Republic Act 11232 aaaaaaa Classes of Corporation

The Revised Corporation Code of the 1.​ Stock Corporation

Philippines Corporations which have capital
stock divided into shares and are
Date Approved: February 20, 2019 authorized to distribute to the
Effectivity Date: February 23, 2019 holders of such shares dividends
or allotments of the surplus
GENERAL PROVISIONS profits on the basis of the shares
DEFINITIONS AND CLASSIFICATION held. Sec. 3, R.A. 11232.

Corporation 2.​ Non-stock Corporation

A corporation is an artificial being It is a corporation that does not
created by operation of law, having have owners represented by
the right of succession and the shares of stock.
powers, attributes and properties
expressly authorized by law or In general, corporations registered with
incident to its existence. (Sec. 2 R.A the Securities and Exchange
11232) Commission are governed by R.A
-​ All requirements required by law 11232 or the Revised Corporation Code
is met (operation of law) of the Philippines. These corporations
are private corporations.
Article XII, Section 16, 1987 However, there are corporations created
Constitution by special laws or charter. These
“The Congress shall not, except by corporations are governed by the law or
general law, provide for the formation, charter that created them,
organization, or regulation of private supplemented by the provisions of RA
corporation. Government owned and 11232, insofar as they are applicable.
controlled corporations may be These corporations are known as
created or established by special government owned or controlled
charters in the interest of the common corporations. (GOCC)
good and subject to the test of economic -​ Ex. RA 7875 PhilHealth
viability.
-​ Provides the requirements GROUP OF PEOPLE IN A
-​ Separate entity of owners and CORPORATION
corporation that’s why it allows 1. Incorporator
the right of succession 2. Corporators
-​ Resignation does not terminate a 3. Officers
corporation. 4. Members
Incorporator (1-15 persons) HOLDERS OF NON-VOTING SHARES
Incorporators are those stockholders ARE ENTITLED TO VOTE ON THE
or members mentioned in the articles of FOLLOWING:
incorporation as originally forming and (a) Amendment of the articles of
composing the corporation and who are incorporation;
signatories thereof. (sec. 5, R.A. 11232) (b) Adoption and amendment of bylaws;
-​ Natural persons must be of legal (c) Sale, lease, exchange, mortgage,
age pledge, or other disposition of all or
-​ Cannot be considered an substantially all of the corporate
incorporator if s/he does not own property;
a stock (all incorporators are (d) Incurring, creating, or increasing
stockholders but not all bonded indebtedness;
stockholders are incorporator) (e) Increase or decrease of authorized
capital stock;
Corporators (f) Merger or consolidation of the
Corporators are those who compose a corporation with another corporation or
corporation, whether as stockholders other corporations;
or shareholders in a stock corporation or (g) Investment of corporate funds in
as members in a nonstock corporation. another corporation or business in
-​ In non-stock corporation, they are accordance with this Code; and
called “members” (h) Dissolution of the corporation.
Except for the foregoing instances,
CLASSES/SERIES OF SHARES IN A the vote required under the Revised
CORPORATION Corporation Code to approve a
1. Non-Voting Shares particular corporate act shall be
2. Par Value Shares deemed to refer only to stocks with
3. No Par Value voting rights.
4. Preferred Shares
5. Founder Shares PAR VALUE SHARES
6. Redeemable Shares Par value shares means that the
7. Treasury Shares minimum price per share is fixed in the
articles of incorporation of stock
NON-VOTING SHARES corporations. Stocks shall not be
Redeemable shares; certain shares may issued for a consideration less than the
be deprived of voting rights except those par or issued price thereof.
expressly provided by law.
NO PAR VALUE SHARES
No-par value stock doesn't have a
redeemable price, rather prices are
determined by the amount that
investors are willing to pay for the FOUNDERS SHARE
stocks on the open market. Where the exclusive right to vote and be
voted for in the election of directors is
CORPORATION NOT PERMITTED TO granted, it must be for a limited period
ISSUE NO-PAR VALUE SHARES OF not to exceed five (5) years from the
STOCK date of incorporation: Provided, That
➔​ Banks such exclusive right shall not be allowed
➔​ Trust if its exercise will violate Commonwealth
➔​ Insurance Act No. 108, otherwise known as the
➔​ pre-need companies “Anti-Dummy Law”; Republic Act No.
