REVISED CORPORATION CODE - No share may be deprived of voting rights except

those classified and issued as

TITLE I 1. “Preferred” or
GENERAL PROVISIONS 2. “Redeemable” shares,
- Unless otherwise provided in this Code
- Provided, That there shall always be a class or
SECTION. 1. TITLE OF THE CODE series of shares with complete voting rights.
This Code shall be known as the “Revised Corporation - HOLDERS OF NONVOTING SHARES SHALL
Code of the Philippines”. NEVERTHELESS BE ENTITLED TO VOTE ON THE
FOLLOWING MATTERS: (A2SI2MID)
SEC. 2. CORPORATION DEFINED a. Amendment of the articles of incorporation;
A corporation is: b. Adoption and amendment of bylaws
1. An artificial being created by operation of law, c. Sale, lease, exchange, mortgage, pledge, or other
2. Having the right of succession and disposition of all or substantially all of the corporate
3. The powers, attributes, and properties property;
a. Expressly authorized by law or d. Incurring, creating, or increasing bonded
b. Incidental to its existence. indebtedness
e. Increase or decrease of authorized capital stock;
SEC. 3. CLASSES OF CORPORATIONS f. Merger or consolidation of the corporation with
- Corporations formed or organized under this Code may another corporation or other corporations
be stock or nonstock corporations. g. Investment of corporate funds in another
- STOCK CORPORATIONS: are those which have corporation or business in accordance with this
capital stock divided into shares and are authorized to Code; and
distribute to the holders of such shares, dividends, or h. Dissolution of the corporation.
allotments of the surplus profits on the basis of the - Except as provided in the immediately preceding
shares held. paragraph, the vote required under this Code to
- All other corporations are nonstock corporations. approve a particular corporate act shall be deemed to
- refer only to stocks with voting rights.
- The shares or series of shares may or may not
SEC. 4. CORPORATIONS CREATED BY SPECIAL have a par value.
LAWS OR CHARTERS - Provided, That: (BTIP2O)
- Corporations created by special laws or charters shall 1. Banks,
be governed: 2. Trust,
1. Primarily by the provisions of the special law or 3. Insurance, and
charter creating them or applicable to them, 4. Preneed companies,
2. Supplemented by the provisions of this Code, 5. Public utilities, building and loan associations, and
insofar as they are applicable. 6. Other corporations authorized to obtain or access
funds from the public, whether publicly listed or
SEC. 5. CORPORATORS AND INCORPORATORS, not,
STOCKHOLDERS AND MEMBERS - Shall not be permitted to issue no-par value shares of
- CORPORATORS are those who compose a stock.
corporation, whether: - PREFERRED SHARES OF STOCK issued by a
1. As stockholders or shareholders in a stock corporation may be given preference in:
corporation or 1. The distribution of dividends and in
2. As members in a nonstock corporation. 2. The distribution of corporate assets in case of
- INCORPORATORS are those stockholders or liquidation, or
members mentioned in the articles of incorporation as 3. Such other preferences:
originally forming and composing the corporation and - Provided, that preferred shares of stock may be issued
who are signatories thereof. only with a stated par value.
- THE BOARD OF DIRECTORS, where authorized in
SEC. 6. CLASSIFICATION OF SHARES the articles of incorporation, may fix the terms and
1. The classification of shares, conditions of preferred shares of stock or any series
2. Their corresponding rights, privileges, or restrictions, thereof:
and - Provided, further, that such terms and conditions shall
3. Their stated par value, if any, be effective upon filing of a certificate thereof with
- Must be indicated in the articles of incorporation. the Securities and Exchange Commission, hereinafter
- EQUALITY OF SHARES: Each share shall be equal in referred to as the “Commission”.
all respects to every other share, except as otherwise - SHARES OF CAPITAL STOCK ISSUED WITHOUT
provided in PAR VALUE:
a. the articles of incorporation and 1. Shall be deemed fully paid and nonassessable and
b. in the certificate of stock. 2. The holder of such shares shall not be liable to the
- The shares in stock corporations may be divided into corporation or to its creditors in respect thereto:
classes or series of shares, or both.
- Provided, That NO-PAR VALUE SHARES must be
issued for a consideration OF AT LEAST FIVE PESOS
(P5.00) PER SHARE:
- Provided, further, That the entire consideration
received by the corporation for its no-par value shares:
1. Shall be treated as CAPITAL and
2. Shall not be available for distribution as
dividends.
- A corporation may further classify its shares for the
purpose of ensuring compliance with constitutional or
legal requirements.

SEC. 7. FOUNDERS’ SHARES

- FOUNDERS’ SHARES may be given certain rights
and privileges not enjoyed by the owners of other
stocks.
- Where the EXCLUSIVE RIGHT TO VOTE AND BE
VOTED FOR in the election of directors is granted:
1. It must be for a limited period not to exceed five (5)
years from the date of incorporation:
2. Provided, That such exclusive right shall not be
allowed if its exercise will violate:
a. Commonwealth Act No. 108, otherwise known
as the “Anti-Dummy Law”;
b. Republic Act No. 7042, otherwise known as
the “Foreign Investments Act of 1991”; and
c. Other pertinent laws.

SEC. 8. REDEEMABLE SHARES

- REDEEMABLE SHARES may be issued by the
corporation when expressly provided in the articles of
incorporation.
- They are shares which may be purchased by the
corporation from the holders of such shares upon the
expiration of a fixed period,
1. Regardless of the existence of unrestricted
retained earnings (URE) in the books of the
corporation, and
2. Upon such other terms and conditions stated in the
articles of incorporation and the certificate of stock
representing the shares, subject to rules and
regulations issued by the Commission.

SEC. 9. TREASURY SHARES

- TREASURY SHARES are shares of stock which have
been issued and fully paid for, but subsequently
reacquired by the issuing corporation through (PRDS)
1. Purchase,
2. Redemption,
3. Donation, or
4. Some other lawful means.
- Such shares may again be disposed of for a
reasonable price fixed by the board of directors.
 TITLE II 2. Provided, further, That such extension of the
corporate term shall take effect only on the day
INCORPORATION AND following the original or subsequent expiry date(s).
ORGANIZATION OF PRIVATE - A corporation whose term has expired may apply for a
revival of its corporate existence, together with:
CORPORATIONS 1. All the rights and privileges under its certificate of
incorporation and
SEC. 10. NUMBER AND QUALIFICATIONS OF 2. Subject to all of its duties, debts and liabilities
INCORPORATORS existing prior to its revival.
- Who may organize a corporation? (ASBOL - Upon approval by the Commission, the corporation
1. Any person, partnership, association or shall be deemed revived and a certificate of revival of
corporation, corporate existence shall be issued, giving it perpetual
2. Singly or jointly with others existence, unless its application for revival provides
3. But not more than fifteen (15) in number, otherwise.
4. May organize a corporation for - No application for revival of certificate of incorporation
5. Any lawful purpose or purposes: of
- Provided, That: 1. Banks, banking and quasibanking institutions,
1. Natural persons who are licensed to practice a 2. Preneed, insurance and trust companies,
profession, and 3. Non-stock savings and loan associations
2. Partnerships or associations organized for the (NSSLAs),
purpose of practicing a profession, 4. Pawnshops,
- Shall not be allowed to organize as a corporation 5. Corporations engaged in money service business,
unless otherwise provided under special laws. and
REQUIREMENTS: 6. Other financial intermediaries
- INCORPORATORS WHO ARE NATURAL PERSONS - shall be approved by the Commission unless
must be of legal age. accompanied by a favorable recommendation of the
- EACH INCORPORATOR OF A STOCK appropriate government agency.
