CHRONOLOGICAL HIGHLIGHTS &

MILESTONES OF EVENTS
• 188 SECTIONS

SECTIONS WERE

• ADDITIONAL SECTIONS ON
• INVESTIGATION, OFFENSES & PENALTIES
 HIGHLIGHTS OF REPEALED
SECTIONS
I • PERPETUAL CORPORATE TERM

II • OPC

III • CREATION OF EMERGENCY BOARD

IV • OPTIONAL ADR

V • ADHERENCE TO EASE OF DOING BUSINESS

VI • PROTECTION OF MINORITY SH/M

 ONE-PERSON CORPORATIONS
SECTIONS 115-142

• Corp. with single SH & without minimum

ACS required
• allows for more flexibility in pursuing
business because
• the lone SH can make decisions without
having to seek board consensus
• affords greater protection to SH by
• limiting liability to the corporate entity
SEC ISSUES GUIDELINES
ON OPC ESTABLISHMENT
SAMPLE OF SEC COI OF OPC
RESTRICTIONS ON SOLICITATION OF
INVESTMENTS
NON-GENERATION OF TIN
NAME & PURPOSE
 OFFICE &
PERPETUAL LIFE
NAMES, NATIONALITIES & RESIDENCE
OF NOMINEE & ALTERNATE NOMINEE
ACS, SUBSCRIPTION & TREASURER’S
AFFIRMATION
AFFIRMATION & ATTESTATION
ACCEPTANCE LETTER OF NOMINEE
ACCEPTANCE LETTER
ALTERNATE NOMINEE
CONTENTS
 HIGHLIGHTS OF SEC MC ON OPC
• Who can form? [natural person + trustee +
administrator + prohibited for natural person
who exercise profession + foreigner]
• Life [perpetual except trust or estate which is
co-terminus]
• Corporate name
• Only AOI & no By-Laws + generally no minimum
ACS & paid-up
• Single SH is the Sole Director & President
• Designation of nominee & alternate nominee +
Treasurer & CorSec + Cannot be CorSec at the
same time + posting of bond if Treasurer
GUIDELINES FOR CONVERSION OF
CORPORATIONS (OPC OSC)
SEC MEMORANDUM CIRCULAR NO. 27 SERIES OF 2020, OCT 16, 2020
SUB-OUTLINE ON INCORP & ORG
SECTIONS 10-21
Number & qualifications of incorporators

Corporate term

Minimum capital stock not required

Contents, forms, amendments & grounds for AOI disapproval

Corporation name

registration, incorp & commencement of corporate existence

De facto & corporation by estoppel

Effects of non-use of corporate charter & continuous
inoperation
 NUMBER & QUALIFICATIONS OF
INCORPORATORS
SECTION 10
• any person, partnership, assoc or corp

– but not more than 15

– generally, not allowed if for practice of
profession
• Legal age for natural person incorporator

• To own or be subscriber to at
least 1 share
 NUMBER & QUALIFICATIONS OF
INCORPORATORS
OLD CORPORATION CODE
Qualifications
Natural persons, all of legal
age & a majority of whom are
residents of PH
Number
Minimum of 5 persons but not
more than 15 persons
REVISED CORPORATION CODE
Qualifications
Any person, partnership,
association or corporation wherein,
the natural person shall be of legal
age
Number
Minimum of 1 but not
more than 15 in
number
 HIGHLIGHTS
• SEC to allow 2 or more incorporators
– but not more than 15

• incorporators may be any combination

– natural persons SEC-registered partnerships, SEC-
registered domestic corp or assoc in good standing
as well as foreign corp
• Partnerships, corp, assoc
– appoint natural persons who
– shall sign AOI of the corp being formed
• For SEC-registered partnership as an
incorporator
• Required to attach partners’
affidavit
–duly executed by all
partners
– to the effect that they have authorized the partnership
– to invest in the corp. about to be formed &
– that they have designated one of the partners
– to become a signatory to the incorp documents
• investment by SEC-registered
domestic corp or assoc
• must be approved by majority of
BOD/BOT
• ratified by 2/3 votes of SH OCS/M
• directors’/trustees’ certificate or
• secretary’s certificate
• indicating approvals to be executed
• under oath
 FOREIGN CORPORATION AS
INCORPORATOR
• accompanied by a copy of

• authorizing investment &

• specifically naming designated signatory
• resolution must be duly authenticated
by PH consulate or with an apostille
 INDIVIDUALS SIGNING IN WHAT
CAPACITY?
• should be indicated
• individual designated to sign AOI/By-
Laws
• on behalf of an incorporator
• which is not a natural person
• To disclose the name of his
principal
• for whom he is executing [i.e.
incorporator/representative of XYZ Co.]
 of Principal & Signatory to be
indicated
• No application shall be accepted
– unless TIN or passport number of all foreign
investors other than foreign corp which
have not been issued TIN is reflected

