ACCOUNTING FOR CORPORATION

REVISED CORPORATION CODE

Republic Act 11232, otherwise known as the Revised Corporation Code of the
Philippines (RCCP), was signed into law by President Rodrigo Duterte on Feb. 20, 2019
and became effective Feb. 23, 2019.

For over 39 years, the Corporation Code of the Philippines (Corporation Code) or Batas
Pambansa Blg. 68, was the law that governed corporations. The Corporation Code
took effect on May 1, 1980.

Not all of the provisions of the Corporation Code were amended by the RCCP, but
congress decided to re-enact the unchanged provisions and include new provisions
in order to pass a complete Revised Corporation Code of the Philippines.

The first general law on corporations in the Philippines, which was practically a
codification of the American law on corporations, was the Corporation Law or Act
1459. The Philippine Commission passed this law and took effect on Apr. 1, 1906.

The RCCP aims to introduce the following reforms:

• Policies that would enhance the ease of doing business in the Philippines;
• Rules that prioritize corporate and stockholder protection;
• Provisions that instill corporate and civic responsibility; and
• Amendments that will strengthen the country's policy and regulatory
corporate framework.

DEFINITION

A corporation is an artificial being created by operation of law, having the right of

succession and the powers, attributes, and properties expressly authorized by law or
incident to its existence (Revised Corporation Code of the Philippines, Sec; 2).

ATTRIBUTES OF A CORPORATION
1. A corporation is an artificial being with a personality separate and apart from its
individual shareholders or members.

2. It is created by the operation of law. It cannot come into existence by the parties'
mere agreement as in business partnerships. Corporations require special
authority or grant from the State, either by a special incorporation law that
directly creates the corporation or by means of a general corporation law (i.e.,
The Revised Corporation Code of the Philippines).

3. It enjoys the right of succession. A corporation shall have perpetual existence

unless its articles of incorporation provide otherwise (Sec. Il, RCCP). The death,
withdrawal, insolvency, or incapacity of the individual shareholders or members
will not dissolve the corporation. The transfer of ownership of shares of stock does
not dissolve the corporation.

4. It has the powers, attributes, and properties expressly authorized by law or

incident to its existence.
 ADVANTAGES OF A CORPORATION

1. The corporation has the legal capacity to act as a legal entity.

2. Shareholders have limited liability.
3. It has a continuity of existence.
4. Shares of stock can be transferred without the consent of the other
shareholders.
5. Its management is centralized in the board of directors.
6. Shareholders are not general agents of the business.
7. Greater ability to acquire funds.

DISADVANTAGES OF A CORPORATION

1. A corporation is relatively complicated in formation and management.

2. There is a greater degree of government control and supervision.
3. It requires a relatively high cost of formation and operation.
4. It is subject to heavier taxation than other forms of business organizations.
5. Minority Shareholders are subservient to the wishes of the majority.
6. In large corporations, management and control have been separated
from ownership.
7. The transferability of shares permits the uniting of incompatible and
conflicting elements in one venture.

CLASSES OF CORPORATIONS

Section 3 of the RCCP classified private corporations into:

1. Stock corporation. Corporations that have share capital divided into

shares and are authorized to distribute to the holders of such shares,
dividends or allotments of the surplus profits on the basis of the shares held.

2. Non-stock corporation. A non-stock corporation is one where no part of its

income is distributable as dividends to its members, trustees or officers. Any
profit that a non-stock corporation may obtain as an incident to its
operation shall, whenever necessary or proper, be used for the
furtherance of the purpose or purposes for which the corporation was
organized (Sec. 86).

Non-stock corporations may be formed or organized for charitable, religious,

educational, professional, cultural, recreational, fraternal, literary, scientific,
social,civic service, or similar purposes, like trade, industry, agricultural, and like
chambers or any combination (Sec. 87).

OTHER CLASSIFICATIONS OF CORPORATIONS

1. According to the number of persons:
A. Corporation aggregate. A corporation consisting of more than one
corporator.
 B. Corporation sole or a special form of a corporation usually associated
with the clergy. It is a corporation that consists of only one member or
corporator and his successors such as a bishop.

