Titles VIII, IX, & X - Revised Corporation Code of the Philippines - PDF

THE REVISED CORPORATION CODE OF THE PHILIPPINES TITLES VIII, IX, & X MANLAPAZ, MURAO, & ORZAME OVERVIEW VIII CORPORATE BOOKS AND RECORDS IX MERGER & CONSOLIDATION X APPRAISAL RIGHTS  TITLE VIII: CORPORATE BOOKS AND RECORDS  Section 73...

THE REVISED CORPORATION CODE OF THE PHILIPPINES TITLES VIII, IX, & X MANLAPAZ, MURAO, & ORZAME OVERVIEW VIII CORPORATE BOOKS AND RECORDS IX MERGER & CONSOLIDATION X APPRAISAL RIGHTS  TITLE VIII: CORPORATE BOOKS AND RECORDS  Section 73 Books to be Kept; Stock Transfer Agent - Every corporation shall keep and carefully preserve at its principal office all information relating to the corporation including, but not limited to: (a)The articles of incorporation and bylaws of the corporation and all their amendments; (b)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; (c)The names and addresses of all the members of the board of directors or trustees and the executive officers;  Section 73 (c)Copies of the latest reportorial requirements submitted to the Commission; and (d)A record of all business transactions; (e)A record of the resolutions of the board of directors or trustees and of the stockholders or members; (f)Copies of the latest reportorial requirements submitted to the Commission; and  Section 73 (d) The minutes of all meetings of stockholders or members, or of the board of directors or trustees.Such minutes shall set forth in detail, among others: the time and place of the meeting held, how it was authorized, the notice given, the agenda therefor, whether the meeting was regular or special, its object if special, those present and absent, and every act done or ordered done at the meeting. Upon the demand of a director, trustee, stockholder or member, the time when any director, trustee, stockholder or member entered or left the meeting must be noted in the minutes; and on a similar demand, the yeas and nays must be taken on any motion or proposition, and a record thereof carefully made. The protest of a director, trustee, stockholder or member on any action or proposed action must be recorded in full upon their demand.  Section 73 Corporate records, regardless of the form in which they are stored, shall be open to inspection by any director, trustee, stockholder or member of the corporation in person or by a representative at reasonable hours on business days, and a demand in writing may be made by such director, trustee or stockholder at their expense, for copies of such records or excerpts from said records. Republic Act No. 8293, otherwise known as the “Intellectual Property Code of the Philippines”, as amended, Republic Act No. 10173, otherwise known as the “Data Privacy Act of 2012” Republic Act No. 8799, otherwise known as “The Securities Regulation Code”, and the Rules of Court.  Section 73 A requesting party who is not a stockholder or member of record, or is a competitor, director, officer, controlling stockholder or otherwise represents the interests of a competitor shall have no right to inspect or demand reproduction of corporate records. Any stockholder who shall abuse the rights granted under this section shall be penalized under Section 158 of this Code, without prejudice to the provisions of Republic Act No. 8293, otherwise known as the “Intellectual Property Code of the Philippines”, as amended, and Republic Act No. 10173, otherwise known as the “Data Privacy Act of 2012”.  Section 73 Any officer or agent of the corporation who shall refuse to allow the inspection and/or reproduction of records in accordance with the provisions of this Code shall be liable to such director, trustee, stockholder or member for damages, and in addition, shall be guilty of an offense which shall be punishable under Section 161 of this Code: Provided, That if such refusal is made pursuant to a resolution or order of the board of directors or trustees, the liability under this section for such action shall be imposed upon the directors or trustees who voted for such refusal: Provided, further, That it shall be a defense to any action under this section that the person demanding to examine and copy excerpts from the corporation’s records and minutes has improperly used any information secured through any prior examination of the records or minutes of such corporation or of any other corporation, or was not acting in good faith or for a legitimate purpose in making the demand to examine or reproduce corporate records, or is a competitor, director, officer, controlling stockholder or otherwise represents the interests of a competitor.  Section 73 If the corporation denies or does not act on a demand for inspection and/or reproduction, the aggrieved party may report such to the Commission. Within five (5) days from receipt of such report, the Commission shall conduct a summary investigation and issue an order directing the inspection or reproduction of the requested records. Stock corporations must also keep a stock and transfer book, which shall contain a record of all stocks in the names of the stockholders alphabetically arranged; the installments paid and unpaid on all stocks for which subscription has been made, and the date of payment of any installment; a statement of every alienation, sale or transfer of stock made, the date thereof, by and to whom made; and such other entries as the bylaws may prescribe. The stock and transfer book shall be kept in the principal office of the corporation or in the office of its stock transfer agent and shall be open for inspection by any director or stockholder of the corporation at reasonable hours on business days.  