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.