PAGE 1

THE REVISED
CORPORATION
CODE
REPUBLIC ACT NO. 11232

After 38 years of effectivity of the Philippines' old Corporation Code, the Revised Corporation
Code was signed into law on February 20, 2019. Below are the significant changes introduced
by the new Code.
CLASSIFICATION OF SHARES
Designating different types of shares, with varying
rights, privileges and restrictions is still allowed.
However, Founders' shares given the exclusive right to
vote and be voted for are not allowed to exercise that
right in violation of the Anti-Dummy Law and the
Foreign Investments Act. As for Redeemable Shares,
their redemption shall now be subject to any rules and
regulations issued by the SEC, in addition to terms and
restrictions in the Articles of Incorporation and
certificate of stock.

INCORPORATORS
Any person, partnership, association, or corporation, singly or jointly
with others, not exceeding 15, may now be Incorporators.
Incorporators are those persons who originally form a corporation and
are the first stockholders thereof. No minimum number is required, and
majority of them need not be Philippine residents. Previously, a
minimum of 5 natural persons is necessary to create a corporation.

Since there is no longer any minimum number required for

incorporators, any single natural person is now allowed to form a
corporation by him/herself, known under the new Code as a One
Person Corporation.

CORPORATE TERM

Perpetual corporate existence is now allowed. Those

whose corporate existence were limited by the 50-year
rule in the old Code will automatically have perpetual
existence, unless they notify the SEC of their desire to
stick to the limited 50-year term.

CHANGES IN CORPORATE TERM

If a corporation wishes to change its corporate term, it may amend
its articles of incorporation at least 3 years prior to the expiration of
its term. Previously, such change should be made at least 5 years
prior to the expiration.

If the term has already expired, the corporation may now ask the
SEC to revive their corporate existence, which option was not
present in the old Code. If the same is approved, the SEC will issue a
certificate of revival giving it perpetual existence, unless it requests
for a limited term. However, no revival is allowed for companies
under the supervision of other government agencies, such as banks
& insurance & trust companies, unless the revival is first approved by
the appropriate government agency.

MINIMUM CAPITAL STOCK

Though There really has been no previously set minimum
amount for a corporation's authorized capital stock, it was
however required to have a minimum subscription of 25% of the
total capital stock, 25% of which must be paid up upon
subscription. The minimum amount for such paid up capital
should not be less than P5,000.

Under the new Code, no such minimum requirements are

provided, subject however to any contrary provision in other
laws.

ARTICLES OF INCORPORATION
The new Code now recognizes that the Articles of
Incorporation may be authenticated, instead of merely being
acknowledged before a notary public. Its required contents
are similar to those required under the old Code, however, it
may now include an arbitration agreement to govern intra-
corporate disputes and relations.
PAGE 2

THE REVISED
CORPORATION
CODE
REPUBLIC ACT NO. 11232
REQUIREMENTS FOR INCORPORATION
Though generally, the same documentary requirements are needed to
incorporate, the new Code provides that the Articles of Incorporation may
be filed with the SEC, and any application for amendments thereto, in an
electronic document. The old Code did not have any similar provision
regarding electronic documents.

In addition to the articles of incorporation, another document previously

required was the treasurer's affidavit attesting that the minimum
amounts of subscribed and paid-up capital have been met. Since the new
Code no longer requires such minimum amounts, the treasurer need not
issue such affidavit. In lieu of this, the Articles should just indicate that the
named treasurer certifies that the information in the Articles regarding
authorized capital stock, and the subscription and paid-up amounts have
been duly received for and in behalf of the corporation.

CORPORATE NAME
Previously, the old Code did not allow corporate names which are
identical, similar, or confusingly similar with another corporate
name, among others. Under the new Code, names which are "not
A CORP.
distinguishable" from reserved corporate names or names of
existing corporations.Names are not distinguishable even if they
contain the word corporation, company, incorporated, limited or
any abbreviation thereof, or any punctuation, article conjunction,
contraction, preposition or abbreviation, or is of a different tenses,
with spacing, or with a number of the same word or phrase.

POWER OF SEC OVER CORPORATE NAMES

Previously, the SEC only had the power to approve or deny proposed
corporate names and any change thereto. Under the new Code, the
SEC the power to summarily order a corporation to cease and desist
from using a name it finds to be in violation of the requirements of
the law. It may also now cause the removal of all visible signs,
marks, ads, labels, prints and other materials bearing the
disapproved name.

If the corporation does not obey the order of the SEC, the SEC may
hold it and its responsible officers or directors in contempt, and/or
hold them administratively , civilly, and/or criminally liable, and/or
revoke its registration altogether.

THE PROCESS OF INCORPORATION

The old Code did not provide for a specific process to be followed
when incorporating a company. At most, it only stated when
corporate existence commences. Under the new Code, a specific
process has been laid down. First, the incorporators shall submit their
Name INC. intended corporate name to the SEC for verification. Once approved,
AOI they shall then submit their articles of incorporation and by-laws to
By-Laws
the SEC. Once the SEC determines that the documents submitted are
fully compliant, then it shall issue the certificate of incorporation.
Upon issuance of such certificate, its corporate existence begins.

NON-USE OF CORPORATE CHARTER

Under the Old Code, a new corporation must formally organize and
commence business or construction of its works within 2 years from
incorporation, otherwise, it shall be deemed dissolved.

Under the new Code, A new corporation has 5 years from date of
incorporation to commence business operations. If its fails to do so
within the said 5-year period, its certificate of incorporation will be
deemed revoked at the end of the 5-year period.

CONTINUOUS INOPERATION
It may be possible that a corporation, even after it has initially
commenced business operation, may become inoperative. Under the old
Code, if it becomes inoperative continuously for 5 years, then the SEC
may revoke its certificate of incorporation.

Under the new Code, the corporation may be placed by the SEC under
delinquent status, after notice and hearing, for a period of 2 years, to
allow it to resume operations. This will be lifted once the corporation
resumes business, but if it does not resume operations, then the SEC may
revoke its certificate of incorporation.
PAGE 3

THE REVISED
CORPORATION
CODE
REPUBLIC ACT NO. 11232
BOARD OF DIRECTORS & TRUSTEES
A corporation exercises its powers trough a board of directors, if it is a
stock corporation, or through a board of trustees, if it is a non-stock
corporation. Previously, directors hold office for a term of 1 year, and
majority of whom should be Philippine residents. Trustees hold office in
a way that 1/3 of the first board will hold office for 1 year, then
subsequent ones will hold office for 3 years.

Under the new Code, directors hold office for a period of 1 year, while
trustees hold office for 3 years. Majority of the Board is also no longer
required to be Philippine residents.