2. According to nationality:
A. Domestic corporation. A corporation organized under Philippine laws.
B. Foreign corporation. A corporation formed, organized or existing under
laws other than the Philippines' and whose laws allow Filipino citizens and
corporations to do business in its own country or State (Sec. 140).

3. According to whether for public or private purposes:

A. Public corporation. A corporation formed or organized for the government
of a portion of the state (e.g., provinces, cities, municipalities, and
barangays).
B. Private corporation. A corporation created for a private aim, benefit, or
purpose.

4. According to whether for a charitable purpose or not:

A. Ecclesiastical corporation. Those organized for religious purposes.
B. Eleemosynary corporation. Those established for public charity.
C. Civil corporation. Those established for business or profit.

5. According to their legal right to corporate existence:

A. De jure corporation. A corporation existing in fact and in law. It is organized
in strict conformity with the law.
B. De facto corporation. A corporation existing in fact but not in law.

6. According to the degree of public participation with regard to share ownership:

A. Close corporation. A corporation whose share ownership is limited to

selected persons or members of a family not exceeding 20 persons.
B. Open corporation. A corporation where the share is available for
subscription or purchase by any person.
C. Publicly-held corporation. A corporation with a class of equity securities
listed on an exchange or with assets in excess of P50,000,000 and having
200 or more holders, at least 200 of which are holding at least 100 shares
of a class of its equity securities (SRC Rule 3-1.M, Amended IRR of the
Securities Regulations Code (R.A. 8799)).

7. According to their relation to another corporation:

A. Parent or holding corporation. A corporation that is related to
another corporation that it has the power to either directly or indirectly
elect the majority of the directors of a subsidiary corporation.
B. Subsidiary corporation. A corporation controlled by another corporation
known as a parent corporation.

COMPONENTS OF A CORPORATION
1. Corporators are those who compose a corporation, whether as stockholders or
shareholders in a stock corporation or as members in a nonstock corporation (Sec.
5).
2. Incorporators are those stockholders or members mentioned 'in the Articles of
Incorporation (AOI) as originally forming and composing the corporation and who
are signatories to said articles of incorporation (Sec. 5).

Section 10 of the RCCP provides that any person, partnership, association or

corporation, singly or jointly with others but not more than fifteen (15) in number, may
organize a corporation for any lawful purpose or purposes.

Natural persons licensed to practice a profession, and partnerships or associations

organized for the purpose of practicing a profession, shall not be allowed to organize
as a corporation unless otherwise provided under special laws.

Incorporators who are natural persons must be of legal age. Each incorporator of a
stock corporation must own or be a subscriber to at least one (1) share of the capital
stock. A corporation with a single stockholder is considered a One Person Corporation
(OPC; will be discussed later).

Incorporators are no longer confined to natural persons (i.e. human beings). Artificial
beings (e.g., a partnership, association, or corporation) can be incorporators.

Under the old Corporation Code, the minimum number of incorporators was five. Under
the RCCP, one person can form a corporation, the OPC. The requirement of "not less
than five (5) nor more than fifteen (15) trustees" were retained in the case of
educational corporations (Sec. 106, and that "the number of trustees shall be in
multiples of five (5)" and religious societies (Sec. 114).

Note: All incorporators (if they continue to be shareholders) are corporators of a

corporation, but not all corporators are incorporators. An incorporator will always retain
his status as such though no longer having an interest in the corporation shareholders
or stockholders are corporators in. a stock corporation (Sec. 5)

3. Shareholders or stockholders are corporators in a stock corporation. (Section 5)

Shareholders may be natural or juridical persons.

4. Members are corporators of a non-stock corporation (Sec. 5).

5. Subscribers are persons who have agreed to take and pay for original, unissued
shares of a corporation formed or to be formed. Note: All incorporators are
subscribers, but a subscriber need not be an incorporator,

6. Promoter is a person who, acting alone or with others, takes the initiative in
founding and organizing the corporation and receives consideration therefor.

7. Underwriters are usually investment bankers who have-

o agreed, alone or with others, to buy at stated terms an entire or a substantial
part of an issue of securities; or
o guaranteed the sale of an issue by agreement to buy from the issuing
corporation any unsold portion at a stated price; or
 o agreed to use his best efforts to market all or part of an issue; or
o offered for sale shares he has purchased from a controlling stockholder.

