REVISED CORPORATION CODE OF THE PHILIPPINES

R.A. No. 11232 or the Revised Corporation Code of the Philippines was approved on February 20, 2019.

How are corporations created?

1. By a General Law - private corporations are generally created under the provisions of the Revised Corporation Code.

2. By a Special Law - public corporations are created through special laws.

Private Corporation - is an artificial being created by operation of law having the right of succession, and the powers, attributes
and properties expressly authorized by law or incident to its existence.

Attributes of a Corporation

1. It is an artificial being with a separate and distinct personality.

2. It is created by the operation of law.
3. It enjoys the right of succession.
4. It has the powers, attributes and properties expressly authorized by law or incident to its existence.

Doctrines

1. Concession Theory or Government Paternity Theory or Franchise Theory - a corporation comes into existence upon the
issuance of the certificate of incorporation. Then and only then will it acquire juridical personality.

2. Doctrine of Separate Personality or Corporate Entity - a corporation is a legal or juridical person with a personality
separate and apart from its individual stockholders or members. Due the corporation's separate juridical personality, a
stockholder may not be made to answer for acts or liabilities of said corporation, and vice-versa.

3. Doctrine of Piercing the Veil of Corporate Fiction or Alter Ego or Business Conduit Doctrine or Instrumentality Rule -
when the veil of corporate fiction is used as a shield to defeat public convenience, justify wrong, protect fraud, or
defend a crime, this fiction shall be disregarded and the individuals composing it will be treated identical.

4. Trust Fund Doctrine- the capital stock, properties and other assets of a corporation are regarded as equity in trust for
the payment of corporate creditors.

5. Wasting Asset Doctrine - a wasting asset corporation or an entity engaged in the extraction of a natural resource can
legally return shareholders during the lifetime of the corporation. Accordingly, a wasting asset corporation can pay a
dividend not only to the extent of the retained earnings but also to the extent of the accumulated depletion.

6. Theory of General Capacities - a corporation may exercise any and all powers that may be exercised by persons.

7. Theory of Special/Limited Capacities - no corporation under the Revised Corporation Code shall possess or exercise any
corporate power, except those conferred by law, its articles of incorporation, those implied from express powers and
those as are necessary or incidental to the exercise of the powers conferred.

8. Corporations cannot claim moral damages - a corporation is not entitled to moral damages because it has no feelings,
no emotions, no senses. However, when a corporation has a good reputation that is debased, resulting in its humiliation
in the business realm, it can claim moral damages.

9. Corporation cannot be held criminally liable - since a corporation is a mere legal fiction, it cannot be held. liable for a
crime committed by its officers since it does not have the essential element of malice. Criminal action is limited to the
corporate agents guilty of an act amounting to a crime and never against the corporation itself.

Tests to Determine the Nationality of Corporations

1. Incorporation Test - determined by the state of incorporation regardless of the nationality of its Stockholders.
where formed/incorporated

2. Domicile Test - determined by the state where it is domiciled.

 3. Control Test or Wartime Test - determined by the nationality of the controlling stockholders or members. This is applied
in times of war. This is also applied in any industry or activity where foreign ownership is prohibited or restricted under
the Foreign Investment Negative List, e.g. exploitation of natural resources (60%), public utilities (60%), mass media
% owned by Filipinos (100%), and advertising (70%). For purposes of determining compliance therewith, the required percentage of Filipino
ownership shall be applied to both:

a. the total number of outstanding shares of stock entitled to vote in the election of directors; and
b. the total number of outstanding shares of stock, whether or not entitled to vote in the titled to vo election of
directors.

*Grandfather Rule - is a method of determining the nationality of a corporation, which is owned in part by another corporation,
by breaking down the equity structure of the shareholder corporation. This rule is applied only if doubt exists as to the locus of
the "beneficial ownership" and "control" of a corporation, even if the 60-40 Filipino to foreign equity ratio is apparently met by
the subject or investee corporation.

Classes of Corporation

1. Classification under the Code a. Stock-those which have capital stock divided into shares and are authorized to
distribute to the holders of such shares, dividends, or allotments of the surplus profits on the basis of the shares held. b.
Non-stock-one where no part of its income is distributed as dividends to its members, trustees, or officers.

2. As to purpose
a. Public - one formed or organized for the government of a portion of the state. Its purpose is for the general
good and welfare.
b. Private - one formed for some private purpose, benefit, aim or end. It may be either stock or non-stock.

3. As to legality of existence
strict legal rqmts a. De jure - corporation created in strict or substantial conformity with the mandatory statutory requirements for
cannot be successfully charged incorporation and the right of which to exist as a corporation cannot be successfully attacked or questioned by
any party even in a direct proceeding for that purpose by the state.

comply with legal rqmts b. De facto - organized with a colorable compliance with the requirements of a valid law and its existence cannot
can’t be questioned except by
Solicitor General be inquired collaterally but such inquiry may be made by the Solicitor General in a quo warranto proceedings.

c. Corporation by estoppel - group of persons that assumes to act as a corporation knowing it to be without
if acted w/o authority, can be authority to do so, and enters into a transaction with a third person on the strength of such appearance. All
held liable as general partners
persons who assume to act as a corporation knowing it to be without authority to do so shall be liable as
general partners for all debts, liabilities and damages incurred or arising as a result thereof.

operating as a corpo for a d. Corporation by prescription - one which has exercised corporate powers for an indefinite period without
long time
interference on the part of the sovereign power.

4. As to laws of incorporation
a. Domestic - corporation formed, organized, or existing under Philippine laws.
b. Foreign - a corporation formed, organized, or existing under any laws other than those of the Philippines and
whose law allows Filipino citizens and corporations to do business in its own country and state.

5. As to whether they are open to the public or not

a. Open - one which is open to any person who may wish to become a stockholder or member thereto.
b. Close - one whose articles of incorporation provides that: (a) all the corporation's issued stock of all classes,
exclusive of treasury shares, shall be held of record by not more than a specified number of persons, not
exceeding twenty (20); (b) all the issued stock of all classes shall be subject to one or more specified
restrictions on transfer, and (c) the corporation shall not list in any stock exchange or make any public offering
of its stocks of any class.

6. As to the number of persons who compose them

a. Aggregate corporation - a corporation consisting of more than one person or member.
b. One-person corporation - a corporation consisting of only one person or member.
 7. As to the relationship of management and control
a. Parent - its control lies in its power, directly or indirectly, to elect the subsidiary's directors thus controlling its
management policies.
b. Subsidiary - one in which control, in the form of ownership of majority of its shares, is in another corporation
(the parent corporation).

8. As to whether they are for religious purposes or not

a. Ecclesiastical - one organized for religious purposes.
b. Lay - one organized for a purpose other than for religion.

9. As to whether they are for charitable purpose or not

alms a. Eleemosynary - one established for or devoted to charitable purposes or those supported by charity.
b. Civil - one established for business or profit.

Classification of Shares

Shares of stock - are units into which the capital stock is divided. A share of stock represents interest of the holder thereof to
participate in the management of the corporation, to share proportionally in the profits of the business and, upon liquidation, to
obtain an aliquot part of corporate assets after all corporate debts have been paid.

Doctrine of Equality of Shares - where the articles of incorporation do not provide for any distinction of the shares of stock, all
shares issued by the corporation are presumed to be equal and enjoy the same rights and privileges and are also subject to the
same liabilities.

Classification of Shares

1. Common shares - the basic class of stock ordinarily and usually issued without extraordinary rights and privileges, and the
owners thereof are entitled to a pro rata share in the profits of the corporation and in its assets upon dissolution and likewise in
the management of its affairs without preference or advantage whatsoever.

“priority” 2. Preferred shares -

shares with a stated par value which entitle the holder thereof to certain preferences over the holders of
over
common
common stock. The preference may be (a) as to asset, or (b) as to dividends, or (c)as may be determined by the board of
directors when authorized to do so.

3. Voting shares - shares with a right to vote.

must always be at least one class of shares with full voting rights
*There shall always be a class or series of shares which have complete voting rights.

4. Non-voting shares - shares without right to vote.

*The law only authorizes the denial of voting rights in the case of redeemable shares and preferred shares which must
be expressly denied in the articles of incorporation.
Page 19
• Treasury shares have no voting rights while in the treasury.
Legal restrictions: The law only allows companies to issue non-voting shares in t wo specific cases:
• Fractional shares are not entitled to vote.
1. Redeemable shares: Shares that the company can buy back later
expressly denied • Escrow shares cannot vote before fulfilling specific conditions.
2. Preferred shares: Shares that may offer other benefits, like higher dividends
• Unpaid shares (if not delinquent) retain voting rights.
• Important note: For these shares to be non-voting, it must be clearly stated in the company's Important Exception: Non-voting shareholders can still vote on
articles of incorporation. This is the official document that outlines how the company is set up and run. critical matters such as:
• Amendment of articles of incorporation
• Adoption and amendment of bylaws
• Sale or disposition of substantial corporate property

V
 *Holders of non-voting shares shall nevertheless be entitled to vote on the following matters: (AASIIMID)
NON VOTING SHARES CAN VOTE HERE VOTES: acdefg - majority BOD + ⅔ SH
a. Amendment of the articles of incorporation;
A b. Adoption and amendment of bylaws; (before incorporation - ALL, after - majority)
c. Sale, lease, exchange, mortgage, pledge, or other disposition of all or substantially all of the corporate
property;
d. Incurring, creating, or increasing bonded indebtedness;
e. Increase or decrease of authorized capital stock;
f. Merger or consolidation of the corporation with another corporation or other corporations;
g. Investment of corporate funds in another corporation or business in accordance with the Code; and
D h. Dissolution of the corporation. (Cr affected - majority + ⅔, Cr not affected - majority + majority)

5. Par value shares - shares with a value fixed in the articles of incorporation and the certificates of stock.

6. No par value shares - shares having no par value. The issued value will be fixed by the Board of Directors and stated in the
certificate or articles of incorporation.

