CORPORATION LAW (2019) MIDTERM REVIEWER
GAVIOLA-CLIMACO
CLASSES OF SHARES
PAR VALUE SHARES V. NO PAR VALUE SHARES
PAR VALUE SHARES
Those shares with a specific money value fixed or stated in
the Articles of Incorporation and appearing in the
certificate of stock for each share of the same issue.
The primary purpose thereof is to fix the minimum issue
price of the shares thus, assuring creditors that the
corporation would receive a minimum amount for its stock.
RULE AS TO ITS ISSUANCE:
A par value share cannot be issued below par but can be
issued more than par and the excess thereof shall form part
of the paid-in capital but it is accounted for as a premium
or as an additional paid-in capital.
NO PAR VALUE SHARES
One without any stated or par value appearing on the face
of the certificate of stock. IOW, it is a stock which does not
state show much money it represents.
REQUIREMENTS FOR THE ISSUANCE OF NON-PAR SHARES
BY THE CORPORATION:
1) Shares of stock issued without par value shall be deemed
fully paid and non-assessable and the holder of such shares
shall not be liable to the corporation or to its creditors in
respect thereto
- The consideration given shall be considered as the full
amount of the issue price, there can be no subscription
receivable.
2) The shares without par value may not be issued for a
consideration less than the value of Five pesos (P5.00) per
share
- This is the minimum consideration for a non par value
share
3) The entire consideration received by the corporation for
its non-par value shares shall be treated as capital and shall
not be available for distribution as dividends. (Section 6,
par.4 of the Corporation Code)
SHARES THAT CANNOT BE NO PAR VALUE SHARES:
1) Preferred Shares
- Sec.6, par.2, CC: “Preferred shares of stock may be issued
only with a stated par value.”
2) Shares in banks
3) Shares in trust companies
4) Shares in insurance companies
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5) Shares in public utilities, and
6) Shares in building and loan associations. (Sec. 6, par. 1,
last sentence)
Distinctions between par value shares vis-a-vis non par
value shares:
AS STATED IN THE ARTICLES OF INCORPORATION
Par value shares
“SEVENTH: That the authorized capital stock of the
corporation is P___ in lawful money of the Philippines,
divided into ____ shares with the par value of P___ per
share.”
No par value shares
“SEVENTH: That the capital stock of the corporation is ____
shares without par value. “
AS TO SUBSCRIPTION
In par value shares, you can subscribe without paying the
subcription.
For eg. You subscribed to 10, 000 shares with a par value of
1 peso per share & you pay nothing. It is perfectly valid but
the moment the date for the payment comes as specified
in the subscription agreement or when the BOD makes the
call, you have to pay.
In no par value shares, you cannot subscribe without
paying. They are always considered to be fully paid and
non-assessable.
For eg. You subscribed to 10,000 shares with an issue price
of 20php then it’s gonna be (10k x 20 = 200k) so you must
pay 200,000.00 pesos. If it’s 10php per share then it’s gonna
be (10k x 10 = 100k) thus, you need to pay 100,000.00
pesos.
TN: The issue price for a no par value share cannot be less
than 5 pesos.
VOTING SHARES V. NON-VOTING SHARES
VOTING SHARES
These are shares which have the right to vote.
NON-VOTING SHARES
These are shares without right to vote.
CONDITIONS IN THE ISSUANCE OF NON-VOTING SHARES
UNDER SECTION 6 OF THE CORPORATION CODE:
1) Only preferred or redeemable shares may be made non-
voting shares
2) There must remain other shares with full voting rights
CORPORATION LAW (2019) MIDTERM REVIEWER
- There can be no valid agreement where a corporation has
all non-voting shares. Any agreeement that will take away
the right to vote of all the shares in a corporation is not
valid.
3) The non-voting shares may still vote in the matters
enumerated under Section 9, accordingly:
a. Amendment of the articles of incorporation
b. Adoption and amendment of by-laws
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 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 this Code, and
h. Dissolution of the corporation.
What are the conditions to the issuance of non-voting
shares?
1. If the stock is originally issued as voting stock, it may not
thereafter be deprived of the right to vote without the
consent of the holder.
2. Under the Code, no share may be deprived of voting
rights except those classified and issued as "preferred" or
"redeemable" shares, unless otherwise provided in the
Code.
3.Where non-voting shares are provided for , the Code
requires that there shall always be a class or series of
shares which have complete voting rights.
4. Under Section 6 (par. 1), only preferred or redeemable
shares may be denied the right to vote. The issuance of
common stock with a feature that voting rights thereof
shall be exercised by a trustee violates the rule that
common shares cannot be deprived of voting rights. The
automatic assignment of voting rights in an indirect
violation of Section 6.
5. In case any amendment of the articles of incorporation
has the effect of changing or restricting the rights of any
stockholder, the latter shall have the right to dissent and
demand payment of the fair value of his shares
Atty: The rule is that a corporation must always have voting
shares there can be no valid agreement where a
corporation has all non-voting share. Any agreement that
will take away the right to vote of all the shares of a
corporation is not valid.
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What are the instances where non-voting shares are still
required to vote?
Under Article 6
...where the articles of incorporation provide for non-voting
shared 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 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 business
7. Investment of corporate funds in another corporation or
business
8. Dissolution of the Corporation.
FOUNDER’S SHARES
Section 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.
“exclusive right to vote and be voted for in the election of
directors is granted”
 An exception to the right of common shareholders
to vote
 Founder shares are not deprived of their right to
vote but it has the effect that deprives the
common shareholders of their right to vote.
Provided that such exclusivity is granted to the
founder’s shares and shall be limited to 5 years.
