THE
CORPORATION CODE
OF THE
PHILIPPINES
[Batas Pambansa Blg. 68]
TITLE I
GENERAL PROVISIONS
Definitions and Classifications
Section 1. Title of the Code. - This Code shall be known as "The Corporation Code of the
Philippines".
Sec. 2. Corporation defined. - A 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.
Sec. 3. Classes of corporations. - Corporations formed or organized under this Code
may be stock or non-stock corporations. Corporations 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 are stock corporations. All
other corporations are non-stock corporations.
Sec. 4. Corporations created by special laws or charters. - Corporations created
by special laws or charters shall be governed primarily by the provisions of the special law
or charter creating them or applicable to them, supplemented by the provisions of this
Code, insofar as they are applicable.
Sec. 5. Corporators and incorporators, stockholders and members. Corporators are those who compose a corporation, whether as stockholders or as members.
Incorporators are those stockholders or members mentioned in the articles of
incorporation as originally forming and composing the corporation and who are
signatories thereof.
Corporators in a stock corporation are called stockholders or shareholders. Corporators in
a non-stock corporation are called members.
Sec. 6. Classification of shares. - The shares of stock of stock corporations may be
divided into classes or series of shares, or both, any of which classes or series of shares may
have such rights, privileges or restrictions as may be stated in the articles of incorporation:
Provided, That no share may be deprived of voting rights except those classified and issued
as "preferred" or "redeemable" shares, unless otherwise provided in this Code: Provided,
further, That there shall always be a class or series of shares which have complete voting
rights. Any or all of the shares or series of shares may have a par value or have no par value
as may be provided for in the articles of incorporation: Provided, however, That banks,
trust companies, insurance companies, public utilities, and building and loan associations
shall not be permitted to issue no-par value shares of stock.
Preferred shares of stock issued by any corporation may be given preference in the
distribution of the assets of the corporation in case of liquidation and in the distribution of
dividends, or such other preferences as may be stated in the articles of incorporation which
are not violative of the provisions of this Code: Provided, That preferred shares of stock
may be issued only with a stated par value. The board of directors, where authorized in the
articles of incorporation, may fix the terms and conditions of preferred shares of stock or
any series thereof: Provided, That such terms and conditions shall be effective upon the
filing of a certificate thereof with the Securities and Exchange Commission.
Shares of capital stock issued without par value shall be deemed fully paid and nonassessable and the holder of such shares shall not be liable to the corporation or to its
creditors in respect thereto: Provided; That shares without par value may not be issued for
a consideration less than the value of five (P5.00) pesos per share: Provided, further, That
the entire consideration received by the corporation for its no-par value shares shall be
treated as capital and shall not be available for distribution as dividends.
A corporation may, furthermore, classify its shares for the purpose of insuring compliance
with constitutional or legal requirements.
Except as otherwise provided in the articles of incorporation and stated in the certificate of
stock, each share shall be equal in all respects to every other share.
Where the articles of incorporation provide for non-voting shares in the cases allowed by
this Code, the holders of such shares shall nevertheless be entitled to vote on the following
matters:
1. Amendment of the articles of incorporation;
2. Adoption and amendment of by-laws;
3. Sale, lease, exchange, mortgage, pledge or other disposition of all or
substantially all of the corporate property;
4. Incurring, creating or increasing bonded indebtedness;
5. Increase or decrease of capital stock;
6. Merger or consolidation of the corporation with another corporation or
other corporations;
7. Investment of corporate funds in another corporation or business in
accordance with this Code; and
8. Dissolution of the corporation.
Except as provided in the immediately preceding paragraph, the vote necessary to approve
a particular corporate act as provided in this Code shall be deemed to refer only to stocks
with voting rights.
Sec. 7. Founders' shares. - Founders' shares classified as such in the articles of
incorporation may be given certain rights and privileges not enjoyed by the owners of other
stocks, provided that 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 subject to
the approval of the Securities and Exchange Commission. The five-year period shall
commence from the date of the aforesaid approval by the Securities and Exchange
Commission.
Sec. 8. Redeemable shares. - Redeemable shares may be issued by the corporation
when expressly so provided in the articles of incorporation. They may be purchased or
taken up by the corporation upon the expiration of a fixed period, regardless of the
existence of unrestricted retained earnings in the books of the corporation, and upon such
other terms and conditions as may be stated in the articles of incorporation, which terms
and conditions must also be stated in the certificate of stock representing said shares.
Sec. 9. Treasury shares. - Treasury shares are shares of stock which have been issued
and fully paid for, but subsequently reacquired by the issuing corporation 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 of directors.
