Summary Outline of Revised corporation code

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Duller, Leigh Yrielle
M. BSA
OUTLINE: Republic Act 11232 (Revised
Corporation Code of the Philippines)
Sec 1. Title of the code
The code shall be known as the “Revised
Corporation Code of the Philippines”
- An act providing for the revised
corporation code of the
Philippines
- Enacted on February 20,
2019 Scope of the code
1. Provide incorporation, organization, and
regulation of private corporations, both
stock and non-stock, including
educational and religious corporations.
2. Defines their power and provides
for their dissolution
3. Fixes the duties and liabilities of
directors or trustees and other
officers
4. Declares the rights and liabilities
of stockholders and members
5. Prescribes the conditions under
which corporations including foreign
corporations may transact business
6. Provides penalties for violations of
the code
7. Repeals all laws and parts of laws
conflict and inconsistent with the
code
Sec. 2 CORPORATION DEFINED.
Definition of Corporation (The definition refers
only to private corporations or to corporations
organized under the corporation code)
Attributes of Corporation:
1. An artificial being;
2. Created by operation of law;
3. Having the right to succession;
4. has the powers, attributes, and properties
expressly authorized by law or incidental to
its existence.
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- It is an artificial being; (Doctrine
of corporate personality)
A corporation is a legal or juridical person,
separate and distinct from its shareholders. Its
corporate name may take, hold, or dispose
property under its corporate capacity. May
enter a contract, can sue and be sued on court.
As a consequence:
a. Liability for acts or contracts – Utang ng
corporation kanya lang, utang ng
stockholders kanya lang. walang
damayan (general rule) Exception:
Doctrine of piercing the veil of
corporate entity – It is when the
corporate entity is being used as a cloak
or cover for fraud or illegality, or to
defeat public convenience, justify
wrong, protect fraud, or defend crime.
Instances: Where a corporation is
dissolved and its assets are transferred
to another corporation to avoid a
financial liability of the first
corporation.
b. Right to acquire and possess property
– acquire any property. Claims of
ownership: but residual interest only.
c. Property acquired by the corporation is
owned by corporation and not of
stockholders
d. All contracts entered into in its name
by its regular appointed officers or
agents of contracts and not those of
stockholders, belong to the partnership.
e. The tax exemption granted to
corporation is not extended to
dividends paid.
f. Corporation has no personality to bring
action in behalf of its stockholders
g. Changes in stockholders will not change
the partnership
- It is created by operation of Law;
or created by law
 a. A corporation require special
authority or grant from the state.
(GOCC: GSIS, SSS)
b. Created by operation of law – A special
incorporation law which directly creates
the corporation. May ginawang law na
act as a guide lang or had provided the
regulatory ways on how to create a
corporation for those individual desiring
to be and act as a corporation.
- It has the right of succession
a. A corporation has a capacity of
continuous existence irrespective of the
death, withdrawal, insolvency, or
incapacity of a stockholders, and
regardless of the transfer their interest
or share of stock. (perpetual existence
unless stipulated in AOI)
b. 50 years renewable in the old law:
batas pambansa bilang 68
c. Corporations created by special laws
have the right of successions for the
term provided in the laws creating
them.
- It has only the powers, attributes and
properties expressly authorized by
law or incident to its existence.
a. A corporation, being purely a creation
of law, may exercise only such powers
granted by the law of its creation.
b. Express grant – power nakalagay sa law
pag created by law, pag created by
operation of law yung mga nakalagay
sa AOI.
c. Implied power- mga hindi
nakalagay, mga kailangan lang
gagawin.
Sec. 3&4 DIFFERENT TYPES
OF CORPORATION
• Stock Corporations – Corporations that
have capital stock divided into shares
that are authorized to be distributed.
BOD
• Non-stock Corporations –
Corporations that are not stock
corporations. Contribution of the
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member is where they get their capital.
BOT
• Corporations created by special laws
or charters – This Corporation shall
be governed primarily by the
provisions of the special law or charter.
GOCC
Sec. 5 CORPORATORS – are those who
compose a corporation, whether as:
• Stockholders in a stock corporation
• Members in a non-stock corporation
INCORPORATORS - are those stockholders
or members mentioned in the articles of
incorporation as originally forming and
composing the corporation and who are
signatories thereof.
Sec. 6 CLASSIFICATION OF SHARES
• The rights, privileges, or restrictions,
and their stated par value must be
indicated in the articles of
incorporation.
• Each share shall be equal to other
share, except provided in the articles of
incorporation and in the certificate of
stock.
Par value shares – One in which a specific value
if fixed in the articles of incorporation and
appearing in the certificate of stock.
No-par value shares – One without any value
appearing on the face of the certificate of stock.
• It must be issued for a consideration
of at least 5 pesos per share.
• Entire consideration received by the
corporation for its no par value shares
shall be treated as capital and shall
not be available for distribution as
dividends.
• (banks, trust, insurance, and preneed
companies, public utilities, building and
loan associations, and other
corporations authorized to obtain or
access funds from the public, whether
publicly listed or not, shall not be
permitted to issue no par value
shares of stock.)
Voting Shares – Issued with the right to vote
BOD and officers
Non-voting shares – issued without the right to
vote BOD and officers
Ordinary shares – These shares entitle the holder
to an equal pro-rata division of profits without
any preference.
Preference shares – These shares entitle the
holder to certain advantages over the holders of
ordinary shares.
• Issued only with stated par value
Promotion shares – Those issued to promoters as
compensation in promoting the incorporation of
a corporation.
Treasury shares – A stock that has been issued
by the corporation as fully paid and later
reacquired but not retired.
Convertible shares – A stock which is
convertible from one class to another class.
Founder’s share - Founders’ shares may be
given certain rights and privileges not enjoyed
by the owners of other stocks.
Redeemable shares – These are shares which
may be purchased by the corporation from the
holders of such shares.
• May be issued by the corporations
when expressly provided in the
article of corporation.
TITLE II
Sec. 10 NUMBER AND QUALIFICATIONS
OF INCORPORATORS
Any person, partnership, association or
corporation, singly or jointly with others but not
more than 15 in number, may organize a
corporation.
Following persons not allowed to organize as
a corporation:
1. Natural persons who are licensed to practice
a profession; and
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2. Partnerships or associations organized for
the purpose of practicing a profession.
(Unless otherwise provided by special laws)
NUMBER OF INCORPORATORS:
• Not more than 15.
• Note: RCC removed the minimum number of
incorporators.
QUALIFICATIONS OF INCORPORATORS
1. Natural persons
2. Legal age; and
3. Must own or be a subscriber to at least 1
share of the capital stock.
Sec. 11 CORPORATE TERM
Corporate term shall have a perpetual existence.
Unless the corporation, upon a vote of its
stockholders representing a majority of its
outstanding capital stock, notifies the
Commission that it elects to retain its specific
corporate term pursuant to its AoI.
Dissenting stockholder – yung umayaw sa
amendment of AOI tsaka extension of
term(appraisal rights) isauli ang share na lang
EXTENSION OF CORPORATE TERM
A corporate term for a specific period may
be extended or shortened by amending the
AOI, provided that:
1. No extension may be made earlier than
3 years prior to the expiration;
2. If there are justifiable reasons; or
3. Such extension shall take effect only on
the day following the original or
subsequently expiry date(s).
RULE ON CORPORATION WHOSE TERM
EXPIRED
1. They may apply for a revival of its
existence together with:
a. All rights & privileges under its
certificate; and
b. All of its duties, debt & liabilities
existing prior to its revival.
2. Such revival must be approved by the SEC,
and shall only be deemed revived upon
issuance of certificate of revival of corporate
existence.
Sec. 12. MINIMUM CAPITAL STOCK
SHALL NOT BE REQUIRED OF STOCK
CORPORATION.
• Otherwise provided by special law
Sec. 13 CONTENTS OF ARTICLES OF
CORPORATION
All corporations shall file with the SEC the
AoI, in any of the official languages, duly
signed and acknowledged or authenticated, in
such form and manner as be allowed by the
Commission.
SUBSTANTIAL CONTENTS OF
ARTICLES OF
INCORPORATION
1. Name of the corporation.
2. Specific purpose or purposes for which is
being formed. Where a corporation has
more than one state purpose, it shall indicate
the following:
a. Primary purpose;
b. Secondary purpose(s).
3. Principal office of the corporation, must
be located within the Philippines;
4. Term of the corporation, if such has
not elected perpetual existence;
5. Names, nationalities, and residence
addresses of the incorporators;
6. Number of directors/trustees, which shall
not be more than 15.
7. Names, nationalities, and residence
addresses of persons who shall act as directors
or trustees;
8. (For stock corporation) amount of its
authorized capital stock, number of shares
which is divided, par value of each, names,
nationalities, and residence addresses of the
original subscription, and a statement that some
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or all of the shares are without par value, if
applicable.
9. (Non-stock Corp) amount of its capital,
names, nationalities and residence addresses
of the contributors, and amount contributed by
each; and
10. Other matters consistent and
which incorporators may deem
necessary and convenient.
11. Arbitration agreement – (not mandatory,
as the word in the code provided that such
agreement “may be provided” in the articles.
FILING OF ARTICLES OF
INCORPORATION
The articles of incorporation and applications for
amendments may be filed with the SEC in the
form of an electronic document, in accordance
with the SEC’s rules and regulations on
electronic filing.
Sec. 15 AMMENDMENT OF ARTICLES OF
INCORPORATION
• 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. Unless
otherwise prescribed by this Code or by
special law, and for legitimate
purposes,
• The articles of incorporation of a non-
stock corporation may be amended by
the vote or written assent of majority
of the trustees and at least two-thirds
(2/3) of the members.
• The amendments shall take effect
upon their approval by the
Commission or from the date of filing
with the said Commission if not acted
upon within six (6) months from the
date of filing
 for a cause not attributable to the
corporation.
Sec. 16 The commission may disapprove the
articles of incorporation or any amendment
thereto if the same is not compliant with
requirements of this code.
Sec. 17. CORPORATE NAME.
No corporate name shall be allowed by the SEC
if it is not distinguishable from that already
reserved or registered for the use of another
corporation, or if such name is already protected
by law, or when its use is contrary to existing
law, rules and regulations.
A NAME IS NOT DISTINGUISHABLE,
WHEN:
1. The word “corporation”, “company”,
“incorporate”, “limited”, “limited liability”,
an abbreviation of one of such words; and
2. Punctuations, articles, conjunctions,
contractions, prepositions, abbreviations,
different tenses, spacing, or number of the
same word or phrase.
INVALID CORPORATE NAMES
1. Not distinguishable from a name already
reserved or registered for the use of
another corporation;
2. Protected by law; or
3. Contrary to law & rules and regulations.
RULES ON CORPORATE NAMES
1. If the corporate name is one of the invalid
corporate names mentioned above, the Sec may
summarily order the corporation to
immediately cease and desist from using such
name and require the corporation to register a
new one.
2. SEC shall also cause the removal of all
visible signage, marks, advertisements, labels,
prints and other effects bearing such corporate
name.
3. If the change of corporate name is
approved, SEC shall issue a certificate of
incorporation under the amended name.
EFFECT OF FAILURE TO COMPLY
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If the corporation fails to comply with the SEC’s
order:
1. SEC may hold the corporation and its
responsible directors or officers in
contempt;
2. May hold them administratively, civilly,
and/or criminally liable under this Code
and other applicable laws; and/or
3. Revoke the registration of the corporation.
SEC. 18. REGISTRATION,
INCORPORATION AND
COMMENCEMENT OF CORPORATION
EXISTENCE
PROCEDURE ON REGISTRATION
1. A person or group of persons desiring to
incorporate shall submit the intended
corporate name to the SEC for verification.
2. If the SEC finds that the name is
distinguishable (provided the requirements for
corporate name are followed), the name shall
be reserved in favor of the incorporators.
3. Incorporators shall submit their articles
of incorporation and by-laws to the SEC.
4. If SEC finds that the submitted documents
and information are fully compliant with the
requirements of this Code, SEC shall issue
the certificate of incorporation.
COMMENCEMENT OF CORPORATE
EXISTENCE
A private corporations commences its corporate
existence and juridical personality from the date
the Commission issues the certificate of
incorporation under its official seal.
Sec. 21 EFFECTS OF NON-USE OF
CHARTER AND CONTINUOS
INOPERATION
• If a corporation does not formally
organize and commence its business
within five (5) years from the date of
its incorporation, its certificate of
incorporation shall be deemed
revoked as of the day following the
end of the five-year period.
 • If a corporation has commenced its
business but subsequently becomes
inoperative for a period of at least
five (5) consecutive years, the
Commission may, after due notice
and hearing, place the corporation
under delinquent status.
TITLE III
Sec. 22 THE BOARD OF DIRECTORS OR
TRUSTEES OF A CORPORATION;
QUALIFICATIONS AND TERM
ROLE OF BOARD OF DIRECTORS /
TRUSTEES
• They shall exercise the corporate
powers, conduct all business, and
control all properties of the
corporation.
TERM OF BOARD OF DIRECTORS /
TRUSTEES
1. Directors shall be elected for a term of 1
year from among the holders of stock
registered in the corporation’s books;
2. Trustees shall be elected for a term not
exceeding 3 years from among the members
of the corporation.
3. A director who ceases to own at least one
(1) share of stock or a trustee who ceases to be
a member of the corporation shall cease to be
such.
INDEPENDENT DIRECTORS - A person
who is independent of management and free
from any business or other relationship which
could, or could reasonably be perceived to
materially interfere with the exercise of
independent judgment in carrying out the
responsibilities as a director.
Board of the following corporations vested
with public interest shall have independent
directors constituting at least 20% of such
board:
a. Corporations covered by Sec. 17.2 of RA
8799 (Securities Regulation Code),
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b. Banks and quasi-banks, nonstock savings and
loan associations, pawnshops, corporations,
engaged in money service business, preneed,
trust and insurance companies, and other
financial intermediaries; and
c. Other corporations engaged in business
vested with public interest.
ELECTION OF INDEPENDENT
DIRECTORS
It must be elected by shareholders present or
entitled to vote in absentia during the election of
directors.
Sec. 23. ELECTION OF DIRECTORS OR
TRUSTEES
Each stockholder or member shall have the right
to nominate any director or trustee who
possesses all of the qualifications and none of
the disqualifications in this Code. Unless when
the exclusive rights is reserved for holders of
founders’ shares under Sec. 7 of this Code.
RULE ON PROXY (IES)
1. At all elections of directors or trustees, there
must be present, either in person or through a
representative authorized to act by written
proxy, the owners of majority of the outstanding
capital stock, or if there be no capital stock, a
majority of the members entitled to vote.
2. When so authorized in the by-laws or by a
majority of the board of directors, the
stockholders or member may also vote
through remote communications or in
absentia.
• Provided that the right to vote through
such modes may be exercised in
corporations vested with public
interest, notwithstanding the absence of
a provision in the by-laws of such
corporations.
• Stockholders or members who
participates through remote
communication or in absentia shall be
deemed present for purposes of
quorum.
SEC. 24. CORPORATE OFFICERS cause. Provided, that w/out cause may
Board of directors, after their election, must not be used to deprive.
formally organize and elect the following
officers: • SEC shall motu proprio, (out of their
own will) or upon verified complaint,
a. President, who must be a director; and after due notice and hearing,
order the removal of a director or
b. Treasurer, must be a resident of trustee elected despite the
the Philippines; disqualification, or whose
disqualification arose or is discovered
c. Secretary, must be a resident of subsequent to an election.
the Philippines; and
Requisites for removal of directors or
d. Other officers as may be provided in the trustees:
by- laws.
• The removal must “take place
e. If the corporation vested with public interest either in a general meeting or in a
– compliance officer. special meeting called for the
purpose.”
SEC. 26. DISQUALIFICATION OF • There must be “previous notice to the
DRECTORS, TRUSTEES stockholders or members of the
OR OFFICERS. corporation of the intention to
A person shall be disqualified from being a propose such removal at the
director, trustee, or officer of any corporation if, meeting”
within 5 years prior to the election or • Director or trustee may be removed
appointment as such, the person was: by a vote of stockholders holding or
representing at least 2/3 of the
1. Convicted by final judgment: outstanding capital or 2/3 of the
a. Offense punishable by vote of members in a non-stock
imprisonment for a period exceeding 6 years; corp.
b. Violating this code; and A director or trustee can be removed from
c. Violating RA 8799 office but he cannot be removed a
(Securities Regulation stockholders of the corporation, depriving
Code; him of his ownership of shares, without due
process.
2. Found administratively liable for any
offense involving fraudulent t acts; and SEC. 28 VACANCIES FOR REMOVAL OF
DIRECTORS OR TRUSTEES
3. By a foreign court or equivalent foreign
regulatory authority for acts, violations, QUORUM – IS THE MINIMUM
or misconduct similar to those REQUIREMENT NUMBER OF PERSONS
enumerated in paragraphs (a) and (b) IN A MEETING TO MAKE A MEETING
above. VALID, WILL CONSTITUTE THE
MAJORITY OR ALL OF BOD OR BOT.
SEC. 27. REMOVAL DIRECTORS
OR TRUSTEES. . • Any vacancy in board, other than
because of removal or by expiration
• If the secretary refuses, the of term, the remaining of the boards
stockholders or members, holding the can fill the vacancy, constituting the
majority of capital stock or majority of quorum.
members, signing the demand can • The stockholders or members can
initiate the meeting for the removal fill if there is no quorum.
with or without • When the vacancy is because of the
expiration of term, the election
shall held no later than the day of
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such

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 expiration. (july 1 nag expire dapat
july 1 may na elect na) on a meeting
called for that purpose.
• When the vacancy is due of
removal, the election for the
vacancy may happen at the same
day of the removal and must be
stated in the agenda of the meeting.
• The election, in all other cases must
be held no later than 45 days from the
time the vacancy arose.
• The substitute or new elect shall
serve only the remaining years left.
• When in emergency, and a meeting
that needs a quorum. The vacancies
can be filled by the officers
temporarily. Emergencies that
require grave, substantial, and
irreplaceable loss or damage to the
corporation. Shall notify the
commission within 3 days from the
creation.
• Increase of BOD or BOT shall only
be filled by an election during a
meeting.
SEC. 29. COMPENSATION OF
DIRECTORS OR TRUSTEES.
• In absence of any provision in the
AOI or bylaws, there will be no
compensation, except for
reasonable per diems (allowances).
• The stockholders holding the majority
of the capital stock or majority of
members may grant compensation
and approve amount at a meeting.
• Not exceeding 10% of the net income
before income tax.
SEC. 30. LIABILITY OF A DIRECTORS,
TRUSTEES, OR OFICERS.
• Solidarily obligations (jointly and
severally) – each debtor is liable to
the entire obligations, each creditor is
entitled to the entire obligation.
Cases when directors/trustees or
officers liable damages:
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• He wilfully and knowing fully votes
or assents to patently unlawful acts of
the corporations
• He is guilty of gross negligence, or
bad faith in directing the affairs of the
corporation.
• He acquires any personal or
pecuniary interest I conflict with
his duty as such director or officer
or trustee.
SEC. 31. DEALINGS OF DIRECTORS,
TRUSTEES, OR OFFICERS WITH THE
CORPORATION
A contract of the corporation with 1 or more of
its directors, trustees, officers, or their spouses
and relatives within the 4thPAGE 5 OF 5 civil
degree of consanguinity or affinity is voidable,
at the option of such corporation. Unless all the
following conditions are present:
1. The presence of such director or trustee in
the board meeting in which the contract was
approved was not necessary to constitute a
quorum for such meeting;
2. The vote of such director or trustee was
not necessary for the approval of the contract;
3. The contract is fair and reasonable under
the circumstances;
4. 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; and
5. In case of an officer, the contract has been
previously authorized by the board of
directors.
EFFECT; WHERE ANY OF THE FIRST 3
CONDITIONS ARE
ABSENT
Where any of the set forth in the preceding
paragraph is absent, in the case of director or
trustee, such contract may be ratified by the vote
of the stockholders representing at least two-
thirds (2/3) of the outstanding capital stock or
of at least two-thirds (2/3) of the members in a
meeting called for the purpose:
Provided, that full disclosure of the adverse
interest of the directors or trustees involved is
made at such meeting and the contract is fair
and reasonable under the circumstances.
.
TITLE IV
POWERS OF CORPORATION
SEC. 35. CORPORATE POWERS
AND CAPACITY
1. To sue and be sued in its corporate name;
2. To have perpetual existence unless the
certificate of incorporation provides
otherwise;
3. Adopt and use a corporate seal;
4. Amend its articles of incorporation in
accordance with the provisions of this
Code;
5. To adopt bylaws, not contrary to law,
morals or public policy, and to amend or
repeal the same in accordance with this Code;
6. In case of stock corporations, to issue or sell
stocks to subscribers and to sell treasury stocks
in accordance with the provisions of this Code;
and to admit members to the corporation if it
be a non-stock corporation;
7. To purchase, receive, take or grant, hold,
convey, sell, lease, pledge, mortgage, and
otherwise deal with such real and personal
property, including securities and bonds of
other corporations.
8. To enter into a partnership, joint venture,
merger, consolidation, or any other
commercial agreement with natural and
juridical persons;
9. To make reasonable donations, including
those for the public welfare or for hospital,
charitable, cultural, scientific, civic, or similar
purposes; Provided, that no foreign
corporation shall give donations in aid of any
political party or candidate or for purposes
of partisan political activity;
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10. To establish pension, retirement, and
other plans for the benefit of its directors,
trustees, officers, and employees; and
11. To exercise such other powers as may be
essential to necessary to carry out its purpose
or purposes as stated in the articles of
incorporation.
SEC. 36. POWER TO EXTEND OR
SHORTEN CORPORATE
TERM.
Notice can also be allowed through by-laws, or
done with the consent of the stockholder, sent
electronically in accordance with the rules and
regulations of the Commission on the use of
electronic data messages.
TITLE V
BY-LAWS
SEC. 45. ADOPTION OF BY-LAWS.
• The one-month period to adopt by-laws
was deleted.
SEC. 46. CONTENTS OF BY-LAWS
(a) The time, place and manner of calling
and conducting regular or special meetings
of the directors or trustees;
(b) The time and manner of calling and
conducting regular or special meetings and
mode of notifying the stockholders or
members thereof;
(c) The required quorum in meetings of
stockholders or members and the manner
of voting therein; (d)
The modes by which a stockholder, member,
director, or trustee may attend meetings and cast
their votes;
(e) The form for proxies of stockholders and
members and the manner of voting them;
(f) The directors’ or trustees’ qualifications,
duties and responsibilities, the guidelines for
setting the compensation of directors or
trustees and officers, and the maximum number
of other board representations that an
independent director or trustee may have which
shall, in no
case, be more than the number prescribed by
the Commission;
(g) The time for holding the annual election of
directors or trustees and the mode or manner
of giving notice thereof;
(h) The manner of election or appointment and
the term of office of all officers other than
directors or trustees;
(i) The penalties for violation of the bylaws;
(j) In the case of stock corporations, the
manner of issuing stock certificates; and
(k) Such other matters as may be necessary
for the proper or convenient transaction of its
corporate affairs for the promotion of good
governance and anti-graft and corruption
measures.

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