8. Independent director is a person who, apart from shareholdings and fees received
from the corporation, is independent of management and free from any business
or other relationship which could or could reasonably be perceived to, materially
interfere with the exercise of independent judgment in carrying out the
responsibilities as a director (Sec. 22).

The board of the following corporations vested with public interest shall have
independent directors constituting at least 20% of such board:

a. Corporations covered by Section 17.2 of Republic Act 8799, "The Securities

Regulation Code," namely those whose securities are registered with the SEC,
corporations listed with an exchange or with assets of at least P50M and having
200 or more holders of shares, with at least 100 shares of a class of its equity
shares;

b. Banks and quasi-banks, non-stock savings and loan associations (NSSLAs),

pawnshops, corporations engaged in money service business, pre-need, trust
and insurance companies, and other financial intermediaries; and

c. Other corporations engaged in business vested with public interest similar to the
above, as may be determined by the Commission, after taking into account
relevant factors which are germane to the objective and purpose of requiring
the election of an independent director, such as the extent of minority
Ownership, type of financial products or securities issued or offered to investors,

public interest involved in the nature of business operations, and other analogous
factors.

9. Additional General Powers per RCCP. Every corporation incorporated under the
RCCP is expressly given the power to enter into a partnership, joint venture, or any
commercial agreement with natural or juridical persons (Note: under BP68, only to
enter into a merger or consolidation with other corporations). Also, domestic
corporations are allowed to give donations in aid of any political party or candidate
or for purposes of partisan political activity (Sec. 35). These were not allowed in the
Corporation Code.

CLASSES OF SHARES
1. Par value shares. One in which a specific amount is fixed in the articles of
incorporation and appearing on the certificate of stock. The par value is the
minimum issue price of the shares.

Section 6 of the Code states that preference (or preferred) shares of stock may
be issued only as par value shares.

2. No-par value shares. One without any value appearing on the face of the
certificate of stock. A no-par value share may have a stated value that may be
fixed in the articles of incorporation or by the board of directors or shareholders.
 Thus, the issue price may vary from time to time as it is usually fixed based on the
book value of the corporation's shares.

3. However, the minimum stated value of a no-par value share is five pesos (P5.00)
per share. In addition, shares issued without par value are deemed fully paid.

Banks, trust, insurance, and preneed companies, public utilities, building and
loan associations, and other corporations authorized to obtain or access funds
from the public, whether publicly listed or not, shall not be permitted to issue no-
par value shares of stock (Sec. 6).

4. Voting shares. Those issued with the right to vote.

5. Non-voting shares. Those issued without the right to vote.

6. Ordinary shares. These shares entitle the holder to an equal pro-rata division of
profits without any preference.

7. Preference shares. These shares entitle the holder to certain advantages or

benefits over the holders of ordinary shares.

8. Founders' shares may be given certain rights and privileges not. enjoyed by the
owners of other stocks (Sec. 7).
9. Redeemable shares may be issued by the corporation when expressly provided
in the articles of incorporation. They are shares that may be purchased by the
corporation from the holders of such shares upon the expiration of a fixed period,
regardless of the existence of unrestricted retained earnings in the books of
the corporation and upon such other terms and conditions stated in the articles
of incorporation and the certificate of stock representing the shares (Sec. 8).

10. Treasury shares. A stock that has been issued by the corporation as fully paid
and later reacquired but not retired.

11. Promotion shares. Those issued to promoters as compensation in promoting the

incorporation of a corporation or for services rendered in launching or promoting
the welfare of the corporation.

