Special Law 11232

Acquisition and Alienation of Property

Acquisition and Alienation of Property

A corporation sole may purchase and hold real estate and personal property for its church, charitable, benevolent, or educational purposes, and may receive bequests or gifts for such purposes. Such corporation may sell or mortgage real property held by it by obtaining an order for that purpose from the Regional Trial Court of the province where the property is situated upon proof that the notice of the application for leave to sell or mortgage has been made through publication or as directed by the Court, and that it is in the interest of the corporation that leave to sell or mortgage be granted. The application for leave to sell or mortgage must be made by petition, duly verified, by the chief archbishop, bishop, priest, minister, rabbi, or presiding elder acting as corporation sole, and may be opposed by any member of the religious denomination, sect or church represented by the corporation sole

When a Board Meeting is Unnecessary or Improperly Held

Unless the bylaws provide otherwise, any action taken by the directors of a close corporation without a meeting called properly and with due notice shall nevertheless be deemed valid if: (a) Before or after such action is taken, a written consent thereto is signed by all the directors; or (b) All the stockholders have actual or implied knowledge of the action and make no prompt

objection in writing; or (c) The directors are accustomed to take informal action with the express or implied

acquiescence of all the stockholders; or (d) All the directors have express or implied knowledge of the action in question and none

of them makes a prompt objection in writing.

Deadlocks

Notwithstanding any contrary provision in the close corporation’s

articles of incorporation, bylaws, or stockholders’ agreement, if the directors or stockholders are so divided on the management of the corporation’s business and affairs that the votes required for a corporate action cannot be obtained, with the consequence that the business and affairs of the corporation can no longer be conducted to the advantage of the stockholders generally, the Commission, upon written petition by any stockholder, shall have the power to arbitrate the dispute.

Regular and Special Meetings of Stockholders or Members

Regular meetings of stockholders or members shall be held annually on a date fixed in the bylaws, or if not so fixed, on any date after April 15 of every year as determined by the board of directors or trustees

Classes of Corporations.

Corporations formed or organized under this Code may be stock or nonstock corporations. Stock corporations are those which have capital stock divided into shares and are authorized to distribute to the holders of such shares, dividends, or allotments of the surplus profits on the basis of the shares held. All other corporations are nonstock corporations.

Corporators and Incorporators, Stockholders and Members

Corporators are

those who compose a corporation, whether as stockholders or shareholders in a stock corporation or as members in a nonstock corporation. Incorporators are those stockholders or members mentioned in the articles of incorporation as originally forming and composing the corporation and who are signatories thereof.

Classification of Shares

their corresponding rights,

privileges, or restrictions, and their stated par value, if any, must be indicated in the articles of incorporation. Each share shall be equal in all respects to every other share, except as otherwise provided in the articles of incorporation and in the certificate of stock.

Founders’ Shares

may be given certain rights and privileges

not enjoyed by the owners of other stocks. Where the exclusive right to vote and be voted for in the election of directors is granted, it must be for a limited period not to exceed five (5) years from the date of incorporation:

Redeemable Shares

They are shares which may be purchased by the corporation from the holders of such shares upon the expiration of a fixed period, regardless of the existence of unrestricted retained earnings in the books of the corporation, and upon such other terms and conditions stated in the articles of incorporation and the certificate of stock representing the shares, subject to rules and regulations issued by the Commission.

Treasury Shares

shares of stock which have been issued

and fully paid for, but subsequently reacquired by the issuing corporation through purchase, redemption, donation, or some other lawful means. Such shares may again be disposed of for a reasonable price fixed by the board of directors.

Number and Qualifications of Incorporators

Any person, partnership,

association or corporation, singly or jointly with others but not more than fifteen (15) in number, may organize a corporation for any lawful purpose or purposes: Provided, That natural persons who are licensed to practice a profession, and partnerships or associations organized for the purpose of practicing a profession, shall not be allowed to organize as a corporation unless otherwise provided under special laws. Incorporators who are natural persons must be of legal age.

