Corporation Code Batas Pambansa Bilang 68

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    Batas Pambansa Bilang 68

    THE CORPORATION CODE OF THE PHILIPPINES

    Be it enacted by the Batasang Pambansa in session assembled:

    TITLE I GENERAL PROVISIONS

    DEFINITIONS AND CLASSIFICATIONS

    Seti!n "#Title of the Code. This Code shall be known as The Corporation Code of the Philippines. (n)

    Seti!n $#Corporation defined. A corporation is an artificial being created by operation of law, haing the right of s!ccession and thpowers, attrib!tes and properties e"pressly a!thori#ed by law or incident to its e"istence. ($)

    Seti!n %#Classes of corporations. Corporations for%ed or organi#ed !nder this Code %ay be stock or non&stock corporationCorporations which hae capital stock diided into shares and are a!thori#ed to distrib!te to the holders of s!ch shares diidends oallot%ents of the s!rpl!s profits on the basis of the shares held are stock corporations. All other corporations are non&stock corporation('a)

    Seti!n Corporations created by special laws or charters. Corporations created by special laws or charters shall be goernepri%arily by the proisions of the special law or charter creating the% or applicable to the%, s!pple%ented by the proisions of this Code

    insofar as they are applicable. (n)

    Seti!n '#Corporators and incorporators, stockholders and members. Corporators are those who co%pose a corporation, whether astockholders or as %e%bers. ncorporators are those stockholders or %e%bers %entioned in the articles of incorporation as originallfor%ing and co%posing the corporation and who are signatories thereof.

    Corporators in a stock corporation are called stockholders or shareholders. Corporators in a non&stock corporation are called %e%bers(a)

    Seti!n 6#Classification of shares. The shares of stock of stock corporations %ay be diided into classes or series of shares, or bothany of which classes or series of shares %ay hae s!ch rights, priileges or restrictions as %ay be stated in the articles of incorporationProided, That no share %ay be depried of oting rights e"cept those classified and iss!ed as preferred or redee%able shares!nless otherwise proided in this Code* Proided, f!rther, That there shall always be a class or series of shares which hae co%pletoting rights. Any or all of the shares or series of shares %ay hae a par al!e or hae no par al!e as %ay be proided for in the article

    of incorporation* Proided, howeer, That banks, tr!st co%panies, ins!rance co%panies, p!blic !tilities, and b!ilding and loaassociations shall not be per%itted to iss!e no&par al!e shares of stock.

    Preferred shares of stock iss!ed by any corporation %ay be gien preference in the distrib!tion of the assets of the corporation in case oli+!idation and in the distrib!tion of diidends, or s!ch other preferences as %ay be stated in the articles of incorporation which are noiolatie of the proisions of this Code* Proided, That preferred shares of stock %ay be iss!ed only with a stated par al!e. The board odirectors, where a!thori#ed in the articles of incorporation, %ay fi" the ter%s and conditions of preferred shares of stock or any seriethereof* Proided, That s!ch ter%s and conditions shall be effectie !pon the filing of a certificate thereof with the ec!rities an-"change Co%%ission.

    hares of capital stock iss!ed witho!t par al!e shall be dee%ed f!lly paid and non&assessable and the holder of s!ch shares shall nobe liable to the corporation or to its creditors in respect thereto* Proided That shares witho!t par al!e %ay not be iss!ed for consideration less than the al!e of fie (P/.00) pesos per share* Proided, f!rther, That the entire consideration receied by thcorporation for its no&par al!e shares shall be treated as capital and shall not be aailable for distrib!tion as diidends.

    A corporation %ay, f!rther%ore, classify its shares for the p!rpose of ins!ring co%pliance with constit!tional or legal re+!ire%ents.

    -"cept as otherwise proided in the articles of incorporation and stated in the certificate of stock, each share shall be e+!al in all respecto eery other share.

    1here the articles of incorporation proide for non&oting shares in the cases allowed by this Code, the holders of s!ch shares shaneertheless be entitled to ote on the following %atters*

    2. A%end%ent of the articles of incorporation

    $. Adoption and a%end%ent of by&laws

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    '. ale, lease, e"change, %ortgage, pledge or other disposition of all or s!bstantially all of the corporate property

    . nc!rring, creating or increasing bonded indebtedness

    /. ncrease or decrease of capital stock

    3. 4erger or consolidation of the corporation with another corporation or other corporations

    5. nest%ent of corporate f!nds in another corporation or b!siness in accordance with this Code and

    6. 7issol!tion of the corporation.

    -"cept as proided in the i%%ediately preceding paragraph, the ote necessary to approe a partic!lar corporate act as proided in thCode shall be dee%ed to refer only to stocks with oting rights. (/a)

    Seti!n (#Founders shares. 8o!nders9 shares classified as s!ch in the articles of incorporation %ay be gien certain rights anpriileges not en:oyed by the owners of other stocks, proided that where the e"cl!sie right to ote and be oted for in the election odirectors is granted, it %!st be for a li%ited period not to e"ceed fie (/) years s!b:ect to the approal of the ec!rities and -"changCo%%ission. The fie&year period shall co%%ence fro% the date of the aforesaid approal by the ec!rities and -"change Co%%ission(n)

    Seti!n 8#edeemable shares. ;edee%able shares %ay be iss!ed by the corporation when e"pressly so proided in the articles oincorporation. They %ay be p!rchased or taken !p by the corporation !pon the e"piration of a fi"ed period, regardless of the e"istence o!nrestricted retained earnings in the books of the corporation, and !pon s!ch other ter%s and conditions as %ay be stated in the articleof incorporation, which ter%s and conditions %!st also be stated in the certificate of stock representing said shares. (n)

    Seti!n )#Treasury shares. Treas!ry shares are shares of stock which hae been iss!ed and f!lly paid for, b!t s!bse+!entreac+!ired by the iss!ing corporation by p!rchase, rede%ption, donation or thro!gh so%e other lawf!l %eans. !ch shares %ay again bdisposed of for a reasonable price fi"ed by the board of directors. (n)

    TITLE II

    INCORPORATION AND ORGANI*ATION OF PRIVATE CORPORATIONS

    Seti!n "+#!umber and "ualifications of incorporators. Any n!%ber of nat!ral persons not less than fie (/) b!t not %ore than fiftee(2/), all of legal age and a %a:ority of who% are residents of the Philippines, %ay for% a priate corporation for any lawf!l p!rpose op!rposes. -ach of the incorporators of s stock corporation %!st own or be a s!bscriber to at least one (2) share of the capital stock of th

    corporation. (3a)

    Seti!n ""#Corporate term. A corporation shall e"ist for a period not e"ceeding fifty (/0) years fro% the date of incorporation !nlessooner dissoled or !nless said period is e"tended. The corporate ter% as originally stated in the articles of incorporation %ay be"tended for periods not e"ceeding f ifty (/0) years in any single instance by an a%end%ent of the articles of incorporation, in accordancwith this Code Proided, That no e"tension can be %ade earlier than fie (/) years prior to the original or s!bse+!ent e"piry date(s!nless there are :!stifiable reasons for an earlier e"tension as %ay be deter%ined by the ec!rities and -"change Co%%ission. (3)

    Seti!n "$##inimum capital stock re"uired of stock corporations. tock corporations incorporated !nder this Code shall not bre+!ired to hae any %ini%!% a!thori#ed capital stock e"cept as otherwise specifically proided for by special law, and s!b:ect to thproisions of the following section.

    Seti!n "%#$mount of capital stock to be subscribed and paid for the purposes of incorporation. At least twenty&fie percent ($/

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    '. The place where the principal office of the corporation is to be located, which %!st be within the Philippines

    . The ter% for which the corporation is to e"ist

    /. The na%es, nationalities and residences of the incorporators

    3. The n!%ber of directors or tr!stees, which shall not be less than fie (/) nor %ore than fifteen (2/)

    5. The na%es, nationalities and residences of persons who shall act as directors or tr!stees !ntil the first reg!lar directors or tr!stees ard!ly elected and +!alified in accordance with this Code

    6. f it be a stock corporation, the a%o!nt of its a!thori#ed capital stock in lawf!l %oney of the Philippines, the n!%ber of shares intwhich it is diided, and in case the share are par al!e shares, the par al!e of each, the na%es, nationalities and residences of thoriginal s!bscribers, and the a%o!nt s!bscribed and paid by each on his s!bscription, and if so%e or all of the shares are witho!t paal!e, s!ch fact %!st be stated

    >. f it be a non&stock corporation, the a%o!nt of its capital, the na%es, nationalities and residences of the contrib!tors and the a%o!ncontrib!ted by each and

    20. !ch other %atters as are not inconsistent with law and which the incorporators %ay dee% necessary and conenient.

    The ec!rities and -"change Co%%ission shall not accept the articles of incorporation of any stock corporation !nless acco%panied by sworn state%ent of the Treas!rer elected by the s!bscribers showing that at least twenty&fie ($/

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    HTG* That the n!%ber of directors or tr!stees of the corporation shall be and the na%es, nationalities and residences of thfirst directors or tr!stees of the corporation are as follows*

    BA4- [email protected] ;-7-BC-

    -I-BTG* That the a!thori#ed capital stock of the corporation is (P) P- in lawf!l %oney the Philippines, diided into shares with the par al!e of (P) Pesos per share.

    (n case all the share are witho!t par al!e)*

    That the capital stock of the corporation is shares witho!t par al!e. (n case so%e shares hae par al!e and so%are witho!t par al!e)* That the capital stock of said corporation consists of shares of which shares arof the par al!e of (P) P- each, and of which shares are witho!t paal!e.

    -JGTG* That at least twenty fie ($/

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    (4odify Bos. 6 and > if shares are with no par al!e. n case the corporation is non&stock, Bos. 5, 6 and > of the aboe articles %ay be%odified accordingly, and it is s!fficient if the articles state the a%o!nt of capital or %oney contrib!ted or donated by specified personsstating the na%es, nationalities and residences of the contrib!tors or donors and the respectie a%o!nt gien by each.)

    T-BTG* That has been elected by the s!bscribers as Treas!rer of the Corporation to act as s!ch !ntil hs!ccessor is d!ly elected and +!alified in accordance with the by&laws, and that as s!ch Treas!rer, he has been a!thori#ed to receie foand in the na%e and for the benefit of the corporation, all s!bscription (or fees) or contrib!tions or donations paid or gien by thes!bscribers or %e%bers.

