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TITLE IV POWERS OF CORPORATIONS 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 succession by its corporate name for the period of time stated in the articles of incorporation and the certificate of incorporation; 3. To adopt and use a corporate seal; 4. To amend its articles of incorporation in accordance with the provisions of this Code; 5. To adopt by-laws, not contrary to law, morals, or public policy, and to amend or repeal the same in accordance with this Code; 6. In case of stock corporations, to issue or sell stocks to subscribers and to sell stocks to subscribers and to sell treasury stocks in accordance with the provisions of this Code; and to admit members to the corporation if it be a non-stock corporation; 7. To purchase, receive, take or grant, hold, convey, sell, lease, pledge, mortgage and otherwise deal with such real and personal property, including securities and bonds of other corporations, as the transaction of the lawful business of the corporation may reasonably and necessarily require, subject to the limitations prescribed by law and the Constitution; 8. To enter into merger or consolidation with other corporations as provided in this Code; 9. To make reasonable donations, including those for the public welfare or for hospital, charitable, cultural, scientific, civic, or similar purposes: Provided, That no corporation, domestic or foreign, shall give donations in aid of any political party or candidate or for purposes of partisan political activity; 10. To establish pension, retirement, and other plans for the benefit of its directors, trustees, officers and employees; and 11. To exercise such other powers as may be essential or necessary to carry out its purpose or purposes as stated in the articles of incorporation.

Sec. 37. Power to extend or shorten corporate term. - A private corporation may extend or shorten its term as stated in the articles of incorporation when approved by a majority vote of the board of directors or 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. (n) Sec. 38. Power to increase or decrease capital stock; incur, create or increase bonded indebtedness. - No corporation shall increase or decrease its capital stock or incur, create or increase any bonded indebtedness unless approved by a majority vote of the board of directors and, at a stockholder's meeting duly called for the purpose, two-thirds (2/3) of the outstanding capital stock shall favor the increase or diminution of the capital stock, or the incurring, creating or increasing of any bonded indebtedness. Written notice of the proposed increase or diminution of the capital stock or of the incurring, creating, or increasing of any bonded indebtedness and of the time and place of the stockholder's meeting at which the proposed increase or diminution of the capital stock or the incurring or increasing of any bonded indebtedness is to be considered, must be addressed to each stockholder 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. A certificate in duplicate must be signed by a majority of the directors of the corporation and countersigned by the chairman and the secretary of the stockholders' meeting, setting forth: (1) That the requirements of this section have been complied with; (2) The amount of the increase or diminution of the capital stock;

