How long does a corporation exist? Can you shorten or extend its life? (Section 11, RCC)

Summary

Attorney Marie Chris Mathan's virtual classroom video on YouTube explains the concept of corporate term, addressing the perpetual existence of corporations under the revised corporation code unless specified otherwise in the articles of incorporation. The video covers the historical changes in corporate life limits, the process for amending corporate terms, and the possibility of revival for expired corporations, including specific requirements for financial institutions and those with revoked or suspended certificates.

Takeaways

• 📜 The general rule for a corporation's existence under the revised corporation code is perpetual, meaning it lasts indefinitely unless stated otherwise in the articles of incorporation.
• 📝 Section 11 of the corporation code specifies that a corporation has perpetual existence unless the articles of incorporation provide a specific term.
• 🔄 Prior to the revised corporation code, the maximum corporate term was 50 years, renewable for another 50 years.
• ⏳ Corporations created before the revised corporation code's effectivity on February 23, 2019, are also granted perpetual existence unless they opt to retain their original term.
• 🗳️ Stockholders representing a majority interest can vote to retain the original corporate term, and this decision must be notified to the Securities and Exchange Commission.
• 🔑 Dissenting stockholders have the appraisal right, allowing them to demand fair value for their shares if the corporate term is retained contrary to their vote.
• 📝 Amending the articles of incorporation is the process to change the corporate term, whether to shorten or extend it, as per Section 15 of the revised corporation code.
• 📆 Extensions of the corporate term must be made at least three years prior to the original or subsequent expiry date, unless there are justifiable reasons for an earlier extension.
• 🔄 A corporation whose term has expired can apply for a revival of its corporate existence, subject to approval by the Securities and Exchange Commission.
• 📜 Upon approval of revival, the corporation is deemed revived with perpetual existence unless a different term is indicated in the application for revival.
• 🏦 Special types of corporations, such as banks and financial institutions, require a favorable recommendation from an appropriate government agency for revival applications.
• 🚫 Corporations that have completed liquidation, had their registration revoked for reasons other than non-filing of reports, or had their certificate of registration suspended cannot apply for revival of corporate existence.

Q & A

What is the general rule regarding the existence of a corporation according to the revised corporation code?

The general rule, as stated in Section 11 of the revised corporation code, is that a corporation has perpetual existence, meaning it is intended to live forever unless otherwise specified in the articles of incorporation.

Can the incorporators specify a different duration for the corporation's existence in the articles of incorporation?

Yes, the incorporators can decide to limit the life of the corporation by indicating a specific term or number of years for the corporation to exist in the articles of incorporation.

What was the previous limit to the life of a corporation under the old corporation code?

Under the old corporation code, the life of a corporation was limited to 50 years, renewable for another 50 years.

What is the effect of the revised corporation code on corporations that were created prior to its effectivity on February 23, 2019?

The revised corporation code is retroactive, and corporations created prior to its effectivity now have perpetual existence unless they elect to retain their specific corporate term as stated in their original articles of incorporation.

What should a corporation do if its stockholders wish to retain the original corporate term specified in the articles of incorporation?

The corporation must notify the Securities and Exchange Commission that the stockholders representing the majority interest have voted to retain the original corporate term.

What is an appraisal right in the context of corporate law?

An appraisal right allows dissenting stockholders to demand the fair value of their shares, typically when there is a change in the corporate structure or terms that they do not agree with.

Can a corporation change its corporate term after it has been established?

Yes, a corporation can amend its corporate term by amending the articles of incorporation, following the requirements set out in Section 15 of the revised corporation code.

What is the minimum time frame within which a corporation cannot extend its term as per the revised corporation code?

A corporation cannot extend its term earlier than three years prior to the original or subsequent expiry date, unless there are justifiable reasons and the commission approves an earlier extension.

What happens if a corporation's term has expired and it has not filed for an extension?

The corporation may apply for a revival of its corporate existence, which, upon approval by the commission, will be deemed revived with a new certificate of revival of corporate existence, typically granting perpetual existence unless otherwise stated.

Are there any special requirements for certain types of corporations applying for revival of corporate existence?

Yes, certain corporations like banks, insurance companies, and other financial intermediaries need a favorable recommendation from an appropriate government agency in addition to the application for revival.

What is the condition for an expired corporation whose name has been reused by another corporation and wishes to apply for revival?

