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The Revised Corporation Code of the Philippines:

Changes and Developments in Corporation Law


by Atty. Nico B. Valderrama, CPA, MPM
Posted on February 22, 2019; Updated on July 12, 2019

The long-anticipated revision and update of the corporation law have now been realized. With the passage of the
Revised Corporation Code of the Philippines (RCC) or RA 11232, the rules governing corporations may now
address the current concerns of corporations and would-be corporations. It aims to further ease the formation of
corporations and filing of applications and reports which have frustrated those who deal with the bureaucracy. It
empowers the SEC to fully enforce the new law. It also introduced new rules that align with developments in
technology and new laws that came after the old Corporation Code or BP 68 like the Philippine Deposit Insurance
Corporation Charter or RA 3591, the New Central Bank Act or RA 7653, the Rules of Court, the Intellectual
Property Code or RA 8293, the Securities Regulation Code or RA 8799, the Data Privacy Act or RA 10173, and
the Philippine Competition Act or RA 10667. Some established rules and practices of the SEC have been
institutionalized by their incorporation in the RCC. The updates on corporation law presented herein are divided
into two categories: (i) Changes and (ii) Innovations. Changes shall refer to those rules already existing under
the old Corporation Code (OCC), but later refined or amended by RCC. Innovations shall refer to those rules not
provided under the OCC which are first introduced by RCC. At the latter portion, items retained by the RCC are
likewise listed. The corresponding sections in the RCC are provided at the end of each item for easy reference.

CHANGES: revision (reference in the RCC; provision in the OCC amended)


1. Corporations prohibited from issuing no-par Person Corporation (OPC). (Section 10; Section
value shares now includes other corporations 10)
authorized to obtain or access funds from the 7. As a general rule, corporations shall have
public, whether publicly listed or not. (Section 6 perpetual existence, unless its articles of
of the RCC; Section 6 of the OCC) incorporation provide for a specific term.
2. Exclusive right of holders of founder shares to Corporations formed prior to RCC shall
vote and be voted for in the election of directors automatically have perpetual existence without
shall not exceed 5 years from date of prejudice to its right to elect to retain its specific
incorporation. (Section 7; Section 7) corporate term through a majority vote of its
3. The terms and conditions for the issuance of stockholders. (Section 11; Section 11)
redeemable shares must not only be stated in the 8. Amendment on the corporate term may now be
articles of incorporation but in the certificate of made within 3 years prior to the expiration of the
stock as well. (Section 8; Section 8) corporate term. (Section 11; Section 11)
4. Majority of the incorporators need not be 9. The number of trustees indicated in the articles
residents of the Philippines. (Section 10; of incorporation may now be more than 15.
Section 10) (Section 13; Section 14)
5. Juridical persons such as partnerships, 10. The authorized capital stock no longer needs to
associations, and corporation may now be at least 25% subscribed. (Section 14;
incorporate a corporation. There is no more Sections 13 and 15)
minimum number of incorporators, but the 11. The Treasurer’s Affidavit is no longer
maximum number remains at 15. (Section 10; required since the certification concerning the
Section 10) amount of capital subscribed and/or paid is
6. A corporation with a single stockholder may already included in the articles of incorporation.
now be formed and shall be considered a One (Section 14; Section 14)

