business, and other financial intermediaries shall be each, names, nationalities, and subscribers, amount subscribed and
approved by the Commission unless accompanied by a favorable
recommendation of the appropriate government agency
Extensions of corporate term
1) Limitations –. Amendment is effected before expiration of the
corporate term for after dissolution, extension cannot be made
earlier than (3) years prior to the expiration date unless
justifiable reasons
2) Effects if extension/expiration of term – continuation of the
old, and not the creation of a new, corporation.
3) Automatic extension – by amendment of the articles of
incorporation within (5) yrs period before expiration date of
existing term
Sec. 12. Minimum capital stock required of stock corporations
–.Stock corporations shall not be required to have minimum capital
stock, except as otherwise specially provided by special law
Filipino Percentage ownership
1) Corporations for exploration, development and utilization of
natural resources – 60% capital
2) Public service corporations – 60% by citizens
3) Educational corporations – 60%
4) Banking corporations – 60%
5) Corporations engaged in retail trade – wholly
6) Rural banks – 60%
7) Corporations engaged in coastwise shipping – 60%
8) Corporations engaged in the pawnshop business – 70%
9) Under the Flag Law – 75%
Sec. 13.–. Contents of the Articles of Incorporation. - All
corporations shall file with the Commission articles of incorporation
in any of the official languages, duly signed and acknowledged or
authenticated, in such form and manner as may be allowed by the
Commission, containing substantially the following matters, except
as otherwise prescribed by this Code or by special law:
(a) The name of corporation;
(b) The specific purpose or purposes for which the corporation is
being formed. Where a corporation has more than one stated purpose,
the articles of incorporation shall indicate the primary purpose and
the secondary purpose or purposes: Provided, That a non-stock
corporation may not include a purpose which would change or
contradict its nature as such;
(c) The place where the principal office of the corporation is to be
located, which must be within the Philippines;
(d) The term for which the corporation is to exist, if the corporation
has not elected perpetual existence;
(e) The names, nationalities, and residence addresses of the
incorporators;
(f) The number of directors, which shall not be more than fifteen (15)
or the number of trustees which may be more than fifteen (15);
(g) The names, nationalities, and residence addresses of persons who
shall act as directors or trustees until the first regular directors or
trustees are duly elected and qualified in accordance with this Code;
(h) If it be a stock corporation, the amount of its authorized capital
stock, number of shares into which it is divided, the par value of
paid by each on the subscription, and a statement that some or all of
the shares are without par value, if applicable;
(i) If it be a non-stock corporation, the amount of its capital, the
names, nationalities, and residence addresses of the contributors, and
amount contributed by each; and
(j) Such other matters consistent with law and which the
incorporators may deem necessary and convenient.
Meaning of articles of Incorporation - The articles of
incorporations is the document prepared by the persons establishing a
corporation and filed with the SEC containing the matters required by
the Code.
A corporation created by special law has no articles of incorporation.
(special charter)
Name of corporation
1) Importance – identifies and distinguishes it from other
corporations.
2) Nature – right to use its corporate and trade name is a property
right, a right in rem.
3) Part of name – “corporation” or “Incorporated” or an
abbreviation
Purpose or purposes of the corporation
1) Must be lawful
2) Must not be indefinitely stated
3) Must be stated
4) Must be capable of being lawfully combined
Reasons for statement of purpose
1) Investors must know where and what kind of business or
activity his money will be invested.
2) Know within what scope of business they are authorized to act
3) Third person may know whether the transaction or dealing he
has is within authority of the corporation or not.
4) If actions or transactions are authorized or beyond its powers
An arbitration agreement may be provided in the articles of
incorporation pursuant to Section 181 of this Code.
The Articles of incorporation and applications for amendments
thereto may be filed with the Commission in the form of an electronic
document, in accordance with the Commission's rule and regulations
on electronic filing.
Sec.14. Forms of Articles of Incorporation – Unless otherwise
prescribed by special law, articles of incorporation of all domestic
corporations shall comply substantially with the form.
Revisions:
1. The number of trustees indicated of incorporation may now
be more than 15.
2. Filed electronically
3. Authorized capital stock no longer to be at least 25%
subscribed.
4. Treasurer’s Affidavit is no longer required.
5. No more minimum paid up capital
Innovations:
1.) Arbitration agreement
2.) One Person Corporation OPC at the end of its corporate
name.
