Batas Pambansa Bilang 68THE CORPORATION CODE OF THEPHILIPPINESBe it enacted by the Batasang Pambansa insession assembled:TITLE IGENERAL PROVISIONSDEFINITIONSAND CLASSIFICATIONSSectin !"Title of the Code. This Code shallbe known as "The Corporation Code of thePhilippines." (n)Sectin #" Corporation defned. A corporationis an artifcial being created by operation of law,haing the right of s!ccession and the powers,attrib!tesandpropertiese"presslya!thori#edby law or incident to its e"istence. ($)Sectin $"Classes of corporations.Corporations for%ed or organi#ed !nder thisCode%aybestockornon&stockcorporations.Corporationswhichhaecapital stockdiidedinto sharesand are a!thori#ed todistrib!te tothe holders of s!ch shares diidends orallot%ents of the s!rpl!s profts on the basis ofthe shares held are stock corporations. All othercorporations are non&stock corporations. ('a)Sectin %"Corporations created by speciallaws or charters. Corporations created byspecial laws or charters shall be goernedpri%arily by the proisions of the special law orcharter creatingthe%or applicabletothe%,s!pple%entedbytheproisionsof thisCode,insofar as they are applicable. (n)Sectin &"Corporators and incorporators,stockholdersandmembers.Corporatorsarethose whoco%poseacorporation,whetherasstockholders or as %e%bers. (ncorporators arethosestockholders or %e%bers %entionedinthe articles of incorporation as originallyfor%ing and co%posing the corporation andwho are signatories thereof.Corporators inastockcorporationarecalledstockholdersorshareholders. Corporatorsinanon&stock corporation are called %e%bers. ()a)Sectin 6"Classifcation of shares. Thesharesof stockof stockcorporations%aybediided into classes or series of shares, or both,anyof whichclassesor seriesof shares%ayhaes!chrights, priilegesor restrictions as%aybestatedinthearticles of incorporation*Proided, That noshare%aybedepriedofoting rights e"cept those classifed and iss!edas"preferred" or "redee%able" shares, !nlessotherwise proided in this Code* Proided,f!rther, That thereshall alwaysbeaclassorseries of shares whichhaeco%pleteotingrights. Any or all of theshares or series ofshares%ayhaeapar al!eor haenoparal!e as %ay be proided for in the articles ofincorporation* Proided, howeer, That banks,tr!st co%panies, ins!ranceco%panies, p!blic!tilities, and b!ilding and loan associations shallnot be per%itted to iss!e no&par al!e shares ofstock.Preferred shares of stock iss!ed by anycorporation %ay be gien preference in thedistrib!tion of the assets of the corporationincaseof li+!idationandinthedistrib!tionofdiidends, or s!ch other preferences as %ay bestated in the articles of incorporation which arenot iolatie of the proisions of this Code*Proided, That preferred shares of stock %ay beiss!ed only with a stated par al!e. The boardof directors, where a!thori#ed in the articles ofincorporation, %ay f" the ter%s and conditionsof preferred shares of stock or any seriesthereof* Proided, That s!ch ter%s andconditions shall be e,ectie !pon the fling of acertifcate thereof with the -ec!rities and."change Co%%ission.-hares of capital stock iss!ed witho!t par al!eshall be dee%ed f!lly paid and non&assessableand the holder of s!ch shares shall not be liableto the corporation or to its creditors in respectthereto* Proided/ That shares witho!t par al!e%ay not be iss!ed for a consideration less thanthe al!e of fe (P0.11) pesos per share*Proided, f!rther, That the entire considerationreceied by the corporation for its no&par al!eshares shall be treated as capital and shall notbe aailable for distrib!tion as diidends.A corporation %ay, f!rther%ore, classify itssharesforthep!rposeof ins!ringco%pliancewith constit!tional or legal re+!ire%ents.."cept as otherwise proided in the articles ofincorporationandstatedinthecertifcateofstock, each share shall be e+!al in all respectsto eery other share.2herethearticlesofincorporation proidefornon&oting shares in the cases allowed by thisCode, the holders of s!ch shares shallneertheless be entitled to ote on the following%atters*3. A%end%ent of the articles ofincorporation/$. Adoption and a%end%ent of by&laws/'. -ale, lease, e"change, %ortgage, pledgeor other disposition of all or s!bstantiallyall of the corporate property/). (nc!rring, creating or increasing bondedindebtedness/0. (ncrease or decrease of capital stock/4. 5erger or consolidation of thecorporationwithanothercorporationorother corporations/6. (nest%ent of corporate f!nds in anothercorporation or b!siness in accordancewith this Code/ and7. 8issol!tion of the corporation.."cept as proided in the i%%ediatelypreceding paragraph, the ote necessary toapproe a partic!lar corporate act as proidedinthisCodeshall bedee%edtoreferonlytostocks with oting rights. (0a)Sectin '"Founders shares. 9o!nders:shares classifed as s!ch in the articles ofincorporation%aybegiencertainrightsandpriilegesnoten;oyedbytheownersof otherstocks, proided that where the e"cl!sie rightto ote andbe oted for in the election ofdirectors isgranted, it %!st befor ali%itedperiodnottoe"ceedfe(0)yearss!b;ecttotheapproal of the-ec!rities and."changeCo%%ission. The fe&year period shallco%%ence fro% the date of the aforesaidapproal by the -ec!rities and ."changeCo%%ission. (n)Sectin 8"!edeemable shares. cers to beelectedshall perfor%thed!ties en;oinedonthe% by law and the by&laws of the corporation.Anlessthearticlesof incorporationortheby&laws proide for a greater %a;ority, a %a;ority ofthe n!%ber of directors or tr!stees as f"ed inthearticlesof incorporationshall constit!tea+!or!% for the transaction of corporateb!siness, and eery decision of at least a%a;ority of the directors or tr!stees present at a%eetingat whichthereisa+!or!%shall bealid as a corporate act, e"cept for the electionof o>cers whichshall re+!ire theote of a%a;ority of all the %e%bers of the board.8irectors or tr!stees cannot attend or ote bypro"y at board %eetings. (''a)Sectin#6"!eport of election of directors,trusteesando/cers.2ithin thirty ('1)daysafter the election of the directors, tr!stees ando>cers of the corporation, the secretary, or anyother o>cer of the corporation, shall s!b%it tothe-ec!ritiesand."changeCo%%ission, thena%es, nationalities and residences of thedirectors, tr!stees, and o>cers elected. -ho!lda director, tr!stee or o>cer die, resign or in any%anner cease to hold o>ce, his heirs in case ofhis death, the secretary, or any other o>cer ofthe corporation, or the director, tr!stee oro>cer hi%self, shall i%%ediatelyreport s!chfact to the -ec!rities and ."changeCo%%ission. (n)Sectin #'"+is#ualifcation of directors,trusteesoro/cers.Dopersonconictedbyfnal ;!dg%ent of an o,ense p!nishable byi%prison%ent for a period e"ceeding si" (4)years, or aiolationof this Codeco%%ittedwithinfe(0) years prior tothedateof hiselection or appoint%ent, shall +!alify as adirector, tr!steeor o>cer of anycorporation.(n)Sectin #8" !emo)al of directors or trustees. Any director or tr!stee of a corporation %ay bere%oed fro% o>ce by a ote of thestockholders holding or representing at leasttwo&thirds ($?') of the o!tstanding capital stock,or if the corporation be a non&stock corporation,byaoteof at least two&thirds ($?') of the%e%bersentitledto ote* Proided, Thats!chre%oal shall take place either at a reg!lar%eeting of the corporation or at a special%eetingcalledfor thep!rpose, andineithercase, after preio!snoticetostockholdersor%e%bers of the corporation of the intention topropose s!ch re%oal at the %eeting. A special%eetingof thestockholdersor%e%bersof acorporation for the p!rpose of re%oal ofdirectors ortr!stees, or any of the%,%!st becalled by the secretary on order of the presidentoronthewrittende%andof thestockholdersrepresentingor holdingat least a%a;orityofthe o!tstanding capital stock, or, if it be a non&stock corporation,on the written de%and of a%a;ority of the %e%bers entitled to ote.-ho!ldthesecretaryfail or ref!setocall thespecial %eeting!pons!chde%andor fail orref!se to gie the notice, or if there is nosecretary, the call for the %eeting %ay beaddressed directly to the stockholders or%e%bers by any stockholder or %e%ber of thecorporationsigningthede%and. Doticeoftheti%e and placeofs!ch %eeting,as wellas ofthe intention to propose s!ch re%oal, %!st begien by p!blication or by written noticeprescribed in this Code. cers is oidable, at the option ofs!ch corporation, !nless all the followingconditions are present*3. That thepresenceof s!chdirector ortr!steeintheboard%eetinginwhichthe contract was approed was notnecessary to constit!te a +!or!%fors!ch %eeting/$. That the ote of s!ch director or tr!steewasnot necessaryfor theapproal ofthe contract/'. That the contract is fair and reasonable!nder the circ!%stances/ and). Thatincaseof ano>cer, thecontracthas beenpreio!slya!thori#edbytheboard of directors.2here any of the frst two conditions set forth inthe preceding paragraph is absent, in the caseof acontract withadirector or tr!stee, s!chcontract %ay beratifedby the oteof thestockholders representing at least two&thirds($?')of theo!tstandingcapital stockorof atleast two&thirds ($?') of the %e%bers in a%eeting called for the p!rpose* Proided, Thatf!ll disclos!reof theaderseinterest of thedirectorsortr!steesinoledis%adeats!ch%eeting* Proided, howeer, Thatthecontractis fair and reasonable !nder the circ!