THE REVISED CORPORATION CODE: CHANGES AND DEVELOPMENTS IN CORPORATION LAW by NICO B. VALDERRAMA |1
12. There is no more minimum paid-up capital. SEC and the Philippine Competition Commission
(Section 14; Section 14) or PCC may impose additional qualifications or
13. False certification concerning the amount of other disqualifications. (Section 26; Section 27)
capital subscribed and/or paid is a new ground 23. Elections to fill vacancies in directorships and
to disapprove articles of incorporation or trusteeships due to term expiration must be held
amendments thereto. (Section 16; Section 17) no later than the day of such expiration. In
14. Failure of a corporation to formally organize and case of removal, vacancy may be filled during the
commence its business within 5 years from the same meeting. In all other cases, it must be filled
date of its incorporation shall be render the no later than 45 days from the time the
certificate of incorporation deemed revoked as vacancy arose. (Section 28; Section 29)
of the day following the end of the 5-year 24. Dealings of directors, trustees, or officers now
period. (Section 21; Section 22) include their spouses and relatives within the
15. After commencing its business, failure of the 4th civil degree of consanguinity or affinity.
corporation to operate for at least 5 consecutive (Section 31; Section 32)
years may be placed under delinquent status 25. The prohibition on domestic corporations
by SEC after due notice and hearing. A against giving donations for political
delinquent corporation shall have 2 years to purposes has been removed. Now, only foreign
resume operations and comply with all SEC- corporations are prohibited to give such
prescribed requirements. Failure to comply shall donations. (Article 35; Section 36)
be a cause for revocation of the certificate of 26. Notice about the meeting on the proposed
incorporation. (Section 21) extension or shortening of corporate term may
16. Majority of the directors or trustees need not be now be given to the stockholders and members
residents of the Philippines. (Section 22; electronically. (Section 36; Section 37)
Section 23) 27. Notice about the meeting on the proposed
17. Trustees elected shall have a term not exceeding increase or decrease of capital stock or increase
3 years. (Section 22; Section 23) of bonded indebtedness may now be given to the
18. A treasurer to be elected must be a resident of stockholders electronically. (Section 37;
the Philippines. (Section 24; Section 25) Section 38)

19. The election of an officer no longer expressly 28. The certificate executed in case of increase or
requires absolute majority of the number of decrease of capital stock or increase of bonded
directors/trustees fixed in the articles of indebtedness need not set forth the actual
incorporation. (Section 24; Section 25) indebtedness of the corporation on the day of
the meeting. (Section 37; Section 38)
20. The duties of elected officers may be provided
not only in the bylaws, but also as resolved by 29. The application for increase or decrease of
the board of directors. (Section 24; Section 25) capital stock or increase of bonded
indebtedness shall require prior approval of SEC
21. The death, resignation, or cessation to hold office and where appropriate, of the Philippine
of any director, trustee, or officer shall be Competition Commission (PCC). (Section 37;
reported in writing to the SEC within 7 days from Section 38)
knowledge thereof. (Section 25; Section 26)
30. The application for increase or decrease of
22. Disqualification of directors, trustees, or officers capital stock or increase of bonded
for violations of the RCC and Securities indebtedness shall be filed with the SEC within
Regulation Code or RA 8799, now clearly 6 months from the date of approval of the board
requires conviction by final judgment. It also of directors and stockholders, which may be
adds two additional disqualifications: finding extended for justifiable reasons. (Section 37;
of administrative liability for any offense involving Section 38)
fraudulent acts and judgment or finding of a
foreign court or equivalent foreign regulatory for 31. The treasurer’s sworn statement accompanying
acts similar to the aforementioned grounds. The the application for increase of capital stock now

