number of shares
outstanding, or in the case of non-stock corporations, the number of
members; [and]

3. As to each corporation, the number of shares or members
voting for and against such plan, respectively[.J;

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

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

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

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

SECTION 44. Section 79 of the Code is hereby amended to read as follows:

“Sec. 79. Effectivity of merger or consolidation. - The articles of merger or
of consolidation, signed and certified as herein above required, shall be
submitted to the [Securities and Exchange] Commission in quadruplicate for its
approval: Provided, That in the case of merger or consolidation of banks or
jiding and loan associations, trust companies, insurance
companies, public utilities, educational institutions and other special corporations
governed by special laws, the favorable recommendation of the appropriate
government agency shall first be obtained[]; PROVIDED, FURTHER, THAT
THE SUBMISSION OF ARTICLES OF MERGER OR CONSOLIDATION, IN
THE FORM OF AN ELECTRONIC DOCUMENT, SHALL BE IN ACCORDANCE
WITH THE RULES AND REGULATIONS OF THE COMMISSION ON THE USE
OF ELECTRONIC DATA MESSAGES. If the Commission is satisfied that the



Page 33 of 63

1 merger or consolidation of the corporations concerned is not inconsistent with the
2 provisions of this Code and existing laws, it shall issue a certificate of merger or
3 of consolidation, at which time the merger or consolidation shall be effective.

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

11 SECTION 45. Anew provision is inserted in the Code as Section 81 as follows:

12 SEC. 81. DE FACTO MERGERS. - A SALE OF THE ASSETS OF A
13 CORPORATION, WHETHER EFFECTUATED THROUGH A SINGLE OR A
14 SERIES OF TRANSACTIONS, SHALL BE DEEMED A DE FACTO MERGER
15 AND TREATED AS A MERGER OR CONSOLIDATION UNDER THIS CODE
16 WHEN THE BUYER AND SELLER CORPORATIONS ENGAGE IN THE SAME
17 OR SIMILAR BUSINESS, WHETHER WHOLE OR IN PART, AND THE
18 TRANSACTION IS COUPLED WITH OR RESULTS IN ANY, SOME, OR ALL
19 OF THE FOLLOWING OR OTHER SIMILAR CIRCUMSTANCES:

20 1. THE SALE IS OF ALL OR SUBSTANTIALLY ALL OF THE
21 ASSETS OF THE CORPORATION. A SALE SHALL BE DEEMED TO BE OF
22 ALL OR SUBSTANTIALLY ALL OF THE ASSETS OF THE CORPORATION
23 WHEN:

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

26 b. THE SELLER CORPORATION IS LEFT WITH ONLY
27 BAD OR TOXIC ASSETS OR MASSIVE LIABILITIES,

28 c. THE REMAINING ASSETS ARE NOT SUFFICIENT FOR
29 THE CONTINUATION OF THE SELLER CORPORATION’S ORDINARY
30 OPERATIONS, OR

31 d. UNDER CIRCUMSTANCES CONGRUOUS TO THE
32 FOREGOING.

33 2. THE TRANSACTION RESULTS IN THE CESSATION OF THE
34 ORDINARY BUSINESS OF THE SELLER CORPORATION. SUCH
35 CESSATION SHALL BE DEEMED TO EXIST DESPITE THE NON-
36 DISSOLUTION OF THE SELLER CORPORATION WHEN:

37 a THE SELLER CORPORATION BECOMES MERELY A
38 SHELL CORPORATION,

39 b. THE SELLER CORPORATION HAS NO OPERATIONS
40 WHICH ARE BY THEMSELVES ECONOMICALLY VIABLE,

4) c. THE SELLER CORPORATION IS RENDERED
42 INCAPABLE OF DOING BUSINESS EXCEPT THROUGH THE BUYER
43 CORPORATION, OR

44 d. UNDER CIRCUMSTANCES CONGRUOUS TO THE
45 FOREGOING.

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

49 SELLER CORPORATION'S BUSINESS IN THE BUSINESS OF THE BUYER


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CORPORATION. SUCH INTEGRATION OR CONTINUITY SHALL BE
DEEMED TO EXIST WHEN THE BUYER CORPORATION, WHETHER
WHOLLY OR IN PART, CONTINUES THE ‘SELLER CORPORATION'S
BUSINESS IN TERMS OF MANAGEMENT, PERSONNEL, PHYSICAL
LOCATION, ASSETS, PROCESS, TECHNOLOGY ACTIVITIES, OR GENERAL
BUSINESS OPERATIONS, OR INTEGRATES AND COMBINES THESE
ASPECTS WITH ITS OWN BUSINESS MODEL, WHETHER OR NOT THERE
1S A COMPLETE IDENTITY OR UNIFORMITY IN EVERY MATERIAL
CHARACTERISTIC.

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

6. THE BUYER CORPORATION PAYS FOR THE SELLER
‘CORPORATION’S ASSETS WITH SHARES OF ITS OWN STOCK.

6. UNDER THE TERMS OF THE SALE OF THE ASSETS, THE
SELLER CORPORATION IS PROHIBITED BY THE BUYER CORPORATION
FROM CONTINUING OR ENGAGING IN THE SAME OR SIMILAR BUSINESS.

THIS PROVISION SHALL APPLY WHETHER THE BUYER
CORPORATION CARRIES OUT THE WHOLE OR A PART OF THE
TRANSACTION OR SERIES OF TRANSACTIONS IN ITS OWN NAME OR
THROUGH ANY OF ITS WHOLLY OWNED AND CONTROLLED
SUBSIDIARIES OR OTHER RELATED PARTIES.

SECTION 46.

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

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

2. 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. In case of merger or consolidation WHETHER DE JURE
OR DE FACTO[J;

4. WHEN THE CORPORATION SUBMITS FALSE OR
INACCURATE FINANCIAL STATEMENTS AND/OR REPORTORIAL
REQUIREMENTS OR WHEN THEY CONTAIN MISSTATEMENTS OR
MISREPRESENTATIONS;

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

Section 81 of the Code is hereby Section 82 and amended to read as


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6 WHEN STOCKHOLDERS REPRESENTING A
MAJORITY APPOINT THEIR NOMINEES AS DIRECTORS, WITHOUT
HOLDING ELECTIONS;

7. WHEN DIRECTORS AUTHORIZE PAYMENTS TO
ENTITIES RELATED TO THEM OR OTHERWISE ENGAGE IN
RELATED PARTY TRANSACTIONS; AND

8. IN INSTANCES WHEN THE CORPORATION IS
VIOLATING THE PROVISIONS OF THIS CODE, ITS RULES, OR
OTHER LAWS.”

SECTION 47. Sections 82 and 83 of the Code are hereby renumbered as Sections
83 and 84, respectively.

SECTION 48. Section 84 of the Code is hereby renumbered as Section 85 and
amended to delete “Securities and Exchange” from “Securities and Exchange Commission’ in
each instance.

SECTION 49. Sections 85 to 88 of the Code are hereby renumbered as Sections 66
to 89 accordingly.

SECTION 50. Section 89 of the Code is hereby renumbered as Section 90 and
amended to read as follows:

“Sec. [89]90. Right to vote. “EXCEPT AS OTHERWISE PROVIDED IN
THIS CODE, the right of the members of any class or classes to vote may be
limited, broadened or denied to the extent specified in the articles of
incorporation or the by-laws. Unless 60 limited, broadened or denied, each
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 IN PERSON, IN ABSENTIA, ORby proxy in accordance
with the provisions of this Code.

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

SECTION 61. Sections 90 and 91 of the Code are hereby renumbered as Sections
91 and 92, respectively.

SECTION 52, Section 92 of the Code is hereby renumbered as Section 93 and
amended to read as follows:

“sec. {92]93. Election and term of trustees. {Unless otherwise provided
in the articles of incorporation or the by-laws,JThe board of trustees of non-stock
corporationsSHALL BE IN SUCH NUMBER AS MAY BE FIXED IN THE
ARTICLES OF INCORPORATION OR BY-LAWS [, which may be more
thanJNOT EXCEEDING fifteen (15) {in number as may be fixed in their articles of
incorporation or by-laws, shall]. THEY SHALL HOLD OFFICE FOR ONE
YEARUNTIL THEIR SUCCESSORS ARE ELECTED AND QUALIFIED.[as soon
as organized, so classify themselves that the term of officeof one-third (1/3) of
shew vuimber shall expire everyyear, and subsequent elections of trustees


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comprising one-third (1/3) of the board of trustees shall be held annually and
trustees so elected shall have a term of three (3) years.] Trustees [thereafter]
elected to fill vacancies occurring before the expirdtion of a particular term shall
hold office only for the unexpired period.

EXCEPT WITH RESPECT TO INDEPENDENT TRUSTEES UNDER
SECTION 23, no person shall be elected as trustee unless he is a member of the
corporation.

Unless otherwise provided in the articles of incorporation or the by-laws,
officers of a non-stock corporation may be directly elected by the members.”

SECTION 53. Section 93 of the Code is hereby renumbered as Section 94 and
amended to read as follows:

“Sec. [93]94. [Place of meetings|LIST OF MEMBERS AND PROXIES. -
THE CORPORATION SHALL, AT ALL TIMES, KEEP A LIST OF ITS
MEMBERS AND THEIR PROXIES ON SITE AT ITS PRINCIPAL OFFICE, IN
THE FORM THE COMMISSION MAY REQUIRE, WHICH LIST SHALL BE
UPDATED IN A MANNER AS TO REFLECT THE MEMBERS AND PROXIES
OF RECORD AS OF TWENTY DAYS PRIOR TO ANY SCHEDULED
ELECTION. [The by-laws may provide that the members of a non-stock
corporation may hold their regular or special meetings at any place even outside
the place where the principal office of the corporation is located: Provided, That
proper notice is sent to all members indicating the date, time and place of the
meeting: and Provided, further, That the place of meeting shall be within the
Philippines.]

SECTION 54, Section 94 of the Code is hereby renumbered as Section 95 and
amended to read as follows:

“Sec. [94]95. 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 136 (4) (B) to (I), its assets
shall be applied and distributed as follows:

20K 0K 2000"

SECTION 56. Sections 95 to 103 of the Code are hereby renumbered as Sections
96 to 104 accordingly.

