REGULATORY FRAMEWORK FOR BUSINESS TRANSACTIONS

COVERAGE: Comparison of Corporation Code of the Philippines (BP 68) and Revised Corporation Code
of the Philippines (RA 11232)
Direction: Read and study the following concepts.

Title of the Code Corporation Code of the Philippines Revised Corporation Code of the
Philippines
Number of the Code Batas Pambansa Bilang 68 (BP 68) Republic Act No. 11232 (R.A. 11232)
Corporations Prohibited (BLTBPI) Buildings and Loan Association, (BLTBPIPO) Buildings and Loan Association,
to Issue No-Par Value Trust Company, Banks, Insurance Trust Company, Banks, Insurance Company,
Common Stocks Company, Public Utility Public Utility, Preneed Company, Other
corporations authorized to obtain or access
money from the public (whether publicly listed
or not)
Founder’s Shares No similar provision Exclusive right of founder’s shares to be
Restriction as to elected in the BoD shall not be allowed if its
exclusive right to be exercise will violate Anti-Dummy Law, Foreign
elected in the BoD Investments Act and other pertinent laws.
Regulation on No similar provision The terms and conditions stated in the AoI and
Redeemable Shares stock certificate regarding redeemable shares
shall be subject to rules and regulations issued
by SEC.
Incorporators of Private Only natural persons not less than five (5) Any person, partnership, association or
Corporation but not more than fifteen (15) may become corporation, singly or jointly but not more than
incorporators. fifteen (15) in number may become
incorporators.
Corporate Term of Maximum term of 50 years although Perpetual existence unless its articles of
existence unlimited times of renewal incorporation provides for specific term.
Renewal of Corporate It is mandatory because failure to renew It is not mandatory for corporation with
Term within the deadline for renewal is an perpetual existence because there is no term
automatic ground for corporate dissolution. to renew. As regards to corporation with
specific term, a corporation whose term has
expired may apply with SEC for the revival of
its certificate of incorporation and subject to all
of its duties, debts, and liabilities existing prior
to its revival. Upon approval by SEC, the
corporation shall be deemed revived and a
certificate of revival of corporate existence
shall be issued, giving it perpetual existence,
unless its application for revival provides
otherwise.
Effect of failure to renew It is an automatic ground for corporate The corporation is not automatically dissolved
corporate term within dissolution. The corporation is ip so facto by operation of law because it is now allowed
the deadline for renewal dissolved by operation of law. to file for the revival of corporate existence with
SEC.
Period of renewal of Within five(5)-year period prior the original or Within three(3)-year period prior the original or
corporate term subsequent expiry date(s) of the corporate subsequent expiry date(s) of the corporate
term term
Application for revival of No similar provision No application for revival of certificate of
certificate of incorporation of banks, banking and quasi-
incorporation banking institutions, preneed, insurance and
trust companies, nonstock savings and loan
associations, pawnshops, corporations
engaged in money service business, and other
financial intermediaries shall be approved by
SEC unless accompanied by a favorable
recommendation of the appropriate
government agency such as BSP or Insurance
Commission.

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 Minimum subscribed 25% of the authorized capital stock No similar provision
capital stock
Minimum paid up capital 25% of actually subscribed shares of stocks No similar provision
or P5,000, whichever is higher
Form of Articles of Duly signed and acknowledged by all the Duly signed and acknowledged or
Incorporation to be filed incorporators authenticated by all incorporators
to SEC
Provision in Arbitration No similar provision An arbitration agreement may be provided in
Agreement in Articles of the articles of incorporation
Incorporation
Sworn statement of Required No longer required
Treasurer elected as to
minimum 25%
subscription and as to
25% minimum paid up
capital or P5,000,
whichever is higher
Certificate of Bank Required No longer required
Deposit for paid up
capital

Filing of articles of Not allowed Allowed

incorporation and
applications for
amendments thereto
with SEC in the form of
electronic document
(Electronic Filing)
Undertaking to change No similar provision New undertaking in the articles of incorporation
the name of corporation
immediately upon
receipt of notice from
SEC that another
corporation, partnership
or person has acquired
a prior right to the use of
such name
Power of SEC to No similar provision The SEC has the power to summarily enjoin
summarily order the the corporation from using name that is not
corporation to distinguishable; already reserved or registered
immediately cease and for the use of another corporation; or if such
desist from using name name is already protected by law, or when its
that (1) is not use is contrary to existing laws, rules and
distinguishable, (2) is regulations. If the corporation fails to comply
already protected by with the order of SEC, the SEC may hold the
law, or (3) contrary to corporation and its responsible directors or
law, rules and officers in contempt and/or or hold them
regulations. administratively, civilly and/or criminally liable
under RCC and other applicable laws and/or
revoke the registration of the corporation.
Provision on No similar provision A name is not distinguishable even if it
determination of name contains one or more of the following:
that is not a. The word “corporation”, “company”,
distinguishable “incorporated”, “limited”, or an
abbreviation of one of such words; and
b. Punctuations, articles, conjunctions,
contractions, prepositions,
abbreviations, different tenses,
spacing, or number of the same word
or phrase.

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 Verification of intended No similar provision A person or group or group of persons desiring
corporate by SEC name to incorporate shall submit the intended
prior to submission of corporate name to the SEC for verification. If
Articles of Incorporation the SEC finds that the name is distinguishable
and By-laws and from a name already reserved or registered for
reservation of corporate the use of another corporation, not protected
name by law and is not contrary to law, rules and
regulations, the name shall be reserved in
favor of the incorporators. The incorporators
shall then submit their articles of incorporation
and bylaws to the SEC.
Period of Submission of Either (1) at the time of submission of articles Only at the time of submission of Articles of
By-laws or Adoption of of incorporation or (2) within 30 days from the Incorporation
By-laws issuance by SEC of Certificate of
Registration or Incorporation
Mandatory period to Within two (2) years from the date of Within five (5) years from the date of
formally organize and to incorporation (Issuance by SEC of certificate incorporation (Issuance by SEC of certificate of
commence business of registration or incorporation) registration or incorporation)
transaction to prevent
automatic dissolution of
the corporation
Provision on revocation The continuous inoperation of a corporation The SEC may, after due notice and hearing,
of certificate of for a period of at least five (5) years shall be place a corporation which subsequently
registration of a ground for the suspension or revocation of becomes inoperative for a period of at least
delinquent corporation its corporate franchise or certificate of five (5) years under delinquent status. A
(Inoperative corporation incorporation. delinquent corporation shall have a period of
for a period of at least two (2) years to resume operations and comply
five (5) consecutive with all requirements that SEC shall prescribe.
years) Upon compliance by the corporation, the SEC
shall issue an order lifting the delinquent
status. Failure to comply with the requirements
and resume operations within the period given
by the SEC shall cause the revocation of the
corporation’s certification of incorporation. The
SEC shall give reasonable notice to, and
coordinate with the appropriate regulatory
agency prior to the suspension, revocation of
the certificate of incorporation of companies
under their special regulatory jurisdiction.
Period to resume No similar provision. A delinquent corporation shall have a period of
operation of a two (2) years to resume operations and comply
delinquent corporation with all requirements that SEC shall prescribe.
(Inoperative corporation
for a period of at least
five (5) consecutive
years)
Number of members of The number of directors or trustees, which The number of directors, which shall not be
Board of Directors or shall not be less than five (5) nor more than more than fifteen (15) or the number of
Board of Trustees as fifteen (15) trustees which may be more than fifteen (15)
provided in original
articles of incorporation
Term of Trustees of The original term is staggered term of one, Term not exceeding three (3) years
Nonstock Corporation two or three years.
Mandatory Presence of No Similar Provision The board of the following corporations vested
independent directors in with public interest shall have independent
the BoD constituting at directors constituting at least twenty percent
least 20% of such BoD (20%) of such board:
a. Corporations covered by Section 17.2
of “Securities Regulation Code”
namely those whose securities are
registered with SEC, corporations
listed with an exchange (PSE) or with

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 assets of at least P50,000,000 and
having 200 or more shareholders,
each holding at least 100 shares of a
class of its equity shares.
b. Banks and quasi-banks, nonstock
savings and loan associations,
pawnshops, corporations engaged in
money service business, preneed,
trust and insurance companies, and
other financial intermediaries; and
c. Other corporations engaged in
business vested with public interest
similar to the above, as may be
determined by the SEC, after taking
into account relevant factors which are
germane to the objective and purpose
of requiring the election of an
independent director, such as the
extent of minority ownership, type of
financial products, or securities issued
or offered to investors, public interest
involved in the nature of business
operations, and other analogous
factors.