➔​ public utilities 7042, otherwise known as the “Foreign
➔​ building and loan associations, Investments Act of 1991”; and other
and pertinent laws.
➔​ other corporations authorized to -​ No foreigners are allowed to vote.
obtain or access funds from the
public, whether publicly listed or REDEEMABLE SHARES
not. Redeemable shares are shares which
may be purchased by the corporation
PREFERRED SHARES from the holders of such shares upon
Preferred shares of stock are stocks the expiration of a fixed period,
issued by a corporation which may be regardless of the existence of
given preference in the distribution of unrestricted retained earnings in the
dividends and in the distribution of books of the corporation, and upon such
corporate assets in case of liquidation, other terms and conditions stated in the
or such other preferences. articles of incorporation and the
-​ Priority shares. certificate of stock representing the
-​ If they issue different preferred shares, subject to rules and regulations
shares, they will be categorized. issued by the Securities and Exchange
-​ Must be certificated by SEC. Commission (SEC).

FOUNDERS EQUITY OR FOUNDERS KINDS OF REDEEMABLE SHARES

STOCK Compulsory- shares that the
Founder's equity or founder's stock is a corporation is required to redeem.
class of stock issued to founders or Optional- shares that the corporation is
early members of a company. not mandated to redeem.
-​ They have rights only available
for them. SPECIAL RULES ON REDEEMABLE
SHARES​
1. Redeemable shares may be issued
by the corporation only when it is
expressly authorized by the Articles of 5. The redeemable shares are deemed
Incorporation; retired upon redemption, unless
2. The terms and conditions affecting otherwise provided in the AOI. (SEC
redeemable shares must be stated Rules Governing Redeemable and
both in the Articles of Incorporation and Treasury Shares, 26 April 1982)
in the certificates of stock representing
such shares; and 6. Unrestricted retained earnings are
3. Redeemable shares may be not necessary before shares can be
deprived of voting rights in the Articles redeemed, but there must be sufficient
of Incorporation unless otherwise assets to pay the creditors and to
provided. (Sections 6 and 8, RCCP) answer for operations.
-​ Numbers 1-2 requires to be
specified. UNRESTRICTED RETAINED
EARNING
LIMITATIONS OF REDEEMABLE The amount of accumulated profits and
SHARE​ gains realized out of the normal and
(Republic Planters Banks v. Agana, continuous operation of the
G.R. No. 51765, March 3, 1997) corporation.
1. Redeemable shares may be issued
only when expressly provided for in the REDEMPTION CANNOT BE MADE ON
Articles of Incorporation. (Section 8, THE FOLLOWING:
RCCP) 1.​ Where the corporation is
insolvent, or
2. The terms and conditions affecting 2.​ if such redemption will cause
said shares must be stated both in the insolvency or inability of the
AOI and in the certificate of stock. corporation to meet its debts as
(Section 8, RCCP) they mature.

3. Redeemable shares may be deprived TREASURY SHARES

of voting rights in the Articles of Treasury shares are shares of stock
Incorporation. (Section 6, RCCP) which have been issued and fully paid
for, but subsequently reacquired by the
4. The corporation is required to issuing corporation through purchase,
maintain a sinking fund to answer for redemption, donation, or some other
redemption price if the corporation is lawful means.
required to redeem. (SEC-OGC Opinion
No. 07-03)
Sinking Fund - set aside funds to pay
for redeemable shares
INCORPORATION AND The term may be extended or
ORGANIZATION OF PRIVATE shortened by amending the articles
CORPORATION of incorporation: Provided, That no
Under Sec. 10 of R.A 11232, Any extension may be made earlier than
person, partnership, association or three (3) years prior to the original or
corporation, singly or jointly with others subsequent expiry date(s) unless there
but not more than fifteen (15) in number, are justifiable reasons for an earlier
may organize a corporation for any extension as may be determined by the
lawful purpose or purposes: Provided, Commission: Provided, further, That
That natural persons who are licensed such extension of the corporate term
to practice a profession, and shall take effect only on the day
partnerships or associations organized following the original or subsequent
for the purpose of practicing a expiry date(s).