THE REVISED CORPORATION CODE: CHANGES AND DEVELOPMENTS IN CORPORATION LAW by NICO B. VALDERRAMA |2
clearly provides that the required 25% is not lawfully called or convened. (Section 49;
subscription is of the “increase in capital Section 50)
stock” instead of “increased capital stock”. The 40. Metro Cebu, Metro Davao, and other
new rule is consistent with the current policy of Metropolitan areas (in addition to Metro Manila)
the SEC. (Section 37; Section 38) are now considered a city or municipality for
32. Notice about the meeting on the proposed sale purposes of places where stockholders’ or
or other disposition of all or substantially all of the members’ meetings may be held. (Section 50;
corporate assets may now be given to the Section 51)
stockholders electronically. (Section 39; 41. Notices of stockholders’ or members’ meetings
Section 40) now require certain information and
33. Notice about the meeting on the proposed accompanying proxy forms. (Section 50;
investment of corporate funds in another Section 51)
corporation may now be given to the 42. All proceedings and any business transacted at
stockholders electronically. (Section 41; the stockholders’ or members’ meetings shall be
Section 42) valid even if improperly held or called, provided
34. Bylaws must now be filed together with the that no one of the present stockholders or
articles of incorporation. It can no longer be filed members expressly states at the beginning of the
within one month from notice of issuance of the meeting that the express purpose of
certificate of incorporation. (Section 45; Section attendance is to object to the transaction of
46) any business because the meeting is not
35. Bylaws may provide for the maximum number of lawfully called or convened. (Section 50; Section
other board representations that an 51)
independent director or trustee may have. 43. Notice of board meetings must be sent to every
(Section 46; Section 47) director or trustee at least 2 days prior to the
36. Bylaws may provide other matters for the proper scheduled meeting, unless a longer period is
or convenient transaction of its corporate affairs provided in the bylaws. (Section 52; Section 53)
for the promotion of good governance and anti- 44. It is now expressly provided that directors or
graft and corruption measures. (Section 46; trustees who cannot physically attend or vote at
Section 47) board meetings can participate and vote through
37. If the date of regular meeting of stockholders is remote communication that allow them
not fixed in the bylaws, it shall be held on any reasonable opportunities to participate. (Section
date after April 15 of every year as determined 52; Section 53)
by the board provided that a written notice shall 45. Pledgors and mortgagors are now identified as
be sent to all stockholders or members at least secured creditors to include other persons
21 days prior to the meeting, unless a different granted with security interest over the shares.
period is required. Notice of regular meetings (Section 54; Section 55)
may now be sent electronically. (Section 49; 46. No voting trust agreement shall be entered into
Section 50) which are anti-competitive and violative of
38. There is an exhaustive list of matters (which nationality and capital requirements in
may be expanded through proposal) required to addition to for purposes for the perpetuation of
be presented at each regular meeting of fraud. (Section 58; Section 59)
stockholders or members. (Section 49; Section 47. Additional consideration for stocks: shares of
50) stock in another corporation and other generally
39. General waivers of notice in the articles of accepted form of consideration. (Section 61;
incorporation or the bylaws shall not be allowed. Section 62)
Attendance at a meeting shall not constitute a 48. Notice of the sale of delinquent stocks may be
waiver of notice of such meeting when the sent through other means provided in the
express purpose of attendance is to object to the bylaws. (Section 67; Section 68)
transaction of any business because the meeting
THE REVISED CORPORATION CODE: CHANGES AND DEVELOPMENTS IN CORPORATION LAW by NICO B. VALDERRAMA |3
49. There is an exhaustive list of corporate books member at least 20 days prior to the meeting
and records that must be preserved at the and must be published once prior to the
principal office and made available to the meeting in a newspaper. Notice may now be
stockholders or members. (Section 73; Section given electronically. (Section 134; Section 118)
74) 59. A verified request for voluntary dissolution shall
50. The financial statements furnished to the be filed with the SEC containing required
requesting stockholder or member shall be in information and accompanied by required
the form and substance of the financial documents. (Section 134; Section 118)
reporting required by the SEC. (Section 74; 60. The SEC must approve the request for
Section 75) dissolution within 15 days from receipt and
51. If the total assets or total liabilities of the issue the certificate of dissolution. (Section 134;
corporation are less than P600,000 or such Section 118)
other amount as may be determined by the 61. For corporations regulated by government
Department of Finance, the financial statements agencies, applications for dissolution must be
required to be presented to the stockholders or favourably recommended by the appropriate
members may be certified under oath by the government agency. (Section 134; Section
treasurer and the president. (Section 74; 118)
Section 75)
62. In case of voluntary dissolutions where creditors
52. The notice required for meetings to approve are affected, the petition must contain certain
merger or consolidation shall be given in the information and accompanied by required
same manner as giving notice of regular or documents. (Section 135; Section 119)
special meetings. (Section 76; Section 77)
63. It is now clearly provided that voluntary
53. There are four additional items that must be set dissolution shall take effect only upon the
forth in the articles of merger or consolidation. issuance by the SEC of a certificate of
(Section 77; Section 78) dissolution. (Sections 134 and 135; Sections
54. There is appraisal right in case of investment of 118 and 119)
corporate funds for any purpose other than the 64. In case of expiration of corporate term,
primary purpose of the corporation. (Section 80; dissolution shall automatically take effect on the
Section 81) day following the last day of the corporate
55. The first trustees elected in a non-stock term stated in the articles of incorporation
corporation does not have to serve their initial without need for the issuance of the certificate of
terms partially (1 year for 1/3 of the board, 2 dissolution. (Section 136; Section 120)
years for the other 1/3, and 3 years for the rest). 65. The grounds for involuntary dissolution are
(Section 91; Section 92) now listed down. (Section 138; Section 121)
56. Incorporation of educational institutions no 66. Banks are excluded from the provision on
longer require the favourable corporate liquidation. (Section 139, Section 122)
recommendation of the Department of
Education. (Section 107 of OCC was not 67. Upon the winding up of corporate affairs, any
reproduced in RCC) asset distributable to any creditor or stockholder
or member who is unknown or cannot be found
57. The voting requirement in case of voluntary shall be escheated in favour of the national
dissolution where no creditors are affected now government. (Section 139; Section 122)
only requires majority vote of the board and
affirmative vote of stockholders owning at least 68. The threshold for bonds or securities required
majority of the outstanding capital stock or for foreign corporations applying for license to
majority of the members. (Section 134; Section do business in the Philippines has been adjusted
118) P100,000 to P500,000 (as initial bond or
security) and P5,000,000 to P10,000,000
58. Notice on the meeting to vote on the voluntary (licensee’s gross income for the fiscal year that
dissolution must be given to each stockholder or