CORPORATION must own or be a subscriber to at
least one (1) share of the capital stock. SEC. 12. MINIMUM CAPITAL STOCK NOT REQUIRED
- A corporation with a single stockholder is considered a OF STOCK CORPORATIONS
ONE PERSON CORPORATION as described in Title - Stock corporations shall not be required to have a
XIII, Chapter III of this Code. minimum capital stock, except as otherwise specifically
provided by special law.
SEC. 11. CORPORATE TERM
- A corporation shall have perpetual existence unless SEC. 13. CONTENTS OF THE ARTICLES OF
its articles of incorporation provides otherwise. INCORPORATION
- Corporations - All corporations shall file with the Commission articles
1. With certificates of incorporation issued prior to the of incorporation (ODF)
effectivity of this Code, and - In any of the official languages,
2. Which continue to exist, - Duly signed and acknowledged or authenticated,
- Shall have perpetual existence, UNLESS the - In such form and manner as may be allowed by the
corporation: Commission, containing substantially the following
1. Upon a vote of its stockholders representing a matters, except as otherwise prescribed by this Code
majority of its outstanding capital stock, or by special law:
2. Notifies the Commission that it elects to retain its a. The name of the corporation;
specific corporate term pursuant to its articles of b. The specific purpose or purposes for which the
incorporation: corporation is being formed.
3. Provided, that any change in the corporate term  Where a corporation has more than one stated
under this section is without prejudice to the purpose, the articles of incorporation shall
appraisal right of dissenting stockholders in indicate the primary purpose and the
accordance with the provisions of this Code. secondary purpose or purposes:
 Provided, That a nonstock corporation may not
EXTENSION/SHORTENING include a purpose which would change or
- A corporate term for a specific period may be contradict its nature as such;
extended or shortened by amending the articles of c. The place where the principal office of the
incorporation: corporation is to be located, which must be within
1. Provided, That NO EXTENSION may be made the Philippines;
earlier than three (3) years prior to the original or d. The term for which the corporation is to exist, if the
subsequent expiry date(s) unless there are corporation has not elected perpetual existence;
justifiable reasons for an earlier extension as may e. The names, nationalities, and residence addresses
be determined by the Commission. of the incorporators;
 f. The number of directors, which shall not be more a. corporate secretary and a
than fifteen (15) or the number of trustees which b. Majority of the directors or trustees,
may be more than fifteen (15); c. With a statement that the amendments have
g. The names, nationalities, and residence addresses been duly approved by the required vote of the
of persons who shall act as directors or trustees stockholders or members,
until the first regular directors or trustees are duly 3. Shall be submitted to the Commission.
elected and qualified in accordance with this Code - The amendments shall take effect:
h. If it be a stock corporation, 1. Upon their approval by the Commission or
 The amount of its authorized capital stock, 2. From the date of filing with the said Commission if
 Number of shares into which it is divided, not acted upon within six (6) months from the date
 The par value of each, of filing for a cause not attributable to the
 Names, nationalities, and residence corporation.
addresses of the original subscribers,
 Amount subscribed and paid by each on the SEC. 16. GROUNDS WHEN ARTICLES OF
subscription, and INCORPORATION OR AMENDMENT MAY BE
 A statement that some or all of the shares are DISAPPROVED
without par value, if applicable; - The Commission may disapprove the articles of
i. If it be a nonstock corporation, incorporation or any amendment thereto if the same is
 The amount of its capital, not compliant with the requirements of this Code:
 The names, nationalities, and residence - Provided, That the Commission shall give the
addresses of the contributors, and incorporators, directors, trustees, or officers a
 Amount contributed by each; and reasonable time from receipt of the disapproval
j. Such other matters consistent with law and which within which to modify the objectionable portions
the incorporators may deem necessary and of the articles or amendment.
convenient. - THE FOLLOWING ARE GROUNDS FOR SUCH
- An arbitration agreement may be provided in the DISAPPROVAL:
articles of incorporation pursuant to Section 181 of this a. The articles of incorporation or any amendment
Code. thereto is not substantially in accordance with the
- The articles of incorporation and applications for form prescribed herein
amendments thereto may be filed with the Commission b. The purpose or purposes of the corporation are
in the form of an electronic document, in accordance patently unconstitutional, illegal, immoral or
with the Commission’s rules and regulations on contrary to government rules and regulations;
electronic filing. c. The certification concerning the amount of capital
stock subscribed and/or paid is false; and
SEC. 14. SEE CODAL d. The required percentage of Filipino ownership of
SEC. 15. AMENDMENT OF ARTICLES OF the capital stock under existing laws or the
INCORPORATION Constitution has not been complied with.
- Unless otherwise prescribed by this Code or by special - No articles of incorporation or amendment to articles of
law, and incorporation of
- For legitimate purposes, 1. Banks, banking and quasi-banking institutions,
- Any provision or matter stated in the articles of 2. Preneed, insurance and trust companies,
incorporation may be amended by: 3. NSSLAS,
1. A majority vote of the board of directors or trustees 4. Pawnshops, and
and 5. Other financial intermediaries
2. The vote or written assent of the stockholders - Shall be approved by the Commission unless
representing at least two-thirds (2/3) of the accompanied by a favorable recommendation of the
outstanding capital stock, appropriate government agency to the effect that such
3. Without prejudice to the appraisal right of articles or amendment is in accordance with law.
dissenting stockholders in accordance with the
provisions of this Code. SEC. 17. CORPORATE NAME
- The articles of incorporation of a nonstock - No corporate name shall be allowed by the
corporation may be amended by: Commission if: (DAC)
1. The vote or written assent of majority of the 1. It is not DISTINGUISHABLE from that already
trustees and reserved or registered for the use of another
2. At least two-thirds (2/3) of the members. corporation, or
- The original and amended articles together shall 2. If such name is ALREADY PROTECTED BY
contain all provisions required by law to be set out in LAW, or
the articles of incorporation. 3. When its use is CONTRARY TO EXISTING LAW,
- Amendments to the articles shall be indicated by: RULES AND REGULATIONS.
1. Underscoring the change or changes made , - A name is not distinguishable even if it contains one or
and a more of the following:
2. Copy thereof duly certified under oath by the
 a. The word “corporation”, “company”, “incorporated”, constitute a BODY CORPORATE under the name
“limited”, “limited liability”, or an abbreviation of one stated in the articles of incorporation for the period of
of such words; and time mentioned therein,
b. Punctuations, articles, conjunctions, contractions, - Unless said period is extended or the corporation is
prepositions, abbreviations, different tenses, sooner dissolved in accordance with law.
spacing, or number of the same word or phrase.