INDEPENDENT DIRECTORS
Previously, the old Code did not require the appointment of independent
directors, and was only required for specific corporations such as those
falling under the Securities Regulation Code, and banks and institutions
under the supervision of the BSP. Independent Directors are persons who,
apart from shares and fees from the corporation, are independent of
management and free from any business or other relationship which could
A CORP. materially interfere with independent judgement in carrying out their
responsibilities as director.

Under the new Code, Corporations vested with public interest should have a
board with independent directors constituting at least 20% of the board, to
be elected by their shareholders. Corporations vested with public interest are
corporations engaged in registered securities activities, publicly listed
companies, public companies which are those with assets of at least
P50,000,000 and with 200 or more holders of shares, each with at least 100
shares, banks and quasi-banks, NSSLAs, pawnshops, money service
companies, pre-need, trust and insurance companies, other financial
intermediaries, and other corporations vested with similar public interests.

ELECTION OF DIRECTORS & TRUSTEES

Previously, the old Code provided for the manner of electing directors
or trustees, without any mention of nominations. Under the new
Code, Directors/Trustees are first nominated by the
stockholders/members, and the nominees receiving the highest
number of votes will be elected. Generally, the same process for
elections still governs, however, remote communication or voting in
absentia may now be done, if allowed in the by-laws or authorized
by majority of the board. These 2 new modes for voting is not
available for corporations vested with public interest.

FAILURE TO HOLD ELECTIONS OF DIRECTORS &

TRUSTEES
The old Code did not provide for a specific process to be followed in case
no elections are held or the required majority of the
stockholders/members were not present during the elections. Under the
new Code, even if no elections are held, the meeting will be adjourned
and the same will be reported to the SEC within 30 days from the date of
the elections. The report should include a new specific date when the
elections will be held which should not be more than 60 days from the
first date. In case no date was selected, the SEC may schedule it for the
corporation, and issue other orders in relation thereto.

CORPORATE OFFICERS
Under the Old Code, the directors were only required to elect a
president, who must be a director, a treasurer who need not be a
director, and a corporate secretary who must be a resident citizen of
the Philippines. No other officers are required to be elected, unless
there are others listed in the by-laws.

Under the new Code, the same officers are required, however, the
treasurer is now required to be a resident of the Philippines. In
addition to these officers, a compliance officer must also be elected
for corporations vested with public interest.

DEATH & RESIGNATION OF DIRECTOR,

TRUSTEE & OFFICER
Though the old Code required that any death, resignation or any other
circumstance causing a director, trustee, or officer to cease holding office
must be reported to the SEC, no period was provided therefor. Under the
new Code, such vacancy should be reported to the SEC within 7 days
from the time the secretary learns of such death, resignation, etc.
PAGE 4

THE REVISED
CORPORATION
CODE
REPUBLIC ACT NO. 11232
DISQUALIFICATIONS OF DIRECTORS,
TRUSTEES, & OFFICERS
Under the old Code, only those who have been convicted by final
judgment of an offense punishable by imprisonment of more than 6
years under the said Code, within 5 years from election or appointment,
are disqualified.

Under the new Code, additional disqualifications were included, such as

those who have been found, within the same 5-year period, to have
violated the Securities Regulation Code, made administratively liable for
offenses involving fraudulent acts, and found by a foreign court to have
violated or engaged in similar misconduct. In addition, the SEC and the
Phil. Competition Commission may impose additional
qualifications/disqualifications.

REMOVAL OF DIRECTORS & TRUSTEES

Under the old Code, only the stockholders or members of a corporation
may remove any member of the board. Under the new Code, the SEC is
A CORP. also given the power to motu proprio, upon verified complaint, after due
notice and hearing, to order the removal of a disqualified director/trustee.
The said removal is without prejudice to any other sanction the SEC may
impose on the board member who, despite knowledge of disqualification,
failed to remove the director/trustee involved.

VACANCIES IN THE BOARD

Under the old Code, though vacancies caused by removal or expiration
of term were required to be filed by the vote of majority of the
stockholders or members, no procedure for such election was included.
Even for vacancies caused by other reasons, no mention is made as to
the time when they should be filled.

Under the new Code, elections for vacancies due to term expiration
should be held within 1 day from date of expiration in a meeting called
for that purpose. If the vacancy is due to removal, the election may be
held on the same day of the meeting authorizing removal, which fact
of removal should be indicated in the agenda and notice of the
meeting. For any other vacancy, elections should be held within 45
days from the time when the vacancy arose. The director/trustee to be
elected will only be a replacement, and shall serve only for the
unexpired term.
VACANCIES IN THE BOARD REQUIRING
EMERGENCY ACTION
The old Code did not have any provision on vacancies requiring immediate
emergency action. Under the said Code, even if emergency action is needed,
the general rules on vacancies should still be followed.

This is remedied by the new Code since it provides that any vacancy which
prevents the board from constituting a quorum to do business, and there is
a need to act in order to prevent grave, substantial, and irreparable loss or
damage to the corporation, may be temporarily filled from among the
officers of the corporation by unanimous vote of the remaining
directors/trustees. The one designated will only be allowed to act on the
emergency action necessary at such time, since his/her term shall cease
within a reasonable time from the termination of the emergency or upon
election of a replacement. Within 3 days from the creation of the emergency
board, the corporation is required to notify the SEC of such matter.

COMPENSATION OF DIRECTORS & TRUSTEES

Similar to the old Code, the new Code provides that the board shall
not receive compensation to act as members of the board, except for
reasonable per diems, unless majority of their stockholders/members
approve to give them compensation. But, the new Code also
provides that corporations vested with public interest shall submit to
the shareholders/members and the SEC, an annual report of the total
compensation of each of their directors/trustees.

DEALINGS OF DIRECTORS, TRUSTEES, & OFFICERS

WITH THE CORPORATION
Under the old Code, only contracts of directors, trustees, and officers
with the corporation are voidable, unless certain conditions are
present. Under the new Code, even contracts with their spouses and
relatives within the 4th civil degree of consanguinity or affinity are also
voidable. However, in addition to the conditions laid down in the old
Code to make such contracts valid, an additional condition was
inserted: in case of corporations vested with public interest, material
contracts are approved by at least 2/3 of the entire membership of the
board, with at least a majority of the independent directors voting to
approve the material contract.
PAGE 5

THE REVISED
CORPORATION
CODE
REPUBLIC ACT NO. 11232
SPECIAL COMMITTEES
Even under the old Code, the board may create an executive
committee, if they are allowed by the by-laws, to be composed of at
least 3 directors, to act on specific matters delegated by the board.

In addition to the executive committee, the new Code allows for the
creation of special committees which are temporary or permanent in
nature, and the board may determine the committee members' term,
compensation, powers, and responsibilities.

