CORRESPONDING NUMBER OF VOTES / APPROVAL OF THE
CORPORATE TRANSACTIONS
Government-owned or
controlled corporation
Classes of Corporation
Classification of Shares
Number and Qualifications
of Incorporators
Corporate term
Revival of Corporate
Existence
Authorization of Capital
Stock
Contents of Articles of
Incorporation
Amendment of Articles of
Incorporation
TRANSACTIONS
STOCK CORPORATION NON-STOCK CORPORATION
When the government Must have members and must
directly or indirectly not distribute any part of
owns or controls at least their income to said members.
fifty-one (51) percent of
its capital stock.
Corporations which have No part of its income is
capital stock divided into distributable as dividends to
shares and are authorized its members, trustees, or
to distribute the officers.
dividends or allotments of
surplus profits.
The right to vote in Stock The right to vote in Non-
Corporations – Only stock Stock Corporations – The
actually issued and voting rights attach to the
outstanding may be voted, membership, only those who
each share of stock is are actual members with
entitled to vote. voting rights should be
counted.
 Not more than fifteen Not more than (15) in number.
(15) in number, may
organize a corporation
for any lawful purpose
or purposes.
 Each incorporator of a
stock corporation must
own or be a subscriber
to at least one (1)
share of capital stock.
 Shall have perpetual
existence and unless
the corporation, upon a
vote of its
stockholders
representing majority
of its outstanding
capital stock.
 Notifies the Commission
Upon approval by the
Commission, the
corporation shall be
deemed revived and a
certificate of revival of
corporate existence shall
be issued.
 Not required to have a
minimum capital stock.
 Unless, provided by
special law.
The amount of its The amount of its capital,
authorized capital stock, the names, nationalities, and
number of shares and its residence addresses of the
par value, names, contributors, and amount
nationalities, and contributed by each.
residence address of
original subscribers,
amount subscribed and
paid, and a statement.
 Must be approved by a The vote or written assent of
majority vote of the majority of the trustees and
board of directors or at least two-thirds (2/3) of
trustees. the members.

Authority of the Board of
Directors or Trustees
Election of Directors or
Trustees
Quorum for the meeting of
Directors and Trustees
Removal of Directors or
Trustees
Vacancies in the Office of
Director or Trustees
Compensation of Directors
or Trustees
Dealings of directors,
trustees or officers with
the corporation -
corporations vested with
public interest
 The vote or written
assent of the
stockholders
representing at least
two-thirds (2/3) of the
outstanding capital
stock.
 Exception only of some powers expressly granted by law
to stockholders or members.
 The board of directors or trustees has the sole
authority to determine policies, enter into contracts,
and conduct the ordinary business of the corporation
within the scope of its charter.
 The stockholder may A majority of the members
vote such number of entitled to vote.
shares for as many
persons as there are
directors to be
elected.
 Cumulate such shares
and give on candidate
as many votes as the
number of directors to
be elected multiplied
by the number of the
shares owned.
 Distribute them on the
same principle among as
many candidates as may
be seen.
 The owners of majority
of the outstanding
capital stock.
Majority of the directors Quorum for the meeting of
or trustees Directors and Trustees
Vote of the stockholders Vote of at least two-thirds
representing at least two- (2/3) of members
thirds (2/3) of the
outstanding capital stock
May be filled by vote of
at least a majority of the
remaining directors or
trustees
 fixed by the
corporation’s by-laws
 stockholders
representing at least a
majority of the
outstanding capital
stock, vote to grant
the same
Material contracts are
approved by at least two-
thirds (2/3) of the entire
membership of the board,
with at least a majority
of the independent
directors voting to
approve the material
contract
Ratification by Vote of the stockholders Vote of at least two-thirds
stockholders on self- representing at least two- (2/3) of the members in a
dealing directors, or thirds (2/3) of the meeting
trustees, or officers outstanding capital stock