%stances.(n)Sectin$$"Contracts between corporationswith interlocking directors. ."cept in cases offra!d, and proided the contract is fair andreasonable !nder the circ!%stances, a contractbetween two or %ore corporations hainginterlocking directors shall not be inalidated onthat gro!nd alone* Proided, That if the interestof the interlocking director in one corporation iss!bstantial and his interest in the othercorporationorcorporationsis%erelyno%inal,he shall be s!b;ect to the proisions of thepreceding section insofar as the lattercorporation or corporations are concerned.-tockholdings e"ceeding twenty ($1=) percentof the o!tstanding capital stock shall beconsidered s!bstantial for p!rposes ofinterlocking directors. (n)Sectin $%"+isloyalty of a director. 2here adirector, by irt!e of his o>ce, ac+!ires forhi%self a b!siness opport!nity which sho!ldbelong to the corporation, thereby obtainingprofts to the pre;!dice of s!ch corporation, he%!st acco!nt to the latter for all s!ch profts byref!ndingthesa%e, !nlesshis act has beenratifed by a ote of the stockholders owning orrepresenting at least two&thirds ($?') of theo!tstanding capital stock. This proision shall beapplicable, notwithstanding the fact that thedirector risked his own f!nds in the ent!re. (n)Sectin$&",*ecuti)ecommittee. Theby&laws of a corporation %ay create an e"ec!tieco%%ittee, co%posedof not less thanthree%e%bers of the board, to be appointed by theboard. -aidco%%ittee %ay act, by %a;orityote of all its %e%bers, on s!ch specifc%atters within the co%petence of the board, as%ay bedelegated to it in the by&laws or on a%a;ority ote of the board, e"cept with respectto* (3) approal of any action for whichshareholders: approal is also re+!ired/ ($) thefling of acancies in the board/ (') thea%end%ent or repeal of by&laws or the adoptionof new by&laws/ ()) the a%end%ent or repeal ofany resol!tion of the board which by its e"presster%sisnotsoa%endableorrepealable/ and(0) a distrib!tion of cash diidends to theshareholders.TITLE IVPO-ERS OF CORPORATIONSSectin $6"Corporate powers and capacity..ery corporation incorporated !nder this Codehas the power and capacity*3. To s!e and be s!ed in its corporatena%e/$. Cf s!ccession by its corporate na%e forthe period of ti%e stated in the articlesof incorporation and the certifcate ofincorporation/'. To adopt and !se a corporate seal/). To a%end its articles of incorporation inaccordancewiththeproisions of thisCode/0. Toadopt by&laws, not contrarytolaw,%orals, or p!blic policy, and to a%end orrepeal the sa%e in accordance with thisCode/4. (n case of stock corporations, to iss!e orsell stocks to s!bscribers and to sellstocks to s!bscribers and to sell treas!rystocks in accordance with the proisionsofthisCode/ andtoad%it%e%berstothe corporation if it be a non&stockcorporation/6. To p!rchase, receie, take or grant, hold,coney, sell, lease, pledge, %ortgageandotherwisedeal withs!chreal andpersonal property, incl!ding sec!ritiesand bonds of other corporations, as thetransaction of the lawf!l b!siness of thecorporation %ay reasonably andnecessarily re+!ire, s!b;ect to theli%itations prescribed by lawand theConstit!tion/7. To enter into %erger or consolidationwithother corporations as proidedinthis Code/@. To %ake reasonable donations, incl!dingthose for the p!blic welfare or forhospital, charitable, c!lt!ral, scientifc,ciic, or si%ilar p!rposes* Proided, Thatno corporation, do%estic or foreign, shallgie donations in aid of any politicalparty or candidate or for p!rposes ofpartisan political actiity/31. To establish pension, retire%ent, andother plans for the beneft of itsdirectors, tr!stees, o>cers ande%ployees/ and33. To e"ercise s!ch other powers as %ay beessential or necessarytocarryo!t itsp!rpose or p!rposes as stated in thearticles of incorporation. (3'a)Sectin $'"Power to e*tend or shortencorporateterm. Apriatecorporation%aye"tend or shortenits ter%as stated in thearticles of incorporationwhenapproedbya%a;ority ote of the board of directors ortr!stees and ratifed at a %eeting by thestockholders representing at least two&thirds($?') ofthe o!tstandingcapital stockorbyatleast two&thirds ($?') of the %e%bers in case ofnon&stock corporations. 2ritten notice of theproposedactionandof theti%eandplaceofthe %eeting shall be addressed to eachstockholder or %e%ber at his place of residenceas shown on the books of the corporation anddepositedtotheaddresseeinthepost o>cewith postage prepaid, or sered personally*Proided, That in case of e"tension of corporateter%, any dissenting stockholder%ay e"ercisehis appraisal right !nder the conditions proidedin this code. (n)Sectin$8"Power to increase or decreasecapitalstock2 incur, create or increase bondedindebtedness. Do corporation shall increase ordecreaseits capital stockor inc!r, createorincrease any bonded indebtedness !nlessapproedbya%a;orityoteof theboardofdirectorsand, atastockholder:s%eetingd!lycalledfor thep!rpose, two&thirds($?') of theo!tstanding capital stock shall faor theincreaseordi%in!tionof thecapital stock, orthe inc!rring, creating or increasing of anybonded indebtedness. 2ritten notice of theproposedincreaseordi%in!tionof thecapitalstock or of the inc!rring, creating, or increasingof anybondedindebtednessandof theti%eand place of the stockholder:s %eeting at whichthe proposed increase or di%in!tion of thecapital stockor theinc!rringor increasingofanybondedindebtednessistobeconsidered,%!stbeaddressedtoeachstockholderathisplace of residence as shown on the books of thecorporationanddeposited to the addresseeinthe post o>ce with postage prepaid, or seredpersonally.Acertifcateind!plicate%!stbesignedbya%a;ority of the directors of the corporation andco!ntersigned by the chair%an and thesecretary of the stockholders: %eeting, settingforth*(3) That the re+!ire%ents of this sectionhae been co%plied with/($) The a%o!nt of the increase ordi%in!tion of the capital stock/(') (f anincreaseof thecapital stock, thea%o!nt of capital stockor n!%ber ofsharesof no&par stockthereof act!allys!bscribed, the na%es, nationalities andresidences of thepersons s!bscribing,the a%o!nt of capital stock or n!%ber ofno&par stock s!bscribed by each, andthe a%o!nt paid by each on hiss!bscriptionincashor property,orthea%o!nt of capital stockor n!%ber ofsharesof no&parstockallottedtoeachstock&holder if s!chincreaseisfor thep!rpose of %aking e,ectie stockdiidend therefor a!thori#ed/()) Any bonded indebtedness to be inc!rred,created or increased/(0) The act!al indebtedness of thecorporation on the day of the %eeting/(4) The a%o!nt of stock represented at the%eeting/ and(6) The ote a!thori#ing the increase ordi%in!tionof thecapital stock, or theinc!rring, creatingorincreasingof anybonded indebtedness.Any increase or decrease in the capital stock orthe inc!rring, creating or increasing of anybonded indebtedness shall re+!ire priorapproal of the -ec!rities and ."changeCo%%ission.Cne of the d!plicate certifcates shall be kept onfle in the o>ce of the corporation and the othershall be fled with the -ec!rities and ."changeCo%%ission and attached to the original articlesof incorporation. 9ro% and after approal by the-ec!ritiesand."changeCo%%issionandtheiss!ance by the Co%%ission of its certifcate offling, the capital stock shall stand increased ordecreased and the inc!rring, creating orincreasing of any bonded indebtednessa!thori#ed, as the certifcate of fling %aydeclare* Proided, That the -ec!rities and."change Co%%ission shall not accept for flingany certifcate of increase of capital stock!nless acco%panied by the sworn state%ent ofthe treas!rer of the corporation lawf!lly holdingo>ce at the ti%e of the fling of the certifcate,showing that at least twenty&fe ($0=) percentof s!ch increased capital stock has beens!bscribed and that at least twenty&fe ($0=)percent of the a%o!nt s!bscribed has been paideither in act!al cash to the corporation or thattherehasbeentransferredtothecorporationproperty the al!ation of which is e+!al totwenty&fe($0=) percent of thes!bscription*Proided, f!rther, That no decrease of thecapital stock shall be approed by theCo%%ission if its e,ect shall pre;!dice therights of corporate creditors.Don&stock corporations %ay inc!r or createbonded indebtedness, or increase the sa%e,withtheapproal by a%a;ority oteof theboard of tr!stees and of at least two&thirds ($?')of the %e%bers in a %eeting d!ly called for thep!rpose.Gonds iss!ed by a corporation shall beregistered with the -ec!rities and ."changeCo%%ission, which shall haethea!thoritytodeter%ine the s!>ciency of the ter%s thereof.(36a)Sectin $(" Power to deny pre.empti)e right. All stockholders of a stock corporation shallen;oy pre&e%ptie right to s!bscribe to alliss!esor dispositionofsharesofanyclass,inproportion to their respectie shareholdings,!nlesss!chright isdeniedbythearticlesofincorporation or an a%end%ent thereto*Proided, That s!ch pre&e%ptie right shall note"tendtoshares tobeiss!edinco%pliancewith laws re+!iring stock o,erings or %ini%!