- The Commission, upon determination that the SEC. 19. DE FACTO CORPORATIONS
corporate name is: 1. The due incorporation of any corporation claiming
1. Not distinguishable from a name already reserved in good faith to be a corporation under this Code, and
or registered for the use of another corporation; 2. Its right to exercise corporate powers,
2. Already protected by law; or - Shall not be inquired into collaterally in any private
3. Contrary to law, rules and regulations, suit to which such corporation may be a party.
- May summarily order the corporation to: - Such inquiry may be made by the Solicitor General in
1. Immediately cease and desist from using such a quo warranto proceeding.
name and
2. Require the corporation to register a new one. SEC. 20. CORPORATION BY ESTOPPEL
- The Commission shall also cause the removal of all - All persons who assume to act as a corporation
1. Visible signages, knowing it to be without authority to do so shall be
2. Marks, liable as general partners for all debts, liabilities and
3. Advertisements, damages incurred or arising as a result thereof:
4. Labels, - Provided, however, That when any such ostensible
5. Prints and corporation is sued on any transaction entered by it as
6. Other effects bearing such corporate name. a corporation or on any tort committed by it as such, it
- Upon the approval of the new corporate name, the shall not be allowed to use its lack of corporate
Commission shall issue a certificate of incorporation personality as a defense.
under the amended name. - Anyone who assumes an obligation to an ostensible
- If the corporation fails to comply with the Commission’s corporation as such cannot resist performance thereof
order, the Commission may hold the corporation and on the ground that there was in fact no corporation.
its responsible directors or officers
1. In contempt and/or SEC. 21. EFFECTS OF NON-USE OF CORPORATE
2. Hold them administratively, civilly and/or criminally CHARTER AND CONTINUOUS INOPERATION
liable under this Code and other applicable laws - If a corporation does not formally organize and
and/or commence its business WITHIN FIVE (5) YEARS
3. Revoke the registration of the corporation from the date of its incorporation, its certificate of
incorporation shall be deemed revoked as of the day
SEC. 18. REGISTRATION, INCORPORATION AND following the end of the five (5)-year period.
COMMENCEMENT OF CORPORATE EXISTENCE - However, if a corporation has commenced its business
- A person or group of persons desiring to incorporate but subsequently becomes inoperative for a period
shall submit the intended corporate name to the of at least five (5) consecutive years, the
Commission for verification. Commission may, after due notice and hearing, place
- If the Commission finds that the name is the corporation under DELINQUENT STATUS.
distinguishable from a name already reserved or - A delinquent corporation shall have a period of TWO
registered for the use of another corporation, not (2) YEARS to resume operations and comply with all
protected by law and is not contrary to law, rules and requirements that the Commission shall prescribe.
regulations, the name shall be reserved in favor of - Upon compliance by the corporation, the Commission
the incorporators. shall issue an order lifting the delinquent status.
- The INCORPORATORS shall then submit their: - Failure to comply with the requirements and resume
1. Articles of incorporation and operations within the period given by the Commission
2. Bylaws to the Commission. shall cause the revocation of the corporation’s
- If the Commission finds that the submitted documents certificate of incorporation.
and information are fully compliant with the - The Commission shall:
requirements of this Code, other relevant laws, rules 1. Give reasonable notice to, and
and regulations, the Commission shall issue the 2. Coordinate with the appropriate regulatory agency
CERTIFICATE OF INCORPORATION. - Prior to the suspension or revocation of the certificate
- A private corporation organized under this Code of incorporation of companies under their special
commences its corporate existence and juridical regulatory jurisdiction.
personality
1. From the date the Commission issues the
certificate of incorporation
2. Under its OFFICIAL SEAL
- And thereupon the incorporators,
stockholders/members and their successors shall
 TITLE III 1. Independent of management and
2. Free from any business or other relationship which
BOARD OF DIRECTORS/TRUSTEES could, or could reasonably be perceived to
AND OFFICERS materially interfere with the exercise of
independent judgment in carrying out the
SEC. 22. THE BOARD OF DIRECTORS OR TRUSTEES responsibilities as a director.
OF A CORPORATION; QUALIFICATION AND TERM - Independent directors must be ELECTED BY:
- Unless otherwise provided in this Code, 1. The shareholders present or
- THE BOARD OF DIRECTORS OR TRUSTEES 2. Entitled to vote in absentia during the election of
SHALL: directors.
1. Exercise the corporate powers, - Independent directors shall be subject to rules and
2. Conduct all business, and regulations governing
3. Control all properties of the corporation. 1. Their qualifications, disqualifications,
- DIRECTORS: shall be elected for a term of one (1) 2. Voting requirements,
year from among the holders of stocks registered in the 3. Duration of term and term limit,
corporation’s books, while 4. Maximum number of board memberships and
- TRUSTEES: shall be elected for a term not exceeding 5. Other requirements that the Commission will
three (3) years from among the members of the prescribe to strengthen their independence and
corporation. align with international best practices.
- Each director and trustee shall hold office until the
successor is elected and qualified. SEC. 23. ELECTION OF DIRECTORS OR TRUSTEES
1. A director who ceases to own at least one (1) - Except when the exclusive right is reserved for holders
share of stock or of founders’ shares under Section 7 of this Code,
2. A trustee who ceases to be a member of the - Each stockholder or member shall have the right to
corporation nominate any director or trustee who possesses all
- SHALL CEASE TO BE SUCH. of the qualifications and none of the disqualifications
- INDEPENDENT DIRECTORS: set forth in this Code.
- The board of the following corporations vested with - At all elections of directors or trustees , there must be
public interest shall have independent directors present, either
constituting at least twenty percent (20%) of such  In person or
board:  Through a representative authorized to act by
a. Corporations covered by Section 17.2 of Republic written proxy,
Act No. 8799, otherwise known as “The Securities a. The OWNERS OF MAJORITY OF THE
Regulation Code”, namely: OUTSTANDING CAPITAL STOCK, or
1. Those whose securities are registered with the b. If there be no capital stock, A MAJORITY OF THE
Commission, MEMBERS ENTITLED TO VOTE.
2. Corporations listed with an exchange or with - When so authorized in the
assets of at least Fifty million pesos 1. Bylaws or
(P50,000,000.00) and having two hundred 2. By a majority of the board of directors:
(200) or more holders of shares, each holding - The stockholders or members may also vote through
at least one hundred (100) shares of a class of remote communication or in absentia:
its equity shares; - Provided, That the right to vote through such modes
b. Banks and quasi-banks, may be exercised in corporations vested with public
c. NSSLAs, interest, notwithstanding the absence of a provision in
d. Pawnshops, the bylaws of such corporations.
e. Corporations engaged in money service business, - A stockholder or member who participates through
f. Pre-need, trust and insurance companies, and remote communication or in absentia, shall be deemed
other financial intermediaries; and present for purposes of quorum.
g. Other corporations engaged in business vested - The election must be by ballot IF requested by any
with public interest similar to the above, as may be voting stockholder or member.
determined by the Commission, - IN STOCK CORPORATIONS, stockholders entitled to
- After taking into account relevant factors which are vote shall have the right to vote the number of shares
germane to the objective and purpose of requiring the of stock standing in their own names in the stock books
election of an independent director, such as: of the corporation
1. The extent of minority ownership, 1. At the time fixed in the bylaws or
2. Type of financial products or securities issued or 2. Where the bylaws are silent, at the time of the
offered to investors, election.
