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” RECEIVED

Republic of the Philippines 2 ye, 12 SUL OD

HOUSE OF REPRESENTATIVES
Quezon City

Seventeenth Congress
First Regular Session

Mec tee eed

Introduced by Representative H. Harry L. Roque Jr.

EXPLANATORY NOTE

Appraisal right is the right of a dissenting stockholder to demand appraisal and
payment of the fair value of his stocks from the corporation. It allows a stockholder who
dissents and votes against a proposed corporate action to withdraw from the corporation by
demanding payment of the fair value of his shares, It may be exercised by any stockholder
whenever a major change in his contract of investment occurs which he does not agree and
which the law presumes he did not foresee when he bought his shares.

The Corporation Code, Section 37, on a private corporation's power to extend or
shorten its corporate term, provides that a dissenting stockholder may exercise his appraisal
right in case of an extension of corporate term. However, Section 81 of the same Code, which
enumerates the instances when the appraisal right may be exercised, provides that the
appraisal right be exercised in both cases of lengthening and shortening the term of corporate
existence

‘The lengthening and shortening of corporate term results in a substantial change in a
stockholder's contract of investment with a corporation. The corporation's term of existence is

major factor in considering whether to buy shares in a corporate or not. This bill seeks to



harmonize Sections 7 and 81 by clearly allowing the appraisal right in both cases of
lengthening and shortening the term of corporate existence.”

H. HARRY L. ROQUE JR.

* This bill was originally filed by Senator Miriam Defensor Santiago during the Sixteenth Congress, First
Regular Session,


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Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

Seventeenth Congress
First Regular Session

HOUSE OF REP! ‘ATIVES
HB. No.

Introduced by Representative H. Harry L. Roque Jr.

AN ACT
AMENDING BATAS PAMBANSA BLG. 68, OTHERWISE KNOWN AS THE.
CORPORATION CODE, SECTION 37, GRANTING STOCKHOLDERS THE RIGHT OF
APPRAISAL WHEN THE TERM OF CORPORATE EXISTENCE IS EXTENDED

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

SECTION 1. Batas Pambansa Blg 68, otherwise known as the Corporation Code,
Section 37 is hereby amended to read as follows:

“SECTION 37. Power fo extend or shorten corporate term. - A private
corporation may extend or shorten its term as stated in the articles of
incorporation when approved by a majority vote of the board of directors or
trustees and ratified at a meeting by the stockholders representing at least two
thirds (2/3) of the outstanding capital stock or by at least two-thirds (2/3) of
the members in case of non-stock corporations. Written notice of the proposed
action and of the time and place of the meeting shall be addressed to each
stockholder or member at his place of residence as shown on the books of the
corporation and deposited to the addressee in the post office with postage
prepaid, or served personally; PROVIDED, THAT IN CASE OF
EXTENSION OF CORPORATE TERM, ANY DISSENTING


STOCKHOLDER MAY EXERCISE HIS APPRAISAL RIGHT UNDER
‘THE CONDITIONS PROVIDED IN THIS CODE.”

SECTION 2. Repealing Clause. - Any law, presidential decree or issuance, executive
order, letter of instruction, administrative order, rule, or regulation contrary to or inconsistent
with the provisions of this Act is hereby repealed, modified, or amended accordingly.

SECTION 3. Effectivity Clause. - This Act shall take effect fifteen (15) days after its
publication in at least two (2) newspapers of general circulation.

Approved,

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