%stock ownership by thep!blic/or toshares tobe iss!ed in good faith with the approal of thestockholders representing two&thirds ($?') of theo!tstanding capital stock, in e"change forpropertyneededfor corporatep!rposesor inpay%ent of a preio!sly contracted debt.Sectin %*" 3ale or other disposition of assets.-!b;ect to the proisions of e"isting laws onillegal co%binations and %onopolies, acorporation %ay, by a %a;ority ote of its boardof directorsor tr!stees, sell, lease, e"change,%ortgage, pledge or otherwise dispose of all ors!bstantially all of its property and assets,incl!ding its goodwill, !pon s!ch ter%s andconditions and for s!ch consideration, which%ay be %oney, stocks, bonds or otherinstr!%ents for the pay%ent of %oney or otherproperty or consideration, as its board ofdirectors or tr!stees %ay dee% e"pedient,when a!thori#ed by the ote of the stockholdersrepresenting at least two&thirds ($?') of theo!tstandingcapital stock, or incaseof non&stock corporation, by the ote of at least to two&thirds ($?') of the %e%bers, in a stockholder:sor %e%ber:s %eeting d!ly called for thep!rpose. 2ritten notice of the proposed actionand of the ti%e and place of the %eeting shallbe addressed to each stockholder or %e%ber athis place of residence as shown on the books ofthe corporation and deposited to the addresseein the post o>ce with postage prepaid, orsered personally* Proided, That any dissentingstockholder %ay e"ercise his appraisal right!nder the conditions proided in this Code.A sale or other disposition shall be dee%ed tocoer s!bstantiallyall thecorporatepropertyand assets if thereby the corporation wo!ld berenderedincapableof contin!ingtheb!sinessor acco%plishing the p!rpose for which it wasincorporated.After s!ch a!thori#ation or approal by thestockholders or %e%bers, the board of directorsor tr!stees %ay, neertheless, in its discretion,abandon s!ch sale, lease, e"change, %ortgage,pledge or other disposition of property andassets, s!b;ect to the rights of third parties!nder any contract relating thereto, witho!tf!rther action or approal by the stockholders or%e%bers.Dothing in this section is intended to restrict thepower of any corporation, witho!t thea!thori#ation by the stockholders or %e%bers,tosell, lease, e"change, %ortgage, pledgeorotherwisedisposeof anyof its propertyandassets if the sa%e is necessary in the !s!al andreg!lar co!rse of b!siness of said corporation orif the proceeds of the sale or other disposition ofs!chpropertyandassetsbeappropriatedforthe cond!ct of its re%aining b!siness.(nnon&stockcorporationswherethereareno%e%bers with oting rights, the ote of at leasta %a;ority of the tr!stees in o>ce will bes!>cient a!thori#ationfor thecorporationtoenter intoanytransactiona!thori#edbythissection.Sectin %!"Power to ac#uire own shares. Astock corporation shall hae the power top!rchase or ac+!ire its own shares for alegiti%ate corporate p!rpose or p!rposes,incl!ding b!t not li%ited to the following cases*Proided, That the corporation has !nrestrictedretained earnings in its books to coer theshares to be p!rchased or ac+!ired*3. To eli%inate fractional shares arising o!tof stock diidends/$. To collect or co%pro%ise anindebtedness to the corporation, arisingo!t of !npaid s!bscription, in adelin+!ency sale, and to p!rchasedelin+!ent shares sold d!ring said sale/and'. To pay dissenting or withdrawingstockholders entitled to pay%ent fortheir shares !nder the proisions of thisCode. (a)Sectin %#" Power to in)est corporate funds inanother corporation or business or for any otherpurpose. -!b;ect to the proisions of thisCode, a priate corporation %ay inest its f!ndsin any other corporation or b!siness or for anyp!rpose other than the pri%ary p!rpose forwhichit was organi#edwhenapproedbya%a;orityof theboardof directorsor tr!steesand ratifed by the stockholders representing atleast two&thirds ($?') of the o!tstanding capitalstock, or byat least twothirds ($?') of the%e%bers in the case of non&stock corporations,at astockholder:sor %e%ber:s%eetingd!lycalledfor thep!rpose. 2rittennoticeof theproposed inest%ent and the ti%e and place ofthe %eeting shall be addressed to eachstockholder or %e%ber at his place of residenceas shown on the books of the corporation anddepositedtotheaddresseeinthepost o>cewith postage prepaid, or sered personally*Proided, That any dissenting stockholder shallhaeappraisal rightasproidedinthisCode*Proided,howeer, Thatwhere the inest%entbythecorporationisreasonablynecessarytoacco%plish its pri%ary p!rpose as stated in thearticles of incorporation, the approal of thestockholders or %e%bers shall not benecessary. (36 3?$a)Sectin %$"Power to declare di)idends.& Theboardof directorsof astockcorporation%aydeclare diidends o!t of the !nrestrictedretained earnings which shall be payable incash, in property, or in stock to all stockholderson the basis of o!tstanding stock held by the%*Proided, That any cash diidends d!e ondelin+!ent stockshall frst beappliedtothe!npaidbalanceonthes!bscriptionpl!scostsande"penses, whilestockdiidends shall bewithheldfro%thedelin+!entstockholder!ntilhis!npaids!bscriptionisf!llypaid* Proided,f!rther, That no stock diidend shall be iss!edwitho!t the approal of stockholdersrepresentingnot lessthantwo&thirds ($?') oftheo!tstandingcapital stockat areg!lar orspecial %eeting d!ly called for the p!rpose.(34a)-tock corporations are prohibited fro% retainings!rpl!s profts in e"cess of one h!ndred (311=)percent of their paid&in capital stock, e"cept* (3)when;!stifedbydefnitecorporatee"pansionpro;ects or progra%s approed by the board ofdirectors/ or ($) when the corporation isprohibited !nder any loan agree%ent with anyfnancial instit!tion or creditor, whether local orforeign, fro% declaring diidends witho!t its?hisconsent, ands!chconsent has not yet beensec!red/ or (') whenit canbeclearlyshownthats!chretentionisnecessary!nderspecialcirc!%stances obtaining in the corporation,s!ch as when there is need for special reserefor probable contingencies. (n)Sectin %%"Power to enter into managementcontract. Do corporation shall concl!de a%anage%ent contract with another corporation!nless s!ch contract shall hae been approedbytheboardof directorsandbystockholdersowning at least the %a;ority of the o!tstandingcapital stock, orbyatleast a%a;orityof the%e%bers in the case of a non&stock corporation,of both the %anaging and the %anagedcorporation, at a%eetingd!lycalledfor thep!rpose* Proided, That (3) where a stockholderor stockholders representing the sa%e interestof both the %anaging and the %anagedcorporations own or control %ore than one&third(3?') of the total o!tstanding capital stockentitled to ote of the %anaging corporation/ or($) wherea%a;orityof the%e%bers of theboard of directors of the %anaging corporationalso constit!te a %a;ority of the %e%bers of theboard of directors of the %anaged corporation,then the %anage%ent contract %!st beapproed bythestockholders of the %anagedcorporationowningatleasttwo&thirds($?')ofthetotal o!tstandingcapital stockentitledtoote, or by at least two&thirds ($?') of the%e%bers in the case of a non&stock corporation.Do %anage%ent contract shall be entered intofor a period longer than fe years for any oneter%.The proisions of the ne"t preceding paragraphshall apply to any contract whereby acorporation!ndertakesto%anageor operateall or s!bstantially all of the b!siness of anothercorporation, whether s!chcontractsarecalledserice contracts, operating agree%ents orotherwise* Proided, howeer, That s!ch sericecontracts or operating agree%ents which relateto the e"ploration, deelop%ent, e"ploitation or!tili#ation of nat!ral reso!rces %ay be enteredinto for s!ch periods as %ay be proided by thepertinent laws or reg!lations. (n)Sectin %&"Altra ires acts of corporations. Do corporation !nder this Code shall possess ore"ercise any corporate powers e"cept thoseconferred by this Code or by its articles ofincorporation and e"cept s!ch as are necessaryorincidental tothee"erciseof thepowerssoconferred. (n)TITLE VB. LA-SSectin %6"%doption of by.laws. .erycorporation for%ed !nder this Code %!st,withinone(3) %onthafter receipt of o>cialnotice of the iss!ance of its certifcate ofincorporationbythe-ec!ritiesand."changeCo%%ission, adopt a codeof by&laws for itsgoern%ent not inconsistent with this Code. 9orthe adoption of by&laws by the corporation thea>r%atie ote of the stockholdersrepresenting at least a %a;ority of theo!tstanding capital stock, or of at least a%a;orityof the%e%bersincaseof non&stockcorporations, shall benecessary. Theby&lawsshall be signed by the stockholders or %e%bersoting for the%and shall be kept in theprincipal o>ce of the corporation, s!b;ect to theinspection of the stockholders or %e%bersd!ring o>ce ho!rs. A copy thereof, d!lycertifedtobya%a;orityof thedirectors ortr!stees co!ntersigned by the secretary of thecorporation, shall befledwiththe-ec!ritiesand ."change Co%%ission which shall beattached to the original articles of incorporation.Dotwithstanding the proisions of the precedingparagraph, by&laws%aybeadoptedandfledprior toincorporation/ ins!chcase, s!chby&lawsshall beapproedandsignedbyall theincorporators ands!b%ittedtothe-ec!ritiesand."changeCo%%ission, together withthearticles of incorporation.