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limited partner or adding a limited or Art. 1866. A contributor, unless he is a

general partner shall be signed also by general partner, is not a proper party to
the member to be substituted or proceedings by or against a partnership,
added, and when a limited partner is to except where the object is to enforce a
be substituted, the amendment shall limited partner's right against or liability to
also be signed by the assigning limited the partnership.
partner.
Art. 1867. A limited partnership formed
The writing to cancel a certificate shall be under the law prior to the effectivity of this
signed by all members. Code, may become a limited partnership
under this Chapter by complying with the
A person desiring the cancellation or provisions of article 1844, provided the
amendment of a certificate, if any person certificate sets forth:
designated in the first and second
paragraphs as a person who must execute 1. The amount of the original contribution
the writing refuses to do so, may petition of each limited partner, and the time
the court to order a cancellation or when the contribution was made.
amendment thereof.
2. That the property of the partnership
If the court finds that the petitioner has a exceeds the amount sufficient to
right to have the writing executed by a discharge its liabilities to persons not
person who refuses to do so, it shall order claiming as general or limited partners
the Office of the Securities and Exchange by an amount greater than the sum of
Commission where the certificate is the contributions of its limited partners.
recorded, to record the cancellation or A limited partnership formed under the law
amendment of the certificate; and when prior to the effectivity of this Code, until or
the certificate is to be amended, the court unless it becomes a limited partnership
shall also cause to be filed for record in said under this Chapter, shall continue to be
office a certified copy of its decree setting governed by the provisions of the old law.
forth the amendment.
CORPORATIONS
A certificate is amended or cancelled when TITLE I - GENERAL PROVISIONS
there is filed for record in the Office of the DEFINITIONS AND CLASSIFICATIONS
Securities and Exchange Commission, where
the certificate is recorded: Sec. 1. Title of the Code. – This Code shall
be known as “The Corporation Coder of the
1. A writing in accordance with the Philippines”.
provisions of the first or second
paragraph. Sec. 2. Corporation defined. - A corporation
is an artificial being created by operation of
2. A certified copy of the order of the law having the right of succession and the
court in accordance with the provisions powers, attributes and properties expressly
of the fourth paragraph. authorized by law or incident to its
existence.
3. After the certificate is duly amended in
accordance with this article, the Definition
amended certified shall thereafter be A corporation is an artificial being created
for all purposes the certificate provided by operation of law having the right of
for in this Chapter. succession and the powers, attributes and
properties expressly authorized by law or
A certificate is considered cancelled or incident to its existence.
amended when there is filed for record
1. A writing to amend the certificate; or Attributes
2. A certified copy of the order of the 1. It is an artificial being.
court in the event of an unjustified 2. It is created by operation of law.
refusal of a partner to sign the writing. 3. It has the right of succession.

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4. It has only the powers, attributes and partnership.

properties expressly authorized by law Right of No right of Possesses
or incident to its existence. Succession succession right of
succession
Similarities between a partnership and a Extent of Partners Stockholders
Liability to (except are liable only
corporation
Third Persons limited to the extent
1. Juridical personality separate and
partners) of their
distinct from the individuals composing are liable investments
it. personally as
2. Act only through its agents. and represented
3. Composed of an aggregate of subsidiarily by the shares
individuals. for subscribed by
4. Distribute profits to those who partnership them.
contribute to capital. debts to
5. May be organized only when there is a third
persons.
law authorizing it.
Transferability A partner A stockholder
6. Subject to income tax.
of interest cannot has the right
transfer to transfer his
Distinctions between a partnership and a interest so shares
corporation as to make a without the
partner prior consent
Point of without the of the other
Partnership Corporation
Comparison consent of stockholders.
Manner of By mere By law or all other
Creation agreement operation of existing
of the law partners.
parties Term of May be May not be
Number of By a Requires at existence established formed for a
Parties minimum of least five (5) for any term in excess
two (2) incorporators period of of 50 years
persons time extendible to
Commence- Generally From the date stipulated not more than
ment of from the of the by the 50 years.
Juridical moment of issuance of partners.
Personality execution of the certificate Firm name A limited A corporation
the contract of partnership may adopt a
incorporation is required firm name
of the to add the provided it is
Securities and word ‘Ltd.’ not identical
Exchange to its name. or deceptively
Commission similar to any
(SEC) registered
Powers May Can exercise firm name or
exercise only the contrary to
powers powers existing laws.
authorized expressly Dissolution May be May only be
by partners granted by dissolved at dissolved with
provided the law or any time by the consent of
same are incident to its the will of the state.
not contrary existence. any or all
to law, partners.
morals, Governing Civil Code Corporation
good Laws Code
customs,
public policy Advantages of a corporate form of
or public business organizations
order. 1. The capacity to hold property, to
Management When it is It is vested in contract, to sue and be sued as a legal
not agreed the board of
unit or distinct entity.
upon, each directors or
partner is an trustees. 2. Exemption of shareholders from
agent of the individual liability.