Ratification by the Vote of the stockholders

stockholders where a representing at least two-
director violates the thirds (2/3) of the
doctrine of corporate outstanding capital stock
opportunity
Executive committee May act by majority vote
of all members
Power to extend or shorten  Approval by a majority  Approval by a majority
corporate term vote of the board of vote of the board of
directors trustees
 Ratification by the  At least 2/3 of the
stockholders members
representing at least
2/3 of the outstanding
capital stock
Increase or decrease of  Approved by a majority
authorized capital stock vote of the board of
directors
 Ratification by the
stockholders holding at
least 2/3 of the
outstanding capital
stock
 Approved by the SEC
Increase or decrease in Prior approval of the Approved by a majority of the
capital stock or the Commission, and where board of trustees and at
incurring, creating or appropriate, of the least two-thirds (2/3) of the
increasing of any bond Philippine Competition members
indebtedness Commission
Power to deny pre-emptive Approval of the
right stockholders representing
2/3 of the outstanding
capital stock
Sale or other disposition  Approval by the Vote of at least 2/3 of the
of assets majority vote of its members
board of directors or
trustees
 Ratification by the
vote of the
stockholders
representing 2/3 of the
outstanding capital
stock
Power to invest corporate  Approval of majority of Ratification of at least 2/3
funds in another the board of directors of the members at a meeting
corporation or business or or trustees (if only to
for any other purpose accomplish its primary
purpose)
 Ratification by the
stockholders
representing at least
2/3 of the outstanding
capital stock
Declaration of Cash Declared by majority of
Dividends the quorum of the board of
directors
Declaration of Stock Vote representing not less
Dividends than 2/3 of outstanding
capital

Power to Enter into  Approval by the  Ratification of at least a

Management Contract majority of the quorum majority of the members
of the board of  Approval by at least two-
directors thirds (2/3) of the
 Ratification by the members
stockholders owning at
least a majority of the
outstanding capital
stock
 Approval by the
stockholders of the
managed corporation
owning at least two-
thirds (2/3) of the
total outstanding
capital stock entitled
to vote
Adoption of Bylaws Vote of the stockholders Vote of at least a majority
representing at least a of the members
majority of the
outstanding capital stock

Amendment to Bylaws  Board of Directors, by  Board of Trustees, by a

a majority vote majority vote thereof, and
thereof, and the owners at least a majority of the
of at least a majority members
of the outstanding  Owner of 2/3 of the
capital stock members may delegate to
 Owner of 2/3 of the the board of trustees the
outstanding stock may power to amend
delegate to the board
of directors the power
to amend
Right to present and vote Every legal owner of Every member of non-stock
in all corporate meetings shares corporation

Constitution of Quorum for A majority of the directors or trustees, as fixed in the

the transaction articles of incorporation. Majority means fifty percent
plus one (50%+1)
Valid Corporate Act Every decisions by at least a majority of the directors or
trustees constituting a quorum shall be valid as corporate
act
Who shall provide at The chairman or in his absence, the president shall
meetings preside at all meetings of the directors or trustees as
well as the stockholders or members, unless bylaws provide
otherwise.
Right to vote of Secured The Stockholder-grantor
Creditors and shall have the right to
Administrators attend and vote at
meetings of stockholders

Executors, administrators, receivers, and other legal

representatives of the stockholders or members without
need of any written proxy.
Voting in Case in Joint All the co-owners shall be
Ownership of Stock necessary in voting shares
of stock owned by two (2)
or more persons, unless
there is a written proxy
signed by all the co-
 owners, authorizing one or
some of them or any other
person to vote such
shares/s.
Voting right for treasury There are no voting rights for treasury shares as such
shares shares remain in treasury
Manner of voting; Proxy  Shareholders and members may vote in person or by proxy
in all meetings of stockholders or members
The stockholders or members of corporation may also vote
through remote communication or in absentia.
Voting Trusts One or more stockholders
may create a voting trust
for the purpose of
conferring upon a trustee
or trustees the right to
vote and other rights
pertaining to the shares
for a period not exceeding
5 years.
Filing a derivative suit The minority shareholder
who is suing for and on
behalf of the corporation
must allege in his
complaint before the
proper forum that he is
suing on a derivative
cause of action on behalf
of the corporation and all
the other shareholders
similarly situated who
wish to join.
Subscription contract Necessarily involves the
corporation as one of the
contracting parties since
the subject matter of the
transaction is property
owned by the corporation-
its sale of stock.
Consideration for stocks  Stocks shall not be
issued for a
consideration less than
the par or issued price
thereof.
 The valuation thereof
shall be determined by
the stockholders or the
board of directors,
subject to the approval
of the commission.
Certificate of stocks and  The capital stock shall
transfer of shares be divided into shares
for which certificates
signed by the president
or vice president,
countersigned by the
secretary and sealed
with the seal of the
corporation shall be
issued in accordance to
bylaws.
 Shares of Stock may be
transferred by delivery
of the certificate/s
indorsed by the owner.
Issuance of Stock Stock certificates shall
Certificates be issued to a subscriber
until the full amount of
the subscription together
with the interest and
expenses. If any is due,
has been paid.
Liability of Directors for
watered stocks