• After incorporation, all foreign

investors, natural or juridical, shall
secure TIN
 PROHIBITION AFTER SIGNING
• individual who signs AOI
– on behalf of an incorporator
– who is not a natural person
– may not be named as a director or trustee
in AOI
– unless he is also an owner of at least 1
share of stock or a member of the corp
being formed

RATIONALE?
 FOREIGN NATIONAL AS
INCORPORATOR

• His inclusion shall

subject to the applicable
• constitutional, statutory & regulatory
restrictions, as well as conditions
• with respect to foreign participation in
certain investment areas or activities
 IS THERE A NATIONALITY RESTRICTION ON
REAL ESTATE DEVELOPMENT & ACQUISITION?
WHETHER CHINESE FATHER OF MINOR
CAN VALIDLY BE APPOINTED OR
DESIGNATED AS TRUSTEE FOR HIS
DAUGHTER’S SHARES IN THE PROPOSED
CORP?
❏Shares may be issued in trust for
another person

❏ Shares may be registered in the name

of one person but the beneficial
owner may belong to another [SEC OGC
OPINION 12-13, AUG 9, 2012]
 REQUIREMENTS
UNDER FIA

❏ TRUSTEE SHOULD BE
PH NATIONAL

❏ AT LEAST 60% WILL

ACCRUE TO THE
BENEFIT OF PH
NATIONALS
❏ Parents should exercise parental
authority with their children [ART 220
FAMILY CODE]

❏ GR: Father or mother, should, by

force of law & without need of
judicial appointment, administer
the child’s property [ART 225 FAMILY CODE]
 Can Chinese trustee qualify as
nominee/representative of Filipino minor
incorporator in BOD? Will this not violate
“Grandfather Rule”?
SUB-OUTLINE ON INCORP & ORG
SECTIONS 10-21
Number & qualifications of incorporators

Corporate term
Minimum capital stock not required

Contents, forms, amendments & grounds for AOI disapproval

Corporation name

registration, incorp & commencement of corporate existence

De facto & corporation by estoppel

Effects of non-use of corporate charter & continuous
inoperation
 CORPORATE TERM
SECTION 11

• Perpetual corporate term

• for existing & future corp

•unless provided otherwise in AOI

• OBJECTIVES: Allowing corp. to exist beyond
50-yr term provided under old CCP
– will eliminate possibility of legitimate &
productive business prematurely closing down
– only because they failed to renew their registration
Is our AOI deemed amended to the
effect that our Company has now
perpetual existence pursuant to the
RCC?
 CORPORATE TERM
OLD CORPORATION CODE
Term of Corporation
50 yrs existence from the
date of incorporation
Extension of Term
No extension can be made earlier
than 5 yrs prior to the original or
subsequent expiry date
REVISED CORPORATION CODE
Term of Corporation
perpetual existence unless AO
provides otherwise
Corporations with certificates of
incorporation issued prior to the
effectivity of the Code shall have
perpetual existence unless
the corporation elected to retain its
corporate term
Extension of Term
No extension can be made earlier
than 3 yrs prior to the original or
subsequent expiry date
 PERPETUAL LIFE UNDER THE
REVISED CORPORATION CODE
• Victoria’s Milling Company on corporate terms of
existing corporation under RCC [19-16] [Apr 15, 2019]
• Montefino Baguio Condo Corp on doctrine of harmonius
construction [19-18] [May 8, 2019]
• Unlad Resources Development Corp on automatic
deemed perpetual [19-28] [Jul 22, 2019]
• Nielsen on deemed amended to that of perpetual [19-47]
[Sept 5, 2019]
• Pacific Metal on co-terminus life of foreign corp [19-33]
[Sept 9, 2019]
• Colegio De San Jose Jaro Iloilo on perpetual life of
Corporate Sole & Religious Society under the old & new
law even without stating in AOI [19-38] [Sept 17, 2019
• University of Northeastern PH on corporate term of
educational institutions [19-48] [Oct 7, 2019]
SEC SETS GUIDELINES ON
CORPORATE TERM
 TO RETAIN OR
TO NOT RETAIN?
 AMENDMENT ON CORPORATE
TERM WITH SPECIFIC PERIOD
• To extend or shorten
– by amending AOI

– no extension earlier than 3 years

prior to original or subsequent expiry
date(s)
– unless justified as determined by SEC
– extension to take effect only on the day ff.
original or subsequent expiry date(s)
 REVIVAL FOR EXPIRED TERM
OLD CORPORATION CODE REVISED CORPORATION CODE

Revival of Corporation Revival of Corporation

Corporation with expired term may
No counter-part provisions
apply for revival of its corporate
certificate of
existence &
revival of corporate
existence shall be issued
Application for revival of the ff.
companies require endorsement:
 Banks, banking & quasi-
banking institutions Preneed
 Insurance & trust
 Loan Associations (NSSLAs)
 Pawnshops
 money service business
 Other financial intermediaries
IS REVIVING A
CORPORATION
WORTHY OR
NOT?
• Corp. whose certificate of registration
has been revoked &
• whose corporate term has expired