(3) If an increase of the capital stock, the amount of capital stock or number of shares of no-par stock thereof actually subscribed, the names, nationalities and residences of the persons subscribing, the amount of capital stock or number of no-par stock subscribed by each, and the amount paid by each on his subscription in cash or property, or the amount of capital stock or number of shares of no-par stock allotted to each stock-holder if such increase is for the purpose of making effective stock dividend therefor authorized; (4) Any bonded indebtedness to be incurred, created or increased; (5) The actual indebtedness of the corporation on the day of the meeting; (6) The amount of stock represented at the meeting; and (7) The vote authorizing the increase or diminution of the capital stock, or the incurring, creating or increasing of any bonded indebtedness. Any increase or decrease in the capital stock or the incurring, creating or increasing of any bonded indebtedness shall require prior approval of the Securities and Exchange Commission. 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 sworn statement of the treasurer of the corporation lawfully holding office at the time of the filing of the certificate, showing that at least twenty-five (25%) percent of such increased 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. Non-stock corporations may incur or create bonded indebtedness, or increase the same, with the approval by a majority vote of the board of trustees and of at least two-thirds (2/3) of the members in a meeting duly called for the purpose. Bonds issued by a corporation shall be registered with the Securities and Exchange Commission, which shall have the authority to determine the sufficiency of the terms thereof. (17a) Sec. 39. Power to deny pre-emptive right. - All stockholders of a stock corporation shall enjoy pre-emptive right to subscribe to all issues or disposition of shares of any class, in proportion to their respective shareholdings, unless such right is denied by the articles of incorporation or an amendment thereto: Provided, That such pre-emptive right shall not extend to shares to be issued in compliance with laws requiring stock offerings or minimum stock ownership by the public; or to shares to be issued in good faith with the approval of the stockholders representing two-thirds (2/3) of the outstanding capital stock, in exchange for property needed for corporate purposes or in payment of a previously contracted debt. Sec. 40. Sale or other disposition of assets. - Subject to the provisions of existing laws on illegal combinations and monopolies, a corporation may, by a majority vote of its board of directors or trustees, sell, lease, exchange, mortgage, pledge or otherwise dispose of all or substantially all of its property and assets, including its goodwill, upon such terms and conditions and for such consideration, which may be money, stocks, bonds or other instruments for the payment of money or other property or consideration, as its board of directors or trustees may deem expedient, when 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. 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. A sale or other disposition shall be deemed to cover substantially all the corporate property and assets if thereby the corporation would be rendered incapable of continuing the business or accomplishing the purpose for which it was incorporated. 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. (28 1/2a) Sec. 41. Power to acquire own shares. - A stock corporation shall have the power to purchase or acquire its own shares for a legitimate corporate purpose or purposes, including but not limited to the following cases: Provided, That the corporation has unrestricted retained earnings in its books to cover the shares to be purchased or acquired: 1. To eliminate fractional shares arising out of stock dividends; 2. To collect or compromise an indebtedness to the corporation, arising out of unpaid subscription, in a delinquency sale, and to purchase delinquent shares sold during said sale; and 3. To pay dissenting or withdrawing stockholders entitled to payment for their shares under the provisions of this Code. (n) Sec. 42. Power to invest corporate funds in another corporation or business or for any other purpose. - Subject to the provisions of this Code, a private corporation may invest its funds in any other corporation or business or for any purpose other than the primary purpose for which it was organized when approved by a majority of the board of directors or trustees and ratified by the stockholders representing at least two-thirds (2/3) of the outstanding capital stock, or by at least two thirds (2/3) of the members in the case of non-stock corporations, at a stockholder's or member's meeting duly called for the purpose. Written notice of the proposed investment and the time and place of the meeting shall be addressed to each stockholder or member at his place of residence as shown 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 shall have appraisal right as provided in this Code: Provided, however, That where the investment by the corporation is reasonably necessary to accomplish its primary purpose as stated in the articles of incorporation, the approval of the stockholders or members shall not be necessary. (17 1/2a) Sec. 43. Power to declare dividends. - The board of directors of a stock corporation may declare dividends out of the unrestricted retained earnings which shall be payable in cash, in property, or in stock to all stockholders on the basis of outstanding stock held by them: Provided, That any cash dividends due on delinquent stock shall first be applied to the unpaid balance on the subscription plus costs and expenses, while stock dividends shall be withheld from the delinquent stockholder until his 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. (16a) 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. (n) Sec. 44. Power to enter into management contract. - No corporation shall conclude a management contract with another corporation unless such contract shall have been approved by the board of directors and by stockholders owning at least the majority of the outstanding capital stock, or by at least a majority of the members in the case of a non-stock corporation, of both the managing and the managed corporation, at a meeting duly called for the purpose: Provided, That (1) where a stockholder or stockholders representing the same interest of both the managing and the managed corporations own or control more than one-third (1/3) of the total outstanding capital stock entitled to vote of the managing corporation; or (2) where a majority of the members of the board of directors of the managing corporation also constitute a majority of the members of the board of directors of the managed corporation, then the management contract must be approved by the stockholders of the managed corporation owning at least two-thirds (2/3) of the total outstanding capital stock entitled to vote, or by at least two-thirds (2/3) of the members in the case of a non-stock corporation. No management contract shall be entered into for a period longer than five years for any one term. The provisions of the next preceding paragraph shall apply to any contract whereby a corporation undertakes to manage or operate all or substantially all of the business of another corporation, whether such contracts are called service contracts, operating agreements or otherwise: Provided, however, That such service contracts or operating agreements which relate to the exploration, development, exploitation or utilization of natural resources may be entered into for such periods as may be provided by the pertinent laws or regulations. (n) Sec. 45. Ultra vires acts of corporations. - No corporation under this Code shall possess or exercise any corporate powers except those conferred by this Code or by its articles of incorporation and except such as are necessary or incidental to the exercise of the powers so conferred. (n)