SECTION 56. Sections 104, 105, and 107of the Code are hereby amended by
deleting “Securities and Exchange” from “Securities Exchange Commission” in each instance
and, in Section 107, changing “Ministry of Education and Culture” to “Department of Education
Culture and Sports’. Further Sections 104 to 107 are renumbered as Sections 105 to 108

accordingly.
SECTION 57. Section 108 of the Code is hereby deleted.
SECTION 58, Sections 111, 112, 113, 114, 115, and 116 of the Code are hereby

amended by deleting “Securities and Exchange” from “Securities Exchange Commission” in
each instance.


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SECTION 59. A new chapter is hereby added to Title XIIt on Special Corporations

and the succeeding provisions are renumbered accordingly.

CHAPTER Ili
ONE PERSON CORPORATIONS.

SEC, 117. APPLICABILITY OF PROVISIONS TO ONE PERSON
CORPORATIONS. —-THE PROVISIONS OF THIS CODE ARE APPLICABLE TO
ONE PERSON CORPORATIONS EXCEPT AS OTHERWISE PROVIDED IN
THIS TITLE AND IN THE OTHER SPECIFIC PROVISIONS OF THIS CODE.

SEC. 118. ONE PERSON CORPORATION. -A ONE PERSON
CORPORATION IS A CORPORATION WITH ONLY A_ SINGLE
STOCKHOLDER WHO IS A NATURAL PERSON OR A JURIDICAL PERSON.

SEC. 119. SINGLE STOCKHOLDER. - FOR PURPOSES OF THIS
CODE, THE FOLLOWING SHALL BE DEEMED A SINGLE STOCKHOLDER:

a. A NATURAL PERSON WHO WHOLLY OWNS THE SHARES IN THE ONE
PERSON CORPORATION;

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

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

SEC. 120. MINIMUM AMOUNT OF CAPITAL STOCK TO BE PAID
FOR PURPOSES OF INCORPORATION. - THE MINIMUM AMOUNT OF
AUTHORIZED CAPITAL STOCK FOR A ONE PERSON CORPORATION IS
ONE MILLION PESOS (PHP1,000,000.00), THE PAYMENT OF WHICH SHALL
BE MADE BY THE SINGLE STOCKHOLDER IN ONE LUMP SUM AT THE
TIME OF INCORPORATION AND PHYSICALLY SEPARATED FROM THE
PERSONAL FUNDS OF THE SINGLE STOCKHOLDER.

SEC. 121. ARTICLES OF INCORPORATION; BY-LAWS NOT
REQUIRED. - INSOFAR AS APPLICABLE, A ONE PERSON CORPORATION
SHALL FILE ARTICLES OF INCORPORATION IN ACCORDANCE WITH THE
REQUIREMENTS UNDER SECTION 14 OF THIS CODE, SUBJECT TO THE
FOLLOWING:

(1) THERE SHALL BE A STATEMENT AS TO
WHETHER THE CAPITAL STOCK IS THE SOLE INVESTMENT
OF A NATURAL OR OF A JURIDICAL PERSON, OR OF A
TRUST, ESTATE OR ACCOUNT;

(2) IF THE SINGLE STOCKHOLDER IS A
JURIDICAL PERSON, IT SHALL CLEARLY INDICATE THE
NAME, NATIONALITY AND RESIDENCE OF THE NATURAL
PERSON AUTHORIZED TO ACT ON ITS BEHALF AND
ATTACH PROOF OF SUCH AUTHORITY;


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

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

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

(6) THERE SHALL BE ATTACHED TO THE
ARTICLES OF INCORPORATION A CODE OF ETHICS OR
STANDARDS OF CONDUCT AS SET FORTH IN SECTION 47,
SUBPARAGRAPH 11 OF THIS CODE; AND

(7) THERE SHALL BE ATTACHED TO THE
ARTICLES OF INCORPORATION INTERNAL PROCEDURES
FOR WHISTLEBLOWERS AS SET FORTH IN SECTION 47,
SUBPARAGRAPH 12 OF THIS CODE.

THE ONE PERSON CORPORATION SHALL BE EXEMPT FROM THE
FILING OF BY-LAWS.

SEC. 122. PROHIBITION AGAINST MULTIPLE ONE PERSON
CORPORATIONS. — ANY PERSON, TRUST, ESTATE OR ACCOUNT MAY
ONLY INCORPORATE AND MAINTAIN ONE ONE PERSON CORPORATION
AT ANY GIVEN INSTANCE. A ONE PERSON CORPORATION MAY NOT
INCORPORATE A NEW ONE PERSON CORPORATION.

SEC. 123. DISPLAY OF CORPORATE NAME. - A ONE PERSON
CORPORATION SHALL INDICATE EITHER BELOW OR AT THE END OF ITS
CORPORATE NAME, THE WORDS “ONE PERSON CORPORATION” OR
THE LETTERS “OPC”, WHEREVER ITS NAME IS PRINTED, AFFIXED,
ENGRAVED OR OTHERWISE PRESENTED.

SEC. 124. SINGLE STOCKHOLDER AS DIRECTOR, PRESIDENT AND
TREASURER. - THE SINGLE STOCKHOLDER SHALL BE THE SOLE
DIRECTOR, PRESIDENT (OR CHIEF EXECUTIVE OFFICER) AND
TREASURER (OR CHIEF FINANCE OFFICER) OF THE ONE PERSON
CORPORATION.

SEC. 125. CORPORATE SECRETARY AND OTHER OFFICERS. —
WITHIN FIFTEEN DAYS FROM THE ISSUANCE OF ITS CERTIFICATE OF
INCORPORATION, THE ONE PERSON CORPORATION SHALL APPOINT A
CORPORATE SECRETARY, WHO SHALL BE OTHER THAN THE SINGLE
STOCKHOLDER, AND NOTIFY THE COMMISSION THEREOF WITHIN FIVE
DAYS FROM APPOINTMENT.


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THE ONE PERSON CORPORATION MAY APPOINT SUCH OTHER
OFFICERS AS IT MAY DEEM NECESSARY.

‘SEC. 126. SPECIAL FUNCTIONS OF THE CORPORATE SECRETARY.
— IN ADDITION TO THE FUNCTIONS DESIGNATED BY THE ONE PERSON
CORPORATION AND REQUIRED ELSEWHERE IN THIS CODE, THE
CORPORATE SECRETARY SHALL:

(a) BE RESPONSIBLE FOR MAINTAINING THE MINUTES-BOOK
OF THE CORPORATION;

(b) NOTIFY THE NOMINEE, OR ALTERNATE NOMINEE AS THE
CASE MAY BE, OF THE DEATH OR INCAPACITY OF THE
SINGLE STOCKHOLDER, WHICH NOTICE SHALL BE GIVEN
NOT LATER THAN FIVE (5) DAYS FROM THE SINGLE
‘SSTOCKHOLDER’S DEATH OR INCAPACITY;

(c) | NOTIFY THE COMMISSION OF THE DEATH OF THE SINGLE
STOCKHOLDER WITHIN A PERIOD OF FIVE (5) DAYS FROM
SUCH DEATH AND STATING IN SUCH NOTICE THE NAMES,
RESIDENCES AND CONTACT DETAILS OF ALL KNOWN
LEGAL HEIRS; AND

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

SEC. 127. NOMINEE AND ALTERNATE NOMINEE. - THE SINGLE
STOCKHOLDER SHALL DESIGNATE A NOMINEE AND AN ALTERNATE
NOMINEE WHO SHALL, IN THE EVENT OF THE SINGLE STOCKHOLDER’S
DEATH OR INCAPACITY AND AFTER RECEIVING DUE NOTICE THEREOF
FROM THE CORPORATE SECRETARY, TAKE THE PLACE OF THE SINGLE
STOCKHOLDER AS DIRECTOR AND MANAGE THE AFFAIRS OF THE
CORPORATION AS PROVIDED IN THE ARTICLES OF INCORPORATION.

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

THE WRITTEN CONSENT OF THE NOMINEE AND ALTERNATE
NOMINEE SHALL BE SUBMITTED TO THE COMMISSION TOGETHER WITH
THE FILING OF THE ONE PERSON CORPORATION’S ARTICLES OF
INCORPORATION. SUCH CONSENT MAY BE WITHDRAWN IN WRITING BY
FURNISHING COPIES THEREOF TO THE SINGLE STOCKHOLDER AND
THE COMMISSION ANYTIME BEFORE THE DEATH OR INCAPACITY OF
THE SINGLE STOCKHOLDER.

THE NOMINEE SHALL, IN THE EVENT OF THE SINGLE
STOCKHOLDER’S DEATH OR INCAPACITY AND AFTER RECEIVING DUE
NOTICE THEREOF FROM THE CORPORATE SECRETARY, TAKE THE


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PLACE OF THE SINGLE STOCKHOLDER AS DIRECTOR AND MANAGE
THE AFFAIRS OF THE ONE PERSON CORPORATION.
.

SEC. 128. TERM OF NOMINEE AND ALTERNATE NOMINEE. ~
WHEN THE INCAPACITY OF THE SINGLE STOCKHOLDER IS TEMPORARY,
THE NOMINEE SHALL SIT AS DIRECTOR AND MANAGE THE AFFAIRS OF
THE ONE PERSON CORPORATION ONLY UNTIL THE SINGLE
STOCKHOLDER, BY HIS OWN DETERMINATION, REGAINS HIS CAPACITY.
IN CASE OF DEATH OR PERMANENT INCAPACITY OF THE SINGLE
STOCKHOLDER, THE NOMINEE SHALL SIT AS DIRECTOR AND MANAGE
THE AFFAIRS OF THE ONE PERSON CORPORATION ONLY UNTIL THE
LEGAL HEIRS OF THE SINGLE STOCKHOLDER HAVE BEEN LAWFULLY
DETERMINED, THE SHARES ARE TRANSFERRED IN THEIR NAME,
AND/OR THEY HAVE DESIGNATED ONE OF THEM TO ACT ON THEIR
BEHALF AS THE SINGLE STOCKHOLDER OF THE ONE PERSON
CORPORATION.

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

SEC. 129. CHANGE OF NOMINEE OR ALTERNATE NOMINEE.- THE
SINGLE STOCKHOLDER MAY, AT ANY TIME, CHANGE THE NAME OF THE
NOMINEE OR ALTERNATE NOMINEE BY SUBMITTING NEW NAMES AND
NEW WRITTEN CONSENTS TO THE COMMISSION, WHICH SHALL BE
APPENDED TO THE ONE PERSON CORPORATION’S ARTICLES OF
INCORPORATION. THE ARTICLES OF INCORPORATION NEED NOT BE
AMENDED FOR SUCH CHANGE IN NOMINEE OR ALTERNATE NOMINEE.