12. Convertible shares. A stock that is convertible or changeable from one class to
another class.

ARTICLES OF INCORPORATION (AOI)

Contents

Section 13 provides that all corporations organized under this Code shall file with the
Securities and Exchange Commission (SEC) articles of incorporation in any of the
official languages duly signed and acknowledged or authenticated in such form
and manner as may be allowed by the SEC, containing substantially the following
matters, except as otherwise prescribed by this Code or by special law:

1. The name of the corporation;

 2. The specific purpose or purposes for which the corporation is formed;
3. The principal place of business (specific address2 must be specified per SEC
Memorandum Circular No. 3, Series of 2006) which must be within the Philippines;
4. The term of existence if the corporation has not elected perpetual existence;
5. The names, nationalities, and residences of the incorporators;
6. The number of directors, which shall not be more than fifteen (15), or the number
of trustees, which may be more than fifteen (15);
7. The names, nationalities, and residences of the persons who shall act as directors
or trustees until the first regular directors or trustees are elected and qualified.
8. If it be a stock corporation:
a. Amount of authorized share capital in pesos,
b. Number of shares into which it is divided,
c. In case the shares are par value shares:
§ the par value of each share
§ names, nationalities and residences of the original
subscribers
§ the amount subscribed and paid by each subscriber on his
subscription.
§ In case of no par value, the articles need only state such fact
and the number of shares into which said share capital is
divided.
9. If it be a non-stock corporation, the amount of its capital' the names, nationalities
and residences of the contributors, and the amount contributed.

10. Such other matters consistent with law and which the incorporators may deem
necessary and convenient.

11. An arbitration agreement may be provided in the articles Of incorporation

pursuant to Section 181 of the RCCP.

The articles of incorporation and applications for amendments thereto may be filed
with the Commission in the form of an electronic document in accordance with the
Commission's rules and regulations on electronic filing.

No articles of incorporation or amendment to articles of incorporation of banks,

banking and quasi-banking institutions, preneed, insurance and trust companies, non-
stock savings and loan associations (NSSLAs), pawnshops, and other financial
intermediaries shall be approved by the SEC unless accompanied by a favorable
recommendation of the appropriate government agency to the effect that such
articles or amendment is in accordance with law (Sec. 16).

Prescribed Form

Per Section 14, unless otherwise prescribed by special law, the articles of incorporation
of all domestic corporations shall comply substantially with the following form:
Articles of Incorporation of
_____________________
(Name of Corporation)
The undersigned incorporators, all of legal age, have voluntarily agreed to form a
(stock)/(non-stock) corporation under the laws of the Republic of. the Philippines and
Certify the following:

First: That the name of said corporation shall be "_________ , Inc., Corporation or
OPC",

Second: That the purpose or purposes for which such corporation is incorporated
are: (If there is more than one purpose, indicate primary and secondary purposes);

Third: That the principal office of the corporation is located in the

City/Municipality of_______________ Province of________________Philippines;

Fourth: That the corporation shall have perpetual existence or a term of_______
years from the date of issuance of the certificate of incorporation;
Fifth: That the names, nationalities, and residence addresses of the
incorporators of the corporation are as follows:
Name Nationality Residence
______________________ ______________________ ________________
______________________ ______________________ ________________
______________________ ______________________ ________________
______________________ ______________________ ________________
______________________ ______________________ ________________

Sixth: That the number of directors or trustees of the corporation shall be

___________and the names, nationalities, and residence addresses of the first directors
or trustees of the corporation are as follows:

Name Nationality Residence

______________________ ______________________ ________________
______________________ ______________________ ________________
______________________ ______________________ ________________
______________________ ______________________ ________________
______________________ ______________________ ________________

Seventh: That the authorized capital stock of the corporation

is_________divided into________ shares with the par value of _________ PESOS
(P________ )per share. (In case all the shares are without par value): That the capital
stock of the corporation is _______________shares without par value. (In case some
shares have par value and some are without par value): That the capital stock of said
corporation consists of _____________shares, of which _________________shares have a
par value of _______________PESOS (P__________ ) each, and of ______________ which
shares are without par value.

Eighth: That the number of shares of' the authorized capital stock above stated
has been subscribed as follows:

Name of Nationality No. of Shares Amount Amount Paid

Subscriber Subscribed Subscribed
 (Modify No. 8 if shares are with no par value. In case the corporation is non-
stock. Nos. 7 and 8 of the above articles may be modified accordingly, and it is
sufficient if the articles state the amount of capital or money contributed or donated
by specified persons, stating the names, nationalities, and residence addresses of the
contributors or donors and the respective amount given by each.)
Ninth: That _________________has been elected by the subscribers as Treasurer
of the Corporation to act as such until after the successor is duly elected and qualified
in accordance with the by-laws, that as Treasurer, authority has been given to receive
in the name and for the benefit of the corporation, all subscriptions, contributions or
donations paid or given by the subscribers or members, who certifies the information
set forth in the seventh and eighth clauses above, and that the paid-up portion of the
subscription in cash and/or property for the benefit and credit of the corporation has
been duly received.

