A REPORT ON

Group 3 - Concio, Lim, Medina, Papagayo, Saulong

DEFINITION AND PURPOSE

Sec. 86 - Definition
A nonstock corporation is one where no part of its
income is distributable as dividends to its members,
trustees, or officers.

Any profit obtained incidental to its operations shall be

used for the furtherance of the purpose for which the
corporation was organized.
 STOCK VS NONSTOCK
STOCK NONSTOCK

- With capital stock divided - Does not have shares

into shares - May not distribute profits to
- May distribute dividends to members
stockholders

- Stockholders may transfer - Members cannot transfer

their shares their membership (unless
allowed by articles or bylaws)
 STOCK VS NONSTOCK
STOCK NONSTOCK
- Cumulative voting allowed in - Each member entitled to only
election for directors one (1) vote

- Directors cannot be more - Trustees may or may not be

than 15 more than 15

- Term of a trustee is not more

- Term of a director is 1 year
than 3 years
 STOCK VS NONSTOCK
STOCK NONSTOCK

- Members may be deprived of

- Stockholders may vote by the right to vote by proxy if
proxy provided for in the articles or
the bylaws

- Officers may be directly

- Officers are elected by the elected by members (unless
Board of Directors otherwise provided in the
articles or bylaws)
DEFINITION AND PURPOSE

Sec. 87 - Purpose
Nonstock corporations may be formed or organized for
charitable, religious, educational, professional, cultural,
fraternal, literary, scientific, social, civic service, or
similar purposes, like trade, industry, agricultural, and
like chambers, or any combination thereof, subject to the
special provisions of this Title governing particular
classes of nonstock corporations.
DEFINITION AND PURPOSE

EXAMPLES

Chamber of Furniture
Philippine Bible Teach for the Industries of the
Gawad Kalinga Philippines
Society, Inc. Philippines
DEFINITION AND PURPOSE

EXAMPLES

Bagong Lumad Artists Habitat for Humanity

Foundation, Inc. OMF Literature Philippines
DEFINITION AND PURPOSE

Scope of Activities

● May not engage primarily in business or economic activities

● May engage only in those income-generating activities
expressly allowed in their governing documents (i.e., articles
of incorporation) or that are necessary or incidental to the
purpose of the organization
● Any profit generated from economic activities must be used
in furtherance of the organization’s objectives
DEFINITION AND PURPOSE

Scope of Activities

● May engage in lobbying activities, but such activities must

conform to the norms for acceptable advocacy under Article
19 of the Civil Code
● May not directly expend funds on “any political party or
candidate or for purposes of partisan political activity”
ARTICLES OF INCORPORATION
ARTICLES OF INCORPORATION
ARTICLES OF INCORPORATION
ARTICLES OF INCORPORATION
CHAPTER I: MEMBERS
Sec 88 - Right to Vote
● May be limited, broadened, or denied in the articles
of incorporation or the bylaws
● If not so specified, each member shall
proportionately have 1 vote
● May vote by proxy unless otherwise stipulated
● May vote through remote communication or in
absentia
CHAPTER I: MEMBERS

Sec 89 - Non-transferability of Membership

Personal and non-transferable unless otherwise
stated in the articles or the bylaws
CHAPTER I: MEMBERS

Sec 90 - Termination of Membership

● Terminated in the manner and causes stated in the
articles or the bylaws
● Extinguish all rights unless otherwise stated
ARTICLES OF INCORPORATION
ARTICLES OF INCORPORATION
ARTICLES OF INCORPORATION
BYLAWS
BYLAWS
BYLAWS
BYLAWS
CHAPTER II: TRUSTEES AND OFFICERS

Sec. 91 - Election and Term of Trustees

● Trustees may or may not be more than 15

● Term should be no longer than 3 years
● General Rule: Only members of the corporation can be
trustees
○ Exception: Independent trustees of corporations vested
with public interest
CHAPTER II: TRUSTEES AND OFFICERS

Sec. 92 - List of Members and Proxies, Meeting Places

● The corporation shall keep a list of all members and proxies

in the form the SEC requires
● Updated list reflecting members and proxies 20 days before
a meeting
● Meeting can be anywhere provided that proper notice is
sent to all members, and it is within the Philippines
CHAPTER III: DISTRIBUTION OF ASSETS
IN NONSTOCK CORPORATIONS

SEC. 94 – Plan of Distribution of Assets

Procedure in adopting a plan of distribution of assets:
(1) By a majority vote, the board shall adopt a resolution for:
● Recommending a plan of distribution
● Directing the submission thereof to a vote at a regular or special
meeting

(2) Each member with voting rights shall be given a notice stating:
● The proposed plan of distribution or summary thereof
● Date, time, and place of the meeting

(3) Approval of at least 2/3 of members with voting rights present or

represented by proxy in the meeting
CHAPTER III: DISTRIBUTION OF ASSETS
IN NONSTOCK CORPORATIONS

SEC. 93 – Rules of Distribution

(a) All liabilities & obligations of the corporation shall be:

● Paid, satisfied, and discharged
● Or adequate provision be made therefore
CHAPTER III: DISTRIBUTION OF ASSETS
IN NONSTOCK CORPORATIONS

SEC. 93 – Rules of Distribution

(b) Assets of the corporation which are...

● Held upon a condition requiring return, transfer, or conveyance
● The return, transfer, or conveyance of which occurs because of
the dissolution

...shall be returned, transferred, or conveyed in accordance with such

requirements
CHAPTER III: DISTRIBUTION OF ASSETS
IN NONSTOCK CORPORATIONS
SEC. 93 – Rules of Distribution
(c) Assets received & held by the
corporation which:
● Are subject to limitations
permitting their use only for
charitable, religious, benevolent,
educational, or similar purposes
● Are not held upon a condition
requiring return, transfer, or
conveyance
...shall be transferred or conveyed to:
● 1 or more corporations,
societies, or organizations
engaged in activities
substantially similar to those of
the dissolving corporation
● According to a plan of
distribution adopted pursuant to
this Chapter
CHAPTER III: DISTRIBUTION OF ASSETS
IN NONSTOCK CORPORATIONS

SEC. 93 – Rules of Distribution

(d) If any, assets other than those mentioned

● Shall be distributed according to the provisions of
the articles of incorporation or the bylaws
● To the extent that the articles or the bylaws:
○ Determine the distributive rights of members
○ Or provide for distribution
CHAPTER III: DISTRIBUTION OF ASSETS
IN NONSTOCK CORPORATIONS

SEC. 93 – Rules of Distribution

(e) In any other case, assets may be distributed to

persons, societies, or organizations (whether or not
organized for profit), as may be specified in a plan of
distribution adopted pursuant to this Chapter.
 A REPORT ON

Group 3 - Concio, Lim, Medina, Papagayo, Saulong

Skit (Environmental Advocates: E-Nation Inc.)
- Incorporation
- Present sample articles of incorporation
- Organization
- Present bylaws
- Admission of members
- Election of trustees
- Conduct of the business
- List of members & proxies
- Place of meetings
- Scope of activities (ex. If a foundation, what are they allowed to do?)
- Dissolution
- Distribution of assets