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CORPORATION CODE OF THE PHILIPPINES

By Hector s De Leon Jr. PRIVATE CORPORATIONS 5. Owner/subscriber of If non-stock corporation:


ARE atleast one share
ATTRIBUTES OF A 1. must be a member
CORPORATION 1. Government- CORPORATION WITH 2. majority of the directors
owned/controlled MAJORITY OWNERS MUST must be a resident of the
1. It is an artificial being corporation BE FILIPINO Philippines
2. It is created by operation of 2. Quasi-public corporations
law
1. Corporation for METHODS OF VOTING
3. It has the right of
exploration,
succession
COMPONENTS OF development and 1. Straight voting
4. It has only the powers,
CORPORATION utilization of natural 2. Cumulative voting
attributes, and properties
resources for one candidate
expressly authorized by law or
1. Corporators 2. Public service 3. Cumulative voting
incident to its existence
2. Incorporators corporation for distribution
3. Stockholders 3. Educational
DISTINCTION BETWEEN A
4. Members corporation
PARTNERSHIP AND CORPORATE OFFICERS
4. Banking corporation
CORPORATION
THREE OTHER 5. Corporation
COMPONENTS engaged in retail 1. President
1. Manner of creation trade 2. Vice-president
2. Number of incorporators 1. Promoters 6. Rural banks 3. Secretary
3. Commencement of 2. Subscribers 7. Corporation 4. Treasurer
juridical personality 3. Underwriter engaged in 5. General manager
4. Powers coastwise shipping
5. Management CAPITAL STOCKS 8. Corporation REQUISITES OF BOAR
6. Effect of 1. Authorized capital stock engaged in the MEETING
mismanagement 2. Subscribed capital stock pawnshop business
7. Right of succession 3. Outstanding capital stock 9. Under the flag law 1. Meeting of directors
8. Extent of liability 4. Paid-up capital stock or trustees duly
9. Transferability of interest 5. Unissued capital stock assembled as a
CONTENTS OF ARTICLES
10. Term of existence 6. Legal capital board
OF INCORPORATION
11. Firm name 2. Presence of quorum
12. Dissolution 3. Decision of majority
CLASSES OF SHARES IN 1. Name of
13. Laws which govern of quorum or
GENERAL corporation
2. Purpose of majority of entire
CLASSIFICATION OF board
1. Par value /no par corporation
CORPORATIONS 4. Meeting at the
value 3. Principal office of
2. Voting/non- voting corporation place, time, manner
1. Stock corporation 3. Common/preferred 4. Term of corporation provided by the by-
2. Non-stock corporation # 5. Names, laws
4. Promotion share nationalities,
OTHER CLASSIFICATION OF 5. Share in escrow residences of QUORUM DEFINED
CORPORATION 6. Convertible stock incorporators
1. Number Of Person Who 7. Founder’s share 6. Number of directors 1. Number required for
Composed 8. Redeemable share 7. Names, presence of quorum
-Corporation 9. Treasury share nationalities, 2. Number required for
Aggregate residences of approval of
-Corporation Sole KINDS OF PREFERRED directors corporate acts
2.Religious or not SHARE 8. If stock corporation- 3. Number provided
-Ecclesiastical Amount of greater than
-Lay authorized stock majority
1. Preferred as to assets in
3.Charitable or not 9. if non-stock
case of liquidation
-Eleemosynary corporation-amount DISQUALIFICATION OF
2. Preferred as to dividends
-civil of capital and DIRECTORS/TRUSTEES
4.Which Country Names,
-Domestic KINDS OF PREFERRED nationalities,
-foreign SHARE AS TO DIVIDENDS residences of 1. Not convicted by
5.Legal right to corporate contributor final judgment of an
existence 1. Cumulative PS offense punishable
-De jure 2. Non-cumulative PS by imprisonment for
POWERS OF BOARD OF a period exceeding
-De facto 3. Participating PS DIRECTORS
6.Open to public or not 4. Non-participating PS six years
-Close 5. Cumulative-participating 2. Do not violate
1. governing body of corporation code for
-Open PS
the corporation prior 5 years from
7.Relation to other
2. binding effect of election
Corporation STEP IN THE CREATION OF stockholders action
-Parent or Holding CORPORATION 3. extent of judicial WHO CAN FILL VACANCIES?