EXTENDING & SHORTENING THE CORPORATE TERM

Extending or shortening the corporate term is still subject to the

requirement of sending notices to the stockholders/members of the
meeting when the corporate term will be extended or shortened. In
addition to being sent personally or by mail to the stockholders or
members, the new Code allows the notice of the meeting to be sent
A CORP. electronically, so long as such electronic sending is allowed by the
by-laws or with the consent of the stockholder/member, in
accordance with rules and regulations of the SEC on the use of
electronic data messages.

INCREASING/DECREASING CAPITAL STOCK

Similar to the notice requirement meetings called to extend/shorten

the corporate term, the new Code now allows for the notice to be
sent by electronic means, as may be recognized in the by-laws, and
the SEC's rules and regulations on electronic data messages.

In addition, any application to change the capital stock shall now be

filed with the SEC within 6 months from approval of the board and
its stockholders.

DISPOSITIONS OF CORPORATE ASSETS

The old Code was passed at a time when the Philippines still did not have
a competition law. Thus, it is only in the new Code that the said law is
expressly mentioned, thereby subjecting dispositions of corporate assets
to its provisions.

A notable insertion in the new Code is the basis for determining whether
the disposition or sale covers all or substantially all assets or properties.
The new Code now specifically provides that the determination must be
based on the net asset values of the corporate assets and/or properties
as shown in the latests financial statements of the corporation. Another
insertion is the provision on allowing notice of the proposed sale and the
meeting called for such purpose to be sent electronically, when such is
allowed by the by-laws or with the consent of the stockholders/members.
Under the old Code, notice can only be sent personally or by mail.

INVESTING CORPORATE FUNDS

Similar to the old Code, the new Code provides that when corporate
funds will be invested in another corporation or business, a meeting
should be called to allow the stockholders to vote on the investment.
Notice of such meeting should be sent to them prior to the meeting
which, under the new Code, may be sent electronically, in
accordance with rules and regulations of the SEC on electronic data
messages, and when allowed by the by-laws or done with the
consent of the stockholders.

ADOPTION OF BY-LAWS
Under the old Code, within 1 month from receipt of the certificate of
incorporation from the SEC, the corporation is mandated to adopt its by-
laws for its government. But, the same Code also allows for the by-laws to
be adopted prior to incorporation, which must then be signed by all
incorporators, to be filed with and approved by the SEC along with the
articles of incorporation.

Under the new Code, the 1 month period to adopt the by-laws after
incorporation has been deleted. The Corporation now has more time to
adopt its by laws, so long as it files its by-laws with the SEC once adopted. It
may also still choose to adopt the by-laws prior to incorporation, following
the same rules as provided in the old Code.

CONTENTS OF BY-LAWS
The new Code lays down the same contents as those provided in the old
Code. But it does require to include 2 new matters: first, the By-laws must
state the modes by which a stockholder, member, trustee or director may
attend meetings and cast their votes; and, second, it should also state the
maximum number of other board representations that an independent
director or trustee may have, which should not be more than that
prescribed by the SEC. Similar to the Articles of Incorporation, the By-
laws may now also provide for an arbitration agreement.
PAGE 6

THE REVISED
CORPORATION
CODE
REPUBLIC ACT NO. 11232
MEETINGS OF STOCKHOLDERS/MEMBERS
Under the old Code, written notice of regular
stockholders'/members' meetings should be sent to them at least
2 weeks prior to the meeting, unless the by-laws state a
different period. If the by-laws do not provide for a specific date,
then the annual meeting should be held on any date in April of
every year.

The New Code now provides that if the annual meeting is not
specifically fixed in the by-laws, it shall be held on any date
after April 15, and notice thereof should be sent to the
stockholders/members at least 21 days prior to the meeting. The
new Code also now allows for the notice to be sent via
electronic mail or in any other manner as may be allowed by the
SEC.

REGULAR MEETINGS OF STOCKHOLDERS/MEMBERS

Under the new Code, during regular meetings, the board should
strive to present certain matters to the stockholders/members.
Such matters include the minutes of the most recent regular
meeting, members' list/material information on current
stockholders and their voting rights, detailed and comprehensible
assessment of the corporation's performance, financial report for
A CORP.
the preceding year, explanation of dividend policy, director/trustees
profiles and attendance report, appraisals and performance
reports, directors/trustees compensation report, board disclosures
on self-dealing and related party transactions, and profiles of
directors nominated or seeking election or re-election. Any director,
trustee, member, or stockholder may present any other matter to
be included in the meeting's agenda. The stock and transfer
book/membership book should be closed at least 20 days before
the scheduled date of the regular meeting. If the regular meeting is
postponed, written notice of the postponement and the reason
thereof should be sent to the stockholders/members at least 2
weeks prior to the date of the meeting, unless the by-laws or the
law requires a different period. The old Code did not provide for
such matters, and the same are new insertions in the new Code.

SPECIAL MEETINGS OF STOCKHOLDERS/MEMBERS

The new Code now specifically provides that any
stockholder/member may propose the holding of a special
meeting and indicate the items to be included in the agenda. The
new Code also indicates that though notice of special meetings
may still be waived, general waivers in the articles of
incorporation or the by-laws are not allowed, and even if there
has been a valid waiver, attendance in the meeting will be
considered as waiver of notice, unless the person who attended
was present for the purpose of objecting to any business
transaction for the reason that the meeting was not lawfully
called or convened. The new Code also requires that the stock
and transfer book should be closed at least 7 days prior to the
date of the special meeting. Such matters were not provided in
the old Code.

MANNER OF VOTING BY STOCKHOLDERS/MEMBERS

The old Code did not specifically provide how

stockholders/members will vote. The new Code now specifically
provides that stockholder/members may vote vote in person,
through a proxy, or when so authorized in the by-laws or by a
majority of the board, through remote communication or in
absentia, subject to the rules to be issued by the SEC and the
corporation, regarding participation and voting through remote
communication or in absentia, taking into account the
company's scale, number of stockholder/members, structure,
and other factors in line with the protection and promotion of
the meetings. When so authorized, votes should be received
before the corporation finishes the tally of the votes. Anyone
who votes by remote communication or in absentia shall be
deemed present for purposes of a quorum.
PAGE 7

THE REVISED
CORPORATION
CODE
REPUBLIC ACT NO. 11232

PLACE OF MEETINGS OF
STOCKHOLDERS/MEMBERS

Meetings are still to be held in the principal office of the corporation,

and if not practicable, in the city or municipality where the principal
office is located. The old Code provided that any city or municipality in
Metro Manila is considered as a city or municipality. Under the new
Code, cities and municipalities in Metro Cebu, Davao, and other
Metropolitan areas are now also considered as cities and/or
municipalities for purposes of stockholders'/members' meetings.