An independent director is a person who, apart

from shareholdings and fees received from the
corporation, is independent of management
and free from any business or other
relationship which could, or could reasonably
be perceived to materially interfere with the
exercise of independent judgment in carrying
out the responsibilities as a director.

Independent directors must be elected by the

shareholders present or entitled to vote in
absentia during the election of directors.
Independent directors shall be subject to rules
and regulations governing their qualifications,
disqualifications, voting requirements, duration
of term and their limit, maximum number of
board memberships and other requirements
that the SEC will prescribe to strengthen their
independence and align with international
business practices.
Election of directors or Not expressly stipulated Except when the exclusive right is reserved for
trustees holders of founders’ shares under Section 7 of
RCC, each stockholder or member shall have
right to nominate any director or trustee who
possesses all of the qualifications and none of
the disqualifications set forth in RCC.

Voting through remote No similar provision. When so authorized in the by-laws or by a

communication or in majority vote of the board of directors/trustees,
absentia by the stockholders or members may also vote
stockholders or through remote communication or in absentia.
members in the election Provided, that the right to vote through such

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 of directors or trustees modes may be exercised in corporations
(Manner of voting by vested with public interest, notwithstanding the
stockholders or absence of a provision in the bylaws of such
members in their corporations. A stockholder or member who
meeting) participates through remote communication or
in absentia shall be deemed present for
purposes of quorum.
Provision on duties of No similar provision. The directors or trustees elected shall perform
directors or trustees their duties as prescribed by law, rules of good
governance, and by-laws of the corporation.
Required vote on Unless the articles of incorporation or the by- No similar provision.
transaction of corporate laws provide for a greater majority, a majority
business or act of of the number of directors or trustees as fixed
management and in the articles of incorporation shall constitute
required vote for a quorum for the transaction of corporate
election of corporate business, and every decision of at least a
officers majority of the directors or trustees present
at a meeting at which there is a quorum shall
be valid as to corporate act, except for the
election of officers which shall require a vote
of a majority of all the members of the board.
Residency Requirement Not required The treasurer is required to be a resident.
of Treasurer
Election of Compliance Not required If the corporation is vested with public interest,
Officer the board shall elect a compliance officer.
Matter to be reported to Not required Shareholdings of elected directors, trustees
SEC after the election of and officers must be reported to SEC.
directors, trustees and
officers
Nonholding of Election No similar provision. The non-holding of elections and the reasons
of Directors, Trustees therefor shall be reported to SEC within 30
and Officers days from the date of the scheduled election.
The report shall specify a new date for the
election, which shall not be later than sixty (60)
days from the scheduled date. If no new date
has been designated, or if the rescheduled
election is likewise not held, the SEC, may
upon the application of a stockholder, member,
director or trustee, and after verification of the
unjustified non-holding of the election,
summarily order that an election be held. The
SEC shall have the power to issue such orders
as may be appropriate, including orders
directing the issuance of a notice stating the
time and place of the election, designated
presiding officer, and the record date or dates
for the determination of stockholders or
members entitled to vote.
Conviction by final Permanent or lifetime disqualification Temporary disqualification for a period of five
judgment of an offense (5) years from conviction by final judgment
punishable by
imprisonment for a
period exceeding six (6)
years
Grounds for temporary Conviction of violation of Corporation Code a. Convicted by final judgment (1) Of an
disqualification or of the Philippines offense punishable by imprisonment
disqualification for a for a period exceeding six (6) years,
period of five (5) years (2) For violating this Code; and (3) For
violating “The Securities Regulation
Code”; or
b. Found administratively liable for any
offense involving fraudulent acts; or

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 c. By a foreign court or equivalent foreign
regulatory for acts, violations or
misconduct similar to those
enumerate in letter (a) and (b) above.

Power of SEC to No similar provision The SEC shall, moto proprio or upon verified
remove a disqualified complaint, and after notice and hearing, order
director or trustee the removal of a director or trustee elected
despite the disqualification, or whose
disqualification arose or is discovered
subsequent to an election. The removal of a
disqualified director shall be without prejudice
to other sanctions that the SEC may impose on
the board of directors or trustees who, with
knowledge of the disqualification, failed to
remove such director or trustee.
Period for filling up of No similar provision When the vacancy is due to term expiration,
vacancy in the Board of the election shall be held no later than the day
Directors or Trustees of such expiration at a meeting called for that
purpose. When the vacancy arises as a result
of removal by the stockholders or members,
the election may be held on the same day of
the meeting authorizing the removal and this
fact must be so stated in the agenda and notice
of said meeting. In all other cases, the election
must be held no later than forty five (45) days
from the time the vacancy arose. A director or
trustee elected to fill a vacancy shall be
referred to as replacement director or trustee
and shall serve only for the unexpired term of
the predecessor in office.
Emergency Board of No similar provision When the vacancy prevents the remaining
Directors or Trustees directors from constituting a quorum and
emergency action is required to prevent grave,
substantial, and irreparable loss or damage to
the corporation, the vacancy may be
temporarily filled from among the officers of the
corporation by unanimous vote of the
remaining directors or trustees. The action by
the designated director or trustee shall be
limited to the emergency action necessary,
and the term shall cease within a reasonable
time from the termination of the emergency or
upon election of the replacement director or
trustee, whichever comes earlier. The
corporation must notify the SEC within three
(3) days from the creation of the emergency
board, stating therein the reason for its
creation.
Prohibition against No similar provision Directors or trustees shall not participate in the
directors or trustees’ determination of their own per diems or
participation in compensation.
determination of their
own per diems or
compensation

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 Submission of annual No similar provision Corporations vested with public interest shall
report of compensation submit to their shareholders and SEC, an
of BOD/BOT to annual report of the total compensation of each
stockholders and SEC of their directors or trustees.
Scope of restriction on It covers self-dealing directors, trustees or It covers not only self-dealing directors,
self-dealing directors, officers only. trustees or officers but also their spouses and
trustees or officers relatives within fourth (4th) civil degree of
consanguinity or affinity.
Additional requirement Not required In case of corporations vested with public
for validity of contract interest, material contracts are approved by at
with self-dealing least two-thirds (2/3) of the entire membership
directors, trustees or of the board, with at least a majority of the
officers independent directors voting to approve the
material contract.
Allowing the ratification If the requirement or condition that the If the requirement or condition that the contract
of at least 2/3 of contract is fair and reasonable is not is fair and reasonable is not complied with, the
stockholders/members complied with, the contract is voidable at the contract is voidable at the option of corporation
in contract with self- option of corporation and this defect may not but this defect may be ratified by at least 2/3 of
dealing directors, be cleansed by ratification of at least 2/3 of stockholders of members.
trustees or officers in stockholders of members.
case a condition is not
complied with.
Appointment of To be appointed by the Board of Directors No similar provision
Members of Executive
Committee of the BoD
Creation of Special No similar provision The board of directors may create special
Committees by BoD committees of temporary or permanent nature
and determine the members’ term,
composition, compensation, powers and
responsibilities.