Section 73 A stock transfer agent or one engaged principally in the business of registering transfers of stocks in behalf of a stock corporation shall be allowed to operate in the Philippines upon securing a license from the Commission and the payment of a fee to be fixed by the Commission, which shall be renewable annually: Provided, That a stock corporation is not precluded from performing or making transfers of its own stocks, in which case all the rules and regulations imposed on stock transfer agents, except the payment of a license fee herein provided, shall be applicable: Provided, further, That the Commission may require stock corporations which transfer and/or trade stocks in secondary markets to have an independent transfer agent.  Section 74 Right to Financial Statements. – 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 Commission. 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 this Code, and the rules the Commission may prescribe.  However, if the total assets or total liabilities of the corporation is less than Six hundred thousand pesos (P600,000.00), 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.  TITLE IX MERGER AND CONSOLIDATION Murao, Allyza D. DEFINITIONS MERGERS - Two or more corporations unite, one corporation which retains its corporate existence absorbing or merging in itself the other which disappears as a separate corporation. CONSOLIDATION - Two or more corporations unite, giving rise to a new corporate body and dissolving the constituent corporations, which cease to exist as separate corporations. Section 75 Plan of Merger or Consolidation. – Two (2) or more corporations may merge into a single corporation which shall be one of the constituent corporations or may consolidate into a new single corporation which shall be the consolidated corporation. The board of directors or trustees of each corporation, party to the merger or consolidation, shall approve a plan of merger or consolidation setting forth the following: (a) The names of the corporations proposing to merge or consolidate, hereinafter referred to as the constituent corporations; (b) The terms of the merger or consolidation and the mode of carrying the same into effect; Section 75 (c) A statement of the changes, if any, in the articles of incorporation of the surviving corporation in case of merger; and, in case of consolidation, all the statements required to be set forth in the articles of incorporation for corporations organized under this Code; and (d) Such other provisions with respect to the proposed merger or consolidation as are deemed necessary or desirable. Section 76 Stockholders’ or Members’ Approval. – Upon approval by a majority vote of each of the board of directors or trustees of the constituent corporations of the plan of merger or consolidation, the same shall be submitted for approval by the stockholders or members of each of such corporations at separate corporate meetings duly called for the purpose. Notice of such meetings shall be given to all stockholders or members of the respective corporations in the same manner as giving notice of regular or special meetings under Section 49 of this Code.The notice shall state the purpose of the meeting and include a copy or a summary of the plan of merger or consolidation. Section 76 The affirmative vote of stockholders representing at least two-thirds (2/3) of the outstanding capital stock of each corporation in the case of stock corporations or at least two-thirds (2/3) of the members in the case of nonstock corporations shall be necessary for the approval of such plan. Any dissenting stockholder may exercise the right of appraisal in accordance with this Code: Provided, That if after the approval by the stockholders of such plan, the board of directors decides to abandon the plan, the right of appraisal shall be extinguished. Section 76 Any amendment to the plan of merger or consolidation may be made: Provided, That such amendment is approved by a majority vote of the respective boards of directors or trustees of all the constituent corporations and ratified by the affirmative vote of stockholders representing at least two-thirds (2/3) of the outstanding capital stock or of two-thirds (2/3) of the members of each of the constituent corporations. Such plan, together with any amendment, shall be considered as the agreement of merger or consolidation. Section 77 Articles of Merger or Consolidation. – After the approval by the stockholders or members as required by the preceding section, articles of merger or articles of consolidation shall be executed by each of the constituent corporations, to be signed by the president or vice president and certified by the secretary or assistant secretary of each corporation setting forth: (a) The plan of the merger or the plan of consolidation; (b) As to stock corporations, the number of shares outstanding, or in the case of nonstock corporations, the number of members; Section 77 (c) As to each corporation, the number of shares or members voting for or against such plan, respectively; (d) The carrying amounts and fair values of the assets and liabilities of the respective companies as of the agreed cut-off date; (e) The method to be used in the merger or consolidation of accounts of the companies; (f) The provisional or pro forma values, as merged or consolidated, using the accounting method; and (g) Such other information as may