CORPORATION CODE OF THE PHILIPPINES

By Hector s De Leon Jr.

ATTRIBUTES OF A CORPORATION

1. It is an artificial being2. It is created by operation of law3. It has the right of succession4. It has only the powers, attributes, and properties expressly authorized by law or incident to its existence

DISTINCTION BETWEEN A PARTNERSHIP AND CORPORATION

1. Manner of creation2. Number of incorporators3. Commencement of juridical

personality4. Powers5. Management6. Effect of mismanagement7. Right of succession8. Extent of liability9. Transferability of interest10. Term of existence11. Firm name12. Dissolution13. Laws which govern

CLASSIFICATION OF CORPORATIONS

1. Stock corporation2. Non-stock corporation

OTHER CLASSIFICATION OF CORPORATION1. Number Of Person Who Composed

-Corporation Aggregate-Corporation Sole

2.Religious or not-Ecclesiastical -Lay

3.Charitable or not-Eleemosynary-civil

4.Which Country-Domestic -foreign

5.Legal right to corporate existence-De jure-De facto

6.Open to public or not-Close-Open

7.Relation to other Corporation-Parent or Holding-Subsidiary

8.True sense or Limited sense-True-Quasi

-Corporation by prescription-corporation by estoppels9.Public or Private

-Public-Private

PUBLIC CORPORATION ARE:

1. Provinces2. Cities3. Municipalities4. Barangays

PRIVATE CORPORATIONS ARE

1. Government-owned/controlled corporation

2. Quasi-public corporations

COMPONENTS OF CORPORATION

1. Corporators2. Incorporators3. Stockholders4. Members

THREE OTHER COMPONENTS

1. Promoters2. Subscribers3. Underwriter

CAPITAL STOCKS1. Authorized capital stock2. Subscribed capital stock3. Outstanding capital stock4. Paid-up capital stock5. Unissued capital stock6. Legal capital

CLASSES OF SHARES IN GENERAL

1. Par value /no par value2. Voting/non- voting3. Common/preferred #4. Promotion share5. Share in escrow6. Convertible stock7. Founder’s share8. Redeemable share9. Treasury share

KINDS OF PREFERRED SHARE

1. Preferred as to assets in case of liquidation

2. Preferred as to dividends

KINDS OF PREFERRED SHARE AS TO DIVIDENDS

1. Cumulative PS2. Non-cumulative PS3. Participating PS4. Non-participating PS5. Cumulative-participating PS

STEP IN THE CREATION OF CORPORATION

1. Promotion2. Incorporation3. Normal organization and

commencement of business operations

QUALIFICATION OF INCORPORATORS

1. Natural person2. Capacity to contract3. Residents of the Philippines4. Citizens of the Philippines5. Owner/subscriber of atleast

one share

CORPORATION WITH MAJORITY OWNERS MUST BE FILIPINO

1. Corporation for exploration, development and utilization of natural resources

2. Public service corporation

3. Educational corporation4. Banking corporation

5. Corporation engaged in retail trade

6. Rural banks7. Corporation engaged in

coastwise shipping8. Corporation engaged in

the pawnshop business9. Under the flag law

CONTENTS OF ARTICLES OF INCORPORATION

1. Name of corporation2. Purpose of corporation3. Principal office of

corporation4. Term of corporation5. Names, nationalities,

residences of incorporators

6. Number of directors7. Names, nationalities,

residences of directors8. If stock corporation-

Amount of authorized stock

9. if non-stock corporation-amount of capital and Names, nationalities, residences of contributor

POWERS OF BOARD OF DIRECTORS

1. governing body of the corporation

2. binding effect of stockholders action

3. extent of judicial review

QUALIFICATION OF DIRECTORS OR TRUSTEES

If stock corporation:

1. must owned at least one share2. share must be registered in his

name3. must continuously own at least

one share during his term4. majority of directors must be

resident of the Philippines

If non-stock corporation:

1. must be a member2. majority of the directors must

be a resident of the Philippines

METHODS OF VOTING

1. Straight voting2. Cumulative voting for

one candidate3. Cumulative voting for

distribution

CORPORATE OFFICERS

1. President2. Vice-president3. Secretary4. Treasurer5. General manager

REQUISITES OF BOAR MEETING

1. Meeting of directors or trustees duly assembled as a board

2. Presence of quorum3. Decision of majority of

quorum or majority of entire board

4. Meeting at the place, time, manner provided by the by-laws

QUORUM DEFINED

1. Number required for presence of quorum

2. Number required for approval of corporate acts

3. Number provided greater than majority

DISQUALIFICATION OF DIRECTORS/TRUSTEES

1. Not convicted by final judgment of an offense punishable by imprisonment for a period exceeding six years

2. Do not violate corporation code for prior 5 years from election

WHO CAN FILL VACANCIES?

1. Shareholders/members*2. Member of directors

CONTRACT OF CORPORATION WITH THE DIRECTOR OR TRUSTEES IS

VALID IF:1. That 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. That the vote of such director or trustee was not necessary for the approval of the contract;3. That the contract is fair and reasonable under the circumstances; and4. That in case of an officer, the contract has been previously authorized by the board of directors.

CORPORATE POWERS AND CAPACITY

1. To sue and be sued in its corporate name;2. Of succession by its corporate name for the period of time stated in the articles of incorporation and the certificate of incorporation;3. To adopt and use a corporate seal;4. To amend its articles of incorporation in accordance with the provisions of this Code;5. To adopt by-laws, not contrary to law, morals, or public policy, and to amend or repeal the same in accordance with this Code;6. In case of stock corporations, to issue or sell stocks to subscribers and to sell stocks to subscribers and to sell treasury stocks in accordance with the provisions of this Code; and to admit members to the corporation if it be a non-stock corporation;7. To purchase, receive, take or grant, hold, convey, sell, lease, pledge, mortgage and otherwise deal with such real and personal property8. To enter into merger or consolidation with other corporations as provided in this Code;9. To make reasonable donations,

10. To establish pension, retirement, and other plans for the benefit of its directors, trustees, officers and employees; and11. 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.

RELATIVE POWERS OF CORPORATION

1. Any act not prohibited2. Only powers those granted

CLASSIFICATION OF CORPORATE POWERS

1. Those expressly grated or authorized by law2. Those that is necessary to the exercise of the express or incidental power3. Those incidental to its existence

IMPLIED POWERS OF CORPORATION

1. Acts in the usual course of business

2. Acts to protect the debts owing to a corporation

3. Embarking in different business4. Acts in part or wholly to

protect or aid employees5. Acts to increase business

WHY CORPORATION ACQUIRES ITS OWN SHARE?

1. Elimination of fractional share2. Satisfaction of indebtedness to

corporation3. Payment of share of dissenting

or withdrawing stockholders4. Other cases

CONDITIONS IN ACQUIRING OWN SHARES

1. That its capital is not thereby impaired

2. That it be for a legitimate and proper purpose

3. That there shall be unrestricted retained earnings to purchase the same and its capital is thereby impaired

4. That the corporation acts in good faith and without prejudice to the right of the creditor and stockholder

5. That the condition for corporate affairs warrant it

CLASSES OF DIVIDENDS

1. Cash dividend2. Property dividend3. Stock dividend4. Optional dividend5. Composite dividend6. Scrip dividend7. Bond dividend8. Cumulative dividend9. Liquidating dividend10. Preferred dividend

VALIDITY OF BY-LAWS

1. They must not be contrary to existing law and inconsistent with the code

2. They must not be contrary to morals and public policy

3. They must not impair obligation of contract

4. They must be general and uniform in their operation and not directed against particular individual

5. They must be consistent with the articles of incorporation

6. They must be reasonable

CONTENTS OF BY-LAWS

1. The time, place and manner of calling and conducting regular or special meetings of the directors or trustees;

2. The time and manner of calling and conducting regular or special meetings of the stockholders or members;

3. The required quorum in meetings of stockholders or members and the manner of voting therein;

4. The form for proxies of stockholders and members and the manner of voting them;

5. The qualifications, duties and compensation of directors or trustees, officers and employees;

6. The time for holding the annual election of directors of trustees and the mode or manner of giving notice thereof;

7. The manner of election or appointment and the term of office of all officers other than directors or trustees;

8. The penalties for violation of the by-laws;

9. In the case of stock corporations, the manner of issuing stock certificates; and

10. Such other matters as may be necessary for the proper or convenient transaction of its corporate business and affairs.