Corporate power to Power of succession by its corporate name To have perpetual existence unless the
perpetual existence for the period of time stated in the articles of certificate of incorporation provides otherwise
incorporation and the certificate of
incorporation
Power to enter into No similar provision To enter into a partnership, joint venture,
partnership or joint merger, consolidation, or any other
venture commercial agreement with natural and
juridical persons
Prohibition on political No corporation, domestic or foreign, shall No foreign corporation shall give donations in
donation give donations in aid of any political party or aid of any political party or candidate or for
candidate or for purposes of partisan political purposes of partisan political activity.
activity.
Giving notice to No similar provision When allowed in the bylaws or done with the
stockholders/members consent of the stockholders/members, written
in extension or notice to stockholders/members on proposed
shortening of corporate corporate action may be sent electronically in
term accordance with the rules and regulations of
the SEC on the use of electronic data
messages.
Sale or disposition of No similar provision Subject to the provisions of R.A. No. 10667
corporate assets a.k.a. “Philippine Competition Act” and other
related laws, a corporation may, by a majority
vote of its board of directors or trustees, sell,
lease, exchange, mortgage, pledge or
otherwise dispose of its property and assets,
upon such terms and conditions and for such
considerations, which may be money, stocks,
bonds, or other instruments for the payment of
money or other property or consideration, as

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 its board of directors or trustees may deem
expedient.
Criteria for sale of A sale or other disposition shall be deemed The determination of whether or not the same
substantially all the to cover substantially all the corporate involves all or substantially all of the
corporate property property and assets if thereby the corporation’s properties and assets must be
corporation would be rendered incapable of computed based on its net asset value, as
continuing the business or accomplishing the shown in its latest financial statements. A sale
purpose for which it was incorporated. or other disposition shall be deemed to cover
substantially all the corporate property and
assets if thereby the corporation would be
rendered incapable of continuing the business
or accomplishing the purpose for which it was
incorporated.
Date of Regular Regular meetings of stockholders or Regular meetings of stockholders or members
Meetings of members shall be held annually on a date shall be held annually on a date fixed in the by-
Stockholders or fixed in the by-laws, or if not so fixed, on any laws, or if not so fixed, on any date after April
Members date of April as determined by BoD or BoT. 15 as determined by BoD or BoT.
Minimum days of giving Written notice of regular meetings shall be Written notice of regular meetings shall be sent
notice to Stockholders sent to all stockholders or members at least to all stockholders or members at least twenty-
or Members in Regular two (2) weeks prior to the meeting, unless a one (21) days prior to the meeting, unless a
Meeting different period is required by the by-laws. different period is required by the by-laws.
Electronic mail or other No similar provision Written notice of regular meeting may be sent
manner of sending to all stockholders or members of record
notice through electronic mail or such other manner
as the SEC shall allow under its guidelines.
Presentation of No similar provision The law enumerated the matters that the BoD
recommended matters or BoT shall endeavor to present during the
in regular meeting of regular meeting of stockholders or members.
stockholders or
members by BoD or
BoT
Waiver of notice of any Notice of any meeting may be waived, Notice of any meeting may be waived,
meeting by any expressly or impliedly, by any stockholder or expressly or impliedly, by any stockholder or
Stockholder or Member member. member. Provided, that general waivers of
notice in the articles of incorporation or the by-
laws shall not be allowed. Provided, further,
that attendance at a meeting shall constitute a
waiver of notice of such meeting, except when
the person attends a meeting for the express
purpose of objecting to the transaction of any
business because the meeting is not lawfully
called or convened.
Closing of stock and No similar provision Unless the bylaws provide for a longer period,
transfer book or the stock and transfer book or membership
membership book for shall be closed at least twenty (20) days for
regular meeting and regular meetings and seven (7) days for
special meeting of special meetings before the scheduled date of
stockholders or the meeting.
members

Minimum days of giving No similar provision In case of postponement of stockholders’ or

notice to Stockholders members’ regular meetings, written notice
or Members in case of thereof and the reason therefor shall be sent to
postponement of all stockholders or members of record at least
regular meeting of two (2) weeks prior to the date of the meeting,
stockholders or unless a different period is required under the
members bylaws, law or regulation.

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 Place of meeting of Only Metro Manila shall be considered as Metro Manila, Metro Cebu, Metro Davao and
stockholders or city or municipality in the application of city or other Metropolitan Areas shall be considered
members municipality where the principal office of the as city or municipality in the application of city
corporation is located. or municipality where the principal office of the
corporation is located.
Attachments of Notice No similar provision Each notice of meeting shall be accompanied
of Meeting sent to by the following:
Stockholders or 1. Agenda for the meeting
Members 2. A proxy form which shall be submitted
to the corporate secretary within a
reasonable time prior to the meeting
3. When attendance, participation, and
voting are allowed by remote
communication or in absentia, the
requirements and procedures to be
followed when a stockholder or
member elects either option
4. When the meeting is for the election of
directors or trustees, the requirements
and procedure for nomination and
election.
Requisites for Validity of All proceedings had and any businesses All proceedings had and any businesses
stockholders’ or transacted at any meeting of the transacted at any meeting of the stockholders
members’ meeting stockholders or members, if within the or members, if within the powers or authority of
despite impropriety in its powers or authority of the corporation, shall the corporation, shall be valid even if the
holding or calling be valid even if the meeting be improperly meeting be improperly held or called, provided
held or called, provided all the stockholders all the stockholders or members of the
or members of the corporation are present or corporation are present or duly represented at
duly represented at the meeting. the meeting and none of them expressly states
at the beginning of the meeting that the
purpose of their attendance is to object to the
transaction of any business because the
meeting is not lawfully called or convened.

Minimum days of giving Notice of regular or special meetings stating Notice of regular or special meetings stating
notice to Directors or the date, time and place of the meeting must the date, time and place of the meeting must
Trustees in Regular or be sent to every director or trustee at least be sent to every director or trustee at least two
Special Meeting of one (1) day prior to the scheduled meeting, (2) days prior to the scheduled meeting, unless
BoD/BoT unless otherwise provided by the by-laws. otherwise provided by the by-laws.
Manner of Attendance They must physically attend or vote at the Directors or trustees who cannot physically
of Directors or Trustees meeting of BoD/BoT. attend or vote at board meetings can
in Regular or Special participate and vote through remote
Meeting of BoD/BoT communication such as videoconferencing,
teleconferencing, or other alternative modes of
communication that allow them reasonable
opportunities to participate.
Restriction on related No similar provision A director or trustee who has a potential
party transaction interest in any related party transaction must
refuse from voting on the approval of the
related party transaction without prejudice to
compliance with the requirements on self-
dealing director.
Presiding Officer in The president shall preside at all meetings of The chairman of BoD/BoT or, in his absence,
BoD/BoT or the directors or trustees as well as of the the president shall preside at all meetings of
Stockholders’/Members’ stockholders or members, unless the by- the directors or trustees as well as of the
Meeting laws provide otherwise. stockholders or members, unless the by-laws
provide otherwise.
Period of filing of proxy Proxy shall be filed before the scheduled Proxy shall be filed to the corporate secretary
to corporate secretary meeting with the corporate secretary. within reasonable time before the schedule
meeting.
Restriction on voting No voting trust agreement shall be entered No voting trust agreement shall be entered into
trust agreement into for the purpose of circumventing the law for purposes of circumventing the laws against

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 against monopolies and illegal combinations anti-competitive agreements, abuse of
in restraint of trade or used for purposes of dominant position, anti-competitive mergers
fraud. and acquisitions, violation of nationality and
capital requirements, or for the perpetuation of
fraud.