The corporation can still apply for revival but must change its name within 30 days from the issuance of the certificate of revival of corporate existence.

Can a corporation that has completed the liquidation of its assets apply for revival of corporate existence?

No, a corporation that has completed the liquidation of its assets cannot apply for revival of corporate existence as it has already concluded its operations.

What is required for a corporation whose certificate of registration has been revoked due to non-filing of reports to apply for revival?

The corporation must first file a petition to lift the revoked status, which can be incorporated with a petition for revival of corporate existence.

Outlines

00:00

📜 Perpetual Existence of Corporations

Attorney Marie Chris Mathan introduces the concept of corporate term, explaining that under the revised corporation code, corporations have a perpetual existence unless specified otherwise in their articles of incorporation. The general rule is supported by Section 11 of the corporation code, which states that corporations live 'forever' unless a specific term is set by the incorporators. Prior to the revised code, the limit was 50 years, renewable for another 50. The video also addresses the transition for corporations created before the revised code's effectivity on February 23, 2019, stating that they now have perpetual existence unless they choose to retain their original term through a stockholder vote and notify the Securities and Exchange Commission.

05:03

🗳️ Stockholder Decisions and Appraisal Rights

The video continues by discussing the implications of the perpetual existence provision for existing corporations and the process for stockholders to retain a specific corporate term as stated in their articles of incorporation. If the stockholders vote to retain the original term, they must notify the Securities and Exchange Commission. The video also explains the concept of appraisal rights, which allows dissenting stockholders to demand the fair value of their shares. Furthermore, it explores the possibility of changing the corporate term after the corporation's creation, either shortening or extending it, in accordance with Section 15 of the revised corporation code.

10:05

📅 Extending and Reviving Corporate Terms

Attorney Mathan clarifies the process for extending or shortening a corporation's term through amendments to the articles of incorporation. Extensions cannot be made earlier than three years before the expiry date, unless there are justifiable reasons approved by the commission. The extension takes effect the day after the original or subsequent expiry date. The video also covers the revival of corporate existence for corporations whose term has expired, detailing the requirements and the issuance of a certificate of revival, which grants perpetual existence unless otherwise stated in the application for revival.

15:05

🏦 Special Conditions for Financial Institutions

The final paragraph addresses special conditions for certain types of corporations, such as banks, insurance companies, and other financial intermediaries, which require a favorable recommendation from an appropriate government agency for their application for revival of corporate existence to be approved by the commission. The video also discusses the process for corporations whose certificate of registration has been revoked or suspended, and the requirement for an expired corporation to change its name if it has been reused by another corporation. It concludes by stating that corporations that have completed liquidation or had their registration revoked for reasons other than non-filing of reports cannot apply for revival.

Keywords

💡Corporation

A corporation is a legal entity owned by shareholders and is recognized by law as having its own rights and responsibilities separate from its owners. In the video, the term is central to the discussion, as the video aims to clarify the lifespan of a corporation and how it can be perpetual or limited, depending on the articles of incorporation.

💡Perpetual Existence

Perpetual existence refers to the indefinite duration of a legal entity's life, such as a corporation, unless terminated by a specific action. The video explains that under the revised corporation code, a corporation has perpetual existence unless stated otherwise in its articles of incorporation, meaning it is intended to last indefinitely.

💡Articles of Incorporation

Articles of Incorporation are the legal documents that establish a corporation and outline its basic structure, including the corporate name, purpose, and the names of the initial board of directors. The script mentions that the articles of incorporation may specify a different term for the corporation's existence if the incorporators choose not to follow the default perpetual existence.

💡Revised Corporation Code

The Revised Corporation Code is the set of laws governing the formation, operation, and dissolution of corporations in a specific jurisdiction. The video discusses how this code, effective from February 23, 2019, has changed the default corporate term to perpetual existence, unless the articles of incorporation state otherwise.

💡Incorporate

To incorporate is the process of legally establishing a corporation. The video script explains that when a corporation is incorporated, it is granted existence by the state, which can be perpetual unless specified otherwise in the articles of incorporation.

💡Stockholders

Stockholders are the owners of a corporation, holding shares of stock. The video mentions that stockholders have the power to vote on decisions such as retaining the original corporate term or extending it, which is crucial in determining the lifespan of a corporation.