be prescribed by the Commission. Section 78 Effectivity of Merger or Consolidation. – The articles of merger or of consolidation, signed and certified as required by this Code, shall be submitted to the Commission for its approval: Provided, That in the case of merger or consolidation of banks or banking institutions, loan associations, trust companies, insurance companies, public utilities, educational institutions, and other special corporations governed by special laws, the favorable recommendation of the appropriate government agency shall first be obtained. If the Commission is satisfied that the merger or consolidation of the corporations concerned is consistent with the provisions of this Code and existing laws, it shall issue a certificate approving the articles and plan of merger or of consolidation, at which time the merger or consolidation shall be effective. Section 78 If, upon investigation, the Commission has reason to believe that the proposed merger or consolidation is contrary to or inconsistent with the provisions of this Code or existing laws, it shall set a hearing to give the corporations concerned the opportunity to be heard. Written notice of the date, time, and place of hearing shall be given to each constituent corporation at least two (2) weeks before said hearing. The Commission shall thereafter proceed as provided in this Code. Section 79 Effects of Merger or Consolidation. – The merger or consolidation shall have the following effects: (a) The constituent corporations shall become a single corporation which, in case of merger, shall be the surviving corporation designated in the plan of merger; and, in case of consolidation, shall be the consolidated corporation designated in the plan of consolidation; (b) The separate existence of the constituent corporations shall cease, except that of the surviving or the consolidated corporation; (c) The surviving or the consolidated corporation shall possess all the rights, privileges, immunities, and powers and shall be subject to all the duties and liabilities of a corporation organized under this Code; Section 79 (d) The surviving or the consolidated corporation shall possess all the rights, privileges, immunities and franchises of each constituent corporation; and all real or personal property, all receivables due on whatever account, including subscriptions to shares and other choses in action, and every other interest of, belonging to, or due to each constituent corporation, shall be deemed transferred to and vested in such surviving or consolidated corporation without further act or deed; and (e) The surviving or consolidated corporation shall be responsible for all the liabilities and obligations of each constituent corporation as though such surviving or consolidated corporation had itself incurred such liabilities or obligations; and any pending claim, action or proceeding brought by or against any constituent corporation may be prosecuted by or against the surviving or consolidated corporation. The rights of creditors or liens upon the property of such constituent corporations shall not be impaired by the merger or consolidation.  TITLE X APPRAISAL RIGHTS Orzame, Ryza Karylle E. Section 80 When the Right of Appraisal May Be Exercised. – Any stockholder of a corporation shall have the right to dissent and demand payment of the fair value of the shares in the following instances: (a) In case an amendment to the articles of incorporation has the effect of changing or restricting the rights of any stockholder or class of shares, or of authorizing preferences in any respect superior to those of outstanding shares of any class, or of extending or shortening the term of corporate existence; (b) In case of sale, lease, exchange, transfer, mortgage, pledge or other disposition of all or substantially all of the corporate property and assets as provided in this Code; Section 80 (c) In case of merger or consolidation; and (d) In case of investment of corporate funds for any purpose other than the primary purpose of the corporation. Note: In a close corporation, in case any stockholder, for any reason, compel said corporation to purchase his shares at their fair value, which shall not be less than their par or issued value when the corporation has sufficient assets in its books to cover its debts and liabilities exclusive of capital stock (Section 104). Section 81 How Right is Exercised. The dissenting stockholder must have voted against a proposed corporate action. A written demand must be made on the corporation for the payment of the fair value of shares held within thirty (30) days from the date on which the vote was taken. Failure to make the demand within such period shall be deemed a waiver of the appraisal right.  