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3. Continuity of existence in spite of death 2. Quasi-public – are entities engaged in

or changes of members. rendering basic services of such public
4. Transferability of shares. importance as to entitle them to certain
5. Centralized management under a board privileges like eminent domain or use of
of directors. public property. Eg. Electric, gas, water
6. Standardized methods of organization, and telephone companies.
management and finance for the 3. Government-owned or controlled – are
protection of shareholders and entities organized by the government
creditors under statutory regulations. or corporations of which the
government is a majority stockholder.
Disadvantages of a corporate form of Eg. Philippine Air Lines
business organizations 4. Domestic – one incorporated under
1. The limited liability of the stockholders Philippine laws.
serves to limit the credit available to 5. Foreign – one formed, organized, or
the corporation. existing under any laws other than
2. The transferability of shares permits the those of the Philippines.
uniting of incompatible and conflicting 6. Corporation aggregate – one composed
interests in one enterprise. of more than one member or
3. The minority stockholders are usually corporator.
subservient to the wishes of the 7. Corporation sole – consists of one
majority. member or corporator and his
4. In big corporations, the stockholders’ successors.
voting rights have become largely 8. Religious corporations, sole or
theoretical because of widespread aggregate – organized, either as sole or
ownership, lukewarmness and aggregate, to administer properties of
disinterest in management, inertia, and the church.
inaccessible meeting places. 9. Ecclesiastical – organized for religious
5. In large corporations, management and purposes.
control has been separated from 10. Lay – organized for a purpose other
ownership. than religious
6. By and large corporations are subject to 11. Eleemosynary – organized for charitable
governmental restrictions, controls, and purposes.
report requirements not imposed on 12. Civil – are those than ecclesiastical and
other forms of business organizations. eleemosynary, whether public or
7. Corporate sphere of activity is limited in private.
the transaction of its business to the 13. Close – one wherein all the outstanding
state of the organization. stock is owned by the persons who are
8. The corporate form involves “double active in management and conduct of
taxation” on corporation income. the business.
14. Open – one in which all the members or
Sec. 3. Classes of corporations. – corporations have a vote in the election
Corporations formed or organized under of the directors and other officers.
this Code may be stock or non-stock 15. Multi-national – one having been
corporations. Corporations which have created or organized in one state
capital stock divided into shares and are conducts business or activities across
authorized to distribute to the holders of national boundaries and but subject to
such shares dividends or allotments of the the legal sanctions of the countries in
surplus profits on the basis of shares held which they operate.
are stock corporations. All other 16. Non-profit – organized without
corporations are non-stock corporations. contemplation of gains, profits or
dividends to their members on invested
Other kinds of corporations capital.
1. Quasi-corporations – from the word 17. De Jure – one created in strict or
“quasi”, meaning “as if”, are entities substantial conformity with the
that are not absolutely corporations but statutory requirements for
are considered as if they were. Eg. incorporation and whose right to exist
Public boards created by law as a corporation cannot be successfully

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attacked even in a direct proceeding for 2. The formulation of business and