 Effect: After the lapse of 5 years the founder’s
shares will be treated and given the same rights as
other common shareholders.
COMMON SHARES VS. PREFERRED SHARES
Common Shares
 refers to the residual ownership of the corporation
Preferred Shares
CORPORATION LAW (2019) MIDTERM REVIEWER
 preference as to the distribution of the assets of
the corporation
 preference as to the dividends of the corporation:
kinds of Preferred shares as to dividends
 cumulative preferred shares
- the stockholder is entitled to the dividends in
the years where the corporation was not able
to declare dividend plus the current year.
- example: In 2017 and 2018 the corporation did
not declare dividend. In 2019 it declared
dividend. In this case, the stockholder shall be
entitled to the dividends in 2017, 2018, and
2019.
 non-cumulative preferred share
- the stockholder does not have any right for the
years that the corporation did not declare
dividends but only entitled to the dividends
declared in the current year.
 participating preferred shares
- the stockholder is not only entitled to his
preferred shares but also entitled in the
distribution with the common shareholders.
 non-participating preferred shares
- the stockholder is entitled only to his preferred
shares.
- it is a common practice that a preferred
shareholder enter into a stipulation with a
percentage of interest, such stipulated interest
will be followed in the distribution of his share
in the dividends.
Doctrine of Equality of Shares
 Absent any stipulations to the contrary in the
Articles of Incorporation, all shares are treated
equal with the same rights and privileges.
 Therefore, if the articles of incorporation provides
only of common and preferred shares but does not
provide for anything else the two shares are
treated equally.
DOCTRINE OF EQUALITY OF SHARES
“IN THE ABSENCE OF ANY PROVISION IN THE AOI AND IN THE
CERTIFICATE OF STOCK TO THE CONTRARY, ALL STOCKS, REGARDLESS
OF THEIR CLASS NOMENCLATURE, ENJOY THE SAME RIGHTS AND
PRIVILEGES AND SUBJECT TO THE SAME LIABILITIES.”
In terms of whether the preferred shares are cumulative or
non- cumulative, participating or non-participating, if the
articles of incorporation are silent.
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They are presumed to be non-cumulative and non-
participating.
What if the articles of incorporation specify that shares are
both cumulative and participating?
Having cumulative shares is not in conflict with those shares
being participating. Cumulative means you have the right to
dividends in arrears. Participating means you have the right
to participate with the common shares. So, preferred
shares can actually be both cumulative and participating.
REDEEMABLE SHARES
REDEEMABLE SHARES ARE SHARES USUALLY PREFERRED, WHICH BY
THEIR TERMS ARE REDEEMABLE AT A FIXED DATE OR AT THE OPTION
OF EITHER THE ISSUING CORPORATION OR THE STOCKHOLDER OR
BOTH AT A CERTAIN REDEMPTION PRICE.
TREASURY SHARES
TREASURY SHARES ARE SHARES WHICH HAVE BEEN LAWFULLY
ISSUED BY THE CORPORATION AND FULLY PAID FOR AND LATER
REACQUIRED BY IT EITHER BY PURCHASE, REDEMPTION, DONATION,
FORFEITURE OR OTHER LAWFUL MEANS.
RULE IN CASE OF ACQUISITION BY THE CORPORATION IN ITS OWN
SHARES?
IN RELATION TO SEC. 41…..
SEC. 41. POWER TO ACQUIRE OWN SHARES. – A STOCK
CORPORATION SHALL HAVE THE POWER TO PURCHASE OR
ACQUIRE ITS OWN SHARES FOR A LEGITIMATE CORPORATE
PURPOSE OR PURPOSES, INCLUDING BUT NOT LIMITED TO THE
FOLLOWING CASES: PROVIDED, THAT THE CORPORATION HAS
UNRESTRICTED RETAINED EARNINGS IN ITS BOOKS TO COVER THE
SHARES TO BE PURCHASED OR ACQUIRED:
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; AND
3. TO PAY DISSENTING OR WITHDRAWING STOCKHOLDERS
ENTITLED TO PAYMENT FOR THEIR SHARES UNDER THE
PROVISIONS OF THIS CODE.
THE CORPORATION, AS A GENERAL RULE HAS THE POWER TO
ACQUIRE ITS OWN SHARES WHETHER OR NOT THESE SHARES ARE
DEEMED AS REDEEMABLE. EVEN IF THERE ARE NO REDEEMABLE
SHARES IN THE ARTICLES OF INCORPORATION, CORPORATION IS STILL
ALLOWED TO REACQUIRE ITS OWN SHARES UNDER SECTION 41. BUT
THIS SECTION ALLOWS SUCH PURCHASE ONLY IF THE CORPORATION
HAS UNRESTRICTED RETAINED EARNINGS.
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CORPORATION AS A GENERAL RULE HAS THE POWER TO ACQUIRE ITS
OWN SHARES WHETHER THE SHARES ARE REDEEMABLE OR NOT
PROVIDED THAT IF NOT REDEEMABLE THE CORPORATION HAS
UNRESTRICTED RETAINED EARNINGS. BUT IF THE SHARES ARE
TERMED OR CLASSIFIED AS REDEEMABLE ON AOI, EVEN WITHOUT
UNRESTRICTED RETAINED EARNINGS, IT IS AUTHORIZED TO
PURCHASE OR REACQUIRE THE SHARES.
WHAT HAPPENS IF THE CORPORATION ACQUIRES THE
REDEEMABLE SHARES?
IF RETIRED. YOU NEED TO AMEND THE AOI IN ORDER TO
DECREASE THE AUTHORIZED CAPITAL STOCK.