Amendment of Articles of Incorporation

Unless otherwise prescribed by this

Code or by special law, and for legitimate purposes, any provision or matter stated in the articles of incorporation may be amended by a majority vote of the board of directors or trustees and the vote or written assent of the stockholders representing at least two-thirds (2/3) of the outstanding capital stock, without prejudice to the appraisal right of dissenting stockholders in accordance with the provisions of this Code. The articles of incorporation of a nonstock corporation may be amended by the vote or written assent of majority of the trustees and at least two-thirds (2/3) of the members.

Registration, Incorporation and Commencement of Corporate Existence

A

person or group of persons desiring to incorporate shall submit the intended corporate name to the Commission for verification. If the Commission finds that the name is distinguishable from a name already reserved or registered for the use of another corporation, not protected by law and is not contrary to law, rules and regulations, the name shall be reserved in favor of the incorporators. The incorporators shall then submit their articles of incorporation and bylaws to the Commission.

De facto Corporations

The due incorporation of any corporation claiming in

good faith to be a corporation under this Code, and its right to exercise corporate powers, shall not be inquired into collaterally in any private suit to which such corporation may be a party. Such inquiry may be made by the Solicitor General in a quo warranto proceeding.

Effects of Non-Use of Corporate Charter and Continuous Inoperation

If a

corporation does not formally organize and commence its business within five (5) years from the date of its incorporation, its certificate of incorporation shall be deemed revoked as of the day following the end of the five (5)-year period.

However, if a corporation has commenced its business but subsequently becomes

inoperative for a period of at least five (5) consecutive years, the Commission may, after due notice and hearing, place the corporation under delinquent status.

The Board of Directors or Trustees of a Corporation; Qualification and Term

Directors shall be elected for a term of one (1) year from among the holders of stocks registered in the corporation’s books, while trustees shall be elected for a term not exceeding three (3) years from among the members of the corporation. Each director and trustee shall hold office until the successor is elected and qualified. A director who ceases to own at least one (1) share of stock or a trustee who ceases to be a member of the corporation shall cease to be such.

Election of Board of Directors or Trustees

At all elections of directors or trustees, there must be present, either in person or through a

representative authorized to act by written proxy, the owners of majority of the outstanding capital stock, or if there be no capital stock, a majority of the members entitled to vote. When so authorized in the bylaws or by a majority of the board of directors, the stockholders or members may also vote through remote communication or in absentia: Provided, That the right to vote through such modes may be exercised in corporations vested with public interest, notwithstanding the absence of a provision in the bylaws of such corporations.

Corporate Officers

Immediately after their election, the directors of a

corporation must formally organize and elect: (a) a president, who must be a director; (b) a treasurer, who must be a resident; (c) a secretary, who must be a citizen and resident of the Philippines; and (d) such other officers as may be provided in the bylaws. If the corporation is vested with public interest, the board shall also elect a compliance officer. The same person may hold two (2) or more positions concurrently, except that no one shall act as president and secretary or as president and treasurer at the same time, unless otherwise allowed in this Code.

Report of Election of Directors, Trustees and Officers, Non-holding of Election

and Cessation from Office.

If no new date has been designated, or if the rescheduled election is likewise not held, the

Commission may, upon the application of a stockholder, member, director or trustee, and after verification of the unjustified non-holding of the election, summarily order that an election be held. The Commission shall have the power to issue such orders as may be appropriate, including orders directing the issuance of a notice stating the time and place of the election, designated presiding officer, and the record date or dates for the determination of stockholders or members entitled to vote.

Notwithstanding any provision of the articles of incorporation or bylaws to the contrary,

the shares of stock or membership represented at such meeting and entitled to vote shall constitute a quorum for purposes of conducting an election under this section.

Vacancies in the Office of Director or Trustee; Emergency Board

Any

vacancy occurring in the board of directors or trustees other than by removal or by expiration of term may be filled by the vote of at least a majority of the remaining directors or trustees, if still constituting a quorum; otherwise, said vacancies must be filled by the stockholders or members in a regular or special meeting called for that purpose.