Dissolution of a corporation signifies the extinguishment of its franchise and the termination of its corporate existence. A corporation formed or organized under the provisions of the Corporation Code of the Philippines may be dissolved voluntarily or involuntarily. VOLUNTARY DISSOLUTION There are three modes of Voluntary Dissolution: 1. 2. 3. Where no creditors are affected by the dissolution by the dissolution, by an administrative application for dissolution filed with the Securities and Exchange Commission (SEC); Where creditors are affected by dissolution filed with the SEC, with due notice and hearing to be duly conducted; and Shortening of a corporate term by the amendment of the articles of incorporation. Voluntary dissolution where no creditors are affected When no creditors are involved, only a SEC application for dissolution is required. The process is equivalent to the application for the amendment of the articles of incorporation, except that in addition, publication of the notice of dissolution must also be complied with. Under Section 118 of the Corporation Code, in case the dissolution of a corporation does not prejudice the rights of any creditor having a claim against such a corporation, the dissolution may be effected by complying with the following procedural requirements: 1. 2. 3. 4. Majority vote of the board of directors or trustees adopting a resolution for the dissolution of the corporation; Sending notices to each stockholder or member either by registered mail or by personal delivery, of the time, place and object of the meeting calling for the approval of the dissolution of the corporation, at least thirty (30) days prior to said meeting; Publication of such notice of meeting for three (3) consecutive weeks in a newspaper published in the place where the principal office of said corporation is located; and if none, in a newspaper of general circulation in the Philippines; and The 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, at a meeting held on the call of the directors or trustees. A copy of the resolution authorizing the dissolution shall be certified by a majority of the board of directors or trustees and countersigned by the secretary of the corporation and filed with the SEC. The SEC shall thereupon issue the certificate of dissolution. The SEC will not deny an application for dissolution when there are no creditors involved because of the constitutional prohibition against involuntary servitude or the constitutional guarantee of association, and the right to refuse to continue an association. Voluntary dissolution where creditors are affected If there are no creditors involved, there is a need to file a formal petition for dissolution with the SEC. The proceedings are quasi-judicial in nature and conducted to ensure that the rights of the creditors are fully protected. In such proceedings, the SEC is not mandated to dissolve a corporation, especially when it would be detrimental to the interests of the creditors, who may wish to rehabilitate the operations of the corporation to ensure that it would be able to pay-off all of its debt. Under Section 119 of the Corporation Code, where the dissolution may prejudice the rights of any creditor, the following procedure shall be complied with: 1. A petition for dissolution shall be filed with the SEC, signed by a majority of its board of directors or trustees or other officers having the management of its affairs, verified by its president or secretary or one of its directors or trustees, and shall set forth all claims and demands against it, and that its dissolution was resolved upon by the affirmative vote of the stockholders representing at least two-thirds (2/3) of the outstanding capital stock or by at least two-thirds (2/3) of the members at a meeting of its stockholders or members called for that purpose.

2.

If the petition is sufficient in form and substance, the SEC, by an order reciting the purpose of the petition, shall fix a date on or before which objections thereto may be filed by any person, which date shall not be less than thirty (30) days nor more than sixty (60) days after the entry of the order.

3.

Before such date, a copy of the order shall be published at least once a week for three (3) consecutive weeks in a newspaper of general circulation published in the municipality or city where the principal office of the corporation is situated, or if there be no such newspaper, then in a newspaper of general circulation in the Philippines, and a similar copy shall be posted for three (3) consecutive weeks in three (3) public places in such municipality or city.

4.

Upon five (5) days notice, given after the date on which the right to file objections as fixed in the order has expired, t he Commission shall proceed to hear the petition and try any issue made by the objections filed; and if no such objection is sufficient, and the material allegations of the petition are true, it shall render judgment dissolving the corporation and directing such disposition of its assets as justice requires, and may appoint a receiver to collect such assets and pay the debts of the corporation. Dissolution by shortening corporate term A voluntary dissolution may be effected by amending the articles of incorporation to shorten the corporate term. A copy of the amended articles of incorporation shall be submitted to the SEC in accordance with the Corporation 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 for corporate liquidation. The following requirements must be submitted to the SEC:

1. 2. 3. 4. 5. 6.