IF NOT RETIRED. THE CORPORATION CAN SELL THE SHARES OR
THEY CAN BE ISSUED AS PROPERTY DIVIDENDS BECAUSE THESE
SHARES ONCE REACQUIRED BY CORPORATION BECOME PROPERTY BY
THE CORPORATION.
CLARIFICATION: IF IT IS REDEEMABLE SHARES AT THE OPTION
OF THE CORPORATION, WHETHER THE STOCKHOLDERS LIKE IT OR
NOT, THE CORPORATION CAN COMPEL THE ACQUISITION. THAT’S ONE
OF THE DIFFERENCE BETWEEN ORDINARY SHARES AND
REDEEMABLE SHARES.
HOW ABOUT IF THE STOCKHOLDERS COMPEL THE CORPORATION
TO REDEEM THE SHARES?
YOU CAN HAVE REDEEMABLE SHARES AT THE OPTION OF THE
STOCKHOLDERS.
THERE IS ALSO AN INSTANCE WHERE THE STOCKHOLDERS CAN
COMPEL THE CORPORATION TO PURCHASE AS AN EXERCISE OF THEIR
APPRAISAL RIGHT.
SO IT COULD BE REDEEMABLE AT THE OPTION OF THE CORPORATION
OR REDEEMABLE AT THE OPTION OF THE STOCKHOLDERS.
CLASSES OF SHARES
REDEEMABLE SHARES
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 stated in the
articles of incorporation, which terms and conditions
must also be stated in the certificate of stock
representing said shares, (n)
REDEEMABLE SHARES ARE REDEEMABLE EVEN W/O URE
but SUBJECT TO: SEC RULES
Classification that a share is redeemable matters because
if it is a redeemable share, you don’t need UNRESTRICTED
RETAINED EARNINGS before you can redeem it. You can
buy the shares even without it. The only requirements is
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that after Redemption the corporation should have
sufficient assets to pay for liabilities and to cover capital
stocks.
Rule:
1. Redeemable shares are redeemable even without
UNRESTRICTED RETAINED EARNINGS.
2. BUT SEC RULES REQUIRES:
- after redemption , there should still be sufficient assets
to pay of all liability plus the capital stock.
IOW: You cannot redeem without Retained Earnings.
The retained earnings may not be Unrestricted but if you
have a deficit (negative Retained earnings)=CANT
REDEEM.
WHO CAN REDEEM: Corporation/ shareholder
If you have shares that are redeemable , it means that the
parties have already agreed beforehand whether it is
redeemable at the option of the corporation or whether
redeemable at the option of the stockholder.
WHEN TO REDEEM: it depends(Redemption Rights &
Agreement)
When the redemption date comes, the stockholder can
compel redemption because it’s a matter of right already.
If the corporation does not redeem and the stockholders
do not compel redemption , for me it’s now a matter of
agreement between the two. If the stockholder dili
ganahan magpa redeem sa iyahang shares , then the
corporation and the stockholder can just agree that we’ll
just amend our AOI to put in there that it’s no longer
redeemable.
But if the redemption date arrives and the stockholders
and corporation does not say anything and after a few
years the stockholders now say “ui redeem or shares”, it’s
now a matter on how the redemption date was worded.
Ex:
1. “Redemption can take place anytime after March 30”
Effect: Redemption can still be done.
2. “Redemption shall only be until March 30”
Effect: They can no longer redeem.
TN: IT DEPENDS ON HOW REDEMTION RIGHTS ARE
WORDED IN THE ARTICLES OF INCORPORATION AND
AGREEMENT BETWEEN THE PARTIES.
AMEND ROI (reduce ACS) IF REDEEMED SHARES ARE
RETIRED
There’s a need to amend the Articles of Incorporation to
decrease the AUTHORIZED CAPITAL STOCK (ACS) . The
retirement or cancellation of the redeemed shares will not
automatically reduce the ACS , there has to be approval
by the SEC.
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CONVERTIBLE SHARE
CONCEPT
Are shares which are convertible or changeable
by the stockholder from one class to another class (such as
from preferred to common) at a certain price and within a
certain period.
Conversion of shares is a 2-step process:
1ST AMENDMENT: PROVIDE CONVERTIBILITY FEATURE IN
AOI
Provide the Right to Convert in the AOI. If your articles do
not provide for Convertibility, you need to amend the
articles first to allow for the conversion.
2ND AMENDMENT: ACTUAL CONVERSION: WIPE OUT OR
DELETE THE CONVERTIBLE SHARE
when you do convert , you need to amend the AOI to
provide for the issuance or addition (for example) of new
common shares and delete the convertible preferred
shares as you no longer have those class of shares once
conversion takes place.
EXAMPLE
If you allow Preferred shares to be converted to Common.
1. Amend your articles to provide for the Convertibility
Feature. ( Preferred to Common)
2. Do a 2nd Amendment to wipe out the Convertible
preferred and they are now all Common Shares
The two amendments can be filled simultaneously with
the SEC because they will not allow you to change without
going though conversion. So what you will do is to apply
for the convertibility feature and at the same time you
need to apply for the ACTUAL CONVERSION.
NOTE:
Generally it needs 2 amendments unless the Convertibility
feature is already there. You only need to amend for the
actual conversion.