Interest on Unpaid Subscribers to stock shall

Subscriptions
Payment of Balance of
Subscription
Delinquency Sale
Effect of Delinquency
Rights of Unpaid Shares,
Non-delinquent
If Total Assets/
Liabilities are less than
600,000 Php determined by
department of finance
be liable to the
corporation for interest
on all unpaid
subscriptions.
The board of directors at
any time, declare due and
payable to the corporation
unpaid subscriptions and
may collect the same or
such percentage thereof,
in either case, with
accrued interest, if any,
as it may seem necessary.
The board of directors
may, by resolution, order
the sale of delinquent
stock and shall
specifically state the
amount due on each
subscription plus all
accrued interest, and the
date, time and place of
the sale.
The holder of a delinquent
stock is not included in
the determination of
quorum because he is not
entitled to vote; however,
he is entitled to his
right to dividends.
Holders of subscribed
shares not fully paid
which are not delinquent
shall have all the right
of a stockholder.
The Financial statements If Total Assets/ Liabilities
may be certified under are less than 600,000 Php
oath by the Treasurer and determined by department of
the president finance

Plan of Merger or The Board of directors or trustees of each corporation

Consolidation shall approve a plan of merger or consolidation
Plan of Merger or Consolidation
the affirmative vote of At least 2/3 of members is
stockholders representing necessary for the approval of
2/3 of outstanding capital plan.
stock.

Articles of Merger or Shall be executed by each Articles of Merger or

Consolidation of the constituent Consolidation
corporations and to be
signed by the president,
Vice president and the
secretary or its assistant
of each corporation.
Right to Vote Unless so Limited, Broadened,
or denied, each member,
regardless of class is
entitled to (1) one Vote.

Election and Terms of The number of trustees shall

Trustees be fixed in the articles of
incorporation or by laws may
not be more than 15

Plan of Distribution of The Board of trustees shall,

Assets by majority vote, adopt a
resolution recommending a
plan of distribution.

Each member entitled to vote

shall be given a written
notice setting forth the
proposed plan of distribution
or a summary thereof and the
date.
Such plan of distribution
shall be adopted upon
approval of at least (2/3) of
members having voting rights
present or presented by proxy
at such meeting.
CLOSE CORPORATION
Applicability of title All the Corporations stock of all classes, exclusive of
treasury shares, shall be held of record by not more than
specified number of people not exceeding 20.
Classification of Each of whom may be voted for and elected solely by a
directors into one or more particular class of stock.
class
The Business of the Shall be managed by the stockholders of the corporation
corporation rather than by a board of directors.
Articles of incorporation  Classification of
directors into one (1)
or more classes, each
of whom may be voted
and selected solely by
a particular class of
stock
 No meeting of
stockholders need be
called to elect
directors
 Specified officers or
employees shall be
elected or appointed by
stockholders
 Must appear in the
Validity of Restrictions articles of
on Transfer of Shares incorporation and
certificate of stock
 Granting the
corporation the option
to purchase the shares
of the transferring
stockholder
Agreements by Stockholders In exercising any voting
right, the shares held by
the two (2) or more
stockholders shall be
voted as provided or
agreed.

Amendment of Articles of
Incorporation
Deadlocks
Withdrawal of Stockholder
or Dissolution of
Corporation
Board of Trustees
(Educational corporations)
Articles of Incorporation
(Religious corporations)
Submission of the Articles
of Incorporation
(Religious corporations)
Acquisition and Alienation
of Property
Religious Societies
Authorization for Capital
Stock for One Person
Corporation
Display of Corporate Name
Treasurer, Corporate
Secretary, and Other
Officers
Voluntary Dissolution
Where No Creditors are
Vote of at least two-
thirds (2/3) of the
outstanding capital stock,
whether with or without
voting rights
The votes required for a corporate action cannot be
obtained, with the consequence that the business and
affairs of the corporation can no longer be conducted.
Any stockholder may compel
the corporation to
purchase shares held at
fair value which shall not
be less than the par or
issued value
 Shall not be less than (5)
nor more than fifteen (15)
 Trustees shall be in
multiples of five (5)
The chief archbishop, bishop,
priest, minister, rabbi, and
church must file with the
Commission articles of
incorporation
 Verified by affidavit or
affirmation
 Accompanied by a copy of
the commission,
certificate of election or
appointment that is duly
certified to be correct by
any notary public.
 Notice of the application
for leave to sell or
mortgage must be made
through publication or as
directed by Court
 The application must be
made by petition and duly
verified by the chief
archbishop, bishop,
priest, minister, and
rabbi.
 At least two-thirds (2/3)
of its membership has
given written consent or
has voted to incorporate
 The names, nationalities,
and residence addresses of
the trustees, not less
than five (5) nor more
than fifteen (15) elected
by the religious society.
Not required to have a
minimum capital stock
Shall indicate letters
“OPC”
The stockholder/treasurer shall undertake in writing to
faithfully administer the One Person Corporation’s
funds to be received as treasurer, and to disburse and
invest the same according to the articles of
incorporation as approved by the commission. The bond
shall be renewed every two (2) years or as often as may
be required
A resolution adopted by Majority of the members of a
the vote of the meeting to be held upon the
Affected stockholders owning at call of the directors or
least majority of the trustees.
outstanding capital stock.
A resolution to dissolve must be approved by majority vote
of the board of directors or trustees.
Voluntary Dissolution The affirmative vote of
Where Creditors are the stockholders
Affected; Procedure and representing at least two-
Contents of Petition. thirds (2/3) of the
outstanding capital stock
or at least two-thirds
(2/3) of the members at a
meeting of its
stockholders or members
called for that purpose.