that purpose by the State. financial plans.
3. Assembling the enterprise by
Sec. 4. Corporations created by special negotiations and obtaining some
laws or charters. – Corporations created by control over the subject matter by
special laws or charters shall be governed option or contracts made on behalf of
primarily by the provisions of the special the proposed corporation or on his own
law or charter creating them or applicable credit.
to them, supplemented by the provisions of 4. The making of arrangements for
this Code, insofar as they are applicable. financing the enterprise and the
floatation of securities.
Sec. 5. Corporators and incorporators, 5. Arrange tactful and painless methods
stockholders, and members. – Corporators for getting his own reward for the task
are those who compose a corporation, of promotion out of the prospective
whether as stockholders or members. investors and for reimbursement for his
Incorporators are those stockholders or expenses, contracts, and services
members mentioned in the articles of without frightening away those who are
incorporation as originally forming and expected to provide the funds.
composing the corporation and who are
signatories thereof. General rule: A corporation is not bound by
any agreement made by a promoter.
Corporators in a stock corporation are Exception to the rule: Unless and until the
called stock-holders or shareholders. corporation approves the agreement.
Corporators in a non-stock corporation are
called members. Sec. 6. Classification of shares. – The
shares of stock of stock corporations may
Components of a Corporation be divided into classes or series of shares,
1. Corporators – are those who composed or both, any of which classes or series of
a corporation, whether as stockholders shares may have such rights, privileges or
of members. The term includes restrictions as may be stated in the articles
incorporators, stockholders or of incorporation: Provided, That no share
members. may be deprived of voting rights except
2. Incorporators – are those stockholders those classified and issued as “preferred” or
or members mentioned in the articles “redeemable” shares, unless otherwise
of incorporation as originally forming provided in this Code: Provided, further,
and composing the corporation and That there shall always be a class or series
who are signatories thereof. of shares which have complete voting
3. Stockholders or shareholders – are rights. Any or all of the shares or series of
those corporators in a stock shares may have a par value or have no par
corporation. value as may be provided for in the articles
4. Members – are those corporators in a of incorporation: Provided, however, That
non-stock corporation. banks, trust companies, insurance
5. Promoters – is a self-constituted companies, public utilities, and building and
organizer who finds an enterprise or loan associations shall not be permitted to
venture and helps to attract investors, issue no-par value shares of stock.
form a corporation and launch it in
business, all with a view to promotion Preferred shares of stock issued by any
profits. corporation may be given preference in the
distribution of the assets of the corporation
Promotion – is the act of procuring the in case of liquidation and in the distribution
initial finances and the making of all of dividends, or such other preferences as
preparations necessary to launch a may be stated in the articles of
corporation. incorporation which are not violative of the
provisions of this Code: Provided, That
Activities of a promoter preferred shares of stock may be issued
1. The discovery and investigation of a only with a stated par value. The board of
promising business opportunity. directors, where authorized in the articles
of incorporation, may fix the terms and

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conditions of preferred shares of stock or 8. Dissolution of the corporation.

any series thereof: Provided, That such
terms and conditions shall be effective Except as provided in the immediately
upon the filing of a certificate thereof with preceding paragraph, the vote necessary to
the Securities and Exchange Commission. approve a particular corporate act as
provided in this Code shall be deemed to
Shares of capital stock issued without par refer only to stocks with voting rights.
value shall be deemed fully paid and non-
assessable and the holder of such shares Definition
shall not be liable to the corporation or to A “stock” or share of stock is one of the
its creditors in respect thereto: Provided; units into which the capital stock has been
That shares without par value may not be divided. It represents the interest or right
issued for a consideration less than the that the holder of the stock or stockholder
value of five (P5.00) pesos per share: has in the corporation.
Provided, further, That the entire
consideration received by the corporation A stock certificate certifies that one is a
for its no-par value shares shall be treated holder or owner of a certain number of
as capital and shall not be available for shares of stock in the corporation. It is a
distribution as dividends. mere documentary evidence of the holder’s
ownership of shares and a convenient
A corporation may, furthermore, classify its instrument for the transfer of title.
shares for the purpose of insuring
compliance with constitutional or legal Classes or series of shares of stock subject
requirements. to restrictions
1. Shares shall not be deprived of voting
Except as otherwise provided in the articles rights except preferred or redeemable
of incorporation and stated in the shares but non-voting shares must still
certificate of stock, each share shall be be entitles to vote on matters specified
equal in all respects to every other share. in the last paragraph of Section 6 like
Where the articles of incorporation provide matters relating to amendment of the
for non-voting shares in the cases allowed articles of incorporation and dissolution
by this Code, the holders of such shares of the corporation.
shall nevertheless be entitled to vote on the 2. Where non-voting shares are provided
following matters: for there must always be a class or
series of shares with complete voting
1. Amendment of the articles of rights.
incorporation. 3. Banks, trust companies, insurance
companies, public utilities, and building
2. Adoption and amendment of by-laws. and loan associations shall not be
permitted to issue no-par value shares
3. Sale, lease, exchange, mortgage, pledge of stock.
or other disposition of all or 4. Preferred shares of stock which may be
substantially all of the corporate given preference in the distribution of
property. assets in case of liquidation and
distribution of dividends or other
4. Incurring, creating or increasing bonded preferences may be issued only with
indebtedness. stated par value.
5. The terms and conditions of preferred
5. Increase or decrease of capital stock. shares or series thereof may be fixed by
the board of directors only when
6. Merger or consolidation of the authorized by the articles of
corporation with another corporation incorporation the effectivity thereof
or other corporations. shall be reckoned from the filing of
certificate with the SEC.
7. Investment of corporate funds in 6. Shares without par value may not be
another corporation or business in issued for a consideration less than the
accordance with this Code. value of five (P5.00) pesos per share.