Compensation of Directors or Trustees

In the absence of any provision in the

bylaws fixing their compensation, the directors or trustees shall not receive any compensation in their capacity as such, except for reasonable per diems: Provided however, That the stockholders representing at least a majority of the outstanding capital stock or majority of the members may grant directors or trustees with compensation and approve the amount thereof at a regular or special meeting.

In no case shall the total yearly compensation of directors exceed ten (10%) percent of the

net income before income tax of the corporation during the preceding year.

Liability of Directors, Trustees or Officers

A director, trustee, or officer shall not attempt to acquire, or acquire any interest adverse

to the corporation in respect of any matter which has been reposed in them in confidence, and upon which, equity imposes a disability upon themselves to deal in their own behalf; otherwise the said director, trustee, or officer shall be liable as a trustee for the corporation and must account for the profits which otherwise would have accrued to the corporation.

Dealings of Directors, Trustees, or Officers with the Corporation

A contract

of the corporation with (1) one or more of its directors, trustees, officers or their spouses and relatives within the fourth civil degree of consanguinity or affinity is voidable, at the option of such corporation

Contracts Between Corporations with Interlocking Directors

a contract between two (2) or more corporations having interlocking directors shall not be invalidated on that ground alone: Provided, That if the interest of the interlocking director in one (1) corporation is substantial and the interest in the other corporation or corporations is merely nominal, the contract shall be subject to the provisions of the preceding section insofar as the latter corporation or corporations are concerned.

Disloyalty of a Director

Where a director, by virtue of such office, acquires a

business opportunity which should belong to the corporation, thereby obtaining profits to the prejudice of such corporation, the director must account for and refund to the latter all such profits, unless the act has been ratified by a vote of the stockholders owning or representing at least twothirds (2/3) of the outstanding capital stock. This provision shall be applicable, notwithstanding the fact that the director risked one’s own funds in the venture.

Executive, Management, and Other Special Committees

If the bylaws so

provide, the board may create an executive committee composed of at least three (3) directors. Said committee may act, by majority vote of all its members, on such specific matters within the competence of the board, as may be delegated to it in the bylaws or by majority vote of the board, except with respect to the: (a) approval of any action for which shareholders’ approval is also required; (b) filling of vacancies in the board; (c) amendment or repeal of bylaws or the adoption of new bylaws; (d) amendment or repeal of any resolution of the board which by its express terms is not amendable or repealable; and (e) distribution of cash dividends to the shareholders.

Disqualifications of Directors, Trustees, or Officers

A person shall be

disqualified from being a director, trustee or officer of any corporation if, within five (5) years prior to the election or appointment as such, the person was:

(a) Convicted by final judgment: (1) Of an offense punishable by imprisonment for a period exceeding six (6) years;

Page 13 of 73(2) For violating this Code; and (3) For violating Republic Act No. 8799, otherwise known as “The Securities Regulation

Code”; (b) Found administratively liable for any offense involving fraudulent acts; and (c) By a foreign court or equivalent foreign regulatory authority for acts, violations or

misconduct similar to those enumerated in paragraphs (a) and (b) above.

Removal of Directors or Trustees

Any director or trustee of a corporation may

be removed from office by a vote of the stockholders holding or representing at least two-thirds (2/3) of the outstanding capital stock, or in a nonstock corporation, by a vote of at least two-thirds (2/3) of the members entitled to vote: Provided, That such removal shall take place either at a regular meeting of the corporation or at a special meeting called for the purpose, and in either case, after previous notice to stockholders or members of the corporation of the intention to propose such removal at the meeting.

Corporation by Estoppel

All persons who assume to act as a corporation

knowing it to be without authority to do so shall be liable as general partners for all debts, liabilities and damages incurred or arising as a result thereof: Provided, however, That when any such ostensible corporation is sued on any transaction entered by it as a corporation or on any tort committed by it as such, it shall not be allowed to use its lack of corporate personality as a defense. Anyone who assumes an obligation to an ostensible corporation as such cannot resist performance thereof on the ground that there was in fact no corporation.