THE REVISED CORPORATION CODE: CHANGES AND DEVELOPMENTS IN CORPORATION LAW by NICO B. VALDERRAMA |4
will require additional securities). (Section 143; and desist orders, or suspend or revoke
Section 126) certificates of incorporation, or dissolve
69. If a domestic corporation is appointed as a corporations and forfeit its assets. (Section 158;
resident agent of a foreign corporation, it must Sections 143 and 144)
be of sound financial standing and must show 71. Reportorial requirements for every corporation
proof that it in good standing as certified by the are now listed down, with a right to redact
SEC. (Section 144; Section 127) confidential information. (Section 177; Section
70. Administrative sanctions such as fines for the 141)
violations of the RCC or of a rule, regulation, or 72. The powers, functions, and jurisdiction of the
order of the SEC have been increased. Aside SEC are now listed down. (Section 179; Section
from fines, the SEC may issue permanent cease 143)

INNOVATIONS:
1. Revival of corporations whose terms have 10. Corporations vested with public interest shall
expired is now allowed subject to all of its duties, have independent directors constituting 20%
debts, and liabilities existing prior to its revival. of such board. They must be elected by the
(Section 11 of the RCC) shareholders present or entitled to vote in
2. An arbitration agreement may now be provided absentia during the election of directors.
in the articles of incorporation. (Section 13) (Section 22)

3. Filing of the articles of incorporation and 11. Stockholders and members may vote through
amendments thereto may now be filed remote communication or in absentia, if
electronically. (Section 13) authorized in the bylaws or by a majority of the
board. Such modes are available to corporations
4. One Person Corporations must bear “OPC” at vested with public interest, even in the absence
end of its corporate name. (Section 14) of a provision in the bylaws. Stockholders or
5. The form of articles of incorporation now members who participate through remote
includes the undertaking to change the name communication or in absentia shall be deemed
of the corporation when there exists a prior right present for purposes of quorum. (Section 23)
or if it is contrary to law, public morals, good 12. Directors and trustees elected are now required
customs, or public policy. (Section 14) to observe the rules of good corporate
6. Rules on distinguishability of corporate governance. (Section 23)
names are provided. (Section 17) 13. Corporations vested with public interest are
7. SEC now has the authority to cause the required to elect a compliance officer. (Section
removal of all visible signages, marks, 24)
advertisements, labels, prints, and other effects 14. Non-holding of elections and the reasons
bearing a disallowed corporate name. (Section therefor shall be reported to the SEC within 30
17) days from date of the scheduled election. The
8. Failure to comply with SEC’s order related to new date of the election must not be later than
disallowed corporate name may hold the 60 days from the scheduled date. If no new date
corporation and its responsible directors or has been designed or if the rescheduled date is
officers in contempt and/or hold them not held, the SEC may summarily order the
administratively, civilly, and/or criminally liable holding of an election upon application of a
and/or revoke the registration of the corporation. stockholder, member, director, or trustee.
(Section 17) (Section 25)
9. Verification of intended corporate name prior 15. The SEC has now the authority to order the
to registration is now expressly provided. removal of a disqualified director or trustee
(Section 18) motu proprio or upon verified complaint, without
prejudice to the sanctions that the SEC may
THE REVISED CORPORATION CODE: CHANGES AND DEVELOPMENTS IN CORPORATION LAW by NICO B. VALDERRAMA |5
impose on directors or trustees who knew of the 24. The determination of whether or not the sale
disqualification but failed to remove such involves all or substantially all of the
director or trustee. (Section 27) corporation’s properties and assets must be
16. “Emergency board”: When a vacancy prevents computed based on its net asset value, as
the remaining directors from constituting a shown in its latest financial statements. (Section
quorum and emergency action is required to 39)
prevent grave, substantial, and irreparable loss 25. Management contracts shall be entered into for
or damage to the corporation, the vacancy may a period not longer than 5 years for any one
be temporarily filled among the officers of the term. (Section 43)
corporation by unanimous vote of the remaining 26. The modes by which a stockholder, member,
directors or trustees. The action by the director, or trustee may attend meetings and
designated director or trustee shall be limited to cast their votes must now be provided in the
the emergency action necessary, and the term bylaws. (Section 46)
shall cease within a reasonable time from the
termination of the emergency or upon election of 27. The maximum number of other board
the replacement director. The creation of the representations that an independent director or
emergency board shall be reported to the SEC trustee may have which shall, in no case, be
within 3 days from creation stating the reason for more than the number prescribed by the SEC.
its creation. (Section 28) (Section 46)

