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Indefinite Corporate Lifespan. The Old Code Had Prescribed A Maximum Corporate Term of 50

The document discusses revisions made to the Philippine Corporation Code. It summarizes: 1) The revised code removes the minimum number of incorporators required to form a corporation, allowing for one-person corporations. 2) Corporations now have indefinite existence unless otherwise specified, removing the previous 50-year limit that required extension. 3) The revised code does away with minimum capital stock requirements for corporations, except as required by special law, making incorporation easier for small and medium businesses. 4) If a corporation does not formally organize within two years of incorporation or becomes continuously inoperative for five years, its corporate powers and certificate will be revoked.

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Jere Mae Maranan
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55 views

Indefinite Corporate Lifespan. The Old Code Had Prescribed A Maximum Corporate Term of 50

The document discusses revisions made to the Philippine Corporation Code. It summarizes: 1) The revised code removes the minimum number of incorporators required to form a corporation, allowing for one-person corporations. 2) Corporations now have indefinite existence unless otherwise specified, removing the previous 50-year limit that required extension. 3) The revised code does away with minimum capital stock requirements for corporations, except as required by special law, making incorporation easier for small and medium businesses. 4) If a corporation does not formally organize within two years of incorporation or becomes continuously inoperative for five years, its corporate powers and certificate will be revoked.

Uploaded by

Jere Mae Maranan
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Number of incorporators

Old the old Code had prescribed a minimum of five incorporators

Revised Revised Code removes the minimum number of incorporators required to establish a
corporation. The Revised Code goes as far as to permit an individual to form a one-person corporation.

Corporate term or period of existence

Indefinite corporate lifespan. The old Code had prescribed a maximum corporate term of 50
years and required corporations to amend their articles of incorporation (AOI) to extend the
corporate life for another fifty-year period. The new Code now provides that a corporation shall
have perpetual existence unless its articles of incorporation provides otherwise. Existing
corporations are even presumed now to have perpetual existence unless the stockholders vote
to retain the original term provided in the AOI, (upon a vote of the stockholders representing a
majority of its outstanding capital stock) or a new specific period (upon a vote to amend the
articles of incorporation by stockholders representing at least 2/3 of the outstanding capital
stock.  (Sec. 11)
 
. Minimum subscribed and paid-up capital 

Removal of minimum capital stock requirement. The Revised Code does away with the
minimum capital stock requirement for stock corporations, except as otherwise specifically
provided by special law. The change again works to the benefit of small to medium-sized
enterprises by making it easier for them to incorporate. (Sec. 12)
 
4. Period of non-use of charter
Effects on non-use of corporate charter and continuous inoperation of a corporation. – If a corporation
does not formally organize and commence the transaction of its business or the construction of its
works within two (2) years from the date of its incorporation, its corporate powers cease and the
corporation shall be deemed dissolved. However, if a corporation has commenced the transaction of its
business but subsequently becomes continuously inoperative for a period of at least five (5) years, the
same shall be a ground for the suspension or revocation of its corporate franchise or certificate of
incorporation. (19a) This provision shall not apply if the failure to organize, commence the transaction of
its businesses or the construction of its works, or to continuously operate is due to causes beyond the
control of the corporation as may be determined by the Securities and Exchange Commission.
Effects of Non-Use of Corporate Charter and Continuous Inoperation. – If a corporation does not
formally organize and commence its business within five (5) years 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 Commission 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 Commission shall prescribe. Upon
compliance by the corporation, the Commission shall issue an order lifting the delinquent status. Failure
to comply with the requirements and resume operations within the period given by the Commission
shall cause the revocation of the corporation’s certificate of incorporation. The Commission shall give
reasonable notice to, and coordinate with the appropriate regulatory agency prior to the suspension or
revocation of the certificate of incorporation of companies under their special regulatory jurisdiction.

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