The articles of incorporation is one of the most important documents that you must create and submit to the SEC when creating a corporation. But what is it? How do you create one? And can you amend your Articles of Incorporation later on? Here’s what you need to know.
What are articles of incorporation?
The articles of incorporation is a set of documents that you must file with the SEC, or the Securities and Exchange Commission, to legally create a corporation. Once you have submitted it and all other requirements to the SEC, the SEC will issue the Certificate of Incorporation that serves as proof of the corporation’s existence as an artificial person created by law.
The articles of incorporation contain all of the basic yet necessary information regarding the corporation. This includes:
- The name, address, and purpose of the corporation;
- Term of existence of the corporation;
- Names, nationalities, and residences of the incorporators;
- The number of directors, which shall not be more than fifteen (15);
- Names, nationalities, and residences of the acting directors;
- The number of shares and par value of the authorized capital stock of the corporation;
- Names, nationalities, and residences of the subscribers of the authorized capital stock;
- Number of shares subscribed and paid for by each subscriber; and
- The name of the Corporate Treasurer.
How can you amend the articles of incorporation?
Any part of the articles of incorporation may be amended if it is agreed upon by a majority vote of the board of directors or trustees. It will also require the vote or written assent of the stockholders representing at least two-thirds (⅔) of the outstanding capital stock. This is in accordance with Section 15 of the revised Corporation Code.
In order to make the amendments official and recognized, you must first submit the following requirements to the SEC:
- Amended Articles of Incorporation
- Directors’ or Trustees’ Certificate
- Notarized Secretary’s Certificate on no pending case of intra-corporate dispute
- Compliance Monitoring Division (CMD) Clearance and/or clearance from other Department of the Commission
- Endorsement/clearance from other government agencies, if applicable
When preparing the amended articles of incorporation, one should include both the original and amended versions and underscore the changes made, followed by the date of the meeting approving said changes.
The amendments shall only take effect once the Securities and Exchange Commission has given the corporation its approval. Said amendments can also take effect if it has been at least six (6) months since the date of filing and the Commission has not yet acted for a cause not attributable to the corporation.
Can articles of incorporation or amendment be disapproved?
The SEC may disapprove articles of incorporation or any amendments made if it does not comply with the requirements of the Corporation Code. However, the SEC must tell the incorporators, directors, trustees, or officers the reason for disapproval. They must also give them ample time to modify the objectionable portions of the articles or amendments.
The following are grounds for disapproval of articles or amendment:
- The article of amendment is not substantially in accordance with the form prescribed herein;
- The purposes of the corporation are patently unconstitutional, illegal, immoral, or contrary to government rules and regulations;
- The certification concerning the amount of capital stock subscribed and/or paid is false; and
- The required percentage of Filipino ownership of the capital stock under existing laws or the Constitution has not been complied with.