17. Directors or trustees shall not participate in the 28. An arbitration agreement may now be provided
determination of their own per diems or in the bylaws. (Article 46)
compensation. (Section 29) 29. A stockholder or member may now propose the
18. Corporations vested with public interest shall holding of a special meeting and items to be
submit to their shareholders and the SEC an included in the agenda. (Section 46)
annual report of the total compensation of 30. The stock and transfer book or membership
each of the directors or trustees. (Section 29) book shall be closed at least 20 days for
19. Validity of dealings of directors, trustees, or regular meetings and 7 days for special
officers with corporations vested with public meetings before the scheduled date of the
interest require approval by at least 2/3 of the meeting, unless the bylaws provide for a longer
entire membership of the board, with at least a period. (Section 49)
majority of the independent directors voting to 31. In case of postponement of stockholders’ or
approve the material contract. (Section 31) members’ regular meetings, written notice
20. The board is now empowered to create special shall be sent 2 weeks prior to the date of the
committees of temporary or permanent meeting, unless a different period is required.
nature and determine the members’ term, (Section 49)
composition, compensation, powers, and 32. The right to vote of stockholders and members
responsibilities. (Section 34) may now be exercised through remote
21. Corporations have now the express power to communication or in absentia when so
enter into a partnership or joint venture with authorized in the bylaws. The SEC shall issue
any person. (Section 35) rules governing such participation. (Sections 49,
57, and 88)
22. The sale or other disposition of assets of a
corporation is now subject to the Philippine 33. The articles of incorporation or bylaws may
Competition Act or RA 10667. (Section 39) provide for a greater majority to determine the
quorum during board meetings. (Section 52)
23. In non-stock corporations where there are no
members with voting rights, the vote of at least 34. A director or trustee who has a potential
a majority of the trustees in office will be interest in any related party transaction must
sufficient authorization for the corporation to recuse from voting on the approval of the related
enter into any transaction involving sale or other party transaction. (Section 52)
disposition of corporate assets. (Section 39)
THE REVISED CORPORATION CODE: CHANGES AND DEVELOPMENTS IN CORPORATION LAW by NICO B. VALDERRAMA |6
35. The SEC may require corporation whose profession, except when allowed under
securities are traded in trading markets and special laws, may not incorporate as OPCs.
which can reasonably demonstrate their (Section 116)
capability to do so to issue their securities or c. There is no minimum authorized capital stock
shares of stocks in uncertificated or scripless for OPCs except when provided by special
form. (Section 62) laws. (Section 117)
36. The inspecting or reproducing party of corporate d. OPCs are required to file articles of
books or records shall remain bound by incorporation similar to ordinary corporations
confidentiality rules. (Section 73) with additional contents. (Section 118)
37. A requesting party who is not a stockholder or e. OPCs are not required to submit and file
member of record, or is a competitor, director, bylaws. (Section 119)
officer, controlling stockholder or otherwise
represents the interests of a competitor shall f. OPCs are required to indicate the letters
have no right to inspect or demand reproduction “OPC” either below or at the end of its
of corporate records. (Section 73) corporate name. (Section 120)