Sec.15. Amendment of Articles of Incorporation – Unless
otherwise prescribed by this Code or by special law, and for
legitimate purposes, any provision or matter stated in the articles of
incorporation may be amended by a majority vote of the board of
directors or trustees and the vote or written assent of the stockholders
representing at least two-thirds (2/3) of the outstanding capital stock,
without prejudice to the appraisal right of dissenting stockholders in
accordance with the provisions of this Code, or the vote or written
assent of at least two-thirds (2/3) of the members if it be a non-stock
corporation.
Limitations on power of corporation to amend
1) Not allowed when it will be contrary to any provision or
requirement prescribed by the code or by special law
2) Must be for legitimate purposes
3) Must be approved by required vote of BOD and stockholders
4) Shall contain all provisions required by law to be set out in the
articles of incorporation
5) Shall be indicated by underscoring the change/s made; copy of
duly certified oath by corporate secretary and a majority of
BOD or trustees stating that the amendment have been duly
approved by required vote shall be submitted to SEC
6) Shall take effect only upon their approval by SEC (6 months
from said date)
7) If governed by special law, amendments must be accompanied
by a favourable recommendation of appropriate gov’t agency
Sec. 16. Grounds when articles of incorporation or amendment
may be rejected or disapproved – The SEC may reject the articles
of incorporation or disapprove any amendment thereto if the same is
not in compliance with the requirements of this Code: Provided, That
the Commission shall give the incorporators a reasonable time within
which to correct or modify the objectionable portions of the articles
or amendment. The following are grounds for such rejection or
disapproval:
1) That the articles of incorporation or any amendment thereto is
not substantially in accordance with the form prescribed herein;
2) That the purpose or purposes of the corporation are patently
unconstitutional, illegal, immoral, or contrary to government
rules and regulations;
3) That the Treasurer's Affidavit concerning the amount of capital
stock subscribed and/or paid is false;
4) That the percentage of ownership of the capital stock to be
owned by citizens of the Philippines has not been complied
with as required by existing laws or the Constitution.
No articles of incorporation or amendment to articles of
incorporation of banks, banking and quasi-banking institutions,
preneed, insurance and trust companies, NSSLAs, pawnshops
and other financial intermediaries shall be approved by the
Commission unless accompanied by a favorable
recommendation of the appropriate government agency to the
effect that such articles or amendment is in accordance with
law.
Suspension or revocation of the certificate of registration of
corporations
1) Fraud in procuring its certificate of incorporation
2) Serious misrepresentation as to what the corporation can do or
is doing to the great prejudice of, or damage to, the general
public;
3) Refusal to comply with
4) Continuous in operation for a period of at leat (5) yrs
5) Failure to file by-laws within required time period
6) Failure to file required reports in appropriate forms
Sec. 17. Corporate name – No corporate name shall be allowed by
the Commission if it is not distinguishable from that already reserved
or registered for the use if another corporation, or if such name is
already protected by law, rules and regulations.
A name is not distinguishable even if it contains one or more of the
following:
(a)The word "corporation", "company", incorporated",
"limited", "limited liability", or an abbreviation of one if
such words; and
(b) Punctuations, articles, conjunctions, contractions,
prepositions, abbreviations, different tenses, spacing, or
number of the same word or phrase.
The Commission upon determination that the corporate name is: (1)
not distinguishable from a name already reserved or registered for the
use of another corporation; (2) already protected by law; or (3)
contrary to law, rules and regulations, may summarily order the
corporation to immediately cease and desist from using such name
and require the corporation to register a new one. The Commission
shall also cause the removal of all visible signage’s, marks,
advertisements, labels prints and other effects bearing such corporate
name. Upon the approval of the new corporate name, the
Commission shall issue a certificate of incorporation under the
amended name.
If the corporation fails to comply with the Commission's order, the
Commission may hold the corporation and its responsible directors or
officers in contempt and/or hold them administratively, civilly and/or
criminally liable under this Code and other applicable laws and/or
revoke the registration of the corporation
Sec.18. Registration, Incorporation and Commencement of
Corporation Existence. - A person or group of persons desiring to
incorporate shall submit the intended corporate name to the
Commission for verification. If the Commission finds that the name
is distinguishable from a name already reserved or registered for the
use of another corporation, not protected by law and is not contrary to
law, rules and regulation, the name shall be reserved in favor of the
incorporators. The incorporators shall then submit their articles of
incorporation and bylaws to the Commission.
If the Commission finds that the submitted document s and
information are fully compliant with the requirements of this Code,
other relevant laws, rules and regulations, the Commission shall issue
the certificate of incorporation
Innovation:
Verification of intended corporate name prior to
registration is now expressly provided.