Corporate Name

No corporate name shall be allowed by the Commission if it

is not distinguishable from that already reserved or registered for the use of another corporation, or if such name is already protected by law, or when its use is contrary to existing law, rules and regulations.

A name is not distinguishable even if it contains one or more of the following: (a) The word “corporation”, “company”, “incorporated”, “limited”, “limited liability”, or

an abbreviation of one of such words; and (b) Punctuations, articles, conjunctions, contractions, prepositions, abbreviations, different

tenses, spacing, or number of the same word or phrase.

Corporate Term

A corporation shall have perpetual existence unless its

articles of incorporation provides otherwise. Corporations with certificates of incorporation issued prior to the effectivity of this Code,

and which continue to exist, shall have perpetual existence, unless the corporation, upon a vote of its stockholders representing a majority of its outstanding capital stock, notifies the Commission that it elects to retain its specific corporate term pursuant to its articles of incorporation: Provided, That any change in the corporate term under this section is without prejudice to the appraisal right of dissenting stockholders in accordance with the provisions of this Code.

Report of Election of Directors, Trustees, and Officers; Non-holding of Election and Cessation from Office

Within thirty (30) days after the election of the directors, trustees and officers of the corporation, the secretary, or any other officer of the corporation, shall submit to the Commission, the names, nationalities, shareholdings, and residence addresses of the directors, trustees, and officers elected.

The non-holding of elections and the reasons therefor shall be reported to the Commission

within thirty (30) days from the date of the scheduled election. The report shall specify a new date for the election, which shall not be later than sixty (60) days from the scheduled date

Power to Extend or Shorten Corporate Term

A private corporation may extend

or shorten its term as stated in the articles of incorporation when approved by a majority vote of the board of directors or trustees, and ratified at a meeting by the stockholders or members representing at least two-thirds (2/3) of the outstanding capital stock or of its members.

Power to Increase or Decrease Capital Stock; Incur, Create, or Increase Bonded Indebtedness

No corporation shall increase or decrease its capital stock or incur, create or increase any bonded indebtedness unless approved by a majority vote of the board of directors and by two-thirds (2/3) of the outstanding capital stock at a stockholders’ meeting duly called for the purpose.

Power to Deny Pre-emptive Rights

All stockholders of a stock corporation shall

enjoy preemptive right to subscribe to all issues or disposition of shares of any class, in proportion to their respective shareholdings, unless such right is denied by the articles of incorporation or an amendment thereto: Provided, That such preemptive right shall not extend to shares issued in compliance with laws requiring stock offerings or minimum stock ownership by the public; or to shares issued in good faith with the approval of the stockholders representing two-thirds (2/3) of the outstanding capital stock, in exchange for property needed for corporate purposes or in payment of a previously contracted debt.

Sale or Other Disposition of Assets

a corporation may, by a majority vote of its board of directors or trustees, sell, lease, exchange, mortgage, pledge, or otherwise dispose of its property and assets, upon such terms and conditions and for such consideration, which may be money, stocks, bonds, or other instruments for the payment of money or other property or consideration, as its board of directors or trustees may deem expedient.

Power to Acquire Own Shares

Provided that the corporation has unrestricted

retained earnings in its books to cover the shares to be purchased or acquired, a stock corporation shall have the power to purchase or acquire its own shares for a legitimate corporate purpose or purposes, including the following cases:

(a) To eliminate fractional shares arising out of stock dividends; (b) To collect or compromise an indebtedness to the corporation, arising out of unpaid

subscription, in a delinquency sale, and to purchase delinquent shares sold during said sale; and (c) To pay dissenting or withdrawing stockholders entitled to payment for their shares

under the provisions of this Code.