THE
CORPORATION CODE
OF THE
PHILIPPINES
[Batas Pambansa Blg. 68]
TITLE II
INCORPORATION AND ORGANIZATION
OF PRIVATE CORPORATIONS
Sec. 10. Number and qualifications of incorporators. - Any number of natural
persons not less than five (5) but not more than fifteen (15), all of legal age and a majority
of whom are residents of the Philippines, may form a private corporation for any lawful
purpose or purposes. Each of the incorporators of s stock corporation must own or be a
subscriber to at least one (1) share of the capital stock of the corporation.
Sec. 11. Corporate term. - A corporation shall exist for a period not exceeding fifty (50)
years from the date of incorporation unless sooner dissolved or unless said period is
extended. The corporate term as originally stated in the articles of incorporation may be
extended for periods not exceeding fifty (50) years in any single instance by an amendment
of the articles of incorporation, in accordance with this Code; Provided, That no extension
can be made earlier than five (5) years prior to the original or subsequent expiry date(s)
unless there are justifiable reasons for an earlier extension as may be determined by the
Securities and Exchange Commission.
Sec. 12. Minimum capital stock required of stock corporations. - Stock
corporations incorporated under this Code shall not be required to have any minimum
authorized capital stock except as otherwise specifically provided for by special law, and
subject to the provisions of the following section.
Sec. 13. Amount of capital stock to be subscribed and paid for the purposes of
incorporation. - At least twenty-five percent (25%) of the authorized capital stock as
stated in the articles of incorporation must be subscribed at the time of incorporation, and
at least twenty-five (25%) per cent of the total subscription must be paid upon
subscription, the balance to be payable on a date or dates fixed in the contract of
subscription without need of call, or in the absence of a fixed date or dates, upon call for
payment by the board of directors: Provided, however, That in no case shall the paid-up
capital be less than five Thousand (P5,000.00) pesos.
Sec. 14. Contents of the articles of incorporation. - All corporations organized
under this code shall file with the Securities and Exchange Commission articles of
incorporation in any of the official languages duly signed and acknowledged by all of the
incorporators, containing substantially the following matters, except as otherwise
prescribed by this Code or by special law:
1. The name of the corporation;
2. The specific purpose or purposes for which the corporation is being
incorporated. Where a corporation has more than one stated purpose, the
articles of incorporation shall state which is the primary purpose and which
is/are he secondary purpose or purposes: Provided, That a non-stock
corporation may not include a purpose which would change or contradict its
nature as such;
3. The place where the principal office of the corporation is to be located,
which must be within the Philippines;
4. The term for which the corporation is to exist;
5. The names, nationalities and residences of the incorporators;
6. The number of directors or trustees, which shall not be less than five (5)
nor more than fifteen (15);
7. The names, nationalities and residences of persons who shall act as
directors or trustees until the first regular directors or trustees are duly
elected and qualified in accordance with this Code;
8. If it be a stock corporation, the amount of its authorized capital stock in
lawful money of the Philippines, the number of shares into which it is
divided, and in case the share are par value shares, the par value of each, the
names, nationalities and residences of the original subscribers, and the
amount subscribed and paid by each on his subscription, and if some or all of
the shares are without par value, such fact must be stated;
9. If it be a non-stock corporation, the amount of its capital, the names,
nationalities and residences of the contributors and the amount contributed
by each; and
10. Such other matters as are not inconsistent with law and which the
incorporators may deem necessary and convenient.
The Securities and Exchange Commission shall not accept the articles of incorporation of
any stock corporation unless accompanied by a sworn statement of the Treasurer elected
by the subscribers showing that at least twenty-five (25%) percent of the authorized capital
stock of the corporation has been subscribed, and at least twenty-five (25%) of the total
subscription has been fully paid to him in actual cash and/or in property the fair valuation
of which is equal to at least twenty-five (25%) percent of the said subscription, such paidup capital being not less than five thousand (P5,000.00) pesos.
Sec. 15. Forms of Articles of Incorporation. - Unless otherwise prescribed by special
law, articles of incorporation of all domestic corporations shall comply substantially with
the
following
form:
ARTICLES OF INCORPORATION
OF
__________________________
(Name of Corporation)
KNOW ALL MEN BY THESE PRESENTS:
The undersigned incorporators, all of legal age and a majority of whom
are residents of the Philippines, have this day voluntarily agreed to form
a (stock) (non-stock) corporation under the laws of the Republic of the
Philippines;
AND WE HEREBY CERTIFY:
FIRST: That the name of said corporation shall be
".............................................., INC. or CORPORATION";
SECOND: That the purpose or purposes for which such corporation is
incorporated are: (If there is more than one purpose, indicate primary
and secondary purposes);
THIRD: That the principal office of the corporation is located in the
City/Municipality
of
.............................................,
Province
of .................................................., Philippines;
FOURTH: That the term for which said corporation is to exist
is ................ years from and after the date of issuance of the certificate of
incorporation;
FIFTH: That the names, nationalities and
incorporators of the corporation are as follows:
NAME
NATIONALITY
residences
of
the
RESIDENCE
..................................... ..................................... .....................................
