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:
Organized as stock or non-stock.
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:
Common stock ownership.
Identity of directors.
Manner of corporate records.
Methods of conducting business.
Elements:
Control beyond just stock ownership.
Fraudulent use of control.
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.