Notice of the dissolution of the corporation by shortening its corporate term be published in a newspaper of general circulation for three (3) consecutive weeks; List of corporate creditors, with their consent to the shortening of corporate term; Submission by the majority stockholders or principal officers of the corporation of an undertaking under oath that they shall be personally answer for any outstanding obligations of the corporation; and Latest audited financial statements of the corporation which must not be earlier than the date of the stockholders or membership meeting approving the amendment to the articles of incorporation; BIR Tax Clearance Directors' Certificate - A Notarized document signed by majority of the directors and corporate secretary certifying the amendment of the articles of incorporation shortening the corporate term, the votes of the directors and stockholders thereto, and the date and place of the stockholders meeting

7.

Indorsements/clearances from other government agencies, if applicable. Dissolution by expiration of corporate term This is another mode of voluntary dissolution, when the corporate life of the corporation as stated in its articles of incorporation is allowed to expire, without extension, then the corporation is deemed dissolved by such expiration without the need of further action on the part of the corporation or the State. (Section 11).

1.

INVOLUNTARY DISSOLUTION Involuntary dissolution A corporation may be dissolved by the SEC upon filing of a verified complaint and after proper notice and hearing on the grounds provided by existing laws, rules and regulations. (Section 121) The following are the grounds for involuntary dissolution:

1.

If the corporation does not formally organize and commence the transaction of its business or the construction of its works within two (2) years from the date of its incorporation, its corporate power ceases and the corporation shall be deemed dissolved;

2.

If the corporation has commenced the transaction of its business, but subsequently becomes continuously inoperative for a period of five (5) years, the same shall be a ground for the suspension and revocation of its corporate franchise or certificate of incorporation;

3. 4. 5. 6. 7.

When the corporation fails to adopt and file a code of by-laws in the manner provided by law; When the corporation has offended against a provision of a law for its creation or renewal; When it has committed or omitted an act which amounts to a surrender of its corporate rights, privileges,, or franchises; When it has misused a right, privilege, or franchise conferred it upon by law, such as commission by the corporation of ultra vires or illegal acts; When on the basis of findings and recommendations of a duly appointed management committee or rehabilitation receiver, or based on the SEC s own findings, the continuance of the business of the corporation would not be feasible or profitable nor work to the best interest of the stockholders, parties-litigants, creditors, or the general public;

8. 9.

When the corporation is guilty of fraud in procuring its certificate of registrations; When the corporation is guilty of serious misrepresentation as to what the corporation can do or is doing to the great prejudice of or damage to the general public;

10. Refusal of the corporation to comply or defiance of any lawful order of the SEC restraining commission of acts which would amount to a grave violation of its franchise; and 11. Failure of the corporation to file required reports in appropriate forms as determined by the SEC within the prescribed period.

CORPORATION Corporation, definition:

Majority of the incorporators are required to be residents of the Philippines.cralaw [c] Qualifications:

Within the context of Philippine law, a "corporation" is treated as All incorporators: 1. 2. 3. 4. an artificial being created by operation of law, having the right of succession and the powers, attributes and properties expressly authorized by law or incident to its existence [Sec. 2, Corporation Code]. [1] must be natural persons [2] must be of legal age A corporation or a partnership cannot be incorporators of a Philippine corporate entity. The only way a corporation or a partnership may become stockholder of a Philippine corporation is by acquiring a stock thereof but only after it shall have been duly incorporated.cralaw [d] Subscription requirement: All incorporators must subscribe to at least one (1) share of stock of the corporation being organized.cralaw Corporation, minimum subscription: [a] by special law or charter [b] by being organized under the corporation code Corporation, how organized: Philippine corporate entities are organized as follows: [a]Number of incorporators: Incorporators are required to be not less than five [5] but not more than fifteen [15]. [b] Residency requirement: The law requires that the total capital stock to be subscribed at the time of incorporation should at least be twenty five percent [25%] of the authorized capital stock of the corporation being organized.cralaw Corporation, minimum paid-up capital: The paid-up capital of a Philippine corporation must not be less than PhP5,000.00. Thus, it is required that at least twenty five percent [25%] of the subscribed capital stock should be fully paid up but the amount of which should not be less than said PhP5,000.00.cralaw