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7. Unless otherwise provided by law the 4. Incurring, creating or increasing bonded

rights, privileges or restrictions on indebtedness;
classes or series of shares must be 5. Increase or decrease of capital stock;
stated in the articles of incorporation 6. Merger or consolidation of the
and in the stock certificates. corporation with another corporation
or other corporations;
Classes or series of shares 7. Investment of corporate funds in
1. Voting and Non-Voting Shares; another corporation of business in
General rule: Every member of a non- accordance with the Corporation Code;
stock corporation and every legal owner and
of shares in a stock corporation, has a 8. Dissolution of the corporation.
right to be present and vote at all
corporate meetings. Sec. 7. Founders’ shares. – Founders' shares
Exception to the rule: Unless there is a classified as such in the articles of
stipulation in contrary. incorporation may be given certain rights
2. Par Value and No-Par Value Shares and privileges not enjoyed by the owners of
Par value is the given fixed or definite other stocks, provided that where the
value of a share in the articles of exclusive right to vote and be voted for in
incorporation. the election of directors is granted, it must
3. Common and Preferred Shares. be for a limited period not to exceed five (5)
Preferred shares of stock may be: (a) years subject to the approval of the
preferred as to assets; (b) preferred as Securities and Exchange Commission. The
to dividends. Preferred as to dividends five-year period shall commence from the
may either be cumulative or non- date of the aforesaid approval by the
cumulative, or participating or non- Securities and Exchange Commission.
participating
4. Promotion Shares – are such stocks Definition
issued to those who may originally own Founders’ shares, generally common stock,
the mining ground or valuable rights are given to the founders or promoters of a
connected therewith, in consideration corporation in payment of money expended
of their deeding the same to the mining or services rendered in the promotion of it.
company when the company is
incorporated, or it may mean such stock Sec. 8. Redeemable shares. – Redeemable
as is issued to promoters. shares may be issued by the corporation
5. Shares of Escrow – are shares subject to when expressly so provided in the articles
an escrow agreement, that is, an of incorporation. They may be purchased or
agreement under which the shares are taken up by the corporation upon the
deposited by the grantor or his agent expiration of a fixed period, regardless of
with a third person, to be delivered by the existence of unrestricted retained
the depositary to the vendee or earnings in the books of the corporation,
subscriber only upon the happening of and upon such other terms and conditions
certain conditions. as may be stated in the articles of
6. Founder’s Shares; incorporation, which terms and conditions
7. Redeemable “Callable” Shares; must also be stated in the certificate of
8. Treasury Shares; stock representing said shares.
9. Other shares classified to comply with
constitutional or legal requirements. Definition
Redeemable (“Callable”) shares of stock
Instances when non-voting shares may which are usually preferred are frequently
vote issued subject to redemption at the option
1. Amendment of the articles of of either the corporation, the stockholder,
incorporation; or both, at a definite price representing
2. Adoption and amendment of by-laws; premium above the amount originally paid.
3. Sale, lease, exchange, mortgage, pledge
or other disposition of all or Sinking fund refers to a fund set-up by the
substantially all of the corporate corporation where cash is gradually set
property; aside in order to accumulate the amount
necessary to meet the redemption price of

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redeemable shares of specified dates in the extension as may be determined by the

future. Securities and Exchange Commission.

Sec. 9. Treasury shares. - Treasury shares Sec. 12. Minimum capital stock required of
are shares of stock which have been issued stock corporations. – Stock corporations
and fully paid for, but subsequently incorporated under this Code shall not be
reacquired by the issuing corporation by required to have any minimum authorized
purchase, redemption, donation or through capital stock except as otherwise
some other lawful means. Such shares may specifically provided for by special law, and
again be disposed of for a reasonable price subject to the provisions of the following
fixed by the board of directors. (n) section.