3. Public interest involved in the nature of business - The said stockholder may:
operations, and other analogous factors. a. Vote such number of shares for as many persons
- An INDEPENDENT DIRECTOR is a person who, apart as there are directors to be elected;
from shareholdings and fees received from the b. Cumulate said shares and give one (1) candidate
corporation, is: as many votes as the number of directors to be
 elected multiplied by the number of the shares 3. Shareholdings, and
owned; or 4. Residence addresses of the directors, trustees,
c. Distribute them on the same principle among as and officers elected.
many candidates as may be seen fit: - The NON-HOLDING OF ELECTIONS and the reasons
- Provided, That the total number of votes cast shall not therefor shall be reported to the Commission within
exceed the number of shares owned by the thirty (30) days from the date of the scheduled
stockholders as shown in the books of the corporation election.
multiplied by the whole number of directors to be - The report shall specify a new date for the election,
elected: which shall not be later than sixty (60) days from the
- Provided, however, That no delinquent stock shall be scheduled date.
voted. 1. If no new date has been designated, or
- NONSTOCK CORPS: Unless otherwise provided in 2. If the rescheduled election is likewise not held,
the articles of incorporation or in the bylaws, members - The Commission may summarily order that an election
of nonstock corporations may cast as many votes as be held:
there are trustees to be elected but may not cast more 1. Upon the application of a stockholder, member,
than one (1) vote for one (1) candidate. director or trustee, and
- Nominees for directors or trustees receiving the 2. After verification of the unjustified non-holding of
highest number of votes shall be declared elected. the election.
1. If no election is held, or - The Commission shall have the power:
2. The owners of majority of the outstanding capital 1. To issue such orders as may be appropriate,
stock or majority of the members entitled to vote 2. Including orders directing the issuance of a notice
are not present in person, by proxy, or through stating:
remote communication or not voting in absentia at a. The time and place of the election,
the meeting, b. Designated presiding officer, and
- Such meeting may be adjourned and the corporation c. The record date or dates for the determination
shall proceed in accordance with Section 25 of this of stockholders or members entitled to vote.
Code. - Notwithstanding any provision of the articles of
- The directors or trustees elected shall perform their incorporation or bylaws to the contrary,
duties as prescribed by law, rules of good corporate - The shares of stock or membership represented at
governance, and bylaws of the corporation. such meeting and entitled to vote shall constitute a
QUORUM for purposes of conducting an election
SEC. 24. CORPORATE OFFICERS under this section.
- Immediately after their election, - Should a director, trustee or officer
- The directors of a corporation must formally organize 1. Die,
and elect: 2. Resign or in
a. A president: who must be a director; 3. Any manner cease to hold office,
b. A treasurer, who must be a resident; - The secretary, or the director, trustee or officer of the
c. A secretary, who must be a citizen and resident of corporation, shall, WITHIN SEVEN (7) DAYS from
the Philippines; and knowledge thereof, report in writing such fact to the
d. Such other officers as may be provided in the Commission.
bylaws.
- If the corporation is vested with public interest, the SEC. 26. DISQUALIFICATION OF DIRECTORS,
board shall also elect a compliance officer. TRUSTEES OR OFFICERS
- The same person may hold two (2) or more positions - A person shall be disqualified from being a director,
concurrently, except that no one shall act as: trustee or officer of any corporation if, within five (5)
1. President and secretary or as years prior to the election or appointment as such, the
2. President and treasurer person was:
- At the same time, unless otherwise allowed in this a. Convicted by final judgment:
Code. 1. Of an offense punishable by imprisonment for a
- The officers shall manage the corporation and perform period exceeding six (6) years;
such duties as may be provided in the bylaws and/or 2. For violating this Code; and
as resolved by the board of directors. 3. For violating Republic Act No. 8799, otherwise
known as “The Securities Regulation Code”;
SEC. 25. Report of Election of Directors, Trustees and b. Found administratively liable for any offense involving
Officers, Non-holding of Election and Cessation from fraudulent acts; and
Office c. By a foreign court or equivalent foreign regulatory
- WITHIN THIRTY (30) DAYS after the election of the authority for acts, violations or misconduct similar to
directors, trustees and officers of the corporation, those enumerated in paragraphs (a) and (b) above.
- The secretary, or any other officer of the - The foregoing is without prejudice to qualifications or
corporation, shall submit to the Commission, the other disqualifications, which the Commission, the
1. Names, primary regulatory agency, or the Philippine
2. Nationalities, Competition Commission may impose in its
 promotion of good corporate governance or as a - WHEN THE VACANCY IS DUE TO TERM
sanction in its administrative proceedings. EXPIRATION: The election shall be held no later than
the day of such expiration at a meeting called for that
SEC. 27. REMOVAL OF DIRECTORS OR TRUSTEES purpose.
- Any director or trustee of a corporation may be - WHEN THE VACANCY ARISES AS A RESULT OF
removed from office by: REMOVAL BY THE STOCKHOLDERS OR
- A vote of the stockholders holding or representing at MEMBERS: The election may be held on the same day
least two-thirds (2/3) of the outstanding capital stock, of the meeting authorizing the removal and this fact
or in a nonstock corporation, by a vote of at least two- must be so stated in the agenda and notice of said
thirds (2/3) of the members entitled to vote: meeting.
- Provided, That such removal shall take place either at - IN ALL OTHER CASES: the election must be held no
1. A regular meeting of the corporation or at later than forty-five (45) days from the time the
2. A special meeting called for the purpose, vacancy arose.
3. And in either case after previous notice to - A director or trustee elected to fill a vacancy shall be
stockholders or members of the corporation of the referred to as REPLACEMENT DIRECTOR OR
intention to propose such removal at the meeting. TRUSTEE and shall serve only for the unexpired term
- A special meeting of the stockholders or members for of the predecessor in office.
the purpose of removing any director or trustee must - HOWEVER, when:
be called by the 1. The vacancy prevents the remaining directors from
a. Secretary constituting a quorum and
1. On order of the president, or 2. Emergency action is required to prevent grave,
2. Upon written demand of the stockholders substantial, and irreparable loss or damage to
representing or holding at least a majority of the the corporation
outstanding capital stock, or a majority of the - The vacancy may be temporarily filled from among the
members entitled to vote. officers of the corporation by unanimous vote of the
b. If there is no secretary, or if the secretary, despite remaining directors or trustees.
demand, fails or refuses to call the special meeting - The action by the designated director or trustee shall
or to give notice thereof, the stockholder or member be:
of the corporation signing the demand may call for the 1. Limited to the emergency action necessary, and
meeting by directly addressing the stockholders or 2. The term shall cease:
members. a. Wthin a reasonable time from the termination
- Notice of the time and place of such meeting, as well of the emergency or
as of the intention to propose such removal, must be b. Upon election of the replacement director or
given by publication or by written notice prescribed trustee,
in this Code. - Whichever comes earlier.
- REMOVAL MAY BE WITH OR WITHOUT CAUSE: - The corporation must notify the Commission within
- Provided, That removal without cause may not be used THREE (3) DAYS from the creation of the emergency
to deprive minority stockholders or members of the board, stating therein the reason for its creation.
right of representation to which they may be entitled - Any directorship or trusteeship to be filled by reason of
under Section 23 of this Code. an increase in the number of directors or trustees shall
- The Commission shall, motu proprio or upon verified be filled only:
complaint, and after due notice and hearing, order the 1. By an election at a regular or at a special meeting
removal of a director or trustee elected despite the of stockholders or members duly called for the
disqualification, or whose disqualification arose or is purpose, or
discovered subsequent to an election. 2. In the same meeting authorizing the increase of
- The removal of a disqualified director shall be without directors or trustees if so stated in the notice of the
prejudice to other sanctions that the Commission may meeting.
impose on the board of directors or trustees who, with - In all elections to fill vacancies under this section, the
knowledge of the disqualification, failed to remove such procedure set forth in Sections 23 and 25 of this Code
director or trustee. shall apply.