New valid consideration 1. Actual cash paid to the corporation; a. Actual cash paid to the corporation;
for issuances of shares 2. Property, tangible or intangible, actually b. Property, tangible or intangible,
of stocks received by the corporation and necessary or actually received by the corporation
convenient for its use and lawful purposes at and necessary or convenient for its
a fair valuation equal to the par or issued use and lawful purposes at a fair
value of the stock issued; valuation equal to the par or issued
3. Labor performed for or services actually value of the stock issued;
rendered to the corporation; c. Labor performed for or services
4. Previously incurred indebtedness of the actually rendered to the corporation;
corporation; d. Previously incurred indebtedness of
5. Amounts transferred from unrestricted the corporation;
retained earnings to stated capital; and e. Amounts transferred from unrestricted
6. Outstanding shares exchanged for stocks retained earnings to stated capital;
in the event of reclassification or conversion. f. Outstanding shares exchanged for
stocks in the event of reclassification
or conversion;
g. Shares of stock in another corporation;
and/or
h. Other generally accepted form of
consideration.

Uncertified or Scripless No similar provision. The SEC may require corporations whose
Form of Shares of securities are traded in trading markers and
Stocks which can reasonably demonstrate their
capability to do so to issue their securities or
shares of stocks in uncertified or scripless form
in accordance with the rules of SEC.
Interest rate on unpaid 1. Rate of interest fixed in the by-laws 1. Rate of interest fixed in the
subscription 2. Legal rate subscription contract
2. Legal rate
Additional Manner or Notice of delinquency sale shall be sent to Notice of delinquency sale shall be sent to
Mode/ of sending notice every delinquent stockholder either every delinquent stockholder either personally
of public sale to personally or by registered mail. or by registered mail or through other means
delinquent stockholder provided in the by-laws.
Books to be Kept; Stock Every corporation shall keep and carefully Every corporation shall keep and carefully
Transfer Agent preserve at its principal office a record of all preserve at its principal office all information
business transactions and minutes of all relating to the corporation including, but not
meetings of stockholders or members, or of limited to:
the board of directors or trustees, in which
shall be set forth in detail the time and place (a) The articles of incorporation and
of holding the meeting, how authorized, the bylaws of the corporation and all their
notice given, whether the meeting was amendments;
regular or special, if special its object, those
present and absent, and every act done or
ordered done at the meeting. Upon the

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 demand of any director, trustee, stockholder (b) The current ownership structure
or member, the time when any director, and voting rights of the corporation,
trustee, stockholder or member entered or including lists of stockholders or
left the meeting must be noted in the members group structures, intra-
minutes; and on a similar demand, the yeas group relations, ownership data, and
and nays must be taken on any motion or beneficial ownership.
proposition, and a record thereof carefully
made. The protest of any director, trustee, (c) The names and addresses of all
stockholder or member on any action or the members of the board of directors
proposed action must be recorded in full on or trustees and the executive officers;
his demand.
(d) A record of all business
The records of all business transactions of transactions;
the corporation and the minutes of any
meetings shall be open to inspection by any (e) A record of the resolutions of the
director, trustee, stockholder or member of
board of directors or trustees and of
the corporation at reasonable hours on
the stockholders or members;
business days and he may demand, in
writing, for a copy of excerpts from said
records or minutes, at his expense. (f) Copies of the latest reportorial
requirements submitted to the
Commission; and
Any officer or agent of the corporation who
shall refuse to allow any director, trustees,
stockholder or member of the corporation to (g) The minutes of all meetings of
examine and copy excerpts from its records stockholders or members, or of the
or minutes, in accordance with the provisions board of directors or trsutees. Such
of this Code, shall be liable to such director, minutes shall set forth in detail among
trustee, stockholder or member for others; the time and the place of the
damages, and in addition, shall be guilty of meeting held, how it was authorized,
an offense which shall be punishable under the notice given, the agenda therefor,
Section 144 of this Code: Provided, That if whether the meeting was regular or
such refusal is made pursuant to a resolution special, its object if special, those
or order of the board of directors or trustees, present and absent, and every act
the liability under this section for such action done or ordered done at the meeting.
shall be imposed upon the directors or Upon the demand of a director trustee,
trustees who voted for such refusal: and stockholder or member, the time when
Provided, further, That it shall be a defense any director, trustee, stockholder or
to any action under this section that the member entered or left the meeting
person demanding to examine and copy must be noted in the minutes; and on
excerpts from the corporation’s records and a similar demand, the yeas and nays
minutes has improperly used any information must be taken on any motion or
secured through any prior examination of the proposition, and a record thereof
records or minutes of such corporation or of carefully made. The protest of a
any other corporation, or was not acting in director, trustee, stock holder or
good faith or for a legitimate purpose in member on any action or proposed
making his demand. action must be recorded in full upon
their demand.
Stock corporations must also keep a book to
be known as the "stock and transfer book", Corporate records, regardless of the form in
in which must be kept a record of all stocks which they are stored, shall be open to
in the names of the stockholders inspection by any director, trustee, stockholder
alphabetically arranged; the installments or member of the corporation in person or by a
paid and unpaid on all stock for which representative at reasonable hours on
subscription has been made, and the date of business days, and a demand in writing may
payment of any installment; a statement of be made by such director, trustee or
every alienation, sale or transfer of stock stockholder at their expense, for copies of such
made, the date thereof, and by and to whom records or excerpts from said records. The
made; and such other entries as the by-laws inspecting or reproducing party shall remain
may prescribe. The stock and transfer book bound by confidentiality rules under prevailing
shall be kept in the principal office of the laws, such as the rules on trade secrets or
corporation or in the office of its stock processes under Republic Act No. 8293,
otherwise known as the "Intellectual Property

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 transfer agent and shall be open for Code of the Philippines", as amended,
inspection by any director or stockholder of Republic Act No. 10173, otherwise known as
the corporation at reasonable hours on the "Data Privacy Act of 2012" Republic Act
business days. No. 8799, otherwise known as "The Securities
Regulation Code", and the Rules of Court.
No stock transfer agent or one engaged
principally in the business of registering A requesting party who is not a stockholder or
transfers of stocks in behalf of a stock member of record, or is a competitor, director,
corporation shall be allowed to operate in the officer, controlling stockholder or otherwise
Philippines unless he secures a license from represents the interests of a competitor shall
the Securities and Exchange Commission have no right to inspect or demand
and pays a fee as may be fixed by the reproduction of corporate records.
Commission, which shall be renewable
annually: Provided, That a stock corporation Any stockholder who shall abuse the rights
is not precluded from performing or making granted under this section shall be penalized
transfer of its own stocks, in which case all under Section 158 of this Code, without
the rules and regulations imposed on stock prejudice to the provisions of Republic Act No.
transfer agents, except the payment of a 8293, otherwise known as the "Intellectual
license fee herein provided, shall be Property Code of the Philippines", as
applicable. amended, and Republic Act No. 10173,
otherwise known as the "Data Privacy Act of
2012".

Any officer or agent of the corporation who

shall refuse to allow the inspection and/or
reproduction of records in accordance with the
provisions of this Code shall be liable to such
director, trustee, stockholder or member for
damages, and in addition, shall be guilty of an
offense which shall be punishable under
Section 161 of this Code: Provided, That if
such refusal is made pursuant to a resolution
or order of the board of directors or trustees,
the liability under this section for such action
shall be imposed upon the directors or trustees
who voted for such refusal: Provided,
further,That it shall be a defense to any action
under this section that the person demanding
to examine and copy excerpts from the
corporation's record or minutes of such
corporation or of any other corporation, or was
not acting in good faith or of any other
corporation or was not acting in good faith or
for a legitimate purpose in making the demand
to examine or reproduce corporate records or
is a competitor, director, officer, controlling
stockholder or otherwise represents the
interest of a competitor.