..................................... ..................................... .....................................
..................................... ..................................... .....................................
..................................... ..................................... .....................................
..................................... ..................................... .....................................
SIXTH: That the number of directors or trustees of the corporation shall
be .............; and the names, nationalities and residences of the first
directors or trustees of the corporation are as follows:
NAME
NATIONALITY
RESIDENCE
..................................... ..................................... .....................................
..................................... ..................................... .....................................
..................................... ..................................... .....................................
..................................... ..................................... .....................................
..................................... ..................................... .....................................
SEVENTH: That the authorized capital stock of the corporation
is ................................................. (P......................) PESOS in lawful
money of the Philippines, divided into ............... shares with the par
value of ................................... (P.......................) Pesos per share.
(In case all the share are without par value):
That the capital stock of the corporation is ........................... shares
without par value. (In case some shares have par value and some are
without par value): That the capital stock of said corporation consists
of ........................ shares of which ....................... shares are of the par
value of .............................. (P.....................) PESOS each, and of
which ................................ shares are without par value.
EIGHTH: That at least twenty five (25%) per cent of the authorized
capital stock above stated has been subscribed as follows:
Name of Subscriber Nationality No of Shares Amount
Subscribed Subscribed
.................................. .................... ........................ .......................
.................................. .................... ........................ .......................
.................................. .................... ........................ .......................
.................................. .................... ........................ .......................
.................................. .................... ........................ .......................
NINTH: That the above-named subscribers have paid at least twenty-five
(25%) percent of the total subscription as follows:
Name of Subscriber Amount Subscribed Total Paid-In
................................... ...................................... ...............................
................................... ...................................... ...............................
................................... ...................................... ...............................
................................... ...................................... ...............................
................................... ...................................... ...............................
(Modify Nos. 8 and 9 if shares are with no par value. In case the
corporation is non-stock, Nos. 7, 8 and 9 of the above articles may be
modified accordingly, and it is sufficient if the articles state the amount
of capital or money contributed or donated by specified persons, stating
the names, nationalities and residences of the contributors or donors
and the respective amount given by each.)
TENTH: That ....................................... has been elected by the
subscribers as Treasurer of the Corporation to act as such until his
successor is duly elected and qualified in accordance with the by-laws,
and that as such Treasurer, he has been authorized to receive for and in
the name and for the benefit of the corporation, all subscription (or fees)
or contributions or donations paid or given by the subscribers or
members.
ELEVENTH: (Corporations which will engage in any business or activity
reserved for Filipino citizens shall provide the following):
"No transfer of stock or interest which shall reduce the ownership of
Filipino citizens to less than the required percentage of the capital stock
as provided by existing laws shall be allowed or permitted to recorded in
the proper books of the corporation and this restriction shall be
indicated in all stock certificates issued by the corporation."
IN WITNESS WHEREOF, we have hereunto signed these Articles of
Incorporation, this ................... day of .............................., 19 ........... in
the
City/Municipality
of
........................................,
Province
of ................................................., Republic of the Philippines.
............................................ .............................................
............................................ .............................................
................................................
(Names and signatures of the incorporators)
SIGNED IN THE PRESENCE OF:
............................................ .............................................
(Notarial
Acknowledgment)
TREASURER'S AFFIDAVIT
REPUBLIC OF THE PHILIPPINES )
CITY/MUNICIPALITY OF ) S.S.
PROVINCE OF )
I, ...................................., being duly sworn, depose and say:
That I have been elected by the subscribers of the corporation as
Treasurer thereof, to act as such until my successor has been duly
elected and qualified in accordance with the by-laws of the corporation,
and that as such Treasurer, I hereby certify under oath that at least 25%
of the authorized capital stock of the corporation has been subscribed
and at least 25% of the total subscription has been paid, and received by
me, in cash or property, in the amount of not less than P5,000.00, in
accordance with the Corporation Code.
.......................................
(Signature of Treasurer)
SUBSCRIBED AND SWORN to before me, a Notary Public, for and in the
City/Municipality
of
..................................
Province
of .........................................., this ............. day of .........................,
19
........;
by
............................................
with
Res.
Cert.
No. ..................... issued at ................. on ......................, 19 ..........