SEC. 28. VACANCIES IN THE OFFICE OF DIRECTOR SEC. 29. COMPENSATION OF DIRECTORS OR
OR TRUSTEE; EMERGENCY BOARD TRUSTEES
- Any vacancy occurring in the board of directors or - In the absence of any provision in the bylaws fixing
trustees other than by removal or by expiration of term their compensation,
may be filled by - The directors or trustees shall not receive any
1. The vote of at least a majority of the remaining compensation in their capacity as such, except for
directors or trustees, if still constituting a quorum; REASONABLE PER DIEMS.
2. Otherwise, said vacancies must be filled by the - Provided however, That the stockholders representing
stockholders or members in a regular or special at least a majority of the outstanding capital stock or
meeting called for that purpose. majority of the members may grant directors or
 trustees with compensation and approve the amount contract with a director or trustee, such contract may
thereof at a regular or special meeting. be ratified by:
- In no case shall the total yearly compensation of 1. The vote of the stockholders representing at least
directors exceed TEN (10%) PERCENT OF THE NET two-thirds (2/3) of the outstanding capital stock or
INCOME BEFORE INCOME TAX of the corporation of at least two-thirds (2/3) of the members
during the preceding year. 2. In a meeting called for the purpose
- Directors or trustees shall not participate in the 3. Provided, That full disclosure of the adverse
determination of their own per diems or compensation. interest of the directors or trustees involved is
- Corporations vested with public interest shall made at such meeting and
submit to their shareholders and the Commission, an 4. The contract is fair and reasonable under the
annual report of the total compensation of each of their circumstances.
directors or trustees.
SEC. 32. CONTRACTS BETWEEN CORPORATIONS
SEC. 30. LIABILITY OF DIRECTORS, TRUSTEES OR WITH INTERLOCKING DIRECTORS
OFFICERS 1. Except in cases of fraud, and
- Directors or trustees who: (WGA) 2. Provided the contract is fair and reasonable
1. Willfully and knowingly vote for or assent to under the circumstances,
patently unlawful acts of the corporation or - A contract between two (2) or more corporations
2. Who are guilty of gross negligence or bad faith having interlocking directors shall not be invalidated
in directing the affairs of the corporation or on that ground alone.
3. Acquire any personal or pecuniary interest in - Provided, That:
conflict with their duty as such directors or trustees 1. If the interest of the interlocking director in one (1)
- Shall be liable jointly and severally for all damages corporation is substantial and
resulting therefrom suffered by the corporation, its 2. The interest in the other corporation or
stockholders or members and other persons. corporations is merely nominal,
- A director, trustee, or officer shall not attempt to - The contract shall be subject to the provisions of the
acquire, or acquire: preceding section insofar as the latter corporation or
1. Any interest adverse to the corporation in respect corporations are concerned.
of any matter which has been reposed in them in - Stockholdings exceeding twenty percent (20%) of the
confidence, and upon which, outstanding capital stock shall be considered
2. Equity imposes a disability upon themselves to substantial for purposes of interlocking directors.
deal in their own behalf;
- Otherwise the said director, trustee, or officer shall be: SEC. 33. DISLOYALTY OF A DIRECTOR
1. LIABLE AS A TRUSTEE for the corporation and - Where a director:
2. Must account for the profits which otherwise 1. By virtue of such office,
would have accrued to the corporation. 2. Acquires a business opportunity which should
belong to the corporation,
SEC. 31. DEALINGS OF DIRECTORS, TRUSTEES OR 3. Thereby obtaining profits to the prejudice of such
OFFICERS WITH THE CORPORATION corporation,
- A contract of the corporation with: - The director must:
1. One or more of its directors, trustees, officers or 1. Account for and
2. Their spouses and relatives within the fourth civil 2. Refund to the latter all such profits,
degree of consanguinity or affinity is - Unless the act has been ratified by a vote of the
- VOIDABLE, at the option of such corporation stockholders owning or representing at least two-thirds
- Unless all the following conditions are present: (2/3) of the outstanding capital stock.
a. The presence of such director or trustee in the - This provision shall be applicable, notwithstanding the
board meeting in which the contract was approved fact that the director risked one’s own funds in the
was not necessary to constitute a quorum for such venture.
meeting;
b. The vote of such director or trustee was not SEC. 34. EXECUTIVE, MANAGEMENT, AND OTHER
necessary for the approval of the contract; SPECIAL COMMITTEES
c. The contract is fair and reasonable under the - If the bylaws so provide,
circumstances; - THE BOARD may create an executive committee
d. In case of corporations vested with public interest, composed of at least three (3) directors.
material contracts are approved by at least two- - Said committee may act, by majority vote of all its
thirds (2/3) of the entire membership of the board, members, on such specific matters:
with at least a majority of the independent directors 1. Within the competence of the board, as may be
voting to approve the material contract; and delegated to it in the bylaws or
e. In case of an officer, the contract has been 2. By majority vote of the board,
previously authorized by the board of directors. - Except with respect to the:
- Where any of the first three (3) conditions set forth in a. Approval of any action for which shareholders’
the preceding paragraph is absent, in the case of a approval is also required;
 b. Filling of vacancies in the board
c. Amendment or repeal of bylaws or the
adoption of new bylaws;
d. Amendment or repeal of any resolution of the
board which by its express terms is not
amendable or repealable; and
e. Distribution of cash dividends to the
shareholders.
- The board of directors may:
1. Create special committees of temporary or
permanent nature and
2. Determine the members’ term, composition,
compensation, powers, and responsibilities.

‘
 TITLE IV b. Served personally, or
c. When allowed in the bylaws or done with the
POWERS OF CORPORATIONS consent of the stockholder, sent electronically
in accordance with the rules and regulations of
SEC. 35. CORPORATE POWERS AND CAPACITY the Commission on the use of electronic data
- Every corporation incorporated under this Code has messages.
the power and capacity: - In case of extension of corporate term : a dissenting
a. To sue and be sued in its corporate name; stockholder may exercise the right of appraisal under
b. To have perpetual existence unless the certificate the conditions provided in this Code.
of incorporation provides otherwise;
c. To adopt and use a corporate seal; SEC. 37. POWER TO INCREASE OR DECREASE
d. To amend its articles of incorporation in CAPITAL STOCK; INCUR, CREATE OR INCREASE
accordance with the provisions of this Code; BONDED INDEBTEDNESS
e. To adopt bylaws, not contrary to law, morals or - No corporation shall:
public policy, and to amend or repeal the same in 1. Increase or decrease its capital stock or
accordance with this Code; 2. Incur, create or increase any bonded indebtedness
f. In case of stock corporations, to issue or sell - Unless approved by:
stocks to subscribers and to sell treasury stocks in 1. A majority vote of the board of directors and
accordance with the provisions of this Code; and 2. By two-thirds (2/3) of the outstanding capital stock
to admit members to the corporation if it be a 3. At a stockholders’ meeting duly called for the
nonstock corporation; purpose.
