How long does a corporation exist? Can you shorten or extend its life? (Section 11, RCC)
Summary
TLDRAttorney 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
📜 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.
🗳️ 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.
📅 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.
🏦 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.
Mindmap
Keywords
💡Corporation
💡Perpetual Existence
💡Articles of Incorporation
💡Revised Corporation Code
💡Incorporate
💡Stockholders
💡Appraisal Right
💡Amend
💡Revival
💡Securities and Exchange Commission
💡Certificate of Incorporation
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
[Music]
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
click like subscribe and that
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thank you for watching see you next time
in mbl classroom
[Music]
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