Tenth: That the incorporators undertake to change the name of the

corporation immediately upon receipt of notice from the Commission that another
corporation. Partnership or person has acquired a prior right to the use of such name,
that the name has been declared not distinguishable from a name already registered
or reserved for the use of another corporation, or that it is contrary to law, public morals,
good custom or public policy,

Eleventh: (Corporations will engage in any business or activity reserved Filipino

citizens shall provide the following):

"No transfer of stock or interest which shall reduce the ownership of Filipino to
less than the required percentage of capital stock as provided by existing laws shall
allowed or permitted to be recorded in the proper books of the corporation, and this
restriction shall be indicated in all stock certificates issued by the corporation."

IN WITNESS WHEREOF, we have hereunto in the signed these Articles of

Incorporation, this _______ day of _______, 20__ in the City/Municipality of ____________,
Province of ___________, Republic of the Philippines.

________________________________ ___________________________________
________________________________ ___________________________________
________________________________ ___________________________________
________________________________ ___________________________________
(Name and Signature of the Incorporators)

____________________________________
(name and signature of the Treasurer)

Comparison of the Articles of Incorporation per RCCP and Corporation Code

To facilitate comparison of the requirements under the RCCP and the Corporation
Code as to the contents of the Articles of Incorporation (AOI), a table is prepared as
follows:
 RCCP Corporation Code
(RA 11232) (BP 68)
Name If the corporation is an OPC is not allowed.
OPC, the letters "OPC" is
includedin the corporate
name.
Who Can Be an Any natural person, Only natural persons
Incorporator partnership, corporation,
or association
Number of One incorporator is At least five (5)
Incorporator(s enough. incorporators
needed
Residence of Incorporators No residency requirement A majority of the
for incorporators. incorporators must be
residents of the
Philippines.
Term Shall have perpetual term Not exceeding 50 years.
by default unless the AOI
provides otherwise.
Number of Directors No minimum number of Minimum number of
directors/trustees except directors is five (5)
for educational
corporations and religious
societies.
Residence of Directors No residency requirement A majority of the directors
for directors. must be Phil. residents.
Amount of No minimum capital stock At least 25% of the
Subscribed and required unless required authorized capital stock
Paid-ln Capital by special law. There is must be subscribed at
also no minimum least 25% of the subscribed
subscribed capital and no capital must be paid-up.
minimum paid-in capital.

Statement of Subscribed Subscribed and paid-in In two (2) separate clauses

and Paid-ln Capital capital are in the 8th (8th and 9th) of the AOI,
clause of the AOI (Sec. 14, (Sec. 15, Corporation
RCCP). Code).
Treasurer's Affidavit A separate treasurer's A separate treasurer's
affidavit is no longer affidavit is required.
required but the
certification of the
treasurer is part of the AOI
(9th Clause)
Un ertaking to Change No longer required to There is a separate
Name submit a separate undertaking to change
undertaking, see the corporate name to
the 10th Clause of the be signed by directors.
AOI.
Signatories The incorporators and Only incorporators sign the
the treasurer sign the AOI. AOI.
REGISTRATION, INCORPORATION, AND COMMENCEMENT OF CORPORATE EXISTENCE

Under Section 18, a person or group of persons desiring to incorporate shall submit the
intended corporate name to the SEC for verification. If the Commission finds that the
name is distinguishable from a name already reserved or registered for the use of another
corporation, not protected by law, and not contrary to law, rules and regulations, the
name shall be reserved in favor of the incorporators. The incorporators shall then submit
their articles of incorporation and by-laws to the Commission. If the Commission finds that
the submitted documents and information are fully compliant with the RCCP and other
relevant laws, rules, and regulations, SEC shall issue the certificate of incorporation. The
private corporation commences its corporate existence and juridical personality from the
date the SEC issues the certificate of incorporation under its official seal.