INCORPORATION AND ORGANIZATION OF A
PRIVATE CORPORATION
INCORPORATION
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HOW TO INCOPORATE
1. Prepare the Articles of Incorporation
2. Submit with it the Supporting papers required under by
the SEC.
a. Name verification slip
b. Articles of Incorporation and By laws
c. Treasurer’s affidavit
HOW TO INCORPORATE
1. Make a name reservation online on the SEC
website + pay the reservation fee
2. Submission to the SEC of:
a. Name reservation
b. Articles of Incorporation
c. By-laws
d. Treasurer’s Affidavit (technically, the
treasurer’s affidavit is part of the Articles
of Incorporation)
CONTENTS OF THE ARTICLES OF INCORPORATION
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
CORPORATION LAW (2019) MIDTERM REVIEWER ATTY. GAVIOLA-CLIMACO

shares into which it is divided, and in case the share are

par value shares, the par value of each, the names, TERM
nationalities Not to exceed 50 years
and residences of the original subscribers, and the Renewable for another 50 years
amount subscribed and paid by each on his subscription,
and if some or all of the shares are without par value, NAME, NATIONALITIES AND RESIDENCE OF
such fact must be stated; INCORPORATORS
9. If it be a non-stock corporation, the amount of its
capital, the names, nationalities and residences of the QUALIFICATIONS
contributors and the amount contributed by each; and 1. They must be natural persons- juridical persons
10. Such other matters as are not inconsistent with law such as a corporations and partnership can never
and which the incorporators may deem necessary and be incorporators but they can be initial
convenient. stockholders.
Situation:
Foreign Client wants to put up a subsidiary what should
The Securities and Exchange Commission shall not
you advise since a corporation cannot be an
accept the articles of incorporation of any stock
incorporator?
corporation unless accompanied by a sworn statement
- The foreign corporation can be subscribers in a
of the Treasurer elected by the subscribers showing that
corporation here in the Philippines but they can
at least twenty-five (25%) percent of the authorized
never be incorporators for the law specifically
capital stock of the corporation has been subscribed,
provides that they be natural persons.
and at least twenty-five (25%) of the total subscription
has been fully paid to him in actual cash and/or in
- A JURIDICAL ENTITY, DOES IT HAVE TO BE A FOREIGN
property the fair valuation of which is equal to at least
CORPORATION? NO. ANY JURIDICAL ENTITY MAY NOT BE AN
twenty-five (25%) percent of the said subscription, such
INCORPORATOR. IT CAN BE A SUBSCRIBER APPEARING IN THE ARTICLE.
paid-up capital being not less than five thousand
THE LAW ONLY REQUIRES THAT THE INCORPORATORS MUST OWN ONE
(P5,000.00) pesos.
SHARE EACH. IT DOES NOT PREVENT ANOTHER INITIAL SUBSCRIBER FROM
OWNING THE REST OF THE SUBSCRIPTION. YOU CAN GET THE
THE NAME OF THE CORPORATION
INCORPORATORS WHO MUST BE NATURAL PERSONS AND THE REST OF
(In practice, as a lawyer, you will have to ask 3 corporate
THE SHARES MAY NOW BE SUBSCRIBED BY THE INITIAL SUBSCRIBER
names from your client just in case the first name won’t
WHICH IS A JURIDICAL ENTITY. SO THAT JURIDICAL ENTITY IS NOT AN
pass)
INCORPORATOR BUT THAT JURIDICAL ENTITY CAN BE A SUBSCRIBER.
- Once you have the name, apply for reservation
and once reserved, put that in the Articles of
OTHER REQUIREMENTS TO BE AN INCORPORATOR
Incorporation.
1. MUST NOT BE LESS THAN 5 AND NOT MORE THAN 15
2. MUST BE OF LEGAL AGE
PURPOSE OF THE CORPORATION
3. MAJORITY MUST BE RESIDENTS OF THE PHILIPPINES
PrImary Purpose
4. ON CITIZENSHIP: IS IT REQUIRED THAT AN INCORPORATOR
refers to the primary activity of the corporation
MUST BE A CITIZEN OF THE PHILIPPINES?

Secondary Purpose
GR: THERE IS NO REQUIREMENT THAT STOCKHOLDERS MUST BE FILIPINO
the additional activities that the corporation can do
CITIZENS. EVEN FOR INCORPORATORS, THE ONLY REQUIREMENT IS THAT
MAJORITY MUST BE RESIDENTS OF THE PHILIPPINES EXCEPT IF THE
PRINCIPAL OFFICE
CORPORATION IS ENGAGED IN NATIONALIZED ACTIVITIES IN WHICH CASE
It is important because any notice or communication or any
WE HAVE TO COMPLY WITH THE MINIMUM FILIPINO STOCKHOLDINGS
letters that the government will issue or send to you will be
REQUIRED UNDER SPECIAL LAWS OR THE CONSTITUTION
addressed or directed to that address that you have
indicated. It must be specific and must contain the street
number, street name, barangay, building name, unit AUTHORIZED CAPITAL STOCK - THERE IS NO MINIMUM NUMBER OR
AMOUNT FOR THE AUTHORIZED CAPITAL STOCK.
number, municipality or the city where it is located.

GENERAL RULE SUBSCRIBED CAPITAL- ALL THAT THE LAW REQUIRES IS THAT THE
SUBSCRIPTION MUST BE AT LEAST 25% OF THE AUTHORIZED CAPITAL
if there is a change of address, you amend the articles of
STOCK.
incorporation

EXCEPTION PAID UP CAPITAL- THE LAW REQUIRES THAT AT LEAST 25% OF THE
SUBSCRIBED CAPITAL STOCK SHOULD BE PAID INITIALLY OR PAID UP.
if there is a change of address but within the same city, you
can file a general information sheet with the new address.
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EXAMPLE:
IF A CORPORATION HAS AUTHORIZED CAPITAL STOCK OF P100000,
P25000 (25% OF THE ACS) MUST BE SUBSCRIBED AND AT LEAST 25%
OF THE SUBSCRIBED CAPITAL STOCK MUST BE PAID UP.