SEC. 130.RECORDS IN LIEU OF MEETINGS. - NO STOCKHOLDERS
MEETING NEED BE HELD IN A ONE PERSON CORPORATION. WHEN
ACTION IS NEEDED ON ANY MATTER, IT SHALL BE SUFFICIENT, FOR
PURPOSES OF VALIDITY, IF THE RESOLUTION THEREON IS MADE IN
WRITING, SIGNED AND DATED BY THE SINGLE
STOCKHOLDERIDIRECTOR, AND RECORDED IN THE MINUTES-BOOK OF
THE ONE PERSON CORPORATION. THE DATE RECORDED IN THE
MINUTES-BOOK SHALL BE DEEMED TO BE THE DATE OF THE MEETING
FOR ALL PURPOSES UNDER THIS CODE.

SEC. 131. MINUTES-BOOK. - EACH ONE PERSON CORPORATION
SHALL MAINTAIN A MINUTES-BOOK IN WHICH SHALL BE ENTERED IN
WRITING ALL ACTIONS, DECISIONS, RESOLUTIONS TAKEN BY THE ONE
PERSON CORPORATION, SIGNED AND DATED BY THE SINGLE
STOCKHOLDERIDIRECTOR, AT THE TIME THE ACTION, DECISION OR
RESOLUTION IS MADE.

SEC. 132. CO-MINGLING OF PROPERTY. — WHERE THE
SINGLE STOCKHOLDER CANNOT PROVE THAT THE PROPERTY OF THE
ONE PERSON CORPORATION IS INDEPENDENT OF HIS OWN PROPERTY,
HE SHALL ASSUME THE JOINT AND SEVERAL LIABILITY FOR THE DEBTS
AND OTHER LIABILITIES OF THE ONE PERSON CORPORATION.

SEC. 133. REPORTORIAL SUBMISSIONS. - THE ONE PERSON
CORPORATION SHALL SUBMIT THE FOLLOWING TO THE COMMISSION


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ANNUALLY AND WITHIN SUCH PERIODS AS THE COMMISSION MAY
PRESCRIBE:
1. FINANCIAL STATEMENTS CERTIFIED BY THE CHIEF EXECUTIVE OFFICER
AND CORPORATE SECRETARY AND DULY AUDITED BY AN INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANT ACCREDITED BY THE BOARD OF
ACCOUNTANCY;

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

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

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

SEC. 134. CHANGE OF STATUS FROM A REGULAR STOCK
CORPORATION TO A ONE PERSON CORPORATION. - WHEN A SINGLE
STOCKHOLDER, AS DEFINED UNDER THIS TITLE, ACQUIRES ALL THE
STOCKS OF A REGULAR STOCK CORPORATION, THE LATTER MAY
APPLY FOR CONVERSION INTO A ONE PERSON CORPORATION,
SUBJECT TO THE SUBMISSION OF SUCH DOCUMENTS THE SEC MAY
REQUIRE. IF THE APPLICATION FOR CONVERSION IS APPROVED, THE
SEC SHALL FORTHWITH ISSUE AN AMENDED CERTIFICATE OF
INCORPORATION REFLECTING THE CONVERSION. THE ONE PERSON
CORPORATION CONVERTED FROM A REGULAR STOCK CORPORATION
SHALL SUCCEED TO AND BE LEGALLY RESPONSIBLE FOR ALL THE
LATTER’S OUTSTANDING LIABILITIES AS OF THE DATE OF
CONVERSION.

SEC. 135. CHANGE IN STATUS OF A ONE PERSON
CORPORATION. ~ A ONE PERSON CORPORATION MAY BE CONVERTED
INTO A REGULAR STOCK CORPORATION AFTER DUE NOTICE TO THE
SEC OF SUCH FACT, OF THE CIRCUMSTANCES LEADING TO THE
CONVERSION, AND OF COMPLIANCE WITH ALL OTHER REQUIREMENTS
FOR STOCK CORPORATIONS UNDER THIS CODE AND APPLICABLE
RULES. SUCH NOTICE SHALL BE FILED WITH THE SEC WITHIN SIXTY
(60) DAYS FROM THE OCCURRENCE OF THE CIRCUMSTANCES LEADING
TO THE CONVERSION INTO A REGULAR STOCK CORPORATION. IF ALL
REQUIREMENTS HAVE BEEN DULY COMPLIED WITH, THE SEC SHALL
FORTHWITH ISSUE AN AMENDED CERTIFICATE OF INCORPORATION
REFLECTING THE CONVERSION.

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


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TRANSFER OF THE SHARES IN THEIR NAME, THE LEGAL HEIRS SHALL
NOTIFY THE SEC IF THEY DECIDE TO WIND UP AND DISSOLVE THE ONE
PERSON CORPORATION OR CONVERT IT INTO A REGULAR STOCK
CORPORATION.

THE REGULAR STOCK CORPORATION CONVERTED FROM A ONE
PERSON CORPORATION SHALL SUCCEED TO AND BE LEGALLY
RESPONSIBLE FOR ALL THE LATTER’S OUTSTANDING LIABILITIES AS
OF THE DATE OF CONVERSION.

‘SECTION 60. Section 117 of the Code is hereby renumbered as Section 136 and
amended to read as follows:

“TITLE XIV — DISSOLUTION”

“Sec. [117]136. Methods of dissolution; EFFECTIVE DATE OF
DISSOLUTION. - A corporation formed or organized under the provisions of this
Code may be dissolved IN ANY OF THE FOLLOWING WAYS:[voluntarily or
involuntarily.]

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

2. BY ACTION OF A MAJORITY OF THE INCORPORATORS OR
A MAJORITY OF THE DIRECTORS OR TRUSTEES WHEN THE
CORPORATION:

a. HAS NOT COMMENCED BUSINESS,

b. BEING A STOCK CORPORATION, HAS NOT ISSUED
SHARES,

c. HAS NO DEBTS OR OTHER LIABILITIES, AND

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

3. BY ACTION OF THE BOARD OF DIRECTORS AND
STOCKHOLDERS, OR THE BOARD OF TRUSTEES AND MEMBERS AS THE
CASE MAY BE, WHEN:

a NOT QUALIFYING UNDER SECTION 136 (2) ABOVE,
THE GORPORATION FAILS TO COMMENCE OR CONTINUE ITS
BUSINESS OR THE CONSTRUCTION OF ITS WORKS AND ITS
CERTIFICATE OF INCORPORATION HAS NOT YET BEEN REVOKED
IN ACCORDANCE WITH SECTION 22 OF THIS CODE, OR


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

4. BY ORDER OF THE COMMISSION WHEN THE

CORPORATION:

a. FAILED TO COMMENCE OR CONTINUE ITS BUSINESS
OR THE CONSTRUCTION OF ITS WORKS AND THE REVOCATION
OF ITS CERTIFICATE OF INCORPORATION HAS ATTAINED
FINALITY IN ACCORDANCE WITH SECTION 22 OF THIS CODE;

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

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

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

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

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

g. HAS BEEN FOUND TO HAVE REPEATEDLY AND
WILLFULLY EXCEEDED THE AUTHORITY CONFERRED UPON IT BY
LAW;

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

i. HAS BEEN FOUND TO HAVE REPEATEDLY AND
WILLFULLY CONDUCTED ITS BUSINESS IN A FRAUDULENT OR
OTHERWISE UNLAWFUL MANNER; OR


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. HAS BEEN FOUND TO HAVE OTHERWISE VIOLATED
THE PROVISIONS OF THIS CODE.

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

IN THE CASE OF EXPIRATION OF CORPORATE TERM UNDER SECTION
136 (1) ABOVE, DISSOLUTION SHALL AUTOMATICALLY TAKE EFFECT ON
THE DAY FOLLOWING THE LAST DAY OF THE CORPORATE TERM
STATED IN THE ARTICLES OF INCORPORATION, WITHOUT NEED FOR
THE ISSUANCE BY THE COMMISSION OF A CERTIFICATE OF
DISSOLUTION. IN ALL OTHER CASES, THE DISSOLUTION SHALL TAKE
EFFECT ONLY UPON AND AS OF THE ISSUANCE BY THE COMMISSION
OF A CERTIFICATE OF DISSOLUTION, AND SHALL BE WITHOUT
PREJUDICE TO SECTION 141 OF THIS CODE.”

SECTION 61. Section 118 of the Code is hereby renumbered as Section 137 and
amended to read as follows:

“Sec. [118]137. [Voluntary dissolution] DISSOLUTION where no creditors
are affected; PROCEDURE. - DISSOLUTION PURSUANT TO SECTION 136
(2) OF THIS CODE MAY BE MADE BY FILING A VERIFIED REQUEST FOR
DISSOLUTION WITH THE COMMISSION:

a STATING THE NAME OF THE CORPORATION AND
THE NAMES AND ADDRESSES OF THE INCORPORATORS AND
DIRECTORS OR TRUSTEES;

b. STATING THE REASON FOR THE DISSOLUTION OF
‘THE CORPORATION;

¢. _ ATTESTING TO THE EXISTENCE AND CONCURRENCE
OF ALL THE CONDITIONS SET FORTH IN SECTION 136 (2) (A) TO
(D) OF THIS CODE;

d. STATING THE NAMES OF THE INCORPORATORS, OR
OF THE DIRECTORS OR TRUSTEES, CONSTITUTING A MAJORITY,
WHO APPROVED THE DISSOLUTION AND THE DATE, PLACE, AND
TIME OF THE MEETING IN WHICH THE VOTE WAS MADE, WHICH
REQUIREMENT MAY BE DISPENSED WITH IF THE REQUEST ITSELF
1S DULY VERIFIED BY SUCH MAJORITY; AND.

e. WHEN APPLICABLE, ATTACHING: (i) A LIST OF THE
NAMES AND ADDRESSES OF THE PERSONS ENTITLED TO A
RETURN OF PAID SUBSCRIPTIONS OR CONTRIBUTIONS AS SET
FORTH IN SECTION 136 (2) (D), (ii) A SUMMARY OF THE AMOUNTS.
OF THEIR PAID SUBSCRIPTIONS OR CONTRIBUTIONS, (iii) A
SUMMARY OF THE AMOUNTS DISBURSED FOR LAWFUL
EXPENSES WITH COPIES OF THE OFFICIAL RECEIPTS THEREFOR,
AND (iv) A SUMMARY OF THE AMOUNTS RETURNED WITH PROOF
THAT THEY WERE DULY RECEIVED BY THOSE ENTITLED
THERETO.