Power to Invest Corporate Funds in Another Corporation or Business or for Any Other Purposes

Subject to the provisions of this Code, a private corporation may invest its funds in any other corporation, business, or for any purpose other than the primary purpose for which it was organized, when approved by a majority of the board of directors or trustees and ratified by the stockholders representing at least two-thirds (2/3) of the outstanding capital stock, or by at least two thirds (2/3) of the members in the case of nonstock corporations, at a meeting duly called for the purpose.

Power to Declare Dividends

The board of directors of a stock corporation may

declare dividends out of the unrestricted retained earnings which shall be payable in cash, property, or in stock to all stockholders on the basis of outstanding stock held by them: Provided, That any cash dividends due on delinquent stock shall first be applied to the unpaid balance on the subscription plus costs and expenses, while stock dividends shall be withheld from the delinquent stockholders until their unpaid subscription is fully paid: Provided, further, That no stock dividend shall be issued without the approval of stockholders representing at least two-thirds (2/3) of the outstanding capital stock at a regular or special meeting duly called for the purpose.

Power to Enter into Management Contract

No corporation shall conclude a

management contract with another corporation unless such contract is approved by the board of directors and by stockholders owning at least the majority of the outstanding capital stock, or by at least a majority of the members in the case of a nonstock corporation, of both the managing and the managed corporation, at a meeting duly called for the purpose

Ultra Vires Acts of Corporation

No corporation shall possess or exercise

corporate powers other than those conferred by this Code or by its articles of incorporation and except as necessary or incidental to the exercise of the powers conferred.

Adoption of Bylaws

the

affirmative vote of the stockholders representing at least a majority of the outstanding capital stock, or of at least a majority of the members in case of nonstock corporations, shall be necessary. The bylaws shall be signed by the stockholders or members voting for them and shall be kept in the principal office of the corporation, subject to the inspection of the stockholders or members during office hours. A copy thereof, duly certified by a majority of the directors or trustees and countersigned by the secretary of the corporation, shall be filed with the Commission and attached to the original articles of incorporation.

Amendment to Bylaws

A majority of the board of directors or trustees, and

the owners of at least a majority of the outstanding capital stock, or at least a majority of the members of a nonstock corporation, at a regular or special meeting duly called for the purpose, may amend or repeal the bylaws or adopt new bylaws

Place and Time of Meetings of Stockholders or Members

Stockholders’ or

members’ meetings, whether regular or special, shall be held in the principal office of the corporation as set forth in the articles of incorporation, or, if not practicable, in the city or municipality where the principal office of the corporation is located

Regular and Special Meetings of Directors or Trustees; Quorum

a majority of the directors or trustees as stated in the articles of incorporation shall constitute a quorum to transact corporate business, and every decision reached by at least a majority of the directors or trustees constituting a quorum, except for the election of officers which shall require the vote of a majority of all the members of the board, shall be valid as a corporate act.

Who Shall Preside at Meetings

The chairman or, in his absence, the president

shall preside at all meetings of the directors or trustees as well as of the stockholders or members, unless the bylaws provide otherwise.

Rights to Vote of Secured Creditors and Administrators

In case a stockholder

grants security interest in his or her shares in stock corporations, the stockholder-grantor shall have the right to attend and vote at meetings of stockholders, unless the secured creditor is expressly given by the stockholder-grantor such right in writing which is recorded in the appropriate corporate books.

Manner of Voting; Proxies

Stockholders and members may vote in person or

by proxy in all meetings of stockholders or members. When so authorized in the bylaws or by a majority of the board of directors, the

stockholders or members of corporations may also vote through remote communication or in absentia: Provided, That the votes are received before the corporation finishes the tally of votes.

A stockholder or member who participates through remote communication or in absentia, shall be deemed present for purposes of quorum.

Voting Trusts

One or more stockholders of a stock corporation may create a

voting trust for the purpose of conferring upon a trustee or trustees the right to vote and other rights pertaining to the shares for a period not exceeding five (5) years at any time: Provided, That in the case of a voting trust specifically required as a condition in a loan agreement, said voting trust may be for a period exceeding five (5) years but shall automatically expire upon full payment of the loan.