Definition Sec.13. Amount of capital stock to be

Treasury shares are owned by the subscribed and paid for purpose of
corporation having been reacquired by the incorporation. – At least twenty-five
issuing corporation by “purchase, percent (25%) of the authorized capital
redemption, donation or through some stock as stated in the articles of
other lawful means.” It has no voting rights incorporation must be subscribed at the
or rights as to dividends or distributions. time of incorporation, and at least twenty-
five percent (25%) of the total subscription
TITLE II - INCORPORATION AND must be paid upon subscription, the
ORGANIZATION OF PRIVATE balance to be payable on a date or dates
CORPORATIONS fixed in the contract of subscription without
Definition need of call, or in the absence of fixed date
Incorporation is the act of creating a or dates, upon call for payment by the
corporation. board of directors: Provided, however, that
in no case shall the paid-up capital be less
Sec. 10. Number and qualifications of than five thousand (P5,0000) pesos.
incorporators. – Any number of natural
persons not less than five (5) but not more Amount to be subscribed and paid
than fifteen (15), all of legal age and a Illustration:
majority of whom are residents of the If X, Inc. has authorized capital
Philippines, may form a private corporation stock of P100, 000 divided into 1,000 shares
for any lawful purpose or purposes. Each of with par value of P100.00 per share, it must
the incorporators of s stock corporation be shown that at least P25, 000 or 250
must own or be a subscriber to at least one shares of the authorized capital stock must
(1) share of the capital stock of the be subscribed. Of the total subscription of
corporation. P25, 000, at least P6, 250.00 or 25% of total
subscription must be paid. It is not
Qualifications of incorporators necessary that each subscriber pay Twenty-
1. Must be a natural person. five percent (25%) on his subscription. On
2. Must be of legal age. the other hand, where the authorized
capital stock is stated at 2,000 no par value
Sec. 11. Corporate term. – A corporation shares , it must be shown that at least 500-
shall exist for a period not exceeding fifty no par value share have been subscribed.
(50) years from the date of incorporation The basis of computation is on the number
unless sooner dissolved or unless said of shares.
period is extended. The corporate term as
originally stated in the articles of Securities and Exchange
incorporation may be extended for periods Commission (SEC) may conduct compliance
not exceeding fifty (50) years in any single with paid-up capital requirements because
instance by an amendment of the articles of it has come to the knowledge of the
incorporation, in accordance with this Code; Commission that some corporation have
Provided, That no extension can be made been organized merely as fronts for some
earlier than five (5) years prior to the hidden objectives with no real intention of
original or subsequent expiry date(s) unless carrying out the purported purposes in their
there are justifiable reasons for an earlier articles of incorporation. If a bigger capital

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stock is required, the abuse of the privileges the Philippines, and no association,
of a corporation would be minimized. partnership, or corporation the capital
of which is not wholly owned by citizens
Capital stock requirements under the of the Philippines, shall engage directly
special laws or indirectly in the retail trade business.
1. In case of mining and agricultural
incorporation, or corporation organized 7. Only vessels of domestic ownership are
for the purpose of the disposition , authorized to engage in coastwise
exploitation, development or utilization shipping in the Philippines. Vessels are
of natural resources of the Philippines, considered of domestic ownership
as well as corporation organized for the when such ownership is vested in some
operations of public utilities, the one or more of the following: (1)
Constitution provides that at least 60 % Citizens of the Philippines; (2) any
of the capital stock of such corporation corporation or any company composed
must be owned by citizens of the wholly of the citizens of the Philippines;
Philippines. (3) any corporation or company created
under the laws of the Philippines,
2. The Insurance Code provide that “no provided at least 75% of the capital
domestic insurance company shall, if a stock thereof or of any interested in
stock corporation, engage in business in said capital is wholly owned by the
the Philippines unless posses of a paid citizens of the Philippines.
up capital stock equal to at least two
million pesos”. Where the insurance Sec.14. Contents of articles of the
company is to engage in insurance incorporations. – All corporation organized
business it must have a “paid-up capital under this Code shall file with the Securities
stock of at least five million pesos” to and Exchange Commission articles of
be invested in securities specified by incorporation in any of the official
law, which securities are to be languages, duly signed and acknowledged
deposited with the Insurance by all of the incorporators containing
Commissioner. substantially the following matters, except
as otherwise prescribed by this Code or by
3. The Financing Company Act requires special laws:
that “at least sixty per centum of the
capital of financing companies must be 1. The name of the corporation.
owned by citizens of the Philippines and
shall have a paid-up capital of not less 2. The specific purpose or purposes for
than five hundred thousand pesos”. which the corporation is being
incorporated. Where the corporation
4. Commercial banks are required to have have more than one stated purpose,
a paid-up capital of 100 million pesos. the article of incorporation shall state
When a commercial bank having licence which the primary is and which is/are
to operate an expanded foreign the secondary purpose or purposes:
currency deposit system it must have a Provided, That a non-stock corporation
paid-up capital of at least 150 million may not include a purpose which would
pesos and when a commercial bank is change or contradict its nature as such.
authorized to engage in universal
banking it must have a paid up capital 3. The place where the principal office of
of at least 500 million pesos. the corporation is to be located, which
must be within the Philippines.
5. The New Constitution provides that:
“The ownership and management of 4. The term for which the corporation is to
mass media shall be limited to citizens exist.
of the Philippines or to corporations or
association wholly-owned and manage 5. The names, nationalities and residences
by such citizen”. of the incorporators.