Corporation, classes: Corporations may be classified as follows: [a] Stock corporations - [1] capital stock divided into shares; and [2]authorized to distribute profits [b] Non-stock corporations - organized not for profit Corporation, kinds by method of creation:

Corporation, incorporation documents: The following incorporation documents are required: [a] Articles of Incorporation; [b] By-laws; [c] Treasurer's Affidavit which should state compliance with the authorized subscribed and paid-up capital stock requirements.cralaw [d] Bank Certificate that the paid-up capital portion of the authorized capital stock has been deposited with the issuing bank.cralaw There are "express lane" forms available at the Securities and Exchange Commission [SEC] for certain specified corporate business organizations.cralaw Corporation, where filed: The incorporation documents should be filed with the Securities and Exchange Commission [SEC] of the Philippines.cralaw Corporation, what should be stated: [a] the name of the corporation which must not be identical or deceptively or confusingly similar to any existing corporation; [b] the purpose of the corporation; [c] principal office of the corporation; [d] the term or life of the corporation which should not exceed fifty [50] years. This corporate lifetime may, however, be extended for another fifty [50] years but the extension must not be effected earlier than five [5] years before the expiration of its term.cralaw Corporation, limitation on foreign equity holdings: The equity requirements should be strictly observed and followed in certain areas of business where the constitution and the laws of the Philippines impose limitation on foreign holdings.cralaw Generally, however, foreigners may invest as much as one hundred percent [100%] equity in areas not covered by the Negative List under the Foreign Investments Act.cralaw The following provisions thereof may serve as guide: List A : Includes those reserved to Philippine nationals by the Constitution of the Philippines.chanrobles virtual law library [a] exploitation of natural resources [100% domestic equity] [b] operation of public utilities [60% domestic equity] [c] mass media [100% domestic equity] [d] educational institution [70% domestic equity] [e] labor recruitment [65% dom. equity]

[f] retail trade [100% dom. equity] [g] rural banking [100% dom. equity] List B : Includes those regulated by law.chanrobles virtual law library [a] defense-related activities [b] manufacture and distribution of dangerous drugs [c] nightclubs, bathhouse and similar activities [d] small and medium-sized domestic market enterprises with paidin equity capital of less than US$500,000.00 [e] export enterprises utilizing new materials from depleting natural resources with paid-in equity of less than US$500,000.00 Corporation, when corporate existence commences: The corporate life or existence of a Philippine corporation commences from the time a Certificate of Incorporation is issued in its favor by the Securities and Exchange Commission [SEC].cralaw Corporation, effect of non-use: [a] A corporation is deemed dissolved if the corporate charter granted in its favor expires by non-use for a period of at least two [2] years from issuance thereof.cralaw [b] A corporation is deemed suspended or its franchise revoked if it has been duly organized but it failed to operate for a period of five [5] years.cralaw Corporation, its organization: A Philippine corporation is organized by electing members to its Board of Directors, by electing the corporate officers thereof and/or by setting up an Executive Committee.cralaw Board of Directors, qualifications: The members of the Board of a Philippine corporation must possess the following qualifications: [1] owner or holder of at least one [1] share of capital stock; [2] majority of the members must be residents of the Philippines; [3] they must be elected by the owners/holders of at least the majority of the outstanding capital stock.cralaw Board of Directors, corporate acts: For validity and legality of the corporate acts of the Board of Directors, a meeting should be fully convened and the same must be attended by at least a majority of its members. Any and all corporate acts must be duly approved by a majority of the members of the Board except when otherwise provided by Philippine laws or by the By-laws of the corporation.cralaw Board of Directors, self-dealing rule:

A self-dealing transaction of a member of the Board of Directors becomes voidable except under the following circumstances: [1] When the presence of such director in the Board meeting is not necessary to constitute a quorum; [2] When his vote is not necessary for the approval of the contract or transaction [3] When the terms of the contract are fair and reasonable and had been previously approved by the Board of Directors. cralaw Corporate Officers, general rule: As a general rule, the corporate officers of a Philippine corporation consist of the President who is required to be a member of the Board of Directors; the Corporate Treasurer; and the Corporate Secretary who is required to be both a resident and a citizen of the Philippines. cralaw Other corporate officers may be designated under the By-laws of the corporation without getting afoul with the law. cralaw The only limitation imposed by law on corporate officers is that no person can be the President and the Corporate Secretary at the same time or the President and Corporate Treasurer at the same time. cralaw Corporate Officers, personal liability for damages: A corporate officer of a Philippine corporation becomes personally liable for certain corporate acts under the following circumstances: [1] When he willfully and knowingly votes or assents to patently unlawful acts; [2] When he is guilty of gross negligence or bad faith in the conduct of the corporate affairs; or [3] When he acquires personal or pecuniary interest which is in conflict with his duty as such officer.cralaw Stockholders, limited liability:

The liability of stockholders in Philippine corporations is limited only to the extent of their capital contribution thereto. Other properties, holdings or assets of stockholders are not within the reach of corporate creditors. To discourage abuse of this privilege, the Securities and Exchange Commission [SEC] imposes certain reportorial requirements which should be complied with on a regular basis. Stockholders, kinds of meetings: The kinds of meetings involving the stockholders of a Philippine corporation are as follows: [1] Regular meeting which is the equivalent of the annual stockholders' meeting required to be duly provided under the Bylaws; [2] Special meeting which may be called anytime as may be necessary Stockholders' meeting, requisites for validity: In order to be valid, the stockholders' meeting should comply with the following requisites: [1] A notice of such meeting must be served to the stockholders [2] A quorum, [i.e., majority of the outstanding capital stock of the corporation] must be fully established.cralaw [3] Any and all acts of the stockholders in a meeting duly called and constituted, are deemed valid if approved by a majority of the outstanding capital stock or at least two-thirds [2/3] vote in certain cases specified under the law. Corporation, dissolution: As a general rule, the corporate existence of a Philippine corporation may last up to fifty [50] years, renewable for another fifty [50] years. However, such lifetime may be shortened by a vote of 2/3 of the outstanding capital stock thereof through the process called dissolution.

Partnership, nature: Within the context of Philippine law, a "partnership" is treated as an artificial being created by operation of law with a legal personality separate and distinct from the partners thereof. It proceeds from the concept that persons may be allowed to pool their resources and funds to engage in the pursuit of a common business objective without necessarily organizing themselves into a corporation, upon which the law imposes a much higher form of regulation, limitation and standards. Philippine partnerships operate under the concept of unlimited liability and unless otherwise agreed upon by the partners, each one of them acts as manager and agent of the partnership and consequently, their acts bind the partnership. Partnership, governing law: Unlike corporations whose governing law is a special law - the Corporation Code of the Philippines, partnerships in the Philippines are governed by and covered under Articles 1767 to 1867 of the Civil Code of the Philippines [circa 1950]. These are the provisions of law which govern all aspects of partnerships - from their creation, formation, existence, operation and management to their dissolution and liquidation, including the obligations of the partners to one another, to the public or third persons and to the government. Partnership, how formed; registration requirement: Partnerships are required to be registered with the Securities and Exchange Commission [SEC]. Registration is done by filing the Articles of Partnership with the SEC. The Articles of Partnership set forth all the terms and conditions mutually agreed by the partners thereto. More specifically, the documents required are as follows:
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[1] Proposed Articles of Partnership; [2] Name Verification Slip; [3] Bank Certificate of Deposit; [4] Alien Certificate of Registration, Special Investors Resident Visa or proof of other types of visa [in case of foreigner]; [5] Proof of Inward Remittance [in case of non-resident aliens]. It bears noting that corporations are not allowed by law to become partners in a partnership. Partners, liability: As a general rule, the liability of partners in a partnership organization is unlimited in the sense that the partnership creditors may run after them for any and all of their assets and property in payment of the partnership debts. Should one of the partners defray all liabilities of the partnership, he is entitled to be reimbursed by the other partners for their respective shares therein. In the case, however, of limited partnerships, the law allows the limitation of the liability of certain partners to the extent of the amount contributed to the partnership. Partnership, dissolution: Philippine law allows the dissolution of partnership for any reason, provided such dissolution does not amount to a breach of contract or is prejudicial to third parties. The death of a partner or the unauthorized transfer of ownership of his share in the partnership [in case there is a limitation to this effect] results in the dissolution thereof. In other words, any change in the composition of the partnership, unless so allowed, will result in the dissolution thereof. Consequently, the remaining partners may form a new partnership with less or more partners.