profession, shall not be allowed to
organize as a corporation unless A corporation whose term has expired
otherwise provided under special laws. may apply for revival of its corporate
Incorporators who are natural persons existence, together with all the rights
must be of legal age. and privileges under its certificate of
-​ One person corporation means 1 incorporation and subject to all of its
person can create a corporation. duties, debts and liabilities existing prior
to its revival. Upon approval by the
SECTION 87 RCCP Commission, the corporation shall be
“Nonstock corporations may be deemed revived and a certificate of
formed or organized for charitable, revival of corporate existence shall be
religious, educational, issued, giving it perpetual existence,
PROFESSIONAL, cultural, fraternal, unless its application for revival provides
literary, scientific, social, civic service, or otherwise.
similar purposes, like trade, industry,
agricultural and like chambers, or any MINIMUM CAPITAL STOCK
combination thereof, subject to the Stock corporations shall not be required
special provisions of this Title governing to have minimum capital stock, except
particular classes of nonstock as otherwise specially provided by
corporations.” (Emphasis supplied.) special law.(Sec. 12)

CORPORATE TERM KINDS OF CAPITAL STOCK

A corporation shall have perpetual 1.​ Authorized Capital Stock
existence unless its articles of 2.​ Subscribed Capital Stock
incorporation provide otherwise. 3.​ Paid-up Capital Stock
(Sec.11)
Authorized Capital Stock
Authorized capital stock is the amount (e) The names, nationalities, and
fixed in the articles of incorporation to be residence addresses of the
subscribed and paid, or agreed to be incorporators;
paid by stockholders in money, (f) The number of directors, which
property services or other means at the shall not be more than fifteen (15) or the
organization of the corporation and number of trustees which may be
afterwards and upon which it is to more than fifteen (15);
conduct business. (g) The names, nationalities, and
residence addresses of persons who
Subscribed Capital Stock shall act as directors or trustees until the
Subscribed capital stock is the amount first regular directors or trustees are duly
of capital stock of the corporation that is elected and qualified in accordance with
subscribed or are acquired by persons this Code;
or other corporations. (h) If it be a stock corporation, the
amount of its authorized capital stock,
Paid-up Capital Stock number of shares into which it is
Paid-up capital stock is the portion of divided, the par value of each, names,
subscribed capital stock that is paid. nationalities, and subscribers,
amount subscribed and paid by each
CONTENTS OF ARTICLES OF on the subscription, and a statement
INCORPORATION that some or all of the shares are
(a) The name of corporation; without par value, if applicable;
(b) The specific purpose or purposes for (i) If it be a nonstock corporation, the
which the corporation is being formed. amount of its capital, the names,
Where a corporation has more than one nationalities, and residence addresses
stated purpose, the articles of of the contributors, and amount
incorporation shall indicate the contributed by each; and
primary purpose and the secondary (j) Such other matters consistent with
purpose or purposes: Provided, That a law and which the incorporators may
nonstock corporation may not include a deem necessary and convenient.
purpose which would change or
contradict its nature as such; NAME OF CORPORATION
(c) The place where the principal office A corporation cannot use a name which
of the corporation is to be located, which is:
must be within the Philippines; 1. identical or deceptively or confusingly
(d) The term for which the corporation is similar to that of any existing corporation
to exist, if the corporation has not or to any other name protected by law;
elected perpetual existence; or
2. patently deceptive, confusing or
contrary to law.
SPECIFIC PURPOSE (h) If it be a stock corporation, the
The specific purpose or purposes for amount of its authorized capital stock,
which the corporation is being formed. number of shares into which it is
Where a corporation has more than one divided, the par value of each, names,
stated purpose, the articles of nationalities, and subscribers, amount
incorporation shall indicate the subscribed and paid by each on the
primary purpose and the secondary subscription, and a statement that some
purpose or purposes: Provided, That a or all of the shares are without par
nonstock corporation may not include a value, if applicable;
purpose which would change or
contradict its nature as such; CAPITALIZATION
Authorized capital stock – the
GENERAL LIMITATION ON THE maximum amount fixed in the articles to
PURPOSE CLAUSE be subscribed and paid-in or secured to
1. The purpose must be lawful. be paid by the subscribers.
2. The purpose must be specific or Subscribed capital stock– the total
stated concisely although in broad or number of shares and its total value for
general terms. which there are contracts for their
3. If there is more than one purpose, the acquisition or subscription.
primary as well as the secondary ones Paid-up capital stock– the actual
must be specified. amount or value which has been
4. The purpose must be capable of actually contributed or paid to the
being lawfully combined. corporation in consideration of the
subscriptions made thereon.
