NOTES K CORP LAW - DISSOLUTION
Dissolution of a Corporation – extinguishment of the franchise of a corporation and
the termination of its corporate existence.
Modes of Dissolution: a) Voluntary Dissolution; b) Involuntary Dissolution; c)
Shortening of term; and d) Expiration of term.
a) Voluntary dissolution where no creditors are affected (Sec. 134, RCCP)
1) A meeting should be held on the call of directors or trustees.
2) Notice of the meeting should be given to the stockholders by personal
delivery or registered mail or by any means at least 20 days prior to the
meeting.
3) The notice of meeting should also be published once in a newspaper
published in the place or newspaper of general circulation.
4) The resolution to dissolve must be approved by the majority of the
directors/trustees and approved by the stockholders representing at least of
the outstanding capital stock or of members’ majority Sec. 134 RCCP
5) A copy of the resolution shall be certified by the majority of the directors or
trustees and countersigned by the secretary; and
6) The signed and countersigned copy will be filed with the SEC and the latter
will issue the certificate of dissolution.
b) Voluntary dissolution where creditors are affected (Sec. 135, CCP)
1) Approval of the stockholders representing at least 2/3 of the outstanding
capital stock or 2/3 of members in a meeting called for that purpose.
2) Filing of a Petition with the SEC signed by majority of directors or trustees or
other officers having the management of its affairs verified by President or
Secretary or Director.
3) If Petition is sufficient in form and substance, the SEC shall issue an Order
fixing a hearing date for objections;
4) Objections must be filed no less than 30 days nor more than 60 days after the
entry of the Order;
5) Before fixing a deadline for filing Objections, a copy of the Order shall be
published at least once a week for 3 consecutive weeks in a newspaper of
general circulation or if there is no newspaper in the municipality or city of the
principal office or posting for 3 consecutive weeks in 3 public places in each
city or municipality.
6) After the expiration of the time to file objections, a hearing shall be conducted
upon prior five-day notice to hear the objections; and
7) Judgment shall be rendered dissolving the corporation and directing the
disposition of assets; the judgment may include appointment of a receiver.
c) Dissolution by shortening corporate term (Sec. 136 RCCP, CCP). –
This is done amending the Articles of Incorporation. The amended Articles shall
be filed with the SEC and the corporation is deemed dissolved upon approval of
the amended Articles or upon expiration of the new term.
SEC. 138. Involuntary Dissolution. – A corporation may be dissolved by the
Commission motu proprio or upon filing of a verified complaint by any interested
party. The following may be grounds for dissolution of the corporation:
(a) Non-use of corporate charter as provided under Section 21 of this Code;
(b) Continuous inoperation of a corporation as provided under Section 21 of
this Code;
(c) Upon receipt of a lawful court order dissolving the corporation;
(d) Upon finding by final judgment that the corporation procured its
incorporation through fraud;
(e) Upon finding by final judgment that the corporation:
(1) Was created for the purpose of committing, concealing or aiding the
commission of securities violations, smuggling, tax evasion, money laundering, or
graft and corrupt practices;
(2)Committed or aided in the commission of securities violations, smuggling,
tax evasion, money laundering, or graft and corrupt practices, and its stockholders
knew; and
(3) Repeatedly and knowingly tolerated the commission of graft and corrupt
practices or other fraudulent or illegal acts by its directors, trustees, officers, or
employees.
If the corporation is ordered dissolved by final judgment pursuant to the
grounds set forth in subparagraph (e) hereof, its assets, after payment of its
liabilities, shall, upon petition of the Commission with the appropriate court, be
forfeited in favor of the national government. Such forfeiture shall be without
prejudice to the rights of innocent stockholders and employees for services
rendered, and to the application of other penalty or sanction under this Code or
other laws.
The Commission shall give reasonable notice to, and coordinate with, the
appropriate regulatory agency prior to the involuntary dissolution of companies
under their special regulatory jurisdiction.
SEC. 139. Corporate Liquidation. – Except for banks, which shall be
covered by the applicable provisions of Republic Act No. 7653, otherwise known as
the “New Central Bank Act”, as amended, and Republic Act No. 3591, otherwise
known as the Philippine Deposit Insurance Corporation Charter, as amended, every
corporation whose charter expires pursuant to its articles of incorporation, is
annulled by forfeiture, or whose corporate existence is terminated in any other
manner, shall nevertheless remain as a body corporate for three (3) years after the
effective date of dissolution, for the purpose of prosecuting and defending suits by
or against it and enabling it to settle and close its affairs, dispose of and convey its
property, and distribute its assets, but not for the purpose of continuing the business
for which it was established.
At any time during said three (3) years, the corporation is authorized and
empowered to convey all of its property to trustees for the benefit of stockholders,
members, creditors and other persons in interest. After any such conveyance by the
corporation of its property in trust for the benefit of its stockholders, members,
creditors and others in interest, all interest which the corporation had in the property
terminates, the legal interest vests in the trustees, and the beneficial interest in the
stockholders, members, creditors or other persons-in-interest.
Except as otherwise provided for in Sections 93 and 94 of this Code, upon
the winding up of corporate affairs, any asset distributable to any creditor or
stockholder or member who is unknown or cannot be found shall be escheated in
favor of the national government.
Except by decrease of capital stock and as otherwise allowed by this Code,
no corporation shall distribute any of its assets or property except upon lawful
dissolution and after payment of all its debts and liabilities.