*Limitations

a. Banks, preneed, insurance, trust, buildings, public utilities, companies, and loan associations, and other corporations
authorized to obtain or access funds from the public shall not be permitted to issue no par value shares; (BPI-TB PO)

b. No par value shares cannot have an issued price of less than P5.00; no par par : must be 5 above

c. The entire consideration for its issuance constitutes capital so that no part of it should be distributed as dividends;
Y

d. They cannot be issued as preferred stocks; cannot be preferred

e. The articles of incorporation must state the fact that it issued no par value shares as well as the number of said shares;
and

f. Once issued, they are deemed fully paid and non-assessable.

7. Share in escrow - share subject to an agreement by virtue of which the share is deposited by the grantor or his agent with a
third person to be kept by the escrow agent until the performance of a certain condition or the happening of a certain event
contained in the agreement.
fake

8. Over-issued stock - stock issued in excess of the authorized capital stock. It is also known as spurious stock, and its issuance is
considered void.

9. Watered stock - stock issued not in exchange for its equivalent value either in cash, property, share, stock dividends, or
services. It includes stocks:

1. Issued without consideration (bonus shares)

2. Issued as fully paid when the corporation has received a lesser sum of money than its par or issued value
(discount share)

3. Issued for consideration other than actual cash, the fair valuation of which is less than its par or issued value

4. Issued as a stock dividend when there are not sufficient retained earnings to justify it.

*Water in the stock represents the difference between the fair market value at the time of the issuance of the stock and
the part or issued value of said stock.

10. Fractional share - share with a value of less than one full share.

11. Promotional share - shares issued to promoters or those in some way interested in the company for incorporating the
company or for services rendered in launching or promoting the welfare of the company.
12. Convertible shares - shares that are changeable by the stockholder from one class to another at a certain price and within
the same period.
Five years
13. Founders' share - shares are classified as such in the articles of incorporation which are 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,
it must be for a limited period not to exceed five (5) years from the date of incorporation:

14. Redeemable share - shares which may be purchased by the corporation from the holders of such shares upon the expiration
of a fixed period, regardless of the existence of unrestricted retained earnings in the books of the corporation provided that
redemption will not result in insolvency or inability of the corporation to meet its obligations.

15. Treasury share - shares which have been issued and fully paid for, but subsequently reacquired by the issuing corporation by
purchase, redemption, donation or through some other lawful means. Such shares may again be disposed of for a reasonable
price fixed by the board.

Incorporation and Organization of a Corporation

Component of a Corporation

1. Incorporators - those mentioned in the articles of incorporation originally forming and composing the corporation and who
are signatories thereof.

a. Natural or judicial person not suffering from legal incapacity

b. Not more than 15 persons
c. In stock corporation, each must own or subscribe to at least one share; and in a non- stock corporation, he must be a
member

*Natural persons who are licensed to practice a profession, and partnerships or associations organized for the purpose
of practicing a profession, shall not be allowed to organize a corporation.

*A corporation with a single stockholder is considered a One Person Corporation (OPC).

2. Corporators - those who compose a corporation, whether as stockholders or shareholders in a stock corporation or as
members in a nonstock corporation.

3. Promoter - a person who, acting alone or with others, takes initiative in founding and organizing the business or enterprise of
the issuer and receives consideration thereof.

4. Subscriber - a person who has agreed to take and pay for original and unissued shares of a corporation formed or to be
formed.

5. Underwriter - a person who guarantees on a firm commitment and/or declared best effort basis the distribution and sale of
securities of any kind by another company.

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 Commission finds that the name is distinguishable from a name already reserved or registered for the use of another
corporation, not protected by law and is not contrary to law, rules and regulations, the name shall be reserved in favor of the
incorporators.

3. The incorporators shall then submit their articles of incorporation and bylaws to the Commission.

4. If the Commission finds that the submitted documents and information are fully compliant with the requirements of the
Revised Corporation Code, other relevant laws, rules and regulations, the Commission shall issue the certificate of incorporation.

*A private corporation organized under this Code commences its corporate existence and juridical personality from the
date the Commission issues the certificate of incorporation.
Corporate Name - the corporate name shall contain the word "Corporation" or "Incorporated," or the abbreviations "Corp." or
"Inc.", respectively. In the case of a One Person Corporation, the corporate name shall contain the word 'OPC' either below or at
the end of its corporate name.
*A name is not distinguishable even if it contains one or more of the following:

1. The word "corporation", "company", "incorporated", "limited", "limited liability", or 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.

Documents to be Filed with the SEC:

1. Articles of Incorporation, and By-Laws (if crafted prior to incorporation);

2. Certification concerning the amount of capital stock subscribed and/or paid;

3. Undertaking to change the corporate name in case there is another person or entity with same or similar name that was
previously registered; and

4. Favorable recommendation from the appropriate government agency that the AOI or amendments thereto of banks, banking
and quasi-banking institutions, preneed, insurance and trust companies, NSSLAS, pawnshops, and other financial intermediaries,
is in accordance with law.

Articles of Incorporation - the document prepared by the persons establishing a corporation and filed with the SEC containing
the matters required by the code. It is one that defines the charter of the corporation, and the contractual relationships between
the State and the corporation, the stockholder and the State, and between the corporation and its stockholders.

*The charter of the corporation is a contract between 3 parties:

1. between the State and the corporation;

2. between the stockholders and the State;
3. between the corporation and its stockholders.

Contents of the Articles of Incorporation

1. Corporate Name;
2. Purpose Clause;
3. Principal Office;
4. Corporate Term if the corporation has not elected perpetual existence;
5. Incorporators;
6. Trustees/Directors;
7. For stock corporations:
a. The authorized capital stock,
b. Number of shares into which it is divided,
c. The par value of each share,
d. Names, nationalities, and residence addresses of the original subscribers,
e. Amount subscribed and paid by each on the subscription, and
f. A statement that some or all of the shares are without par value, if applicable
8. For nonstock corporations:
a. Amount of its capital,
b. The names, nationalities, and residence addresses of the contributors, and
c. Amount contributed by each
9. Other matters

Amendment of Articles of Incorporation - may be amended by majority vote of the board of directors or trustees and the vote
or written assent of the stockholders representing at least 2/3 of the outstanding capital stock. The amendments shall take effect
upon their approval by the SEC or from the date of filing with the SEC if not acted upon within 6 months from the date of filing
(Doctrine of Approval by Inaction).
within 6 months
*The following items state accomplished facts (fait accompli), therefore, cannot be amended:

1. The names, nationalities and residences of the incorporators.

*To allow an amendment would mean going against the definition of "incorporator".
originally forming & composing
2. Treasurer-in-trust
3. First set of directors or trustees
4. Original stock subscriptions and paid-in capital
5. Place and date of execution
6. Witnesses

By-Laws - rules of action adopted by a corporation for its internal government and for the regulation of conduct, and prescribe
the rights and duties of its stockholders or members towards itself and among themselves in reference to the management of its
affairs. internal governance
conduct regulations
management of corporate affairs

Adoption of By-Laws

1. Before incorporation - the by-laws shall be approved and signed by all the incorporators and submitted to the SEC,
together with the articles of incorporation.

2. After incorporation - the affirmative vote of the stockholders representing at least a majority of the outstanding
capital stock, or of at least a majority of the members in case of nonstock corporations, shall be necessary.

Matters That Cannot Be Provided for in the By-laws (must be in the AOI):

1. Classification of shares of stock and preferences granted to preferred shares

2. Provisions on founder's shares
3. Providing for redeemable shares not in the by-laws BUT MUST BE IN THE AOI
4. Provisions on the purposes of the corporation
5. Providing for the corporate term of existence
6. Capitalization of stock corporations
7. Corporate Name
8. Denial of pre-emptive rights

Amendment of By-laws - a majority of the board of directors or trustees, and the owners of at least a majority of the
outstanding capital stock, or at least a majority of the members of a nonstock corporation, at a regular or special meeting duly
called for the purpose, may amend or repeal the bylaws or adopt new bylaws.

Delegation to Amend the By-Laws the owners of two - thirds (2/3) of the outstanding capital stock or two-thirds (2/3) of the
members in a nonstock corporation may delegate to the board of directors or trustees the power to amend or repeal the by-laws
or adopt new by-laws. Any power delegated to the board of directors or trustees to amend or repeal the by-laws or adopt new
by-laws shall be considered as revoked whenever stockholders owning or representing a majority of the outstanding capital stock
or majority of the members shall vote at a regular or special meeting. 2/3 owners of the shares BOD to amend
if the majority of the owners vote @ a meeting, they can take away delegation

* In all cases, bylaws shall be effective only upon the issuance by the Commission of a certification that the by- laws are in
accordance with the Revised Corporation Code.