Subscription Contract

Any contract for the acquisition of unissued stock in an

existing corporation or a corporation still to be formed shall be deemed a subscription within the meaning of this Title, notwithstanding the fact that the parties refer to it as a purchase or some other contract.

Consideration for Stocks

Stocks shall not be issued for a consideration less

than the par or issued price thereof.

Certificate of Stock and Transfer of Shares

Shares of stock so issued are personal property and may be transferred by delivery of the certificate or certificates indorsed by the owner, his attorney-in-fact, or any other person legally authorized to make the transfer. No transfer, however, shall be valid, except as between the parties, until the transfer is recorded in the books of the corporation showing the names of the parties to the transaction, the date of the transfer, the number of the certificate or certificates, and the number of shares transferred.

Issuance of Stock Certificates

No certificate of stock shall be issued to a

subscriber until the full amount of the subscription together with interest and expenses (in case of delinquent shares), if any is due, has been paid.

Interest on Unpaid Subscription

Subscribers to stocks shall be liable to the

corporation for interest on all unpaid subscriptions from the date of subscription, if so required by and at the rate of interest fixed in the subscription contract.

Payment of Balance of Subscription

Subject to the provisions of the

subscription contract, the board of directors may, at any time, declare due and payable to the corporation unpaid subscriptions and may collect the same or such percentage thereof, in either case, with accrued interest, if any, as it may deem necessary.

Delinquency Sale

The board of directors may, by resolution, order the sale of

delinquent stock and shall specifically state the amount due on each subscription plus all accrued interest, and the date, time and place of the sale which shall not be less than thirty (30) days nor more than sixty (60) days from the date the stocks become delinquent.

When Sale May be Questioned

No action to recover delinquent stock sold can

be sustained upon the ground of irregularity or defect in the notice of sale, or in the sale itself of the delinquent stock, unless the party seeking to maintain such action first pays or tenders to the party holding the stock the sum for which the same was sold, with interest from the date of sale at the legal rate. No such action shall be maintained unless a complaint is filed within six (6) months from the date of sale.

Effect of Delinquency

No delinquent stock shall be voted for, be entitled to

vote, or be represented at any stockholder’s meeting, nor shall the holder thereof be entitled to any of the rights of a stockholder except the right to dividends in accordance with the provisions of this Code, until and unless payment is made by the holder of such delinquent stock for the amount due on the subscription with accrued interest, and the costs and expenses of advertisement, if any.

Rights of Unpaid Subscription, Nondelinquent

Holders of subscribed shares not

fully paid which are not delinquent shall have all the rights of a stockholder.

Pre-emptive Rights in Close Corporations

shall extend to all stock to be issued, including reissuance of treasury shares, whether for money, property or personal services, or in payment of corporate debts, unless the articles of incorporation provide otherwise

Amendment of Articles of Incorporation

seeks to delete or remove any provision required by this Title or to reduce a quorum or voting requirement stated in said articles of incorporation shall require the affirmative vote of at least two-thirds (2/3) of the outstanding capital stock, whether with or without voting rights, or of such greater proportion of shares as may be specifically provided in the articles of incorporation for amending, deleting or removing any of the aforesaid provisions, at a meeting duly called for the purpose.

Withdrawal of Stockholder or Dissolution of Corporation

In addition and without prejudice to other rights and remedies available under this Title, any stockholder of a close corporation may, for any reason, compel the corporation to purchase shares held at fair value, which shall not be less than the par or issued value, when the corporation has sufficient assets in its books to cover its debts and liabilities exclusive of capital stock: Provided, That any stockholder of a close corporation may, by written petition to the Commission, compel the dissolution of such corporation whenever any of acts of the directors, officers, or those in control of the corporation is illegal, fraudulent, dishonest, oppressive or unfairly prejudicial to the corporation or any stockholder, or whenever corporate assets are being misapplied or wasted

Board of Trustees

Trustees of educational institutions organized as nonstock

corporations shall not be less than five (5) nor more than fifteen (15): Provided, That the number of trustees shall be in multiples of five (5).