If the corporation denies or does not act on a

demand for inspection and/or reproduction, the
aggrieved party may report such denial or
inaction to the Commission Within five (5) days
from receipt of such report, the Commission
shall conduct a summary investigation and
issue an order directing the inspection or
reproduction of the requested records.

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 Stock corporations must also keep a stock and
transfer book, which shall contain a record of
all stocks in the names of the stockholders
alphabetically arranged; the installments paid
and unpaid on all stocks for which subscription
has been made, and the date of payment of
any installment; a statement of every
alienation, sale or transfer of stock made, the
date thereof, by and to whom made; and such
other entries as the bylaws may prescribed,
The stock and transfer book shall be kept in the
principal office of the corporation or in the
office of its stock transfer agent and shall be
open or inspection by any director or
stockholder of the corporation at reasonable
hours on business days.

A stock transfer agent or one engaged

principally in the business of registering
transfers of stocks in behalf of a stock
corporation shall be allowed to operate in the
Philippines upon securing a license from the
Commission and the payment of a fee to be
fixed by the Commission, which shall be
renewable annually: Provided, That a stock
corporation is not precluded from performing or
making transfer of its own stocks, in which
case all the rules and regulations imposed on
stock transfer agents, except the payment of a
license fee herein provided, shall be
applicable: Provided, further, That the
Commission may require stock corporations
which transfer and/or trade stocks in
secondary markets to have an independent
transfer agent.

Threshold when Audit If the paid-up capital of corporation is at least If the total assets or total liabilities of
Report of CPA is P50,000. corporation are at least P600,000 or such other
required amount as may be determined by the DoF
Secretary.
Certification Necessary The financial statements may be certified The financial statements may be certified
if below the Threshold under oath by the treasurer or any under oath by the treasurer and the president.
responsible officer by the corporation.
Contents of Articles of 1. Plan or merger or consolidation 1. Plan or merger or consolidation
Merger or Consolidation 2. Number of shares outstanding or 2. Number of shares outstanding or
number of members number of members
3. Number of shares or members 3. Number of shares or members voting
voting for and against the plan for and against the plan
4. Carrying amount and fair value of
assets and liabilities of merging or
consolidating corporation as of the
agreed cut-off date
5. The method to be used in the merger
or consolidation of accounts of the
companies
6. The provisional or proforma values, as
merged or consolidated, using the
accounting method
7. Such other information as may be
prescribed by SEC

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 Manner or Method of Voting by mail or other similar means by The bylaws may likewise authorize voting
voting by Members in members of nonstock corporation may be through remote communication and/or
Nonstock Corporation authorized by the by-laws of nonstock absentia.
corporations with the approval of, and under
such conditions which may be prescribed by
SEC
Term of Trustees Original staggered term of 3 years (3 batches The maximum term of trustees is not more
expiration of trustees) than three (3) years. Original staggered term
of 3 years is deleted.

List of Members and the No similar provision The corporation shall, at all times, keep a list
period of its submission of its members and their proxies in the form the
to SEC SEC may require. The list shall be updated to
reflect the members and proxies of record
twenty (20) prior to any scheduled election.
Prerequisite to Except upon favorable recommendation of No similar provision.
incorporation of any the Ministry of Education and Culture, the
educational institution SEC shall not accept or approve the articles
of incorporation and by-laws of any
educational institution.
Required vote for The dissolution may be effected by majority The dissolution may be effected by majority
voluntary dissolution vote of the board of directors or trustees, and vote of the board of directors or trustees, and
where no creditors are by a resolution duly adopted by the by a resolution duly adopted by the affirmative
affected (Dissolution affirmative vote of the stockholders owning at vote of the stockholders owning at least
does not prejudice least 2/3 of the outstanding capital stock or majority of the outstanding capital stock or of
rights of any creditor of at least 2/3 of the members. at least majority of the members.
having a claim against
it.)
Minimum number of At least thirty (30) days prior to the meeting At least twenty (20) days prior to the meeting
days of giving notice to for the voting of voluntary dissolution where for the voting of voluntary dissolution where no
stockholders or no creditors are affected. creditors are affected.
members prior to vote
for voluntary dissolution
Frequency of Publication of the notice of time, place and Publication of the notice of time, place and
publication of notice of object of the meeting for three (3) object of the meeting shall be made once in a
meeting for voluntary consecutive weeks in a newspaper of newspaper of general circulation prior to the
dissolution general circulation prior to the date of date of meeting.
meeting.

Procedure for voluntary No similar provision A verified request for dissolution shall be filed
dissolution where no with the Commission stating: (a) the reason for
creditors are affected the dissolution; (b) the form, manner, and time
when the notices were given; (c) names of the
stockholders and directors or members and
trustees who approved the dissolution; (d) the
date, place, and time of the meeting in which
the vote was made; and (e) details of
publication. The corporation shall submit the
following to the Commission: (1) a copy of the
resolution authorizing the dissolution, certified
by a majority of the board of directors or
trustees and countersigned by the secretary of
the corporation; (2) proof of publication; and (3)
favorable recommendation form the
appropriate regulatory agency, when
necessary. Within fifteen (15) days from
receipt of the verified request for dissolution,
and in the absence of any withdrawal within
said period, the Commission shall approved

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 the request and issue the certificate of
dissolution. The dissolution shall take effect
only upon the issuance by the Commission of
certificate of dissolution. No application for
dissolution of banks, banking and quasi-
banking institutions, preneed, insurance and
trust companies, NSSLAs, pawnshops, and
other financial intermediaries shall be
approved by the Commission unless
accompanied by a favorable recommendation
of the appropriate government agency.

Withdrawal of Request No similar provision A withdrawal of the request for dissolution shall
and Petition for be made in writing, duly verified by any
Dissolution incorporator, director, trustees, shareholder, or
member and signed by the same number of
incorporators, directors, trustees, shareholder,
or member and signed by the same number of
incorporators, directors, trustees,
shareholders, or members necessary to
request for dissolution as set forth in the
foregoing sections. The withdrawal shall be
submitted no later than fifteen (15) days from
receipt by the Commission of the request for
dissolution, the Commission shall withhold
action on the request for dissolution and shall,
after investigation: (a) make a pronouncement
that the request for dissolution is deemed
withdrawn; (b) direct joint meeting of the board
of directors or trustees and the stockholders or
members for the purpose of ascertaining
whether to proceed with dissolution; or (c)
issue such other orders as it may deem
appropriate.
A withdrawal of the petition for dissolution shall
be in the form of a motion and similar in
substance to a withdrawal of request for
dissolution but shall be verified and filed prior
to publication of the order setting the deadline
for filing objections to the petition.