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Ifdissolution of a corporation PURSUANT TO SECTION 136 (3) OF THIS
CODE does not prejudice the rights of any creditor having a claim against it, the
dissolution maybe effected by majority vote of the board of directors or trustees,
and by a resolution duly adopted by the affirmative vote of the stockholders
owning at least two-thirds (2/3) of the outstanding capital stock or of at least two-
‘thirds (2/3) of the members of a meeting to be held upon call of the directors or
trustees.

AT LEAST THIRTY (30) DAYS PRIOR TO THE MEETING, NOTICE SHALL BE
GIVEN TO EACH SHAREHOLDER OR MEMBER OF RECORD, WHETHER
OR NOT ENTITLED TO VOTE AT THE MEETING, IN THE MANNER
PROVIDED IN SECTION 50 OF THIS CODE AND SHALL STATE THAT THE
PURPOSE OF THE MEETING IS TO VOTE ON THE DISSOLUTION OF THE
CORPORATION. [after publication of the notice] NOTICE of THE time, place
and object of the meeting SHALL LIKEWISE BE MADE BY PUBLICATION for
three (3) consecutive weeks PRIOR TO THE DATE OF THE MEETING in a
newspaper published in the place where the principal office of said corporation is
located; and if no newspaper is published in such place, then in a newspaper of
general circulation in the Philippines.

[. after sending such notice to each stockholder or member [either] by registered
mail or by personal delivery at least thirty (30) days prior to said meeting ]

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

a STATING THE NAME OF THE CORPORATION AND
THE NAMES AND ADDRESSES OF THE DIRECTORS OR TRUSTEES;

b. STATING THE REASON FOR THE DISSOLUTION OF
THE CORPORATION;

c CERTIFYING THAT NO CREDITOR SHALL BE
PREJUDICED BY THE DISSOLUTION AND SUBSTANTIATING THE
SAME WITH FINANCIAL STATEMENTS AND OTHER RECORDS;

da. STATING THE NAMES OF THE DIRECTORS OR
TRUSTEES, CONSTITUTING A MAJORITY, WHO APPROVED THE
DISSOLUTION AND THE DATE, PLACE, AND TIME OF THE MEETING
IN WHICH THE VOTE WAS MADE;

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

f. ATTACHING THERETOa copy of the resolution
authorizing the dissolution WHICH shall HAVE BEEN certified by a
majority of the board of directors or trustees and countersigned by the
secretary of the corporation.


Page 46 of 63

WITHIN FIFTEEN (15) DAYS FROM RECEIPT OF THE VERIFIED REQUEST

1

2 FOR DISSOLUTION, AND IN THE ABSENCE OF ANY WITHDRAWAL WITHIN

3 SAID PERIOD, [The Securities and Exchange] THE Commission

4 shal[APPROVE THE REQUEST AND thereupon issue the certificate of

5 dissolution.”

6 SECTION 62. Section 119 of the Code is hereby renumbered as Section 138 and

7 amended to read as follows:

8 “Sec. [119]138. [Voluntary dissolutionJDISSOLUTION where creditors

9 are affected; PROCEDURE AND CONTENTS OF PETITION. - Where the
10 dissolution of a corporation may prejudice the rights of any creditor, [the petition
ul A VERIFIED PETITION for dissolution shall be filed with the [Securities and
12 Exchange] Commission. The petition shall be signed by a majority of [its] THE
13 CORPORATION'S board of directors or trustees or other officers having the
4 management of its affairs, verified by its president or secretary or one of its
15 directors or trustees, and shall set forth all claims and demands against it, and
16 that its dissolution was resolved upon by the affirmative vote of the stockholders
7 representing at least two-thirds (2/3) of the outstanding capital stock or by at
18 least two-thirds (2/3) of the members at a meeting of its stockholders or members
19 called for that purpose. THE PETITION SHALL LIKEWISE STATE: (a) THE
20 REASON FOR THE DISSOLUTION; (b) THE FORM, MANNER AND TIME
21 WHEN THE NOTICES WERE GIVEN; AND (c) THE DATE, PLACE, AND TIME
22 OF THE MEETING IN WHICH THE VOTE WAS MADE. THE PETITION SHALL
23 HAVE AS ANNEXES (a) A COPY OF THE RESOLUTION AUTHORIZING THE
24 DISSOLUTION, WHICH SHALL HAVE BEEN CERTIFIED BY A MAJORITY OF
25 THE BOARD OF DIRECTORS OR TRUSTEES AND COUNTERSIGNEDBY
26 THE SECRETARY OF THE CORPORATION; AND (b) A LIST OF ALL ITS
27 CREDITORS.
28 If the petition is sufficient in form and substance, the Commission shall,
29 by an order reciting the purpose of the petition, fix a date on or before which
30 objections thereto may be filed by any person, which date shall not be less than
31 thirty (30) days nor more than sixty (60) days after the entry of the order. Before
32 such date, a copy of the order shall be published at least once a week for three
33 (3) consecutive weeks in a newspaper of general circulation published in the
34 municipality or city where the principal office of the corporation is situated, or if
35 there be no such newspaper, then in a newspaper of general circulation in the
36 Philippines, and a simitar copy shall be posted for three (3) consecutive weeks in
37 three (3) public places in such municipality or city
38 Upon five (5) day's notice, given after the date on which the right to file
39 objections as fixed in the order has expired, the Commission shall proceed to
40 hear the petition and try any issue made by the objections filed; and if no such
41 objection is sufficient, and the material allegations of the petition are true, it shall
2 render judgment dissolving the corporation and directing such disposition of its
4B assets as justice requires, and may appoint a receiver to collect such assets and
44 pay the debts of the corporation.”
45, SECTION 63. Section 120 of the Code is hereby renumbered as Section 139 and

46 amended to read as follows:

47 “Sec, [120]139. WITHDRAWAL OF REQUEST FORDissolution [by
48 shortening corporate term] AND WITHDRAWAL OF PETITION FOR
49 DISSOLUTION. — [A voluntary dissolution may be effected by amending the

50 articles of incorporation to shorten the corporate term pursuant to the provisions


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Of this Code. A copy of the amended articles of incorporation shall be submitted
to the Securities and Exchange Commission in accordance with this Code. Upon
approval of the amended articles of incorporation of the expiration of the
shortened term, as the case may be, the corporation shall be deemed dissolved
without any further proceedings, subject to the provisions of this Code on
liquidation ]

A WITHDRAWAL OF THE REQUEST FOR DISSOLUTION SHALL:
a. BE MADE IN WRITING;

b. BE DULY VERIFIED BY ANY INCORPORATOR,
DIRECTOR, SHAREHOLDER OR MEMBER;

c. HAVE THE SIGNATURES OF THE SAME NUMBER OF
INCORPORATORS, DIRECTORS, SHAREHOLDERS OR MEMBERS
NECESSARY TO REQUEST FOR A DISSOLUTION AS SET FORTH IN
THE FOREGOING SECTIONS; AND

da. BE SUBMITTED WITHIN FIFTEEN (15) DAYS FROM
THE RECEIPT BY THE COMMISSION OF THE REQUEST FOR
DISSOLUTION.

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

a. WITHHOLDING THE ISSUANCE OF THE CERTIFICATE
OF DISSOLUTION AND DEEMING THE REQUEST FOR
DISSOLUTION WITHDRAWN; OR

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

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

A MOTION FOR THE WITHDRAWAL OF THE PETITION FOR
DISSOLUTION SHALL BE SIMILAR IN SUBSTANCE AS A WITHDRAWAL OF
REQUEST FOR DISSOLUTION BUT SHALL BE VERIFIED AND FILED PRIOR
TO PUBLICATION OF THE ORDER SETTING THE DATE FOR OBJECTIONS


Page 48 of 63

TO THE PETITION. THE COMMISSION SHALL RESOLVE THE MOTION

1

2 WITHIN THE SAME PROCEEDINGS AS THE PETITION AND ISSUE AN

3 ORDER DEEMING THE PETITION WITHDRAWN OR DENYING THE

4 WITHDRAWAL AND PROCEEDING TO HEAR OBJECTIONS ON THE

5 PETITION.”

6 SECTION 64. — Section 121 of the Code is hereby renumbered as Section 140 and

7 amended to read as follows:

8 “Sec. [121]140. [Involuntary dissolution] DISSOLUTION BYTHE COMMISSION.
9 — {A corporation may be dissolved by the Securities and
10 Exchange]DISSOLUTION PROCEEDINGS PURSUANT TO THE GROUNDS
af SET FORTH IN SECTION 136 (4) AND (5), SECTION 173, OR WHEN
12 PROVIDED IN OTHER LAWS, RULES AND REGULATIONS, MAY BE
13 COMMENCED BY THE Commission MOTU PROPRIO ORupon filing of a
14 verified complaintBY ANY INTERESTED PARTY. [ and after]

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

19 IF THE CORPORATION IS DISSOLVED BY THE COMMISSION
20 PURSUANT TO ANY OF THE GROUNDS SET FORTH IN SECTION 136 (4)
21 (B) TO (i), ITS ASSETS, AFTER PAYMENT OF ITS OUTSTANDING
22 LIABILITIES, SHALL BE FORFEITED IN FAVOR OF THE COMMISSION.
23 SUCH FORFEITURE SHALL BE WITHOUT PREJUDICE TO ANY OTHER
24 PENALTY OR SANCTION FOR THOSE LIABLE UNDER THIS CODE OR
25 OTHER LAWS.[on the grounds provided by existing laws, rules and
26 regulations].”

27 SECTION 65. Section 122 of the Code is hereby renumbered as Section 141 and

28 amended to read as follows:

29 “Sec. [122]141. Corporate liquidation.- Every corporation whose charter
30 expires by its own limitation or is annulled by forfeiture or otherwise, or whose
31 corporate existence for other purposes is terminated in any other manner, shall
32 nevertheless be continued as a body corporate for three (3) years after the [time
33 when it would have been so dissolved] EFFECTIVE DATE OF DISSOLUTION
34 AS PROVIDED IN SECTION 136 OF THIS CODE, ‘for the purpose of
35 prosecuting and defending suits by or against it and enabling it to settle and
36 close its affairs, to dispose of and convey its property and to distribute its assets,
37 but not for the purpose of continuing the business for which it was established.

38 20% XH0KHKK

39 EXCEPT AS OTHERWISE PROVIDED FOR IN SECTIONS 95AND
40 960F THIS CODE, upon the winding up of corporate affairs, any asset
4l distributable to any creditor or stockholder or member who is unknown or cannot
42 be found shall be escheated|to the city or municipality where such assets are
43 locatedJIN FAVOR OF THE NATIONAL GOVERNMENT.

