Revised Corporation Code: Title XI – Non-stock Corporation

TITLE XI – NON-STOCK CORPORATION

Section 86. Definition. – For purposes of this Code and subject to its provision on dissolution, a nonstock corporation is one where no part of its income is distributable as dividends to its members, trustees, or officers: Provided, That any profit which a nonstock corporation may obtain incidental to its operations shall, whenever necessary or proper, be used for the furtherance of the purpose or purposes for which the corporation was organized, subject to the provisions of this Title.

The provisions governing stock corporations, when pertinent, shall be applicable to nonstock corporations, except as may be covered by specific provisions of this Title.

Section 87. Purposes. – Nonstock corporations may be formed or organized for charitable, religious, educational, professional, cultural, fraternal, literary, scientific, social, civil, service, or similar purposes, like trade, industry, agricultural and like chambers, or any combination thereof, subject to the special provisions of this Title governing particular classes of nonstock corporations.  

TITLE XI, CHAPTER 1 – MEMBERS

Section 88. Right to Vote. – The right of the members of any class or classes to vote may be limited, broadened, or denied to the extent specified in the articles of incorporation or the bylaws. Unless so limited, broadened, or denied, each member, regardless of class, shall be entitled to one (1) vote.

Unless otherwise provided in the articles of incorporation or the bylaws, a member may vote by proxy, in accordance with the provisions of this Code. The Bylaws shall likewise authorize voting through remote communication and/or in absentia.

Section 89. Nontransferability of Membership. – Membership in a nonstock corporation and all the rights arising therefrom are personal and nontransferable, unless the articles of incorporation or the bylaws otherwise provide.

Section 90. Termination of Membership. – Membership shall be terminated in the manner and for the causes provided in the articles of incorporation or the bylaws. Termination of membership shall extinguish all rights of a member in the corporation or in its property, unless otherwise provided in the articles of incorporation or bylaws. 

TITLE XI, CHAPTER II – TRUSTEES AND OFFICERS

Section 91. Election and Term of Trustees. – The number of trustees shall be fixed in the articles of incorporation or bylaws which may or may not be more than fifteen (15). They shall hold office for not more than three (3) years until their successors are elected and qualified. Trustee elected to fill vacancies occurring before the expiration of a particular term shall hold office only for the unexpired period.

Except with respect to independent trustee of nonstock corporation vested with public interest, only a member of the corporation shall be elected as trustee.

Unless otherwise provided in the articles of incorporation or the bylaws, the members may directly elect officers of nonstock corporation.

Section 92. List of Members and Proxies, Place of Meetings. – The corporation shall, at all times, keep a list of its members and their proxies in the form the Commission may require. The list shall be updated to reflect the members and proxies of record twenty (20) days prior to any scheduled election. The bylaws may provide that the members of a nonstock corporation may hold regular or special meetings at any place even outside the place where the principal office of the corporation is located: Provided, That proper notice is sent to all members indicating the date, time and place of the meeting: Provided, further, That the place of meeting shall be within Philippine territory.

TITLE XI, CHAPTER III – DISTRIBUTION OF ASSETS IN NON-STOCK CORPORATIONS

Section 93. Rules of Distribution. – The asset of a nonstock corporation undergoing the process of dissolution for reasons other than set forth in Section 139 of this Code shall be applied and distributed as follows:

• (a) All liabilities and obligations of the corporation shall be paid, satisfied and discharged, or adequate provision shall be made therefor;
• (b) Asset held by the corporation upon a condition requiring return, transfer or conveyance, and which condition occurs by reason of the dissolution, shall be returned, transferred or conveyed in accordance with such requirements;
• (c) Assets received and held by the corporation subject to limitations permitting  their use only for charitable, religious, benevolent, educational or similar purposes, but not held upon a condition requiring return, transfer or conveyance by reason of the dissolution, shall be transferred or conveyed to one (1) or more corporations, societies or organizations engaged in activities in the Philippines substantially similar to those of the dissolving corporation according to a plan of distribution adopted pursuant to this Chapter;
• (d) Assets other than those mentioned in the preceding paragraphs, if any, shall be distributed in accordance with the provisions of the articles of incorporation or the bylaws, to the extent that the articles of incorporation or the buy laws determine the distributive rights of members, or any class or classes of members, or provide for distribution.
• (e) In any other case, assets may be distributed to such persons, societies, organizations or corporations, whether or not organized for profit, as may be specified in a plan of distribution adopted pursuant to this Chapter.

Section 94. Plan of Distribution of Assets. – A plan providing for the distribution of assets, consistent with the provisions of this Title, may be adopted by a nonstock corporation in the process of dissolution in the following manner:

• (a) The board of trustees shall, by majority vote, adopt a resolution recommending a plan of distribution and directing the submission thereof to a vote at a regular or special meeting of members having voting rights;
• (b) Each member entitled to vote shall be given a written notice setting forth the proposed plan of distribution or summary thereof and the date, time and place of such meeting within the time and in the manner provided in this Code for the giving of notice of meetings; and, (c) Such plan of distribution shall be adopted upon approval of at least two-thirds (2/3) of the members having voting rights present or represented by proxy at such meeting.

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