Classes of Religious Corporations

Religious corporations may be incorporated

by one or more persons. Such corporations may be classified into corporations sole and religious societies.

Submission of the Articles of Incorporation

The articles of incorporation must

be verified, by affidavit or affirmation of the chief archbishop, bishop, priest, minister, rabbi, or presiding elder, as the case may be, and accompanied by a copy of the commission, certificate of election or letter of appointment of such chief archbishop, bishop, priest, minister, rabbi, or presiding elder, duly certified to be correct by any notary public.

Filling of Vacancies

The successors in office of any chief archbishop, bishop,

priest, minister, rabbi, or presiding elder in a corporation sole shall become the corporation sole on their accession to office and shall be permitted to transact business as such upon filing a copy of their commission, certificate of election, or letters of appointment, duly certified by any notary public with the Commission.

Dissolution

A corporation sole may be dissolved and its affairs settled

voluntarily by submitting to the Commission a verified declaration of dissolution, setting forth: (a) The name of the corporation; (b) The reason for dissolution and winding up; (c) The authorization for the dissolution of the corporation by the particular religious

denomination, sect or church; and (d) The names and addresses of the persons who are to supervise the winding up of the

affairs of the corporation.

Display of Corporate Name

A One Person Corporation shall indicate the

letters “OPC” either below or at the end of its corporate name.

Special Functions of the Corporate Secretary

In addition to the functions

designated by the One Person Corporation, the corporate secretary shall: (a) Be responsible for maintaining the minutes book and/or records of the corporation; (b) Notify the nominee or alternate nominee of the death or incapacity of the single

stockholder, which notice shall be given no later than five (5) days from such occurrence; (c) Notify the Commission of the death of the single stockholder within five (5) days from

such occurrence and stating in such notice the names, residence addresses, and contact details of all known legal heirs; and

(d) Call the nominee or alternate nominee and the known legal heirs to a meeting and

advise the legal heirs with regard to, among others, the election of a new director, amendment of the articles of incorporation, and other ancillary and/or consequential matters.

Term of Nominee and Alternate Nominee

In case of death or permanent incapacity of the single stockholder, the nominee shall sit as

director and manage the affairs of the One Person Corporation until the legal heirs of the single stockholder have been lawfully determined, and the heirs have designated one of them or have agreed that the estate shall be the single stockholder of the One Person Corporation.

Records in Lieu of Meetings

When action is needed on any matter, it shall

be sufficient to prepare a written resolution, signed and dated by the single stockholder, and recorded in the minutes book of the One Person Corporation. The date of recording in the minutes book shall be deemed to be the date of the meeting for all purposes under this Code.

Reportorial Requirements

The One Person Corporation shall submit the

following within such period as the Commission may prescribe: (a) Annual financial statements audited by an independent certified public accountant:

Provided, That if the total assets or total liabilities of the corporation are less than Six Hundred Thousand Pesos (P600,000.00), the financial statements shall be certified under oath by the corporation’s treasurer and president.

(b) A report containing explanations or comments by the president on every qualification,

reservation, or adverse remark or disclaimer made by the auditor in the latter’s report; (c) A disclosure of all self-dealings and related party transactions entered into between the

One Person Corporation and the single stockholder; and (d) Other reports as the Commission may require. For purposes of this provision, the fiscal year of a One Person Corporation shall be that set

forth in its articles of incorporation or, in the absence thereof, the calendar year. The Commission may place the corporation under delinquent status should the corporation

fail to submit the reportorial requirements three (3) times, consecutively or intermittently, within a period of five (5) years.

Dissolution by Shortening Corporate Term

A voluntary dissolution may be

effected by amending the articles of incorporation to shorten the corporate term pursuant to the provisions of this Code. A copy of the amended articles of incorporation shall be submitted to the Commission in accordance with this Code.