44 XXX XXX XXX


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1 SECTION 66. Section 125 is amended to delete “Securities and Exchange” from
2 “Securities and Exchange Commission’ in each instance, Further, Sections 123, 124 and 125 of
3 the Code are hereby renumbered as Sections 142, 143 and 144, respectively.

4 SECTION 67. Section 126 of the Code is hereby renumbered as Section 145 and

5 amended to read as follows

6 “Sec. [126]145. /ssuance of a license.- \f the [Securities and Exchange)

7 Commission is satisfied that the applicant has complied with all the requirements

8 of this Code and other special laws, rules and regulations, the Commission shalt

9 issue a license to the applicant to transact business in the Philippines for the
10 purpose or purposes specified in such license. Upon issuance of the license, such
i foreign corporation may commence to transact business in the Philippines and
12 continue to do so for as long as it retains its authority to act as a corporation
13 under the laws of the country or state of its incorporation, unless such license is
14 sooner surrendered, revoked, suspended or annulled in accordance with this
15 Code or other special laws.

16 Within sixty (60) days after the issuance of the license to transact business
7 in the Philippines, the licensee, except foreign banking or insurance corporations,
18 shall deposit with the (Securities and Exchange] Commission for the benefit of
19 present and future creditors of the licensee in the Philippines, securities
20 satisfactory to the [Securities and Exchange] Commission, consisting of bonds or
21 other evidence of indebtedness of the Government of the Philippines, its political
22 subdivisions and instrumentalities, or of government-owned or controlled
2B corporations and entities, shares of stock OR DEBT SECURITIES THAT ARE
24 REGISTERED UNDER THE SECURITIES REGULATION CODE [in “registered
25 enterprises" as this term is defined in Republic Act No. 5186}, shares of stock in
26 domestic corporations [registered] LISTED in the stock exchange, [or] shares of
27 stock in domestic insurance companies and banks, OR ANY FINANCIAL
28 INSTRUMENT DETERMINED SUITABLE BY THE COMMISSION, or any
29 combination THEREOF fof these kinds of securities,] in the actual market value of
30 at least [one] FIVE hundred thousand [(P100,000.)} (P500,000) pesosOR SUCH
31 OTHER AMOUNT THAT MAY BE SET BY THE COMMISSION; Provided,
32 however, That within six (6) months after each fiscal year of the licensee, the
33 [Securities and Exchange] Commission shall require the licensee to deposit
34 additional securities OR FINANCIAL INSTRUMENTS equivalent in actual market
35 value to two (2%) percent of the amount by which the licensee's gross income for
36 that fiscal year exceeds [five] TEN million [(P5,000,000.00)} (P10,000,000.00)
37 pesos. The [Securities and Exchange] Commission shall also require THE
38 deposit of additional securities OR FINANCIAL INSTRUMENTS if the actual
39 market value of the securities OR FINANCIAL INSTRUMENTS on deposit has
40 decreased by at least ten (10%) percent of their actual market value at the time
41 they were deposited. The [Securities and Exchange] Commission may at its
42 discretion release part of the additional [securities] deposit[ed with it] if the gross
B income of the licensee has decreased, or if the actual market value of the total
44 [securities on] deposit has increased, by more than ten (10%) percent of thelR:
45 actual market value [of the securities] at the time they were deposited. The
46 [Securities and Exchange] Commission may, from time to time, allow the licensee
47 to MAKE substitute DEPOSITS[other securities] for those already on deposit as
48 long as the licensee is solvent. Such licensee shall be entitled to collect the
49 interest or dividends on {the] SUCH[securities]depositS[ed]. In the event the
50 licensee ceases to do business in the Philippines, ITS {the securities]depositS[ed
31 as aforesaid] shall be returned, upon the licensee's application therefor and upon
52 proof to the satisfaction of the [Securities and Exchange] Commission that the
33 licensee has no liability to Philippine residents, including the Government of the

54 Republic of the Philippines. FOR PURPOSES OF COMPUTING THE


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SECURITIES DEPOSIT, THE COMPOSITION OF GROSS INCOME AND
ALLOWABLE DEDUCTIONS THEREFROM SHALL BE IN ACCORDANCE
WITH THE RULES OF THE COMMISSION.”

SECTION 68. Sections 128, 130, 131, 132, 134, 135, and 136 of the Code are
hereby amended to delete “Securities and Exchange” from “Securities and Exchange
Commission” in each instance. Further, Sections 127 to 136 are hereby renumbered as
Sections 146 to 155 accordingly.

SECTION 69. A new title is inserted in the Code containing Sections 156 to 175,
thus:

TITLE XVI - INVESTIGATIONS, OFFENSES
AND PENALTIES

“Sec. 156.INVESTIGATION AND PROSECUTION OF OFFENSES. -
THE COMMISSION MAY, UPON COMPLAINT OR MOTU PROPRIO, MAKE
SUCH INVESTIGATIONS AS IT DEEMS NECESSARY TO DETERMINE
WHETHER ANY PERSON HAS VIOLATED OR IS ABOUT TO VIOLATE ANY
PROVISION OF THIS CODE, ANY RULE, REGULATION OR ORDER
THEREUNDER, AND MAY REQUIRE OR PERMIT ANY PERSON TO FILE
WITH IT A STATEMENT IN WRITING, UNDER OATH OR OTHERWISE, AS
THE COMMISSION SHALL DETERMINE, AS TO ALL FACTS AND
CIRCUMSTANCES CONCERNING THE MATTER TO BE INVESTIGATED.

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

SEC. 157. ADMINISTRATION OF OATHS,AND SUBPOENA OF
WITNESSES AND DOCUMENTS. - FOR THE PURPOSE OF THE
INVESTIGATIONS IN THE PRECEDING SECTION, OR ANY OTHER
PROCEEDING UNDER THIS CODE, THE COMMISSION OR ANY OFFICER
DESIGNATED BY IT IS EMPOWERED TO ADMINISTER OATHS AND
AFFIRMATIONS, SUBPOENA WITNESSES, COMPEL ATTENDANCE, TAKE
EVIDENCE, REQUIRE THE PRODUCTION OF ANY BOOK, PAPER,
CORRESPONDENCE, MEMORANDUM, OR OTHER RECORD WHICH THE
COMMISSION DEEMS RELEVANT OR MATERIAL TO THE INQUIRY, AND TO


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PERFORM SUCH OTHER ACTS NECESSARY IN THE CONDUCT OF SUCH
INVESTIGATION OR PROCEEDINGS.

SECTION 158. CEASE AND DESIST ORDERS. - WHENEVER IT
‘SHALL APPEAR TO THE COMMISSION THAT ANY PERSON HAS ENGAGED
OR IS ABOUT TO ENGAGE IN ANY ACT OR PRACTICE CONSTITUTING A
VIOLATION OF ANY PROVISION OF THIS CODE, ANY RULE, REGULATION
OR ORDER THEREUNDER, IT MAY ISSUE AN ORDER FOR SUCH PERSON
TO DESIST FROM COMMITTING SUCH ACT OR PRACTICE. AFTER
FINDING THAT SUCH PERSON HAS ENGAGED IN ANY SUCH ACT OR
PRACTICE AND THAT THERE IS A REASONABLE LIKELIHOOD OF SUCH
PERSON CONTINUING FURTHER OR FUTURE VIOLATIONS, THE
COMMISSION MAY ISSUE, EX PARTE A CEASE AND DESIST ORDER
ENJOINING SUCH PERSON FROM FURTHER OR FUTURE VIOLATIONS FOR
A MAXIMUM PERIOD OF TWENTY (20) DAYS.

THEREAFTER, THE COMMISSION MAY PROCEED
ADMINISTRATIVELY AGAINST SUCH PERSON IN ACCORDANCE WITH
SECTION 160, AND/OR TRANSMIT SUCH EVIDENCE AS MAY BE
AVAILABLE CONCERNING ANY VIOLATION OF ANY PROVISION OF THIS
CODE, OR ANY RULE, REGULATION OR ORDER THEREUNDER, TO THE
DEPARTMENT OF JUSTICE, WHICH MAY INSTITUTE THE APPROPRIATE
CRIMINAL PROCEEDINGS UNDER THIS CODE, AND/OR TO THE PROPER
COURT, TRIBUNAL, OR QUASI-JUDICIAL AGENCY IN INSTANCES WHERE
THE LAW ALLOWS INDEPENDENT CIVIL OR CRIMINAL PROCEEDINGS OF
VIOLATIONS ARISING FROM THE SAME ACT.

SEC. 159. CONTEMPT. - ANY PERSON WHO, WITHIN HIS POWER
BUT WITHOUT JUSTIFIABLE OR LAWFUL CAUSE, FAILS OR REFUSES TO
COMPLY WITH ANY LAWFUL ORDER, DECISION OR SUBPOENA ISSUED
BY THE COMMISSION SHALL, AFTER DUE NOTICE AND HEARING, BE
GUILTY OF CONTEMPT OF THE COMMISSION. SUCH PERSON SHALL BE
FINED IN SUCH AMOUNT AS THE COMMISSION MAY DETERMINE. WHEN
THE FAILURE OR REFUSAL IS A CLEAR AND OPEN DEFIANCE OF THE
COMMISSION’S ORDER, DECISION OR SUBPOENA, THE PERSON SHALL
BE FINED ON A DAILY BASIS IN AN AMOUNT THE COMMISSION MAY
DETERMINE AND DETAINED UNDER AN ARREST ORDER ISSUED BY THE
COMMISSION UNTIL SUCH ORDER, DECISION OR SUBPOENA IS
COMPLIED WITH.

SEC. 160. ADMINISTRATIVE SANCTIONS. - 1F, AFTER DUE NOTICE
AND HEARING INITIATED EITHER BY COMPLAINT OR MOTU PROPRIO,
THE COMMISSION FINDS THAT ANY PROVISION OF THIS CODE, OR ANY
OF THE COMMISSION’S RULES OR ORDERS HAS BEEN VIOLATED, THE
COMMISSION MAY IMPOSE ANY OR ALL OF THE FOLLOWING SANCTIONS
ON THOSE FOUND RESPONSIBLE FOR THE VIOLATION:

(A) A FINE RANGING FROM FIVE THOUSAND PESOS
(PHP5,000.00) TO TWO MILLION PESOS (PHP2,000,000.00) PLUS
NOT MORE THAN ONE THOUSAND PESOS (PHP1,000.00) FOR
EACH DAY OF CONTINUING VIOLATION, IN NO CASE TO EXCEED
TWO MILLION PESOS (PHP2,000,000.00);

(B) ARREST AND DETENTION IN CONNECTION WITH ITS
CONTEMPT POWER UNDER SECTION 159;


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(C)__ SUSPENSION OR REVOCATION OF THE CERTIFICATE
OF INCORPORATION;

(D) DISSOLUTION OF THE CORPORATION AND
FORFEITURE OF ITS ASSETS UNDER THE CONDITIONS IN TITLE
XV OF THIS CODE; AND

{E) | OTHER PENALTIES WITHIN THE POWER OF THE
COMMISSION TO IMPOSE OR AS PRESCRIBED IN ITS RULES AND
REGULATIONS.