PRINCIPAL OFFICE
The residence of the corporation is the Stocks shall not be issued for a
place of its principal office as may be consideration less than the par or
indicated in its articles of incorporation issued price thereof
and may, therefore, be sued only at
that place. (CRS vs. Antillon) FORMS OF ARTICLES OF
INCORPORATION
NAME, NATIONALITIES AND Unless otherwise prescribed by
RESIDENCE OF INCORPORATOR special law, the articles of incorporation
-​ NUMBER OF DIRECTOR OR of all domestic corporations shall comply
TRUSTEES substantially with the form prescribed by
The number of directors, which RCCP.
shall not be more than fifteen (15)
or the number of trustees which AMENDMENT OF ARTICLES OF
may be more than fifteen (15); INCORPORATION
Unless otherwise prescribed by this Philippine national, at least 60%
Code or by special law, and for of its capital stock outstanding
legitimate purposes, any provision or and entitled to vote must be
matter stated in the articles of owned and held by Filipino
incorporation may be amended by a citizens. This requirement also
majority vote of the board of directors or applies to the Board of Directors,
trustees and the vote or written assent where at least 60% of the
of the stockholders representing at least members must be Filipino. This
two-thirds (2/3) of the outstanding applies to both domestic and
capital stock, without prejudice to the foreign-owned corporations
appraisal right of dissenting operating in the Philippines.
stockholders in accordance with the
provisions of this Code. The articles of CORPORATE NAME
incorporation of a nonstock No corporate name shall be allowed by
corporation may be amended by the the Commission if it is not
vote or written assent of majority of distinguishable from that already
the trustees and at least two-thirds reserved or registered for the use of
(2/3) of the members. (Sec. 15) another corporation, or if such name is
already protected by law, rules and
GROUNDS FOR DISAPPROVAL OF regulations. (Sec. 17)
ARTICLES OF INCORPORATION OR
AMENDMENT EFFECTS OF NON-USE OF
a) The articles of incorporation or any CORPORATE CHARTER AND
amendment thereto is not substantially CONTINUOUS INOPERATION
in accordance with the form prescribed If a corporation does not formally
herein; organize and commence its business
b) The purpose or purposes of the within five (5) years from the date of its
corporation are patently incorporation, its certificate of
unconstitutional, illegal, immoral or incorporation shall be deemed revoked
contrary to government rules and as of the day following the end of the
regulations; five (5)-year period.
c) The certification concerning the However, if a corporation has
amount of capital stock subscribed commenced its business but
and/or paid is false; and subsequently becomes inoperative for
d) The required percentage of Filipino a period of at least five (5) consecutive
ownership of the capital stock under years, the Commission may, after due
existing laws or the Constitution has not notice and hearing, place the
been complied with. (Sec. 16) corporation under delinquent status.
-​ In the Philippines, for a (Sec 21)
corporation to be considered a
TERM a) those whose securities are
Director - a term of one (1) year from registered with the SEC,
among the holders of stocks registered b) Corporations listed with the stock
in the corporation's book. exchange, or
Trustee- term not exceeding three (3) c) those of a class of its equity shares.
years from among the members of the
corporation. 2. Banks and quasi-banks, non-stock
Each director and trustee shall hold savings and loan associations,
office until the successor is elected and pawnshops, corporations engaged in
qualified. (Sec. 22) money service business, preneed, trust
QUALIFICATIONS and insurance companies, and other
1. For stock corporation financial intermediaries.
A director must own at least one (1)
share of stock. INDEPENDENT DIRECTOR
2. For nonstock Corporation An independent director is a person who
A trustee must be a member of the apart from shareholdings and fees
corporation. received from any business or other
relationship which could, or could
FOR CORPORATION VESTED WITH reasonable be received to materially
PUBLIC INTEREST interfere with the exercise of
It shall have independent directors independent judgment in carrying out
constituting at least twenty percent the responsibilities as a director.
(20%) of such board.
ELECTION OF DIRECTORS OR
Independent directors must be TRUSTEES
elected by the shareholders present
or entitled to vote in absentia during Except when the exclusive right is
the election of directors. reserved for holders of founders' shares
under Section 7 of this Code, each
Corporation vested with public stockholder or member shall have the
interest are those corporations whose right to nominate any director or
operations significantly impact the trustee who posseses all of the
public, shareholders and communities. qualifications and none of the
disqualifications set forth in this Code.