38. Abuse of the right of inspection shall be g. The single stockholder shall be the sole
penalized without prejudice to liabilities under director and president of the OPC. (Section
the Intellectual Property Code and Data Privacy 121)
Act. (Section 73) h. The treasurer, corporate secretary, and other
39. If the corporation denies or does not act on a officers shall be appointed within 15 days
demand for inspection and/or reproduction of from issuance of the certificate of
corporate records, the aggrieved party may incorporation. The single stockholder may
report such denial or inaction to the SEC. The not be appointed as the corporate secretary.
SEC may issue an order directing the inspection The single stockholder may be appointed as
or reproduction of the requested records after a treasurer but must give a bond to the SEC.
summary investigation conducted within 5 days (Section 122)
from receipt of such report. (Section 73) i. The corporate secretary of an OPC has
40. The SEC may require stock corporations which special functions. (Section 123)
transfer and/or trade stocks in secondary j. The single stockholder is required to
markets to have an independent transfer designate a nominee and an alternate
agent. (Section 73) nominee who shall take the place of the
41. Independent trustees of non-stock single stockholder in case of death or
corporations vested with public interest need not incapacity. (Section 124)
be a member of the non-stock corporation. k. The term of the nominee and alternate
(Section 91) nominee shall only be temporary until the
42. A non-stock corporation shall, at all times, keep heirs have been lawfully determined or the
a list of its members and their proxies in the estate becomes the single stockholder.
form the SEC may require. The list shall be (Section 125)
updated to reflect the members and proxies of l. The nominee or alternate nominee may be
record 20 days prior to any scheduled election. changed by submitting the names of the new
(Section 92) nominees and their corresponding consent
43. Allowing One Person Corporations (OPCs): to the SEC without need of amending the
OPC’s articles of incorporation. (Section
a. OPCs may be formed by a natural person, 126)
trust, or an estate. (Section 116)
m. All actions, decisions, and resolutions taken
b. Banks, quasi-banks, pre-need, trust, by the OPC shall be contained in a minutes
insurance, public and publicly-listed book. (Section 127)
companies, non-chartered GOCCs, and
natural persons licensed to exercise a
THE REVISED CORPORATION CODE: CHANGES AND DEVELOPMENTS IN CORPORATION LAW by NICO B. VALDERRAMA |7
n. Actions of the OPC may be recorded in the c. Violation of duty to maintain records and to
minutes book in lieu of meetings. (Section allow their inspection or reproduction
128) d. Willful certification of incomplete, inaccurate,
o. OPCs are required to submit reportorial false, or misleading statements or reports
requirements to the SEC, subject to penalties e. Independent auditor collusion
in case of non-compliance. (Section 129)
f. Obtaining corporate registration through
p. OPCs shall have limited liability, and the fraud
principles of piercing the corporate veil
applies with equal force to OPCs. (Section g. Fraudulent conduct of business
130) h. Acting as intermediaries for graft and corrupt
q. An OPC may be converted into an ordinary practices
stock corporation and vice versa. (Sections i. Engaging intermediaries for graft and corrupt
131 and 132) practices
44. A request for dissolution may now be withdrawn j. Tolerating graft and corrupt practices
through a motion duly verified by any k. Retaliation against whistleblowers
incorporator, director, trustee, shareholder, or
member. (Section 137) 51. There exists a liability for all directors,
trustees, officers, and other employees,
45. If the corporation is ordered dissolved by final including aiders and abettors who commits
judgment under Section 138(3), its net assets any violation of the RCC, any rule, regulation, or
shall be forfeited in favor of the national order of the SEC. (Sections 171 and 172)
government without prejudice to the rights of
innocent stockholders and employees for 52. The amount collected by the SEC shall be
services rendered. (Section 138) deposited and maintained in a separate
account to fund its modernization and to
46. The SEC has regulatory jurisdiction to augment its operational expenses. (Section 175)
investigate an alleged violation of the RCC, or of
a rule, regulation, or order of the SEC. (Section 53. The SEC shall exercise visitorial powers over
154) all corporations. (Section 178)
47. The SEC, through its designated officer, has 54. The SEC shall develop and implement an
subpoena powers. (Section 155) electronic filing and monitoring system.
(Section 180)
48. The SEC may issue cease and desist orders
(even ex parte) to persons reasonable believed 55. An arbitration procedure is laid down to govern
to have violated or about to violate the RCC, or a arbitration agreements provided in the articles of
rule, regulation, or order of the SEC. (Section incorporation or bylaws. (Section 181)
156) 56. Jurisdiction over party-list organizations are
49. The SEC has contempt powers subject to due transferred to the Commission on Elections or
notice and hearing. (Section 157) COMELEC. (Section 182)
50. Specific acts are punishable with a 57. Corporations affected by the new
corresponding fine: (Sections 159 to 169) requirements are given 2 years from the
effectivity of the RCC within which to comply.
a. Unauthorized use of corporate name (Section 185)
b. Violation of disqualification provision