NOTICE OF MEETINGS OF STOCKHOLDERS/MEMBERS

The new Code now specifically states that notice of any meeting will
be sent in accordance with what is provided in the by-laws, which
notice shall state the time place, and purpose of the meetings. The
notice of meeting shall be accompanied by the agenda, a proxy form
to be submitted to the secretary with a reasonable time prior to the
meeting, the requirements for attendance, participation and voting in
absentia or by remote communication, when such is allowed, and
the requirements and procedures for nomination and election if the
meeting is for such purpose. Such matters were not specifically
provided in the old Code.

Similar to the old Code, the new Code also provides that any
business transacted during the meeting, so long as within the
powers or authority of the corporation, shall be valid even the
meeting was improperly called or held, so long as the
stockholders/members were all present or duly represented. The new
Code however requires that, as an additional condition for the
validity of the meeting, none of the stockholders/members expressly
state at the beginning of the meeting that the purpose of their
attendance is to object to the transaction of business because the
meeting was not lawfully called or convened.

MEETINGS OF DIRECTORS/TRUSTEES

Under the old Code, quorum in meetings was only defined

for stockholders'/members' meetings, but no mention was
made regarding quorum for board meetings. The new Code
now specifically provides that a majority of the members of
the board as stated in the articles of incorporation shall
constitute a quorum to transact corporate business, unless a
different quorum is provided in the articles or by-laws. Every
decision reached by majority of the board constituting a
quorum, except for elections of the officers requiring vote of
majority of all members of the board, shall be valid as a
corporate act. Also, the new Code states that the chairman
shall preside during the meeting, and the president will only
preside if the chairman is absent.

NOTICE, ATTENDANCE & VOTING BY THE BOARD

Under the old Code, notice of meetings, whether special
or regular, should be sent at least 1 day prior to the
scheduled meeting, unless a longer time is required in
the by-laws. The new Code now requires that notice
should be sent at least 2 days before the meeting.
Additionally, the new Code now also provides for
attendance and voting at board meetings through
remote communication, such as by videoconferencing,
A CORP. teleconferencing, or other alternative modes of
communication, when the directors/trustees cannot
physically attend. Also, in case a director/trustee has
potential interest in any related party transaction,
he/she must recuse from voting on the approval of the
transaction.
PAGE 8

THE REVISED
CORPORATION
CODE
REPUBLIC ACT NO. 11232
CONSIDERATION FOR SHARES OF STOCK
Similar to what was provided in the old Code, shares of stock
cannot be issued for any consideration less than its par or
issued price. Different kinds of consideration are acceptable
under the corporation code, such as cash, properties, labor
performed or rendered for the corporation, previously
incurred indebtedness amounts transferred from unrestricted
retained earnings to capital, and outstanding shares
exchanged for stocks in case of reclassification or
conversion. However, the new Code included some
additional types of acceptable consideration, specifically,
shares of stock in another corporation, and other generally
accepted forms of consideration. These two are in addition
to the acceptable forms of consideration stated in the old
Code.

CERTIFICATES OF STOCK
Under the old Code, only written certificates of stock,
signed by the president or vice president, and
countersigned by the secretary or assistant secretary, with
the seal of the corporation, were recognized. Under the new
Code, the SEC may require corporations whose securities
are traded in trading markets and which can reasonably
demonstrate their ability to do so, to issue their securities
or shares of stock in uncertificated or scripless form in
accordance with the rules of the SEC.

CORPORATE BOOKS TO BE KEPT

Under the old Code, corporations were only required to keep a record of all
their business transactions and minutes of all meetings of the
stockholders/members and of the directors/trustees. The new Code provides
a more comprehensive list of information required to be kept by corporations.
The new Code provides that corporations shall keep and carefully preserve at
its principal office all information relating to the corporation, including but not
limited to its articles of incorporation and by-laws and any of their
amendments, its current ownership structure and voting right, list of
stockholders/members, group structures, intra-group relations, ownership
data and beneficial ownership, the names addresses of all members of its
board, a record of all board resolutions, and resolutions of
stockholders/members and executive officers, record of all business
transactions, copies of latest reportorial requirements submitted to the SEC,
and minutes of all meetings, which must provide specific details such as the
time and date of each meeting, the agenda, whether it was special or regular,
the attendance, and every act done or carried out during each meeting.

RIGHT TO INSPECT CORPORATE RECORDS

The new Code still protects stockholders'/members' rights to inspect
corporate books. Corporate records, regardless of the form in which they are
stored, shall still be subject to inspection by any director, trustee, stockholder
or member, who shall be bound by the confidentiality rules under prevailing
laws, such as those relating to trade secrets and processes and data privacy
rights. However, to safeguard against abuses, the new Code does not allow
a requesting party who is not a stockholder/member, or is a competitor,
director, officer, controlling stockholder or otherwise represents the interests
of a competitor, to inspect or demand reproduction of corporate records.
Likewise, the new Code provides that any stockholder who abuses the right
to inspect corporate records shall be penalized under Section 158 of the said
Code which governs administrative sanctions for violations of the
corporation code. Any officer or agent who refuses to allow inspection or
reproduction of records because the requesting party is a competitor,
director, officer controlling stockholder or otherwise represents the interests
of a competitor, cannot be held liable for such refusal.

REFUSAL TO ALLOW INSPECTION

Though the old Code penalized unjustified refusal to allow inspection, no
procedure was laid down to enable an aggrieved party to seek redress.
The new Code now specifically provides for such procedure. If the
corporation denies or does not act on a demand for inspection and/or
reproduction of corporate records, the aggrieved party may report the
denial or inaction to the SEC. Within 5 days from receipt of such report,
the SEC shall conduct summary investigation and issue an order directing
the inspection or reproduction of the requested records.

FINANCIAL STATEMENTS
The new Code does away with the specific requirements of having a
balance sheet and a profit and loss statement in corporate financial
statements, which now need only to comply with the form and
substance required by the SEC. However, the SEC has yet to issue
their rules on the new form. The threshold used to determine
whether financial statements need to be signed and certified by an
independent CPA has been increased from P50,000 to P600,000.
Thus, if total assets or total liabilities of a corporation are less than
P600,000, its financial statements only need to be certified under
oath by its president and treasurer.
PAGE 9

THE REVISED
CORPORATION
CODE
REPUBLIC ACT NO. 11232
MERGERS & CONSOLIDATIONS
The procedure for mergers/consolidations in the new Code is
similar to that laid down in the old Code. The same still
needs approval by the stockholders/members in a meeting
called for the purpose, and the manner of giving notice of
such meeting is the same as calling for regular or special
meetings, which may now be done by electronic mail. Once
approved by the stockholders/members, the articles of
merger/consolidation shall be executed, which now needs to
include the carrying amount and fair values of the assets
and liabilities of the respective companies as of agreed cut
off date, the method to be used in the merger/consolidation
of company accounts, the provisional pro forma values, as
merged/consolidated using the accounting method, and such
other information as may be required by the SEC, in addition
to the existing items set forth in the old Code.