💡Appraisal Right

Appraisal right is the right of dissenting stockholders to demand payment for their shares at a fair value if they disagree with certain corporate actions, such as a merger. The script explains that if stockholders vote against retaining the original corporate term, they have the right to an appraisal of their shares.

💡Amend

To amend means to make changes or alterations to a legal document. The video script states that corporations can amend their articles of incorporation to change the corporate term, either shortening or extending it, following the requirements set out in the Revised Corporation Code.

💡Revival

Revival in the context of corporations refers to the process of reactivating a corporation whose term has expired or has been dissolved. The video explains that corporations can apply for revival of their corporate existence, subject to approval by the Securities and Exchange Commission, and regain their rights and privileges.

💡Securities and Exchange Commission

The Securities and Exchange Commission (SEC) is the regulatory body responsible for enforcing securities laws, regulating the securities industry, and overseeing corporate governance. In the video, the SEC is mentioned as the authority that corporations must notify when they decide to retain a specific corporate term or when applying for revival of corporate existence.

💡Certificate of Incorporation

A Certificate of Incorporation is a document issued by the SEC that certifies the corporation's existence. The video script discusses how corporations with a specific term can notify the SEC to retain this term, and how corporations can apply for a revival of their corporate existence, which would be evidenced by a new certificate of revival.

Highlights

A corporation has perpetual existence under the general rule of the revised corporation code, unless stated otherwise in the articles of incorporation.

Section 11 of the corporation code outlines the rules for the duration of a corporation's existence.

Incorporatees can specify a term for the corporation's existence in the articles of incorporation, deviating from the default perpetual existence.

Prior to the revised corporation code, the maximum corporate term was 50 years, renewable for another 50 years.

Corporations created before the revised corporation code's effectivity on February 23, 2019, are subject to the new perpetual existence rule unless they opt out.

Stockholders of existing corporations can vote to retain a specific corporate term as per their articles of incorporation.

Dissenting stockholders have the appraisal right to demand fair value for their shares if the corporate term is retained or changed.

The corporate term can be amended by changing the articles of incorporation, following the requirements of section 15 of the revised corporation code.

A corporation can extend or shorten its term by amending the articles of incorporation, with restrictions on the timing of extensions.

Extensions of the corporate term can only be made three years prior to the expiry date unless there are justifiable reasons for earlier extension.

A corporation whose term has expired can apply for revival of its corporate existence, subject to approval by the Securities and Exchange Commission.

Revival of corporate existence restores the corporation's rights and privileges, as well as its duties, debts, and liabilities.

Certain types of corporations require a favorable recommendation from an appropriate government agency for revival of their corporate existence.

Corporations with a revoked or suspended certificate of registration must first seek to lift that status before applying for revival.

An expired corporation that has had its name reused by another corporation must change its name within 30 days of revival.

Corporations that have completed liquidation cannot apply for revival of their corporate existence.

Corporations with a revoked certificate of registration for reasons other than non-filing of reports cannot apply for revival.

Transcripts

foreign

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hi i am attorney marie chris mathan

this is my virtual classroom welcome to

my youtube channel

in this channel i shall aim to simplify

the law i will discuss concepts and

principles of law in under 10 minutes

hello again everyone welcome to my

virtual classroom for this video i want

us to talk about the corporate term

or how long does the corporation exist

so when you create a corporation how

long will it last is it 10 years is it

30 years is it 50 years this video will

answer that

so how long does a corporation exist

your revised corporation code says

that it has perpetual existence in other

words

it will live

forever

that is the general rule and that is

provided for under section 11 of your

corporation code let us read that

particular portion of section 11.