IF THE 100,000 ACS IS SUBSCRIBED BY A,B,C, D AND E, WHAT IS
REQUIRED IS THAT THE TOTAL SUBSCRIPTION MUST AT LEAST BE 25,000.
IT IS NOT A REQUIREMENT THAT THE 25000 MUST BE DIVIDED EQUALLY
AMONG THE A,B,C, D AND E. IT IS NOT REQUIRED THAT A,B,C, D AND
E MUST SUBSCRIBE 5000 EACH FOR AS LONG AS THE TOTAL
SUBSCRIPTION IS AT LEAST 25% OF THE ACS.
THE LAW DOES NOT SAY WHO MUST SUBSCRIBE. WHAT THE LAW ONLY
REQUIRES IS THAT 25% OF THE SUBSCRIBED CAPITAL MUST BE PAID UP,
SO YOU MAY HAVE INCORPORATORS SUBSCRIBING TO SHARES WITHOUT
PAYING UP. IN FACT THAT IS WHAT HAPPENED IN THE NARRA NICKEL
CASE. OLYMPIC MINES DID NOT PAY THEIR SUBSCRIPTION. ALL THE PAID
UP CAPITAL CAME FROM MBMI, A FOREIGN INVESTOR. SO THAT IS THE
REQUIREMENT ON THE SUBSCRIPTION TO INCORPORATE.
FOR EXAMPLE: YOU HAVE 100,000 SHARE, 25% IS PAID UP, NOW I
AM GOING TO RETIRE 15,000 SHARES.
ACS: 85,000
SUBSCRIBED: 10,000
10/ 85% = 11% REMAINING SUBSCRIBED CAPITAL.
THIS IS ALLOWED.
25/25% REQUIREMENT IS ONLY APPLICABLE IN CASE
OF INCREASE AUTHORIZED CAPITAL STOCK AND AT THE
TIME OF INCORPORATION
SECTION 13. AMOUNT OF CAPITAL; STOCK TO BE SUBSCRIBED AND
PAID FOR THE PURPOSES OF INCORPORATION. AT LEAST 25% OF THE
AUTHORIZED CAPITAL STOCK AS STATED IN THE ARTICLES OF
INCORPORATION MUST BE SUBSCRIBED AT THE TIME OF
INCORPORATION, AND AT LEAST 25% OF THE TOTAL SUBSCRIPTION
MUST BE PAID UPON SUBSCRIPTION, X X X.
REQUIREMENTS FOR A VALID CORPORATE NAME
1. Must not be similar or identical with any other
existing corporation; or
2. Must not be patently deceptive, confusing or,
contrary to existing laws; or
3. Nature of the business is somewhat similar.
GROUNDS TO QUESTION A CORPORATE NAME
IRCP VS CA
1. Complainant corporation has acquired prior right
over the use of such corporate name; and
2. Proposed name is either:
a. Identical; or
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ATTY. GAVIOLA-CLIMACO
b. Deceptively or confusingly by similar that of
any existing corporation or to any other name
already protected by law; or
c. Patently or deceptive, confusing/ contrary to
existing laws.
FACTS:
 October 13, 1976- RCP was organized for purpose
of engaging in the business of manufacturing
refractory bricks.
 June 22, 1977-RCP registered its name with DTI
 August 23, 1979- “Synclaire Mftg Corp” was
organized
 August 23, 1985- Synclaire changed its name to
IRCP.
 Both are the only local suppliers of monolithic
gunning mix.
 April 14, 1988- RCP filed a petition with SEC to
compel IRCP to change its corporate name on the
ground that it was confusingly similar with RCP
SEC: Rendered judgment in favor of RCP
SEC en banc: Ordered to delete or drop the name
“Refractories”
Court of Appeals: Name is confusingly similar and RCP has
established prior right to use the word “refractories”
IRCP argues:
1. Jurisdiction is vested with regular courts as it is not under
PD 902-a
2. “refractories” is a generic name
3. Not confusing similarity
RULING
SEC has jurisdiction— under regulatory powers
Jurisdiction of SEC is not merely confined to adjudicative
functions under PD 902-A. By express mandate, it has
absolute jurisdiction, supervision and control over all
corporation. It exercises regulatory and administrative
powers to implement and enforce the Corporation Code,
one of which is Section 18 which provides:
“Sec 18. Corporate name. — no corporate name may be
allowed by the SEC if the proposed name is identical or
deceptively or confusingly similar to that of any existing
corporation…or is patently deceptive, confusing or contrary
to existing laws..”
It is the SEC's duty to prevent confusion in the use of
corporate names not only for the protection of the
corporations involved but more so for the protection of the
public, and it has authority to de-register at all times and
under all circumstances corporate names which in its
estimation are likely to generate confusion.
CORPORATION LAW (2019) MIDTERM REVIEWER
There is confusing or deceptive similarity
To fall within the prohibition of the law, two requisites must
be proven:
1. That complainant corporation acquired a prior
right over the use of the corporate name
2. That proposed name is either:
i. Identical
ii. Deceptively or confusingly similaR
iii. Patently deceptive
In this case, anent the second requisite in determining the
existence of confusing similarity, the test is whether the
similarity is such as to mislead a person using ordinary care
and discrimination. The only word that distinguishes them
is the word “industrial” which merely identifies a
corporation’s general field of activities or operations. Both
corporations also cater to the same clientele and as
established by SEC, both have similar packaging.
Refractories is a generic term but its usage is not
widespread and its continuous use by RCP for a
considerable period has made the term so closely identified
with it.
IRCP’s appropriation of RCP’s corporate name cannot find
justification under the generic word rule. A contrary ruling
would encourage corporations to adopt verbatim and
register an existing and protected corporate name, to the
detriment of the public.