    [email protected]* (Corporations which will engage in any b!siness or actiity resered for 8ilipino citi#ens shall proide the following)*

    Bo transfer of stock or interest which shall red!ce the ownership of 8ilipino citi#ens to less than the re+!ired percentage of the capitastock as proided by e"isting laws shall be allowed or per%itted to be recorded in the proper books of the corporation and this restrictioshall be indicated in all stock certificates iss!ed by the corporation.

    B 1TB- 1G-;-8, we hae here!nto signed these Articles of ncorporation, this day of , 2 in the City=4!nicipality of , Proince of , ;ep!blic of the Philippines.

    (Ba%es and signat!res of the incorporators)

    JB-7 B TG- P;--BC- 8*

    (Botarial Acknowledg%ent)

    T;-A?;-;9 A887AIT

    ;[email protected] 8 TG- [email protected])

    [email protected] 8 ) ..

    P;IBC- 8 )

    , , being d!ly sworn, depose and say*

    That hae been elected by the s!bscribers of the corporation as Treas!rer thereof, to act as s!ch !ntil %y s!ccessor has been d!lelected and +!alified in accordance with the by&laws of the corporation, and that as s!ch Treas!rer, hereby certify !nder oath that aleast $/< of the a!thori#ed capital stock of the corporation has been s!bscribed and at least $/< of the total s!bscription has been paiand receied by %e, in cash or property, in the a%o!nt of not less than P/,000.00, in accordance with the Corporation Code.

    (ignat!re of Treas!rer)

    ?EC;E-7 AB7 1;B to before %e, a Botary P!blic, for and in the City=4!nicipality ofProince o, this day of , 2> by with ;es. Cert. Bo. iss!ed at on , 2>

    BTA;F [email protected]

    4y co%%ission e"pires on

    , 2>

    7oc. Bo.

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    Page Bo.

    Eook Bo.

    eries of 2> (5a)

    Seti!n "6#$mendment of $rticles of %ncorporation. ?nless otherwise prescribed by this Code or by special law, and for legiti%ap!rposes, any proision or %atter stated in the articles of incorporation %ay be a%ended by a %a:ority ote of the board of directors otr!stees and the ote or written assent of the stockholders representing at least two&thirds ($=') of the o!tstanding capital stock, witho!pre:!dice to the appraisal right of dissenting stockholders in accordance with the proisions of this Code, or the ote or written assent of aleast two&thirds ($=') of the %e%bers if it be a non&stock corporation.

    The original and a%ended articles together shall contain all proisions re+!ired by law to be set o!t in the articles of incorporation. !charticles, as a%ended shall be indicated by !nderscoring the change or changes %ade, and a copy thereof d!ly certified !nder oath by thcorporate secretary and a %a:ority of the directors or tr!stees stating the fact that said a%end%ent or a%end%ents hae been d!approed by the re+!ired ote of the stockholders or %e%bers, shall be s!b%itted to the ec!rities and -"change Co%%ission.

    The a%end%ents shall take effect !pon their approal by the ec!rities and -"change Co%%ission or fro% the date of filing with the saCo%%ission if not acted !pon within si" (3) %onths fro% the date of filing for a ca!se not attrib!table to the corporation.

    Seti!n "(#&rounds when articles of incorporation or amendment may be re'ected or disappro(ed. The ec!rities and -"changCo%%ission %ay re:ect the articles of incorporation or disapproe any a%end%ent thereto if the sa%e is not in co%pliance with thre+!ire%ents of this Code* Proided, That the Co%%ission shall gie the incorporators a reasonable ti%e within which to correct or %odifthe ob:ectionable portions of the articles or a%end%ent. The following are gro!nds for s!ch re:ection or disapproal*

    2. That the articles of incorporation or any a%end%ent thereto is not s!bstantially in accordance with the for% prescribed herein

    $. That the p!rpose or p!rposes of the corporation are patently !nconstit!tional, illegal, i%%oral, or contrary to goern%ent r!les anreg!lations

    '. That the Treas!rer9s Affidait concerning the a%o!nt of capital stock s!bscribed and=or paid is false

    . That the percentage of ownership of the capital stock to be owned by citi#ens of the Philippines has not been co%plied with as re+!ireby e"isting laws or the Constit!tion.

    Bo articles of incorporation or a%end%ent to articles of incorporation of banks, banking and +!asi&banking instit!tions, b!ilding and loaassociations, tr!st co%panies and other financial inter%ediaries, ins!rance co%panies, p!blic !tilities, ed!cational instit!tions, and othe

    corporations goerned by special laws shall be accepted or approed by the Co%%ission !nless acco%panied by a faorabreco%%endation of the appropriate goern%ent agency to the effect that s!ch articles or a%end%ent is in accordance with law. (n)

    Seti!n "8#Corporate name. Bo corporate na%e %ay be allowed by the ec!rities and -"change Co%%ission if the proposed na%e identical or deceptiely or conf!singly si%ilar to that of any e"isting corporation or to any other na%e already protected by law or patently deceptie, conf!sing or contrary to e"isting laws. 1hen a change in the corporate na%e is approed, the Co%%ission shall iss!an a%ended certificate of incorporation !nder the a%ended na%e. (n)

    Seti!n ")#Commencement of corporate e)istence. A priate corporation for%ed or organi#ed !nder this Code co%%ences to hacorporate e"istence and :!ridical personality and is dee%ed incorporated fro% the date the ec!rities and -"change Co%%ission iss!ea certificate of incorporation !nder its official seal and there!pon the incorporators, stockholders=%e%bers and their s!ccessors shaconstit!te a body politic and corporate !nder the na%e stated in the articles of incorporation for the period of ti%e %entioned therein!nless said period is e"tended or the corporation is sooner dissoled in accordance with law. (n)

    Seti!n $+#*e facto corporations. The d!e incorporation of any corporation clai%ing in good faith to be a corporation !nder this Codeand its right to e"ercise corporate powers, shall not be in+!ired into collaterally in any priate s!it to which s!ch corporation %ay be party. !ch in+!iry %ay be %ade by the olicitor Jeneral in a +!o warranto proceeding. (n)

    Seti!n $"#Corporation by estoppel. All persons who ass!%e to act as a corporation knowing it to be witho!t a!thority to do so shall bliable as general partners for all debts, liabilities and da%ages inc!rred or arising as a res!lt thereof* Proided, howeer, That when ans!ch ostensible corporation is s!ed on any transaction entered by it as a corporation or on any tort co%%itted by it as s!ch, it shall not ballowed to !se as a defense its lack of corporate personality.

    n who ass!%es an obligation to an ostensible corporation as s!ch, cannot resist perfor%ance thereof on the gro!nd that there was ifact no corporation. (n)

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    Seti!n $$#+ffects on nonuse of corporate charter and continuous inoperation of a corporation. f a corporation does not for%alorgani#e and co%%ence the transaction of its b!siness or the constr!ction of its works within two ($) years fro% the date of itsincorporation, its corporate powers cease and the corporation shall be dee%ed dissoled. Goweer, if a corporation has co%%enced thtransaction of its b!siness b!t s!bse+!ently beco%es contin!o!sly inoperatie for a period of at least fie (/) years, the sa%e shall be gro!nd for the s!spension or reocation of its corporate franchise or certificate of incorporation. (2>a)

    This proision shall not apply if the fail!re to organi#e, co%%ence the transaction of its b!sinesses or the constr!ction of its works, or tocontin!o!sly operate is d!e to ca!ses beyond the control of the corporation as %ay be deter%ined by the ec!rities and -"changCo%%ission.

    TITLE III

    BOARD OF DIRECTORS,TR-STEES AND OFFICERS

    Seti!n $%#The board of directors or trustees. ?nless otherwise proided in this Code, the corporate powers of all corporations for%e!nder this Code shall be e"ercised, all b!siness cond!cted and all property of s!ch corporations controlled and held by the board odirectors or tr!stees to be elected fro% a%ong the holders of stocks, or where there is no stock, fro% a%ong the %e%bers of thcorporation, who shall hold office for one (2) year !ntil their s!ccessors are elected and +!alified. ($6a)

    -ery director %!st own at least one (2) share of the capital stock of the corporation of which he is a director, which share shall stand inhis na%e on the books of the corporation. Any director who ceases to be the owner of at least one (2) share of the capital stock of thcorporation of which he is a director shall thereby cease to be a director. Tr!stees of non&stock corporations %!st be %e%bers thereof. %a:ority of the directors or tr!stees of all corporations organi#ed !nder this Code %!st be residents of the Philippines.

    Seti!n $+lection of directors or trustees. At all elections of directors or tr!stees, there %!st be present, either in person or brepresentatie a!thori#ed to act by written pro"y, the owners of a %a:ority of the o!tstanding capital stock, or if there be no capital stock,%a:ority of the %e%bers entitled to ote. The election %!st be by ballot if re+!ested by any oting stockholder or %e%ber. n stockcorporations, eery stockholder entitled to ote shall hae the right to ote in person or by pro"y the n!%ber of shares of stock standingat the ti%e fi"ed in the by&laws, in his own na%e on the stock books of the corporation, or where the by&laws are silent, at the ti%e of thelection and said stockholder %ay ote s!ch n!%ber of shares for as %any persons as there are directors to be elected or he %ac!%!late said shares and gie one candidate as %any otes as the n!%ber of directors to be elected %!ltiplied by the n!%ber of hshares shall e+!al, or he %ay distrib!te the% on the sa%e principle a%ong as %any candidates as he shall see fit* Proided, That thtotal n!%ber of otes cast by hi% shall not e"ceed the n!%ber of shares owned by hi% as shown in the books of the corporation%!ltiplied by the whole n!%ber of directors to be elected* Proided, howeer, That no delin+!ent stock shall be oted. ?nless otherwisproided in the articles of incorporation or in the by&laws, %e%bers of corporations which hae no capital stock %ay cast as %any oteas there are tr!stees to be elected b!t %ay not cast %ore than one ote for one candidate. Candidates receiing the highest n!%ber ootes shall be declared elected. Any %eeting of the stockholders or %e%bers called for an election %ay ad:o!rn fro% day to day or fro%ti%e to ti%e b!t not sine die or indefinitely if, for any reason, no election is held, or if there are not present or represented by pro"y, at th%eeting, the owners of a %a:ority of the o!tstanding capital stock, or if there be no capital stock, a %a:ority of the %e%ber entitled to ote

    ('2a)

    Seti!n $'#Corporate officers, "uorum. %%ediately after their election, the directors of a corporation %!st for%ally organi#e by thelection of a president, who shall be a director, a treas!rer who %ay or %ay not be a director, a secretary who shall be a resident andciti#en of the Philippines, and s!ch other officers as %ay be proided for in the by&laws. Any two ($) or %ore positions %ay be heldconc!rrently by the sa%e person, e"cept that no one shall act as president and secretary or as president and treas!rer at the sa%e ti%e

    The directors or tr!stees and officers to be elected shall perfor% the d!ties en:oined on the% by law and the by&laws of the corporation?nless the articles of incorporation or the by&laws proide for a greater %a:ority, a %a:ority of the n!%ber of directors or tr!stees as fi"ein the articles of incorporation shall constit!te a +!or!% for the transaction of corporate b!siness, and eery decision of at least a %a:oriof the directors or tr!stees present at a %eeting at which there is a +!or!% shall be alid as a corporate act, e"cept for the election oofficers which shall re+!ire the ote of a %a:ority of all the %e%bers of the board.