KINDS OF MEETING

1. Regular2. Special

REQUISITES OF VALID MEETINGS

1. It must be held at the proper place

2. It must be held at the stated date and at the appointed time or at a reasonable time

3. It must be called by t proper person

4. There must be a previous notice

5. There must be a quorum

REQUISITES OF NOTICE OF MEETINGS

1. Must be issued by one who has authority to issue it

2. Must be In writing3. Must state the date, time,

place of the meeting4. Must state the business to be

transacted thereat5. Must be sent at a certain time

before the scheduled meeting

6. Must comply with any other requirements prescribed by laws/by-laws

MATTERS AT WHICH THE LAW REQUIRES SPECIFIC NUMBER OF

VOTES

1. To amend the articles of incorporation – B/T-M & M/OCS-2/3

2. To elect directors or trustees-M/OCS-M

3. To remove directors or trustees- M/OCS-2/3

4. To call a special meeting to remove director or trustees- M/OCS-M

5. To ratify a contract of a director or trustees with the corporation- M/OCS-2/3

6. To extend /shorten corporate terms-B/T-M & M/OCS-2/3

7. To increase or decrease the capital stock -B/T-M & M/OCS-2/3

8. To incur, create, or increase bonded indebtedness- B/T-M & M/OCS-2/3

9. To sell, lease, exchange, mortgage, pledge substantial assets- B/T-M & M/OCS-2/3

10. To invest corporate funds in other business- B/T-M & M/OCS-2/3

11. To issue stock dividends-Q-M & M/OCS-2/3

12. To enter into a management contract- Q-M & M/SH-M/2/3

13. To adopt by-laws-OCS-M14. To amend, repeal or

adopt new by-laws- B/T-M & OCS-M

15. To delegate to board of director the power to amend or repeal the by-laws-OCS-2/3

16. To revoke the preceding power delegated to the board of directors-OCS-M

17. To fix the issued price of no par value share-Q-M or OCS-M

18. To effect or amend the plan of merger or consolidation- B/T-M & M/OCS-2/3

19. To dissolve the corporation- B/T-M & M/OCS-2/3

20. To adopt a plan of distribution of assets of NSC- B/T-M & M-2/3

PRESIDING OFFICER AT MEETINGS

1. President/chairman/vice-chairman

2. Stockholder or member in a temporary capacity

3. Stockholder or member chosenMANNER OF VOTING

1. Directly2. Indirectly By means of proxies By a trustee under a voting

trust agreement

By executors, administrators, receivers, or other legal representative appointed by court

HOW PARTICIPATION IN CORPORATION ACQUIRED

If stock corporation By subscription contract with

an existing corporation for the acquisition of unissued share

By purchase from the corporation of treasury share

By transfer from a previous stockholder of the outstanding share or existing subscription to share

If non-stock corporation By contract with the

corporation the modes of entering into which vary according to the charter

CONSIDERATION FOR STOCKS

1. Actual cash paid to the corporation;

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; and

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

SOURCE OF CORPORATE CAPITAL

1. Funds furnish by shareholder2. Borrowings3. Profits and stock dividends

DIFFERENT MODE BY SHARE MAY ISSUED

1. By subscription before and after incorporation, to original, unissued stock

2. By sale of treasury stock after incorporation for money, property, or service

3. By subscription to new stock

4. By making a stock dividend

MODES OF STOCK TRANSFER

1. Endorsement and delivery of stock certificate

2. Transfer in a separate instrument

3. Judicial or extra-judicial settlement of the estate