TEST IN DETERMINING IDENTITY/SIMILARITY
if it has the tendency to mislead a person using ordinary
care and discrimination.
IN THE CASE OF WANTING TO INCORPORATE A SUBSIDIARY:
you have the same name. the SEC allows it. Provided, that
the corportation which had a priority right will send a letter
of consent. In this case, you cannot reserve your name
online. You will have to write a letter to the SEC main office
in Manila to basically grant permission for the subsidiary to
use the name of the parent. So, just because it’s similart,
it’s automatically not allowed. So if the corporation with the
prior right consents, then, it will be allowed. But it has to be
proven that there is a parent-subsidiary/affiliate.
IGLESIA NI KRISTO CASE
When Soriano, et al. registered the corporate name of
petitioner corporation, respondent corporation filed a
petition before the SEC for the change of petitioner's
corporate name on the ground that the same causes
confusion among their members and the public.
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ATTY. GAVIOLA-CLIMACO
Is the corporation name “Ang Mga Kaanib sa Iglesia ng Dios
Kay Kristo Hesus, H.S.K, sa Bansang Pilipinas “(The
acronym "H.S.K." stands for Haligi at Saligan ng
Katotohanan) confusingly similar to “IGLESIA NG DIOS KAY
CRISTO JESUS, HALIGI AT SUHAY NG KATOTOHANAN”?
YES.
The additional words "Ang Mga Kaanib " and "Sa Bansang
Pilipinas, Inc." in
petitioner's name are, as correctly observed by the SEC,
merely descriptive of and also referring to the members, or
kaanib, of respondent who are likewise residing in the
Philippines. These words can hardly serve as an effective
differentiating medium necessary to avoid confusion or
diIculty in distinguishing petitioner from respondent. This is
especially so, since both petitioner and respondent
corporations are using the same acronym — H.S.K.; not to
mention the fact that both are espousing religious
beliefs and operating in the same place. Parenthetically, it
is well to mention that the acronym H.S.K. used by
petitioner stands for "Haligi at Saligan ng Katotohanan."
Atty’s Discussion:
Under Intellectual Property law (IP), trade name is not
protected if it is not generic. if you use a generic name for
a product, that name will not be protected. You cannot
register it, and other companies can use that name.
Ex:
Your product name is “bag”. You cannot prevent other
corporations from using that word because that is a generic
word.
The Supreme Court in this case said that such rule is not
applicable to the provision of the Corporation Code on
corporate names. So, even if the corporate name is generic,
it is still protected under the Corporation Code because the
SC, to rule otherwise, would encourage other corporations
to adopt verbatim and register an existing corporate name
to the detriment of the public. So, for example you have a
corporation named “bag Inc.”, you can prevent another
corporation from using “bag Corp.”. Generic names,
although not protected in the IP code, they are protected
as corporate names. This is the essence of the Iglesia ni
Kristo case.
ZUELLIG FREIGHT AND CARGO SYSTEMS,
PETITIONER, VS. NATIONAL LABOR RELATIONS
COMMISSION AND RONALDO V. SAN MIGUEL ,
RESPONDENTS
Petitioner Zuellig (formerly, “zeta”) ceased operations and
dismissed some of its workers. One of those workers was
Ronaldo San Miguel. He filed a complaint, alleging that it
was an illegal dismissal.
CORPORATION LAW (2019) MIDTERM REVIEWER
Zeta amended its articles and changed its name to “Zuellig”.
It was found out that there was no business cessation but
merely a change of business name and the upgrading of
stocks of the corporation. SC held that that there was no
closure to speak of. The termination of services allegedly
due to cessation of business operations of Zeta was illegal.
It was merely a change of name, and not a change of being.
Atty’s Discussion:
The right of succession in corporate law basically is that: any
change in the stockholdings or in the board of directors of
the corporation will not change the continuity of the
corporation. A change in name is basically just ancillary to
the right of succession, in the sense that the corporate
entity continues to exist, even if it changes its name or
amend its articles. Although there is no change in the
shareholdings of the corporation, but there is a change of
name. it’s similar to a person changing his name. it doesn’t
mean that he is a new person.
The SC said that: no, this is still one and the same
corporation. therefore, you cannot say that you’ve stopped
business operations. The corporation continued to exist. It
merely changed its name, purpose, and its authorized
capital stock.
So, a corporation, unlike a partnership, where if you amend
anything in the articles of partnership, it automatically
dissolves that one partnership and creates another one. In
a corporation, such is not the case. A corporation continues
to exist even if you amend its articles.
COMMENCEMENT OF CORPORATE EXISTENCE
Section 19. A private corporation formed or
organized under this Code
commences to have corporate existence and juridical
personality and is deemed incorporate from the date
the Securities and Exchange Commission issues a
certificate of incorporation under its official seal. Xxx
THE MOMENT THE SEC ISSUES THE CERTIFICATE OF
INCORPORATION THERE IS RELATIONSHIP BETWEEN:
1) The state and the corporation – because it is the state
which granted life to the corporation
2) The Corporation to its stockholders – because the
stockholders are the one who compose the corporation
3) the stockholders and the state – because in reality, the
corporation is just an artificial being. The stockholder being
the ones making up the corporation, the franchise granted
by the state to the corporation, is a privilege granted to the
stockholders
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ATTY. GAVIOLA-CLIMACO
DE FACTO CORPORATIONS
Section 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.
DE JURE CORPORATION
One created substantial conformity with the mandatory
statutory requirements in the corporation code of the
Philippines
DE FACTO CORPORATION
One which actually exists for all practical purposes as a
corporation, but which has no legal right to corporate
existence as against the State.