    7irectors or tr!stees cannot attend or ote by pro"y at board %eetings. (''a)

    Seti!n $6#eport of election of directors, trustees and officers. 1ithin thirty ('0) days after the election of the directors, tr!stees anofficers of the corporation, the secretary, or any other officer of the corporation, shall s!b%it to the ec!rities and -"change Co%%issiothe na%es, nationalities and residences of the directors, tr!stees, and officers elected. ho!ld a director, tr!stee or officer die, resign or any %anner cease to hold office, his heirs in case of his death, the secretary, or any other officer of the corporation, or the director, tr!steor officer hi%self, shall i%%ediately report s!ch fact to the ec!rities and -"change Co%%ission. (n)

    Seti!n $(#*is"ualification of directors, trustees or officers. Bo person conicted by final :!dg%ent of an offense p!nishable bi%prison%ent for a period e"ceeding si" (3) years, or a iolation of this Code co%%itted within fie (/) years prior to the date of helection or appoint%ent, shall +!alify as a director, tr!stee or officer of any corporation. (n)

    Seti!n $8#emo(al of directors or trustees. Any director or tr!stee of a corporation %ay be re%oed fro% office by a ote of thstockholders holding or representing at least two&thirds ($=') of the o!tstanding capital stock, or if the corporation be a non&stoc

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    corporation, by a ote of at least two&thirds ($=') of the %e%bers entitled to ote* Proided, That s!ch re%oal shall take place either at reg!lar %eeting of the corporation or at a special %eeting called for the p!rpose, and in either case, after preio!s notice to stockholderor %e%bers of the corporation of the intention to propose s!ch re%oal at the %eeting. A special %eeting of the stockholders or %e%beof a corporation for the p!rpose of re%oal of directors or tr!stees, or any of the%, %!st be called by the secretary on order of thpresident or on the written de%and of the stockholders representing or holding at least a %a:ority of the o!tstanding capital stock, or, if be a non&stock corporation, on the written de%and of a %a:ority of the %e%bers entitled to ote. ho!ld the secretary fail or ref!se to cathe special %eeting !pon s!ch de%and or fail or ref!se to gie the notice, or if there is no secretary, the call for the %eeting %ay baddressed directly to the stockholders or %e%bers by any stockholder or %e%ber of the corporation signing the de%and. Botice of theti%e and place of s!ch %eeting, as well as of the intention to propose s!ch re%oal, %!st be gien by p!blication or by written noticprescribed in this Code. ;e%oal %ay be with or witho!t ca!se* Proided, That re%oal witho!t ca!se %ay not be !sed to depri%inority stockholders or %e%bers of the right of representation to which they %ay be entitled !nder ection $ of this Code. (n)

    Seti!n $)#-acancies in the office of director or trustee. Any acancy occ!rring in the board of directors or tr!stees other than bre%oal by the stockholders or %e%bers or by e"piration of ter%, %ay be filled by the ote of at least a %a:ority of the re%aining directoor tr!stees, if still constit!ting a +!or!% otherwise, said acancies %!st be filled by the stockholders in a reg!lar or special %eeting callefor that p!rpose. A director or tr!stee so elected to fill a acancy shall be elected only or the !ne"pired ter% of his predecessor in office.

    Any directorship or tr!steeship to be filled by reason of an increase in the n!%ber of directors or tr!stees shall be filled only by an electioat a reg!lar or at a special %eeting of stockholders or %e%bers d!ly called for the p!rpose, or in the sa%e %eeting a!thori#ing thincrease of directors or tr!stees if so stated in the notice of the %eeting. (n)

    Seti!n %+#Compensation of directors. n the absence of any proision in the by&laws fi"ing their co%pensation, the directors shall noreceie any co%pensation, as s!ch directors, e"cept for reasonable per die%s* Proided, howeer, That any s!ch co%pensation othethan per die%s %ay be granted to directors by the ote of the stockholders representing at least a %a:ority of the o!tstanding capital stocat a reg!lar or special stockholders9 %eeting. n no case shall the total yearly co%pensation of directors, as s!ch directors, e"ceed te

    (20

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    Seti!n %*isloyalty of a director. 1here a director, by irt!e of his office, ac+!ires for hi%self a b!siness opport!nity which sho!lbelong to the corporation, thereby obtaining profits to the pre:!dice of s!ch corporation, he %!st acco!nt to the latter for all s!ch profits bref!nding the sa%e, !nless his act has been ratified by a ote of the stockholders owning or representing at least two&thirds ($=') of tho!tstanding capital stock. This proision shall be applicable, notwithstanding the fact that the director risked his own f!nds in the ent!r(n)

    Seti!n %'#+)ecuti(e committee. The by&laws of a corporation %ay create an e"ec!tie co%%ittee, co%posed of not less than thre%e%bers of the board, to be appointed by the board. aid co%%ittee %ay act, by %a:ority ote of all its %e%bers, on s!ch specifi%atters within the co%petence of the board, as %ay be delegated to it in the by&laws or on a %a:ority ote of the board, e"cept withrespect to* (2) approal of any action for which shareholders9 approal is also re+!ired ($) the filing of acancies in the board (') tha%end%ent or repeal of by&laws or the adoption of new by&laws () the a%end%ent or repeal of any resol!tion of the board which by it

    e"press ter%s is not so a%endable or repealable and (/) a distrib!tion of cash diidends to the shareholders.

    TITLE IV

    PO.ERS OF CORPORATIONS

    Seti!n %6#Corporate powers and capacity. -ery corporation incorporated !nder this Code has the power and capacity*

    2. To s!e and be s!ed in its corporate na%e

    $. f s!ccession by its corporate na%e for the period of ti%e stated in the articles of incorporation and the certificate of incorporation

    '. To adopt and !se a corporate seal

    . To a%end its articles of incorporation in accordance with the proisions of this Code

    /. To adopt by&laws, not contrary to law, %orals, or p!blic policy, and to a%end or repeal the sa%e in accordance with this Code

    3. n case of stock corporations, to iss!e or sell stocks to s!bscribers and to sell stocks to s!bscribers and to sell treas!ry stocks iaccordance with the proisions of this Code and to ad%it %e%bers to the corporation if it be a non&stock corporation

    5. To p!rchase, receie, take or grant, hold, coney, sell, lease, pledge, %ortgage and otherwise deal with s!ch real and personaproperty, incl!ding sec!rities and bonds of other corporations, as the transaction of the lawf!l b!siness of the corporation %ay reasonaband necessarily re+!ire, s!b:ect to the li%itations prescribed by law and the Constit!tion

    6. To enter into %erger or consolidation with other corporations as proided in this Code

    >. To %ake reasonable donations, incl!ding those for the p!blic welfare or for hospital, charitable, c!lt!ral, scientific, ciic, or si%ilap!rposes* Proided, That no corporation, do%estic or foreign, shall gie donations in aid of any political party or candidate or for p!rposeof partisan political actiity

    20. To establish pension, retire%ent, and other plans for the benefit of its directors, tr!stees, officers and e%ployees and

    22. To e"ercise s!ch other powers as %ay be essential or necessary to carry o!t its p!rpose or p!rposes as stated in the articles oincorporation. (2'a)

    Seti!n %(#Power to e)tend or shorten corporate term. A priate corporation %ay e"tend or shorten its ter% as stated in the articles oincorporation when approed by a %a:ority ote of the board of directors or tr!stees and ratified at a %eeting by the stockholderrepresenting at least two&thirds ($=') of the o!tstanding capital stock or by at least two&thirds ($=') of the %e%bers in case of non&stoc

    corporations. 1ritten notice of the proposed action and of the ti%e and place of the %eeting shall be addressed to each stockholder o%e%ber at his place of residence as shown on the books of the corporation and deposited to the addressee in the post office witpostage prepaid, or sered personally* Proided, That in case of e"tension of corporate ter%, any dissenting stockholder %ay e"ercise happraisal right !nder the conditions proided in this code. (n)

    Seti!n %8#Power to increase or decrease capital stock/ incur, create or increase bonded indebtedness. Bo corporation shall increasor decrease its capital stock or inc!r, create or increase any bonded indebtedness !nless approed by a %a:ority ote of the board odirectors and, at a stockholder9s %eeting d!ly called for the p!rpose, two&thirds ($=') of the o!tstanding capital stock shall faor thincrease or di%in!tion of the capital stock, or the inc!rring, creating or increasing of any bonded indebtedness. 1ritten notice of thproposed increase or di%in!tion of the capital stock or of the inc!rring, creating, or increasing of any bonded indebtedness and of thti%e and place of the stockholder9s %eeting at which the proposed increase or di%in!tion of the capital stock or the inc!rring or increasinof any bonded indebtedness is to be considered, %!st be addressed to each stockholder at his place of residence as shown on the bookof the corporation and deposited to the addressee in the post office with postage prepaid, or sered personally.