Minimum Capital Stock - stock corporations shall not be required to have a minimum capital stock.

*No minimum amount of capital stock to be subscribed and paid for the purpose of incorporation.

*Insurance corporation- P5 million

*Pawnshop- P100,000
*Financial intermediary applying for authority to perform quasi-banking functions-P50 million
Corporate Term

a. A corporation shall have perpetual existence unless its articles of incorporation provide otherwise.

b. Corporations with certificates of incorporation issued prior to the effectivity of the Revised Corporation Code (RCC), and
which continue to exist, shall have 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 articles of incorporation.

c. A corporate term for a specific period may be extended or shortened by amending the articles of incorporation.

d. No extension may be made earlier than three (3) years prior to the original or subsequent expiry date(s) unless there
are justifiable reasons. ex. established in 2010 w/ a 20 year term, will expire on 2030 campy apply for extension before 2027

e. A corporation whose term has expired may apply for a revival of its corporate existence, together with all the rights and
privileges under its certificate of incorporation. Upon approval by the SEC, the corporation shall be deemed revived and
a certificate of revival of corporate existence shall be issued.

Effects of Non-Use of Corporate Charter and Continuous Inoperation (Part of Dissolution)

a. 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
(5)-year period.

b. However, if a corporation has commenced its business but subsequently becomes inoperative for a period of at least
five (5) consecutive years, the SEC may, after due notice and hearing, place the corporation under delinquent status.

c. A delinquent corporation shall have a period of two (2) years to resume operations and comply with all requirements
that the SEC shall prescribe. Upon compliance by the corporation, the SEC shall issue an order lifting the delinquent
status. Failure to comply with the requirements and resume operations within the period given by the Commission shall
cause the revocation of the corporation's certificate of incorporation.

Board of Directors and Trustees

- corporate powers are exercised by the board of directors or trustees. Corporate officers = Agents

Qualifications

1. Natural person with legal capacity

2. Not more than 15 persons

*In an ordinary non-stock corporation, the articles of incorporation or the by-laws may provide more than 15 trustees.

*In a non-stock educational corporation, there shall not be less than 5 nor more than 15 persons provided that the
number shall be in multiples of 5. (5-10-15) 5 to 15

3. For a stock corporation, he must own or subscribe to at least 1 share; for a non-stock corporation, he must be a member. 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.

4. Such other qualifications as required by the by-laws not inconsistent with the provisions of the Revised Corporation Code.

Non-Competition Clause - statement in the by-laws providing that no person shall qualify or be eligible for nomination or election
to the board if he is engaged in any business which competes with or is antagonistic to that of the corporation is valid.
opposed under by laws
 Disqualification of Directors, Trustees or Officers

- A person shall be disqualified from being a director, trustee or officer of any corporation if, within five (5) years prior to
the election or appointment as such, the person was:

1. Convicted by final judgment:

a. of an offense punishable by imprisonment for a period exceeding six (6) years;

b. for violating the Revised Corporation Code and
c. for violating Republic Act No. 8799, otherwise known as "The Securities Regulation Code";

2. Found administratively liable for any offense involving fraudulent acts; and

3. By a foreign court or equivalent foreign regulatory authority for acts, violations or misconduct similar to those enumerated in
paragraphs (1) and (2) above.

Independent Director - is a person who, apart from shareholdings and fees received from the corporation, 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. Independent directors must
be elected by the shareholders present or entitled to vote in absentia during the election of directors.

The board of the following corporations vested with public interest shall have independent directors constituting at least twenty
percent (20%) of such board: (ex. 10 members, 2 must be independent directors)

1. Corporations covered by Section 17.2 of Republic Act No. 8799, otherwise known as "The Securities Regulation
Code", namely those whose securities are registered with the SEC, corporations listed with an exchange or with assets
of at least Fifty million pesos (P50,000,000.00) and having two hundred (200) or more holders of shares, each holding at
least one hundred (100) shares of a class of its equity shares; (publicly listed)

need
Independent
2. Banks and quasi-banks, Non-stock savings and loan associations (NSSLAs), pawnshops, corporations engaged in
Directors money service business, pre-need, trust and insurance companies, and other financial intermediaries; and financial institutions

3. Other corporations engaged in business vested with public interest similar to the above, as may be determined by the
Commission, after taking into account relevant factors which are germane to the objective and purpose of requiring the
election of an independent director, such as the extent of minority ownership, type of financial products or securities
issued or offered to investors, public interest involved in the nature of business operations, and other analogous factors.
relevant

Term of Office

1. Stock corporation - directors shall be elected for a term of one (1) year. Each director shall hold office until the
successor is elected and qualified.
T for 3 yr term
2. Ordinary non-stock corporation - trustees shall hold office for not more than three (3) years until their successors
are elected and qualified. Trustees elected to fill vacancies occurring before the expiration of a particular term shall hold
office only for the unexpired period.

3. Non-stock educational corporation - one-fifth (1/5) of their number shall expire every year. Trustees thereafter
elected to fill vacancies, occurring before the expiration of a particular term, shall hold office only for the unexpired
period. Trustees elected thereafter to fill vacancies caused by expiration of term shall hold office for five (5) years.

Holdover Principle - the directors or trustees shall be elected for a fixed term but may continue to serve until their successors
are elected and qualified. even if a director’s orc trustees term ends, they can keep serving until a new person is chosen

Election of the Board of Directors or Trustees

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.
 w/o being physically present

2. When so authorized in the bylaws or by a majority of the board of directors, the stockholders or members may also
vote through remote communication or in absentia. The right to vote through such modes may be exercised in
corporations vested with public interest, notwithstanding the absence of a provision in the bylaws of such corporations.
remote voting is allowed if not mentioned in rules
3. A stockholder or member, who participates through remote communication or in absentia, shall be deemed present
for purposes of quorum.

4. The election must be by ballot if requested by any voting stockholder or member.

for privacy or accuracy

Methods of Voting

1. Straight voting - every stockholder may vote such a number of shares for as many persons as there are directors to be
elected. • A company has 5 director positions to fill • A company has 5 director positions to fill
• You own 100 shares
• You can vote up to 100 shares for each of the 5 candidates • You own 100 shares
• You can give all 500 votes (100 shares * 5 positions) to a single candidate
2. Cumulative Voting for One Candidate - a stockholder is allowed to concentrate his votes and give to one candidate

3. Cumulative Voting by Distribution - a stockholder is allowed to concentrate his votes and distribute them among as
many candidates as he deems fit. •• AYoucompany has 5 director positions to fill
own 100 shares
- 200 votes for Candidate A
- 150 votes for Candidate B
• You can distribute your 500 votes among candidates as you wish, e.g.: - 150 votes for Candidate C
*Unless otherwise provided in the articles of incorporation or in the bylaws, members of nonstock corporations may cast as
many votes as there are trustees to be elected but may not cast more than one (1) vote for one (1) candidate.
has 3 trustees positions to fill
A shareholder owns 100 shares but hasn't fully paid for 20 of them • each member can vote for up to 3 candidates
* No delinquent stock shall be voted. - They can only vote with the 80 fully paid shares • a member cannot vote more than once for the same candidate
- The 20 delinquent shares cannot be used for voting.

*A majority of the number of directors or trustees as fixed in the articles of incorporation shall constitute a quorum for the
transaction of corporate business unless the articles of incorporation or the by-laws provide for a greater majority, and every
decision of at least a majority of the directors or trustees present at a meeting at which there is a quorum shall be valid as
- Example:
corporate act. • Board meetings and quorum:
- Example: A corporation has 9 directors as fixed in its articles of incorporation
- A quorum would require at least 5 directors (majority of 9) to be present
- If 7 directors are present at a meeting:
Corporate Officers - This meets the quorum requirement
- A decision supported by at least 4 of the 7 present directors (majority) would be considered a valid corporate act

*Majority vote of ALL the members of the board of directors/trustees are required to elect the following corporate officers:
**(residency requirement removed)
1. President- must be a director
2. Secretary- must be a citizen and resident of the Philippines
3. Treasurer- must be a resident of the Philippines
4. If the corporation is vested with public interest, the board shall also elect a compliance officer.
5. Such other officers as may be provided in the bylaws

*The same person may hold two (2) or more positions concurrently, except that no one shall act as president and secretary or
as president and treasurer at the same time. so secretary & treasurer ALLOWED
E for 3 30 days
*Within thirty (30) days after the election of the directors, trustees and officers of the corporation, the secretary, or any other
officer of the corporation, shall submit to the Commission, the names, nationalities, shareholdings, and residence addresses of
the directors, trustees, and officers elected.

E like 3 3 directors

Executive Committee
- the board may create an executive committee composed of at least three (3) directors. Said committee may act, by
majority vote of all its members, on such specific matters within the competence of the board, as may be delegated to
it in the bylaws or by majority vote of the board, except with respect to the:

cannot do 1. approval of any action for which shareholders' approval is also required;
2. filling of vacancies in the board;
3. amendment or repeal of bylaws or the adoption of new bylaws;
4. amendment or repeal of any resolution of the board which by its express terms is not amendable or repealable; and
5. distribution of cash/property dividends to the shareholders.
These limitations ensure that the full board retains control over major decisions.
Compensation of Directors or Trustees

General rule: The directors or trustees shall not receive any compensation in their capacity as such.
Exceptions:
1. Allowed in the bylaws fixing their compensation
2. Reasonable per diems daily allowance
3. Stockholders representing at least a majority of the outstanding capital stock or majority of the members may grant
directors or trustees with compensation.