Upon the expiration of the shortened term, as stated in the approved amended articles of

incorporation, the corporation shall be deemed dissolved without any further proceedings, subject to the provisions of this Code on liquidation.

Issuance of a License

If the Commission is satisfied that the applicant has

complied with all the requirements of this Code and other special laws, rules and regulations, the Commission shall issue a license to transact business in the Philippines to the applicant for the purpose or purposes specified in such license.

Who May be a Resident Agent

may be either an individual residing in the Philippines or a domestic corporation lawfully transacting business in the Philippines: Provided, That an individual resident agent must be of good moral character and of sound financial standing: Provided, further, That in case of a domestic corporation who will act as a resident agent, it must likewise be of sound financial standing and must show proof that it is in good standing as certified by the Commission.

Resident Agent; Service of Process

As a condition to the issuance of the license for a foreign corporation to transact business in the Philippines, such corporation shall file with the Commission a written power of attorney designating a person who must be a resident of the Philippines, on whom summons and other legal processes may be served in all actions or other legal proceedings against such corporation, and consenting that service upon such resident agent shall be admitted and held as valid as if served upon the duly authorized officers of the foreign corporation at its home office

Amended Lice

A foreign corporation authorized to transact business in the Philippines shall obtain an amended license in the event it changes its corporate name, or desires to pursue other or additional purposes in the Philippines, by submitting an application with the Commission, favorably endorsed by the appropriate government agency in the proper cases

Merger or Consolidation Involving a Foreign Corporation Licensed in the Philippines

One or more foreign corporations authorized to transact business in the Philippines may merge or consolidate with any domestic corporation or corporations if permitted under Philippine laws and by the law of its incorporation: Provided, That the requirements on merger or consolidation as provided in this Code are followed.

Withdrawal of Foreign Corporations

Subject to existing laws and regulations, a foreign corporation licensed to transact business in the Philippines may be allowed to withdraw from the Philippines by filing a petition for withdrawal of license.

Administration of Oaths, Subpoena of Witnesses, and Documents

The Commission, through its designated officer, may administer oaths and affirmations, issue subpoena and subpoena duces tecum, take testimony in any inquiry or investigation, and may perform other acts necessary to the proceedings or to the investigation.

Cease and Desist Orders

Whenever the Commission has reasonable basis to believe that a person has violated, or is about to violate this Code, a rule, regulation, or order of the Commission, it may direct such person to desist from committing the act constituting the violation.

Contempt

Any person who, without justifiable cause, fails or refuses to comply with any lawful order, decision, or subpoena issued by the Commission shall, after due notice and hearing, be held in contempt and fined in an amount not exceeding Thirty thousand pesos (P30,000.00). When the refusal amounts to clear and open defiance of the Commission’s order, decision, or subpoena, the Commission may impose a daily fine of One thousand pesos (P1,000.00) until the order, decision, or subpoena is complied with.

10,000; 200,000

The unauthorized use of a corporate name shall be punished with a fine ranging from ______________ to _______________

10,000; 200,000

When, despite the knowledge of the existence of a ground for disqualification as provided in Section 26 of this Code, a director, trustee or officer willfully holds office, or willfully conceals such disqualification, such director, trustee or officer shall be punished with a fine ranging from ____________________ to ______________ at the discretion of the court, and shall be permanently disqualified from being a director, trustee or officer of any corporation.

20,000; 400,000

The unjustified failure or refusal by the corporation, or by those responsible for keeping and maintaining corporate records, to comply with Sections 45, 73, 92, 128, 177 and other pertinent rules and provisions of this Code on inspection and reproduction of records shall be punished with a fine ranging from Ten thousand pesos (P10,000.00) to Two hundred thousand pesos (P200,000.00), at the discretion of the court, taking into consideration the seriousness of the violation and its implications. When the violation of this provision is injurious or detrimental to the public, the penalty is a fine ranging from __________ to __________