NON-USE OF CORPORATE CHARTER AND CONTINUOUS INOPERATION

Section 21 states that if a corporation does not formally organize and commence
its business within five (5) years (Note: two (2) years in the Corporation Code) from the
date of its incorporation, its certificate of incorporation shall be deemed revoked as of
the day following the end of the five-year period.

However, if a corporation has commenced its business but subsequently becomes

inoperative for a period of at least five (5) consecutive years, the SEC may, after due
notice and hearing, place the corporation under delinquent status.

A delinquent corporation shall have a period of two (2) years to resume operations and
comply with all requirements that the SEC shall prescribe. Upon compliance by the
corporation, the SEC shall issue an order lifting the delinquent status. Failure to comply
with the requirements and resume operations within the period given by the SEC shall
cause the revocation of the corporation's certificate of incorporation.

The SEC may also place the corporation under delinquent status in case of failure to
submit the reportorial requirements three (3) times, consecutively or intermittently, within
a period of five (5) years (Sec. 177).

BY-LAWS

These are the rules of action adopted by the corporation for its internal government and
for the government of its officers, shareholders, or members. Under Section 46, a private
corporation may provide in its by-laws for:

1. The time, place, and manner of calling and conducting regular or special
meetings of the directors or trustees;
2. The time and manner of calling and conducting regular or special meetings and
mode of notifying the stockholders or members thereof;
3. The required quorum in meetings of stockholders or members and the manner of
voting therein;
4. The modes by which a stockholder, member, director, or trustee may attend
meetings and cast their votes;
5. The form for proxies of stockholders and members and the manner of voting
them;
 6. The directors' or trustees' qualifications, duties, and responsibilities, the guidelines
for setting the compensation of directors or trustees and officers, and the
maximum number of other board representations that an independent director
or trustee may have which shall, in no case, be more than the number prescribed
by the SEC;
7. The time for holding the annual election of directors of trustees and the mode or
manner of giving notice thereof;
8. The manner of election or appointment and the term of office of all officers other
than directors or trustees;
9. The penalties for violation of the bylaws;
10. In the case of stock corporations, the manner of issuing stock certificates; and
11. Such other matters as may be necessary for the proper or convenient transaction
of its corporate affairs for the promotion of good governance and anti-graft and
corrupti0n measures
12. An arbitration agreement may be provided in the by-laws pursuant to Section
181. (New provisions in the RCCP)

NO MINIMUM CAPITAL STOCK

Stock corporations shall not be required to have a minimum capital stock, except as
otherwise specifically provided by special law (Sec. 12). The minimum paid-in capital
of at least P5,000 under Sec. 13 of the Corporation Code of the Philippines was
deleted.

There is also no minimum subscribed capital and no minimum paid-in capital

requirement. The requirements under Section 13 of the Corporation Code of the
Philippines, state: "at the time of incorporation, at least 25% of the authorized capital
stock as stated in the articles of incorporation must be subscribed, and at least 25% of
the total subscription must be paid upon subscription," have been deleted in the
RCCP.

Note that the 25% subscribed and 25% paid-up rule is still applicable when the
corporation increases its capital stock (Sec. 37).

BASIC CORPORATE ORGANIZATIONAL STRUCTURE

The ultimate control of the corporation rests with the shareholders. They are the owners of
the corporation. The shareholders elect the top governing body of the corporation, the
members of the board of directors. The board of directors is responsible for the formulation
of the overall policies for the corporation and for the exercise of corporate powers. The
board also elects a chairman of the board.

Directors shall be elected for a term of one (1) year from among the holders of stocks
registered in the corporation's books (Sec. 22). Independent directors (as defined earlier)
must be elected by the shareholders present or entitled to vote in absentia during the
election of directors (Sec. 22).

The election of the professional management team or the administrative officers is

entrusted to the board. This team may include the president; executive vice-president;
vice presidents in charge of sales, manufacturing, accounting, finance, administration,
and other key areas; secretary; treasurer; and controller. These officers implement the
board of directors' policies and actively manage the day-to-day affairs of the
corporation. Annually, a corporation holds a shareholders' meeting during which the
shareholders elect their directors and make other decisions.