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

SEC. 161. CONTINUED AND UNJUSTIFIED USE OF FORMER
CORPORATE NAME; PENALTIES. — A CORPORATION THAT CONTINUES
TO USE A CORPORATE NAME ALREADY PREVIOUSLY REMOVED FROM
REGISTRATION OR RESERVATION SHALL BE PUNISHED WITH A FINE
RANGING FROM FIFTY THOUSAND PESOS (PHP50,000.00) TO TWO.
HUNDRED. THOUSAND PESOS (PHP200,000.00) AND/OR IMPRISONMENT
OF SIX (6) MONTHS TO TWO (2) YEARS AT THE DISCRETION OF THE
COURT; PROVIDED THAT THE CORPORATION MAY CLAIM THE DEFENSE
THAT 7, OR ANY OF ITS STOCKHOLDERS OR OTHER
DIRECTORS/OFFICERS EXERTED REASONABLE EFFORTS AGAINST THE
CONTINUED AND UNJUSTIFIED USE OF THE FORMER CORPORATE NAME,
IN WHICH CASE ONLY THE RESPONSIBLE DIRECTORS/OFFICERS SHALL
BE HELD CRIMINALLY LIABLE UNDER THIS PROVISION.

Sec. 162. CONCEALMENT OF DISQUALIFICATION; PENALTIES. —
EACH WILLFUL OR DELIBERATE CONCEALMENT BY A DIRECTOR OR
TRUSTEE OF ANY DISQUALIFICATION UNDER SECTION 27 ALREADY
EXISTING AT THE TIME HE ACCEPTED THE POST, SHALL BE PUNISHED
BY A FINE RANGING FROM FIFTY THOUSAND PESOS (PHP50,000.00) TO
TWO HUNDRED THOUSAND PESOS (PHP200,000.00) AND/OR
IMPRISONMENT OF SIX (6) MONTHS TO TWO (2) YEARS AT THE
DISCRETION OF THE COURT, AND BY A PERMANENT DISQUALIFICATION
FROM FURTHER ACTING AS DIRECTOR OF ANY CORPORATION. FOR
PURPOSES OF THIS SECTION, CONCEALMENT SHALL BE WILLFUL OR
DELIBERATE WHEN, DESPITE HAVING KNOWLEDGE OF THE EXISTENCE
OF THE DISQUALIFICATION, THE DIRECTOR OR TRUSTEE ACCEPTS THE
PosT.

Sec. 163. VIOLATION OF DUTY TO KEEP OR MAINTAIN RECORDS
AND/OR ALLOW THEIR INSPECTION OR REPRODUCTION; PENALTIES. -
THE UNJUSTIFIED FAILURE OR REFUSAL BY THE CORPORATION, OR BY
THOSE RESPONSIBLE FOR KEEPING AND MAINTAINING THE
CORPORATION’S RECORDS, TO COMPLY WITH SECTIONS 46, 74, 93, 180
AND OTHER PROVISIONS OF THIS CODE AND THE RULES OF THE
COMMISSION WITH RESPECT TO THE RETENTION, MAINTENANCE AND
KEEPING OF RECORDS AND ALLOWING THEIR INSPECTION OR
REPRODUCTION, AS THE CASE MAY BE, SHALL BE PUNISHED WITH A


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FINE RANGING FROM FIFTY THOUSAND PESOS (PHP50,000.00) TO FIVE
HUNDRED THOUSAND PESOS (PHPS500,000.00) AND IMPRISONMENT OF
THIRTY (30) DAYS TO TWO (2) YEARS AT THE DISCRETION OF THE
COURT.

THE PENALTIES IMPOSED UNDER THIS SECTION SHALL BE IN
ADDITION TO THE SANCTIONS IMPOSED BY THE COMMISSION IN THE
EXERCISE OF ITS CONTEMPT POWERS UNDER SECTION 159 TO COMPEL
COMPLIANCE WITH THE DUTIES UNDER THE MENTIONED PROVISIONS.

SEC, 164. KNOWING OR WILLFUL CERTIFICATION OF
INCOMPLETE, INACCURATE, FALSE OR MISLEADING STATEMENTS OR
REPORTS; PENALTIES. - ANY PERSON WHO CERTIFIES ANY REPORT OR
MATTER AS SET FORTH IN THISCODE KNOWING, OR BEING IN A
POSITION TO KNOW, THAT THE SAME IS INCOMPLETE, INACCURATE, OR
CONTAINS FALSE OR MISLEADING INFORMATION OR STATEMENTS
SHALL BE PUNISHED WITH A FINE RANGING FROM TWO HUNDRED
THOUSAND PESOS (PHP200,000.00) TO TWO MILLION PESOS
(PHP2,000,000.00) AND/OR IMPRISONMENT OF TWO (2) TO TEN (10)
YEARS. WHEN THE VIOLATION IS WILLFUL, THE PENALTY SHALL BE A
FINE RANGING FROM FOUR HUNDRED THOUSAND PESOS
(PHP400,000.00) TO FOUR MILLION PESOS (PHP4,000,000.00) AND/OR
IMPRISONMENT OF FOUR (4) TO TWENTY (20) YEARS.

SEC. 165. INDEPENDENTAUDITORCOLLUSION; PENALTIES. —
WHEN AN INDEPENDENT AUDITOR COLLUDES WITH A CORPORATION OR
ITS REPRESENTATIVES AND CERTIFIES THE CORPORATION'S FINANCIAL
STATEMENTS WHICH ARE EITHER INCOMPLETE OR WHICH CONTAIN
INACCURATE, FALSE OR MISLEADING STATEMENTS OR REPORTS, OR
WHICH DO NOT GIVE A FAIR AND ACCURATE PRESENTATION OF THE
CORPORATION'S CONDITION, SUCH AUDITOR SHALL BE PUNISHED WITH
A FINE RANGING FROM FOUR HUNDRED THOUSAND PESOS
(PHP400,000.00) TO FOUR MILLION PESOS (PHP4,000,000.00) AND/OR
IMPRISONMENT OF FOUR (4) TO TWENTY (20) YEARS.

SEC. 166. PROCURING THE ORGANIZATION OF A CORPORATION
THROUGH FRAUD; PENALTIES. - THOSE RESPONSIBLE FOR
PROCURING THE ORGANIZATION OF A CORPORATION THROUGH FRAUD,
OR ASSISTING DIRECTLY OR INDIRECTLY THEREIN, SHALL BE PUNISHED
WITH A FINE RANGING FROM FIVE HUNDRED THOUSAND PESOS
(PHP500,000.00) TO TWO MILLION PESOS (PHP2,000,000.00) AND/OR
IMPRISONMENT OF TWO (2) TO TEN (10) YEARS AT THE DISCRETION OF
THE COURT.

Sec. 167. FRAUDULENT OR UNLAWFUL CONDUCT OF BUSINESS;
PENALTIES. — A CORPORATION THAT WILLFULLY CONDUCTS ITS
BUSINESS IN A FRAUDULENT OR OTHERWISE UNLAWFUL MANNER
SHALL BE PUNISHED WITH A FINE RANGING FROM FIVE HUNDRED
THOUSAND PESOS (PHP500,000.00) TO TWO MILLION PESOS
(PHP2,000,000.00) AND/OR IMPRISONMENT OF FIVE (5) TO TEN (10) YEARS
AT THE DISCRETION OF THE COURT.

Sec. 168. THEFT OF IDENTITY; PENALTIES. - ANY CORPORATION
WHO WILLFULLY OBTAINS ANY IDENTIFYING INFORMATION OF A
PERSON, WHETHER NATURAL OR JURIDICAL, AND USES THAT
INFORMATION FOR ANY UNLAWFUL PURPOSE,INCLUDING BUT NOT


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LIMITED TO OBTAINING, OR ATTEMPTING TO OBTAIN, CREDIT, GOODS,
SERVICES, OR REAL PROPERTY WITHOUT THE CONSENT OF THAT
PERSON, SHALL BE PUNISHED WITH A FINE RANGING FROM ONE
MILLION PESOS (PHP1,000,000.00) TO FIVE MILLION PESOS
(PHP§,000,000.00) AND IMPRISONMENT OF TEN (10) YEARS. THE SAME
PENALTY SHALL BE IMPOSED WHEN THE OFFENDER IS A NATURAL
PERSON,OR A GROUP THEREOF, AND THE IDENTITY STOLEN IS THAT OF
A CORPORATION.

Sec. 169. ACTING AS INTERMEDIARIES FOR GRAFT AND CORRUPT
PRACTICES; PENALTIES. - A CORPORATION CREATED FOR THE
PURPOSE OF COMMITTING, OR AIDING IN THE COMMISSION OF, GRAFT
AND CORRUPT PRACTICES OR IN THE CONCEALMENT THEREOF SHALL
BE PUNISHED BY A FINE RANGING FROM ONE MILLION (PHP1,000,000.00)
TO FIVE MILLION (PHPS5,000,000.00) PESOS AND IMPRISONMENT OF TEN
(10) YEARS.

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

Sec. 170. ENGAGING INTERMEDIARIES FOR GRAFT AND CORRUPT
PRACTICES; PENALTIES. - A CORPORATION THAT, FOR THE PURPOSE
OF SHIELDING ITSELF FROM LIABILITY FOR GRAFT AND CORRUPT
PRACTICES, ENGAGES THE SERVICES OF AN INTERMEDIARY WHO
COMMITS GRAFT AND CORRUPT PRACTICES FOR THE CORPORATION’S.
BENEFIT OR IN ITS INTEREST, SHALL BE PUNISHED BY A FINE OF ONE
MILLION PESOS (PHP1,000,000.00) AND IMPRISONMENT OF TEN (10)
YEARS.