RETENTIONS:
1. Definition and classes of corporations, 2. Rules governing redeemable, preferred, and
corporations created by special laws, treasury shares (Sections 6, 8, and 9)
corporators, incorporators, stockholders, and 3. Rules on de facto corporations and corporations
members (Sections 2 to 5 of the RCC) by estoppel (Sections 19 and 20)
THE REVISED CORPORATION CODE: CHANGES AND DEVELOPMENTS IN CORPORATION LAW by NICO B. VALDERRAMA |8
4. Rule on disloyalty of a director (Section 33) 12. Definition and purposes of non-stock
5. Rules on powers to deny pre-emptive right, corporations and non-transferability and
acquire own shares and declare dividends termination of membership (Sections 86 to 87
(Sections 38, 40, and 42) and 89 to 90)

6. Rule on ultra vires acts (Section 44) 13. Rules in distribution of assets in non-stock
corporations (Sections 93 and 94)
7. Rules on amendment to bylaws (Section 47)
14. Rules governing close corporations (Sections 95
8. Rules on quorum in stockholders’ and members’ to 104)
meetings and who shall preside (Sections 51 and
53) 15. Rules governing religious corporations (Sections
107 to 114)
9. Rules on voting in case of joint ownership of
stocks and for treasury shares (Sections 56 and 16. Definition and rights of foreign corporation
57) (Section 140)

10. Rules on subscription contract, pre- 17. Rule on application for a license to do business
incorporation subscription, issuance of stock by foreign corporations (Section 142)
certificates, liability for watered stocks, interest 18. Rules on applicable laws to foreign corporations,
on unpaid subscription, payment of balance of amendments to its articles of incorporation and
subscription, questioning delinquency sales, bylaws, amendment of license, merger or
court action to recover unpaid subscriptions, consolidation, doing business without a license,
effect of delinquency, right of unpaid and non- revocation of license, issuance of certificate of
delinquent shares, lost or destroyed certificates revocation, and withdrawal (Sections 146 to 153)
(Sections 59 to 60, 63 to 66, and 68 to 72) 19. Definition of outstanding capital stock (Section
11. Procedure in the exercise of appraisal right 173)
(Sections 81 to 84) 20. Rule on designation of governing boards
(Section 174)

The RCC took effect on February 23, 2019, upon complete publication in Manila Bulletin and the Business Mirror
on Saturday, February 23, 2019. The official copy of RCC is now available for download in the website of the
Official Gazette.

DISCLAIMER: This is for general information only. This shall not serve as a substitute for professional advice
which depends on specific facts and circumstances. If this would be used for academic or other informational
purposes, securing the author’s express permission is required. All rights reserved.

ABOUT THE AUTHOR: Atty. Nico B. Valderrama, CPA, MPM is a corporate legal counsel for a group of
companies engaged in manufacturing, transportation, and real estate development. He also provides legal
counselling to various clients engaged in hospital business, real estate brokerage, and commercial leasing. He
was a junior reviewer in the Review School of Accountancy (ReSA) and taught Regulatory Framework for
Business Transactions (RFBT) which covers several civil and commercial laws. He also teaches civil and
commercial laws in the Arellano University School of Law (AUSL). He is likewise licensed to practice law in the
State of New York, USA.

THE REVISED CORPORATION CODE: CHANGES AND DEVELOPMENTS IN CORPORATION LAW by NICO B. VALDERRAMA |9
THE REVISED CORPORATION CODE: CHANGES AND DEVELOPMENTS IN CORPORATION LAW by NICO B. VALDERRAMA | 10