(n all cases, by&laws shall be e,ectie only !pontheiss!ancebythe-ec!rities and."changeCo%%issionof acertifcationthattheby&lawsare not inconsistent with this Code.The -ec!rities and ."change Co%%ission shallnot accept for fling the by&laws or anya%end%ent thereto of any bank, bankinginstit!tion, b!ildingandloanassociation, tr!stco%pany, ins!rance co%pany, p!blic !tility,ed!cational instit!tion or other specialcorporationsgoernedbyspecial laws, !nlessacco%panied by a certifcate of the appropriategoern%ent agency to the e,ect that s!ch by&laws or a%end%ents are inaccordance withlaw. ($1a)Sectin %'"Contents ofby.laws. -!b;ect totheproisions of theConstit!tion, this Code,other special laws, and the articles ofincorporation, a priate corporation %ayproide in its by&laws for*3. Theti%e, placeand%anner of callingand cond!cting reg!lar or special%eetings of the directors or tr!stees/$. The ti%e and %anner of calling andcond!ctingreg!lar or special %eetingsof the stockholders or %e%bers/'. The re+!ired +!or!%in %eetings ofstockholders or %e%bers and the%anner of oting therein/). The for% for pro"ies of stockholders and%e%bers and the %anner of otingthe%/0. The +!alifcations, d!ties andco%pensation of directors or tr!stees,o>cers and e%ployees/4. The ti%e for holding the ann!al electionof directors of tr!stees and the %ode or%anner of giing notice thereof/6. The%annerof electionorappoint%entand the ter% of o>ce of all o>cers otherthan directors or tr!stees/7. The penalties for iolation of the by&laws/@. (nthecaseof stock corporations, the%anner of iss!ing stock certifcates/ and31. -!ch other %atters as %ay be necessaryfor the proper or conenient transactionof its corporate b!siness and a,airs.($3a)Sectin%8"%mendments to by.laws. Theboardof directors or tr!stees, bya%a;orityote thereof, and the owners of at least a%a;ority of the o!tstanding capital stock, or atleast a %a;ority of the %e%bers of a non&stockcorporation, at a reg!lar or special %eeting d!lycalledfor thep!rpose, %aya%endor repealany by&laws or adopt new by&laws. The ownersof two&thirds ($?') of theo!tstandingcapitalstockortwo&thirds($?') of the%e%bersinanon&stock corporation %ay delegate to theboard of directors or tr!stees the power toa%end or repeal any by&laws or adopt new by&laws* Proided, That any power delegated to theboard of directors or tr!stees to a%end orrepealany by&laws or adopt new by&laws shallbe considered as reoked wheneerstockholders owning or representing a %a;orityof the o!tstanding capital stock or a %a;ority ofthe %e%bers in non&stock corporations, shall soote at a reg!lar or special %eeting.2heneer any a%end%ent or new by&laws areadopted, s!ch a%end%ent or new by&laws shallbe attached to the original by&laws in the o>ceof thecorporation, andacopythereof, d!lycertifed !nder oath by the corporate secretaryand a %a;ority of the directors or tr!stees, shallbe fled with the -ec!rities and ."changeCo%%issionthesa%etobeattachedtotheoriginal articles of incorporation and original by&laws.The a%ended or newby&laws shall only bee,ectie!pontheiss!ancebythe-ec!ritiesand ."change Co%%ission of a certifcation thatthesa%earenotinconsistentwiththisCode.($$a and $'a)TITLE VI/EETINGSSectin %("4indsof meetings.5eetingsofdirectors, tr!stees, stockholders, or %e%bers%ay be reg!lar or special. (n)Sectin&*"!egular andspecial meetingsofstockholders or members. & cer.($), $4)Sectin&!"Place and time of meetings ofstockholders of members. -tockholder:s or%e%ber:s %eetings, whether reg!lar or special,shallbeheld in the city or %!nicipality wherethe principal o>ce of the corporation is located,andif practicable inthe principal o>ceofthecorporation* Proided, That5etro5anilashall,for p!rposes of this section, be considered a cityor %!nicipality.Dotice of %eetings shall be in writing, and theti%e and place thereof stated therein.All proceedings had and any b!sinesstransactedat any %eetingofthestockholdersor %e%bers, if within the powers or a!thority ofthe corporation, shall be alid een if the%eeting be i%properly held or called, proidedall the stockholders or %e%bers of thecorporation are present or d!ly represented atthe %eeting. ($) and $0)Sectin "5uorumin meetings. Anlessotherwise proided for in this Code or in the by&laws, a +!or!% shall consist of the stockholdersrepresenting a %a;ority of the o!tstandingcapital stockora%a;orityof the%e%bersinthe case of non&stock corporations. (n)Sectin&$"!egular andspecial meetingsofdirectors or trustees. cers,no action %ay be bro!ght against anycorporationwhichshall haeiss!edcertifcateof stock in lie! of those lost, stolen or destroyedp!rs!ant to the proced!re aboe&described.(r%atie ote of stockholders representing atleast two&thirds ($?') of the o!tstanding capitalstock of each corporationinthecase of stockcorporationsoratleasttwo&thirds($?') of the%e%bers in the case of non&stock corporationsshall be necessary for the approal of s!ch plan.Any dissenting stockholder in stock corporations%ay e"ercisehisappraisal right in accordancewith the Code* Proided, That if after theapproal by the stockholders of s!ch plan, theboard of directors decides to abandon the plan,the appraisal right shall be e"ting!ished.Any a%end%ent to the plan of %erger orconsolidation %ay be %ade, proided s!cha%end%ent is approed by %a;ority ote of therespectie boards of directors or tr!stees of allthe constit!ent corporations and ratifed by thea>r%atie ote of stockholders representing atleast two&thirds ($?') of the o!tstanding capitalstock or of two&thirds ($?') of the %e%bers ofeach of the constit!ent corporations. -!ch plan,together with any a%end%ent, shall beconsidered as the agree%ent of %erger orconsolidation. (n)Sectin '8" Articles of %erger or consolidation. After the approal by the stockholders or%e%bers as re+!ired by the preceding section,articles of %erger or articles of consolidationshall bee"ec!tedbyeachof theconstit!entcorporations, to besignedbythepresidentorice&president and certifed by the secretary orassistantsecretaryof eachcorporationsettingforth*3. Theplanof the%erger or theplanofconsolidation/$. As to stock corporations, the n!%ber ofshares o!tstanding, or in the case ofnon&stock corporations, the n!%ber of%e%bers/ and'. Astoeachcorporation, then!%ber ofshares or %e%bers oting for andagainst s!ch plan, respectiely. (n)Sectin '(".,ectiity of %erger orconsolidation. Thearticles of %erger or ofconsolidation, signed and certifed as hereinaboe re+!ired, shall be s!b%itted to the-ec!rities and ."change Co%%ission in+!adr!plicate for its approal* Proided, That inthe case of %erger or consolidation of banks orbanking instit!tions, b!ilding and loanassociations, tr!st co%panies, ins!ranceco%panies, p!blic !tilities, ed!cationalinstit!tions and other special corporationsgoerned by special laws, the faorablereco%%endation of the appropriate goern%entagency shall frst be obtained. (f theCo%%ission is satisfed that the %erger orconsolidationof thecorporationsconcernedisnot inconsistent with the proisions of this Codeand e"isting laws, it shall iss!e a certifcate of%erger or of consolidation, at whichti%ethe%erger or consolidation shall be e,ectie.(f, !pon inestigation, the -ec!rities and."change Co%%ission has reason to belieethat theproposed%erger or consolidationiscontrary to or inconsistent with the proisions ofthis Code or e"isting laws, it shall set a hearingto gie the corporations concerned theopport!nitytobeheard. 2rittennoticeof thedate, ti%e and place of hearing shall be gien toeachconstit!ent corporationat least two($)weeks before said hearing. The Co%%issionshall thereafter proceed as proided in thisCode. (n)Sectin 8*" .,ects of %erger or consolidation.The%erger or consolidationshall haethefollowing e,ects*3. The constit!ent corporations shallbeco%easinglecorporationwhich, incaseof %erger, shall bethes!riingcorporation designated in the plan of%erger/ and, incaseof consolidation,shall be the consolidated corporationdesignated in the plan of consolidation/$. The separate e"istence of theconstit!ent corporations shall cease,e"cept that of the s!riing or theconsolidated corporation/'. The s!riing or the consolidatedcorporationshall possessall therights,priileges, i%%!nities andpowers andshall be s!b;ect to all the d!ties andliabilities of a corporation organi#ed!nder this Code/). The s!riing or the consolidatedcorporation shall there!pon andthereafter possess all the rights,priileges,i%%!nitiesandfranchises ofeach of the constit!ent corporations/ andall property, real or personal, and allreceiables d!e on whateer acco!nt,incl!ding s!bscriptions to shares andother choses in action, and all and eeryother interest of, or belonging to, or d!eto each constit!ent corporation, shall bedee%ed transferred to and ested ins!ch s!riing or consolidatedcorporation witho!t f!rther act or deed/and0. The s!riing or consolidatedcorporation shall be responsible andliable for all the liabilities and obligationsof each of the constit!ent corporations inthe sa%e %anner as if s!ch s!riing orconsolidated corporation had itselfinc!rred s!ch liabilities or obligations/and any pending clai%, action orproceeding bro!ght by or against any ofs!ch constit!ent corporations %ay beprosec!ted by or against the s!riing orconsolidatedcorporation. Therights ofcreditorsor liens!ponthepropertyofany of s!ch constit!ent corporationsshall not be i%paired by s!ch %erger orconsolidation. (n)TITLE 1APPRAISAL RIGHTSectin 8!"