*In no case shall the total yearly compensation of directors exceed ten (10%) percent of the net income before income tax of the
corporation during the preceding year.

*Directors or trustees shall not participate in the determination of their own per diems or compensation.

2/3
Removal of Directors or Trustees
- Any director or trustee of a corporation may be removed from office by a vote of the stockholders holding or
representing at least two-thirds (2/3) of the outstanding capital stock, or in a nonstock corporation, by a vote of at least
two-thirds (2/3) of the members entitled to vote.

General rule: Removal may be with or without cause.

Exception: Removal without cause may not be used to deprive minority stockholders or members of the right of representation
to which they may be entitled. can’t remove someone without cause if it takes away the right of the minority

*The SEC shall, motu proprio or upon verified complaint, and after due notice and hearing, order the removal of a director or
trustee elected despite the disqualification, or whose disqualification arose or is discovered subsequent to an election.

Vacancies in the Office of the Director or Trustee

1. By the stockholders or members

a. If the vacancy results from the removal by the stockholder or member;

b. Expiration of the term;

c. If the vacancy is created by reason of an increase in the number of directors or trustees

d. If the vacancy occurs other than by (a), (b), or (c), such as death, resignation, abandonment, or
disqualification, if the remaining directors or trustees do not constitute a quorum for the purpose of filling the
vacancy; and

e. If the board refers the matter to the stockholders or members.

board
2. By majority of the remaining members of the board if still constituting a quorum.

*Quorum means majority of the total number of the members of the board. (50% + 1)

*Should a director, trustee or officer die, resign or in any manner cease to hold office, the secretary, or the director, trustee or
officer of the corporation, or in case of death, the officer's heirs shall, within seven (7) days from knowledge thereof, report in
writing such fact to the SEC.

*A director or trustee elected to fill a vacancy shall be referred to as replacement director or trustee and shall serve only for the
unexpired term of the predecessor in office.

*When the vacancy prevents the remaining directors from constituting a quorum and emergency action is required to prevent
grave, substantial, and irreparable loss or damage to the corporation, the vacancy may be temporarily filled by the emergency
board from among the officers of the corporation by unanimous vote of the remaining directors or trustees. The action by the
designated director or trustee shall be limited to the emergency action necessary, and the term shall cease within a reasonable
time from the termination of the emergency or upon election of the replacement director or trustee, whichever comes earlier.

vacancy prevents the remaining from URGENT decisions (quorum) remaining temporarily fills the vacancy UNANIMOUS VOTE from all remaining

actions related only to the emergency action needed

ends when emergency is over

new permanent director is elected
Liability of Directors, Trustees or Officers

General rule: Directors, Trustees or Officers are not solidarily liable with the corporation.
Exceptions:
When liable
1. Directors or trustees who willfully and knowingly vote for or assent to patently unlawful acts of the corporation
2. Those who are guilty of gross negligence or bad faith in directing the affairs of the corporation
3. Those who acquire any personal or pecuniary interest in conflict with their duty as such directors or trustees
4. Consent to the issuance of watered stock allowing to issue stock for the less than its true value
5. Agree or stipulate in a contract to hold himself personally liable with the corporation.

THIS PROTECTS 3rd PARTIES in GOOD FAITH

Doctrine of Apparent Authority - if a corporation knowingly permits one of its officers, or any other agent, to act within the
scope of an apparent authority, it holds him out to the public as possessing the power to do those acts, and thus, the corporation
will, as against anyone who has in good faith dealt with it through such agent, be estopped from denying the agent's authority.
corporation allows someone to have apparent authority corp can’t later deny the person’s authority
corporation becomes legally bound by the action of the person even if they didn’t actually have full authority

Three-Fold Duties of Directors (OLD)

1. Duty of Obedience - to direct the affairs of the corporation only in accordance with the purposes for which it was
organized.

2. Duty of Loyalty - the director or officer owes loyalty and allegiance to the corporation-a loyalty that is undivided and
an allegiance that is influenced by no consideration other than the welfare of the corporation.

3. Duty of Diligence - directors and officers are required to exercise due care in the performance of their function.

Business Judgement Rule - courts will not interfere in the decisions made by the BOD as regards the internal affairs of the
corporation unless such contracts are so unconscionable and oppressive as to amount to a wanton destruction of rights of the
minority.

Disloyalty of a Director - where a director, by virtue of such office, acquires a business opportunity which should belong to the
corporation, thereby obtaining profits to the prejudice of such corporation, the director must account for and refund to the latter
all such profits, unless the act has been ratified by a vote of the stockholders owning or representing at least two thirds (2/3)
of the outstanding capital stock (Doctrine of Corporate Opportunity). This rule shall be applicable, notwithstanding the fact that
the director risked his own funds in the venture.

*A business opportunity ceases to be corporate opportunity and transforms to personal opportunity where the corporation
refuses or is definitely no longer able to avail itself of the opportunity. Here, the Doctrine of Corporate Opportunity is not
applicable.

voidable contracts
Self-Dealing Directors, Trustees or Officers - a contract of the corporation with (1) one or more of its directors, trustees, officers
or their spouses and relatives within the fourth civil degree of consanguinity or affinity is voidable, at the option of such
corporation, unless all the following conditions are present: (*Voidable contract is valid unless annulled by the corporation)
When allowed
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 two- thirds (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.
 *Where ANY of the first three (3) conditions set forth above is absent (VOIDABLE), in the case of a contract with a 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.

Interlocking Directors - when a director in one corporation is also a director in another corporation. (VALID)

*A contract between two (2) or more corporations having interlocking directors shall not be invalidated on that ground alone,
except in cases of fraud, and provided the contract is fair and reasonable under the circumstances, provided that if the interest
of the interlocking director in one (1) corporation is substantial and the interest in the other corporation or corporations is
> merely nominal, the contract shall be subject to the provisions on self-dealing directors insofar as the latter corporation or
corporations are concerned. *Stockholdings exceeding twenty percent (20%) of the outstanding capital stock shall be
considered substantial for purposes of interlocking directors.

Powers of a Corporation

Every corporation incorporated under this Code has the power and capacity:
Incidental Powers

1. To sue and be sued in its corporate name;

2. To have perpetual existence unless the certificate of incorporation provides otherwise;

3. To adopt and use a corporate seal;

4. To amend its articles of incorporation;

5. To adopt bylaws, not contrary to law, morals or public policy, and to amend or repeal the same;

6. In case of stock corporations, to issue or sell stocks to subscribers and to sell treasury stocks; and to admit
members to the corporation if it be a nonstock 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, as the transaction of the lawful business of
the corporation may reasonably and necessarily require, subject to the limitations prescribed by law and the
Constitution;

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 partisan political activity;

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 or necessary to carry out its purpose or purposes as stated in
the articles of incorporation.

Kinds

1. Express- such powers as are expressly granted by law and its articles of incorporation.
2. Incidental - those which may be incident to its existence as a juridical entity. (listed above)
3. Implied - those reasonably necessary to accomplish its purposes, as stated in its articles of incorporation.

*SH = stockholders owning the outstanding shares

Express Powers

1. Power to extend or shorten corporate term (requires AOI)

rights that shareholders typically have to get fair valuation of their shares
- majority vote of the BOD/BOT and 2/3 vote of SH/M
disagree - dissenting SH may exercise their appraisal right in case of extending corporate term but cannot be exercised in
case of shortening the corporate term. (made within 3 years prior to expiration)
appraisal right not allowed see example above
*SH-those who own the outstanding capital stock

2. Power to increase or decrease capital stock (requires AOI)

stock corporation

- majority vote of the BOD and 2/3 vote of SH

- any increase in capital stock must be accompanied by a sworn statement of the treasurer showing that at
least 25% of the increase in capital stock has been subscribed and that at least 25% of the amount subscribed
has been paid.
- a treasurer's affidavit is required in an increase of capital stock, not in a decrease in capital stock.
- appraisal rights can be exercised only if the increase of capital stock results in or has the effect of changing or
restricting the rights of any stockholder or class of shares, or of authorizing preferences in any respect
superior to those of outstanding shares of any class.

3. Power to create or increase bonded indebtedness - majority vote of the BOD/BOT and 2/3 vote of SH/M

4. Power to deny pre-emptive right (amendment) – MUST BE “share - alike”

right to allow existing SH to buy new shares before they’re offered to others
*Pre-emptive right - the preferential right of shareholders to subscribe to all issues or disposition of shares of
any class in proportion to their present shareholdings. The purpose of pre- emptive right is to enable the
shareholder to retain his proportionate control in the corporation and to retain his equity in the surplus.
stock corporation
- majority vote of the BOD and 2/3 vote of SH

- the right may be expressly denied by the Articles of Incorporation or an amendment (prior - ALL or after -
majority + 2/3) thereto. *no appraisal right, prior* *after, restricts the power to deny*

- dissenting SH may exercise their appraisal right in case of denial of pre-emptive rights through an
amendment of the articles of incorporation since it has the effect of changing or restricting the rights of the
stockholder.