paragraph 1 of section 11 provides

a corporation shall have perpetual

existence unless its articles of

incorporation provides otherwise

what does that mean

this simply means

that when a corporation is created when

it is now granted that existence by the

state through your securities and

exchange commission your corporation

will live forever it will continue to

exist that's precisely what is meant by

perpetual existence

what is the exception to that the

exception is if the incorporators have

actually decided to put a particular

term or a particular number of years for

the corporation to exist and such is

indicated or stated in the articles of

incorporation

so when the incorporators are now

drafting their articles of incorporation

they have to decide whether they would

want to follow the general rule under

your revised corporation code where the

life of the corporation is perpetual if

they do not want to follow that and they

want to limit the life of the

corporation then they must indicate that

in their articles of incorporation

now remember that prior to the revised

corporation code the old code actually

set a limit to the life of the

corporation before it was set at 50

years

the life of the corporation was only for

50 years renewable for another 50 years

this time however under the revised

corporation code this code now gives

continuity to the existence of a

corporation by making it

perpetual the existence is now perpetual

again unless the incorporators decide

otherwise and if they do they have again

as i've said to indicate it in the

articles of incorporation

so what happens now to the corporations

which were created prior to the

effectivity of the revised corporation

code

if you have watched my video on what a

corporation is i have mentioned there

that the effectivity of the revised

corporation code was february 23 2019.

so what happens to the corporate term or

the life of the corporation

of those corporations that were created

prior to the effectivity of this code or

prior to february february 23 2019.

what would be the corporate term would

it follow the old code or will it follow

the revised corporation code on

perpetual existence the answer to the

question is still found in section 11 of

your revised corporation code and that

is the second paragraph of section 11.

let us read the second paragraph it says

corporations with certificates of

incorporation issued prior to the

effectivity of this code and which

continue to exist shall have perpetual

existence unless the corporation upon a

vote of its stockholders representing a

majority of its outstanding capital

stock notifies the commission

that it elects to retain its specific

corporate term pursuant to its articles

of incorporation

provided that any change in the

corporate term under the section is

without prejudice to the appraisal right

of dissenting stockholders in accordance

with the provisions of this hood

this means then that your section 11

actually provides for the retroactivity

of this particular provision because

this provision on perpetual existence of

the corporation is now being applied

even to corporations that were already

existing prior to the effectivity of the

revised corporation code in other words

if for example abc corporation was

already in existence

in 2018 and they were already issued a

certificate of incorporation in the year

2018 prior to the effectivity of the

revised corporation code

and they have written on their articles

of incorporation that the life of the

corporation is let's say only for 30

years because the limit prior to the rcc

or your revised corporation code is 50

years

so if

abc corporation decided and it's written

on their articles that it is to

to be existing or to live only for 30

years

the section 11 in your revised

corporation code tells you that the

corporate's existence will now be

perpetual with the effectivity of the

revised corporation code

now

if the

stockholders would want to retain the

original corporate term of 30 years what

should they do they should notify the

securities and exchange commission

they must notify the securities and

exchange commission

that majority or rather the stockholders

representing the majority interest in

the corporation has voted upon

retaining the original corporate term

now remember that what is only required

to retain the original corporate term is

the vote of the stakeholders

representing the majority interest and

that such decision to retain as voted

upon by the stockholders representing

the majority interest

such decision must be made known to the

securities and exchange commission

having said that that only a majority is

required what happens now to the to the

stockholders who voted against it

they will now be given their appraisal

right what is an appraisal right an

appraisal right is when the dissenting

stockholder can now demand for the fair

value for the payment rather of the fair

value of their shares

next question

can you still change the corporate term

meaning

if you created a corporation and you

decided to

follow the revised corporation code of

the corporation having perpetual

existence can you still change it can

you still shorten the corporate term

or if in the creation of the corporation

in the articles of incorporation the

incorporators decided to have a shorter

term say only for 30 years instead of

following the default corporate term of

perpetual existence does that mean that

they can no longer change or amend the

corporate term of 30 years that they

have indicated in the articles of

incorporation

they actually can amend the corporate

term how by amending the articles of

incorporation of course they have to

follow the requirements for amending the

articles of incorporation as required

and provided by on by in section 15 of

the revised corporation code i will also

be discussing about amending the

articles of incorporation in another

video

so if they

incorporated or created the corporation

under the revised corporation code

meaning after february 23 2019 and they

were issued a certificate of

incorporation and they did not indicate

in the articles of incorporation the

corporate term then the

law will now be followed that that that

corporation has perpetual existence if

they want to shorten it

then they can do so by amending the

articles of incorporation now

if in the articles of incorporation they

already put a

corporate term say for 30 years can they

still

extend it the answer is yes

how

that is answered by

the third paragraph of your section 11.

