TITLE IGENERAL
PROVISIONSDefinitions
and Classifications
Section 1.
Title
of the Code. - This Code shall be known as "The
Corporation Code of the Philippines".cralaw:red
Sec. 2. Corporation
defined.- 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.
Sec. 3. Classes
of corporations.-
Corporations
formed or organized under this Code may be stock or non-stock
corporations.
Corporations which have capital stock 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 are stock
corporations.
All other corporations are non-stock corporations.
Sec. 4. Corporations
created by special laws or charters. - Corporations
created
by special laws or charters shall be governed primarily by the
provisions
of the special law or charter creating them or applicable to them,
supplemented
by the provisions of this Code, insofar as they are applicable.
Sec. 5. Corporators
and incorporators, stockholders and members. -
Corporators
are those who compose a corporation, whether as stockholders or as
members.
Incorporators are those stockholders or members mentioned in the
articles
of incorporation as originally forming and composing the corporation
and
who are signatories thereof.
Corporators
in a stock corporation are called
stockholders or shareholders. Corporators in a non-stock corporation
are
called members.
Sec. 6. Classification
of shares - The shares of
stock of stock corporations may be divided into classes or series of
shares,
or both, any of which classes or series of shares may have such rights,
privileges or restrictions as may be stated in the articles of
incorporation:
Provided, That no share may be deprived of voting rights except those
classified
and issued as "preferred" or "redeemable" shares, unless otherwise
provided
in this Code: Provided, further, That there shall always be a class or
series of shares which have complete voting rights. Any or all of the
shares
or series of shares may have a par value or have no par value as may be
provided for in the articles of incorporation: Provided, however, That
banks, trust companies, insurance companies, public utilities, and
building
and loan associations shall not be permitted to issue no-par value
shares
of stock.
Preferred
shares of stock issued by any corporation
may be given preference in the distribution of the assets of the
corporation
in case of liquidation and in the distribution of dividends, or such
other
preferences as may be stated in the articles of incorporation which are
not violative of the provisions of this Code: Provided, That preferred
shares of stock may be issued only with a stated par value. The board
of
directors, where authorized in the articles of incorporation, may fix
the
terms and conditions of preferred shares of stock or any series
thereof:
Provided, That such terms and conditions shall be effective upon the
filing
of a certificate thereof with the Securities and Exchange Commission.
Shares of
capital stock issued without par
value shall be deemed fully paid and non-assessable and the holder of
such
shares shall not be liable to the corporation or to its creditors in
respect
thereto: Provided; That shares without par value may not be issued for
a consideration less than the value of five (P5.00) pesos per share:
Provided,
further, That the entire consideration received by the corporation for
its no-par value shares shall be treated as capital and shall not be
available
for distribution as dividends.
A corporation
may, furthermore, classify its
shares for the purpose of insuring compliance with constitutional or
legal
requirements.
Except as
otherwise provided in the articles
of incorporation and stated in the certificate of stock, each share
shall
be equal in all respects to every other share.
Where the
articles of incorporation provide
for non-voting shares in the cases allowed by this Code, the holders of
such shares shall nevertheless be entitled to vote on the following
matters:
1. Amendment of the articles of
incorporation;
2. Adoption and amendment of by-laws;
3. Sale, lease, exchange, mortgage,
pledge
or other disposition of all or substantially all of the corporate
property;
4. Incurring, creating or increasing
bonded
indebtedness;
5. Increase or decrease of capital
stock;
6. Merger or consolidation of the
corporation
with another corporation or other corporations;
7. Investment of corporate funds in
another
corporation or business in accordance with this Code; and
8. Dissolution of the corporation.
Except as
provided in the immediately preceding
paragraph, the vote necessary to approve a particular corporate act as
provided in this Code shall be deemed to refer only to stocks with
voting
rights.
Sec. 7. Founders'
shares. - Founders' shares classified as such in the
articles
of incorporation may be given certain rights and privileges not enjoyed
by the owners of other stocks, provided that where the exclusive right
to vote and be voted for in the election of directors is granted, it
must
be for a limited period not to exceed five (5) years subject to the
approval
of the Securities and Exchange Commission. The five-year period shall
commence
from the date of the aforesaid approval by the Securities and Exchange
Commission.
Sec. 8. Redeemable
shares. - Redeemable shares may be issued by the
corporation
when expressly so provided in the articles of incorporation. They may
be
purchased or taken up by the corporation 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
as may be stated in the articles of incorporation, which terms and
conditions
must also be stated in the certificate of stock representing said
shares.
Sec. 9. Treasury
shares. - Treasury shares are shares of stock which have
been issued and fully paid for, but subsequently reacquired by the
issuing
corporation by purchase, redemption, donation or through some other
lawful
means. Such shares may again be disposed of for a reasonable price
fixed
by the board of directors.
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