g. To purchase, receive, take or grant, hold, convey, - Written notice of:
sell, lease, pledge, mortgage, and otherwise deal 1. The time and place of the stockholders’ meeting
with such real and personal property, including and
securities and bonds of other corporations, as the 2. The purpose for said meeting
transaction of the lawful business of the - Must be:
corporation may reasonably and necessarily 1. Sent to the stockholders at their places of
require, subject to the limitations prescribed by residence as shown in the books of the corporation
law and the Constitution; and
h. To enter into a partnership, joint venture, merger, 2. Served on the stockholders:
consolidation, or any other commercial agreement a. Personally, or
with natural and juridical persons; b. Through electronic means recognized in the
i. To make reasonable donations, including those corporation’s bylaws and/or the Commission’s
for the public welfare or for hospital, charitable, rules as a valid mode for service of notices.
cultural, scientific, civic, or similar purposes - A certificate must be:
- Provided, That no foreign corporation shall give 1. Signed by a majority of the directors of the
donations in aid of any political party or candidate or corporation and
for purposes of partisan political activity; 2. Countersigned by the chairperson and secretary
j. To establish pension, retirement, and other plans of the stockholders’ meeting, setting forth:
for the benefit of its directors, trustees, officers, a. That the requirements of this section have
and employees; and been complied with;
k. To exercise such other powers as may be b. The amount of the increase or decrease of the
essential or necessary to carry out its purpose or capital stock;
purposes as stated in the articles of incorporation. c. In case of an increase of the capital stock
i. The amount of capital stock or
SEC. 36. POWER TO EXTEND OR SHORTEN number of shares of no-par stock
CORPORATE TERM thereof actually subscribed,
- A private corporation may extend or shorten its term as ii. The names, nationalities and
stated in the articles of incorporation when: addresses of the persons subscribing,
1. Approved by a majority vote of the board of iii. The amount of capital stock or
directors or trustees, and number of no-par stock subscribed by
2. Ratified at a meeting by the stockholders or each, and
members representing at least two-thirds (2/3) of iv. The amount paid by each on the
the outstanding capital stock or of its members. subscription in cash or property, or
- WRITTEN NOTICE of the proposed action and THE v. The amount of capital stock or
TIME AND PLACE OF THE MEETING shall be: number of shares of no-par stock
1. Sent to stockholders or members at their allotted to each stockholder if such
respective place of residence as shown in the increase is for the purpose of making
books of the corporation, and effective stock dividend therefor
2. Must either be: authorized;
a. Deposited to the addressee in the post office d. Any bonded indebtedness to be incurred,
with postage prepaid, created or increased;
 e. The amount of stock represented at the 1. Shares issued in compliance with laws requiring
meeting; and stock offerings or minimum stock ownership by the
f. The vote authorizing the increase or decrease public; or to
of the capital stock, or the incurring, creating or 2. Shares issued in good faith with the approval of the
increasing of any bonded indebtedness. stockholders representing two-thirds (2/3) of the
- Any increase or decrease in the capital stock or the outstanding capital stock, in exchange for property
incurring, creating or increasing of any bonded needed for corporate purposes or
indebtedness shall: 3. In payment of a previously contracted debt.
1. Require prior approval of the Commission, and
2. Where appropriate, of the Philippine Competition SEC. 39. SALE OR OTHER DISPOSITION OF ASSETS
Commission. - Subject to the provisions of Republic Act No. 10667,
- The application with the Commission shall be made otherwise known as “Philippine Competition Act”,
WITHIN SIX (6) MONTHS from the date of approval of and other related laws,
the board of directors and stockholders, which period - A corporation may, by a majority vote of its board of
may be extended for justifiable reasons. directors or trustees:
- Copies of the certificate shall be: 1. Sell,
1. Kept on file in the office of the corporation and 2. Lease,
2. Filed with the Commission and 3. Exchange,
3. Attached to the original articles of incorporation. 4. Mortgage,
- After approval by the Commission and the 5. Pledge, or
issuance by the Commission of its certificate of 6. Otherwise dispose of its property and assets,
filing, the capital stock shall be deemed increased or - Upon such terms and conditions and for such
decreased and the incurring, creating or increasing of consideration, which may be:
any bonded indebtedness authorized, as the certificate 1. Money,
of filing may declare: 2. Stocks,
- Provided, That the Commission shall not accept for 3. Bonds, or
filing any certificate of increase of capital stock unless 4. Other instruments for the payment of money or
accompanied by: other property or consideration,
1. A sworn statement of the treasurer of the - As its board of directors or trustees may deem
corporation lawfully holding office at the time of the expedient.
filing of the certificate, - A sale of all or substantially all of the corporation’s
2. Showing that at least twenty-five percent (25%) of properties and assets, including its goodwill, must be:
the increase in capital stock has been subscribed 1. Authorized by the vote of the stockholders
and representing at least two-thirds (2/3) of the
3. That at least twenty-five percent (25%) of the outstanding capital stock, or at least two-thirds
amount subscribed has been paid in actual cash to (2/3) of the members,
the corporation or 2. In a stockholders’ or members’ meeting duly
4. That property, the valuation of which is equal to called for the purpose.
twenty-five percent (25%) of the subscription, has - In nonstock corporations where there are no
been transferred to the corporation: members with voting rights, the vote of at least a
- - Provided, further, That no decrease in capital stock MAJORITY OF THE TRUSTEES IN OFFICE will be
shall be approved by the Commission if its effect shall sufficient authorization for the corporation to enter into
prejudice the rights of corporate creditors. any transaction authorized by this section.
- NONSTOCK CORPORATIONS may incur, create or - The determination of whether or not the sale involves
increase bonded indebtedness when: all or substantially all of the corporation’s properties
1. Approved by a majority of the board of trustees and assets must be computed based on its net asset
and of at least two-thirds (2/3) of the members value, as shown in its latest financial statements.
2. In a meeting duly called for the purpose. - A sale or other disposition shall be deemed to cover
- Bonds issued by a corporation shall be registered with substantially all the corporate property and assets if
the Commission, which shall have the authority to thereby the corporation would be rendered incapable
determine the sufficiency of the terms thereof. of:
1. Continuing the business or
SEC. 38. POWER TO DENY PREEMPTIVE RIGHT 2. Sccomplishing the purpose for which it was
- All STOCKHOLDERS OF A STOCK CORPORATION incorporated.
shall enjoy preemptive right: - Written notice of the proposed action and of the
1. To subscribe to all issues or disposition of shares time and place for the meeting shall be:
of any class, 1. Addressed to stockholders or members at their
2. In proportion to their respective shareholdings, places of residence as shown in the books of the
3. Unless such right is denied by the articles of corporation
incorporation or an amendment thereto. 2. And
- Provided, That such preemptive right shall not extend a. Deposited to the addressee in the post office
to: with postage prepaid,
 b. Served personally, or with the rules and regulations of the Commission on
c. When allowed by the bylaws or done with the the use of electronic data message, when allowed by
consent of the stockholder, sent electronically: the bylaws or done with the consent of the
- Provided, That any dissenting stockholder may stockholders:
exercise the right of appraisal under the conditions - Provided, That any dissenting stockholder shall have
provided in this Code. appraisal right as provided in this Code:
- After such authorization or approval by the - Provided, however, That where the investment by
stockholders or members, the board of directors or the corporation is reasonably necessary to
trustees may, nevertheless, in its discretion, abandon accomplish its primary purpose as stated in the
such sale, lease, exchange, mortgage, pledge, or other articles of incorporation, the approval of the
disposition of property and assets, subject to the rights stockholders or members shall NOT BE NECESSARY.