let's read your third paragraph

it says

a corporate term for a specific period

may be extended or shorted by amending

the articles of incorporation

provided that no extension may be made

earlier than three years prior to the

original or subsequent expiry date or

dates unless there are justifiable

reasons for an earlier extension as may

be determined by the commission provided

further that such extension of the

corporate term shall take effect only on

the day following the original or

subsequent expiry date or dates

so yes the corporation can extend the

corporate term they just have to make

sure that the extension must be made not

earlier than three years from the time

that the original term will expire or

the renewed term will expire if there

was already an extension or a prior

renewal unless of course you can justify

an earlier renewal and such is approved

by the securities and exchange

commission so when will the renewal or

the extension of the corporate term when

will it take effect your law is very

clear it will take effect the day after

the expiration of the original term or

the day after the expiration of the

previous renewed term if there was

already a renewal prior to this current

renewal or

extension now what if the corporate term

has expired and the corporation was not

able to file for an extension

the corporation was not able to renew it

and they want to continue on with the

business

can they still ask for a revival of

their certificate of incorporation or of

their corporate existence the answer is

yes the corporation may apply for

revival of their corporate existence and

that is actually provided for still

under your section 11. let's read that

particular paragraph it says a

corporation whose term has expired may

apply for a revival of its corporate

existence together with all the rights

and privileges under its certificate of

incorporation and subject to all of its

duties debts and liabilities existing

prior to its revival upon approval by

the commission the corporation shall be

deemed revived and a certificate of

revival of corporate existence shall be

issued giving it perpetual existence

unless its application for revival

provides otherwise

so what does that tell you it tells you

that if a corporation has expired and

they want to actually continue with a

business but unfortunately they were

unable to file for an extension they

still have a remedy they can file for an

application of revival of corporate

existence and they will have the same

rights and privileges as when they had

before

of course the corporation will also be

subject to all the duties debts and

liabilities that were existing prior to

its revival

so

when the commission or the securities

and exchange commission approves their

application for revival of corporate

existence they will now be issued a

certificate of revival of corporate

existence and what is the corporate term

now

it will now be the default corporate

term which is

perpetual existence

unless in their application for revival

the corporation has indicated there a

different corporate term there are

however corporations certain types of

corporations

that would need more than just the

application for revival of corporate

existence it would also need a favorable

recommendation um from an from

an appropriate agency what are these

corporations you'll find that in the

last paragraph of section 11. let's read

the last paragraph

it reads no application for revival of

certificate of incorporation of

banks banking and quasi banking

institutions

pre-need insurance and trust companies

non-stock savings and loan associations

pawn shops corporations engaged in money

service business and other financial

intermediaries shall be approved by the

commission unless accompanied by

favorable recommendation of the

appropriate government agency so for

those types of

corporations should their corporate

existence

get expired and they fail to renew or

file for an extension of their corporate

term

they can still file

an application for renewal of corporate

existence but of course it has to be

accompanied with a favorable

recommendation from the appropriate

government agency now how about

corporations whose corporate term

has

expired but

such corporation has been revoked

by the securities and exchange

commission due to non-filing of reports

can they ask that they that their

corporate existence be revived

the answer is yes

they can still file for an application

or petition for revival of corporate

existence but we also first have to ask

for the lifting of the revoked status

they have to file a petition to lift the

revoked status such petition can

actually be incorporated with a petition

for revival of corporate existence now

how about an expired corporation

whose certificate of registration was

suspended by your securities and

exchange commission can they file

a petition for revival of corporate

existence the answer also is still yes

but just like an expired corporation

whose certificate of registration has

been revolt that corporation must also

file a petition to lift the suspended

status also that petition can be

incorporated with the petition to revive

the corporate existence now how about

an expired corporation whose name has

now been validly reused or validly used

by another corporation

can they still file a petition for

revival of corporate existence the

answer is still yes however they must

now change their name within 30 days

from the issuance of the certificate of

revival of corporate existence

however

expired corporations who have already

completed the liquidation of their

assets can no longer apply or petition

for revival of their corporate existence

why because they have already completed

the liquidation and another is an

expired corporation whose certificate of

registration has been revoked on grounds

other than the non-filing of the reports

they cannot also ask for revival of

corporate

existence so that ends

our discussion on the corporate term on

answering the question of how long a

corporation can actually exist and on

the question of whether we can amend

the corporate term and also the question

on whether we can revive the corporate

existence if it has already

expired i hope you have learned

something from this video and i will see

you in the next

so if you find this video helpful please

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thank you for watching see you next time

in mbl classroom

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