Example of corporation vested with (Section 23)
public interest
1. Corporations covered by Section Section 7. Founders' Shares. -
17.2 of Republic Act No. 8799 (the Founders' shares may be given certain
Securities Regulation Code) namely: rights and privileges not enjoyed by the
owners of other stock. Where the
exclusive right to vote and be voted for (1) Of an offense punishable by
in the election of directors is granted, it imprisonment for a period exceeding six
must be for a limited period not to (6) years;
exceed five (5) years from the date of (2) For violating this Code; and
incorporation: Provided, That such (3) For violating Republic Act No.
exclusive right shall not be allowed if its 8799, otherwise known as "The
exercise will violate Commonwealth Act Securities Regulation Code";
No. 108, otherwise known as the (b) Found administratively liable for any
"Anti-Dummy Law"; Republic Act No. offense involving fraudulent acts; and
7042, otherwise known as the "Foreign (c) By a foreign court or equivalent
Investments Act of 1991"; and other foreign regulatory authority for acts,
pertinent laws. violations or misconduct similar to those
enumerated in paragraphs (a) and (b)
At all elections of directors or trustees, above.
there must be present, either in person The foregoing is without prejudice to
or through a representative authorized qualifications or other disqualifications,
to act by written proxy, the owners of which the Commission, the primary
majority of the outstanding capital regulatory agency, or Philippine
stock, or if there be no capital stock, a Competition Commission may impose in
majority of the members entitled to its promotion of good corporate
vote. governance or as a sanction in its
administrative proceedings. (Sec. 26)
CORPORATE OFFICERS
(a) President, who must be a director; GROUNDS FOR DISQUALIFICATION
(b) Treasurer, who must be a resident; OF DIRECTORS, TRUSTEES, OR
(c) Secretary, who must be a citizen and OFFICERS
resident of the Philippines; Memorandum Circular No. 4, series of
(d) Compliance Officer for corporation 2022 (“M.C. No. 4”)
vested with public interest. A.​ Within five (5) years prior to the
(e) Such other officers as may be election or appointment, the director,
provided in the bylaws. (Section 24) trustee, or officer was:
1.​ Convicted by final judgment for
DISQUALIFICATION OF DIRECTORS, an offense punishable by
TRUSTEES OR OFFICERS​ imprisonment for a period
A person shall be disqualified from exceeding six (6) years, or for
being a director, trustee or officer of any violating the RCC, the Securities
corporation if, within five (5) years prior Regulation Code (“SRC”), or by a
to the election or appointment as such, foreign court or equivalent foreign
the person was: regulatory authority for acts,
(a) Convicted by: violations, or misconduct like
 those enumerated in Section 26 3.​ Found administratively liable by a
(a) and (b) of the RCC. foreign court or equivalent foreign
2.​ Found administratively liable by regulatory authority for acts,
final judgment for any offense violations, or misconduct like
involving fraudulent acts those enumerated in Section 26
punishable under the RCC, SRC, paragraphs (a) and (b) of the
or other laws, rules, or RCC.
