CORPORATION CODE OF THE PHILIPPINES

By Hector s De Leon Jr. 7. Corporation engaged in 4. Meeting at the place,

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