TITLE XI NONSTOCK CORPORATIONS

Non stock corporation - one where no part of its income is distributable as dividends to
its members, trustees, or officers
Purposes:
1. Charitable
2. Educational
3. Professional
4. Cultural
5. Fraternal
6. Literary
7. Scientific
8. Social
9. Civic service
10. Like purposes
a. Trade
b. Industry
c. agricultural
11. like chambers or any combination
Powers to make profits and engage in business
1. incidental profits – any profit derived by a non-stock corporation from any authorized
activity cannot be distributed as dividends to its members. It shall be used for the
furtherance of the purpose which the corporation was organized
2. obtained from investment of accumulated funds – a non stock corporation may not
lawfully engage in any business activity for profit as it would run counter to its very
nature s non profit entity however it may invest its accumulated funds for profit purposes
provided that such power must be included in its articles of incorporation in order that the
investment may not be considered ultra vires
Members
1. right to vote – entitled to one vote only
a member may vote by proxy and the by laws may authorize voting in remote or in
absentia
2. non transferability of membership – membership is personal and non-transferable,
unless the articles of incorporation and or by laws so provide
3. termination – for cause provided in the articles of incorporation or by laws. The effect of
termination is the extinguishment of all rights of a member unless otherwise provided by
articles of incorporation or by laws
Trustees and officers
1. fixed in the article of incorporation or by laws which may or may not be more than 15
2. they shall hold office for not more than 3 years until their successors are elected and
qualified
trustees elected to fill vacancies occurring before the expiration of a particular term shall
hold office only for the unexpired period
 3. Except with respect to independent trustees of nonstock corporations vested with public
interest, only a member of the corporation shall be elected as trustee
Meetings
1. The bylaws may provide that the members of a nonstock corporation may hold
their regular or special meetings at any place even outside the place where the principal
office of the corporation is located
2. proper notice is sent to all members indicating the date, time and place of the meeting
3. the place of meeting shall be within Philippine territory
Distribution of assets
1. all its creditors shall be paid
2. assets held subject to return on dissolution shall be delivered back to their givers
3. assets held for charitable, religious purposes etc without a condition for their return on
dissolution, shall be conveyed to one or more organizations engaged in similar activities
as dissolved corporation
4. all other assets shall be distributed to members, as provided for in the Articles or by-laws
Plan of distribution
1. BOT by majority vote, adopt a resolution
2. Each member entitled to vote shall be given a written notice
3. The plan of distribution shall be adopted upon approval of at least 2/3 of the members
having voting rights present or represented by proxy at such meeting