Rules on Perpetual Existence of Corporations under SEC Memorandum Circular No. 22, Series of 2020.

1. What is the corporate term of corporations incorporated under R.A. No. 11232 (Revised Corporation Code)?

Corporations incorporated under the RCC shall have perpetual existence unless its articles of incorporation provides a specific corporate term.

2. What is the effect on the corporate term of corporations incorporated under the old Corporation Code when the RCC took effect?

The corporate term became deemed perpetual upon the effectivity of the RCC, without any action on the part of the corporation.

a. What are the requirements for the perpetual term to be reflected in the articles of incorporation of a corporation incorporated prior to the effectivity of the RCC?

The corporation, subject to payment of filing fees, may amend Article Four by a vote of the majority of its Board of Directors or Trustees and by a vote of its stockholders representing a majority of its outstanding capital stock including the non-voting shares, or majority of the members, in case of a non-stock corporation.

b. What is the voting requirement if there are other provisions to be amended in one same amended articles of incorporation?

A majority vote of the Board of Directors or Trustees and vote of the stockholders representing two-thirds (2/3) of its outstanding capital stock or members, in case of a non-stock corporation, is required.

3. Are corporations incorporated prior to the effectivity of the RCC allowed to continue with their present corporate term?

Yes.

a. What are the requirements if such corporation elects to continue with their present corporate term?

The corporation shall file with the Securities of Exchange Commission a Notice to retain its corporate term.

The Directors' Certificate shall be attached to the said Notice certifying that the decision to retain the specific corporate term as specified in the Articles of Incorporation was approved in a meeting duly held for the purpose by a majority vote of the Board of Directors or Trustees and by the vote of the stockholders representing a majority of the outstanding capital stock, including the non-voting shares, or a majority of the members, in case of a non-stock corporation.

This Notice must be signed by at least a majority of the members of the Board of Directors or Trustees, and attested by the Corporate Secretary.

b. When is deadline for the filing of Notice to retain the corporate term?

This Notice must be submitted until February 23, 2021.

c. What is the effect of failure to file Notice to retain the corporate term until February 23, 2021?

The corporate term shall be treated as perpetual after the said date.

4. Are corporations allowed to extend or shorten the corporate term?


Yes. Corporations incorporated under the RCC whose articles of incorporation provide for a specific term of existence and existing corporations incorporated under the Corporation Code and The Corporation Law that opted to retain its specific corporate term, may file an amendment of articles of incorporation to extend or shorten the specific corporate term.


a. What is the voting requirement for the amendment to extend or shorten the corporate term?


The amendment must be approved by vote or written assent of majority of the Board of Directors or Trustees and vote or written assent of the stockholders representing at least two-thirds (2/3) of the outstanding capital stock of the corporation.


b. Is there any limitation as to the allowance of extension of corporate term?


In no case shall any extension of corporations mentioned in the preceding paragraph be made earlier than three (3) years prior to the original or subsequent expiration date of the corporate term, unless there are justifiable reasons for extension as may be determined by the Commission. Extension of the corporate term shall take effect only on the day following the original or subsequent expiry date(s).

5. Can corporations change specific corporate term to perpetual corporate term?


Yes. Corporations incorporated under the RCC whose articles of incorporation provide for a specific term of existence and existing corporations incorporated under The Corporation Code and The Corporation Law that notified the Commission of the decision to retain the specific corporate term, may subsequently amend its specific corporate term to perpetual term of existence.


a. What is the voting requirement for the amendment to change specific corporate term to perpetual corporate term?


The amendment must be approved by vote or written assent of majority of the Board of Directors or Trustees and vote or written assent of the stockholders representing at least two-thirds (2/3) of the outstanding capital stock of the corporation.

6. Can corporations change perpetual corporate term to specific corporate term?


Yes. The below corporations may subsequently amend its perpetual term of existence to specific corporate term:


1. Corporations incorporated under the RCC whose articles of incorporation provide for perpetual term of existence

2. Corporations incorporated under the Corporation Code of the Philippines and Old Corporation Code existing at the time of effectivity of the RCC whose corporate terms were treated perpetual for failure to file the Notice to retain specific corporate term, and

3. Corporations that amended their articles of incorporation to reflect their perpetual term of existence, may subsequently amend its perpetual term of existence to specific corporate term.

a. What is the voting requirement for the amendment to change perpetual corporate term to specific corporate term?


The amendment must be approved by vote or written assent of majority of the Board of Directors or Trustees and vote or written assent of the stockholders representing at least two-thirds (2/3) of the outstanding capital stock of the corporation.

7. Is there any limitation as to the allowance of change in the corporate term?


Any change in the corporate term pursuant to Section 11 shall be without prejudice to the appraisal right of dissenting stockholders in accordance with the provisions of the RCC.

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