-Subsidiary
review
8.True sense or Limited sense 1. Promotion
-True 2. Incorporation 1. Shareholders/memb
-Quasi QUALIFICATION OF ers*
3. Normal organization and DIRECTORS OR TRUSTEES
-Corporation by prescription commencement of 2. Member of directors
-corporation by estoppels If stock corporation:
business operations
9.Public or Private CONTRACT OF
-Public 1. must owned at least one CORPORATION WITH THE
-Private QUALIFICATION OF share
INCORPORATORS DIRECTOR OR TRUSTEES IS
2. share must be registered VALID IF:
PUBLIC CORPORATION in his name 1. That the presence of such
ARE: 1. Natural person 3. must continuously own director or trustee in the
2. Capacity to contract at least one share during board meeting in which the
1. Provinces 3. Residents of the his term contract was approved was
2. Cities Philippines 4. majority of directors not necessary to constitute a
3. Municipalities 4. Citizens of the must be resident of the quorum for such meeting;
4. Barangays Philippines Philippines
2. That the vote of such WHY CORPORATION 3. The required quorum in incorporation – B/T-
director or trustee was not ACQUIRES ITS OWN meetings of stockholders M & M/OCS-2/3
necessary for the approval of SHARE? or members and the 2. To elect directors or
the contract; trustees-M/OCS-M
manner of voting therein;
3. That the contract is fair and 1. Elimination of fractional 3. To remove directors
4. The form for proxies of
reasonable under the share stockholders and or trustees- M/OCS-
circumstances; and 2. Satisfaction of
4. That in case of an officer, members and the 2/3
indebtedness to 4. To call a special
the contract has been corporation manner of voting them;
previously authorized by the 5. The qualifications, duties meeting to remove
3. Payment of share of
board of directors. dissenting or and compensation of director or trustees-
withdrawing stockholders directors or trustees, M/OCS-M
CORPORATE POWERS AND 4. Other cases officers and employees; 5. To ratify a contract
CAPACITY 6. The time for holding the of a director or
CONDITIONS IN ACQUIRING annual election of trustees with the
1. To sue and be sued in its OWN SHARES corporation- M/OCS-
directors of trustees and
corporate name;
2. Of succession by its corporate the mode or manner of 2/3
name for the period of time stated 1. That its capital is not giving notice thereof; 6. To extend /shorten
in the articles of incorporation and thereby impaired 7. The manner of election corporate terms-
the certificate of incorporation; 2. That it be for a legitimate or appointment and the B/T-M & M/OCS-2/3
3. To adopt and use a corporate and proper purpose 7. To increase or
term of office of all
seal; 3. That there shall be decrease the capital
4. To amend its articles of unrestricted retained officers other than
directors or trustees; stock -B/T-M &
incorporation in accordance with earnings to purchase the
the provisions of this Code; same and its capital is 8. The penalties for M/OCS-2/3
5. To adopt by-laws, not contrary to thereby impaired violation of the by-laws; 8. To incur, create, or
law, morals, or public policy, and to 4. That the corporation acts 9. In the case of stock increase bonded
amend or repeal the same in in good faith and without corporations, the manner indebtedness- B/T-M
accordance with this Code; prejudice to the right of of issuing stock & M/OCS-2/3