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

Sec. 171. TOLERATING GRAFT AND CORRUPT PRACTICES;
PENALTIES. -A DIRECTOR, TRUSTEE, OR OFFICER OF THE
CORPORATION WHO KNOWINGLY ALLOWS OR TOLERATES THE
COMMISSION OF GRAFT AND CORRUPT PRACTICES OR OTHER
FRAUDULENT ACTS BY ITS DIRECTORS, TRUSTEES, OFFICERS, OR
EMPLOYEES, FAILING TO SANCTION THEM, REPORT THEIR ACTIONS TO
THE PROPER AGENCIES, AND/OR FILE THE APPROPRIATE ACTION
AGAINST THEM, SHALL BE PUNISHED BY A FINE OF ONE MILLION PESOS
(PHP1,000,000.00) AND IMPRISONMENT TEN (10) YEARS.


Page 55 of 63

SEC. 172. RETALIATION AGAINST WHISTLEBLOWERS. -ANY

1

2 PERSON WHO, KNOWINGLY AND WITH THE INTENT TO RETALIATE,
3 TAKES ANY ACTION HARMFUL TO ANOTHER PERSON, INCLUDING BUT
4 NOT LIMITED TO INTERFERENCE WITH THE LAWFUL EMPLOYMENT OR
5 LIVELIHOOD OF ANY PERSON, FOR PROVIDING ANY TRUTHFUL
6 INFORMATION RELATING TO THE COMMISSION OR POSSIBLE
7 COMMISSION OF ANY OFFENSE OR VIOLATION UNDER THIS CODE,
8 SHALL BE PUNISHED WITH A FINE RANGING FROM FIVE HUNDRED
9 THOUSAND PESOS (PHP500,000.00) TO ONE MILLION PESOS
10 (PHP1,000,000.00) AND/OR IMPRISONMENT OF FIVE (5) TO TEN (10)
u YEARS, AT THE DISCRETION OF THE COURT.

12 “Sec.[141]173.OTHER Violations of the Code; SEPARATE LIABILITY. -
13 Violations of any of the other provisions of this Code or its amendments not
14 ‘otherwise specifically penalized herein shall be punished by a fine of not less than
15 [one] FIFTY thousand {P1,000.00} (P50,000.00) pesos but not more than ONE
16 MILLION (P1,000,000.00) [ten thousand (P10,000.00)] pesos ANDior by
7 imprisonment [for] OF not less than thirty (30) days but not more than five (5)
18 years, or both, [in] AT the discretion of the court. If the violation is committed by a
19 corporation, the same may, after notice and hearing, be dissolved in appropriate
20 proceedings before the [Securities and Exchange] Commission: Provided, That
21 such dissolution shall not preclude the institution of appropriate action against the
2 director, trustee or officer of the corporation responsible for said violation:
23 Provided, further, That nothing in this section shall be construed to repeal the
24 other causes for dissolution of a corporation provided in this Code

25 LIABILITY FOR ANY OF THE FOREGOING OFFENSES SHALL BE
26 SEPARATE FROM AND WITHOUT PREJUDICE TO ANY OTHER
27 ADMINISTRATIVE CIVIL, CRIMINAL LIABILITY UNDER THIS CODE AND
28 OTHER LAWS.

29 SEC. 174. LIABILITY OF DIRECTORS, TRUSTEES, OFFICERS OR
30 OTHER EMPLOYEES. - IF THE OFFENDER IS A CORPORATION THE
31 PENALTY MAY, AT THE DISCRETION OF THE COURT, BE IMPOSED UPON
32 SUCH CORPORATION AND/OR UPON ITS DIRECTORS, TRUSTEES,
33 STOCKHOLDERS, MEMBERS, OFFICERS OR EMPLOYEES RESPONSIBLE
34 FOR THE VIOLATION OR INDISPENSABLE TO ITS COMMISSION.

35 SEC. 175. LIABILITY OF AIDERS AND ABETTORS AND OTHER
36 SECONDARY LIABILITY. - ANYONE WHO SHALL AID, ABET, COUNSEL,
37 COMMAND, INDUCE OR PROCURE ANY VIOLATION OF THIS CODE, OR
38 ANY RULE, REGULATION OR ORDER OF THE COMMISSION OR WHO
39 SHALL ASSIST THE ACT OR OMISSION OF ANY PERSON PRIMARILY
40 LIABLE FOR THE VIOLATION, WITH KNOWLEDGE OR IN RECKLESS
41 DISREGARD THAT SUCH ACT OR OMISSION IS WRONGFUL SHALL BE
42 PUNISHED WITH A FINE AND/OR IMPRISONMENT NOT EXCEEDING THAT
43 IMPOSED ON THE PRINCIPAL OFFENDERS, AT THE DISCRETION OF THE
44 COURT AFTER TAKING INTO ACCOUNT THEIR PARTICIPATION IN THE
45 OFFENSE.

46 SECTION 70. _Title XVI on Miscellaneous Provisions is hereby renumbered as Title
47 Xvi.

48 SECTION 71. — Sections 137 and 138 of the Code are renumbered as Sections 176

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Page 56 of 63

SECTION 72. Section 140 of the Code is hereby renumbered as Section 179 and
amended to read as follows:

wer ane

“Sec. [140]179. NATIONALITYAND Stock ownership OF [in certain]
corporations. —THE NATIONALITY OFA CORPORATION SHALL BE
DETERMINED BY COMPUTING THE REQUIRED PERCENTAGE OF FILIPINO
OWNERSHIP BASED ON BOTH (A) THE ENTIRE OUTSTANDING CAPITAL
STOCK, AND (b) THE VOTING STOCKS, TAKING INTO CONSIDERATION
THE FULL BENEFICIAL OWNERSHIP OF THE STOCKS.

EXCEPT WHEN THE CORPORATION IS REQUIRED BY THE CONSTITUTION

OR_BY_STATUTE TO BE WHOLLY NATIONALIZED, OR WHEN THE
CORPORATION HAS A CORPORATE STOCKHOLDER OWNING LESS
THAN 60% OF BOTH ITS OUTSTANDING CAPITAL STOCK AND VOTING
STOCKS, THE CONTROL TEST SHALL BE APPLIED WHEN DETERMINING

ITS NATIONALITY.

EXCEPT WHEN A MORE STRINGENT MEASURE IS REQUIRED IN THE
CONSTITUTION OR OTHER LAWS, A CORPORATION SHALL BE DEEMED
A PHILIPPINE NATIONAL WHEN:

(A) ITIS ORGANIZED UNDER THE LAWS OF THE PHILIPPINES
AND _AT LEAST SIXTY PERCENT (60%) OF THE CAPITAL
STOCK OUTSTANDING AND ENTITLED TO VOTE IS OWNED
AND HELD BY CITIZENS OF THE PHILIPPINES, PROVIDED,
THAT WHERE A CORPORATION AND ITS NON-FILIPINO
STOCKHOLDERS OWN STOCKS IN ANOTHER
CORPORATION, AT LEAST SIXTY PERCENT (60%) OF THE
CAPITAL STOCKS OUTSTANDING AND ENTITLED TO VOTE

TH CORPO! INS MUST INED AND HELD B'
CITIZENS OF THE PHILIPPINES AND AT LEAST SIXTY
PERCENT 1%) OF THE :MBERS HE BOARD OF

DIRECTORS OF BOTH CORPORATIONS MUST BE CITIZENS
F THE PHILIPPINES: OR

(B) ALTHOUGH ORGANIZED ABROAD, IT IS REGISTERED AS

DOING BUSINESS IN THE PHILIPPINES UNDER THIS CODE
AND ONE HUNDRED PERCENT (100%) OF THE CAPITAL
STOCK OUTSTANDING AND ENTITLED TO VOTE IS WHOLLY
QWNED BY FILIPINOS.

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

Maximum limits may be set by the [Batasang Pambansa] CONGRESS for
stockholdings in corporations declared by it to be vested with a public interest
pursuant to the provisions of this section, belonging to individuals or groups of
individuals related to each other by consanguinity or affinity or by close business
interests, or whenever it is necessary to achieve national objectives, prevent
illegal monopolies or combinations in restraint or trade, or to implement national
economic policies declared in laws, rules and regulations designed to promote
the general welfare and foster economic development.

In recommending to the [Batasang Pambansa] CONGRESS corporations,
businesses or industries to be declared vested with a public interest and in
formulating proposals for limitations on stock ownership, 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


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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.”

SECTION 73. Section 141 of the Code is hereby renumbered as Section 180and
amended to read as follows:

“Sec. [141]180. [Annualreport] REPORTORIAL REQUIREMENTS of
corporations. - EXCEPT AS OTHERWISE PROVIDED IN THIS CODE, every
corporation, domestic or foreign, [lawfully] doing business in the Philippines shall
submit to the [Securities and Exchange] Commission, IN THE FORM AND
SUBSTANCE PRESCRIBED BY IT:

[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 theSecurities and Exchange Commission may require.]

1. ANNUAL FINANCIAL STATEMENTS DULY AUDITED BY THE
CORPORATION’S INTERNAL AUDITOR AND BY AN INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANT WHO IS ACCREDITED BY THE BOARD
OF ACCOUNTANCY AND WHO POSSESSES SUCH OTHER
ACCREDITATION AS THE COMMISSION MAY REQUIRE;

2. A GENERAL INFORMATION SHEET;

3. A DIRECTOR OR TRUSTEE COMPENSATION REPORT
WHICH SHALL CONTAIN, AMONG OTHERS, THE FOLLOWING:

a. THE CORPORATION’S POLICY ON DIRECTOR OR
TRUSTEE REMUNERATION, INCLUDING THE FRAMEWORK FOR
DETERMINING THE REMUNERATION LEVELS FOR INDIVIDUAL
DIRECTORS OR TRUSTEES;

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

c. A STATEMENT OF OTHER FORMS OF
REMUNERATION AND/OR COMPENSATION ARRANGEMENTS NOT
COVERED UNDER THE PRECEDING SUB-PARAGRAPHS;

4. A DIRECTOR OR TRUSTEE APPRAISAL OR PERFORMANCE
REPORT AND THE STANDARDS OR CRITERIA USED TO ASSESS EACH
DIRECTOR OR TRUSTEE;

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

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7. SUCH OTHER REPORTS THAT THE COMMISSION MAY
REQUIRE BY RULE.