regulations enforced or
implemented by the SEC. REMOVAL OF DIRECTOR OR
3.​ Found administratively liable by a TRUSTEE​
foreign court or equivalent foreign Any director or trustee of a corporation
regulatory authority for acts, may be removed from office by vote of
violations, or misconduct similar the stockholders holding or representing
to those enumerated in at least two-thirds (2/3) of the
paragraphs (a) and (b) of Section outstanding capital stock, or in a
26 of the RCC. nonstock corporation, by a vote of at
4.​ Found administratively liable for least two-thirds (2/3) of the member
refusal to allow inspection and/or entitled to vote: Provided, That such
reproduction of corporate records removal shall take place either at a
regular meeting of the corporation or
B. Within the tenure, the director, at a special meeting called for the
trustee, or officer was: purpose, and in either case, after
1.​ Convicted by final judgment of an previous notice to stockholders or
offense punishable by members of the corporation of the
imprisonment for a period intention to propose such removal at the
exceeding six (6) years, or for meeting. (Section 27)
violating the RCC or the SRC, or
by a foreign court or equivalent VACANCIES IN THE OFFICE OF
foreign regulatory authority for DIRECTOR OR TRUSTEE;
acts, violations, or misconduct EMERGENCY BOARD​
like those enumerated in Section Any vacancy occurring in the board of
26 paragraphs (a) and (b) of the directors or trustees other that by
RCC removal or expiration of term may be
2.​ Found administratively liable by filled by the vote of at least a majority
final judgment for any offense of the remaining directors or
involving fraudulent acts trustees, if still constituting a quorum;
punishable under the RCC, SRC, otherwise, said vacancies must be filled
or other laws, rules or regulations by the stockholders or members in a
enforced or implemented by the regular or special meeting called for that
SEC purpose. (Sec. 28)
 -​ Quorum - the minimum number the replacement director or trustee,
of members of an assembly or whichever comes earlier. The
society that must be present at corporation must notify the Commission
any of its meetings to make the within three (3) days from the
proceedings of that meeting valid. creation of the emergency board,
When the vacancy is due to term stating therein the reason for its
expiration, the election shall be held no creation.
later that the day of such expiration at a
meeting called for that purpose. When Any directorship or trusteeship to be
the vacancy arises as a result of filled by a reason of an increase in
removal by the stockholders or the number of directors or trustees
members, the election may be held on shall be filled only by an election at a
the same day of the meeting authorizing regular or at a special meeting of
the removal and this fact must be so stockholders or members duly called for
stated in the agenda and notice of said the purpose, or in the same meeting
meeting. In all other cases, the election authorizing the increase of directors or
must be held no later than forty-five trustees if so stated in the notice of the
(45) days from the time the vacancy meeting.
arose. A director or trustee elected to
fill a vacancy shall be referred to as LIABILITY OF DIRECTORS,
replacement director or trustee and TRUSTEES OR OFFICERS
shall serve only for the unexpired term Directors or trustees who willfully and
of the predecessor in office. knowingly vote for or assent to patently
unlawful acts of the corporation or who
However, when the vacancy prevents are guilty of gross negligence or bad
the remaining directors from faith in directing the affairs of the
constituting a quorum and corporation or acquire any personal or
emergency action is required to pecuniary interest in conflict with their
prevent grave, substantial, and duty as such directors or trustees shall
irreparable loss or damage to the be liable jointly and severally for all
corporation, the vacancy may be damages resulting therefrom suffered
temporarily filled from among the by the corporation, its stockholders or
officers of the corporation by unanimous members and other persons.
vote of the remaining directors or
trustees. The action by the designated A director, trustee or officer shall not
director or trustee shall be limited to attempt to acquire, or any interest
the emergency action necessary, and adverse to the corporation in respect
the term shall cease within a of any matter which has been
reasonable time from the termination reposed in them in confidence, and
of the emergency or upon election of upon which, equity imposes a disability
upon themselves to deal in their own contract with a director or trustee, such
behalf; otherwise, the said director, contract may be ratified by the vote
trustee or officer shall be liable as a of the stockholders representing at
trustee for the corporation and must least two-thirds (2/3) of the
account for the profits which otherwise outstanding capital stock or of at
would have accrued to the corporation. least two-thirds (2/3) of the members
(Sec 30) in a meeting called for the purpose:
Provided, That full disclosure of the
DEALINGS OF DIRECTORS, adverse interest of the directors or
TRUSTEES OR OFFICERS WITH THE trustees involved is made at such
CORPORATION meeting and the contract is fair and
A contract of the corporation with one reasonable under the circumstances.
(1) or more of its directors, trustees, (Sec. 31)
officers or their spouses and relatives
within the fourth civil degree of
consanguinity or affinity is voidable, at
the option of such corporation, unless
all the following conditions are
present:
(a) The presence of such director or
trustee in the board meeting in which
the contract was approved was not
necessary to constitute a quorum for
such meeting;
(b) The vote of such director or trustee
was not necessary for the approval of
the contract;
(c) The contract is fair and reasonable
under the circumstances;
(d) In case of corporations vested with
public interest, material contracts are
approved by at least a majority of the
independent directors voting to
approved the material contract; and
(e) In case of an officer, the contract has
been previously authorized by the board
of directors.
Where any of the first three (3)
conditions set forth in the preceding
paragraph is absent, in the case of a