6. In case of stock corporations, to
the creditor and certificates; and 9. To sell, lease,
issue or sell stocks to subscribers
stockholder 10. Such other matters as exchange,
and to sell stocks to subscribers
5. That the condition for mortgage, pledge
and to sell treasury stocks in may be necessary for the
corporate affairs warrant
accordance with the provisions of proper or convenient substantial assets-
it
this Code; and to admit members transaction of its B/T-M & M/OCS-2/3
to the corporation if it be a non- 10. To invest corporate
CLASSES OF DIVIDENDS corporate business and
stock corporation; funds in other
7. To purchase, receive, take or affairs.
business- B/T-M &
grant, hold, convey, sell, lease, 1. Cash dividend
pledge, mortgage and otherwise 2. Property dividend KINDS OF MEETING M/OCS-2/3
deal with such real and personal 3. Stock dividend 11. To issue stock
property 4. Optional dividend 1. Regular dividends-Q-M &
8. To enter into merger or 5. Composite dividend 2. Special M/OCS-2/3
consolidation with other 6. Scrip dividend 12. To enter into a
corporations as provided in this 7. Bond dividend REQUISITES OF VALID
management
Code; 8. Cumulative MEETINGS
9. To make reasonable donations, contract- Q-M &
dividend
10. To establish pension,
1. It must be held at the M/SH-M/2/3
9. Liquidating dividend
retirement, and other plans for the 13. To adopt by-laws-
benefit of its directors, trustees,
10. Preferred dividend proper place
2. It must be held at the OCS-M
officers and employees; and 14. To amend, repeal or
11. To exercise such other powers VALIDITY OF BY-LAWS stated date and at the
adopt new by-laws-
as may be essential or necessary appointed time or at a
to carry out its purpose or purposes B/T-M & OCS-M
1. They must not be reasonable time
as stated in the articles of 15. To delegate to
contrary to existing law 3. It must be called by t
incorporation. board of director
and inconsistent with the proper person
code 4. There must be a previous the power to amend
2. They must not be notice or repeal the by-
RELATIVE POWERS OF
contrary to morals and 5. There must be a quorum laws-OCS-2/3
CORPORATION
public policy 16. To revoke the
3. They must not impair REQUISITES OF NOTICE OF preceding power
1. Any act not prohibited obligation of contract MEETINGS delegated to the
2. Only powers those 4. They must be general
granted board of directors-
and uniform in their 1. Must be issued by one
operation and not OCS-M
who has authority to 17. To fix the issued
CLASSIFICATION OF directed against
CORPORATE POWERS particular individual issue it price of no par
1. Those expressly grated or 5. They must be consistent 2. Must be In writing value share-Q-M or
authorized by law with the articles of 3. Must state the date, OCS-M
2. Those that is necessary to incorporation time, place of the 18. To effect or amend
the exercise of the express or 6. They must be reasonable meeting the plan of merger
incidental power 4. Must state the business or consolidation-
3. Those incidental to its CONTENTS OF BY-LAWS to be transacted thereat B/T-M & M/OCS-2/3
existence 5. Must be sent at a certain 19. To dissolve the
1. The time, place and time before the corporation- B/T-M
IMPLIED POWERS OF
manner of calling and scheduled meeting & M/OCS-2/3
CORPORATION
conducting regular or 6. Must comply with any 20. To adopt a plan of
special meetings of the other requirements distribution of
directors or trustees; prescribed by laws/by- assets of NSC- B/T-
1. Acts in the usual course
of business 2. The time and manner of laws M & M-2/3
2. Acts to protect the debts calling and conducting
owing to a corporation MATTERS AT WHICH THE PRESIDING OFFICER AT
regular or special
3. Embarking in different LAW REQUIRES SPECIFIC MEETINGS
meetings of the
business NUMBER OF VOTES
stockholders or
4. Acts in part or wholly to 1. President/chairman/vice-
members; 1. To amend the
protect or aid employees chairman
5. Acts to increase business articles of
2. Stockholder or member acquisition of unissued purposes at a fair valuation equal incorporation, to
in a temporary capacity share to the par or issued value of the original, unissued
3. Stockholder or member stock issued;
 By purchase from the stock
3. Labor performed for or services
chosen corporation of treasury actually rendered to the 2. By sale of treasury
MANNER OF VOTING share corporation; stock after
 By transfer from a 4. Previously incurred indebtedness incorporation for
1. Directly of the corporation;
previous stockholder of money, property, or
2. Indirectly 5. Amounts transferred from
the outstanding share or service
 By means of proxies unrestricted retained earnings to
existing subscription to stated capital; and 3. By subscription to
 By a trustee under a
share 6. Outstanding shares exchanged new stock
voting trust agreement for stocks in the event of 4. By making a stock
 By executors, reclassification or conversion. dividend
If non-stock corporation
administrators, receivers,  By contract with the SOURCE OF CORPORATE
or other legal CAPITAL MODES OF STOCK
corporation the modes of
representative appointed TRANSFER
entering into which vary 1. Funds furnish by
by court
according to the charter shareholder 1. Endorsement and
2. Borrowings delivery of stock
3. Profits and stock certificate
CONSIDERATION FOR
HOW PARTICIPATION IN dividends 2. Transfer in a
STOCKS
CORPORATION ACQUIRED separate instrument
DIFFERENT MODE BY 3. Judicial or extra-
1. Actual cash paid to the
If stock corporation corporation; SHARE MAY ISSUED judicial settlement
 By subscription contract 2. Property, tangible or intangible, of the estate
with an existing actually received by the 1. By subscription
corporation for the corporation and necessary or before and after
convenient for its use and lawful