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

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

2. AS TO THE GENERAL INFORMATION SHEET, THAT
THE INFORMATION CONTAINED THEREIN IS COMPLETE,
ACCURATE AND DOES NOT CONTAIN ANY FALSE OR
MISLEADINGSTATEMENT OR MISREPRESENTATION; AND

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

Such [reporJREPORTORIAL REQUIREMENTS shall be submitted
ANNUALLY ANDwithin such period as may be prescribed by the [Securities and
Exchange] Commission

IF A CORPORATION FAILS TO SUBMIT ANY OF THE FOREGOING
REPORTORIAL REQUIREMENTS THREE TIMES, WHETHER
INTERMITTENTLY OR CONSECUTIVELY, WITHIN A PERIOD OF FIVE
YEARS, THE COMMISSION MAY, AFTER DUE NOTICE AND HEARING, PUT
THE CORPORATION ON DELINQUENCY STATUS OR REVOKE ITS
CERTIFICATE OF INCORPORATION IN ACCORDANCE WITH SECTION 22.”

SECTION 74. — Section 142 of the Code is hereby renumbered as Section 181and
amended to read as follows:

“Sec. [142]181. VISITORIAL POWER AND Confidential nature of
examination results. - THE COMMISSION SHALL EXERCISE VISITORIAL
POWERS OVER ALL CORPORATIONS REGISTERED WITH IT. THESE
VISITORIAL POWERS SHALL INCLUDE, BUT NOT BE LIMITED TO
EXAMINATION, INVESTIGATION, INSPECTION OF RECORDS
REGARDLESS OF THE FORM IN WHICH THE INFORMATION IS
CONTAINED, REGULATION AND SUPERVISION OF ACTIVITIES,
ENFORCING COMPLIANCE AND IMPOSING SANCTIONS IN ACCORDANCE
WITH THIS CODE.

ANY UNJUSTIFIED REFUSAL OR OBSTRUCTION BY A
CORPORATION, OR ANYONE UNDER ITS EMPLOY, IN THE COMMISSION'S
EXERCISE OF THE FOREGOING AUTHORITY SHALL, IN ADDITION TO THE


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IMPOSITION OF PENALTIES AND SANCTIONS UNDER THIS CODE,
CONSTITUTE A JUSTIFIABLE GROUND FOR THE REVOCATION OF ITS
CERTIFICATE OF INCORPORATION.”

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 any 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 the law may require the same to be
made public, WHEN NECESSARY FOR THE COMMISSION TO TAKE ACTION
OR 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.

SECTION 75. Section 143 of Code is hereby renumbered as Section 182and
amended to read as follows:

“Sec. [143]182. [Rule-making power] POWERS AND FUNCTIONS of the
{Securities and Exchange] Commission AND JURISDICTION OVER ACTIONS.
- CONSISTENT WITH AND IN ADDITION TO THE POWERS AND
FUNCTIONS PROVIDED IN PRESIDENTIAL DECREE NO. 902-A, THE
SECURITIES REGULATION CODE, THE INVESTMENT HOUSES LAW, THE
FINANCING COMPANY ACT AND OTHER LAWS, [The Securities and
Exchange] Commission shall have [the power and authority], AMONG OTHERS,
THE FOLLOWING POWERS AND FUNCTIONS:

4. HAVE JURISDICTION AND SUPERVISION OVER ALL
CORPORATIONS, REGISTERED WITH IT, EXCEPT AS OTHERWISE
PROVIDED UNDER THIS CODE;

2. FORMULATE POLICIES AND RECOMMENDATIONS ON
ISSUES PERTAINING TO THE REGULATION AND SUPERVISION OF
CORPORATIONS, AND PROPOSE LEGISLATION AND
AMENDMENTS THERETO;

3. APPROVE OR REJECT APPLICATIONS, ISSUE OR
REVOKE OTHER CERTIFICATIONS, REQUIRE
ADDITIONALSUBMISSIONS OR AMENDMENTS THERETO;

4 REGULATE, INVESTIGATE, SUPERVISE THE
ACTIVITIES OF PERSONS TO ENSURE COMPLIANCE WITH THIS
CODE;

5. IMPOSE SANCTIONS FOR THE VIOLATIONS OF THIS
CODE AND ITS RULES, REGULATIONS AND ORDERS OF THE
COMMISSION ISSUED PURSUANT THERETO;

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


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

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

9. PUNISH FOR CONTEMPT OF THE COMMISSION,
BOTH DIRECT AND INDIRECT;

10. COMPEL THE OFFICERS OF ANY REGISTERED
CORPORATION TO CALL MEETINGS OF STOCKHOLDERS OR
MEMBERS UNDER ITS SUPERVISION AND TO ISSUE SUCH
ORDERS AS MAY BE APPROPRIATE, INCLUDING, WITHOUT
LIMITATION, ORDERS DESIGNATING THE TIME AND PLACE OF
THE ELECTION, THE RECORD DATE OR DATES FOR
DETERMINATION OF STOCKHOLDERS ENTITLED TO NOTICE OF
THE ELECTION AND TO VOTE THEREAT, AND THE FORM OF
NOTICE OF SUCH ELECTION;

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

12, | SUSPEND OR REVOKE, AFTER PROPER NOTICE AND
HEARING, THE CERTIFICATE OF INCORPORATION OF
CORPORATIONS UPON ANY OF THE GROUNDS PROVIDED UNDER
THIS CODE OR WHEN DIRECTED BY FINAL JUDGMENT OF A
COURT OF COMPETENT JURISDICTION;

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

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

15. EXERCISE SUCH OTHER POWERS AS MAY BE
PROVIDED BY LAW AS WELL AS THOSE WHICH MAY BE IMPLIED
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CARRYING OUT THE EXPRESS POWERS GRANTED TO THE
COMMISSION TO ACHIEVE THE OBJECTIVES AND PURPOSES OF
THIS CODE AND SUCH OTHER LAWS.

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

SECTION 76. Section 144 of the Code is hereby deleted, amended and transferred
to Section 173.

SECTION 77. A new provision is inserted in the Code as Section 184:

SECTION 184. DEVELOPMENT OF OTHER SYSTEMS. - THE
COMMISSION SHALL, CONSIDERING ADVANCES IN TECHNOLOGY,
DEVELOP SUCH SYSTEMS AS IT MAY DEEM NECESSARY TO FACILITATE
AND EXPEDITE, AMONG OTHERS, CORPORATE NAME RESERVATION AND
REGISTRATION, INCORPORATION, AND THE SUBMISSION OF REPORTS,
NOTICES, DOCUMENTS AND OTHER PAPERS REQUIRED UNDER THIS
CODE, AND PRESCRIBE THE CORRESPONDING RULES AND
REGULATIONS THEREFOR. THE COMMISSION SHALL HAVE FULL
DISCRETION TO DETERMINE WHICH SYSTEM OR SYSTEMS ALLOW THE
MOST EFFECTIVE IMPLEMENTATION AND ENFORCEMENT OF THE
PROVISIONS OF THIS CODE

SECTION 78. Anew provision is inserted in the Code as Section 185:

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

THE ARBITRATION AGREEMENT SHALL BE BINDING AGAINST THE
CORPORATION'S DIRECTORS, TRUSTEES, OFFICERS OR MANAGERS,
UPON ACCEPTANCE OF THEIR POST.

TO BE VALID, THE AGREEMENT TO ARBITRATE IN THE ARTICLES OF
INCORPORATION OR THE BY-LAWS SHOULD INDICATE THE NUMBER AND
PROCEDURE FOR THE APPOINTMENT OF ARBITRATORS AND GRANT TO
A DESIGNATED THIRD, INDEPENDENT, AND EXTERNAL PARTY OR BODY


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THE POWER TO APPOINT THE ARBITRATORS. IF THE THIRD PARTY OR
BODY FAILS TO APPOINT THE ARBITRATORS IN THE MANNER AND.
WITHIN THE PERIOD SPECIFIED IN THE AGREEMENT TO ARBITRATE,
EACH PARTY TO THE ARBITRATION MAY REQUEST THAT THE
APPOINTMENT OF THE ARBITRATORS BE MADE BY THE COMMISSION.
ARBITRATORS SHALL BE THOSE WHO ARE EITHER DULY ACCREDITED
BY THE COMMISSION OR MEMBERS OF ORGANIZATIONS DULY-
ACCREDITED BY THE COMMISSION.

THE ARBITRAL TRIBUNAL SHALL HAVE FULL AUTHORITY TO
RESOLVE ALL ISSUES RELATING TO ITS JURISDICTION AND/OR THE
VALIDITY OR EFFECTIVITY OF THE ARBITRATION AGREEMENT. A
REGIONAL TRIAL COURT BEFORE WHICH AN INTRACORPORATE DISPUTE
1S FILED SHALL, BEFORE THE TERMINATION OF THE PRETRIAL
CONFERENCE, DISMISS THE CASE UPON DETERMINING THE EXISTENCE
OF AN AGREEMENT TO ARBITRATE IN THE ARTICLES OF
INCORPORATION OR BY-LAWS OF THE CORPORATION, ANY AMENDMENT
THEREOF, OR IN A SEPARATE AGREEMENT.

THE ARBITRAL TRIBUNAL SHALL HAVE THE POWER TO GRANT
INTERIM MEASURES NECESSARY TO ENSURE ENFORCEMENT OF THE
AWARD, TO PREVENT A MISCARRIAGE OF JUSTICE, OR TO OTHERWISE
PROTECT THE RIGHTS OF THE PARTIES.

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

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

SECTION 79. A new provision is inserted in the Code as Section 186 and the
succeeding provisions are re-numbered accordingly and amended as follows:

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

THE MONITORING, SUPERVISION AND REGULATION OF
CORPORATIONS OF SUCH CHARACTER ABOVE-DESCRIBED PREVIOUSLY
REGISTERED WITH THE COMMISSION SHALL LIKEWISE BE TRANSFERRED
TO THE SAID PERTINENT GOVERNMENT AGENCIES, RESPECTIVELY.

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

SECTION 80. Implementing Rules and Regulations. - The Commission shali
promulgate and/or amend the necessary rules and regulations for the effective implementation
of this Act.

SECTION 81. _Separability Clause. - If any provision of this Act is declared invalid or
unconstitutional, other provisions hereof which are not affected thereby shall continue to be in
full force and effect.

SECTION 82. Repealing Clause. - Any law, presidential decree or issuance,
executive order, letter of instruction, administrative order, rule or regulation contrary to or
inconsistent with any provision of this Act is hereby repealed or modified accordingly.

SECTION 83. —Effectivity Clause. - This Act shall take effect fifteen (15) days after its
Publication in the Official Gazette or in at least two (2) newspapers of general circulation,