(nstances of appraisal right. Anystockholder of a corporation shall hae the rightto dissent and de%and pay%ent of the fairal!e of his shares in the following instances*3. (n case any a%end%ent to the articles ofincorporation has the e,ect of changingor restricting the rights of anystockholder or class of shares, or ofa!thori#ingpreferences inany respects!periortothoseof o!tstandingsharesof any class, or of e"tending orshortening the ter% of corporatee"istence/$. (n case of sale, lease, e"change,transfer, %ortgage, pledge or otherdispositionof all or s!bstantiallyall ofthe corporate property and assets asproided in the Code/ and'. (n case of %erger or consolidation. (n)Sectin 8#"7owright is e*ercised. Theappraisal right %ay be e"ercised by anystockholder whoshall haeotedagainst theproposed corporate action, by %aking a writtende%andonthecorporationwithinthirty('1)days after the date on which the ote was takenfor pay%ent of thefair al!eof his shares*Proided, That fail!re to %ake the de%andwithin s!ch period shall be dee%ed a waier oftheappraisal right. (f theproposedcorporateaction is i%ple%ented or a,ected, thecorporation shall pay to s!ch stockholder, !pons!rrender of the certifcate or certifcates ofstock representing his shares, the fair al!ethereof as of the day prior to the date on whichthe ote was taken, e"cl!ding any appreciationor depreciation in anticipation of s!ch corporateaction.(f withinaperiodof si"ty(41) daysfro%thedate the corporate action was approed by thestockholders, thewithdrawingstockholderandthe corporation cannot agree on the fair al!eof the shares, it shall be deter%ined andappraisedbythree(') disinterestedpersons,one of who% shall be na%ed by thestockholder, another by the corporation, andthe third by the two th!s chosen. The fndings ofthe %a;ority of the appraisers shall be fnal, andtheir awardshall bepaidbythecorporationwithin thirty ('1) days after s!ch award is%ade* Proided, That no pay%ent shall be%ade to any dissenting stockholder !nless thecorporationhas!nrestrictedretainedearningsin its books to coer s!ch pay%ent* andProided, f!rther, That !ponpay%ent bythecorporation of the agreed or awarded price, thestockholder shall forthwith transfer his shares tothe corporation. (n)Sectin 8$",-ect of demand and terminationof right. 9ro% the ti%e of de%and for pay%entof the fair al!e of a stockholder:s shares !ntileither the abandon%ent of the corporate actioninoled or the p!rchase of the said shares bythe corporation, all rights accr!ing to s!chshares, incl!ding oting and diidend rights,shall be s!spended in accordance with theproisions of this Code, e"cept the right of s!chstockholder to receie pay%ent of the fair al!ethereof* Proided, That if the dissentingstockholder is not paid the al!e of his shareswithin '1 days after the award, his oting anddiidendrightsshall i%%ediatelyberestored.(n)Sectin 8%"6hen right to payment ceases.Do de%and for pay%ent !nder this Title %ay bewithdrawn !nless the corporation consentsthereto. (f, howeer, s!ch de%and for pay%entis withdrawn with the consent of thecorporation, or if the proposed corporate actionis abandoned or rescinded by the corporation ordisapproed by the -ec!rities and ."changeCo%%ission where s!ch approal is necessary,orif the-ec!ritiesand."changeCo%%issiondeter%ines that s!ch stockholder is not entitledtotheappraisal right, thentheright of saidstockholder to be paid the fair al!e of hisshares shall cease, his stat!s as a stockholdershall there!ponberestored, andall diidenddistrib!tionswhichwo!ldhaeaccr!edonhisshares shall be paid to hi%. (n)Sectin8&"6hobearscostsof appraisal.Thecostsande"pensesof appraisal shall beborne by the corporation, !nless the fair al!eascertained by the appraisers is appro"i%atelythesa%eas thepricewhichthecorporation%ayhaeo,eredtopaythestockholder, inwhich case they shall be borne by the latter. (nthe case of an action to recoer s!ch fair al!e,all costs and e"penses shall be assessedagainst thecorporation, !nless theref!sal ofthe stockholder to receie pay%ent was!n;!stifed. (n)Sectin 86""otation on certifcates2 rights oftransferee. 2ithin ten (31) days afterde%anding pay%ent for his shares, a dissentingstockholder shall s!b%it the certifcates of stockrepresentinghissharestothecorporationfornotation thereon that s!ch shares are dissentingshares. Iis fail!re to do so shall, at the option ofthe corporation, ter%inate his rights !nder thisTitle. (f sharesrepresentedbythecertifcatesbearing s!chnotation are transferred,andthecertifcatesconse+!entlycancelled, therightsof thetransferor as adissentingstockholder!nder thisTitleshall ceaseandthetransfereeshall hae all the rights of a reg!lar stockholder/and all diidend distrib!tions which wo!ld haeaccr!edons!chshares shall bepaidtothetransferee. (n)TITLE 1INON2STOC0 CORPORATIONSSectin8'"8efnition. 9orthep!rposesofthis Code, a non&stock corporation is one whereno part of its inco%e is distrib!table asdiidends to its %e%bers, tr!stees, or o>cers,s!b;ect to the proisions of this Code ondissol!tion* Proided, That anyproft whichanon&stock corporation %ay obtain as an incidenttoitsoperationsshall, wheneernecessaryorproper, be !sed for the f!rtherance of thep!rpose or p!rposes forwhichthecorporationwas organi#ed, s!b;ect to the proisions of thisTitle.The proisions goerning stock corporation,when pertinent, shall be applicable to non&stockcorporations, e"cept as %ay be coered byspecifc proisions of this Title. (n)Sectin 88" P!rposes. Don&stock corporations%ay be for%ed or organi#ed for charitable,religio!s, ed!cational, professional, c!lt!ral,fraternal, literary, scientifc, social, ciic serice,or si%ilar p!rposes, like trade, ind!stry,agric!lt!ral and like cha%bers, or anyco%bination thereof, s!b;ect to the specialproisions of this Title goerning partic!larclasses of non&stock corporations. (n)CHAPTER I/E/BERSSectin8("!ightto)ote.Therightof the%e%bers of any class or classes to ote %ay beli%ited, broadened or denied to the e"tentspecifed in the articles of incorporation or theby&laws. Anless so li%ited, broadened or denied,each %e%ber, regardless of class, shall beentitled to one ote.Anless otherwise proided in the articles ofincorporationor theby&laws, a%e%ber %ayote by pro"y in accordance with the proisionsof this Code. (n)Koting by %ail or other si%ilar %eans by%e%bers of non&stock corporations %ay bea!thori#ed by the by&laws of non&stockcorporations withtheapproal of, and!nders!chconditionswhich%aybeprescribedby,the -ec!rities and ."change Co%%ission.Sectin (*" Don&transferability of %e%bership. 5e%bership in a non&stock corporation and allrightsarisingtherefro%arepersonal andnon&transferable, !nless the articles of incorporationor the by&laws otherwise proide. (n)Sectin (!"Ter%ination of %e%bership. 5e%bership shall be ter%inated in the %annerandfortheca!sesproidedinthearticlesofincorporation or the by&laws. Ter%ination of%e%bership shall hae the e,ect ofe"ting!ishing all rights of a %e%ber in thecorporation or in its property, !nless otherwiseproided in the articles of incorporation or theby&laws. (n)CHAPTER IITR,STEES AND OFFICESSectin(#",lectionandtermof trustees.Anless otherwise proided in the articles ofincorporation or the by&laws, the board oftr!steesof non&stockcorporations, which%aybe %ore than ffteen (30) in n!%ber as %ay bef"ed in their articles of incorporation or by&laws,shall, as soon as organi#ed, so classifythe%seles that the ter% of o>ce of one&third(3?') of their n!%ber shall e"pireeeryyear/and s!bse+!ent elections of tr!stees co%prisingone&third (3?') of the board of tr!stees shall beheld ann!ally and tr!stees so elected shall haeater%of three(') years. Tr!steesthereafterelectedtofll acancies occ!rringbeforethee"piration of a partic!lar ter% shall hold o>ceonly for the !ne"pired period.Do person shall be elected as tr!stee !nless heis a %e%ber of the corporation.Anless otherwise proided in the articles ofincorporation or the by&laws, o>cers of a non&stock corporation %ay be directly elected by the%e%bers. (n)Sectin ($"Placeofmeetings.Theby&laws%ay proide that the %e%bers of a non&stockcorporation%ayholdtheir reg!lar or special%eetingsatanyplaceeeno!tsidetheplacewhere the principal o>ce of the corporation islocated* Proided, That proper notice is sent toall %e%bers indicating the date, ti%e and placeof the %eeting* and Proided, f!rther, That theplace of %eeting shall be within the Philippines.