6. Under the Retail Trade Nationalization

law “no person who is not a citizen of

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6. The number of directors or trustees Incorporators may choose any name they
which shall not be less than five (5) nor see fit , however strange, uneuphonious, or
more than fifteen (15). unrhetorical it may be , provided it is one
not identical with or prejudicially similar to
7. The names, nationalities and residences a name which has previously been adopted
of the person who shall act as directors by and is being use by another corporation
or trustees until the first regular as its corporate name
directors or trustees are duly elected
and qualified accordance with this Change of Corporate name
Code. The change of the corporate name
doesn’t mean a new corporation, nor the
8. If it be a stock corporation, the amount successor of the original corporation. It is
of its authorized capital stock in lawful the same corporation with a different name
money of the Philippines, the number having its character with no respect change.
of shares which it is divided, and in case The corporation continues, as before,
the shares are par value shares, the par responsible in its new name for all debts or
value of each, the names, nationalities other liabilities it had previously contracted
and residences of the original or incurred.
subscriber, and the amount subscribed
and paid by each on his subscription, 2. Specific purpose or purposes.
and if some or all of the shares are The statement of the purpose has its
without par value, such fact must be principal function the affirmative
stated. authorization of the management to enter
into those contracts and business
9. If it be a non-stock corporation, the transactions which may be considered as
amount of its capital, the names, incidental to its attainment of the purposes.
nationalities and residences of the It also imposes implied limitations of their
contributors and the amount, authority by the exclusion of lines of activity
contributed by each. which are not covered.

10. Such other matters are not inconsistent 3. Principal office of the Corporation.
with law and which the incorporators The principal office of the corporation must
may deem necessary and convenient. be within the Philippines. It is where the
books of the corporation are kept and its
The Securities and Exchange Commission officers usually and ordinarily meet for the
shall not accept the articles of incorporation purpose of managing the affairs and
of any stock corporation unless transactions of the business of the
accompanied by a sworn statement of the corporation.
Treasurer elected by the subscriber
showing that at least 25% of the authorized 4. Terms of Existence of the Corporation.
capital stock of the corporation has been The corporation shall exist for a period not
subscribed, and at least 25% of the total exceeding fifty (50) years from the date of
subscription has been fully paid to him in incorporation unless sooner dissolved or
actual cash and/or in property the fair unless said period is extended.
valuation of which are equal to at least 25%
of the said subscription , such paid up 5. Names, Nationalities and residences of
capital being not less than five-thousand incorporators.
pesos (P5,000). The names, nationalities and residences of
the incorporators must be stated in the
Sec.15. Forms of Articles of Incorporation. articles of the corporation for the purpose
– Unless otherwise prescribed by special of complying with legal requirement that
law, articles of incorporation of all domestic majority of the incorporators must be
corporations shall supply substantially the residents of the Philippines and complying
following requirements in the form as with the statutory requirement on share
provided for by the SEC: ownership and in other instances where
Filipino Citizens are required.
1. The name of the corporation.
6. Number of directors and trustees.