• for reasons

• shall not be allowed to revive its

corporate existence
 CONTENTS & FORM OF AOI
SECTIONS 13 & 14

1 • Name, purpose, principal office, term

2 • Names, nationalities & residence of incorporators

3
• Names, nationalities & residence of directors or trustees

4 • ACS, number of shares subscribed

5 • Treasurer

6
• Undertake to change name upon notification

7
• Additional attestation for corp reserved to Filipinos
 CORPORATION NAME
SECTION 17

• corporate name should be

distinguishable from that

already reserved or registered for use by
another corp
– not protected by law
– not contrary to law, rules & regulations
 POWER OF SEC ON CORP NAME
SECTION 17

• issue cease & desist order summarily &

• require to register a new one

• order toremove all visible

signages, marks, advertisements, labels
prints & other effects bearing such corp
name
• Order contempt + admin, civil & criminal
penalties
 CORPORATE NAME
OLD CORPORATION CODE REVISED CORPORATION CODE

Rules for Non-Distinguishable Rules for Non-Distinguishable

Name Name
No counter-part provision name is not distinguishable even if
it contains one or more of the ff:

“corporation”, “company”,
“incorporated”, “limited”, “limited
liability”, or an abbreviation of one
such words;

Punctuations, articles, conjunctions,

contractions, prepositions,
abbreviations, different tenses,
spacing, or number of the same
word or phrase
 SEC AMENDED GUIDELINES ON
CORPORATE & PARTNERSHIP NAMES
CAN REGISTERED CORP NAME BE USED IN REGULAR
& OFFICIAL TRANSACTIONS EVEN WITHOUT THE
TRADE NAME?

“THE CHRISTIAN & MISSIONARY ALLIANCE

CHURCHES OF THE PHILIPPINES, INC.
Doing business under the name and style of CAMACOP”
CORP MAY ASSUME NAME OTHER THAN
ITS LEGAL (CORPORATE) NAME &
CARRY ON BUSINESS IN SUCH (BUSINESS
OR TRADE) NAME
CITIN PAST SEC OGC OPINION 11-39, SEPT 21, 2021
 TRADE NAME & REGISTERED
CORPORATE NAME MAY BE USED
INTERCHANGEABLY
SEC OGC OPINION 22-04 [MARCH 29, 2022]
 ITEM NO. 4 SEC MC 13,
SERIES OF 2019
trade name that is different from
corporate name shall be indicated
indicated in the articles of
corporation/partnership & may
have more than one trade name
AMENDMENT OF LICENSE TO
TRANSACT BUSINESS IN PH

SEC-OGC OPINION 22-08 [MAY 30, 2022]

IMPLIED OR INCIDENTAL POWERS ARE THOSE
WHICH ARE ESSENTIAL OR NECESSARY TO
CARRY-OUT ITS PURPOSE AS STATED IN AOI
 Is Branch allowed to
engage in "after-sales
support services” even
without amendment of
SEC License to Transact
Business?
“Purpose Clause” may
be stretched to cover
new & unexpected
situations impliedly.
But in those cases it
can not, proper
amendment thereof
would be necessary
 RCC allowing foreign corp to do
business under its License issued
 License subsists as long as it retains its
authority to act as corp under laws of
its home country
 Amendment of license if desire to
pursue other or additional purposes
SEC 141, 143 & 148 RCC
 selling of components & spare parts is part of
services offered to customers after machinery sale
is made. After-sale support services are necessary
to & implied from the nature of activity that
KOBELCO is engaged in (i.e., wholesale of hydraulic
excavator, crane & its attachments & parts)
 ACTS BEYOND THOSE CONFERRED BY RCC OR AOI ARE
ULTRA VIRES EXCEPT THOSE WHICH ARE NECESSARY OR
INCIDENTAL TO THE EXERCISE OF POWERS CONFERRED

IT IS NOT ULTRA VIRES IF THE ACT IS DIRECT &

IMMEDIATE FURTHERANCE OF BUSINESS &
REASONABLY NECESSARY TO THEIR EXISTENCE
PRIMARY
financing of motor vehicles
INCIDENTAL
transferring ownership & or
cancellation of mortgage over
motor vehicles of its clients who
have availed of its financial
services
 Corporations has such powers
expressly granted in its charter or
in statutes
 under which it is created or such
powers
 as are necessary for the purpose of
carrying out its express power
 AMOUNT OF CAPITAL STOCK
SUBSCRIBED & PAID
OLD CORPORATION CODE REVISED CORPORATION CODE

Subscribed Capital Subscribed Capital

At least 25% of ACS NO MORE 25% REQUIREMENT

Paid Capital
Paid Capital
At least 25% of the total subscription
NO MORE 25% REQUIREMENT
Paid-Up Capital shall not be less than
PHP 5K
 CONTENTS OF ARTICLES OF
INCORPORATION
OLD CORPORATION CODE REVISED CORPORATION CODE