of third parties under any contract relating thereto,
without further action or approval by the stockholders SEC. 42. POWER TO DECLARE DIVIDENDS
or members. - The BOARD OF DIRECTORS of a stock corporation
- Nothing in this section is intended to restrict the may declare dividends:
power of any corporation, without the authorization 1. Out of the unrestricted retained earnings
by the stockholders or members, to sell, lease, 2. Which shall be payable in cash, property, or in
exchange, mortgage, pledge, or otherwise dispose of stock to all stockholders
any of its property and assets if: 3. On the basis of outstanding stock held by them:
1. The same is necessary in the usual and regular - Provided, That:
course of business of the corporation or if 1. Any cash dividends due on delinquent stock shall
2. The proceeds of the sale or other disposition of first be applied to the unpaid balance on the
such property and assets shall be appropriated for subscription plus costs and expenses,
the conduct of its remaining business. 2. While stock dividends shall be withheld from the
delinquent stockholders until their unpaid
SEC. 40. Power to Acquire Own Shares subscription is fully paid:
- Provided that the corporation has unrestricted - Provided, further, That no stock dividend shall be
retained earnings in its books to cover the shares to issued without:
be purchased or acquired, 1. the approval of stockholders representing at least
- A stock corporation shall have the power to purchase two-thirds (2/3) of the outstanding capital stock
or acquire its own shares for a legitimate corporate 2. At a regular or special meeting duly called for the
purpose or purposes, including the following cases: purpose.
a. To eliminate fractional shares arising out of stock - Stock corporations are prohibited from retaining
dividends surplus profits in excess of one hundred percent
b. To collect or compromise an indebtedness to the (100%) of their paid-in capital stock, except
corporation, arising out of unpaid subscription, in a a. When justified by definite corporate expansion
delinquency sale, and to purchase delinquent projects or programs approved by the board of
shares sold during said sale; and directors; or
c. To pay dissenting or withdrawing stockholders b. When the corporation is prohibited under any loan
entitled to payment for their shares under the agreement with financial institutions or creditors,
provisions of this Code. whether local or foreign, from declaring dividends
without their consent, and such consent has not
SEC. 41. POWER TO INVEST CORPORATE FUNDS IN yet been secured; or
ANOTHER CORPORATION OR BUSINESS OR FOR c. When it can be clearly shown that such retention is
ANY OTHER PURPOSE necessary under special circumstances obtaining
- Subject to the provisions of this Code, in the corporation, such as when there is need for
- A private corporation may invest its funds in any other special reserve for probable contingencies.
corporation, business, or for any purpose other than
the primary purpose for which it was organized, when: SEC. 43. POWER TO ENTER INTO MANAGEMENT
1. Approved by a majority of the board of directors or CONTRACT
trustees and - No corporation shall conclude a management
2. Ratified by the stockholders representing at least contract with another corporation unless such contract
two-thirds (2/3) of the outstanding capital stock, or is:
by at least two thirds (2/3) of the members in the  Approved by the board of directors and by
case of nonstock corporations, stockholders owning at least the majority of
3. At a meeting duly called for the purpose. the outstanding capital stock, or by at least a
- Notice of the proposed investment and the time and majority of the members in the case of a
place of the meeting shall be addressed to each nonstock corporation,
stockholder or member at the place of residence as  Of BOTH the managing and the managed
shown in the books of the corporation and deposited to corporation,
the addressee in the post office with postage prepaid,  At a meeting duly called for the purpose:
served personally, or sent electronically in accordance - Provided, That:
 a. Where a stockholder or stockholders representing
the same interest of both the managing and the
managed corporations own or control more than
one-third (1/3) of the total outstanding capital stock
entitled to vote of the managing corporation; or
b. Where a majority of the members of the board of
directors of the managing corporation also
constitute a majority of the members of the board
of directors of the managed corporation,
- THEN the management contract must be approved:
1. By the stockholders of the managed corporation
owning at least two-thirds (2/3) of the total
outstanding capital stock entitled to vote, or
2. By at least two-thirds (2/3) of the members in the
case of a nonstock corporation.
- These shall apply to any contract whereby a
corporation undertakes to manage or operate all or
substantially all of the business of another corporation,
whether such contracts are called service contracts,
operating agreements or otherwise:
- Provided, however, That such service contracts or
operating agreements which relate to the:
1. Exploration,
2. Development,
3. Exploitation or
4. Utilization of natural resources
- May be entered into for such periods as may be
provided by the pertinent laws or regulations.
- No management contract shall be entered into for a
period longer than five (5) years for any one (1)
term.

SEC. 44. ULTRA VIRES ACTS OF CORPORATIONS

- No corporation shall possess or exercise corporate
powers other than: (CBE)
1. Those conferred by this Code or
2. By its articles of incorporation and
3. Except as necessary or incidental to the exercise
of the powers conferred.
 TITLE V d. The modes by which a stockholder, member, director,
or trustee may attend meetings and cast their votes;
BYLAWS e. The form for proxies of stockholders and members and
the manner of voting them
SEC. 45. ADOPTION OF BYLAWS f. The directors’ or trustees’ qualifications, duties and
- For the adoption of bylaws by the corporation, responsibilities, the guidelines for setting the
- The AFFIRMATIVE VOTE of the stockholders compensation of directors or trustees and officers, and
representing: the maximum number of other board representations
1. At least a majority of the outstanding capital stock, that an independent director or trustee may have which
or of shall, in no case, be more than the number prescribed
2. At least a majority of the members in case of by the Commission;
nonstock corporations g. The time for holding the annual election of directors or
- Shall be necessary. trustees and the mode or manner of giving notice
- The BYLAWS: thereof;
1. Shall be signed by the stockholders or members h. The manner of election or appointment and the term of
voting for them and office of all officers other than directors or trustees;
2. Shall be kept in the principal office of the i. The penalties for violation of the bylaws;
corporation, subject to the inspection of the j. In the case of stock corporations, the manner of
stockholders or members during office hours. issuing stock certificates;
3. A copy thereof: k. Such other matters as may be necessary for the proper
a. Duly certified by a majority of the directors or or convenient transaction of its corporate affairs for the
trustees and promotion of good governance and anti-graft and
b. Countersigned by the secretary of the corruption measures.
corporation, - An arbitration agreement may be provided in the
Shall be filed with the Commission and attached to bylaws pursuant to Section 181 of this Code.
the original articles of incorporation.
- Notwithstanding the provisions of the preceding SEC. 47. AMENDMENT TO BYLAWS
paragraph, bylaws may be adopted and filed prior 1. A majority of the board of directors or trustees,
to incorporation; and
- In such case, such bylaws shall be approved and 2. The owners of at least a majority of the outstanding
signed by all the incorporators and submitted to the capital stock, or at least a majority of the members
Commission, together with the articles of of a nonstock corporation,
incorporation. 3. At a regular or special meeting duly called for the
- IN ALL CASES, bylaws shall be effective only upon purpose,
the issuance by the Commission of a certification - May amend or repeal the bylaws or adopt new
that the bylaws are in accordance with this Code. bylaws.