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    A certificate in d!plicate %!st be signed by a %a:ority of the directors of the corporation and co!ntersigned by the chair%an and thsecretary of the stockholders9 %eeting, setting forth*

    (2) That the re+!ire%ents of this section hae been co%plied with

    ($) The a%o!nt of the increase or di%in!tion of the capital stock

    (') f an increase of the capital stock, the a%o!nt of capital stock or n!%ber of shares of no&par stock thereof act!ally s!bscribed, thna%es, nationalities and residences of the persons s!bscribing, the a%o!nt of capital stock or n!%ber of no&par stock s!bscribed beach, and the a%o!nt paid by each on his s!bscription in cash or property, or the a%o!nt of capital stock or n!%ber of shares of no&pastock allotted to each stock&holder if s!ch increase is for the p!rpose of %aking effectie stock diidend therefor a!thori#ed

    () Any bonded indebtedness to be inc!rred, created or increased

    (/) The act!al indebtedness of the corporation on the day of the %eeting

    (3) The a%o!nt of stock represented at the %eeting and

    (5) The ote a!thori#ing the increase or di%in!tion of the capital stock, or the inc!rring, creating or increasing of any bondeindebtedness.

    Any increase or decrease in the capital stock or the inc!rring, creating or increasing of any bonded indebtedness shall re+!ire prioapproal of the ec!rities and -"change Co%%ission.

    ne of the d!plicate certificates shall be kept on file in the office of the corporation and the other shall be filed with the ec!rities an-"change Co%%ission and attached to the original articles of incorporation. 8ro% and after approal by the ec!rities and -"changCo%%ission and the iss!ance by the Co%%ission of its certificate of filing, the capital stock shall stand increased or decreased and thinc!rring, creating or increasing of any bonded indebtedness a!thori#ed, as the certificate of filing %ay declare* Proided, That thec!rities and -"change Co%%ission shall not accept for filing any certificate of increase of capital stock !nless acco%panied by thsworn state%ent of the treas!rer of the corporation lawf!lly holding office at the ti%e of the filing of the certificate, showing that at leastwenty&fie ($/

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    Bothing in this section is intended to restrict the power of any corporation, witho!t the a!thori#ation by the stockholders or %e%bers, tsell, lease, e"change, %ortgage, pledge or otherwise dispose of any of its property and assets if the sa%e is necessary in the !s!al andreg!lar co!rse of b!siness of said corporation or if the proceeds of the sale or other disposition of s!ch property and assets bappropriated for the cond!ct of its re%aining b!siness.

    n non&stock corporations where there are no %e%bers with oting rights, the ote of at least a %a:ority of the tr!stees in office will bes!fficient a!thori#ation for the corporation to enter into any transaction a!thori#ed by this section.

    Seti!n &"#Power to ac"uire own shares. A stock corporation shall hae the power to p!rchase or ac+!ire its own shares for legiti%ate corporate p!rpose or p!rposes, incl!ding b!t not li%ited to the following cases* Proided, That the corporation has !nrestricteretained earnings in its books to coer the shares to be p!rchased or ac+!ired*

    2. To eli%inate fractional shares arising o!t of stock diidends

    $. To collect or co%pro%ise an indebtedness to the corporation, arising o!t of !npaid s!bscription, in a delin+!ency sale, and to p!rchasdelin+!ent shares sold d!ring said sale and

    '. To pay dissenting or withdrawing stockholders entitled to pay%ent for their shares !nder the proisions of this Code. (a)

    Seti!n &$#Power to in(est corporate funds in another corporation or business or for any other purpose. !b:ect to the proisions this Code, a priate corporation %ay inest its f!nds in any other corporation or b!siness or for any p!rpose other than the pri%arp!rpose for which it was organi#ed when approed by a %a:ority of the board of directors or tr!stees and ratified by the stockholderrepresenting at least two&thirds ($=') of the o!tstanding capital stock, or by at least two thirds ($=') of the %e%bers in the case of nonstock corporations, at a stockholder9s or %e%ber9s %eeting d!ly called for the p!rpose. 1ritten notice of the proposed inest%ent and th

    ti%e and place of the %eeting shall be addressed to each stockholder or %e%ber at his place of residence as shown on the books of thcorporation and deposited to the addressee in the post office with postage prepaid, or sered personally* Proided, That any dissentinstockholder shall hae appraisal right as proided in this Code* Proided, howeer, That where the inest%ent by the corporation ireasonably necessary to acco%plish its pri%ary p!rpose as stated in the articles of incorporation, the approal of the stockholders o%e%bers shall not be necessary. (25 2=$a)

    Seti!n &%#Power to declare di(idends. The board of directors of a stock corporation %ay declare diidends o!t of the !nrestricteretained earnings which shall be payable in cash, in property, or in stock to all stockholders on the basis of o!tstanding stock held bthe%* Proided, That any cash diidends d!e on delin+!ent stock shall first be applied to the !npaid balance on the s!bscription pl!costs and e"penses, while stock diidends shall be withheld fro% the delin+!ent stockholder !ntil his !npaid s!bscription is f!lly paidProided, f!rther, That no stock diidend shall be iss!ed witho!t the approal of stockholders representing not less than two&thirds ($=') othe o!tstanding capital stock at a reg!lar or special %eeting d!ly called for the p!rpose. (23a)

    tock corporations are prohibited fro% retaining s!rpl!s profits in e"cess of one h!ndred (200

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    B/ LA.S

    Seti!n &6#$doption of bylaws. -ery corporation for%ed !nder this Code %!st, within one (2) %onth after receipt of official notice othe iss!ance of its certificate of incorporation by the ec!rities and -"change Co%%ission, adopt a code of by&laws for its goern%ent noinconsistent with this Code. 8or the adoption of by&laws by the corporation the affir%atie ote of the stockholders representing at least %a:ority of the o!tstanding capital stock, or of at least a %a:ority of the %e%bers in case of non&stock corporations, shall be necessaryThe by&laws shall be signed by the stockholders or %e%bers oting for the% and shall be kept in the principal office of the corporations!b:ect to the inspection of the stockholders or %e%bers d!ring office ho!rs. A copy thereof, d!ly certified to by a %a:ority of the directoror tr!stees co!ntersigned by the secretary of the corporation, shall be filed with the ec!rities and -"change Co%%ission which shall battached to the original articles of incorporation.

    Botwithstanding the proisions of the preceding paragraph, by&laws %ay be adopted and filed prior to incorporation in s!ch case, s!cby&laws shall be approed and signed by all the incorporators and s!b%itted to the ec!rities and -"change Co%%ission, together witthe articles of incorporation.

    n all cases, by&laws shall be effectie only !pon the iss!ance by the ec!rities and -"change Co%%ission of a certification that the bylaws are not inconsistent with this Code.

    The ec!rities and -"change Co%%ission shall not accept for filing the by&laws or any a%end%ent thereto of any bank, bankinginstit!tion, b!ilding and loan association, tr!st co%pany, ins!rance co%pany, p!blic !tility, ed!cational instit!tion or other specicorporations goerned by special laws, !nless acco%panied by a certificate of the appropriate goern%ent agency to the effect that s!cby&laws or a%end%ents are in accordance with law. ($0a)

    Seti!n &(#Contents of bylaws. !b:ect to the proisions of the Constit!tion, this Code, other special laws, and the articles oincorporation, a priate corporation %ay proide in its by&laws for*

    2. The ti%e, place and %anner of calling and cond!cting reg!lar or special %eetings of the directors or tr!stees

    $. The ti%e and %anner of calling and cond!cting reg!lar or special %eetings of the stockholders or %e%bers

    '. The re+!ired +!or!% in %eetings of stockholders or %e%bers and the %anner of oting therein

    . The for% for pro"ies of stockholders and %e%bers and the %anner of oting the%

    /. The +!alifications, d!ties and co%pensation of directors or tr!stees, officers and e%ployees

    3. The ti%e for holding the ann!al election of directors of tr!stees and the %ode or %anner of giing notice thereof

    5. The %anner of election or appoint%ent and the ter% of office of all officers other than directors or tr!stees

    6. The penalties for iolation of the by&laws

    >. n the case of stock corporations, the %anner of iss!ing stock certificates and

    20. !ch other %atters as %ay be necessary for the proper or conenient transaction of its corporate b!siness and affairs. ($2a)

    Seti!n &8#$mendments to bylaws. The board of directors or tr!stees, by a %a:ority ote thereof, and the owners of at least a %a:oritof the o!tstanding capital stock, or at least a %a:ority of the %e%bers of a non&stock corporation, at a reg!lar or special %eeting d!lycalled for the p!rpose, %ay a%end or repeal any by&laws or adopt new by&laws. The owners of two&thirds ($=') of the o!tstanding capitastock or two&thirds ($=') of the %e%bers in a non&stock corporation %ay delegate to the board of directors or tr!stees the power to a%en

    or repeal any by&laws or adopt new by&laws* Proided, That any power delegated to the board of directors or tr!stees to a%end or repeaany by&laws or adopt new by&laws shall be considered as reoked wheneer stockholders owning or representing a %a:ority of tho!tstanding capital stock or a %a:ority of the %e%bers in non&stock corporations, shall so ote at a reg!lar or special %eeting.

    1heneer any a%end%ent or new by&laws are adopted, s!ch a%end%ent or new by&laws shall be attached to the original by&laws in thoffice of the corporation, and a copy thereof, d!ly certified !nder oath by the corporate secretary and a %a:ority of the directors otr!stees, shall be filed with the ec!rities and -"change Co%%ission the sa%e to be attached to the original articles of incorporation anoriginal by&laws.

    The a%ended or new by&laws shall only be effectie !pon the iss!ance by the ec!rities and -"change Co%%ission of a certification ththe sa%e are not inconsistent with this Code. ($$a and $'a)

    TITLE VI

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    0EETINGS

    Seti!n &)#1inds of meetings. 4eetings of directors, tr!stees, stockholders, or %e%bers %ay be reg!lar or special. (n)

    Seti!n '+#egular and special meetings of stockholders or members. ;eg!lar %eetings of stockholders or %e%bers shall be heann!ally on a date fi"ed in the by&laws, or if not so fi"ed, on any date in April of eery year as deter%ined by the board of directors otr!stees* Proided, That written notice of reg!lar %eetings shall be sent to all stockholders or %e%bers of record at least two ($) weekprior to the %eeting, !nless a different period is re+!ired by the by&laws.

    pecial %eetings of stockholders or %e%bers shall be held at any ti%e dee%ed necessary or as proided in the by&laws* Proidedhoweer, That at least one (2) week written notice shall be sent to all stockholders or %e%bers, !nless otherwise proided in the by&laws

    Botice of any %eeting %ay be waied, e"pressly or i%pliedly, by any stockholder or %e%ber.