- "All issues" of shares extends to BOTH issuances of: (APPLICABLE ONLY TO))
● new shares resulting in an increase in capital stock, and
● previously unsubscribed shares which formed part of the existing capital stock. (reoffered shares NOT))

- for close corporations, the pre-emptive rights extend to all stock to be issued, including reissuance of treasury
shares, whether for money, property or personal services, or in payment of corporate debts, unless the articles
of incorporation provide otherwise.

- Preemptive right of SH is NOT AVAILABLE under the following:

1. shares to be issued to comply with the laws requiring stock offering or minimum stock ownership by the
public

2. it does not apply to shares that are being reoffered by the corporation

3. shares issued in good faith with approval of the 2/3 of SH, in exchange for property needed for corporate
purposes or in payment of a previously contracted debt

4. in case the right is denied in the articles of incorporation

5. waiver of right by the SH

6. in case of non-stock corporations, bc preemptive right is only for the stock corporation
*Right of First Refusal - obligates a stockholder who may wish to sell or assign his shares to first offer the shares to
the corporation (before to the public) or to the other existing stockholders under terms and conditions which are
reasonable. within before outside

5. Power to sell or dispose all or substantially all of the corporate assets

- majority vote of the BOD/BOT and 2/3 vote of SH/M

- in nonstock corporations where there are no members with voting rights, the vote of at least a majority of
the trustees in office will be sufficient authorization for the corporation to enter into such a transaction.

- dissenting SH may exercise their appraisal right

- a sale or other disposition shall be deemed to cover substantially all the corporate property and assets if
thereby the corporation would be rendered incapable of continuing the business. going concern ceases

- After obtaining the authorization or approval by the stockholders or members, the board of directors or
trustees may abandon such sale, lease, exchange, mortgage, pledge, or other disposition of property and
assets.

- no authorization from the SH/M is required if the same is necessary in the usual and regular course of
business of the corporation or if the proceeds of the sale or other disposition of such property and assets shall
be appropriated for the conduct of its remaining business or if the transaction does not cover all or
substantially all of the assets.

6. Power to acquire own shares

- This corporate power does not need shareholder's approval. Discretion solely rests on the board, provided
that the corporation has unrestricted retained earnings and for a legitimate corporate purpose/s, except:

a. redeemable shares may be acquired even without surplus profit for as long as it will not result to the
insolvency of the corporation; (NO appraisal right)

b. in cases that the corporation conveys its stocks in payment of a debt; (NO appraisal right)

c. in a close corporation, a stockholder may demand the payment of the fair value of shares regardless of
existence of retained earnings for as long as it will not result in the insolvency of the corporation. (NO
appraisal right)

- Purposes: of acquiring own shares

1. To eliminate fractional shares arising out of stock dividends;

2. To collect or compromise an indebtedness to the corporation, arising out of unpaid subscription, in a

delinquency sale, and to purchase delinquent shares sold during said sale;

3. To pay dissenting or withdrawing stockholders entitled to payment for their shares; (exercise appraisal right)
a stockholder disagrees w/ major decisions & wants to leave, the company can buy thru shares

4. To acquire treasury shares; buy back its own stock

5. To redeem redeemable shares;

6. To effect a decrease of capital stock; and

7. In close corporations, when there is a deadlock in the management of the business.

7. Power to invest corporate funds in another corporation or business or for any other purpose

- majority vote of the BOD/BOT and 2/3 vote of SH/M

- dissenting SH may exercise their appraisal right

 Rules in case a corporation wants to invest in an undertaking:

a. Investment of a corporation in a business which is in line with its primary purpose requires only the
approval of the BOD. **no need for SH/M

b. Investment of assets for any of its secondary purposes requires the prior approval of its
shareholders/members. ⅔

c. If the investment is outside the purpose/s for which the corporation was organized, articles of
incorporation must be amended first, otherwise it will be an ultra vires act.
beyond the corporation’s legal power or authority

8. Power to declare dividends

*cash and property dividends - majority vote of the quorum BOD present at the meeting

*stock dividends - majority of vote the quorum of BOD and 2/3 vote of SH

- dividends may only be declared out of actual and bona fide unrestricted retained earnings.

- any cash dividends due on delinquent stock shall first be applied to the unpaid balance on the subscription plus
costs and expenses, while stock dividends shall be withheld from the delinquent stockholders until their
unpaid subscription is fully paid

- stock corporations are prohibited from retaining surplus profits in excess of one hundred percent (100%) of
their paid-in capital stock, Except:
When they can keep more
a. when justified by definite corporate expansion projects or programs approved by the board of directors;

b. when the corporation is prohibited under any loan agreement with financial institutions or creditors,
whether local or foreign, from declaring dividends without their consent, and such consent has not yet been
secured; or

c. when it can be clearly shown that such retention is necessary under special circumstances obtaining in the
corporation, such as when there is need for special reserve for probable contingencies.

9. Power to enter into management contract

- management contract is 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.

- this refers only to a management contract with another corporation and DOES NOT apply to management
contracts entered into by a corporation with natural persons. Corollary to this, management contract with a
natural person need not comply with the voting requirements.

- GR: majority vote of the quorum BOD/BOT and majority vote of the SH/M of both the managing and
managed corporation. both majority

- EXCEPTION: majority vote of the quorum BOD/BOT and majority vote of the SH/M of the managing
corporation and majority vote of the quorum BOD/BOT and 2/3 vote of the SH/M of the managed corporation
in the following instances: managing: majority + majority
managed: majority + 2/3

1. 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

2. 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,
 - no management contract shall be entered into for a period longer than five (5) years for anyone (1) term,
except service contracts or operating agreements which relate to exploration, development, exploitation or
utilization of natural resources may be entered into for such periods as may be provided in the pertinent laws
and regulations. (UNLI RENEWAL)

Ultra Vires Acts of Corporation - an act committed outside the object for which a corporation is created as defined by the law of
its organization and therefore beyond the powers conferred upon it by law. It also refers to acts done by a corporation outside of
the express and implied powers vested in it by its charter and by the law; hence, illegal. VOID

Types of ultra vires acts leer

1. acts done beyond the powers of the corporation as provided in the law or its articles of incorporation - cannot be
ratified.

*ultra vires acts which are not illegal but are within the scope of the articles of incorporation, are merely voidable and
may become binding and enforceable when ratified by the SH/M.

2. acts or contracts, which are per se illegal as being contrary to law - cannot be ratified.

3. acts or contracts entered into on behalf of a corporation by the directors, trustees, or officers who have no corporate
authority - can be ratified by the SH/M.

Remedies in case of ultra vires acts:

1. State
a. dissolution of the corporation thru a quo warranto proceeding
b. injunction court order to stop certain actions
c. suspension or revocation of the certificate of registration by the SEC

2. Stockholders
a. Injunction
b. derivative suit lawsuit on behalf of the corporation
c. ratification (except when a 3rd party is prejudiced or the act is illegal)

3. Creditors - nullification of contract in fraud of creditors

Appraisal Right - the right to a written demand payment of the fair value of his share after dissenting from a proposed
corporate action involving a fundamental change in the corporation in the cases provided by law. **within 30 days to exercise such right

Instances of Appraisal Right (ASIMA)

1. In case an amendment to the articles of incorporation has the effect of changing or restricting the rights of any
stockholder or class of shares, or of authorizing preferences in any respect superior to those of outstanding shares of
any class, or of extending the term of corporate existence;

2. In case of sale, lease, exchange, transfer, mortgage, pledge or other disposition of all or substantially all of the
corporate property and assets as provided in this Code;

3. In case of investment of corporate funds for any purpose other than the primary purpose of the corporation;

4. In case of merger or consolidation; and

5. In a close corporation, a stockholder may for any reason compel the corporation to purchase his shares.
(NO UNRESTRICTED RE)
Procedures of Exercising Appraisal Right

1. The dissenting stockholder who votes against a proposed corporate action may exercise the right of appraisal by
making a written demand on the corporation for the payment of the fair value of shares held within thirty (30) days
from the date on which the vote was taken. The failure to make the demand within such period shall be deemed a
waiver of the appraisal right.

2. If the proposed corporate action is implemented, the corporation shall pay the stockholder, upon surrender of the
certificate or certificates of stock representing the stockholder's shares, the fair value thereof as of the day before the
vote was taken, excluding any appreciation or depreciation in anticipation of such corporate action.

3. If, within sixty (60) days from the approval of the corporate action by the stockholders, the withdrawing stockholder
and the corporation cannot agree on the fair value of the shares, it shall be determined and appraised by three (3)
disinterested persons, one of whom shall be named by the stockholder, another by the corporation, and the third by
the two (2) thus chosen. The findings of the majority of the appraisers shall be final.

*The costs and expenses of appraisal shall be borne by the corporation, unless the fair value ascertained by the
appraisers is approximately the same as the price which the corporation may have offered to pay the
stockholder, in which case they shall be borne by the latter.

4. The award price shall be paid by the corporation within thirty (30) days after such award is made provided that no
payment shall be made to any dissenting stockholder unless the corporation has unrestricted retained earnings in its
books to cover such payment. If failed payment, his right will automatically be restored.