Hierarchy of Corporate Structure

Shareholders
elect the
Board of Directors
elect the
Officers
hire
Employees

Section 24 states that the president of a corporation must be a director of the

corporation, but he cannot act as president and secretary or as president and
treasurer at the same time. The president is the only officer required by law to be a
director.

The corporate secretary must be a resident and a citizen of the Philippines. He need
not be a director unless required by the corporate by-laws. It is generally the
secretary's duty to make and keep its records and make proper entries of the votes,
resolutions, and proceedings of the shareholders and directors in the corporation's
management. The corporate treasurer is the proper officer entrusted with the
authority to receive and keep the corporation's money and disburse them as he may
be authorized. The treasurer may or may not be a director but is required, per Sec.
24 of the RCCP, to be a resident of the Philippines.

If the corporation is vested with the public interest, the board shall also elect a
compliance officer (Sec. 24).

There is no prohibition in the law against a shareholder being a director or officer of

two or more corporations. The Corporation Code does not prohibit a corporate officer
from occupying the same position in another corporation organized for the same
purpose. However, such a situation may be prohibited by special law, the articles of
incorporation, or corporate by-laws. There is a particular case involving a business
tycoon who wanted to become a San Miguel Corporation director, although he was
already occupying the same post in the two corporations directly competing with the
food and beverage giant. At that time, San Miguel amended its by-laws to provide for
the disqualification of a shareholder from being a director of the corporation if the
former already occupies the same position in a competing firm. The Supreme Court
later upheld the decision of San Miguel. Thus, a corporation is authorized to prescribe
qualifications for its directors (Gokongwei vs. SEC, 89 SCRA 336).

RIGHTS OF A SHAREHOLDER

The following are some of the rights of a shareholder:

1. Right to be issued a certificate of stock or other evidence of share ownership
and to transfer such shares.
2. Right to vote via remote communication or in absentia (Note: under BP68, in
person or by proxy only) at shareholders' meetings (Sec. 57).
3. Right to elect and remove directors.
4. Right to adopt, amend or repeal the by-laws.
 5. Right to purchase a portion of any new shares issued to maintain the same
percentage of stock ownership. This right is known as the pre-emptive right.
However, this right is not absolute and may be denied.
6. Right to receive dividends when declared.
7. Right to inspect corporate books and records and to receive financial reports of
the corporation's operations.
8. Right to participate in the distribution of corporate assets upon dissolution.

CORPORATE BOOKS AND RECORDS

Every private corporation, stock or non-stock, is required to keep books and records
at its principal office of the following:
1. Minutes book. It contains the minutes of the meetings of the directors and
shareholders.
2. Stock and transfer book. It is a record of the names of shareholders, installments
paid and unpaid by shareholders and dates of payment, any transfer of stock
and dates thereof, by whom and to whom made.
3. Books of accounts. These represent the record of all business transactions. The
books of accounts normally include the journal and the ledger.
4. 4. Subscription book. It is a book of printed blank subscriptions.
5. Shareholders' ledger. It is a ledger that details the number of shares issued to
each shareholder.
6. Subscribers' ledger. It is a subsidiary ledger for the subscriptions receivable
account; it reports the individual subscriptions of the subscribers.
7. Stock certificate book. It is a book of printed blank certificates of stock.

Section 73 provides that every corporation shall keep and carefully preserve at its
principal office all information relating to the corporation, including, but not limited
to:
1. The articles of incorporation and by-laws of the corporation and all their
amendments;
2. The current ownership structure and voting rights of the corporation, including
lists of stockholders or members, group structures, intra-group relations, ownership
data, and beneficial ownership;
3. The names and addresses of all the members of the board of directors or trustees
and the executive officers;
4. A record of all business transactions;
5. A record of the resolutions of the board of directors or trustees and of the
stockholders or members;
6. Copies of the latest reportorial requirements submitted to the Commission; and
7. The minutes of all meetings of stockholders or members and of the board of
directors or trustees.