Number of Directors/Trustees
Shall not be less than 5 nor more than Number of Directors/Trustees
15 Directors shall not be more than 15

Trustees may be more than 15

Sworn Statement of Treasurer Sworn Statement of Treasurer

AOI of any stock corporation must NO MORE
be accompanied by sworn Submission of AOI may be done
statement of Treasurer upon filing through electronic filing
 CONTENTS OF ARTICLES OF
INCORPORATION
OLD CORPORATION CODE REVISED CORPORATION CODE

Article 9
Article 9
Minimum paid-up capital of at 25% of
NO MORE
the total subscription

Treasurer Affidavit Treasurer Affidavit

NO MORE

Notarized Section Notarized Section

NO MORE
 SEC. 18. REGISTRATION, INCORPORATION & COMMENCEMENT OF
CORPORATION EXISTENCE
73

PROCEDURE ON REGISTRATION

Submit SEC finds that

intended name is Submit
corporate
name for
distinguishable,
name will be
AOI & by-
laws
COI
verification reserved
 EFFECTS OF NON-USE OF
CORPORATE CHARTER &
CONTINUOUS INOPERATION
SECTION 21
 EFFECTS OF NON-USE OF CORPORATE CHARTER
& CONTINUOUS OPERATION
OLD CORPORATION CODE
Commencement of Business
Transactions
Within 2 yrs from the date of
incorporation
Commenced but becomes
inoperative within 5 yrs
Ground for suspension or
revocation of certificate of
incorporation
REVISED CORPORATION CODE
Commencement of Business
Transactions
Within 5 yrs from the date of
incorporation
Commenced but becomes inoperative
within 5 yrs
At delinquent status after due notice &
hearing
Delinquent corp shall have period of 2
yrs to resume operations & comply with
all requirements
Failure to comply shall cause revocation
of certificate of incorporation
RCC OUTLINE ON MANAGEMENT OF CORP
SEC 22-34
BOD/BOT qualifications & term

Election of BOD/BOT

Corporate officers
Report of election of directors/trustees officers & non-holding
of election & cessation from office
Disqualification,removal, vacancy & emergency board

Compensation & liability

Dealings & contracts with interlocking directors,
disloyalty
Executive management & special committees
 SEC. 22. BOD/BOT; QUALIFICATIONS & TERM
77

📌 NUMBER OF MEMBERS OF BOD-

NOT MORE than 15
📌 NUMBER OF TRUSTEES
MAY BE MORE than 15

📌 TERM OF BOD/BOT
⮚ Directors elected for a term of 1 yr from
among holders of stock registered in corp
books
⮚ Trustees elected for a term not exceeding 3
yrs from among members of corp
⮚ To hold office until successor is qualified
 BOD/BOT
OLD CORPORATION CODE REVISED CORPORATION CODE
Term
Term 1 year for Directors while
Trustees shall be elected for
1 yr for both term not exceeding 3 yrs
Independent Directors
Corp with public interest shall have
independent directors constituting at
Independent Directors least 20% of such board
Not expressly provided Independent of management & free
from any business or relationship

Must abide SEC rules on qualifications,

voting, term & membership
Directors’ additional qualifications should
be spelled out in SEC-approved Amended
Bylaws
 ELECTION OF DIRECTORS/TRUSTEES
SEC 23

SH/M right to nominate

– except when exclusive right is reserved for
holders of founders' shares
– qualifications & none of disqualifications
Election in person or proxy for
representative
– owners of majority of OCS/M entitled to vote
– By-laws (except PLC)+ majority BOD
– SH/M may vote through remote communication
or in absentia
 ELECTION THRU BALLOT
SEC 23

if requested by any voting SH/M

ON RIGHT TO VOTE FOR STOCK CORP
SEC 23
based on # of outstanding shares in their
own names at the time fixed in bylaws
– if silent at the time of election
– vote such # of shares for as many persons
as there are directors to be elected
– cumulate said shares & give 1 candidate as
many votes as the # of directors to be
elected multiplied by # of shares owned
– distribute among as many candidates as
may be seen fit provided votes cast shall
not exceed # of shares owned
ON RIGHT TO VOTE FOR NON-STOCK
SEC 23

may cast as many votes as there are

trustees to be elected
may not cast more than 1 vote for 1
candidate
 ON DELINQUENT STOCK
SEC 23

no delinquent stock shall be voted

 NO ELECTION HELD OR ABSENCE OF
MAJORITY
SECTIONS 23 & 25

meeting may be

SEC on non-
Report to

election
 ELECTION-RECAP!
OLD CORPORATION CODE REVISED CORPORATION CODE

Right to Nominate Right to Nominate

Each SH or Member (except if
No counter-part reserved for holders of founders’
provisions shares)

Voting through Remote

Communication
Voting through Remote
SH/Members may vote
Communication through remote
No counter-part provisions
communication (if provided
in the By-Laws)
 SEC. 25. REPORT OF ELECTION OF DIRECTORS, TRUSTEES &
OFFICERS, NON-HOLDING OF ELECTION & CESSATION FROM
88 OFFICE

📌 Non-holding of elections & the reasons-reported to SEC

within 30 days from date of scheduled election. To specify
new date for election-not later than 60 days from scheduled
date

📌 If no new date has been designated, or if rescheduled election is

likewise not held, SEC, may upon application of election, summarily
order that an election be held, including orders directing issuance of
notice stating the time & place, designated presiding officer & record
date/s for determination of SH/M entitled to vote

📌 Should director, trustee or officer die, resign or in any

manner cease to hold office-report to SEC within 7 days from
knowledge thereof
REPORT OF ELECTION, NON-HOLDING OF ELECTION
& CESSATION FROM OFFICE
REVISED CORPORATION
OLD CORPORATION CODE CODE

Information To Be Reported Information To Be Reported

Names, nationalities, &
residence addresses of
directors, trustees & officers
elected
Non-holding of Elections
No provisions
Includes shareholdings
Non-holding of Elections
• Must report to SEC within
30 days before scheduled
date of election
• specifying new date of
election not later than 60
days from original
schedule of election
 REPORT OF ELECTION, NON-HOLDING OF
ELECTION & CESSATION FROM OFFICE
OLD CORPORATION CODE REVISED CORPORATION CODE

Power of SEC to Compel Holding

Power of SEC to of Election
Compel Holding of SEC has power to issue notice of
Election election, designate presiding
No counter-part officer & record date of SH or
provisions members eligible to vote:

IF no new date is designated

IF meeting is not held on

rescheduled date
 CAN GENERAL MEMBERSHIP VALIDLY ELECT A
NUMBER OF MEMBERS OF BOT NOTWITHSTANDING
DIFFERENT REQUIREMENT IN BY-LAWS?

CAN PRESENT BOD ELECT ADDITIONAL MEMBERS TO

FILL UP THE VACANCY IN THE BOARD EVEN IN
VIOLATION OF BY-LAWS MINIMUM REQUIREMENT
92

SEC. 24. CORPORATE OFFICERS

BOD, after their election, must formally organize & elect the ff
officers:
a. President, who must be director
b. Treasurer, must be resident of PH
c. Secretary, should be resident & citizen of PH
d. Other officers as may be provided in bylaws
e. Corporation vested with public interest-compliance officer

📌 Shareholdings of elected directors, trustees & officers must be

reported to SEC after election
 CORPORATE OFFICERS
REVISED CORPORATION
OLD CORPORATION CODE
CODE
Treasurer Treasurer
No counter-part provisions Must be resident
Compliance Officer
Compliance Officer
Required for corporations
No counter-part provisions
vested with public interest

Incompatible Positions
Incompatible Positions President & Secretary
President & Treasurer
 SEC. 26. DISQUALIFICATION OF DIRECTORS, TRUSTEES OR OFFICERS
94

📌 if within 5 years prior to election or appointment as

such, person was:
1. Convicted by final judgment
a. Offense punishable by imprisonment for a period
exceeding 6 years
b. Violating RCC
c. Violating SRC
2. Found administratively liable for any offense involving
fraudulent acts
3. By a foreign court or equivalent foreign regulatory
authority for acts, violations, or misconduct similar to
those enumerated above
 DISQUALIFICATION OF DIRECTORS,
TRUSTEES OR OFFICERS
OLD CORPORATION CODE REVISED CORPORATION CODE

Grounds for Disqualification Additional Grounds for

Convicted by final
judgement within 5 yrs prior
to the election/appointment
for the ff:
❏ An offense punishable by
imprisonment for more
than 6 years, or
❏ for violating the
Corporation Code
Disqualification
❏ for violating SRC
❏ found administratively
liable for any offense
involving fraud
❏ By foreign court or
equivalent foreign
regulatory authority similar
acts
 Guidelines for
Removal of
Disqualified
Directors, Trustees
& Officers of
Corporations
 SEC. 27. REMOVAL OF DIRECTORS OR
97 TRUSTEES-POWER OF SEC
📌 SEC shall motu proprio, or upon verified
complaint & after due notice & hearing,
order removal despite disqualification, or
whose disqualification arose or is
discovered subsequent to an election

📌 removal shall be without prejudice to

other sanctions that SEC may impose on
BOD/BOT who, with knowledge of
disqualification, failed to remove such
director or trustee
 PERIOD FOR FILLING UP VACANCY IN BOD/BOT
98

CAUSE OF VACANCY PERIOD OF ELECTION

Not later than day of such expiration
Due to term expiration at a meeting called for that purpose

May be held same day of meeting

authorizing removal & this fact must
Removal by SH/M be so stated in agenda & notice of
meeting

Not later than 45 days from time

Other cases vacancy arose

📌 Director or trustee elected to fill vacancy shall be referred to as replacement

& shall serve only for the unexpired term of predecessor in office
VACANCY & EMERGENCY BOARD
SECTION 28
 SEC. 28 EMERGENCY BOD/BOT
100

📌 When vacancy in BOD prevents remaining

directors from constituting quorum & consequently
from making emergency actions required to
prevent grave, substantial & irreparable loss or
damage
❏ vacancy may be temporarily filled
from among officers by unanimous
vote of remaining directors or
trustees
❏ notify SEC within 3 days from
creation of emergency board
 SEC. 29 COMPENSATION OF
101
DIRECTORS/ TRUSTEES

❏ prohibits Director/Trustee from

participating in fixing their own
per diems or compensation

❏ corp vested with public interest

to submit to their SH & SEC
annual report of total
compensation of each of their
directors or trustees
 COMPENSATION OF
DIRECTORS & TRUSTEES
OLD CORPORATION CODE REVISED CORPORATION CODE

Who May Fix Compensation Who May Fix Compensation

May be granted to directors Directors & trustees can
by vote of SH representing not participate in
majority of the authorized determination of their own
capital stock per diems or compensation

Report on Compensation
Report on Compensation Annual report to SEC if
No counter-part provision corporation vested with public
interest
 LIABILITY
SEC 30

DEALINGS
SEC 31

CONTRACTS BETWEEN CORPORATIONS WITH

INTERLOCKING DIRECTORS
SEC 32

DISLOYALTY
SEC 33
 DEALINGS OF DIRECTORS, TRUSTEES, OR OFFICERS WITH THE
CORPORATION
104

XPN: (PVF)
GR: NOT ONLY SELF-DEALING
DIRECTORS, TRUSTEES OR OFFICERS 1. presence of such director or
trustee in board meeting in which
but also their spouses & relatives within 4th contract was approved was not
civil degree of consanguinity or affinity- necessary to constitute a
VOIDABLE, at option of such corp quorum
2. vote was not necessary for
approval of contract
📌 IN CASE OF CORP VESTED WITH 3. contract is fair & reasonable
PUBLIC INTEREST
Material contracts are approved by at
least 2/3 of entire membership of board,
with at least majority of the independent IF NOT COMPLIED
directors voting to approve such & WITH:

Contract may be ratified

by at least 2/3 of SH/M
📌 In case of an officer,
contract has been previously authorized by BOD
 DEALING OF DIRECTORS,
TRUSTEEES OR OFFICERS
OLD CORPORATION CODE REVISED CORPORATION CODE
Now also includes: spouses &
Contracts with Related relatives within 4th civil degree of
consanguinity or affinity
Parties of the Corp
Limited to directors, trustees, Directors or trustees who have
or officers potential interest must recuse from
voting
Material contracts Must be approved by at
between related parties least 2/3 of the entire
& corp with vested public membership of the board,
interest: with at least majority of the
No counter-part provision IDs voting to approve
 COMMITTEE CREATION & POWERS
SECTION 34

bylaws so provide
– EXECOM composed of at least 3 directors
– majority of vote to decide on specific matters
delegated under bylaws or BOD
– except approval of any action for which SH'
approval is also required
– filing of vacancies in the board
– amendment, repeal, adaption of bylaws
– amendment or term is not amendable or
repealable & distribution of cash dividends
 COMMITTEE CREATION & POWERS
SECTION 34

special
BOD may create

committees
– of temporary or permanent nature &
– determine term, composition, compensation,
powers & responsibilities
SUB-OUTLINE ON POWERS OF CORP
SECTIONS 35-44

Corporate powers & capacity-foreign corp prohibition

Extend or shorten corporate term-BOD majority + 2/3

Increase/decrease capital stock, incur, create, or increase
bonded indebtedness (PCC notification)

Deny pre-emptive right if provided in AOI

Sale of disposition of assets, acquire own shares

Invest corporate funds, declare dividends & enter
into mgmt. contract
Ultra-vires acts
CORP. CAN RETIRE PREFERRED SHARES AFTER
REDEMPTION & REMOVE THE SAME FROM
TREASURY SHARES

AMENDMENT OF AOI BY DECREASING ACS

 REDEEMABLE PREFERENCE
SHARES & REDUCTION OF
CAPITAL STOCK

ALLOWED –
• Purchase of redeemable shares upon expiration of
fixed period
• regardless of existence of unrestricted RE
• as long as, after such redemption, it has sufficient
assets to cover liabilities & capital stock
IS IT ABSOLUTE TO HAVE UNRESTRICTED EARNINGS
BEFORE CORP. REDEEM, REACQUIRE, OR
REPURCHASE ITS OWN SHARES?

ESSENCE OF TRUST FUND DOCTRINE IN

REDEMPTION OF SHARES
REDEMPTION MAY NOT BE MADE IF IT
RESULTS IN INSOLVENCY
REPUBLIC PLANTERS BANK VS AGANA SR
G.R. NO. 51765 [MARCH 3, 1997]
 POWER TO INVEST CORPORATE FUNDS
[SECTION 41]

• Board majority + 2/3 ratification

• if investment is

• to accomplish its primary purpose

• approval not necessary
 SEC CONSIDERATION ON
CORPORATE GOVERNANCE & MINORITY INVESTORS
 ON MEETINGS
SECTIONS 48-58

Regular & special meetings of SH/M

Place & time of meetings of SH/M & quorum

Meetings of Directors/Trustees & quorum

Who shall preside at meetings

Right to vote of secured creditors & administrators

Voting in case of joint ownership of stocks & treasury

Manner of voting, proxies & voting trusts

 MEETINGS
DIRECTORS STOCKHOLDERS
QUORUM Majority Majority of the OCS
DATE OF Annual on date fixed in by-
Monthly as fixed in by-
REGULAR laws or if not fixed, any date
MEETING laws AFTER APRIL 15
DATE OF SPECIAL Any time necessary or as
MEETING provided in by-laws
Regular Meetings-21 days
PRIOR unless otherwise
2 days prior to meeting
provided in by-laws
NOTICE unless otherwise
Special Meetings-1 week
provided in by-laws unless otherwise provided
in by-laws
 MEETINGS
DIRECTORS STOCKHOLDERS

Shall not be at the principal

office itself, unless it is not
PLACE Anywhere practicable, in the city or
municipality where
principal office is located
PROXY VOTING Not allowed Generally allowed
GR: Majority of those
present.
XPN:
a. Election of corporate Refer to voting
VOTING
REQUIREMENT
officers: majority of all requirements under Rights
BOD members of Stockholders
b. When the by-laws
provide for higher voting
requirement
MEETINGS OF STOCKHOLDERS/MEMBERS
OLD CORPORATION CODE REVISED CORPORATION CODE

Required Report for a • Minutes of the most recent

regular meeting with
Regular Meeting
certain minimum
No counter-part provisions information required
• List of members or SH &
voting rights
• Detailed assessment of
corporation’s performance
• Financial report for
preceding year
• Explanation of dividend
policy & fact of payment or
non-payment
• Director or trustee profiles
MEETINGS OF STOCKHOLDERS/MEMBERS
OLD CORPORATION CODE REVISED CORPORATION CODE

Required Report for a

• Director or trustee
Regular Meeting
attendance report
No counter-part
• Appraisal & performance
provision
reports for the board
• Director or trustee
compensation report
• Disclosures on self-
dealings & related party
transactions
• Profiles of directors
nominated or seeking re-
election
MEETINGS OF STOCKHOLDERS/MEMBERS
OLD CORPORATION CODE REVISED CORPORATION CODE

Waiver of notice of • Implied waiver cannot be

meeting: through general waivers in
the AOI or By-Laws
May be implied in waiver • Attendance in meeting is a
waiver of the notice, except
when express purpose of
attendance is to object to the
improper call of the meeting
SH or Member’s right to
propose holding of a • Allowed SH/member
special meeting may propose items
No counter-part to include in agenda
provisions
MEETINGS OF STOCKHOLDERS/MEMBERS
OLD CORPORATION CODE REVISED CORPORATION CODE
Closure of stock transfer book • At least 20 days for regular
during regular & special meeting & 7 days for special
meetings: meeting before date of meeting
No counter-part provisions

Postponement of regular • Written notice of postponement

must be sent to SH/members at
meeting: least 2 weeks prior to the date
No counter-part provisions of the meeting
 SEC ISSUES RULES ON
NOTICE OF MEETING OF SH/M
MEETINGS OF STOCKHOLDERS/MEMBERS
OLD CORPORATION CODE REVISED CORPORATION CODE

Notice of meeting Must be accompanied by:

1. Agenda
No counter-part 2. Proxy form
provisions 3. Requirements &
procedure to be followed
if voting is through
remote communication or
in absentia; &
4. When the meeting is for
the election of directors
or trustees, the
requirements &
procedure for nomination
& election
MEETINGS OF STOCKHOLDERS/MEMBERS
OLD CORPORATION CODE REVISED CORPORATION CODE

Improperly held or • Valid provided all

called meetings Valid members/SH are
provided all members or present &
stockholders are present
• NOT ONE member
or SH objects at the
start of the meeting
to hold the meeting
for the improper
call or holding of the
meeting
 MEETINGS OF STOCKHOLDERS/MEMBERS
OLD CORPORATION CODE REVISED CORPORATION CODE

Date of Annual Meeting if Date of Annual Meeting if

Not Fixed in the By-Laws Not Fixed in the By-Laws
Any date in April Any date after April 15

Notice of Regular Meeting

Notice of Regular Meeting
At least 21 days or 3 weeks
At least 2 weeks unless a
prior to the meeting, unless a
different period is required by
different period is required by
the By-Laws
the By-Laws

Notice sent by electronic Notice sent by electronic

means: means:
No provisions Allowed
 PROXIES
OLD CORPORATION CODE REVISED CORPORATION CODE

Filing of proxies
Filed with the corporate • Must be received
secretary before the by corporate
scheduled meeting
secretary
• within a
reasonable time
• before the
scheduled
meeting
 MEETINGS OF DIRECTORS & TRUSTEES
OLD CORPORATION CODE REVISED CORPORATION CODE

Notice of regular & special

meetings of directors &
trustees
At least 1 day prior, unless
otherwise provided by the
by-laws
At least 2 days prior,
unless a longer
period is required by
the by-laws

Voting by teleconference,
videoconference, or other
alternative modes Codification of
No counter-part existing SEC policy
contributions
 MEETINGS OF DIRECTORS & TRUSTEES
OLD CORPORATION CODE REVISED CORPORATION CODE

• Chairman, or in his
Who presides absence,
President unless the by- • the President,
laws provide otherwise • unless the by-laws provide
otherwise

• Right to vote of SH • Covers all situations

where shares are
where SH grants
mortgaged, pledged or
security interest in his
used as security
• Only provides in case of or her shares to his or
pledge and mortgages her creditors
 SEC ISSUES RULES ON
REMOTE PARTICIPATION IN MEETING
CAN VOTING THROUGH REMOTE COMMUNICATION
BE ALLOWED EVEN IN THE ABSENCE OF ANY
PROVISION IN THE BYLAWS?

IF YES, CAN THIS BE DONE IN ALL MEETINGS?

VOTING THROUGH REMOTE
COMMUNICATION IS ALLOWED BY
VIRTUE OF A BOARD RESOLUTION
 MANNER OF VOTING; PROXIES
SEC 57 RCC & SEC 12 MC NO. 6 SERIES OF 2020

– SH/M may vote in person or by proxy in all meetings

of stockholders or members
SH/M may also vote
through remote communication or in absentia
when:
A. authorized in the by-laws or
B. by a majority of the board of BOD/BOT

• resolution issued by BOD/BOT shall only be for

that purpose & for the particular meeting stated
in the said resolution
SUB-OUTLINE ON CORPORATE BOOKS
SECTIONS 73-74

Books to be kept & stock transfer agent, right

to inspect is not absolute, to report to SEC
within 5 days if no valid & reasonable ground

Right to AFS-Php 600K assets

& liabilities to be audited
otherwise certified by
Treasurer/President
 CORPORATE BOOKS & RECORDS
OLD CORPORATION CODE REVISED CORPORATION CODE

Corporate Books & Records

Record of all business 1. AOI & By-Laws
2. Current ownership structure,
transactions & minutes voting rights, list of SH/members,
group structures, intra-group
relations, ownership data, and
beneficial ownership
3. Names & addresses of directors,
trustees & officers
4. Record of all business transactions
5. A record of the board resolutions
6. Copies of the latest reportorial
requirements submitted to the
SEC
7. minutes of all meetings of
SH/members, or of the BOD/BOT
 CORPORATE BOOKS & RECORDS
OLD CORPORATION CODE REVISED CORPORATION CODE

Laws on Confidentiality Inspecting or reproducing

No counter-part provision party remains bound by
confidentiality rules
under prevailing laws,
such as:
- Trade secrets or
processes under the
Intellectual Property
Code
- Data Privacy Act
- SRC
- Rules of Court
 REPORTORIAL REQUIREMENTS
TO BE SUBMITTED TO SEC
OLD CORPORATION CODE REVISED CORPORATION CODE

Required Reports
Annual financial report must be Required Reports
certified by an independent CPA in Annual financial statements must
appropriate cases be audited by an independent CPA

GENERAL
INFORMATION
SHEET-BENEFICIAL
INTEREST DATA
REQUIRED?
 RIGHT OF INSPECTION
OLD CORPORATION CODE
Right to Inspect Corporate Records
Shall be open to inspection by any
director, trustee, SH/member, or by a
representative
Action for denial of right to inspect
or non-action
No provisions
REVISED CORPORATION CODE
• requesting party who is not
a SH, member shall have no
right to inspect or demand
reproduction of corporate
records
• Aggrieved party may report to
SEC
• SEC will conduct summary
investigation within 5 days from
receipt of report
SUB-OUTLINE ON DISSOLUTION
SECTIONS 133-139

Voluntary or involuntary method of dissolution

Voluntary dissolution where no creditors are affected

Creditors are affected

Dissolution by shortening corporate term

Withdrawal of request & Petition for Dissolution

Involuntary dissolution & liquidation

1980 Corporate charter was
revoked in 2003
No creditors but with lone asset
of parcel of land left
Out of 9 directors, 6 are living
 3 YRS TO CONTINUE AS A BODY
CORPORATE FOR LIQUIDATION
PURPOSES
SEC 139 RCC
 Disposition of remaining undistributed
assets must necessarily continue even
after such period [SEC OGC OPINION 15-11, SEPT 4, 2015]
 RECAP! RCC IN A NUTSHELL

I • PERPETUAL CORPORATE TERM

II • OPC

III • CREATION OF EMERGENCY BOARD

IV • OPTIONAL ADR

V • ADHERENCE TO EASE OF DOING BUSINESS

VI • PROTECTION OF MINORITY SH/M

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