Incorporation and organization of private corporations

Incorporation & Organization

Republic Act No. 11232 | Sections 10-21

Sec 10. The Incorporators

Any person, partnership, association, or corporation may organize a corporation.

Number:
Not more than fifteen (15).
(Note: OPC allows for just 1)
Legal Age:
Required for natural persons.
Ownership:
Must own/subscribe to at least one (1) share.
Professionals:
Generally prohibited for the practice of profession unless special law allows.

Sec 11. Corporate Term

Default Rule: Perpetual Existence.

Corporations existing prior to the Code shall have perpetual existence unless they vote otherwise.

ℹ️ Commencement (Sec. 18)
Juridical personality begins from the date the Commission issues the Certificate of Incorporation.

Sec 13-15. Articles of Incorporation (AOI)

SEC
The AOI must be filed with the SEC.

The AOI is the charter of the corporation. It must contain substantially the following:

  • Name of Corporation
  • Specific Purpose (Primary & Secondary)
  • Principal Office (Must be in PH)
  • Term (if not perpetual)
  • Names/Nationalities/Addresses of Incorporators
  • Number & Names of Directors/Trustees
  • Authorized Capital Stock (Amount, Shares, Par Value)
  • Arbitration Agreement (Optional)

How to Amend the AOI? (Sec. 15)

Amendment requires a "Double Majority":

Majority Vote
of Board of Directors / Trustees + 2/3 Vote
of Outstanding Capital Stock / Members
2/3 Vote (Required)
Remaining 1/3

Note: Dissenting stockholders may exercise appraisal rights.

Defective Considerations

Doctrine Concept
De Facto Corporation
(Sec. 19)		 Claiming in good faith to be a corporation. Its existence cannot be attacked collaterally (private suit). Only the Solicitor General can challenge it via Quo Warranto.
Corporation by Estoppel
(Sec. 20)		 Persons assuming to act as a corporation without authority are liable as general partners. They cannot use "lack of personality" as a defense when sued.

Sec 21. Effects of Inaction

Failure to Organize (5 Years)

If the corporation does not commence business within 5 years from incorporation: Certificate Deemed Revoked.

Continuous Inoperation (5 Years)

If the corporation commenced but stopped for 5 consecutive years: Delinquent Status.

Period to Cure (2 Years)

Delinquent corporations have 2 years to resume. Failure to comply = Revocation.

Source: Republic Act No. 11232 (Revised Corporation Code of the Philippines)