Section 74 states that a corporation shall furnish a stockholder or member, within ten
(10) days from receipt of their written request, its most recent financial statement in the
form and substance of the financial reporting required by the SEC. At the regular
meeting of stockholders or members, the board of directors or trustees shall present to
such stockholders or members a financial report of the operations of the corporation
for the preceding year, which shall include financial statements, duly signed and
certified in accordance with the RCCP, and the rules the SEC may prescribe. However,
if the total assets or total liabilities of the corporation is less than P600,000, or such other
amount as may be determined appropriate by the Department of Finance, the
Financial Statements may be certified under oath by the treasurer and the president.

ONE PERSON CORPORATION (OPC)

The Revised Corporation Code of the Philippines added a new type of corporation,
the One Person Corporation (OPC). OPC is a corporation with a single stockholder,
who may be a natural person, a trust, or an estate (Sec. 116). One person may
incorporate two or more OPCs.

Banks and quasi-banks, pre-need, trust, insurance, public and publicly-listed

companies, and non-chartered government-owned and -controlled corporations
may not. incorporate as OPCs. A natural person licensed to exercise a profession may
not organize as an OPC for the purpose of exercising such profession except as
otherwise provided under special laws (Sec. 116).

The OPC has a personality separate and distinct from the single stockholder. The sole
shareholder's liability is limited to his investment. He has the burden of affirmatively
showing that the corporation was adequately financed. Where the single
stockholder cannot prove that the property of the OPC is independent of the
stockholder's personal property, the stockholder shall be. jointly and severally liable
for the debts and other liabilities of the OPC. The principle of piercing the corporate
veil applies with equal force to OPC as to other corporations (Sec. 130).

An OPC shall not be required to have a minimum authorized capital stock except as
otherwise provided by a special law (Sec. 117). If the corporation is an OPC, the
letter "OPC" is included, either below or at the end of its corporate name (Sec. 120).
The OPC is not required to submit and file corporate by-laws (Sec. 119). But, the OPC
is required to file the AOI in accordance with Section 14. It shall likewise substantially
contain the following:
1. If the single stockholder is a trust or an estate, the name, nationality, and
residence of the trustee, administrator, executor, guardian, conservator,
custodian, or other person exercising fiduciary duties together with the proof of
such authority to act on behalf of the trust or estate; and

2. Name, nationality, the residence of the nominee and alternate nominee, and
the extent, coverage, and limitation of the authority (Sec. 118).

The single stockholder shall be the sole director and president of the OPC (Sec. 121).
Within fifteen (15) days from the issuance of its certificate of incorporation, the OPC
shall appoint a treasurer, corporate secretary, and other officers as it may deem
necessary and notify the SEC thereof within five (5) days from appointment. The single
stockholder may not be appointed as the corporate secretary. The single stockholder
may be the treasurer. The single stockholder, who is likewise the self-appointed
treasurer of the corporation, shall give a two-year term bond to the SEC in such a sum
as may be required (Sec. 122).

The single stockholder cannot be a corporate secretary in view of its special function
under Section 123 (c), "notify the SEC of the death of the single stockholder within five
(5) days from such occurrence and stating in such notice the names, residence
addresses and contact details of all known legal heirs."
The single stockholder shall designate a nominee and an alternate nominee who shall,
in the event of the single stockholder's death or incapacity, take the place of the single
stockholder as director and shall manage the corporation's affairs. The articles of
incorporation shall state the names, residence addresses, and contact details of
the nominee and alternate nominee, as well as the extent and limitations of their
authority in managing the affairs of the OPC. The written consent of the nominee and
alternate nominee shall be attached to the application for incorporation. Such
consent may be withdrawn in writing any time before the death or incapacity of the
single stockholder (Sec. 124). The single stockholder may, at any time, change its
nominee and alternate nominee by submitting to the SEC the names of the new
nominees and their corresponding written consent. For this purpose, the articles of
incorporation need not be amended (Sec. 126).

A One Person Corporation shall maintain a minutes book which shall contain all actions,
decisions, and resolutions taken by the OPC (Sec. 127). Records in Lieu of Meetings.
When action is needed on any matter, it shall be sufficient to prepare a written
resolution, signed and dated by the single stockholder, and recorded in the minutes'
book of the OPC. The date of recording in the minutes' book shall be deemed to be
the date of the meeting for all Purposes under the RCCP (Sec. 128).