If the proposed corporate action is implemented, the corporation shall pay the stockholder, upon surrender of the certificate or certificates of stock representing the stockholder's shares, the fair value thereof as of the day before the vote was taken, excluding any appreciation or depreciation in anticipation of such corporate action. If, within sixty (60) days from the approval of the corporate action by the stockholders, the withdrawing stockholder and the corporation cannot agree on the fair value of the shares, it shall be determined and appraised by three (3) disinterested persons, one of whom shall be named by the stockholder,another by the corporation, and the third by the two (2) thus chosen. The findings of the majority of the appraisers shall be final, and their award shall be paid by the corporation within thirty (30) days after such award is made: Provided, That no payment shall be made to any dissenting stockholder unless the corporation has unrestricted retained earnings in its books to cover such payment: Provided, further. That upon payment by the corporation of the agreed or awarded price, the stockholder shall forthwith transfer the shares to the corporation. Section 81. How Right is Exercised  VALUATION DATE The fair value of the shares of the dissenting stockholder is determine as of the day prior to the date on which the vote was taken excluding any appreciation or depreciation in value of the shares in anticipation of such corporate action. Section 81. How Right is Exercised Section 82 Effect of Demand and Termination of Right. From the time of demand for payment of the fair value of a stockholder's shares until either the abandonment of the corporate action involved or the purchase of the said shares by the corporation, all rights accruing to such shares, including voting and dividend rights, shall be suspended in accordance with the provisions of this Code, except the right of such stockholder to receive payment of the fair value thereof: Provided, That if the dissenting stockholder is not paid the value of the said shares within thirty (30) days after the award, the voting and dividend rights shall immediately be restored.  Section 82. Effect of Demand and Termination of Right (a) From the time of demand for payment of the fair value of a stockholder's shares until either the abandonment of the corporate action involved or the purchase of the said shares by the corporation, all rights accruing to such shares, including voting and dividend rights, shall be suspended. (b) The dissenting stockholder shall be entitled to receive payment of the fair value of his shares as agreed upon between him and the corporation or as determined by the appraisers chosen by them. (c) If the dissenting stockholder is not paid the value of his shares within 30 days after the award, his voting and dividend rights shall immediately be restored.  Section 82. Effect of Demand and Termination of Right (d) Upon such payment, all his rights are terminated, not merely suspended. But if before he is paid the proposed corporate action is abandoned, his rights and status as a stockholder shall thereupon be permanently restored. (e) Payment may be made only if the corporation has unrestricted retained earnings in its books to cover the same. Section 83 When Right to Payment Ceases. No demand for payment under this Title may be withdrawn unless the corporation consents thereto. If, however, such demand for payment is withdrawn with the consent of the corporation, or if the proposed corporate action is abandoned or rescinded by the corporation or disapproved by the Commission where such approval is necessary, or if the Commission determines that such stockholder is not entitled to the appraisal right, then the right of the stockholder to be paid the fair value of the shares shall cease, the status as the stockholder shall be restored, and all dividend distributions which would have accrued on the shares shall be paid to the stockholder.  GENERAL RULE A dissenting stockholder who demands payment of his share is no longer allowed to withdraw from his decision. Section 83. When Right to Payment Ceases  EXCEPTIONS 01 The corporation consents to the withdrawal; 02 The proposed corporate actions disapproved by the SEC where its approval is necessary. 03 The proposed corporate action is abandoned or rescinded by the corporation; and 04 The SEC determines that such stockholder is not entitled to appraisal right. Section 83. When Right to Payment Ceases Section 84 Who Bears Costs of Appraisal. General Rule The corporation shall bear the costs of appraisal. Exceptions The fair value ascertained by the appraisers is approximately the same as the price which the corporation may have offered to pay the stockholder , in which case shall be borne by the stockholder.  BY THE CORPORATION 01 Where the price which the corporation offered to pay he dissenting stockholder is lower than the fair value as determined by the appraisers named by them. 02 Where an action is filed by the dissenting stockholder to recover such fair value and the refusal of the stockholder to receive payment is found by the court to be justified. Section 84. Who Bears Costs of Appraisal  BY THE DISSENTING STOCKHOLDER 01 Where the price offered by the corporation is approximately the same as the fair value ascertained by the appraisers. 02 Where the same action is filed by the dissenting stockholder and his refusal to accept payment when found by the court to. be unjustified. Section 84. Who Bears Costs of Appraisal Section 85 Notation on Certificates; Rights of Transferee. Within ten (10) days after demanding payment for shares held, a dissenting stockholder shall submit the certificates of stock representing the shares to the corporation for notation that such shares are dissenting shares. Failure to do so shall, at the option of the corporation, terminate the rights under this Title. If shares represented by the certificates bearing such notation are transferred, and the certificates consequently cancelled, the rights of the transferor as a dissenting stockholder under this Title shall cease and the transferee shall have all the rights of a regular stockholder; and all dividend distributions which would have accrued on such shares shall be paid to the transferee. THANK YOU!