Enumeration of A corporation may be dissolved by the A corporation may be dissolve by the

Grounds for Involuntary Securities and Exchange Commission upon Commission motu propio or upon filing of a
Dissolution of a filing of a verified complaint and after proper verified complaint by any interested party. The
corporation by SEC notice and hearing on the grounds provided following may be grounds for dissolution of the
by existing laws, rules and regulations. corporation:
(a) None-use of corporate charter as provided
under Section 21 of his Code;
(b) Continuous inoperation of a corporation as
provided under Section 21 of this Code;
(c) Upon receipt of a lawful court order
dissolving the corporation;
(d) Upon finding by the final judgment that the
corporation procured its incorporation through
fraud;
(e) Upon finding by final judgment that the
corporation:
(1) Was created for the purpose of committing,
concealing or aiding the commission of
securities violation, smuggling, tax evasion,
money laundering, or graft and corrupt
practices;

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 (2) Committed or aided in the commission of
securities violations, smuggling, tax evasion,
money laundering, or graft and corrupt
practices, and its stockholders knew of the
same; and
(3) Repeatedly and knowingly tolerated the
commission of graft and corrupt practices or
other fraudulent or illegal acts by its directors,
trustees, officers, or employees.
If the corporation is ordered dissolved by final
judgment pursuant to the grounds set forth in
subparagraph (e) hereof, its assets, after
payment of its liabilities, shall upon petition of
the Commission with the appropriate court, be
forfeited in favor of the national government.
Such forfeiture shall be without prejudice to the
rights of innocent stockholders and employees
for services rendered, and to the application for
other penalty or sanction under this Code or
other laws.
The Commission shall give reasonable notice
to, and coordinate with, the appropriate
regulatory agency prior to the involuntary
dissolution of companies under their special
regulatory jurisdiction.

Beneficiary of corporate Upon the winding up of the corporate affairs, Except as otherwise provided for in Section 93
property escheated any asset distributable to any creditor or and 94 of this Code, upon the winding up of
stockholder or member who is unknown or corporate affairs, any asset distributable to any
cannot be found shall be escheated to the creditor or stockholder or member who is
city or municipality where such assets are unknown or cannot be found shall be
located. escheated in favor of the national government.
Bond of Foreign Bond equivalent to least one hundred Bond equivalent to at least Five hundred
Corporation for its thousand (P100,000.) pesos; Provided, thousand pesos (₱500,000.00) or such other
License to engage in however, That within six (6) months after amount that may be set by the SEC: Provided,
business each fiscal year of the licensee, the SEC however, That within six (6) months after each
shall require the licensee to deposit fiscal year of the licensee, the Commission
additional securities equivalent in actual shall require the licensee to deposit additional
market value to two (2%) percent of the securities or financial instruments equivalent in
amount by which the licensee’s gross actual market value to two percent (2%) of the
income for that fiscal year exceeds five amount by which the licensee's gross income
million (P5,000,000.00) pesos. for that fiscal year exceeds Ten million pesos
(₱10,000,000.00).
Additional qualification Not required In case of a domestic corporation who will act
of a domestic as a resident agent, it must be likewise be of
corporation acting as sound financial standing and must show proof
resident agent of a that it is in good standing as certified by SEC.
foreign corporation

Violation of the Code Violations of any of the provisions of this Refer to discussion below for the new penalties
Code or its amendments not otherwise for violation of Revised Corporation Code
specifically penalized therein shall be
punished by a fine of not less than one
thousand (P1,000.00) pesos but not more
than ten thousand (P10,000.00) pesos or by
imprisonment for not less than thirty (30)
days but not more than five (5) years, or
both, in the discretion of the court. If the
violation is committed by a corporation, the
same may, after notice and hearing, be
dissolved in appropriate proceedings before
the Securities and Exchange Commission:

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 Provided, That such dissolution shall not
preclude the institution of appropriate action
against the director, trustee or officer of the
corporation responsible for said violation:
Provided, further, That nothing in this section
shall be construed to repeal the other causes
for dissolution of a corporation provided in
this Code.

Investigation and No similar provision The Commission may investigate an alleged

Prosecution of Offenses violation of this Code, or of a rule, regulation,
or order of the Commission.
The Commission may publish its findings,
orders, opinions, advisories, or information
concerning any such violation, as may be
relevant to the general public or to the parties
concerned, subject to the provisions of
Republic Act No. 10173, otherwise known as
the "Data Privacy Act of 2012", and other
pertinent laws.
The Commission shall give reasonable notice
to and coordinate with the appropriate
regulatory agency prior to any such publication
involving companies under their regulatory
jurisdiction.

Administration of Oaths, No similar provision The Commission, through its designated

Subpoena of Witnesses officer, may administer oaths and affirmations,
and Documents issue subpoena and subpoena duces tecum,
take testimony in any inquiry or investigation,
and may perform other acts necessary to the
proceedings or to the investigation.
Cease and Desist No similar provision Whenever the Commission has reasonable
Orders basis to believe that a person has violated, or
is about to violate this Code, a rule, regulation,
or order of the Commission, it may direct such
person to desist from committing the act
constituting the violation.

The Commission may issue a cease and desist

order ex parte to enjoin an act or practice
which is fraudulent or can be reasonably
expected to cause significant, imminent, and
irreparable danger or injury to public safety or
welfare. The ex parte order shall be valid for a
maximum period of twenty (20) says, without
prejudice to the order being made permanent
after due notice and hearing.

Thereafter the Commission may proceed

administratively against such person in
accordance with Section 158 of this Code,

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 and/or transmit evidence to the Department of
Justice for preliminary investigation or criminal
prosecution and/or initiate criminal prosecution
for any violation of this Code, rule, or
regulation.

Contempt No similar provision Any person who, without justifiable cause, fails
or refuses to comply with any lawful order,
decision, or subpoena issued by the
Commission shall, after due notice and
hearing, be held in contempt and fined in an
amount not exceeding Thirty thousand pesos
(₱30,000.00). When the refusal amounts to
clear and open defiance of the Commission's
order, decision, or subpoena, the Commission
may impose a daily fine of One thousand
pesos (₱1,000.00) until the order, decision, or
subpoena is complied with.
Administrative No similar provision If, after due notice and hearing, the
Sanctions Commission finds that any provision of this
Code, rules or regulations, or any of the
Commission's orders has been violated, the
Commission may impose any or all of the
following sanctions, taking into consideration
the extent of participation, nature, effects,
frequency and seriousness of the violation:

(a) Imposition of a fine ranging from

Five thousand pesos (₱5,000.00) to
Two million pesos (₱2,000,000.00),
and not more that One thousand
pesos (₱1,000.00) for each day of
continuing violation but in no case to
exceed Two million pesos
(₱2,000,000.00);

(b) Issuance of the permanent cease

and desist order;

(c) Suspension or revocation of the

certificate of incorporation; and

(d) Dissolution of the corporation and

forfeiture of its assets under the
conditions in Title XIV of this Code.

Unauthorized Use of No similar provision The unauthorized use of corporate name shall
Corporate Name; be punished with a fine ranging from Ten
Penalties thousand pesos (₱10,000.00) to Two hundred
thousand pesos (₱200,000.00).
Violation of No similar provision When, despite the knwoledge of the existence
Disqualification of a ground for disqualification as provided in
Provision; Penalties Section 26 of this Code, a director, trustee or
officer willfully holds office, or willfully conceals
such disqualification, such director, trustee or
officer shall be punished with a fine ranging
from Ten thousand pesos (₱10,000.00) to Two
hundred thousand pesos (₱200,000.00) at the