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The number of the director and trustees Property as subscription payment –

must not be less than five (5) nor more than Generally, all forms of tangible properties
fifteen (15). are acceptable for purposes of payment to
subscription provided that the three test of
7. Names, nationalities and residences of paid-up capital determination are complied
directors. with, i.e., ownership, existence and
A majority of the directors or trustees of all valuable, subject to certain restrictions as
corporation organized under this Code must may be imposed by law.
be a residents citizens of the Philippines.
SEC adopted the policy that
8. Amount of authorized capital stock. discourages the inclusion of intangible
A stock corporation must state the “amount assets as goodwill, lease-hold rights, or
of its authorized capital stock in lawful timber concession rights, payment of such
money of the Philippines, the number of properties Motor vehicle, real estate
shares into which it is divided, and in case properties and navigable vessels in payment
the shares are par value shares, the par of pre-incorporation subscription, increases
value of each, the names, nationalities, and of capital stock or in exchange for additional
residences of the original subscribers, and issuance of shares are allowed only by the
the amount subscribed and paid by each on SEC provided that:
his subscription, and if some or all the 1. There has been a proof of valid
shares are without par value, such fact must transfer;
be stated”. 2. All taxes due from the properties
has been paid; and
9. Non-stock Corporation. 3. Such properties have been
The Corporation Code requires the articles reasonably valued.
of the non-stock corporation to states: the
amount of its capital, the names, Papers to accompany articles with SEC
nationalities and residences of its The SEC requires the following papers to be
contributors and the amount contributed submitted to it with the articles of
by each. A non-stock corporation may have incorporation:
capital but it has no authorized capital 1. A verification slip executed by the
stock. Chief of the Record Section states
that the proposed name of the
10. Inclusion of other matters. corporation has been verified and
The articles of incorporation “may include found to be distinct/ not similar to
other matters that is not inconsistent with the names of already existing
law and which the incorporators may deem corporation or those pending
necessary and convenient”. registration.
2. Written undertaking to change
Sworn Statement of the Treasurer corporate name in case there is a
The Securities and Exchange Commission person, firm or entity with a prior
shall not accept the articles of incorporation right to the use of said name or one
of any stock corporation unless similar to it.
accompanied by a sworn statement of the 3. Sworn statement of assets and
Treasurer elected by the subscribers liabilities, duly executed under oath
showing that at least: by the corporate treasurer together
with the amount P50.00 to defray
1. 25% of the authorized capital stock has publication expenses.
been subscribed. 4. Bank certificate of deposit, issued
under oath by the bank manager or
2. 25% of the subscription has been fully any authorized bank officer, that
paid in actual cash or property. there is a deposit of the stated
amount representing the paid-up
3. The paid-up capital being not less than capital of the corporation either in
P5,000.00. the name of the treasurer in trust
for the corporation or in the name
SEC Policy of the corporation itself.

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5. Written authority to verify bank Law reserves the rights to modify the
deposit signed by the corporate charter
treasurer empowering the SEC and The constitution and the Corporation Code
/or the Central bank to check and reserved the right to amend the charter of a
inspect the existence of the bank private corporation. The constitution
deposit of the corporate paid-up provides that “no franchise or right be
capital. granted except under the condition that it
6. Taxpayer account number of the shall be subject to amendment, alteration,
incorporators pursuant to Executive or repeal by the National Assembly when
order No. 213. public interest so requires.
7. Registration Data Sheet, a
statement in statistical data form, Amendment of Articles of Incorporation
signed by an authorized The articles of incorporation may be
representative of the corporation amended for legitimate purposes that refer
regarding important information to any matter stated in the articles of
about the corporate seal, incorporation. It may refer to:
corporate name, principal office, 1. Change of corporate name;
capital structure, their subscription 2. Extension of term of corporation;
and TAN (SEC Bulletin, Oct. 1982). 3. Change in classes or series of shares;
4. Change in rights, privileges or
Sec. 16. Amendment of Articles of restrictions in share ownership;
Incorporation. – Unless otherwise 5. Increase or decrease in the number of
prescribed by this Code or by special law, directors; and
and for legitimate purposes, any provision 6. Change in purpose or purposes and
or matter stated in the articles of other necessary changes.
incorporation may be amended by a
majority vote of the board of directors or Vote or recent assent required in
trustees and the vote or written assent of amendment of the articles of incorporation
the stockholders representing at least two- shall be as follows:
thirds (2/3) of the outstanding capital stock, Stock Corporation – A majority vote of the
without prejudice to the appraisal rights of directors or trustees and the vote or written
dissenting stockholders in accordance with assent of the stockholders representing at
the provision of this Code, or the vote or least two- thirds (2/3) of the outstanding
written assent of two-thirds (2/3) of the capital stock. Under section 81 of the Code,
members if it be a non-stock corporation. a dissenting stockholder may exercise his
appraisal right if he is against the
The original and amended articles amendment to be made and demand
altogether shall contain all provision payment of the fair value of his shares.
required by law to be set out in the articles
of incorporation. Such articles, as amended Non-stock Corporation – A majority vote of
shall be indicated by underscoring the board of directors and the vote or written
change or changes made, and the copy assent of 2/3 of the members.
thereof duly certified under oath by the
corporate secretary and the majority of the The amendments to the articles of
directors or trustees stating the fact that incorporation shall take effect upon its
said amendments have been duly approved approval by the Securities and Exchange
by the required vote of the stockholders or Commission or from the filing with the said
members, shall be submitted to the Commission if not acted upon within six
Securities and Exchange Commission. months from the date of filing for a cause
not attributable to the corporation.
The amendment shall take effect upon its
approval by the Securities and Exchange Sec. 17. Grounds when articles of
Commission or from the date of filing with incorporation or amendment may be
the said Commission if not acted upon rejected or disapproved. – The Securities
within six (6) months from the date of filing and Exchange Commission may reject the
for a cause not attributable to the articles of incorporation or disapproved any
corporation. amendment thereto if the same is not in
compliance with the requirements of this