RIGHT OF APPRAISAL
The new Code provides for an additional instance when
dissenting stockholders have the right to dissent and demand
payment for the fair market value of their shares. In addition
to the instances laid down in the old Code, dissenting
stockholders may now exercise their right of appraisal when
investment of corporate funds for any purpose other than the
primary purpose of the corporation is undertaken.

NON-STOCK CORPORATIONS
Substantially the same provisions on non-stock corporations are retained
in the new Code. There are, however, a few changes introduced. First,
similar to stock corporations, by-laws of non-stock corporations may now
provide for voting through remote communication and/or in absentia.
Second, the requirement on election of trustees being elected such that
1/3 would have a term of 1 year, and subsequent elections would be held
annually, has been deleted. Now, trustees just need to hold office for a
term of 3 years until their successors are elected and qualified. Such
corporations are now also required to keep a list of members and their
proxies in such form as required by the SEC, which shall be updated to
reflect members and proxies 20 days prior to any scheduled elections.

EDUCATIONAL CORPORATIONS
Previously, educational corporations were required to obtain the favorable
recommendation of the Department of Education, Culture and Sports prior to
incorporation, without which, the SEC will not approve their incorporation.
Under the new Code, such requirement has been deleted.

FOREIGN CORPORATIONS
Foreign corporations are still required to obtain a license to do business in
the Philippines from the SEC prior to transacting business in the country.
In addition to the previous requirements for a license, the new Code
requires that a certificate under oath by the authorized official/s of the
jurisdiction of the foreign corporation be attached to the application for
license. The certification should state that the laws of the country or state
of the applicant allow Filipino citizens & corporations to do business
therein, and that the applicant is an existing corporation in good
standing. If the certificate is in a foreign language, it should include an
English translation under oath of the translator.

SECURITY DEPOSIT FOR FOREIGN CORPORATIONS

Once the SEC issues a license for the foreign corporation, it is still
required to put up a security deposit consisting of bonds/evidence of
indebtedness of the government of the Philippines, its political
subdivisions and instrumentalities and GOCCs and entities, shares of
stock/debt securities in domestic corporations, or any financial
instruments allowed by the SEC. The market value of such has been
increased from at least P100,000 to P500,000. Within 6 months
after each fiscal year, additional securities still need to be deposited
equivalent to 2% of the amount by which the licensee's gross income
for that fiscal year exceeds P10,000,000, as increased from just
P5,000,000 under the old Code. Computing the securities deposit,
composition of gross income and allowable deductions will now be in
accordance with the rules of the SEC.

RESIDENT AGENTS
Foreign Corporations still need to appoint a resident agent to receive
summons and legal processes on behalf of the corporation. They may still
be either resident individuals or domestic corporations. However, the new
Code now specifically requires that domestic corporations appointed as
resident agents must also be of sound financial standing and must show
proof that it is in good standing as certified by the SEC.
PAGE 10

THE REVISED
CORPORATION
CODE
REPUBLIC ACT NO. 11232
New Type of Corporation introduced under Title XIII Chapter III of the Revised
Corporation Code
ONE PERSON CORPORATIONS
Previously, stock corporations could only be established by
at least 5 natural persons, who are the first subscribers, and
may serve as the first board or directors. Under the new
Code, a "One Person Corporation" (OPC) may now be
created with only one single stockholder, who must be a
natural person, estate or trust. Such person will be the sole
director and president of the OPC.

Since they are vested with public interest, banks and quasi-
banks, pre-need, trust, insurance, public and publicly-listed
companies, and non-chartered GOCCs cannot incorporate as
an OPC. Likewise, a natural person licensed to exercise a
profession cannot create an OPC for purposes of exercising
such profession.
The single stockholder is still a separate person from the OPC, and the doctrine of piercing
the corporate veil still applies, but if the single stockholder cannot prove that the OPC is
independent of his/her personal property, then he/she shall be jointly and severally liable
for debts and other liabilities of the OPC. The single shareholder claiming limited liability
has the burden to prove that the OPC was adequately financed.

ARTICLES & BY-LAWS OF OPCS

OPC articles shall be in accordance with the requirements laid down
for regular corporations, but shall substantially contain the name,
nationality, and residence of the trustee, administrator, executor,
guardian, conservator, custodian or other person exercising fiduciary
duties, for trusts or estates, and the name, nationality residence of the
nominee and alternate nominee and the extent, coverage , and
limitation of their authority. OPCs do not need to file any by-laws.

OFFICERS & APPOINTEES OF OPCS

Within 15 days from incorporation, the OPC shall appoint a treasurer, a
corporate secretary and other officers it deems necessary and notify the SEC
within 15 days from appointment. The single stockholder cannot be
appointed as secretary. If he/she is appointed as treasurer, he/she shall give
a bond to the SEC to be renewed every 2 years, and undertake in writing to
faithfully administer the funds of the OPC, and disburse and invest the same
according to its articles.

The secretary shall be responsible for maintaining the minute book and
records of the OPC, notify the nominee/s and the SEC of death/incapacity of
the single stockholder, and call the nominee/s and legal heirs of the
stockholder to elect a new director, to amend the articles, and for other
matters.

The single stockholder shall also appoint a nominee and alternate nominee,
tasked to take his/her place as director in case of death or incapacity, and
manage the corporation.
NOMINEE & ALTERNATE NOMINEE
The names of the designated nominee and alternate nominee shall be stated in
the articles, along with their address, contact details, and the extent and
limitations of their authority in managing the OPC.They should consent to the
designation in writing which will be attached to the application for incorporation
of the OPC. If they wish, they may withdraw their consent any time before the
death or incapacity of the single stockholder. The single stockholder may change
the named nominees by notifying the SEC, without need to amend the articles.

In case of temporary incapacity of the single stockholder, the nominee shall sit as
director and manage the affairs of the OPC until the stockholder regains capacity.
In case of death or permanent incapacity of the stockholder, the nominee shall sit
as director and stockholder until the legal heirs of the stockholder are determined,
and they designated one of them or the estate as the single stockholder of the
OPC. The alternate, on the other hand, shall be nominee's alternate, meaning
he/she shall be the director in case of death, incapacity or refusal of the nominee
to discharge his/her functions.