5. Upon payment by the corporation of the agreed or awarded price, the stockholder shall forthwith transfer the shares
to the corporation. (Fair Market Value = of the date prior to the vote was taken)

Effect of Demand

- from the time of demand for payment of the fair value of a stockholder's shares, all rights accruing to such shares,
including voting and dividend rights, shall be suspended, except the right of such stockholder to receive payment of the
fair value thereof. If the dissenting stockholder is not paid the value of the said shares within thirty (30) days after the
award, the voting and dividend rights shall immediately be restored.

Meetings of Directors and Stockholders or Members

Meetings of Directors

1. Regular - shall be held monthly, unless the bylaws provide otherwise.

2. Special - may be held at any time upon the call of the president or as provided in the by-laws.

*Meetings of directors or trustees of corporations may be held anywhere in or outside of the Philippines, unless the bylaws
provide otherwise.

*Notice of regular or special meetings stating the date, time and place of the meeting must be sent to every director or trustee
at least two (2) days prior to the scheduled meeting, unless a longer time is provided in the by-laws.

*The chairman or, in his absence, the president shall preside at all meetings of the directors or trustees as well as of the
stockholders or members, unless the bylaws provide otherwise.

*Unless the articles of incorporation or the bylaws provides for a greater majority, a majority of the directors or trustees as
stated in the articles of incorporation shall constitute a quorum to transact corporate business, and every decision reached by
at least a majority of the directors or trustees constituting a quorum, except for the election of officers which shall require the
vote of a majority of all the members of the board, shall be valid as a corporate act.
not just those present

*Directors or trustees who cannot physically attend or vote at board meetings can participate and vote through remote
communication such as videoconferencing, teleconferencing, or other alternative modes of communication that allow them
reasonable opportunities to participate. Directors or trustees cannot attend or vote by proxy at board meetings.
 Meetings of Stockholders or Members

1. Regular - shall be held annually on a date fixed in the bylaws, or if not so fixed, on any date after April 15 of every
year as determined by the board of directors or trustees. A written notice of regular meetings shall be sent to all
stockholders or members of record at least twenty-one (21) days prior to the meeting, unless a different period is
required in the bylaws, law, or regulation. 3 weeks

2. Special - shall be held at any time deemed necessary or as provided in the bylaws. At least one (1) week written
notice shall be sent to all stockholders or members, unless a different period is provided in the bylaws, law or
regulation. jod is prov

*Stockholders' or members' meetings, whether regular or special, shall be held in the principal office of the corporation as set
forth in the articles of incorporation, or, if not practicable, in the city or municipality where the principal office of the
corporation is located. **members - may be outside the city but within the Philippines
minimum number of people needed for a valid meeting
*Unless otherwise provided in this Code or in the bylaws, a quorum shall consist of the stockholders representing a majority of
the outstanding capital stock or a majority of the members in the case of nonstock corporations.

*The right to vote of stockholders or members may be exercised in person, through a proxy, or when so authorized in the
bylaws, through remote communication or in absentia.

*Executors, administrators, receivers, and other legal representatives (EARL) duly appointed by the court may attend and vote
in behalf of the stockholders or members without need of any written proxy.
except for directors & trustees

*A stockholder or member who participates through remote communication or in absentia, shall be deemed present for
purposes of quorum. **The chairman or, in his absence, the president shall preside.

Rules on Meeting/Voting Applicable to Certain Kinds of Shares

1. Delinquent shares shall not be entitled to vote.

2. Treasury shares have no voting rights while they remain in the treasury.

Page 3 3. Fractional shares shall not be entitled to vote.

4. Escrow shares shall not be entitled to vote before the fulfillment of the condition imposed thereon.

5. Unpaid shares, if not delinquent, are entitled to all the rights of stockholders including the right to vote.

6. When shares are jointly owned by two or more persons, the consent of all the co-owners shall be necessary, except if
there is a written proxy, signed by all the co-owners, authorizing one or some of them or any other person to vote such
share or shares. However, when the shares are owned in an "and/or" capacity, any one of the joint owners can vote said
shares or appoint a proxy therefor. no need for consent

Manner of Voting of Stockholders or Members

1. Directly (in person)

2. Indirectly

a. By means of proxy
b. By trustee under a voting trust agreement
EARL c. By executor, administrator, receiver or other legal representative duly appointed by the court
d. Through remote communication or int absential in absentia

*Proxies shall be in writing, signed and filed, by the stockholder or member, in any form authorized in the bylaws and received
by the corporate secretary within a reasonable time before the scheduled meeting. Unless otherwise provided in the proxy
form, it shall be valid only for the meeting for which it is intended. No proxy shall be valid and effective for a period longer
than five (5) years at any one time (if the proxy covers all the meetings).
Revocation of Proxy

1. Express - written or oral notice

2. Implied - by conduct, i.e. appearance of the stockholder or member giving the proxy during the meeting, or issuance
of subsequent proxy, or the sale of shares.

Voting Trust Agreement - an agreement whereby a stockholder of a stock corporation confers upon a trustee/s the right to
vote and other rights pertaining to the shares for a period not exceeding five (5) years at any time. It must be in writing and
notarized, and shall specify the terms and conditions thereof. A certified copy of such agreement shall be filed with the
corporation and with the SEC; otherwise, the agreement is ineffective and unenforceable. The certificate or certificates of
stock covered by the voting trust agreement shall be canceled and new ones shall be issued in the name of the trustee or
trustees, stating that they are issued pursuant to said agreement. (irrevocable)

The voting trustee or trustees may vote by proxy or in any manner authorized under the by-laws unless the agreement provides
otherwise.

Subscription Contract - any contract for the acquisition of unissued stock in an existing corporation or a corporation still to be
formed.

*A subscription contract is indivisible. Consequently, where stocks were subscribed and part of the subscription
contract price was not paid, the whole subscription shall be considered delinquent, and not only the shares which
correspond to the amount not paid. not just the unpaid portion that’s delinquent, the whole contract is affected

*If unpaid, cannot ask the corporation to issue him the certificate of stocks pertaining to the paid subscription.
Kinds:
agreement to buy shares BEFORE a company is officially formed
1. Pre-incorporation subscription - irrevocable for a period of at least six (6) months from the date of subscription,
unless all of the other subscribers consent to the revocation, or the corporation fails to incorporate within the same
period or within a longer period stipulated in the contract of subscription (failed to materialize).

2. Post-incorporation subscription buying shares after a company is already formed

Consideration for the issuance of stock may be:

1. Actual cash (check) paid to the corporation; *no promissory note

2. Property, tangible or intangible, actually received by the corporation and necessary or convenient for its use and
lawful purposes at a fair valuation equal to the par or issued value of the stock issued;

3. Labor performed for or services actually rendered to the corporation;

4. Previously incurred indebtedness of the corporation;

5. Amounts transferred from unrestricted retained earnings to stated capital;

6. Outstanding shares exchanged for stocks in the event of reclassification or conversion;

7. Shares of stock in another corporation; and/or

8. Other generally accepted forms of consideration.

*Shares of stock shall not be issued in exchange for promissory notes or future service.
handing over or signing/endorsing
*Shares of stock so issued are personal property and may be transferred by delivery of the certificate or certificates endorsed
by the owner, his attorney-in-fact, or any other person legally authorized to make the transfer. No transfer, however, shall be
valid, except as between the parties, until the transfer is recorded in the books of the corporation showing the names of the
parties to the transaction, the date of the transfer, the number of the certificate or certificates, and the number of shares
transferred. The transfer is valid bet ween the t wo people involved, even if it's not recorded yet. But for it to be recognized by everyone else, it needs to be in the company's records.

*No certificate of stock shall be issued to a subscriber until the full amount of the subscription together with interest and
expenses (in case of delinquent shares), if any is due, has been paid

*The SEC may require corporations whose securities are traded in trading markets (ex. PSE) and, which can reasonably
demonstrate their capability to do so, to issue their securities or shares of stocks in uncertificated or scripless form. An
uncertificated share is a subscription duly recorded in the corporate books, but has no corresponding certificate of stock yet
issued. Uncertificated shares or securities are those evidenced by electronic or similar records.

Delinquent Shares

1. If the subscription contract fixes the date for payment, failure to pay on such date shall render the entire balance due and
payable with interest. Thirty (30) days therefrom, if still unpaid, the shares become delinquent as of the due date and subject
to sale, unless the board declares otherwise.

2. If no date is fixed in the subscription contract, the board of directors can make the call for payment, and specify the due date.
The notice of call is mandatory. A mere demand is insufficient. The failure to pay on such date shall render the entire balance
due and payable with interest. Thirty days therefrom, if still unpaid, the shares become delinquent, as of the date of call, and
subject to sale, unless the board declares otherwise.

*(WHOLE AMOUNT CONSIDERED DELINQUENT BC OF INDIVISIBILITY)

Call - the resolution or formal declaration of the board that the unpaid subscriptions are due and payable.
Delinquency sale
- The board of directors may, by resolution, order the sale of delinquent stock and shall specifically state the amount due
on each subscription plus all accrued interest, and the date, time and place of the sale which shall not be less than
thirty (30) days nor more than sixty (60) days from the date the stocks become delinquent.
30 days < sale < 60 days after becoming delinquent

Highest bidder in delinquency sale - the bidder who shall offer to pay the full amount of the balance on the subscription
together with accrued interest, costs of advertisement and expenses of sale, for the smallest number of shares or fraction of a
share.

