Corpo Title 1-3

Republic Act No. 11232: The Revised Corporation Code of the Philippines

Title I: General Provisions

Section 1: Title of the Code

• Known as the "Revised Corporation Code of the Philippines".

• Took effect on February 23, 2019.

Section 2: Corporation Defined

• Definition: An artificial being created by operation of law, with rights of succession and powers authorized by law.

• Characteristics:

  • Artificial being.

  • Created by law.

  • Right of succession.

  • Powers and attributes as authorized.

• Relates primarily to private corporations.

Public vs. Private Corporations

• Boy Scouts of the Philippines (BSP):

  • A public corporation for public interest, not subject to government ownership/test of viability.

• Government-Owned or Controlled Corporation (GOCC):

  • Defined as any agency organized under law that functions for public needs and is at least 51% owned by the government.

  • Requirements:

    1. Organized as stock or non-stock.

    2. For stock, must have capital divided and authorize dividend distribution.

Piercing the Corporate Veil

• Concept understood as holding individuals personally liable to protect against fraud or wrongful acts.

• Factors for application:

  1. Common stock ownership.

  2. Identity of directors.

  3. Manner of corporate records.

  4. Methods of conducting business.

• Elements:

  1. Control beyond just stock ownership.

  2. Fraudulent use of control.

  3. Causal link between actions and injury suffered.

Corporate Classification

• Corporations may be classified as:

  • Stock Corporations: Have capital stock and can distribute dividends.

  • Non-Stock Corporations: No income distributable as dividends.

Compliance and Regulation

• Forming a Corporation: Requires Articles of Incorporation, which must include:

  • Name, purpose, office location, term, incorporator details, and authorized capital stock.

• Amendments: Require majority approval and compliance with regulatory recommendations.

Corporate Governance

• Board of Directors: Responsible for corporate affairs, with independent directors in public-interest corporations.

• Election of Directors: Must meet specific quorum requirements and follows regulations for voting and nominations.

• Officers and Management: Directors appoint officers to manage corporate affairs; must adhere to regulations regarding compensation and conflicts of interest.

Liability of Directors and Officers

• Directors and officers can be held liable for unlawful acts or gross negligence. They cannot vote for their own compensation unless approved by the stockholders.

• Disqualification: Certain conditions can disqualify individuals from serving, such as criminal convictions or breaches of fiduciary duty.

Key Legal Principles

• Corporate Personality: Corporations are distinct legal entities, and piercing the veil may be necessary under specific conditions to protect stakeholders.

• Business Judgment Rule: Courts generally respect the decisions of the board unless actions are found to be in bad faith or grossly negligent.

Risks and Challenges in Corporate Operations

• Directors must ensure that they do not engage in self-dealing practices. Contracts made in conflict with interests can be declared voidable unless meeting certain conditions.

• The validity of contracts is contingent upon full disclosure and fairness.

Conclusion

• The Revised Corporation Code standardizes corporate governance, defines corporate structure, and provides legal frameworks to ensure ethical business practices.