RECORDS OF MEETINGS & REPORTORIAL REQUIREMENTS

An OPC shall maintain a minute book containing all actions, decisions,
and resolutions of the OPC. If action is needed on any matter, a written
resolution, signed and dated by the single stockholder and recorded in
the minute book is sufficient for validity of the corporate act. the date of
recording in the minute book is deemed the date of the meeting.
Just like a regular corporation, an OPC shall file with the SEC its financial
statements, certified by an independent CPA if assets/liabilities are
P600,000 or more, report of explanations/comments of the president on
qualifications, reservations or adverse remarks of the auditor, disclosure
of all self-dealings and related party transactions, and other reports
required by the SEC.

CONVERSION OF OPC
OPCs may be converted into an ordinary stock corporation, while ordinary stock
corporations may be converted into OPCs. When a single stockholder acquires all
stocks of an ordinary corporation, he/she may apply for conversion into an OPC
by submitting the necessary documents to the SEC. Once approved, the SEC will
issue a certificate reflecting the conversion, at which point the OPC will assume
the outstanding liabilities of the ordinary corporation. On the other hand, an OPC
may be converted into an ordinary corporation by submitting to the SEC notice of
such conversion and the circumstances leading to it, subject to submission of all
other requirements. Also, when the single stockholder dies, his/her legal heirs
may choose to dissolve the OPC or convert it into an ordinary corporation.
PAGE 11

THE REVISED
CORPORATION
CODE
REPUBLIC ACT NO. 11232
DISSOLUTION
Similar to the provisions of the old Code, corporations may be dissolved voluntarily or
involuntarily.

VOLUNTARY DISSOLUTION WITH NO CREDITORS AFFECTED

Generally, the procedure under the old Code has been
retained, however, the new Code now requires that
majority vote of the board, and majority vote of the
stockholder/s members to approve the dissolution.
Previously, the voting requirements was majority vote of
the board and 2/3 vote for the stockholder/members. Notice
of the meeting when voting will be held should be sent at
least 20 days (lowered from 30 days) prior to the meetings,
by means which includes any means authorized under the
by-laws. Notice of the time, place. and object of the
meeting should also still be published, but such may be
done any time prior to the meeting, and need not be for 3
weeks. The new Code now likewise provides that a verified
request for dissolution be filed with the SEC providing
details of the dissolution, and submit certain documents
showing compliance with the requirements. The request
shall be approved by the SEC within 15 days from receipt,
and dissolution shall take effect only upon issuance of a
certificate of dissolution. Banks, preneed, insurance and
trust companies, and other similar financial intermediaries
require favorable recommendation of the appropriate
government agency prior to filing their application.

VOLUNTARY DISSOLUTION WITH AFFECTED CREDITORS

Voluntary dissolution under this type still requires filing of a verified
petition with the SEC. Previously the petition may be signed by majority
of the board or other officer having management of corporate affairs,
but now, only majority of the board are qualified to sign. the petition is
still then verified by the president/secretary/one of the
directors/trustees. The new Code includes additional matters to be
included in the petition. Specifically the petition should state the reason
for dissolution, the form, manner and time when notices were given, and
the date, place, and time of the meeting when votes were cast. The
corporation must then submit to the SEC, a copy of the resolution
authorizing dissolution certified by majority of the board and
countersigned by the secretary, and a list of all creditors. To do away
with confusion, the new Code now states that dissolution takes effect
upon issuance of a certificate of dissolution by the SEC.

SHORTENING CORPORATE TERM

Dissolution may still be done by shortening the corporate term, the process
for which is still substantially the same as that provided in the old Code.
However, under the new Code, the dissolution now takes effect from
expiration of the shortened term as stated in the approved articles, without
any further proceedings. Previously, it takes effect upon approval by the SEC.

To prevent confusion, the new Code now specifically provides that in case of
expiration of corporate term, dissolution automatically takes effect on the
day following the last day of the corporate term as stated in the articles,
without need for issuance by the SEC of a certificate of dissolution.

REQUEST FOR DISSOLUTION MAY BE WITHDRAWN

The old Code did not specifically provide for withdrawal of any request for
dissolution filed with the SEC. The new Code now provides for it and lays down
the procedure for such withdrawal. The request should be in writing, in the form
of a motion and similar in substance to the request for dissolution, duly verified by
any incorporator, director, trustee, shareholder, or member and signed by the
same person/s. The request should be filed with the SEC no later than 15 days
from receipt of the SEC of the request for dissolution, and prior to any deadline
set by the SEC for filing objections to the dissolution. Once received, the SEC shall
then stop acing on the dissolution and investigate the matter. After investigation,
it may may pronouncement stating that the request for dissolution is withdrawn,
direct a joint meeting of the board and the stockholders/members to ascertain
whether to proceed with dissolution, or issue such other orders it deems
appropriate.

INVOLUNTARY DISSOLUTION
Under the old Code, involuntary dissolution of corporation may be done
only upon verified complaint, after due notice and hearing. The new Code,
on the other hand, gives the SEC the power to motu proprio order
dissolution, based on the following grounds: a. non-use of corporate
charter; b. continuous inoperation; c. upon receipt of a lawful order of a
court dissolving the corporation; d. upon finding by final judgment that
the corporation procured incorporation through fraud; d. upon finding by
final judgement that the corporation was created to commit, conceal, or
aid securities violations, smuggling, tax evasion, money laundering, graft
and corrupt practice, or that it committed or aided in the commission of
such acts, or it repeatedly and knowingly tolerated the commission of
such acts and other fraudulent or illegal acts of directors, trustees,
officers or employees. Its assets may also be forfeited in favor of the
government.

CORPORATE LIQUIDATION
Under the old Code, corporate liquidation may be carried out for every
corporation. the new Code now specifically removes banks from the coverage of
the Code from provisions on liquidation since liquidation for such entities are
covered by the New Central Bank Act and the Philippine Deposit Insurance
Corporation Charter. The new Code also clarifies when the 3-year winding up
period beginnings, which is after the effective date of liquidations. Previously, it
began after the time when it would have been so dissolved.
PAGE 12

THE REVISED
CORPORATION
CODE
REPUBLIC ACT NO. 11232
Specific Provisions on Investigations, Offenses & Penalties introduced under Title XVI of
the Revised Corporation Code

POWERS OF THE SEC

The new Code now specifically lays down all powers of the
SEC. It may investigate an alleged violation of the Code, or
of a rule, regulation, or any of its orders, and publish its
findings, orders, opinions, advisories or information
concerning such violations as may be relevant to the public
or concerned parties. If investigations concern companies
under the regulatory jurisdiction of other agencies, then they
shall notify the agencies and coordinate with them.