(n)CHAPTER IIIDISTRIB,TION OF ASSETS INNON2STOC0 CORPORATIONSSectin(%"!ules of distribution. (ncasedissol!tion of a non&stock corporation inaccordance with the proisions of this Code, itsassets shall be applied and distrib!ted asfollows*3. All liabilities and obligations of thecorporationshall bepaid, satisfedanddischarged, or ade+!ateproisionshallbe %ade therefore/$. Assetsheldbythecorporation!ponacondition re+!iring ret!rn, transfer orconeyance, and which condition occ!rsby reason of the dissol!tion, shall beret!rned, transferred or coneyed inaccordance with s!ch re+!ire%ents/'. Assets receied and held by thecorporation s!b;ect to li%itationsper%ittingtheir!seonlyforcharitable,religio!s, beneolent, ed!cational orsi%ilar p!rposes, b!t not held!ponacondition re+!iring ret!rn, transfer orconeyance by reason of the dissol!tion,shall be transferred or coneyed to oneor %ore corporations, societies ororgani#ations engaged in actiities in thePhilippines s!bstantially si%ilar to thoseof thedissolingcorporationaccordingto a plan of distrib!tion adoptedp!rs!ant to this Chapter/). Assets other than those %entioned intheprecedingparagraphs, if any, shallbe distrib!ted in accordance with theproisions of the articles of incorporationor theby&laws, tothee"tent that thearticlesof incorporationortheby&laws,deter%ine the distrib!tie rights of%e%bers, or any class or classes of%e%bers, or proide for distrib!tion/ and0. (n any other case, assets %ay bedistrib!ted to s!ch persons, societies,organi#ations or corporations, whether ornot organi#ed for proft, as %ay bespecifed in a plan of distrib!tionadopted p!rs!ant to this Chapter. (n)Sectin (&"Plan of distribution of assets. Aplan proiding for the distrib!tion of assets, notinconsistent with the proisions of this Title,%ay be adopted by a non&stock corporation inthe process of dissol!tion in the following%anner*Theboardof tr!steesshall, by%a;orityote,adopt a resol!tion reco%%ending a plan ofdistrib!tion and directing the s!b%issionthereof to a ote at a reg!lar or special %eetingof %e%bers haing oting rights. 2ritten noticesetting forth the proposed plan of distrib!tion ora s!%%ary thereof and the date, ti%e andplaceof s!ch%eetingshall begientoeach%e%ber entitled to ote, within the ti%e and inthe %anner proided in this Code for the giingof notice of %eetings to %e%bers. -!ch plan ofdistrib!tionshall beadopted!ponapproal ofat least two&thirds ($?') of the %e%bers haingoting rights present or represented by pro"y ats!ch %eeting. (n)TITLE 1IICLOSE CORPORATIONSSectin (6" +efnition and applicability of Title.& A close corporation, within the %eaning of thisCode, is one whose articles of incorporationproide that* (3) All thecorporation:s iss!edstock of all classes, e"cl!sie of treas!ry shares,shall beheldof recordby not %orethanaspecifed n!%ber of persons, not e"ceedingtwenty ($1)/ ($) all the iss!ed stock of allclasses shall be s!b;ect to one or %ore specifedrestrictionsontransferper%ittedbythisTitle/and(') Thecorporationshall not list inanystock e"change or %ake any p!blic o,ering ofanyof itsstockof anyclass. Dotwithstandingthe foregoing, a corporation shall not bedee%ed a close corporation when at least two&thirds ($?') of its oting stock or oting rights isowned or controlled by another corporationwhich is not a close corporation within the%eaning of this Code.Any corporation %ay be incorporated as a closecorporation, e"cept %ining or oil co%panies,stocke"changes, banks, ins!ranceco%panies,p!blic !tilities, ed!cational instit!tions andcorporations declared tobe ested withp!blicinterest in accordance with the proisions of thisCode.The proisions of this Title shall pri%arily goernclose corporations* Proided, That theproisions of other Titles of this Code shall applys!ppletorily e"cept insofar as this Titleotherwise proides.Sectin('"%rticles of incorporation. Thearticlesof incorporationof aclosecorporation%ay proide*3. 9or aclassifcationof shares or rightsand the +!alifcations for owning orholding the sa%e and restrictions ontheir transfers as %ay be stated therein,s!b;ect to the proisions of the followingsection/$. 9ora classifcation of directors into oneor %ore classes, each of who% %ay beoted for and elected solely by apartic!lar class of stock/ and'. 9or a greater +!or!% or otingre+!ire%ents in %eetings ofstockholders or directors than thoseproided in this Code.The articles of incorporation of a closecorporation%ayproidethat theb!sinessofthe corporation shall be %anaged by thestockholders of the corporation rather than by aboard of directors. -o long as this proisioncontin!es in e,ect*3. Do %eeting of stockholders need becalled to elect directors/$. Anless the conte"t clearly re+!iresotherwise, the stockholders of thecorporation shall be dee%ed to bedirectors for the p!rpose of applying theproisions of this Code/ and'. The stockholders of the corporation shallbe s!b;ect to all liabilities of directors.The articles of incorporation %ay likewiseproidethat all o>cersor e%ployeesor thatspecifed o>cers or e%ployees shall be electedor appointed by the stockholders, instead of bythe board of directors.Sectin (8"0alidity of restrictions on transferof shares. cers/ (')directing or prohibiting any act of thecorporation or its board of directors,stockholders, o>cers, or other persons party totheaction/ ())re+!iringthep!rchaseattheirfair al!e of shares of any stockholder, either bythe corporation regardless of the aailability of!nrestrictedretainedearningsinitsbooks, orby the other stockholders/ (0) appointing aproisional director/ (4) dissoling thecorporation/ or (6) granting s!ch other relief asthe circ!%stances %ay warrant.A proisional director shall be an i%partialperson who is neither a stockholder nor acreditor of the corporation or of any s!bsidiaryor a>liate of the corporation, and whose f!rther+!alifcations, if any, %ay be deter%ined by theCo%%ission. A proisional director is not areceierof thecorporationand doesnothaethe title and powers of a c!stodian or receier. Aproisional director shall hae all the rights andpowers of a d!ly elected director of thecorporation, incl!ding the right to notice of andto ote at %eetings of directors, !ntil s!ch ti%eas he shall be re%oed by order of theCo%%ission or by all the stockholders. Iisco%pensation shall be deter%ined byagree%ent betweenhi%andthecorporations!b;ect toapproal of theCo%%ission, which%ayf" his co%pensationintheabsenceofagree%ent or in the eent of disagree%entbetween the proisional director and thecorporation.Sectin !*&"6ithdrawal of stockholder ordissolution of corporation. (n addition andwitho!t pre;!dice to other rights and re%ediesaailable to a stockholder !nder this Title, anystockholder of a close corporation %ay, for anyreason, co%pel the said corporation to p!rchasehis shares at their fair al!e, which shall not belessthantheir par or iss!edal!e, whenthecorporation has s!>cient assets in its books tocoer its debts and liabilities e"cl!sie of capitalstock* Proided, That any stockholder of a closecorporation %ay, by written petition to the-ec!rities and."changeCo%%ission, co%pelthedissol!tionof s!chcorporationwheneerany of acts of the directors, o>cers or those incontrol of the corporation is illegal, orfra!d!lent, or dishonest, or oppressie or!nfairly pre;!dicial to thecorporationor anystockholder, orwheneercorporateassetsarebeing %isapplied or wasted.TITLE 1IIISPECIAL CORPORATIONSCHAPTERI 2 ED,CATIONAL CORPORATIONSSectin !*6"&ncorporation. .d!cationalcorporations shall be goerned by special lawsand by the general proisions of this Code. (n)Sectin !*'"Pre.re#uisites to incorporation.."cept!ponfaorablereco%%endationof the5inistry of .d!cation and C!lt!re, the -ec!ritiesand."changeCo%%issionshall notacceptorapproethearticles of incorporationandby&laws of any ed!cational instit!tion. (347a)Sectin !*8"Boardof trustees.Tr!steesofed!cationalinstit!tionsorgani#edas non&stockcorporations shall not be less than fe (0) nor%ore than ffteen (30)* Proided, howeer, Thatthe n!%ber of tr!stees shall be in %!ltiples offe (0).Anless otherwise proided in the articles ofincorporation on the by&laws, the board oftr!stees of incorporatedschools, colleges, orotherinstit!tionsof learningshall, assoonasorgani#ed, so classify the%seles that the ter%of o>ce of one&ffth (3?0) of their n!%ber shalle"pire eery year. Tr!stees thereafter elected tofll acancies, occ!rring before the e"piration ofa partic!lar ter%, shallhold o>ce only for the!ne"pired period. Tr!stees elected thereafter tofll acancies ca!sed by e"piration of ter% shallhold o>ce for fe (0) years. A %a;ority of thetr!stees shall constit!te a +!or!% for thetransaction of b!siness. The powers anda!thority of tr!stees shall be defned in the by&laws.9or instit!tions organi#ed as stock corporations,the n!%ber and ter%of directors shall begoerned by the proisions on stockcorporations. (34@a)CHAPTER IIRELIGIO,S CORPORATIONSSectin !