SEVENTH DAY ADVENTIST VS. NORTHEASTER
MINDANAO MISSION OF SEVENTH DAY ADVENTIST,
INC
Spouses Cosio donated a parcel of land to herein petitioner.
But the spouses, years thereafter, sold the land to
respondent. Petitioners then questioned the sale and filed
a suit for cancellation of title and quieting of ownership.
It was found out that the alleged donation to petitioner was
void. The deed of donation was not in favor of any informal
group of SDA members but a supposed SPUM-
SDA Bayugan (the local church) which, at the time, had
neither juridical personality nor capacity to accept such
gift, because it wasn’t a corporation since there wasn’t an
issuance of a certificate of incorporation from SEC.
Petitioner alleged that it was a de facto corporation.
Because being a de facto corporation, it would not be
susceptible to a collateral attack, which is what is
happening in this case.
But the SC said that they did not comply with the stringent
requirements before a corporation be considered a de facto
corporation.
requirements before one can qualify as a de
facto corporation:
a. the existence of a valid law under which it may be
incorporated;
b. an attempt in good faith to incorporate; and
c. assumption of corporate powers
DE FACTO CORPORATION
CORPORATION LAW (2019) MIDTERM REVIEWER
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.
GENERAL RULE:
De facto corporation’s existence can only be attacked
directly, through a quo warranto proceeding. Collateral
attacks are not allowed.
A quo warranto proceeding is a direct attack which
questions the very existence of the corporation because the
issue of the case is WON the corporation exist.
Atty G: Meaning as between a corporation considered as a
de facto and a case where you do not question the
corporation’s existence directly (collateral attack), the
corporation’s existence will be upheld.
ATTEMPT IN GOOD FAITH (MINIMUM REQUIREMENTS):
In order to have an attempt in good faith to incorporate,
you must actually have INCORPORATED.
1. The corporation must have filed the articles of
incorporation, treasurer’s affidavit, by-laws with the SEC.
2. The SEC must have actually issued the certificate of
incorporation.
Atty G: If you did not comply with the preceding minimum
requirements, that is not a de facto corporation. Hence, the
existence of such may be attacked collaterally.
If the SEC issued the certificate of incorporation, even if
there was a defect in the issuance by the SEC, that
corporation is a de facto corporation, and its existence
cannot be attacked collaterally. It must be done thru a
direct attack, thru a quo warranto proceeding.
SEVENTH DAY ADVENTIST CONFERENCE CHURCH OF
SOUTHERN PHILIPPINES, INC. V. NORTHEASTERN
MINDANAO MISSION OFSEVENTH DAY ADVENTIST, INC.
The donee was saying that you cannot just question my
existence thru the revocation of the donation, you cannot
say that I do not exist because only the state can question
my existence thru a quo warranto. Only the state can
question the existence of a de facto corporation and I am a
de facto corporation. We cannot just say that the donation
is revoked because I don’t exist. You have to file a quo
warranto case first. Is this contention valid? NO.
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ATTY. GAVIOLA-CLIMACO
Ruling: In this case, the SC said that Northeastern Seventh
Day Adventist did not even attempt to file their articles of
incorporation, hence, it is not a de facto corporation.
Therefore, it is not protected and its existence can be
attacked collaterally. It may be negated even without
bringing a quo warranto case.
CORPORATION BY ESTOPPEL
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.
Atty G: These are corporations who have exercised rights as
a corporation and has undertaken obligations as a
corporation, even without validly incorporating. In which
case, the person’s who made up the corporation are
estopped from claiming that they are not. But they cannot,
because there is no real corporation, they will not be liable
as a corporation. They will be liable as partners. They will
be solidarily liable in their personal capacity.
AMENDMENT OF THE ARTICLES OF CORPORATION
Sec. 103. Amendment of articles of incorporation. -
Any amendment to the articles of incorporation
which seeks to delete or remove any provision
required by this Title to be contained in the articles of
incorporation or to reduce a quorum or voting
requirement stated in said articles of incorporation
shall not be valid or effective unless approved by the
affirmative vote of at least two-thirds (2/3) of the
outstanding capital stock, whether with or without
voting rights, or of such greater proportion of shares
as may be specifically provided in the articles of
incorporation for amending, deleting or removing any
of the aforesaid provisions, at a meeting duly called
for the purpose.
Amending the Articles
1. Approval of the majority of the Board Of Directors
2. Such approval be ratified by the 2/3 of the outstanding
capital stock.
CORPORATION LAW (2019) MIDTERM REVIEWER
TN: The vote is not on the stockholders, but on the
outstanding capital stock. You don’t count by person. You
count by shares.
Ex: 5 stockholders; 4 of whom owned 1 share each; 1
stockholder owning 996 shares. Total 1000 shares.
The vote is not 2/3 of the 5 stockholders, but 2/3 of the
1000 shares. Even if only the 1 stockholder who owns the
996 shares vote, then he already gets 2/3 vote. Hence, even
if isa lang, but as long as he holds 2/3, then he gets the vote.
AMENDMENT OF ARTICLES OF INCORPORATION
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.
PROCESS
1. Approval of the majority of the majority of the
board of directors
2. Ratified by two thirds ( ) of the outstanding
capital stock.
TN: vote is not on the stockholders but on the outstanding
capital stock.
ILLUSTRATION:
5 Stockholders, 4 owns one share each, and you have 1
stockholder owning 996 shares, total of 1000 shares.
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ATTY. GAVIOLA-CLIMACO
The vote is based on the two thirds of the shares (1000),
not two thirds of the stockholders. (5)
LEGAL IMPLICATIONS OF THE ILLUSTRATION:
the stockholder holding 996 shares already owns the two
thirds vote if he votes.