The SEC may also administer oaths and affirmations, issue

subpoena and subpoena duces tecum, take testimony and
perform other acts necessary to proceedings and
investigations.
It may issue cease and desist orders when it has reasonable basis to believe that a person
has violated or is about to violate the Code. It may be issued ex parte to enjoin fraudulent
acts or those which would cause significant, imminent and irreparable danger or injury to
public safety or welfare, which order is valid for 20 days. If the order is not obeyed, or if
for no reason, there is failure to comply with any SEC order, decision, or subpoena, the
SEC may hold the person in contempt, after notice and hearing, and subject him/her to a
fine of P30,000. If there is clear and open defiance, then a daily fine of P1,000 may be
imposed by the SEC.

ADMINISTRATIVE SANCTIONS
The SEC may impose the following sanctions in case it finds, after due
notice and hearing, that the Code, its rule or regulations or any of its
orders have been violated, depending on the extent of participation,
nature, effect, frequency and seriousness of the violations:
a. Fine of P5,000 to P2,000,000 and daily fine of P1,000 for each day
of violation, not to exceed P2,000,000;
b. issuance of permanent cease and desist order;
c. suspension/revocation of certificate of incorporation; and
d. dissolution and forfeiture of assets.

UNAUTHORIZED USE OF CORPORATE NAME

The unauthorized use of a corporate name is now punishable with a fine
ranging from P10,000 to P200,000.

VIOLATION OF DISQUALIFICATION
A person who has knowledge of a ground for disqualification but who is still
elected and holds office as a director, trustee or officer, or who wilfully
conceals such fact, may be punished with a fine of P10,000 to P200,000, and
will be permanently disqualified from being a director, trustee, or officer of a
corporation. If the violation is injurious to the public, the penalty will be
increased to P20,000 to P400,000.

VIOLATION OF DUTY TO MAINTAIN RECORDS & ALLOW

INSPECTION
Unjustified refusal or failure to keep and maintain corporate books,
and to allow inspection and reproduction of corporate records is now
punishable with a fine ranging from P10,000 to P200,000. When the
violation is injurious or detrimental to the public, the penalty is
increased to P20,000 to P400,000, without prejudice to the exercise of
the contempt powers of the SEC.

FOREIGN CORPORATIONS INCOMPLETE, INACCURATE, FALSE OR

MISLEADING STATEMENTS & REPORTS
Any person who wilfully certifies a report required under the Code knowing
that it contains incomplete, inaccurate, false, or misleading information or
statements shall now be punished with a fine of P20,000 to P200,000, which
may be increased to P40,000 to P400,000 if the certification is injurious or
detrimental to the public.

INDEPENDENT AUDITOR COLLUSION

An independent auditor who, in collusion with the directors or
representatives of the corporation, certifies the corporate financial
statements despite incompleteness or inaccuracy, or despite failure to
give a fair and accurate presentation of the corporate condition, or
despite containing false or misleading statements, may now be
punished with a fine between P80,000 to P800,000. When the
statement or report is fraudulent, or has the effect of causing injury to
the public, the fine is increased to P100,000 to P600,000.

REGISTRATION THROUGH FRAUD

Those responsible for formation of a corporation through fraud or who
assisted therein, shall now be subject to a fine of P200,000 to P2,000,000,
and may be increased to P400,000 to P5,000,000 if injurious or detrimental to
the public.
PAGE 13

THE REVISED
CORPORATION
CODE
REPUBLIC ACT NO. 11232
Specific Provisions on Investigations, Offenses & Penalties introduced under Title XVI of
the Revised Corporation Code

FRAUDULENT CONDUCT OF BUSINESS

a corporation that conducts business through fraud may not
be punished with a fine of P200,000 to P2,000,000, and if
the violation is injurious or detrimental to the public, the
penalty is increased to P400,000 to P5,000,000.

GRAFT & CORRUPTION INTERMEDIARIES

A corporation used for fraud, or for committing, concealing graft and
corrupt practices are not subjected to a fine, in addition to other
sanctions, of P100,000 to P5,000,000. When it is found that any of its
directors, officers, employees, agents or representatives are engaged
in graft and corrupt practices, the corporation's failure to install
safeguards for the transparent and lawful delivery of services, and
policies, code of ethics, and procedures against graft and corruption
shall be prima facie evidence of corporate liability.

ENGAGING INTERMEDIARIES FOR GRAFT &

CORRUPTION
A corporation that appoints an intermediary who engages in graft and
corrupt practices for the benefit of the corporation shall now be punished
with a fine ranging from P100,000 to P1,000,000.

TOLERATING GRAFT & CORRUPTION

A director, trustee, or officer who knowingly fails to sanction, report, or file the
appropriate action with proper agencies, allows or tolerates graft and corrupt
practices or fraudulent acts of corporate director, trustees, officers or
employees, shall now be punished with a fine ranging from P500,000 to
P1,000,000.

RETALIATION AGAINST WHISTLEBLOWERS

To protect whistleblowers, or those who provide truthful information
relating to the commission or possible commission of any offense or
violation of the Code, the new Code punishes any person who
knowingly and with intent to retaliate, commits acts detrimental to the
whistleblower such as interfering with the lawful employment or
livelihood of the whistleblower. The violator will be punished with a
fine of P100,000 to P1,000,000.

OTHER VIOLATIONS
The old Code had a general provision on violations of the corporation laws.
The new Code adopts the same general provision, on top of the other
provisions on specific violations. Violations which are not otherwise penalized
under the Code are punishable by a fine of not less than P10,000 to
P1,000,000. If the violation is committed by a corporation, it may, after notice
and hearing, be dissolved in appropriate proceedings by the SEC, which
should not bar the institution of any action against the director, trustee or
officer or corporation responsible. Liability under this provision in the new
Code shall be separate from any other administrative, civil or criminal liability
under the law. The old Code only provided a fine of P1,000 to P10,000, but
included imprisonment as a penalty, for a period of 30 days to a maximum of
5 years, without any mention of dissolution as an additional sanction.

LIABILITY OF DIRECTORS, TRUSTEES, OFFICERS &

EMPLOYEES
The Code now specifically provides that if the offender is a
corporation,
F O R E I G NtheCpenalty
ORPO may,
R Aat T the
ION discretion
S of the court, be
imposed upon such corporation and/or upon its directors, trustees,
stockholders, members, officers, or employees responsible for the
violation or indispensable to its commission.

LIABILITY OF AIDERS, ABETTORS & OTHER

SECONDARY LIABILITY
The new Code provides that anyone who shall aid, abet, counsel,
command, induce, or cause any violation of the Code or any rule,
regulation, or order of the SEC shall be punished with a fine not
exceeding that imposed on the principal offenders at the discretion of
the court, after taking into account their participation in the offense.
PAGE 14

THE REVISED
CORPORATION
CODE
REPUBLIC ACT NO. 11232

COLLECTION AND USE OF FEES

Previously, the SEC may only collect and receive fees,
fines and other charges pursuant to the Code and its rules
and regulations. The new Code allows the SEC to retain
and use the said fees, which shall be deposited and
maintained in a separate account which shall form a fund
for SEC modernization and to augment operational
expenses such as, but not limited to capital outlay,
increase in compensation and benefits comparable with
prevailing rates in the private sector, reasonable
employee allowance, employee career advancement and
professionalization, legal assistance, seminars, and other
professional fees.