*("Classes of religious corporations. dait of thepresiding elder, secretary, or clerk or other%e%ber of s!chreligio!s societyor religio!sorder, or diocese, synod, or district organi#ationof thereligio!sdeno%ination, sect or ch!rch,setting forth the following*3. That the religio!s society or religio!sorder, or diocese, synod, or districtorgani#ation is a religio!s organi#ation ofa religio!s deno%ination, sect or ch!rch/$. That at least two&thirds ($?') of its%e%bership hae gien their writtenconsent or hae oted to incorporate, ata d!ly conened %eeting of the body/'. That theincorporationof thereligio!ssociety or religio!s order, or diocese,synod, or district organi#ation desiring toincorporate is not forbidden byco%petent a!thority or by theconstit!tion, r!les, reg!lations ordiscipline of the religio!sdeno%ination,sect, or ch!rch of which it for%s a part/). That the religio!s society or religio!sorder, or diocese, synod, or districtorgani#ation desires to incorporate forthe ad%inistration of its a,airs,properties and estate/0. Theplacewheretheprincipal o>ceofthe corporation is to be established andlocated, which place %!st be within thePhilippines/ and4. The na%es, nationalities, and residencesof thetr!steeselectedbythereligio!ssociety or religio!s order, or the diocese,synod, or district organi#ationtoserefor the frst year or s!ch other period as%aybeprescribedbythelawsof thereligio!s society or religio!s order, or ofthe diocese, synod, or districtorgani#ation, the board of tr!stees to benot less than fe (0) nor %ore thanffteen (30). (341a)TITLE 1IVDISSOL,TIONSectin !!'"5ethods of dissol!tion. Acorporation for%ed or organi#ed !nder theproisions of this Code %ay be dissoledol!ntarily or inol!ntarily. (n)Sectin!!8"Kol!ntarydissol!tionwherenocreditors are a,ected. (f dissol!tion of acorporation does not pre;!dice the rights of anycreditor haing a clai% against it, thedissol!tion %ay be e,ected by %a;ority ote oftheboardof directors or tr!stees, andbyaresol!tion d!ly adopted by the a>r%atie oteof thestockholdersowningat leasttwo&thirds($?')of theo!tstandingcapital stockorof atleast two&thirds ($?') of the %e%bers of a%eeting to be held !pon call of the directors ortr!stees after p!blication of the notice of ti%e,placeandob;ect of the%eetingfor three(')consec!tie weeks in a newspaper p!blished inthe place where the principal o>ce of saidcorporationislocated/ andif nonewspaperisp!blished in s!ch place, then in a newspaper ofgeneral circ!lation in the Philippines, aftersending s!ch notice to each stockholder or%e%ber either by registered %ail or bypersonal deliery at least thirty ('1) days priorto said %eeting. A copy of the resol!tiona!thori#ing the dissol!tion shall be certifed bya %a;ority of the board of directors or tr!steesand co!ntersigned by the secretary of thecorporation. The -ec!rities and ."changeCo%%ission shall there!pon iss!e thecertifcate of dissol!tion. (4$a)Sectin !!("Kol!ntary dissol!tion wherecreditorsarea,ected. 2herethedissol!tionof a corporation %ay pre;!dice the rights of anycreditor, the petition for dissol!tion shall befled with the -ec!rities and ."changeCo%%ission.The petition shallbe signedby a%a;ority of its board of directors or tr!stees orother o>cers haingthe %anage%ent of itsa,airs, erifed by its president or secretary oroneof itsdirectorsor tr!stees, andshall setforthall clai%s andde%ands against it, andthat itsdissol!tionwasresoled!ponbythea>r%atie ote of the stockholdersrepresenting at least two&thirds ($?') of theo!tstandingcapital stockor byat least two&thirds ($?') of the %e%bers at a %eeting of itsstockholders or %e%bers called for thatp!rpose.(f the petition is s!>cient in for% ands!bstance, theCo%%issionshall, byanorderrecitingthe p!rpose ofthe petition,f" a dateonorbeforewhichob;ectionsthereto%aybefled by any person, which date shall not be lessthan thirty('1) days nor%ore than si"ty(41)daysaftertheentryof theorder. Gefores!chdate, a copy of the order shall be p!blished atleast once a week for three (') consec!tieweeks in a newspaper of general circ!lationp!blished in the %!nicipality or city where theprincipal o>ce of the corporation is sit!ated, orif there be no s!ch newspaper, then in anewspaper of general circ!lation in thePhilippines, and a si%ilar copy shallbe postedfor three(') consec!tie weeks inthree (')p!blic places in s!ch %!nicipality or city.Apon fe (0) day:s notice, gien after the dateon which the right to fle ob;ections as f"ed inthe order has e"pired, the Co%%ission shallproceed to hear the petition and try any iss!e%adebytheob;ections fled/ andif nos!chob;ection is s!>cient, and the %aterialallegations of the petition are tr!e, it shallrender ;!dg%ent dissoling the corporation anddirecting s!ch disposition of its assets as ;!sticere+!ires, and %ay appoint a receier to collects!ch assets and pay the debts of thecorporation. (cial lang!age of thePhilippines, if necessary. Theapplicationshallbe !nder oath and, !nless already stated in itsarticles of incorporation, shall specifcally setforth the following*3. The date and ter% of incorporation/$. The address, incl!ding the streetn!%ber, of the principal o>ce of thecorporationinthe co!ntry or stateofincorporation/'. Thena%eandaddress of its residentagent a!thori#ed to accept s!%%onsand process in all legal proceedings and,pending the establish%ent of a localo>ce, all notices a,ecting thecorporation/). TheplaceinthePhilippineswherethecorporation intends to operate/0. Thespecifcp!rposeorp!rposeswhichthe corporation intends to p!rs!e in thetransaction of its b!siness in thePhilippines*Proided,Thatsaid p!rposeor p!rposes are those specifcally statedinthecertifcateof a!thorityiss!edbythe appropriate goern%ent agency/4. The na%es and addresses of the presentdirectors and o>cers of the corporation/6. A state%ent of its a!thori#ed capitalstock and the aggregate n!%ber ofshares which the corporation hasa!thoritytoiss!e, ite%i#edbyclasses,paral!eofshares,shares witho!tparal!e, and series, if any/7. Astate%ent of its o!tstandingcapitalstock and the aggregate n!%ber ofshares which the corporation has iss!ed,ite%i#ed by classes, par al!e of shares,shareswitho!tparal!e, andseries, ifany/@. A state%ent of the a%o!nt act!ally paidin/ and31. -!chadditional infor%ationas%aybenecessary or appropriate in order toenable the -ec!rities and ."changeCo%%issionto deter%inewhethers!chcorporation is entitled to a license totransact b!siness in the Philippines, andto deter%ine and assess the feespayable.Attached to the application for license shall be ad!ly e"ec!ted certifcate !nder oath by thea!thori#ed o>cial or o>cials of the ;!risdictionof its incorporation, attesting to the fact that thelawsof theco!ntryor stateof theapplicantallow9ilipinociti#ens andcorporations todob!sinesstherein, andthat theapplicant isane"istingcorporationingoodstanding. (f s!chcertifcate is in a foreign lang!age, a translationthereof in.nglish!nder oathofthetranslatorshall be attached thereto.The application for a license to transactb!siness in the Philippines shall likewise beacco%panied by a state%ent !nder oath of thepresident or any other person a!thori#ed by thecorporation, showingtothesatisfactionof the-ec!rities and ."change Co%%ission and othergoern%ental agencyinthepropercasesthattheapplicantissolent andinso!nd fnancialcondition, and setting forth the assets andliabilities of the corporation as of the date note"ceeding one (3) year i%%ediately prior to thefling of the application.9oreign banking, fnancial and ins!rancecorporations shall, in addition to the aboere+!ire%ents, co%ply with the proisions ofe"isting laws applicable to the%. (n the case ofall other foreign corporations, no application forlicensetotransact b!sinessinthePhilippinesshall be accepted by the -ec!rities and."change Co%%ission witho!t preio!sa!thority fro% the appropriate goern%entagency, wheneer re+!ired by law. (47a)Sectin!#6"&ssuanceof alicense. (f the-ec!rities and ."change Co%%ission is satisfedthat the applicant has co%pliedwithall there+!ire%ents of this Code and other speciallaws, r!les and reg!lations, the Co%%issionshall iss!e a license to the applicant to transactb!sinessinthePhilippinesfor thep!rposeorp!rposes specifed in s!ch license. Aponiss!ance of the license, s!ch foreign corporation%ay co%%ence to transact b!siness in thePhilippines and contin!e to do so for as long asitretainsitsa!thoritytoactasacorporation!nder thelawsof theco!ntryor stateof itsincorporation, !nless s!ch license is sooners!rrendered, reoked, s!spended or ann!lled inaccordance with this Code or other special laws.2ithin si"ty (41) days after the iss!ance of thelicensetotransactb!sinessinthePhilippines,the license, e"cept foreign banking or ins!rancecorporation, shall deposit with the -ec!ritiesand."changeCo%%issionfor thebeneft ofpresentandf!t!recreditorsofthelicenseeinthe Philippines, sec!rities satisfactory to the-ec!rities and ."change Co%%ission,consisting of bonds or other eidence ofindebtedness of the Loern%ent of thePhilippines, its political s!bdiisions andinstr!%entalities, or of goern%ent&owned orcontrolledcorporationsandentities, sharesofstock in "registered enterprises" as this ter% isdefned in cial or o>cials of the co!ntry or state !nderthe laws of which %erger or consolidation wase,ected* Proided, howeer, That if theabsorbed corporation is the foreign corporationdoing b!siness in the Philippines, the latter shallat the sa%e ti%e fle a petition for withdrawal ofits license in accordance with this Title. (n)Sectin !$$" +oing business without a license. Do foreign corporation transacting b!siness inthe Philippines witho!t a license, or itss!ccessors or assigns, shall be per%itted to%aintain or interene in any action, s!it orproceeding in any co!rt or ad%inistratieagency of the Philippines/ b!t s!ch corporation%ay be s!ed or proceeded against beforePhilippine co!rts or ad%inistratietrib!nals onany alid ca!se of action recogni#ed !nderPhilippine laws. (4@a)Sectin !