    1heneer, for any ca!se, there is no person a!thori#ed to call a %eeting, the ec!rities and -"change Co%%ission, !pon petition of stockholder or %e%ber on a showing of good ca!se therefor, %ay iss!e an order to the petitioning stockholder or %e%ber directing hi% tcall a %eeting of the corporation by giing proper notice re+!ired by this Code or by the by&laws. The petitioning stockholder or %e%beshall preside thereat !ntil at least a %a:ority of the stockholders or %e%bers present hae chosen one of their n!%ber as presiding office($, $3)

    Seti!n '"#Place and time of meetings of stockholders of members. tockholder9s or %e%ber9s %eetings, whether reg!lar or speciashall be held in the city or %!nicipality where the principal office of the corporation is located, and if practicable in the principal office of thcorporation* Proided, That 4etro 4anila shall, for p!rposes of this section, be considered a city or %!nicipality.

    Botice of %eetings shall be in writing, and the ti%e and place thereof stated therein.

    All proceedings had and any b!siness transacted at any %eeting of the stockholders or %e%bers, if within the powers or a!thority of thcorporation, shall be alid een if the %eeting be i%properly held or called, proided all the stockholders or %e%bers of the corporatioare present or d!ly represented at the %eeting. ($ and $/)

    Seti!n '$#2uorum in meetings. ?nless otherwise proided for in this Code or in the by&laws, a +!or!% shall consist of thstockholders representing a %a:ority of the o!tstanding capital stock or a %a:ority of the %e%bers in the case of non&stock corporations(n)

    Seti!n '%#egular and special meetings of directors or trustees. ;eg!lar %eetings of the board of directors or tr!stees of eercorporation shall be held %onthly, !nless the by&laws proide otherwise.

    pecial %eetings of the board of directors or tr!stees %ay be held at any ti%e !pon the call of the president or as proided in the by&laws

    4eetings of directors or tr!stees of corporations %ay be held anywhere in or o!tside of the Philippines, !nless the by&laws proidotherwise. Botice of reg!lar or special %eetings stating the date, ti%e and place of the %eeting %!st be sent to eery director or tr!stee aleast one (2) day prior to the sched!led %eeting, !nless otherwise proided by the by&laws. A director or tr!stee %ay waie thre+!ire%ent, either e"pressly or i%pliedly. (n)

    Seti!n 'ho shall preside at meetings. The president shall preside at all %eetings of the directors or tr!stee as well as of thstockholders or %e%bers, !nless the by&laws proide otherwise. (n)

    Seti!n ''#ight to (ote of pledgors, mortgagors, and administrators. n case of pledged or %ortgaged shares in stock corporationsthe pledgor or %ortgagor shall hae the right to attend and ote at %eetings of stockholders, !nless the pledgee or %ortgagee ie"pressly gien by the pledgor or %ortgagor s!ch right in writing which is recorded on the appropriate corporate books. (n)

    -"ec!tors, ad%inistrators, receiers, and other legal representaties d!ly appointed by the co!rt %ay attend and ote in behalf of thstockholders or %e%bers witho!t need of any written pro"y. ($5a)

    Seti!n '6#-oting in case of 'oint ownership of stock. n case of shares of stock owned :ointly by two or %ore persons, in order to otthe sa%e, the consent of all the co&owners shall be necessary, !nless there is a written pro"y, signed by all the co&owners, a!thori#ingone or so%e of the% or any other person to ote s!ch share or shares* Proided, That when the shares are owned in an and=or capaciby the holders thereof, any one of the :oint owners can ote said shares or appoint a pro"y therefor. (n)

    Seti!n '(#-oting right for treasury shares. Treas!ry shares shall hae no oting right as long as s!ch shares re%ain in the Treas!r(n)

    Seti!n '8#Pro)ies. tockholders and %e%bers %ay ote in person or by pro"y in all %eetings of stockholders or %e%bers. Pro"ieshall in writing, signed by the stockholder or %e%ber and filed before the sched!led %eeting with the corporate secretary. ?nles

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    otherwise proided in the pro"y, it shall be alid only for the %eeting for which it is intended. Bo pro"y shall be alid and effectie for period longer than fie (/) years at any one ti%e. (n)

    Seti!n ')#-oting trusts. ne or %ore stockholders of a stock corporation %ay create a oting tr!st for the p!rpose of conferring !poa tr!stee or tr!stees the right to ote and other rights pertaining to the shares for a period not e"ceeding fie (/) years at any ti%eProided, That in the case of a oting tr!st specifically re+!ired as a condition in a loan agree%ent, said oting tr!st %ay be for a periode"ceeding fie (/) years b!t shall a!to%atically e"pire !pon f!ll pay%ent of the loan. A oting tr!st agree%ent %!st be in writing andnotari#ed, and shall specify the ter%s and conditions thereof. A certified copy of s!ch agree%ent shall be filed with the corporation anwith the ec!rities and -"change Co%%ission otherwise, said agree%ent is ineffectie and !nenforceable. The certificate or certificateof stock coered by the oting tr!st agree%ent shall be cancelled and new ones shall be iss!ed in the na%e of the tr!stee or tr!steesstating that they are iss!ed p!rs!ant to said agree%ent. n the books of the corporation, it shall be noted that the transfer in the na%e o

    the tr!stee or tr!stees is %ade p!rs!ant to said oting tr!st agree%ent.

    The tr!stee or tr!stees shall e"ec!te and delier to the transferors oting tr!st certificates, which shall be transferable in the sa%e %anneand with the sa%e effect as certificates of stock.

    The oting tr!st agree%ent filed with the corporation shall be s!b:ect to e"a%ination by any stockholder of the corporation in the sa%%anner as any other corporate book or record* Proided, That both the transferor and the tr!stee or tr!stees %ay e"ercise the right oinspection of all corporate books and records in accordance with the proisions of this Code.

    Any other stockholder %ay transfer his shares to the sa%e tr!stee or tr!stees !pon the ter%s and conditions stated in the oting tr!sagree%ent, and there!pon shall be bo!nd by all the proisions of said agree%ent.

    Bo oting tr!st agree%ent shall be entered into for the p!rpose of circ!%enting the law against %onopolies and illegal co%binations irestraint of trade or !sed for p!rposes of fra!d.

    ?nless e"pressly renewed, all rights granted in a oting tr!st agree%ent shall a!to%atically e"pire at the end of the agreed period, andthe oting tr!st certificates as well as the certificates of stock in the na%e of the tr!stee or tr!stees shall thereby be dee%ed cancelledand new certificates of stock shall be reiss!ed in the na%e of the transferors.

    The oting tr!stee or tr!stees %ay ote by pro"y !nless the agree%ent proides otherwise. ('3a)

    TITLE VII

    STOC1S AND STOC1HOLDERS

    Seti!n 6+#0ubscription contract. Any contract for the ac+!isition of !niss!ed stock in an e"isting corporation or a corporation still to bfor%ed shall be dee%ed a s!bscription within the %eaning of this Title, notwithstanding the fact that the parties refer to it as a p!rchase oso%e other contract. (n)

    Seti!n 6"#Preincorporation subscription. A s!bscription for shares of stock of a corporation still to be for%ed shall be irreocable forperiod of at least si" (3) %onths fro% the date of s!bscription, !nless all of the other s!bscribers consent to the reocation, or !nless thincorporation of said corporation fails to %ateriali#e within said period or within a longer period as %ay be stip!lated in the contract os!bscription* Proided, That no pre&incorporation s!bscription %ay be reoked after the s!b%ission of the articles of incorporation to thec!rities and -"change Co%%ission. (n)

    Seti!n 6$#Consideration for stocks. tocks shall not be iss!ed for a consideration less than the par or iss!ed price thereoConsideration for the iss!ance of stock %ay be any or a co%bination of any two or %ore of the following*

    2. Act!al cash paid to the corporation

    $. Property, tangible or intangible, act!ally receied by the corporation and necessary or conenient for its !se and lawf!l p!rposes at fair al!ation e+!al to the par or iss!ed al!e of the stock iss!ed

    '. @abor perfor%ed for or serices act!ally rendered to the corporation

    . Preio!sly inc!rred indebtedness of the corporation

    /. A%o!nts transferred fro% !nrestricted retained earnings to stated capital and

    3. !tstanding shares e"changed for stocks in the eent of reclassification or conersion.

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    1here the consideration is other than act!al cash, or consists of intangible property s!ch as patents of copyrights, the al!ation thereoshall initially be deter%ined by the incorporators or the board of directors, s!b:ect to approal by the ec!rities and -"changCo%%ission.

    hares of stock shall not be iss!ed in e"change for pro%issory notes or f!t!re serice.

    The sa%e considerations proided for in this section, insofar as they %ay be applicable, %ay be !sed for the iss!ance of bonds by thecorporation.

    The iss!ed price of no&par al!e shares %ay be fi"ed in the articles of incorporation or by the board of directors p!rs!ant to a!thoritconferred !pon it by the articles of incorporation or the by&laws, or in the absence thereof, by the stockholders representing at least a%a:ority of the o!tstanding capital stock at a %eeting d!ly called for the p!rpose. (/ and 23)

    Seti!n 6%#Certificate of stock and transfer of shares. The capital stock of stock corporations shall be diided into shares for whiccertificates signed by the president or ice president, co!ntersigned by the secretary or assistant secretary, and sealed with the seal othe corporation shall be iss!ed in accordance with the by&laws. hares of stock so iss!ed are personal property and %ay be transferreby deliery of the certificate or certificates indorsed by the owner or his attorney&in&fact or other person legally a!thori#ed to %ake thtransfer. Bo transfer, howeer, shall be alid, e"cept as between the parties, !ntil the transfer is recorded in the books of the corporatioshowing the na%es of the parties to the transaction, the date of the transfer, the n!%ber of the certificate or certificates and the n!%ber oshares transferred.