*The stock so purchased shall be transferred to such purchaser in the books of the corporation and a certificate for such stock
shall be issued in the purchaser's favor. The remaining shares, if any, shall be credited in favor of the delinquent stockholder who
shall likewise be entitled to the issuance of a certificate of stock covering such shares.

*No delinquent stock shall be voted for, be entitled to vote, or be represented at any stockholder's meeting, nor shall the holder
thereof be entitled to any of the rights of a stockholder except the right to dividends.

Fundamental Rights of a Stockholder

1. Direct or indirect participation in management

2. Voting rights

3. Right to remove directors

4. Proprietary rights

a. Right to dividends a share of the company’s profits

b. Appraisal rights the right to have their shares valued fairly
c. Right to issuance of stock certificate for fully paid shares
d. Proportionate participation in the distribution of assets in liquidation
e. Pre-emptive right first chance to buy new stocks before they’re offered to others
f. Right to transfer of stocks in corporate books

5. Right to inspect books and records.

6. Right to be furnished with the most recent financial statements/reports

7. Right to recover stocks unlawfully sold for delinquent payment of subscription

8. Right to file individual suit, representative suit and derivative suits

Actions by stockholders or Members (RID)

1. Representative suit - a suit brought by the stockholder in behalf of himself and all other stockholders similarly
situated when a suit brought by the shareholder in his own name against the corporation when a wrong is directly
inflicted against him or a wrong is committed against a group of stockholders.

2. Individual suit -a suit brought by the shareholder in his own name against the corporation when a wrong is directly
inflicted against him.

3. Derivative suit - a suit brought by a stockholder for and on behalf of the corporation for its protection from the
wrongful acts committed by the directors/trustees of the corporation, when the stockholder finds that he has no redress
remedy
because the directors/trustees, are the ones vested by law to decide whether or not to sue.
stockholder acts because directors/trustees (who normally make such decisions) won’t sue themselves
Corporate books and records

*Every corporation shall keep and carefully preserve at its principal office all information including but not limited to:

1. articles of incorporation and by-laws and all their amendments;

2. current ownership structure and voting rights of corporation;
3. names and addresses of all members of BOD/trustees and the executive officers;
4. record of all business transactions;
5. record of resolutions of BOD/Trustees and of stockholders/members;
6. copies of latest reportorial requirements submitted to the SEC; and
7. minutes of all meetings of stockholders/members or of BOD/trustees.

Non-Stock Corporation - a non-stock corporation is one where no part of its income is distributed as dividends to its members,
trustees, or officers. Any profit which a non- stock corporation may obtain incidental to its operations shall, whenever necessary
or proper, be used for the furtherance of the purpose or purposes for which the corporation was organized.
**NO AUTHORIZED CAPITAL STOCK Not to enrich the individuals

*Non-stock corporations may be formed or organized for charitable, religious, educational, professional, cultural,
fraternal, literary, scientific, social, civic service, or similar purposes, like trade, industry, agricultural and like chambers,
or any combination thereof.
1:1 vote
Right to vote - unless so limited, broadened, or denied, each member, regardless of class, shall be entitled to one vote. Unless
otherwise provided in the articles of incorporation or the bylaws, a member may vote by proxy. The bylaws may likewise
authorize voting through remote communication and/or in absentia.

*Membership in a nonstock corporation and all rights arising therefrom are personal and non-transferable, unless the articles of
incorporation or the bylaws otherwise provide.

*Unless otherwise provided in the articles of incorporation or the bylaws, the members may directly elect officers of a nonstock
corporation.

*The bylaws may provide that the members of a nonstock corporation may hold their regular or special meetings at any place
even outside the place where the principal office of the corporation is located provided that the place of meeting shall be
within the Philippines.

*Distribution of assets may be based on the AOI or By laws, or plan of distribution of assets as approved by the majority of the
trustees and ⅔ of members. trustees and members bc non stock

Rules on Conversion:

1. Stock to non-stock corporation - conversion may be made by mere amendments of the articles of incorporation.

2. Non-stock to stock corporation - a non-stock corporation cannot be converted into a stock corporation by mere
amendment of its articles of incorporation because the conversion would change the corporate nature from non-profit
to monetary gain. What the corporation should do is to dissolve itself and its members may decide to organize a stock
corporation.

Close Corporation- is one whose articles of incorporation provides that: (a) all the corporation's issued stock of all classes,
exclusive of treasury shares, shall be held of record by not more than a specified number of persons, not exceeding twenty (20);
(b) all the issued stock of all classes shall be subject to one or more specified restrictions on transfer; and (c) the corporation shall
not list in any stock exchange or make any public offering of its stocks of any class.

*A corporation shall not be deemed a close corporation when at least two-thirds (2/3) of its voting stock or voting rights is
owned or controlled by another corporation which is not a close corporation.
 *Any corporation may be incorporated as a close corporation, except: (BPI-MOOSE)

● Banks
● Public utilities
● Insurance companies
● Mining not allowed to be a close corporation bc they’re for the public
● Oil companies
● Other corporations vested in public interest
● Stock exchanges
● Educational institutions

*The articles of incorporation of a close corporation may provide that the business of the corporation shall be managed by the
stockholders of the corporation rather than by a board of directors.

*The articles of incorporation may provide that all officers or employees or that specified officers or employees shall be elected
or appointed by the stockholders, instead of by the board of directors.

*Restrictions on the right to transfer shares must appear in the articles of incorporation, in the by-laws, as well as in the
certificate of stock; otherwise, the same shall not be binding on any purchaser in good faith.
gives existing shareholders the first chance to buy any new stock the company issues
*The preemptive right of stockholders in close corporations shall extend to all stock to be issued, including reissuance of
treasury shares, whether for money, property or personal services, or in payment of corporate debts, unless the articles of
incorporation provide otherwise.

*Notwithstanding any contrary provision in the close corporation's articles of incorporation, bylaws, or stockholders' agreement,
if the directors or stockholders are so divided on the management of the corporation's business and affairs that the votes
required for a corporate action cannot be obtained (deadlock), with the consequence that the business and affairs of the
corporation can no longer be conducted to the advantage of the stockholders generally, the SEC, upon written petition by any
stockholder, shall have the power to arbitrate the dispute. In the exercise of such power, the SEC shall have authority to make
settle
appropriate orders, such as:

change rules 1. canceling or altering any provision contained in the articles of incorporation, bylaws, or any stockholder's agreement;

cancel decisions 2. canceling, altering or enjoining a resolution or act of the corporation or its board of directors, stockholders, or
officers;

give orders 3. directing or prohibiting any act of the corporation or its board of directors, stockholders, officers, or other persons
party to the action;

4. requiring the purchase at their fair value of shares of any stockholder, either by the corporation regardless of the
availability of unrestricted retained earnings in its books, or by the other stockholders;

5. appointing a provisional director,

6. dissolving the corporation; or

7. granting such other relief as the circumstances may warrant.

*Any stockholder of a close corporation may, by written petition to the SEC, compel the dissolution of such corporation
whenever any of acts of the directors, officers, or those in control of the corporation is illegal, fraudulent, dishonest, oppressive
or unfairly prejudicial to the corporation or any stockholder, or whenever corporate assets are being misapplied or wasted.

**In a close corporation, a stockholder may for any reason compel the corporation to purchase his shares.
(NO UNRESTRICTED RE)

Foreign Corporation - is one formed, organized or existing under laws other than those of the Philippines' and whose laws
allow Filipino citizens and corporations to do business in its own country or State. It shall have the right to transact business in
the Philippines after obtaining a license for that purpose in accordance with this Code and a certificate of authority from the
appropriate government agency. MAY SUE OR BE SUED
*No foreign corporation transacting business in the Philippines without a license, or its successors or assigns, shall be permitted
to maintain or intervene in any action, suit or proceeding in any court or administrative agency of the Philippines; but such
corporation may be sued or proceeded against before Philippine courts or administrative tribunals on any valid cause of action
recognized under Philippine laws. However, a foreign corporation is allowed to gain access to our courts even without the
prescribed license (can still sue) to transact business in the Philippines in the following instances:
remedy
1. when the corporation seeks redress for an isolated transaction;

2. to protect its corporate reputation, name and goodwill, such as an action for infringement of trademark and unfair
competition;

3. to enforce its right not arising out of a business transaction;

4. when a party is estopped to challenge the personality and capacity of a foreign corporation by having acknowledged the same
by entering into a contract with it (Principle of Estoppel). other party already did business with them, knowing they were unlicensed

*As a condition to the issuance of the license for a foreign corporation to transact business in the Philippines, such corporation
shall file with the Commission a written power of attorney designating a person who must be a resident of the Philippines, on
whom summons and other legal processes may be served in all actions or other legal proceedings against such corporation, and
consenting that service upon such resident agent shall be admitted and held as valid as if served upon the duly authorized
officers of the foreign corporation at its home office.

Resident Agent - may be either an individual residing in the Philippines or a domestic corporation lawfully transacting business
in the Philippines provided that an individual resident agent must be of good moral character and of sound financial standing and
that in case of a domestic corporation who will act as a resident agent, it must likewise be of sound financial standing and must
show proof that it is in good standing as certified by the SEC.