- The Commission shall not accept for filing the bylaws - The owners of two-thirds (2/3) of the outstanding
or any amendment thereto of any: (B2TIPEO) capital stock or two-thirds (2/3) of the members in a
1. Bank, banking institution, nonstock corporation may delegate to the board of
2. Building and loan association, directors or trustees the power to amend or repeal the
3. Trust company, bylaws or adopt new bylaws:
4. Insurance company, - Provided, That any power delegated to the board of
5. Public utility, directors or trustees to amend or repeal the bylaws or
6. Educational institution, or adopt new bylaws shall be considered as REVOKED
7. Other special corporations governed by special whenever:
laws, 1. Stockholders owning or representing a majority of
- Unless accompanied by a certificate of the the outstanding capital stock or
appropriate government agency to the effect that 2. Majority of the members shall so vote at a regular
such bylaws or amendments are in accordance with or special meeting.
law. - Whenever the bylaws are amended or new bylaws are
adopted, the corporation shall file with the
SEC. 46. CONTENTS OF BYLAWS Commission:
- A private corporation may provide the following in its 1. Such amended or new bylaws and,
bylaws: 2. If applicable, the stockholders’ or members’
a. The time, place and manner of calling and conducting resolution authorizing the delegation of the power
regular or special meetings of the directors or trustees; to amend and/or adopt new bylaws,
b. The time and manner of calling and conducting regular 3. Duly certified under oath by the corporate
or special meetings and mode of notifying the secretary and a majority of the directors or
stockholders or members thereof; trustees.
c. The required quorum in meetings of stockholders or - The amended or new bylaws shall only be effective upon the
members and the manner of voting therein issuance by the Commission of a certification that the same
is in accordance with this Code and other relevant laws.
 TITLE IX  Approved by a majority vote of the respective
boards of directors or trustees of all the constituent
MERGER AND CONSOLIDATION corporations and
 Ratified by the affirmative vote of stockholders
SEC. 75. PLAN OF MERGER OR CONSOLIDATION. representing at least two-thirds (2/3) of the
- Two (2) or more corporations: outstanding capital stock or of two-thirds (2/3) of
a. May merge into a single corporation which shall be the members of each of the constituent
one of the constituent corporations or corporations.
b. May consolidate into a new single corporation - Such plan, together with any amendment, shall be
which shall be the consolidated corporation. considered as the agreement of merger or consolidation.
- The board of directors or trustees of each corporation,
party to the merger or consolidation, shall approve a SEC. 77. ARTICLES OF MERGER OR CONSOLIDATION
plan of merger or consolidation setting forth the - After the approval by the stockholders or members as
following: required by the preceding section, articles of merger or
1. The names of the corporations proposing to merge articles of consolidation shall be executed by each of
or consolidate, hereinafter referred to as the the constituent corporations, to be signed by the
constituent corporations; president or vice president and certified by the
2. The terms of the merger or consolidation and the secretary or assistant secretary of each corporation
mode of carrying the same into effect; ( setting forth: (a) The plan of the merger or the plan of
3. A statement of the changes, if any, in the articles of consolidation; (b) As to stock corporations, the number
incorporation of the surviving corporation in case of of shares outstanding, or in the case of nonstock
merger; and, corporations, the number of members; (c) As to each
 In case of consolidation, all the statements corporation, the number of shares or members voting
required to be set forth in the articles of for or against such plan, respectively; (d) The carrying
incorporation for corporations organized amounts and fair values of the assets and liabilities of
under this Code; and the respective companies as of the agreed cut-off date;
4. Such other provisions with respect to the proposed (e) The method to be used in the merger or
merger or consolidation as are deemed necessary consolidation of accounts of the companies; (f) The
or desirable. provisional or pro forma values, as merged or
consolidated, using the accounting method; and (g)
SEC. 76. STOCKHOLDERS’ OR MEMBERS’ Such other information as may be prescribed by the
APPROVAL Commission.
- Upon approval by a majority vote of each of the board
of directors or trustees of the constituent corporations SEC. 78. EFFECTIVITY OF MERGER OR
of the plan of merger or consolidation, CONSOLIDATION
- The same shall be submitted for approval by the The articles of merger or of consolidation, signed and
stockholders or members of each of such corporations certified as required by this Code, shall be submitted to the
at separate corporate meetings duly called for the Commission for its approval: Provided, That in the case of
purpose. merger or consolidation of banks or banking institutions,
- Notice of such meetings shall be given to all loan associations, trust companies, insurance companies,
stockholders or members of the respective public utilities, educational institutions, and other special
corporations in the same manner as giving notice of corporations governed by special laws, the favorable
regular or special meetings under Section 49 of this recommendation of the appropriate government agency
Code. shall first be obtained. If the Commission is satisfied that
- The notice shall state the purpose of the meeting and the merger or consolidation of the corporations concerned
include a copy or a summary of the plan of merger or is consistent with the provisions of this Code and existing
consolidation. laws, it shall issue a certificate approving the articles and
- The affirmative vote of stockholders representing at plan of merger or of consolidation, at which time the
least two-thirds (2/3) of the outstanding capital stock of merger or consolidation shall be effective. Page 38 of 73 If,
each corporation in the case of stock corporations or at upon investigation, the Commission has reason to believe
least two-thirds (2/3) of the members in the case of that the proposed merger or consolidation is contrary to or
nonstock corporations shall be necessary for the inconsistent with the provisions of this Code or existing
approval of such plan. laws, it shall set a hearing to give the corporations
- Any dissenting stockholder may exercise the right of concerned the opportunity to be heard. Written notice of
appraisal in accordance with this Code: the date, time, and place of hearing shall be given to each
- Provided, That if after the approval by the stockholders constituent corporation at least two (2) weeks before said
of such plan, the board of directors decides to hearing. The Commission shall thereafter proceed as
ABANDON the plan, the right of appraisal shall be provided in this Code.
extinguished.
- Any amendment to the plan of merger or consolidation SEC. 79. EFFECTS OF MERGER OR CONSOLIDATION
may be made: Provided, That such amendment is The merger or consolidation shall have the following
effects: (a) The constituent corporations shall become a
single corporation which, in case of merger, shall be the
surviving corporation designated in the plan of merger;
and, in case of consolidation, shall be the consolidated
corporation designated in the plan of consolidation; (b) The
separate existence of the constituent corporations shall
cease, except that of the surviving or the consolidated
corporation; (c) The surviving or the consolidated
corporation shall possess all the rights, privileges,
immunities, and powers and shall be subject to all the
duties and liabilities of a corporation organized under this
Code; (d) The surviving or the consolidated corporation
shall possess all the rights, privileges, immunities and
franchises of each constituent corporation; and all real or
personal property, all receivables due on whatever
account, including subscriptions to shares and other
choses in action, and every other interest of, belonging to,
or due to each constituent corporation, shall be deemed
transferred to and vested in such surviving or consolidated
corporation without further act or deed; and (e) The
surviving or consolidated corporation shall be responsible
for all the liabilities and obligations of each constituent
corporation as though such surviving or consolidated
corporation had itself incurred such liabilities or obligations;
and any pending claim, action or proceeding brought by or
against any constituent corporation may be prosecuted by
or against the surviving or consolidated corporation. The
rights of creditors or liens upon the property of such
constituent corporations shall not be impaired by the
merger or consolidation.