$%"!e)ocation of license. 2itho!tpre;!dice to other gro!nds proided by speciallaws, the licenseof a foreigncorporationtotransact b!siness in the Philippines %ay bereoked or s!spended by the -ec!rities and."change Co%%ission !pon any of the followinggro!nds*3. 9ail!re to fle its ann!al report or pay anyfees as re+!ired by this Code/$. 9ail!re to appoint and %aintain aresident agent in the Philippines asre+!ired by this Title/'. 9ail!re, after change of its resident agentor of his address, to s!b%it to the-ec!ritiesand."changeCo%%issionastate%ent of s!ch change as re+!ired bythis Title/). 9ail!retos!b%it tothe-ec!ritiesand."changeCo%%issionana!thenticatedcopy of any a%end%ent to its articles ofincorporation or by&laws or of anyarticles of %erger or consolidation withinthe ti%e prescribed by this Title/0. A %isrepresentation of any %aterial%atter in any application, report,a>dait or other doc!%ent s!b%itted bys!ch corporation p!rs!ant to this Title/4. 9ail!re to pay any and all ta"es, i%posts,assess%ents or penalties, if any, lawf!llyd!e to the Philippine Loern%ent or anyof its agencies or political s!bdiisions/6. Transactingb!siness inthe Philippineso!tsideof thep!rposeor p!rposesforwhich s!ch corporation is a!thori#ed!nder its license/7. Transacting b!siness in the Philippines asagent of or actingfor andinbehalf ofany foreign corporation or entity not d!lylicensed to do b!siness in thePhilippines/ or@. Any other gro!nd as wo!ld render it !nfttotransact b!sinessinthePhilippines.(n)Sectin !$&"&ssuance of certifcate ofre)ocation. Aponthereocationofanys!chlicensetotransactb!sinessinthePhilippines,the-ec!ritiesand."changeCo%%issionshalliss!e a corresponding certifcate of reocation,f!rnishing a copy thereof to the appropriategoern%ent agency in the proper cases.The -ec!rities and ."change Co%%ission shallalso%ail tothecorporationat its registeredo>ce in the Philippines a notice of s!chreocation acco%panied by a copy of thecertifcate of reocation. (n)Sectin !$6"6ithdrawal of foreigncorporations. -!b;ect to e"isting laws andreg!lations, aforeigncorporationlicensedtotransact b!siness in the Philippines %ay beallowed to withdrawfro%the Philippines byflingapetitionfor withdrawal of license. Docertifcate of withdrawal shall be iss!ed by the-ec!rities and ."change Co%%ission !nless allthe following re+!ire%ents are %et/3. All clai%s which hae accr!ed in thePhilippines hae been paid,co%pro%ised or settled/$. All ta"es, i%posts, assess%ents, andpenalties, if any, lawf!lly d!e to thePhilippine Loern%ent or any of itsagencies or political s!bdiisions haebeen paid/ and'. The petition for withdrawal of license hasbeen p!blished once a week for three (')consec!tie weeks in a newspaper ofgeneral circ!lation in the Philippines.TITLE 1VI/ISCELLANEO,S PROVISIONSSectin !$'"8utstanding capital stockdefned. The ter% "o!tstanding capital stock",as !sed in this Code, %eans the total shares ofstock iss!ed !nder binding s!bscriptionagree%ents to s!bscribers or stockholders,whether or not f!llyor partiallypaid, e"cepttreas!ry shares. (n)Sectin !$8" +esignation of go)erning boards.Theproisionsof specifcproisionsof thisCode to the contrary notwithstanding, non&stockor special corporations %ay, thro!gh theirarticles of incorporation or their by&laws,designate their goerning boards by any na%eother than as board of tr!stees. (n)Sectin!$("&ncorporationandother fees.The -ec!rities and ."change Co%%ission ishereby a!thori#ed to collect and receie fees asa!thori#edbylawor byr!lesandreg!lationspro%!lgated by the Co%%ission.9:wphi9 (n)Sectin !%*"3tock ownership in certaincorporations. P!rs!ant to the d!ties specifedby Article J(K of the Constit!tion, the Dational.cono%ic and 8eelop%ent A!thority shall,fro%ti%eto ti%e, %akea deter%inationofwhether the corporate ehicle has been !sed byanycorporationor byb!sinessor ind!strytofr!strate the proisions thereof or of applicablelaws, and shall s!b%it to the GatasangPa%bansa, wheneer dee%ed necessary, areport of its fndings, incl!dingreco%%endations for their preention orcorrection.5a"i%!%li%its%aybeset bytheGatasangPa%bansa for stockholdings in corporationsdeclared by it to be ested with a p!blic interestp!rs!ant to the proisions of this section,belonging to indiid!als or gro!ps of indiid!alsrelated to each other by consang!inity ora>nity or by close b!siness interests, orwheneer it is necessarytoachieenationalob;ecties, preent illegal %onopolies orco%binations in restraint or trade, or toi%ple%entnational econo%icpolicies declaredin laws, r!les and reg!lations designed topro%ote the general welfare and fosterecono%ic deelop%ent.(nreco%%endingto theGatasangPa%bansacorporations, b!sinesses or ind!stries to bedeclaredestedwithap!blicinterest andinfor%!latingproposals for li%itations onstockownership, the Dational .cono%ic and8eelop%entA!thorityshall considerthetypeand nat!re of the ind!stry, the si#e of theenterprise, the econo%ies of scale, thegeographic location, the e"tent of 9ilipinoownership, thelabor intensityof theactiity,thee"port potential, aswell as other factorswhich are ger%ane to the reali#ation andpro%otion of b!siness and ind!stry.Sectin !%!"%nnual reportor corporations..ery corporation, do%estic or foreign, lawf!llydoing b!siness in the Philippines shall s!b%it tothe -ec!rities and ."change Co%%ission anann!al report of its operations, together with afnancialstate%entofits assets and liabilities,certifed by any independent certifed p!blicacco!ntant inappropriatecases, coeringthepreceding fscal year and s!ch otherre+!ire%ents as the-ec!rities and."changeCo%%ission%ayre+!ire. -!chreportshall bes!b%itted within s!ch period as %ay beprescribed by the -ec!rities and ."changeCo%%ission. (n)Sectin !%#"Confdential nature ofe*amination results. All interrogatoriespropo!nded by the -ec!rities and ."changeCo%%ission and the answers thereto, as well astheres!lts of anye"a%ination%adebytheCo%%ission or by any other o>cial a!thori#edby law to %ake an e"a%ination of theoperations, books and records of anycorporation, shall bekept strictlyconfdential,e"cept insofar as the law %ay re+!ire the sa%eto be %ade p!blic or where s!chinterrogatories, answers or res!lts arenecessarytobepresentedaseidencebeforeany co!rt. (n)Sectin !%$"!ule.making power of the3ecurities and ,*change Commission. The-ec!rities and ."change Co%%ission shall haethe power and a!thority to i%ple%ent theproisions of this Code, and to pro%!lgate r!lesand reg!lations reasonably necessary to enableit to perfor% its d!ties here!nder, partic!larly inthe preention of fra!d and ab!ses on the partof the controlling stockholders, %e%bers,directors, tr!stees or o>cers. (n)Sectin !%%"0iolations of the Code.Kiolations of any of the proisions of this Codeor its a%end%ents not otherwise specifcallypenali#ed therein shall be p!nished by a fne ofnotlessthanonetho!sand(P3,111.11)pesosb!t not %orethantentho!sand(P31,111.11)pesos or by i%prison%ent for not less thanthirty ('1) days b!t not %ore than fe (0)years, or both, in the discretion of the co!rt. (fthe iolation is co%%itted by a corporation, thesa%e %ay, after notice and hearing, bedissoled in appropriate proceedings before the-ec!rities and ."change Co%%ission* Proided,That s!ch dissol!tion shall not precl!de theinstit!tion of appropriate action against thedirector, tr!steeor o>cer of thecorporationresponsible for said iolation* Proided, f!rther,That nothing in this section shall be constr!edtorepeal theotherca!sesfor dissol!tion of acorporation proided in this Code. (3@1 3?$ a)Sectin !%&" %mendment or repeal. Do rightor re%edy in faor of or against anycorporation, its stockholders, %e%bers,directors,tr!stees, oro>cers, noranyliabilityinc!rred by any s!ch corporation, stockholders,%e%bers, directors, tr!stees, oro>cers, shallbe re%oed or i%paired either by thes!bse+!ent dissol!tion of said corporation or byanys!bse+!ent a%end%ent or repeal of thisCode or of any part thereof. (n)Sectin!%6"!epealingclause. ."cept ase"pressly proided by this Code, all laws orparts thereof inconsistent with any proision ofthis Code shall be dee%ed repealed. (n)Sectin !%'"3eparability of pro)isions.-ho!ldanyproisionof thisCodeoranypartthereof be declared inalid or !nconstit!tional,the other proisions, so far as they areseparable, shall re%ain in force. (n)Sectin !%8"%pplicability to e*istingcorporations. All corporations lawf!lly e"istinganddoingb!siness inthePhilippines onthedate of the e,ectiity of this Code andheretofore a!thori#ed, licensed or registered bythe -ec!rities and ."change Co%%ission, shallbe dee%ed to hae been a!thori#ed, licensed orregistered!nder theproisions of this Code,s!b;ect to the ter%s and conditions of itslicense, and shall be goerned by the proisionshereof* Proided, That if any s!ch corporation isa,ected by the new re+!ire%ents of this Code,saidcorporationshall, !nlessotherwisehereinproided, begienaperiodof not%orethantwo($)yearsfro%thee,ectiityofthisCodewithin which to co%ply with the sa%e. (n)Sectin !%(" ,-ecti)ity. This Code shall takee,ect i%%ediately !pon its approal.