REPORTORIAL REQUIREMENTS OF CORPORATIONS

Under the old Code all corporations lawfully doing

business in the Philippines were only required to submit
tot he SEC financial statements of assets and liabilities
certified by an independent CPA, in appropriate cases,
and other reports require by the SEC. The new Code now
specifically provides that all corporations doing business
in the Philippines, even if now lawfully done, are
required to submit annual financial statements audited
by an independent CPA if total assets/liabilities are
P600,000 or more, otherwise, it shall be certified by the
treasurer of chief financial officer, and a general
information sheet. In addition to these, the new Code
requires corporations vested with public interest to
submit a director.trustee compensation report, and a
director/trustee appraisal or performance report, and the
standards or criteria used to assess each.

FAILURE TO FILE & CONFIDENTIAL INFORMATION

The new Code now provides that the SEC may place a
corporation under delinquent status in case of failure
to submit the annual reportorial requirements to the
SEC for 3 time, whether consecutively or intermittently,
within a period of 5 years. The SEC shall give
reasonable notice and coordinate with the appropriate
regulatory agency prior to placing on delinquent status
companies under special regulatory jurisdiction. Also,
any person required to file a report with the SEC, may
redact confidential information from such report, so
long as such confidential information is submitted in a
supplemental report prominently labelled as
confidential together with a request for confidential
treatment of the report and the specific grounds for its
grant.

VISITORIAL POWER OF THE SEC

The old Code did not provide for SEC visitorial powers, but
the same has been included in the new Code. The SEC shall
now exercise visitorial powers over all corporations, which
powers shall include the examination and inspection of
records, regulation and supervision of activities, enforcement
of compliance, and imposition of sanctions in accordance
with the Code.

If the corporation, without justifiable cause, refuses or

obstructs the SEC's exercise of visitorial powers, its
certification of incorporation may be revoked by the SEC,
without prejudice to other penalties and sanctions which
may be imposed.

Though interrogatories propounded by the SEC and answers

thereto are still confidential, they will no longer be kept
strictly confidential when disclosure is necessary for the SEC
to take action to protect the public to issue orders in the
exercise of its powers under the Code.
 PAGE 15

THE REVISED
CORPORATION
CODE
REPUBLIC ACT NO. 11232

OTHER POWERS, FUNCTIONS & JURISDICTION OF THE SEC

In addition to its power to implement the Code and to promulgate rules and regulations reasonably
necessary to enable it to perform its duties, the SEC now has the power and authority to do to
following, as specifically listed in the new Code:
Exercise supervision and jurisdiction over all corporations
and persons acting on their behalf;
Pursuant to PD No. 902-A, retain jurisdiction over pending
FO R E Iinvolving
cases G N C Ointra-corporate
RPORATIO N S submitted for final
disputes
resolution. It also retains jurisdiction over pending
suspension/rehabilitation cases filed as of 30 June 2000 until
finally disposed;
Impose sanctions for violations of the Code, its implementing
rules, and SEC orders;
Promote corporate governance and the protection of
minority investors, through among others, issuance of rules
and regulations consistent with international best practices;
SEC
Issue opinions to clarify applications of laws, rules and
regulations;
Issue opinions to clarify the application of laws, rules, and
regulations;
Hold corporations in direct and indirect contempt;
Issue subpoena duces tecum and summon witnesses to
appear in proceedings;
In appropriate cases, order the examination, search and seizure of documents, papers, files and
records, and books of accounts of any entity or person under investigation as may be necessary
s for the proper disposition of the cases;
Suspend or revoke certificates of incorporation after notice and hearing;
l Dissolve or impose sanctions on corporations, upon final court order, for committing, aiding in
the commission of, or in any manner furthering securities violations, smuggling, tax evasion,
money laundering, graft and corruption, or other fraudulent or illegal acts;
Issue writes of execution and attachment to enforce payment of fees, administrative fines, and
other dues collectible under the Code;
Prescribe the number of independent directors and the minimum criteria in determining
independence;
Impose or recommend new modes by which a stockholder, member, director, or trustee may
attend meetings or cast their votes, as technology may allow;
Formulate and enforce standards, guidelines, policies rules and regulations to carry out the
provisions of the Code; and
Exercise such other powers provided in laws or those which may be necessary to carry out the
powers expressly granted to it.
Power, authority and responsibilities of the SEC over party-list organizations have now been
transferred to the COMELEC, to whom monitoring, supervision and regulation will be automatically
transferred within 6 months from effectivity of the new Code.

ELECTRONIC FILING AND MONITORING SYSTEM

The new Code now specifically provides that the SEC shall
develop and implement an electronic filing and monitoring
system. For this, it shall promulgate rules to facilitate and
expedite, among others, corporate name reservation and
registration, incorporation, submission of reports, notices,
and documents required by the Code, and sharing of
pertinent information with other government agencies.

ARBITRATION FOR CORPORATIONS

Since the new Code now allows for arbitration in case of disputes
between the corporation, stockholders or members, an arbitration
agreement may be provided in the articles of incorporation or the by-
laws of a corporation. When such is in place disputes which arise
from the implementation of the articles or by-laws, or from intra-
corporate relations shall be referred to arbitration. A dispute shall be
nonarbitrable when it involves criminal offenses of third parties. Any
such arbitration agreement is binding on the corporation, its
directors, trustees, officers, and executives and managers.

To be enforceable, the arbitration agreement should indicate the

number of arbitrators and the procedure for their appointment. The
power to appoint the arbitrators shall be granted to a designated
independent third party, and should such party fail to appoint the
arbitrators in the manner and within the period specified in the
agreement, the parties may request the SEC to appoint the
arbitrators. In any case, arbitrators must be accredited or must
belong to organizations accredited for the purpose of arbitration.

The arbitral tribunal shall have the power to rule on its own jurisdiction and on questions relating
to validity of the arbitration agreement. When an intra-corporate dispute is filed with the Regional
Trial Court, the court shall dismiss before pre-trial conference is terminated upon its determination
that an arbitration agreement is in the corporation's articles or by-laws, or in a separate
agreement. The tribunal may grant interim measures to ensure enforcement of the award, prevent
miscarriage of justice, otherwise protect rights of the parties.

A final arbitral award shall be executory after the lapse of 15 days from receipt by the parties and
shall be stayed only by the filing of a bond or issuance by the appellate curt of an injunctive writ.
The SEC shall thus formulate rules and regulations to govern such arbitration.