The petition shall be signed by a majority of its board of

directors or trustees.
Contempt Any person who, without justifiable cause, fails or
refuses to comply with any lawful order, decision, or
subpoena issued by the commission shall after due notice
and hearing, be held in contempt and fined in an amount
not exceeding Thirty thousand pesos.
Administrative Sanctions Imposition of a fine ranging from five thousand pesos of
two million pesos, and not more than one thousand pesos
for each day of continuing violation but in no case to
exceed two million pesos.
Unauthorized use of The unauthorized use of a corporate name shall be punished
corporate name; penalties with a fine ranging from ten thousand pesos to two hundred
thousand pesos.
Violation of A person shall be By a foreign court or
Disqualification disqualified from being a equivalent foreign regulatory
provision; penalties director, trustee or authority fir acts violations
officer of any or misconduct similar to
corporation if, within those enumerated in paragraph
five years prior to the a and b
election or appointment as
such.
Violation of duty to  The unjustified failure A foreign corporation
maintain records, to allow or refusal by the lawfully doing business in
their inspection or corporation, or by the Philippines shall be
reproduction; penalties those responsible for bound by all laws, rules and
keeping and maintaining regulations applicable to
corporate records. domestic corporations of the
same class.
 Reproduction of records
shall be punished with
a fine ranging from ten
thousand pesos(Php
10,000) to two hundred
thousand pesos (Php
200,000) at the
discretion of the
court, taking into
consideration the
seriousness of the
violation and its
implications.
Willfull Certification of Any person whO willfully certifies a report required under
incomplete, Inaccurate, this code, knowing that the same contains incomplete,
fales or misleading inaccurate, false, or misleading information or
statemen, or statements, shall be punished with a fine ranging from
reports;Penalties. twenty thousand pesos (Php 20,000) to two hundred thousand
pesos (Php 200,000).
Independent Auditor An independent auditor who, in collusion with the
Collusion; Penalties corporation’s directors or representatives, certifies the
 corporation’s financial statements despite its
incompleteness or inaccuracy, its failure to give a fair
and accurate presentation of the corporation’s condition,
or despite containing false or misleading statements,
shall be punished with a fine ranging from Eighty thousand
pesos (P80,000.00) to Five hundred thousand pesos
(P500,000.00). When the statement or report certified is
fraudulent, or has the effect of causing injury to the
general public, the auditor or responsible officer may be
punished with a fine ranging from One hundred thousand
pesos (P100,000.00) to Six hundred thousand pesos
(P600,000.00).
Obtaining Corporate Those responsible for the formation of a corporation
Registration Through through fraud, or who assisted directly or indirectly
Fraud; Penalties therein, shall be punished with a fine ranging from Two
hundred thousand pesos (P200,000.00) to Two million pesos
(P2,000,000.00). When the violation of this provision is
injurious or detrimental to the public, the penalty is a
fine ranging from Four hundred thousand pesos
(P400,000.00) to Five million pesos (P5,000,000.00).
Fraudulent Conduct of A corporation that conducts its business through fraud
Business; Penalties shall be punished with a fine ranging from Two hundred
thousand pesos (P200,000.00) to Two million pesos
(P2,000,000.00). When the violation of this provision is
Page 66 of 73 injurious or detrimental to the public, the
penalty is a fine ranging from Four hundred thousand pesos
(P400,000.00) to Five million pesos (P5,000,000.00)
Acting as Intermediaries – A corporation used for fraud, or for committing or
for Graft and Corrupt concealing graft and corrupt practices as defined under
Practices; Penalties. pertinent statutes, shall be liable for a fine ranging
from One hundred thousand pesos (P100,000.00) to Five
million pesos (P5,000,000.00).
Engaging Intermediaries A corporation that
for Graft and Corrupt appoints an intermediary
Practices; Penalties who engages in graft and
corrupt practices for the
corporation’s benefit or
interest shall be punished
with a fine ranging from
One hundred thousand pesos
(P100,000.00) to One
million pesos
(P1,000,000.00).
Jessa Ailaine D. Evangelio February 10, 2020
BSMA- MB 2 RFBT