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Things you need to know about By-Laws for Stock Corporations.
1. What is a By-Laws?
In addition to the Articles of Incorporation which is required for every corporation, the corporation must also have By-Laws. The Articles of Incorporation is the corporation’s charter and contains its most basic information. On the other hand, the By-Laws contain provisions for the corporation’s internal government and for the management of its stockholders as well as those having the direction, management and control of the corporation.
The Revised Corporation Code of the Philippines allows the By-Laws to be submitted to the SEC after the issuance of the Certificate of Incorporation. In practice though, the By-Laws are submitted together with the Articles of Incorporation for approval by the SEC.
If the By-Laws will be submitted after incorporation, the approval of stockholders representing at least a majority of the outstanding capital stock must be obtained. The approval of the majority of directors must also be obtained. If the By-Laws will be submitted prior to incorporation, the By-Laws should be approved and signed by all the incorporators and submitted to the SEC together with the Articles of Incorporation. This By-Laws is intended to be submitted together with the Articles of Incorporation as is usual practice.
2. What should the By-Laws contain?
The Revised Corporation Code allows the following matters to be included in the By-Laws:
The time, place and manner of calling and conducting regular or special meetings of the directors;
The time and manner of calling and conducting regular or special meetings and mode of notifying the stockholders thereof;
The required quorum in meetings of stockholders and the manner of voting therein;
The modes by which a stockholder and director may attend meetings and cast their votes;
The form for proxies of stockholders and the manner of voting them;
The directors’ qualifications, duties and responsibilities, the guidelines for setting the compensation of directors and officers, and the maximum number of other board representations that an independent director may have which shall, in no case, be more than the number prescribed by the Commission;
The time for holding the annual election of directors and the mode or manner of giving notice thereof;
The manner of election or appointment and the term of office of all officers other than directors;
The penalties for violation of the By-Laws;
The manner of issuing stock certificates; and
Such other matters as may be necessary for the proper or convenient transaction of its corporate affairs for the promotion of good governance and anti-graft and corruption measures.
3. What information do you need to create a By-Laws?
To create your By-Laws you’ll need the following minimum information:
The details of the corporation (i.e. name, start and end dates of the corporation’s fiscal year)
The details of the incorporators as indicated in the Articles of Incorporation (i.e. name, TIN)
The date when the annual meeting of stockholders will be held
The details of board of directors meetings (i.e. date when it will be regularly held, quorum needed to validly transact business, required votes from the directors to pass a corporate act)
The term of office of a director
The term of office of the Chairman, President, Treasurer and Corporate Secretary of the corporation
Activities that involve a By-Laws for Stock Corporations sometimes use the following documents. You may be interested in them: