CORPORATION CODE OF THE PHILIPPINES

By Hector s De Leon Jr. PRIVATE CORPORATIONS 5. Owner/subscriber of If non-stock corporation:

ARE atleast one share
ATTRIBUTES OF A 1. must be a member
CORPORATION 1. Government- CORPORATION WITH 2. majority of the directors
owned/controlled MAJORITY OWNERS MUST BE must be a resident of the
1. It is an artificial being corporation
2. It is created by operation of law FILIPINO Philippines
2. Quasi-public corporations
1. Corporation for METHODS OF VOTING
3. It has the right of
exploration,
succession
COMPONENTS OF development and 1. Straight voting
4. It has only the powers,
CORPORATION utilization of natural 2. Cumulative voting
attributes, and properties resources for one candidate
expressly authorized by law or 1. Corporators 2. Public service 3. Cumulative voting
incident to its existence 2. Incorporators corporation
3. Stockholders 3. Educational for distribution
DISTINCTION BETWEEN A
4. Members corporation
PARTNERSHIP AND CORPORATE OFFICERS
4. Banking corporation
CORPORATION THREE OTHER 5. Corporation
COMPONENTS engaged in retail 1. President
1. Manner of creation trade 2. Vice-president
2. Number of incorporators 1. Promoters 6. Rural banks 3. Secretary
3. Commencement of 2. Subscribers 7. Corporation engaged 4. Treasurer
juridical personality 3. Underwriter in coastwise 5. General manager
4. Powers shipping
5. Management CAPITAL STOCKS 8. Corporation engaged REQUISITES OF BOAR
6. Effect of 1. Authorized capital stock in the pawnshop MEETING
mismanagement 2. Subscribed capital stock business
7. Right of succession 3. Outstanding capital stock 9. Under the flag law 1. Meeting of directors or
8. Extent of liability 4. Paid-up capital stock trustees duly
9. Transferability of interest 5. Unissued capital stock CONTENTS OF ARTICLES assembled as a board
10. Term of existence 6. Legal capital OF INCORPORATION
11. Firm name 2. Presence of quorum
12. Dissolution 3. Decision of majority of
CLASSES OF SHARES IN 1. Name of
13. Laws which govern quorum or majority of
GENERAL corporation
2. Purpose of entire board
CLASSIFICATION OF
1. Par value /no par corporation
CORPORATIONS value 3. Principal office of 4. Meeting at the place,
2. Voting/non- voting corporation time, manner provided
1. Stock corporation 3. Common/preferred 4. Term of corporation by the by-laws
2. Non-stock corporation # 5. Names,
4. Promotion share nationalities,
OTHER CLASSIFICATION OF 5. Share in escrow residences of QUORUM DEFINED
CORPORATION 6. Convertible stock incorporators
1. Number Of Person Who 7. Founder’s share 6. Number of directors 1. Number required for
Composed 8. Redeemable share 7. Names, presence of quorum
-Corporation 9. Treasury share nationalities, 2. Number required for
Aggregate residences of approval of corporate
- Corporation KINDS OF PREFERRED directors acts
Sole 2.Religious or not SHARE 8. If stock corporation- 3. Number provided
- Ecclesiastical Amount of authorized greater than
-Lay stock
1. Preferred as to assets in majority
3.Charitable or not 9. if non-stock
case of liquidation
-Eleemosynary corporation-amount of DISQUALIFICATION OF
2. Preferred as to dividends
-civil capital and Names,
4.Which Country DIRECTORS/TRUSTEES
nationalities,
-Domestic KINDS OF PREFERRED
residences of 1. Not convicted by final
-foreign SHARE AS TO DIVIDENDS
contributor judgment of an
5.Legal right to corporate
1. Cumulative PS offense punishable by
existence -De jure 2. Non-cumulative PS imprisonment for a
POWERS OF BOARD OF period exceeding six
-De facto 3. Participating PS
4. Non-participating PS DIRECTORS years
6.Open to public or not
5. Cumulative-participating 2. Do not violate
-Close 1. governing body of
-Open PS corporation code for
the corporation prior 5 years from
7.Relation to other 2. binding effect of
Corporation STEP IN THE CREATION OF election
stockholders action
-Parent or Holding CORPORATION 3. extent of judicial
-Subsidiary WHO CAN FILL VACANCIES?
8.True sense or Limited sense - review
1. Promotion
True 2. Incorporation 1. Shareholders/memb
-Quasi QUALIFICATION OF ers*
3. Normal organization and DIRECTORS OR TRUSTEES If
-Corporation by prescription 2. Member of directors
commencement of
-corporation by estoppels stock corporation:
9.Public or Private business operations
CONTRACT OF
-Public 1. must owned at least one CORPORATION WITH THE
QUALIFICATION OF share
-Private DIRECTOR OR TRUSTEES IS
INCORPORATORS 2. share must be registered in VALID IF:
PUBLIC CORPORATION his name 1. That the presence of such
1. Natural person 3. must continuously own at
ARE: director or trustee in the board
2. Capacity to contract least one share during his
meeting in which the contract
3. Residents of the term
1. Provinces was approved was not
Philippines 4. majority of directors must
2. Cities necessary to constitute a
3. Municipalities 4. Citizens of the be resident of the
quorum for such meeting;
4. Barangays Philippines Philippines
2. That the vote of such director WHY CORPORATION 3. The required quorum in incorporation – B/T-
or trustee was not necessary for ACQUIRES ITS OWN meetings of stockholders or M & M/OCS-2/3
the approval of the contract; SHARE? members and the manner of 2. To elect directors or
voting therein; trustees-M/OCS-M
3. That the contract is fair and 1. Elimination of fractional 3. To remove directors
4. The form for proxies of
reasonable under the share stockholders and or trustees- M/OCS-
circumstances; and 2. Satisfaction of
4. That in case of an officer, the members and the manner 2/3
indebtedness to 4. To call a special
contract has been previously of voting them;
corporation
authorized by the board of 5. The qualifications, duties meeting to remove
3. Payment of share of
directors. dissenting or withdrawing and compensation of director or trustees-
stockholders directors or trustees, M/OCS-M
CORPORATE POWERS AND 4. Other cases officers and employees; 5. To ratify a contract of a
CAPACITY 6. The time for holding the director or trustees
CONDITIONS IN ACQUIRING annual election of directors with the corporation-
1. To sue and be sued in its
OWN SHARES of trustees and the mode or M/OCS-
corporate name;
2. Of succession by its corporate manner of giving notice 2/3
name for the period of time stated in 1. That its capital is not thereof; 6. To extend /shorten
the articles of incorporation and the thereby impaired 7. The manner of election or corporate terms-
certificate of incorporation; 2. That it be for a legitimate appointment and the term B/T-M & M/OCS-2/3
3. To adopt and use a corporate and proper purpose 7. To increase or
of office of all officers
seal; 3. That there shall be decrease the capital
4. To amend its articles of unrestricted retained other than directors or
incorporation in accordance with the trustees; stock -B/T-M &
earnings to purchase the
provisions of this Code; same and its capital is 8. The penalties for violation M/OCS-2/3
5. To adopt by-laws, not contrary to thereby impaired of the by-laws; 8. To incur, create, or
law, morals, or public policy, and to 4. That the corporation acts in 9. In the case of stock increase bonded
amend or repeal the same in
good faith and without corporations, the manner of indebtedness- B/T-M
accordance with this Code;
prejudice to the right of the issuing stock certificates; & M/OCS-2/3
6. In case of stock corporations, to
creditor and stockholder and 9. To sell, lease,
issue or sell stocks to subscribers and
to sell stocks to subscribers and to sell 10. Such other matters as may exchange,
5. That the condition for
treasury stocks in accordance with the be necessary for the proper mortgage, pledge
provisions of this Code; and to admit corporate affairs warrant it substantial assets-
or convenient transaction of
members to the corporation if it be a B/T-M & M/OCS-2/3
non-stock corporation; its corporate business and
10. To invest corporate
CLASSES OF DIVIDENDS affairs.
7. To purchase, receive, take or
funds in other
grant, hold, convey, sell, lease, business- B/T-M &
1. Cash dividend
pledge, mortgage and otherwise 2. Property dividend KINDS OF MEETING M/OCS-2/3
deal with such real and personal 3. Stock dividend 11. To issue stock
property 4. Optional dividend 1. Regular dividends-Q-M &
8. To enter into merger or 5. Composite dividend 2. Special M/OCS-2/3
consolidation with other
6. Scrip dividend 12. To enter into a
corporations as provided in this REQUISITES OF VALID
7. Bond dividend management
Code; MEETINGS
8. Cumulative contract- Q-M &
9. To make reasonable donations,
10. To establish pension, retirement, dividend
1. It must be held at the M/SH-M/2/3
and other plans for the benefit of its 9. Liquidating dividend
13. To adopt by-laws-
directors, trustees, officers and 10. Preferred dividend proper place
2. It must be held at the OCS-M
employees; and
14. To amend, repeal or
11. To exercise such other powers as VALIDITY OF BY-LAWS stated date and at the
adopt new by-laws-
may be essential or necessary to carry appointed time or at a
out its purpose or purposes as stated in reasonable time B/T-M & OCS-M
1. They must not be contrary
15. To delegate to board
the articles of incorporation. to existing law and 3. It must be called by t
inconsistent with the code of director the power
proper person
4. There must be a previous to amend or repeal the
2. They must not be notice by-
RELATIVE POWERS OF
contrary to morals and 5. There must be a quorum laws-OCS-2/3
CORPORATION
public policy 16. To revoke the
3. They must not impair REQUISITES OF NOTICE OF preceding power
1. Any act not prohibited obligation of contract
2. Only powers those MEETINGS delegated to the
4. They must be general
board of directors-
granted and uniform in their
1. Must be issued by one OCS-M
operation and not
CLASSIFICATION OF who has authority to 17. To fix the issued
directed against
CORPORATE POWERS particular individual issue it price of no par value
1. Those expressly grated or 5. They must be consistent 2. Must be In writing share-Q-M or
authorized by law with the articles of 3. Must state the date, OCS-M
2. Those that is necessary to the incorporation time, place of the 18. To effect or amend
exercise of the express or 6. They must be reasonable meeting the plan of merger or
incidental power 4. Must state the business to consolidation-
3. Those incidental to its CONTENTS OF BY-LAWS be transacted thereat
B/T-M & M/OCS-2/3
existence 5. Must be sent at a certain 19. To dissolve the
1. The time, place and time before the scheduled corporation- B/T-M
IMPLIED POWERS OF
manner of calling and meeting
CORPORATION & M/OCS-2/3
conducting regular or 6. Must comply with any 20. To adopt a plan of
special meetings of the other requirements distribution of assets
1. Acts in the usual course of directors or trustees; prescribed by laws/by- of NSC- B/T-M & M-
business 2. The time and manner of laws 2/3
2. Acts to protect the debts calling and conducting
owing to a corporation MATTERS AT WHICH THE PRESIDING OFFICER AT
regular or special meetings
3. Embarking in different LAW REQUIRES SPECIFIC
business of the stockholders or MEETINGS
members; NUMBER OF VOTES
4. Acts in part or wholly to 1. President/chairman/vice-
protect or aid employees 1. To amend the
5. Acts to increase business chairman
articles of
2. Stockholder or member in acquisition of unissued purposes at a fair valuation equal incorporation, to
a temporary capacity share to the par or issued value of the original, unissued
stock issued;
3. Stockholder or member  By purchase from the 3. Labor performed for or services
stock
chosen corporation of treasury 2. By sale of treasury
actually rendered to the
MANNER OF VOTING share corporation; stock after
 By transfer from a previous 4. Previously incurred incorporation for
1. Directly indebtedness of the corporation;
stockholder of the money, property, or
2. Indirectly 5. Amounts transferred from
service
 By means of proxies outstanding share or unrestricted retained earnings
3. By subscription to
 By a trustee under a existing subscription to to stated capital; and
6. Outstanding shares exchanged new stock
voting trust agreement share for stocks in the event of 4. By making a stock
 By executors, reclassification or conversion.
If non-stock corporation dividend
administrators, receivers, or SOURCE OF CORPORATE
 By contract with the
other legal representative CAPITAL MODES OF STOCK
corporation the modes of
appointed by court TRANSFER
entering into which vary 1. Funds furnish by
according to the charter shareholder 1. Endorsement and
2. Borrowings delivery of stock
3. Profits and stock certificate
CONSIDERATION FOR
HOW PARTICIPATION IN dividends 2. Transfer in a separate
STOCKS
CORPORATION ACQUIRED instrument
DIFFERENT MODE BY
1. Actual cash paid to the 3. Judicial or extra-
If stock corporation SHARE MAY ISSUED
corporation; judicial settlement of
 By subscription contract 2. Property, tangible or intangible,
with an existing corporation actually received by the 1. By subscription the estate
corporation and necessary or before and after
for the
convenient for its use and lawful