    Bo shares of stock against which the corporation holds any !npaid clai% shall be transferable in the books of the corporation. ('/)

    Seti!n 6%ssuance of stock certificates. Bo certificate of stock shall be iss!ed to a s!bscriber !ntil the f!ll a%o!nt of his s!bscriptio

    together with interest and e"penses (in case of delin+!ent shares), if any is d!e, has been paid. ('5)

    Seti!n 6'#iability of directors for watered stocks. Any director or officer of a corporation consenting to the iss!ance of stocks for consideration less than its par or iss!ed al!e or for a consideration in any for% other than cash, al!ed in e"cess of its fair al!e, or whhaing knowledge thereof, does not forthwith e"press his ob:ection in writing and file the sa%e with the corporate secretary, shall besolidarily, liable with the stockholder concerned to the corporation and its creditors for the difference between the fair al!e receied at thti%e of iss!ance of the stock and the par or iss!ed al!e of the sa%e. (n)

    Seti!n 66#%nterest on unpaid subscriptions. !bscribers for stock shall pay to the corporation interest on all !npaid s!bscriptions frothe date of s!bscription, if so re+!ired by, and at the rate of interest fi"ed in the by&laws. f no rate of interest is fi"ed in the by&laws, s!crate shall be dee%ed to be the legal rate. ('5)

    Seti!n 6(#Payment of balance of subscription. !b:ect to the proisions of the contract of s!bscription, the board of directors of anstock corporation %ay at any ti%e declare d!e and payable to the corporation !npaid s!bscriptions to the capital stock and %ay collec

    the sa%e or s!ch percentage thereof, in either case with accr!ed interest, if any, as it %ay dee% necessary.

    Pay%ent of any !npaid s!bscription or any percentage thereof, together with the interest accr!ed, if any, shall be %ade on the datspecified in the contract of s!bscription or on the date stated in the call %ade by the board. 8ail!re to pay on s!ch date shall render thentire balance d!e and payable and shall %ake the stockholder liable for interest at the legal rate on s!ch balance, !nless a different ratof interest is proided in the by&laws, co%p!ted fro% s!ch date !ntil f!ll pay%ent. f within thirty ('0) days fro% the said date no pay%enis %ade, all stocks coered by said s!bscription shall there!pon beco%e delin+!ent and shall be s!b:ect to sale as hereinafter proided!nless the board of directors orders otherwise. ('6)

    Seti!n 68#*elin"uency sale. The board of directors %ay, by resol!tion, order the sale of delin+!ent stock and shall specifically statthe a%o!nt d!e on each s!bscription pl!s all accr!ed interest, and the date, ti%e and place of the sale which shall not be less than thirt('0) days nor %ore than si"ty (30) days fro% the date the stocks beco%e delin+!ent.

    Botice of said sale, with a copy of the resol!tion, shall be sent to eery delin+!ent stockholder either personally or by registered %ail. Th

    sa%e shall f!rther%ore be p!blished once a week for two ($) consec!tie weeks in a newspaper of general circ!lation in the proince ocity where the principal office of the corporation is located.

    ?nless the delin+!ent stockholder pays to the corporation, on or before the date specified for the sale of the delin+!ent stock, the balancd!e on his s!bscription, pl!s accr!ed interest, costs of adertise%ent and e"penses of sale, or !nless the board of directors otherwisorders, said delin+!ent stock shall be sold at p!blic a!ction to s!ch bidder who shall offer to pay the f!ll a%o!nt of the balance on thes!bscription together with accr!ed interest, costs of adertise%ent and e"penses of sale, for the s%allest n!%ber of shares or fraction oa share. The stock so p!rchased shall be transferred to s!ch p!rchaser in the books of the corporation and a certificate for s!ch stocshall be iss!ed in his faor. The re%aining shares, if any, shall be credited in faor of the delin+!ent stockholder who shall likewise bentitled to the iss!ance of a certificate of stock coering s!ch shares.

    ho!ld there be no bidder at the p!blic a!ction who offers to pay the f!ll a%o!nt of the balance on the s!bscription together with accr!einterest, costs of adertise%ent and e"penses of sale, for the s%allest n!%ber of shares or fraction of a share, the corporation %ay

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    s!b:ect to the proisions of this Code, bid for the sa%e, and the total a%o!nt d!e shall be credited as paid in f!ll in the books of thecorporation. Title to all the shares of stock coered by the s!bscription shall be ested in the corporation as treas!ry shares and %ay bedisposed of by said corporation in accordance with the proisions of this Code. ('>a&3a)

    Seti!n 6)#3hen sale may be "uestioned. Bo action to recoer delin+!ent stock sold can be s!stained !pon the gro!nd of irreg!laritor defect in the notice of sale, or in the sale itself of the delin+!ent stock, !nless the party seeking to %aintain s!ch action first pays otenders to the party holding the stock the s!% for which the sa%e was sold, with interest fro% the date of sale at the legal rate and ns!ch action shall be %aintained !nless it is co%%enced by the filing of a co%plaint within si" (3) %onths fro% the date of sale. (5a)

    Seti!n (+#Court action to reco(er unpaid subscription. Bothing in this Code shall preent the corporation fro% collecting by action in co!rt of proper :!risdiction the a%o!nt d!e on any !npaid s!bscription, with accr!ed interest, costs and e"penses. (>a)

    Seti!n ("#+ffect of delin"uency. Bo delin+!ent stock shall be oted for or be entitled to ote or to representation at any stockholder%eeting, nor shall the holder thereof be entitled to any of the rights of a stockholder e"cept the right to diidends in accordance with thproisions of this Code, !ntil and !nless he pays the a%o!nt d!e on his s!bscription with accr!ed interest, and the costs and e"penses oadertise%ent, if any. (/0a)

    Seti!n ($#ights of unpaid shares. Golders of s!bscribed shares not f!lly paid which are not delin+!ent shall hae all the rights of stockholder. (n)

    Seti!n (%#ost or destroyed certificates. The following proced!re shall be followed for the iss!ance by a corporation of necertificates of stock in lie! of those which hae been lost, stolen or destroyed*

    2. The registered owner of a certificate of stock in a corporation or his legal representatie shall file with the corporation an affidait i

    triplicate setting forth, if possible, the circ!%stances as to how the certificate was lost, stolen or destroyed, the n!%ber of sharerepresented by s!ch certificate, the serial n!%ber of the certificate and the na%e of the corporation which iss!ed the sa%e. Ge shall alss!b%it s!ch other infor%ation and eidence which he %ay dee% necessary

    $. After erifying the affidait and other infor%ation and eidence with the books of the corporation, said corporation shall p!blish a noticin a newspaper of general circ!lation p!blished in the place where the corporation has its principal office, once a week for three ('consec!tie weeks at the e"pense of the registered owner of the certificate of stock which has been lost, stolen or destroyed. The noticshall state the na%e of said corporation, the na%e of the registered owner and the serial n!%ber of said certificate, and the n!%ber oshares represented by s!ch certificate, and that after the e"piration of one (2) year fro% the date of the last p!blication, if no contest habeen presented to said corporation regarding said certificate of stock, the right to %ake s!ch contest shall be barred and said corporatioshall cancel in its books the certificate of stock which has been lost, stolen or destroyed and iss!e in lie! thereof new certificate of stock!nless the registered owner files a bond or other sec!rity in lie! thereof as %ay be re+!ired, effectie for a period of one (2) year, for s!ca%o!nt and in s!ch for% and with s!ch s!reties as %ay be satisfactory to the board of directors, in which case a new certificate %ay beiss!ed een before the e"piration of the one (2) year period proided herein* Proided, That if a contest has been presented to saicorporation or if an action is pending in co!rt regarding the ownership of said certificate of stock which has been lost, stolen or destroye

    the iss!ance of the new certificate of stock in lie! thereof shall be s!spended !ntil the final decision by the co!rt regarding the ownershof said certificate of stock which has been lost, stolen or destroyed.

    -"cept in case of fra!d, bad faith, or negligence on the part of the corporation and its officers, no action %ay be bro!ght against ancorporation which shall hae iss!ed certificate of stock in lie! of those lost, stolen or destroyed p!rs!ant to the proced!re aboedescribed. (;.A. $02a)

    TITLE VIII

    CORPORATE BOO1S AND RECORDS

    Seti!n (Books to be kept/ stock transfer agent. -ery corporation shall keep and caref!lly presere at its principal office a record oall b!siness transactions and %in!tes of all %eetings of stockholders or %e%bers, or of the board of directors or tr!stees, in which sha

    be set forth in detail the ti%e and place of holding the %eeting, how a!thori#ed, the notice gien, whether the %eeting was reg!lar ospecial, if special its ob:ect, those present and absent, and eery act done or ordered done at the %eeting. ?pon the de%and of andirector, tr!stee, stockholder or %e%ber, the ti%e when any director, tr!stee, stockholder or %e%ber entered or left the %eeting %!st bnoted in the %in!tes and on a si%ilar de%and, the yeas and nays %!st be taken on any %otion or proposition, and a record thereocaref!lly %ade. The protest of any director, tr!stee, stockholder or %e%ber on any action or proposed action %!st be recorded in f!ll ohis de%and.

    The records of all b!siness transactions of the corporation and the %in!tes of any %eetings shall be open to inspection by any directortr!stee, stockholder or %e%ber of the corporation at reasonable ho!rs on b!siness days and he %ay de%and, in writing, for a copy oe"cerpts fro% said records or %in!tes, at his e"pense.