HOW TO AMEND
1. Underscore all changes made
2. Indicate the date of the meeting under the
provision changed.
TN: the date pertains to the date the amended was
approved/ratified by the stockholders
Example: 5 Directors  7 Directors
Seven (7) Directors
(As amended on ______)
INCORPORATORS; ACCOMPLISHED FACT
The original incorporators do not change despite approval
of the amended Articles of Incorporation by a new set of
stockholders.
Securities and Exchange Commission will only require the
original signature page bearing the signatures of the
original Articles and append it to the amended articles. The
original incorporators will never change, it being an
accomplished fact.
REJECTION OF DISAPPROVAL OF ARTICLES
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;
CORPORATION LAW (2019) MIDTERM REVIEWER
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.
Grounds to Reject/Disapprove initial application for
incorporation and Amendment of Articles
1. Articles or Amendment is not substantially in
accordance with form prescribed therein
2. Purpose or purposes of the corporation is
patently unconstitutional, illegal, immoral, or
contrary o government rules and regulations
3. Treasurer’s Affidavit concerning the amount of
capital stock subscribed and/or paid is false
4. Percentage of ownership of capital stock to be
owned by citizens of the Philippines has not
been complied with
Industries requiring prior authority before
incorporation (Regulated Corporations; Sec. 17, last
paragraph)
1. Banks
2. Banking and quasi-banking institutions
3. Building and loan associations
4. Trust companies and other financial
intermediaries
5. Insurance companies
6. Public utilities
7. Educational institutions
8. Other corporations governed by special laws
These industries cannot incorporate or apply for
amendment without the prior authority of the
government agencies governing or controlling them. (Ex.
Certificate to Incorporate from the BSP before
Incorporating a Bank)
The Certificate to Incorporate is to be attached to the
Articles of Incorporation.
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ATTY. GAVIOLA-CLIMACO
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.
Incorporation Without Commencement of
Operations (Failure to Organize)
Within two (2) years from the date of its incorporation –
DEEMED DISSOLVED (Automatic)
Inoperative after Commencement of Operations
Continuously inoperative for a period of at least five (5)
years – GROUND FOR SUSPENSION OR REVOCATION
of corporate franchise or certificate of incorporation.
Legal implication of a ground for suspension or
revocation: notice and hearing is necessary, it is not
automatic.
BY-LAWS
Defined simply as the rules governing the relationship
between the corporation and your stockholders.
Sec. 47. Contents of by-laws. - Subject to the
provisions of the Constitution, this Code, other
special laws, and the articles of incorporation, a
private corporation may provide in its by-laws for:
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;
CORPORATION LAW (2019) MIDTERM REVIEWER
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. (21a)
What should be found in the By-Laws
1. Time, place, and manner in calling the regular
and special meetings of the directors or trustees
2. Required quorum
3. Manner of voting
Parties can agree on a quorum higher than what
is provided by law;
E.g. To agree on a super majority instead of the
regular majority. (Super Majority – anything
more than 50%+1%)
4. Form of proxies and how it should be submitted
E.g. WON it should be notarized, how many days
before the meeting should it be presented
Proxy – basically akin to a power of attorney to
allowanother person to vote your shares.
5. Qualifications, duties, and compensation of the
directors
6. Time for holding the annual election of directors
of trustees
7. Manner of election or appointment and the term
of office of all officers other than directors or
trustees
If the position is provided in the By-Laws, that
position is considered as a corporate officer,
otherwise the position is that of an employee.
8. Penalties for violation of the by-laws
9. For stock corporations, the manner of issuing
stock certificates
10. Other matters necessary for the proper or
convenient transaction of its corporate business
and affairs
When submitted
ACCORDING TO THE LAW - within one (1) month after the
issuance of the certificate of incorporation
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ATTY. GAVIOLA-CLIMACO
ACCORDING TO PRACTICE – submitted simultaneously
with the Articles of Incorporation, otherwise the SEC will
not accept your application
AMENDMENT OF BY-LAWS
Sec. 48. Amendments to by-laws. - The board of
directors or trustees, by a majority vote thereof, and the
owners of at least a majority of the outstanding capital
stock, or at least a majority of the members of a non-
stock corporation, at a regular or special meeting duly
called for the purpose, may amend or repeal any by-laws
or adopt new by-laws. The owners of two-thirds (2/3) of
the outstanding capital stock or two-thirds (2/3) of the
members in a non-stock corporation may delegate to the
board of directors or trustees the power to amend or
repeal any by-laws or adopt new by-laws: Provided, That
any power delegated to the board of directors or
trustees to amend or repeal any 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 a majority of the members
in non-stock corporations, shall so vote at a regular or
special meeting.
Whenever any amendment or new by-laws are adopted,
such amendment or new by-laws shall be attached to
the original by-laws in the office of the corporation, and
a copy thereof, duly certified under oath by the
corporate secretary and a majority of the directors or
trustees, shall be filed with the Securities and Exchange
Commission the same to be attached to the original
articles of incorporation and original by-laws.
The amended or new by-laws shall only be effective
upon the issuance by the Securities and Exchange
Commission of a certification that the same are not
inconsistent with this Code. (22a and 23a)
Process
1. Approval of the majority of the board
2. Ratification by majority of the outstanding
capital stock
When Approval of Stockholders Unnecessary
If such right is expressly granted to the board by the vote
of at least two thirds of the outstanding capital stock.
Cancellation of Grant of Authority by Stockholders
The stockholders may validly cancel the authority
granted to the board by the vote of majority of the
outstanding capital stock