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 discretion of the court, and shall be
permanently disqualified from being a director,
trustee or officer of any corporation. When the
violation of this provision is injurious or
detrimental to the public, the penalty shall be a
fine ranging from Twenty thousand pesos
(₱20,000.00) to Four hundred thousand pesos
(₱400,000.00)
Violation of Duty to No similar provision The unjustified failure or refusal by the
Maintain Records, to corporation, or by those responsible for
Allow their Inspection or keeping and maintaining corporate records, to
Reproduction; Penalties comply with Section s 45, 73, 92, 128, 177 and
other pertinent rules and provisions of this
Code on inspection and reproduction of
records shall be punished with a fine ranging
from Ten thousand pesos (₱10,000.00) to Two
hundred thousand pesos (₱200,000.00), at the
discretion of the court, taking into
consideration the seriousness of the violation
and its implications. When the violation of this
provision is injurious or detrimental to the
public, the penalty is a fine ranging from
Twenty thousand pesos (₱20,000.00) to Four
hundred thousand pesos (₱400,000.00).
The penalties impose under this section shall
be without prejudice to the Commission's
exercise of its contempt powers under Section
157 hereof.
Willful Certification of No similar provision Any person who willfully certifies a report
Incomplete, Inaccurate, required under this Code, knowing that the
False; or Misleading same contains incomplete, inaccurate, false,
Statements or Reports; or misleading information or statements, shall
Penalties be punished with a fine ranging from Twenty
thousand pesos (₱20,000.00) to Two hundred
thousand pesos (₱200,000.00). When the
wrongful certification is injurious or detrimental
to the public, the auditor or the responsible
person may also be punished with a fine
ranging from Forty thousand pesos
(₱40,000.00) to Four hundred thousand pesos
(₱400,000.00).
Independent Auditor No similar provision An independent auditor who, in collusion with
Collusion; Penalties the corporation's directors or representatives,
certifies the corporation's financial statements
despite its incompleteness or inaccuracy, its
failure to give a fair and accurate presentation
of the corporation's condition, or despite
containing false or misleading statements,
shall be punished with a fine ranging from
Eighty thousand pesos (₱80,000.00) to Five
hundred thousand pesos (₱500,000.00).
When the statement or report certified is
fraudulent, or has the effect of causing injury to
the general public, the auditor or responsible
officer may be punished with a fine ranging
from One hundred thousand pesos
(₱100,000.00) to Six hundred thousand pesos
(₱600,000.00).

Obtaining Corporate No similar provision Those responsible for the formation of a

Registration Through corporation through fraud, or who assisted
Fraud; Penalties directly or indirectly therein, shall be punished

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 with a fine ranging from Two hundred thousand
pesos (₱200,000.00) to Two million pesos
(₱2,000,000.00). When the violation of this
provision is injurious or detrimental to the
public, the penalty is a fine ranging from Four
hundred thousand pesos (₱400,000.00) to
Five million pesos, (₱5,000,000.00).
Fraudulent Conduct of No similar provision A corporation that conduct its business through
Business; Penalties fraud shall be punished with a fine ranging
from Two hundred thousand pesos
(₱200,000.00) to Two million pesos
(₱2,000,000.00). When the violation of this
provision is injurious or detrimental to the
public, the penalty is a fine ranging from Four
hundred thousand pesos (₱400,000.00) to
Five million pesos (₱5,000,000.00).
Acting as Intermediaries No similar provision A corporation used for fraud, or for committing
for Graft and Corrupt or concealing graft and corrupt practices as
Practices; Penalties defined under pertinent statutes, shall be liable
for a fine ranging from One hundred thousand
pesos (₱100,000.00) to Five million pesos
(₱5,000,000.00).

When there is a finding that any of its directors,

officers, employees, agents, or
representatives are engaged in graft and
corrupt practices, the corporation's failure to
install:

(a) safeguards for the transparent and

lawful delivery of services; and (b)
policies, code of ethics, and
procedures against graft and
corruption shall be prima facie
evidence of corporate liability under
this section.

Engaging No similar provision A corruption that appoints an intermediary who

Intermediaries for Graft engages in graft and corrupt practices for the
and Corrupt Practices; corporation's benefit or interest shall be
Penalties punished with a fine ranging from One hundred
thousand pesos (₱100,000.00) to One million
pesos (₱1,000,000.00).

Tolerating Graft and No similar provision A director, trustee, or officer who knowingly
Corrupt Practices; fails to sanction, report, or file the appropriate
Penalties action with proper agencies, allows or tolerates
the graft and corrupt practices or fraudulent
acts committed by a corporation's directors,
trustees, officers, or employees shall be
punished with a fine ranging from Five hundred
thousand pesos (₱500,000.00) to One million
pesos (₱1,000,000.00).
Retaliation Against No similar provision A whistleblower refers to any person who
Whistleblowers provides truthful information relating to the
commission or possible commission of any
offense or violation under this Code. Any
person who, knowingly and with intent to

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 retaliate, commits acts detrimental to a
whistleblower such as interfering with the
lawful employment or livelihood of the
whistleblower, shall, at the discretion of the
court, be punished with a fine ranging from
One hundred thousand (₱100,000.00) to One
million (₱1,000,000.00).
Other Violations of the No similar provision Violation of any of the other provisions of this
Code; Separate Liability Code or its amendments not otherwise
specifically penalized therein shall be
punished by a fine of not less than Ten
thousand pesos (₱10,000.00) but not more
than One million pesos (₱1,000,000.00). If the
violation is committed by a corporation, the
same may, after notice and hearing, be
dissolved in appropriate proceedings before
the Commission; Provided, That such
dissolution shall not preclude the institution of
appropriate action against the director, trustee,
or officer of the corporation responsible for said
violation: Provided, further, That nothing in this
section shall be construed to repeal the other
causes for dissolution of corporation provided
in this Code. Liability for any of the foregoing
offenses shall be separate from any other
administrative, civil, or criminal liability under
this Code and other laws.
Liability of Directors, No similar provision If the offender is a corporation, the penalty
Trustees, Officers, or may, at the discretion of the court, be imposed
Other Employees upon such corporation and/or upon its
directors, trustees, stockholders. members,
officers, or employees responsible for the
violation or indispensable to its commission.
Liability of Aiders and No similar provision Anyone who shall aid, abet, counsel,
Abettors and Other command, induce, or cause any violation of
Secondary Liability this Code, or any rule regulation or order of the
Commission shall be punished with a fine not
exceeding that imposed on the principal
offenders, at the discretion of the court, after
taking into account their participation in the
offense.
Incorporation and other The Securities and Exchange Commission is For a more implementation of this Code, the
fees hereby authorized to collect and receive fees Commission is hereby authorized to collect,
as authorized by law or by rules and retain and use fees, fines, and other charges
regulations promulgated by the Commission pursuant to this Code and its rules and
regulations. The amount collected shall be
deposited and maintained in a separate
account which shall form a fund for its
modernization and to augment its operational
expenses such as, but not limited to, capital
outlay, increase in compensation and benefits
comparable with prevailing rates in the private
sector, reasonable employee allowance,
employee health care services, and other
insurance, employee career advancement and
professionalization, legal assistance,
seminars, and other professional fees.

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 Reportorial Every corporation, domestic or foreign, Except as otherwise provided in this Code or
Requirements of a lawfully doing business in the Philippines in the rules issued by the Commission, every
corporation shall submit to the Securities and Exchange corporation, domestic or foreign, doing
Commission an annual report of its business in the Philippines shall submit to the
operations, together with a financial Commission: (a) Annual financial statements
statement of its assets and liabilities, certified audited by an independent certified public
by any independent certified public accountant: Provided, That if the total assets
accountant in appropriate cases, covering or total liabilities of the corporation are less
the preceding fiscal year and such other than Six hundred thousand pesos
requirements as the Securities and (₱600,000.00), the financial statements shall
Exchange Commission may require. Such be certified under oath by the corporation’s
report shall be submitted within such period treasurer or chief financial officer; and (b) A
as may be prescribed by the Securities and general information sheet.
Exchange Commission
Corporations vested with public interest must
also submit the following: (1) A director or
trustee compensation report; and (2) A director
or trustee appraisal or performance report and
the standards or criteria used to assess each,
director or trustee.

The reportorial requirements shall be

submitted annually and within such period as
may be prescribed by the Commission.

The Commission may place the corporation

under delinquent status in case of failure to
submit the reportorial requirements three (3)
times, consecutively or intermittently, within a
period of five (5) years. The Commission shall
give reasonable notice to and coordinate with
the appropriate regulatory agency prior to
placing on delinquent status companies under
their special regulatory jurisdiction.