    Any officer or agent of the corporation who shall ref!se to allow any director, tr!stees, stockholder or %e%ber of the corporation te"a%ine and copy e"cerpts fro% its records or %in!tes, in accordance with the proisions of this Code, shall be liable to s!ch directotr!stee, stockholder or %e%ber for da%ages, and in addition, shall be g!ilty of an offense which shall be p!nishable !nder ection 2 o

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    this Code* Proided, That if s!ch ref!sal is %ade p!rs!ant to a resol!tion or order of the board of directors or tr!stees, the liability !ndethis section for s!ch action shall be i%posed !pon the directors or tr!stees who oted for s!ch ref!sal* and Proided, f!rther, That it shabe a defense to any action !nder this section that the person de%anding to e"a%ine and copy e"cerpts fro% the corporation9s recordand %in!tes has i%properly !sed any infor%ation sec!red thro!gh any prior e"a%ination of the records or %in!tes of s!ch corporation oof any other corporation, or was not acting in good faith or for a legiti%ate p!rpose in %aking his de%and.

    tock corporations %!st also keep a book to be known as the stock and transfer book, in which %!st be kept a record of all stocks in thna%es of the stockholders alphabetically arranged the install%ents paid and !npaid on all stock for which s!bscription has been %adeand the date of pay%ent of any install%ent a state%ent of eery alienation, sale or transfer of stock %ade, the date thereof, and by and twho% %ade and s!ch other entries as the by&laws %ay prescribe. The stock and transfer book shall be kept in the principal office of thcorporation or in the office of its stock transfer agent and shall be open for inspection by any director or stockholder of the corporation a

    reasonable ho!rs on b!siness days.

    Bo stock transfer agent or one engaged principally in the b!siness of registering transfers of stocks in behalf of a stock corporation shabe allowed to operate in the Philippines !nless he sec!res a license fro% the ec!rities and -"change Co%%ission and pays a fee a%ay be fi"ed by the Co%%ission, which shall be renewable ann!ally* Proided, That a stock corporation is not precl!ded fro% perfor%inor %aking transfer of its own stocks, in which case all the r!les and reg!lations i%posed on stock transfer agents, e"cept the pay%ent oflicense fee herein proided, shall be applicable. (/2a and '$a P.E. Bo. $36.)

    Seti!n ('#ight to financial statements. 1ithin ten (20) days fro% receipt of a written re+!est of any stockholder or %e%ber, thcorporation shall f!rnish to hi% its %ost recent financial state%ent, which shall incl!de a balance sheet as of the end of the last ta"abyear and a profit or loss state%ent for said ta"able year, showing in reasonable detail its assets and liabilities and the res!lt of itoperations.

    At the reg!lar %eeting of stockholders or %e%bers, the board of directors or tr!stees shall present to s!ch stockholders or %e%bers

    financial report of the operations of the corporation for the preceding year, which shall incl!de financial state%ents, d!ly signed ancertified by an independent certified p!blic acco!ntant.

    Goweer, if the paid&!p capital of the corporation is less than P/0,000.00, the financial state%ents %ay be certified !nder oath by thetreas!rer or any responsible officer of the corporation. (n)

    TITLE I2

    0ERGER AND CONSOLIDATION

    Seti!n (6#Plan or merger of consolidation. Two or %ore corporations %ay %erge into a single corporation which shall be one of thconstit!ent corporations or %ay consolidate into a new single corporation which shall be the consolidated corporation.

    The board of directors or tr!stees of each corporation, party to the %erger or consolidation, shall approe a plan of %erger oconsolidation setting forth the following*

    2. The na%es of the corporations proposing to %erge or consolidate, hereinafter referred to as the constit!ent corporations

    $. The ter%s of the %erger or consolidation and the %ode of carrying the sa%e into effect

    '. A state%ent of the changes, if any, in the articles of incorporation of the s!riing corporation in case of %erger and, with respect to thconsolidated corporation in case of consolidation, all the state%ents re+!ired to be set forth in the articles of incorporation for corporationorgani#ed !nder this Code and

    . !ch other proisions with respect to the proposed %erger or consolidation as are dee%ed necessary or desirable. (n)

    Seti!n ((#0tockholders or members appro(al. ?pon approal by %a:ority ote of each of the board of directors or tr!stees of thconstit!ent corporations of the plan of %erger or consolidation, the sa%e shall be s!b%itted for approal by the stockholders or %e%beof each of s!ch corporations at separate corporate %eetings d!ly called for the p!rpose. Botice of s!ch %eetings shall be gien to astockholders or %e%bers of the respectie corporations, at least two ($) weeks prior to the date of the %eeting, either personally or bregistered %ail. aid notice shall state the p!rpose of the %eeting and shall incl!de a copy or a s!%%ary of the plan of %erger oconsolidation. The affir%atie ote of stockholders representing at least two&thirds ($=') of the o!tstanding capital stock of eaccorporation in the case of stock corporations or at least two&thirds ($=') of the %e%bers in the case of non&stock corporations shall bnecessary for the approal of s!ch plan. Any dissenting stockholder in stock corporations %ay e"ercise his appraisal right in accordancwith the Code* Proided, That if after the approal by the stockholders of s!ch plan, the board of directors decides to abandon the planthe appraisal right shall be e"ting!ished.

    Any a%end%ent to the plan of %erger or consolidation %ay be %ade, proided s!ch a%end%ent is approed by %a:ority ote of threspectie boards of directors or tr!stees of all the constit!ent corporations and ratified by the affir%atie ote of stockholde

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    representing at least two&thirds ($=') of the o!tstanding capital stock or of two&thirds ($=') of the %e%bers of each of the constit!ecorporations. !ch plan, together with any a%end%ent, shall be considered as the agree%ent of %erger or consolidation. (n)

    Seti!n (8#Articles of %erger or consolidation. After the approal by the stockholders or %e%bers as re+!ired by the precedinsection, articles of %erger or articles of consolidation shall be e"ec!ted by each of the constit!ent corporations, to be signed by thpresident or ice&president and certified by the secretary or assistant secretary of each corporation setting forth*

    2. The plan of the %erger or the plan of consolidation

    $. As to stock corporations, the n!%ber of shares o!tstanding, or in the case of non&stock corporations, the n!%ber of %e%bers and

    '. As to each corporation, the n!%ber of shares or %e%bers oting for and against s!ch plan, respectiely. (n)

    Seti!n ()#-ffectiity of %erger or consolidation. The articles of %erger or of consolidation, signed and certified as herein abore+!ired, shall be s!b%itted to the ec!rities and -"change Co%%ission in +!adr!plicate for its approal* Proided, That in the case o%erger or consolidation of banks or banking instit!tions, b!ilding and loan associations, tr!st co%panies, ins!rance co%panies, p!bli!tilities, ed!cational instit!tions and other special corporations goerned by special laws, the faorable reco%%endation of thappropriate goern%ent agency shall first be obtained. f the Co%%ission is satisfied that the %erger or consolidation of the corporationconcerned is not inconsistent with the proisions of this Code and e"isting laws, it shall iss!e a certificate of %erger or of consolidation, awhich ti%e the %erger or consolidation shall be effectie.

    f, !pon inestigation, the ec!rities and -"change Co%%ission has reason to beliee that the proposed %erger or consolidation icontrary to or inconsistent with the proisions of this Code or e"isting laws, it shall set a hearing to gie the corporations concerned thopport!nity to be heard. 1ritten notice of the date, ti%e and place of hearing shall be gien to each constit!ent corporation at least two ($

    weeks before said hearing. The Co%%ission shall thereafter proceed as proided in this Code. (n)

    Seti!n 8+#-ffects of %erger or consolidation. The %erger or consolidation shall hae the following effects*

    2. The constit!ent corporations shall beco%e a single corporation which, in case of %erger, shall be the s!riing corporation designatein the plan of %erger and, in case of consolidation, shall be the consolidated corporation designated in the plan of consolidation

    $. The separate e"istence of the constit!ent corporations shall cease, e"cept that of the s!riing or the consolidated corporation

    '. The s!riing or the consolidated corporation shall possess all the rights, priileges, i%%!nities and powers and shall be s!b:ect to athe d!ties and liabilities of a corporation organi#ed !nder this Code

    . The s!riing or the consolidated corporation shall there!pon and thereafter possess all the rights, priileges, i%%!nities an

    franchises of each of the constit!ent corporations and all property, real or personal, and all receiables d!e on whateer acco!nincl!ding s!bscriptions to shares and other choses in action, and all and eery other interest of, or belonging to, or d!e to eacconstit!ent corporation, shall be dee%ed transferred to and ested in s!ch s!riing or consolidated corporation witho!t f!rther act odeed and

    /. The s!riing or consolidated corporation shall be responsible and liable for all the liabilities and obligations of each of the constit!encorporations in the sa%e %anner as if s!ch s!riing or consolidated corporation had itself inc!rred s!ch liabilities or obligations and anpending clai%, action or proceeding bro!ght by or against any of s!ch constit!ent corporations %ay be prosec!ted by or against ths!riing or consolidated corporation. The rights of creditors or liens !pon the property of any of s!ch constit!ent corporations shall not bi%paired by s!ch %erger or consolidation. (n)

    TITLE 2

    APPRAISAL RIGHT

    Seti!n 8"#nstances of appraisal right. Any stockholder of a corporation shall hae the right to dissent and de%and pay%ent of the faal!e of his shares in the following instances*

    2. n case any a%end%ent to the articles of incorporation has the effect of changing or restricting the rights of any stockholder or class oshares, or of a!thori#ing preferences in any respect s!perior to those of o!tstanding shares of any class, or of e"tending or shortening thter% of corporate e"istence

    $. n case of sale, lease, e"change, transfer, %ortgage, pledge or other disposition of all or s!bstantially all of the corporate property anassets as proided in the Code and

    '. n case of %erger or consolidation. (n)

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    Seti!n 8$#4ow right is e)ercised. The appraisal right %ay be e"ercised by any stockholder who shall hae oted against the proposecorporate action, by %aking a written de%and on the corporation within thirty ('0) days after the date on which the ote was taken fopay%ent of the fair al!e of his shares* Proided, That fail!re to %ake the de%and within s!ch period shall be dee%ed a waier of thappraisal right. f the proposed corporate action is i%ple%ented or affected, the corporation shall pay to s!ch stockholder, !pon s!rrendeof the certificate or certificates of stock representing his shares, the fair al!e thereof as of the day prior to the date on which the ote wataken, e"cl!ding any appreciation or depreciation in anticipation of s!ch corporate action.

    f within a period of si"ty (30) days fro% the date the corporate action was approed by the stockholders, the withdrawing stockholder anthe corporation cannot agree on the fair al!e of the shares, it shall be deter%ined and appraised by three (') disinterested persons, onof who% shall be na%ed by the stockholder, another by the corporation, and the third by the two th!s chosen. The findings of the %a:oriof the appraisers shall be final, and their award shall be paid by the corporation within thirty ('0) days after s!ch award is %ade* Proided