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Code: Provided, That the Commission shall by which the corporation can be identified
give the incorporators a reasonable time and distinguished from other corporation,
within which to correct or modify the firms or entities.
objectionable portions of the articles or
amendment. The following are grounds for Change of corporate name
such amendment or disapproval: A corporation may change its name by
merely amending its charter in the manner
1. That the articles of incorporation or any prescribed by law. The change of name of
amendment thereto is not substantially the corporation does not result in
in accordance with the form prescribed dissolution. The changing of the name of a
herein. corporation is no more the creation of a
corporation than the changing of the name
2. That the purpose or purposes of the of a natural person.
corporation are patently
unconstitutional, illegal, immoral, or Restriction in use in certain names of
contrary to government rules and words
regulation. There are special laws prohibiting the use of
certain names and/or words. Thus, under
3. That the Treasurer’s Affidavit the General Banking Act, no person or
concerning the amount of capital stock entity not conducting the business of
subscribed and/or paid is false. commercial banking shall use the words
“bank”, “banking”, “banker”, “building and
4. That the required percentage of loan association”, “trust corporation”, etc.
ownership of the capital stock to be or words of similar import. The word
owned by citizens of the Philippines has “National” under Act 2612 may not be use
not been complied with as required by by those doing business as bankers,
existing laws of the constitution. brokers, or savings institutions. “United
Nations” both in its full and abbreviated
No articles of incorporation or amendment forms, for commercial and business
to articles of incorporation of banks, purposes. There are other names or words
banking and quasi-banking institutions, which pursuant to other special laws may
building and loan association, trust not be used.
companies, public utilities, educational
institution, and other corporations Sec. 19. Commencement of Corporate
governed by special laws shall be accepted Existence. – A private corporation formed
or approved by the Commission unless or organized under this Code commences to
accompanied by a favourable have corporate existence and juridical
recommendation of the appropriate personality and is deemed incorporated
government agency to the effect that such from the date the Securities and Exchange
articles or amendment is in accordance with Commission issues a certificate of
law. incorporation under its official seal; and
thereupon the incorporators,
Sec. 18. Corporate name. – No corporate stockholders/members, and their
name may be allowed by the Securities and successors shall constitute a body politic
Exchange Commission if the proposed name and corporate under the name stated in the
is identical or deceptively or confusingly articles of incorporation for the period of
similar to that of any existing corporation or time mentioned therein, unless said period
to any other name already protected by law is extended or the corporation is sooner
or its patently deceptive, confusing or dissolved in accordance with law.
contrary to existing laws. When the change
in a corporate name is approved, the Sec. 20. De Facto corporation. – The due
commission shall issue an amended incorporation any corporation claiming in
certificate of incorporation under the good faith to be a corporation under this
amended name. Code, and its right to exercise corporate
powers, shall not be inquired into
Necessity of Corporate name collaterally in any private suit to which such
It is necessary that a corporation should corporation may be a party. Such inquiry
have a name because that is the only way

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