Any person required to file a report with the

Commission may redact confidential
information from such required report:
Provided, That such confidential information
shall be filed in a supplemental report
prominently labelled "confidential", together
with a request for confidential treatment of the
report and the specific grounds for the grant
thereof.
Visitorial Power and All interrogatories propounded by the The Commission shall exercise visitorial
Confidential Nature of Securities and Exchange Commission and powers over all corporations, which powers
Examination Results the answers thereto, as well as the results of shall include the examination and inspection of
any examination made by the Commission or records, regulation and supervision of
by any other official authorized by law to activities, enforcement of compliance, and
make an examination of the operations, imposition of sanctions in accordance with this
books and records of any corporation, shall Code.
be kept strictly confidential, except insofar as
the law may require the same to be made Should the corporation, without justifiable
public or where such interrogatories, cause, refuse or obstruct the Commission’s
exercise of its visitorial powers, the

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 answers or results are necessary to be Commission may revoke its certificate of
presented as evidence before any court. incorporation, without prejudice to the
imposition of other penalties and sanctions
under this Code.

All interrogatories propounded by the

Commission and the answers thereto, as well
as the results of any examination made by the
Commission or by any other official authorized
by law to make an examination of the
operations, books, and records of any
corporation, shall be kept strictly confidential,
except when the law requires the same to be
made public, when necessary for the
Commission to take action to protect the public
or to issue orders in the exercise of its powers
under this Code, or where such interrogatories,
answers or results are necessary to be
presented as evidence before any court.

Powers of SEC under The Securities and Exchange Commission The Commission shall have the power and
Corporation Code shall have the power and authority to authority to:
implement the provisions of this Code, and to
promulgate rules and regulations reasonably (a) Exercise supervision and
necessary to enable it to perform its duties jurisdiction over all corporations and
hereunder, particularly in the prevention of persons acting on their behalf, except
fraud and abuses on the part of the as otherwise provided under this
controlling stockholders, members, Code;
directors, trustees or officers.
(b) Pursuant to Presidential Decree
No. 902-A, retain jurisdiction over
pending cases involving intra-
corporate disputes submitted for final
resolution. The Commission shall
retain jurisdiction over pending
suspension of payment/rehabilitation
cases filed as of 30 June 2000 until
finally disposed;

(c) Impose sanctions for the violation

of this Code, its implementing rules
and orders of the Commission;

(d) Promote corporate governance

and the protection of minority
investors, through, among others, the
issuance of rules and regulations
consistent with international best
practices;

(e) Issue opinions to clarify the

application of laws, rules and
regulations;

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 (f) Issue cease and desist orders ex
parte to prevent imminent fraud or
injury to the public;

(g) Hold corporations in direct and

indirect contempt;

(h) Issue subpoena duces tecum and

summon witnesses to appear in
proceedings before the Commission;

(i) In appropriate cases, order the

examination, search and seizure of
documents, papers, files and records,
and books of accounts of any entity or
person under investigation as may be
necessary for the proper disposition of
the cases, subject to the provisions of
existing laws;

(j) Suspend or revoke the certificate of

incorporation after proper notice and
hearing;

(k) Dissolve or impose sanctions on

corporations, upon final court order,
for committing, aiding in the
commission of, or in any manner
furthering securities violations,
smuggling, tax evasion, money
laundering, graft and corrupt
practices, or other fraudulent or illegal
acts;

(l) Issue writs of execution and

attachment to enforce payment of
fees, administrative fines, and other
dues collectible under this Code;

(m) Prescribe the number of

independent directors and the
minimum criteria in determining the
independence of a director;

(n) Impose or recommend new modes

by which a stockholder, member,
director, or trustee may attend
meetings or cast their votes, as
technology may allow, taking into
account the company’s scale, number
of shareholders or members,
structure, and other factors consistent
with the basic right of corporate
suffrage;

(o) Formulate and enforce standards,

guidelines, policies, rules and

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 regulations to carry out the provisions
of this Code; and

(p) Exercise such other powers

provided by law or those which may be
necessary or incidental to carrying out
the powers expressly granted to the
Commission.

In imposing penalties and additional

monitoring and supervision requirements, the
Commission shall take into consideration the
size, nature of the business, and capacity of
the corporation.

No court below the Court of Appeals shall have

jurisdiction to issue a restraining order,
preliminary injunction, or preliminary
mandatory injunction in any case, dispute, or
controversy that directly or indirectly interferes
with the exercise of the powers, duties and
responsibilities of the Commission that falls
exclusively within its jurisdiction.

Development and No similar provision The Commission shall develop and implement
Implementation of an electronic filing and monitoring system. The
Electronic Filing and Commission shall promulgate rules to facilitate
Monitoring System and expedite, among others, corporate name
reservation and registration, incorporation,
submission of reports, notices, and documents
required under this Code, and sharing of
pertinent information with other government
agencies.
Arbitration for No similar provision An arbitration agreement may be provided in
Corporations the articles of incorporation or bylaws of a
corporation. When such an agreement is in
place, disputes between the corporation, its
stockholders or members, which arise from the
implementation of the articles of incorporation
or bylaws, or from intra-corporate relations,
shall be referred to arbitration. A dispute shall
be nonarbitrable when it involves criminal
offenses and interests of third parties. The
arbitration agreement shall be binding on the
corporation, its directors, trustees, officers,
and executives or managers.

To be enforceable, the arbitration agreement

should indicate the number of arbitrators and
the procedure for their appointment. The
power to appoint the arbitrators forming the
arbitral tribunal shall be granted to a
designated independent third party. Should the
third party fail to appoint the arbitrators in the
manner and within the period specified in the
arbitration agreement, the parties may request
the Commission to appoint the arbitrators. In
any case, arbitrators must be accredited or

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 must belong to organizations accredited for the
purpose of arbitration.

The arbitral tribunal shall have the power to

rule on its own jurisdiction and on questions
relating to the validity of the arbitration
agreement. When an intra-corporate dispute is
filed with a Regional Trial Court, the court shall
dismiss the case before the termination of the
pretrial conference, if it determines that an
arbitration agreement is written in the
corporation’s articles of incorporation, bylaws,
or in a separate agreement.

The arbitral tribunal shall have the power to

grant interim measures necessary to ensure
enforcement of the award, prevent a
miscarriage of justice, or otherwise protect the
rights of the parties.

A final arbitral award under this section shall

be executory after the lapse of fifteen (15) days
from receipt thereof by the parties and shall be
stayed only by the filing of a bond or the
issuance by the appellate court of an injunctive
writ.

The Commission shall formulate the rules and

regulations, which shall govern arbitration
under this section, subject to existing laws on
arbitration.

Jurisdiction over Party- No similar provision The powers, authorities, and responsibilities of
List Organizations the Commission involving party-list
organizations are transferred to the
Commission on Elections (COMELEC).

Within six (6) months after the effectivity of this

Act, the monitoring, supervision, and
regulation of such corporations shall be
deemed automatically transferred to the
COMELEC.

For this purpose, the COMELEC, in

coordination with the Commission, shall
promulgate the corresponding implementing
rules for the transfer of jurisdiction over the
abovementioned corporations.

Applicability of the No similar provision Nothing in this Act shall be construed as

Corporate Code amending existing provisions of special laws
governing the registration, regulation,
monitoring and supervision of special
corporations such as banks, nonbank financial
institutions and insurance companies.

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 Notwithstanding any provision to the contrary,
regulators such as the Bangko Sentral ng
Pilipinas and the Insurance Commission shall
exercise primary authority over special
corporations such as banks, nonbank financial
institutions, and insurance companies under
their supervision and regulation.

-END-

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