    That no pay%ent shall be %ade to any dissenting stockholder !nless the corporation has !nrestricted retained earnings in its books coer s!ch pay%ent* and Proided, f!rther, That !pon pay%ent by the corporation of the agreed or awarded price, the stockholder shaforthwith transfer his shares to the corporation. (n)

    Seti!n 8%#+ffect of demand and termination of right. 8ro% the ti%e of de%and for pay%ent of the fair al!e of a stockholder9s share!ntil either the abandon%ent of the corporate action inoled or the p!rchase of the said shares by the corporation, all rights accr!ing tos!ch shares, incl!ding oting and diidend rights, shall be s!spended in accordance with the proisions of this Code, e"cept the right os!ch stockholder to receie pay%ent of the fair al!e thereof* Proided, That if the dissenting stockholder is not paid the al!e of hishares within '0 days after the award, his oting and diidend rights shall i%%ediately be restored. (n)

    Seti!n 8hen right to payment ceases. Bo de%and for pay%ent !nder this Title %ay be withdrawn !nless the corporation consenthereto. f, howeer, s!ch de%and for pay%ent is withdrawn with the consent of the corporation, or if the proposed corporate action iabandoned or rescinded by the corporation or disapproed by the ec!rities and -"change Co%%ission where s!ch approal inecessary, or if the ec!rities and -"change Co%%ission deter%ines that s!ch stockholder is not entitled to the appraisal right, then th

    right of said stockholder to be paid the fair al!e of his shares shall cease, his stat!s as a stockholder shall there!pon be restored, and adiidend distrib!tions which wo!ld hae accr!ed on his shares shall be paid to hi%. (n)

    Seti!n 8'#3ho bears costs of appraisal. The costs and e"penses of appraisal shall be borne by the corporation, !nless the fair al!ascertained by the appraisers is appro"i%ately the sa%e as the price which the corporation %ay hae offered to pay the stockholder, iwhich case they shall be borne by the latter. n the case of an action to recoer s!ch fair al!e, all costs and e"penses shall be assesseagainst the corporation, !nless the ref!sal of the stockholder to receie pay%ent was !n:!stified. (n)

    Seti!n 86#!otation on certificates/ rights of transferee. 1ithin ten (20) days after de%anding pay%ent for his shares, a dissentinstockholder shall s!b%it the certificates of stock representing his shares to the corporation for notation thereon that s!ch shares ardissenting shares. Gis fail!re to do so shall, at the option of the corporation, ter%inate his rights !nder this Title. f shares represented bthe certificates bearing s!ch notation are transferred, and the certificates conse+!ently cancelled, the rights of the transferor as dissenting stockholder !nder this Title shall cease and the transferee shall hae all the rights of a reg!lar stockholder and all diidendistrib!tions which wo!ld hae accr!ed on s!ch shares shall be paid to the transferee. (n)

    TITLE 2I

    NON3STOC1 CORPORATIONS

    Seti!n 8(#7efinition. 8or the p!rposes of this Code, a non&stock corporation is one where no part of its inco%e is distrib!table adiidends to its %e%bers, tr!stees, or officers, s!b:ect to the proisions of this Code on dissol!tion* Proided, That any profit which a nonstock corporation %ay obtain as an incident to its operations shall, wheneer necessary or proper, be !sed for the f!rtherance of thp!rpose or p!rposes for which the corporation was organi#ed, s!b:ect to the proisions of this Title.

    The proisions goerning stock corporation, when pertinent, shall be applicable to non&stock corporations, e"cept as %ay be coered bspecific proisions of this Title. (n)

    Seti!n 88#P!rposes. Bon&stock corporations %ay be for%ed or organi#ed for charitable, religio!s, ed!cational, professional, c!lt!rafraternal, literary, scientific, social, ciic serice, or si%ilar p!rposes, like trade, ind!stry, agric!lt!ral and like cha%bers, or anco%bination thereof, s!b:ect to the special proisions of this Title goerning partic!lar classes of non&stock corporations. (n)

    CHAPTER 0E0BERS

    Seti!n 8)#ight to (ote. The right of the %e%bers of any class or classes to ote %ay be li%ited, broadened or denied to the e"tenspecified in the articles of incorporation or the by&laws. ?nless so li%ited, broadened or denied, each %e%ber, regardless of class, shabe entitled to one ote.

    ?nless otherwise proided in the articles of incorporation or the by&laws, a %e%ber %ay ote by pro"y in accordance with the proisionof this Code. (n)

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    Ioting by %ail or other si%ilar %eans by %e%bers of non&stock corporations %ay be a!thori#ed by the by&laws of non&stock corporationwith the approal of, and !nder s!ch conditions which %ay be prescribed by, the ec!rities and -"change Co%%ission.

    Seti!n )+#Bon&transferability of %e%bership. 4e%bership in a non&stock corporation and all rights arising therefro% are personal annon&transferable, !nless the articles of incorporation or the by&laws otherwise proide. (n)

    Seti!n )"#Ter%ination of %e%bership. 4e%bership shall be ter%inated in the %anner and for the ca!ses proided in the articles oincorporation or the by&laws. Ter%ination of %e%bership shall hae the effect of e"ting!ishing all rights of a %e%ber in the corporation oin its property, !nless otherwise proided in the articles of incorporation or the by&laws. (n)

    CHAPTER TR-STEES AND OFFICES

    Seti!n )$#+lection and term of trustees. ?nless otherwise proided in the articles of incorporation or the by&laws, the board of tr!steeof non&stock corporations, which %ay be %ore than fifteen (2/) in n!%ber as %ay be fi"ed in their articles of incorporation or by&lawsshall, as soon as organi#ed, so classify the%seles that the ter% of office of one&third (2=') of their n!%ber shall e"pire eery year ands!bse+!ent elections of tr!stees co%prising one&third (2=') of the board of tr!stees shall be held ann!ally and tr!stees so elected shahae a ter% of three (') years. Tr!stees thereafter elected to fill acancies occ!rring before the e"piration of a partic!lar ter% shall holdoffice only for the !ne"pired period.

    Bo person shall be elected as tr!stee !nless he is a %e%ber of the corporation.

    ?nless otherwise proided in the articles of incorporation or the by&laws, officers of a non&stock corporation %ay be directly elected by th%e%bers. (n)

    Seti!n )%#Place of meetings. The by&laws %ay proide that the %e%bers of a non&stock corporation %ay hold their reg!lar or speci%eetings at any place een o!tside the place where the principal office of the corporation is located* Proided, That proper notice is seto all %e%bers indicating the date, ti%e and place of the %eeting* and Proided, f!rther, That the place of %eeting shall be within thePhilippines. (n)

    CHAPTER DISTRIB-TION OF ASSETS IN NON3STOC1 CORPORATIONS

    Seti!n )ules of distribution. n case dissol!tion of a non&stock corporation in accordance with the proisions of this Code, itassets shall be applied and distrib!ted as follows*

    2. All liabilities and obligations of the corporation shall be paid, satisfied and discharged, or ade+!ate proision shall be %ade therefore

    $. Assets held by the corporation !pon a condition re+!iring ret!rn, transfer or coneyance, and which condition occ!rs by reason of thdissol!tion, shall be ret!rned, transferred or coneyed in accordance with s!ch re+!ire%ents

    '. Assets receied and held by the corporation s!b:ect to li%itations per%itting their !se only for charitable, religio!s, beneolened!cational or si%ilar p!rposes, b!t not held !pon a condition re+!iring ret!rn, transfer or coneyance by reason of the dissol!tion, shabe transferred or coneyed to one or %ore corporations, societies or organi#ations engaged in actiities in the Philippines s!bstantiallsi%ilar to those of the dissoling corporation according to a plan of distrib!tion adopted p!rs!ant to this Chapter

    . Assets other than those %entioned in the preceding paragraphs, if any, shall be distrib!ted in accordance with the proisions of tharticles of incorporation or the by&laws, to the e"tent that the articles of incorporation or the by&laws, deter%ine the distrib!tie rights o%e%bers, or any class or classes of %e%bers, or proide for distrib!tion and

    /. n any other case, assets %ay be distrib!ted to s!ch persons, societies, organi#ations or corporations, whether or not organi#ed fo

    profit, as %ay be specified in a plan of distrib!tion adopted p!rs!ant to this Chapter. (n)

    Seti!n )'#Plan of distribution of assets. A plan proiding for the distrib!tion of assets, not inconsistent with the proisions of this Titl%ay be adopted by a non&stock corporation in the process of dissol!tion in the following %anner*

    The board of tr!stees shall, by %a:ority ote, adopt a resol!tion reco%%ending a plan of distrib!tion and directing the s!b%ission thereoto a ote at a reg!lar or special %eeting of %e%bers haing oting rights. 1ritten notice setting forth the proposed plan of distrib!tion or s!%%ary thereof and the date, ti%e and place of s!ch %eeting shall be gien to each %e%ber entitled to ote, within the ti%e and in th%anner proided in this Code for the giing of notice of %eetings to %e%bers. !ch plan of distrib!tion shall be adopted !pon approal at least two&thirds ($=') of the %e%bers haing oting rights present or represented by pro"y at s!ch %eeting. (n)

    TITLE 2II

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    CLOSE CORPORATIONS

    Seti!n )6#*efinition and applicability of Title. A close corporation, within the %eaning of this Code, is one whose articles incorporation proide that* (2) All the corporation9s iss!ed stock of all classes, e"cl!sie of treas!ry shares, shall be held of record by no%ore than a specified n!%ber of persons, not e"ceeding twenty ($0) ($) all the iss!ed stock of all classes shall be s!b:ect to one or %orspecified restrictions on transfer per%itted by this Title and (') The corporation shall not list in any stock e"change or %ake any p!blioffering of any of its stock of any class. Botwithstanding the foregoing, a corporation shall not be dee%ed a close corporation when aleast two&thirds ($=') of its oting stock or oting rights is owned or controlled by another corporation which is not a close corporatiowithin the %eaning of this Code.

    Any corporation %ay be incorporated as a close corporation, e"cept %ining or oil co%panies, stock e"changes, banks, ins!ranc

    co%panies, p!blic !tilities, ed!cational instit!tions and corporations declared to be ested with p!blic interest in accordance with thproisions of this Code.

    The proisions of this Title shall pri%arily goern close corporations*