One Person Corporation - is a corporation with a single stockholder

Persons who are allowed to form a One Person Corporation (OPC):

NET
1. Natural persons, except those who are licensed to exercise their profession
2. Trust
3. Estate

*If the single stockholder is a trustee, administrator, executor, guardian, conservator, custodian, or another person exercising
fiduciary duties, proof of authority to act on behalf of the trust or estate must be submitted at the time of incorporation.

Persons who are prohibited to form an OPC: (BPI-TPNN)

1. Banks and quasi-banks

2. Public and publicly-listed companies
3. Insurance
4. Trust Companies
5. Pre-need
6. Non-chartered government-owned and controlled corporations
7. Natural persons who are licensed to exercise their profession

*OPC shall submit AOI (name, address, etc.)

*OPC shall not be required to have a minimum authorized capital stock and not required to submit and file corporate
bylaws. Then issued a Certificate of Incorporation.

*OPC shall indicate the letters "OPC" either below or at the end of its corporate name.

*The term of existence of the OPC shall be perpetual.

However, in case of the trust or estate, its term of existence shall be co-terminus with the existence of the trust or estate.
Corporate Officers

*The single stockholder shall be the sole director and president of the OPC.

*Within fifteen (15) days from the issuance of its certificate of incorporation, the One Person Corporation shall appoint a
treasurer, corporate secretary, and other officers as it may deem necessary, and notify the SEC thereof within five (5) days
from appointment.

*The single stockholder may not be appointed as the corporate secretary. A single stockholder who is likewise the
self-appointed treasurer of the corporation shall give a surety bond to the SEC in such a sum as may be required. The bond shall
be renewed every two (2) years or as often as may be required.
Bond B 2nd letter of the alphabet

Nominee and Alternate Nominee

backup

*The single stockholder shall designate a nominee and an alternate nominee who shall, in the event of the single stockholder's
death or incapacity, take the place of the single stockholder as director and shall manage the corporation's affairs.

*The articles of incorporation shall state the names, residence addresses and contact details of the nominee and alternate
nominee, as well as the extent and limitations of their authority in managing the affairs of the One Person Corporation.

*The written consent of the nominee and alternate nominee shall be attached to the application for incorporation. Such consent
may be withdrawn in writing any time before the death or incapacity of the single stockholder.

*The single stockholder may, at any time, change its nominee and alternate nominee by submitting to the Commission the names
of the new nominees and their corresponding written consent. For this purpose, the articles of incorporation need not be
amended.

Terms of the Nominee and Alternate Nominee

*When the incapacity of the single stockholder is temporary, the nominee shall sit as director and manage the affairs of the
OPC until the stockholder, by self- determination, regains the capacity to assume such duties.

*In case of death or permanent incapacity of the single stockholder, the nominee shall sit as director and manage the affairs of
the OPC until the legal heirs of the single stockholder have been lawfully determined, and the heirs have designated one of
them or have agreed that the estate shall be the single stockholder of the OPC.

*The alternate nominee shall sit as director and manage the OPC in case of the nominee's inability, incapacity, death, or refusal
to discharge the functions as director and manager of the corporation, and only for the same term and under the same
conditions applicable to the nominee.

The One Person Corporation shall submit the following within such period as the SEC may prescribe:

1. Annual financial statements audited by an independent certified public accountant. If the total assets or total liabilities of the
corporation are less than Six Hundred Thousand Pesos (P600,000.00), the financial statements shall be certified under oath by
the corporation's treasurer and president;

2. A report containing explanations or comments by the president on every qualification, reservation, or adverse remark or
disclaimer made by the auditor in the latter's report;

3. A disclosure of all self-dealings and related party transactions entered into between the One Person Corporation and the single
stockholder; and

4. Other reports as the SEC may require.

priority
*For purposes of this provision, the fiscal year of a One Person Corporation shall be that set forth in its articles of incorporation
or, in the absence thereof, the calendar year.
*The SEC may place the corporation under delinquent status should the corporation fail to submit the reportorial requirements
three (3) times, consecutively or intermittently, within a period of five (5) years.

Liability of the Single Stockholder

*A sole shareholder claiming limited liability has the burden of affirmatively showing that the corporation was adequately
financed. must prove that the OPC has enough money or assets to operate independently

*Where the single stockholder cannot prove that the property of the OPC is independent of the stockholder's personal property,
the stockholder shall be jointly and severally liable for the debts and other liabilities of the OPC.
Piercing the Corporate Veil
*The principle of piercing the corporate veil applies with equal force to OPCs as with other corporations.

*The OPC under the name of the estate may be dissolved upon proof of partition such as order of partition issued by the court
in case of judicial settlement and deed of extra- judicial settlement in case of summary settlement of the estate.

*The OPC under the name of the trustee may be dissolved upon proof of termination of the trust.

Conversion

1. Ordinary Corporation to OPC - when a single stockholder acquires all the stocks of an ordinary stock corporation, the
latter may apply for conversion into an OPC, subject to the submission of such documents as the SEC may require. If the
application for conversion is approved, the SEC shall issue a certificate of filing of amended articles of incorporation
reflecting the conversion. The OPC converted from an ordinary stock corporation shall succeed the latter and be legally
responsible for all the latter's outstanding liabilities as of the date of conversion. Op of the

2. OPC to Ordinary Corporation - an OPC may be converted into an ordinary stock corporation after due notice to the
SEC of such fact and of the circumstances leading to the conversion, and after compliance with all other requirements
for stock corporations. Such notice shall be filed with the SEC within sixty (60) days from the occurrence of the
circumstances leading to the conversion into an ordinary stock corporation. If all requirements have been complied
with, the SEC shall issue a certificate of filing of amended articles of incorporation reflecting the conversion. The
ordinary stock corporation converted from an OPC shall succeed the latter and be legally responsible for all the latter's
outstanding liabilities as of the date of conversion.

Dissolution
- the extinguishment of the corporate franchise and the termination of corporate existence.

De Jure vs. De Facto Dissolution

court makes legal judgment
1. De Jure dissolution - a dissolution in law adjudged and determined by judicial sentence, or brought about by an act of
or with the consent of the sovereign power, or which results from the expiration of the charter period of corporate life.
actual dissolution
2. De Facto dissolution - one which takes place in substance and in fact when the corporation by reason of insolvency,
cessation of business or otherwise, suspends all its operations and goes into liquidation still retaining its primary
franchise to be a corporation.

Methods of Dissolution

1. Voluntarily
only be done
a. voluntary surrender of its charter by the vote of the BOD/T and the stockholders/members where no
creditors are affected;
b. by the judgment of the SEC after hearing of petition for voluntary dissolution, where creditors are affected;
c. amending the articles of incorporation to shorten its term;
d. in case of a corporation sole, by submitting to the SEC a verified declaration of the dissolution for approval;
and
e. by merger or consolidation.
 2. Involuntarily

a. expiration of the corporate term;

b. by legislative enactment; passes a law to end a corporation
c. failure to organize and commence business within 5 years from incorporation;
d. cessation of business for 5 years;
e. by order of the SEC on grounds under existing laws;
f. by order of the courts following a quo warranto proceeding, a proceeding involving a financially distressed
corporation, or for grounds under existing laws.

Voluntary Dissolution

1. Where no creditors are affected - the dissolution may be affected by majority vote of the board of directors or
trustees, and by a resolution adopted by the affirmative vote of the stockholders owning at least majority of the
outstanding capital stock or majority of the members of a meeting to be held upon the call of the directors or trustees.

2. Where creditors are affected - a verified petition for dissolution shall be filed with the SEC. The petition shall be
signed by a majority of the corporation's board of directors or trustees, verified by its president or secretary or one of
its directors or trustees, and shall set forth all claims and demands against it, and that its dissolution was resolved upon
by the affirmative vote of the stockholders representing at least two-thirds (2/3) of the outstanding capital stock or at
least two-thirds (2/3) of the members at a meeting of its stockholders or members called for that purpose.

*A voluntary dissolution may be affected by amending the articles of incorporation to shorter to shorten the corporate term.

Involuntary Dissolution
- a corporation may be dissolved by the SEC motu proprio or upon filing of a verified complaint by any interested party.
The following may be grounds for involuntary dissolution:

1. Non-use of corporate charter as provided under Section 21 of this Revised Corporation Code;

2. Continuous inoperation of a corporation as provided under Section 21 of Revised Corporation Code;

3. Upon receipt of a lawful court order dissolving the corporation;

4. Upon finding by final judgment that the corporation procured its incorporation through fraud;

5. Upon finding by final judgment that the corporation:

a. Was created for the purpose of committing, concealing or aiding the commission of securities violations,
smuggling, tax evasion, money laundering, or graft and corrupt practices;

b. Committed or aided in the commission of securities violations, smuggling, tax evasion, money laundering, or
graft and corrupt practices, and its stockholders knew; and

c. Repeatedly and knowingly tolerated the commission of graft and corrupt practices or other fraudulent or
illegal acts by its directors, trustees, officers, or employees.

Corporate liquidation - the process by which all the assets of the corporation are converted into liquid assets in order to facilitate
the payment of obligations to creditor, and the remaining balance, if any, is to be distributed to the stockholders or members.

*A dissolved corporation continues to be a body corporate for 3 years from the time it is dissolved for the purpose of liquidation
or winding up its corporate affairs.

RFBT by Atty. Bernard D. Bakilan, CPA