NOTARY PUBLIC
My commission expires on ..........................., 19 ........
Doc. No. ...............;
Page No. ...............;
Book No. ..............;
Series of 19..... (7a)
Sec. 16. Amendment of Articles of Incorporation. - Unless otherwise prescribed by
this Code or by special law, and for legitimate purposes, any provision or matter stated in
the articles of incorporation may be amended by a majority vote of the board of directors or
trustees and the vote or written assent of the stockholders representing at least two-thirds
(2/3) of the outstanding capital stock, without prejudice to the appraisal right of dissenting
stockholders in accordance with the provisions of this Code, or the vote or written assent of
at least two-thirds (2/3) of the members if it be a non-stock corporation.
The original and amended articles together shall contain all provisions required by law to
be set out in the articles of incorporation. Such articles, as amended shall be indicated by
underscoring the change or changes made, and a copy thereof duly certified under oath by
the corporate secretary and a majority of the directors or trustees stating the fact that said
amendment or amendments have been duly approved by the required vote of the
stockholders or members, shall be submitted to the Securities and Exchange Commission.
The amendments shall take effect upon their approval by the Securities and Exchange
Commission or from the date of filing with the said Commission if not acted upon within
six (6) months from the date of filing for a cause not attributable to the corporation.
Sec. 17. Grounds when articles of incorporation or amendment may be
rejected or disapproved. - The Securities and Exchange Commission may reject the
articles of incorporation or disapprove any amendment thereto if the same is not in
compliance with the requirements of this Code: Provided, That the Commission shall give
the incorporators a reasonable time within which to correct or modify the objectionable
portions of the articles or amendment. The following are grounds for such rejection or
disapproval:
1. That the articles of incorporation or any amendment thereto is not
substantially in accordance with the form prescribed herein;
2. That the purpose or purposes of the corporation are patently
unconstitutional, illegal, immoral, or contrary to government rules and
regulations;
3. That the Treasurer's Affidavit concerning the amount of capital stock
subscribed and/or paid if false;
4. That the percentage of ownership of the capital stock to be owned by
citizens of the Philippines has not been complied with as required by existing
laws or the Constitution.
No articles of incorporation or amendment to articles of incorporation of banks, banking
and quasi-banking institutions, building and loan associations, trust companies and other
financial intermediaries, insurance companies, public utilities, educational institutions,
and other corporations governed by special laws shall be accepted or approved by the
Commission unless accompanied by a favorable recommendation of the appropriate
government agency to the effect that such articles or amendment is in accordance with law.
Sec. 18. Corporate name. - No corporate name may be allowed by the Securities and
Exchange Commission if the proposed name is identical or deceptively or confusingly
similar to that of any existing corporation or to any other name already protected by law or
is patently deceptive, confusing or contrary to existing laws. When a change in the
corporate name is approved, the Commission shall issue an amended certificate of
incorporation under the amended name.
Sec. 19. Commencement of corporate existence. - A private corporation formed or
organized under this Code commences to have corporate existence and juridical
personality and is deemed incorporated from the date the Securities and Exchange
Commission issues a certificate of incorporation under its official seal; and thereupon the
incorporators, stockholders/members and their successors shall constitute a body politic
and corporate under the name stated in the articles of incorporation for the period of time
mentioned therein, unless said period is extended or the corporation is sooner dissolved in
accordance with law.
Sec. 20. De facto corporations. - The due incorporation of any corporation claiming in
good faith to be a corporation under this Code, and its right to exercise corporate powers,
shall not be inquired into collaterally in any private suit to which such corporation may be
a party. Such inquiry may be made by the Solicitor General in a quo warranto proceeding.
Sec. 21. Corporation by estoppel. - All 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: Provided, however, That
when any such ostensible corporation is sued on any transaction entered by it as a
corporation or on any tort committed by it as such, it shall not be allowed to use as a
defense its lack of corporate personality.
On who assumes an obligation to an ostensible corporation as such, cannot resist
performance thereof on the ground that there was in fact no corporation.
Sec. 22. Effects on non-use of corporate charter and continuous inoperation
of a corporation. - If a corporation does not formally organize and commence the
transaction of its business or the construction of its works within two (2) years from the
date of its incorporation, its corporate powers cease and the corporation shall be deemed
dissolved. However, if a corporation has commenced the transaction of its business but
subsequently becomes continuously inoperative for a period of at least five (5) years, the
same shall be a ground for the suspension or revocation of its corporate franchise or
certificate of incorporation.
This provision shall not apply if the failure to organize, commence the transaction of its
businesses or the construction of its works, or to continuously operate is due to causes
beyond the control of the corporation as may be determined by the Securities and
Exchange Commission.
