Express Innovation Corporation (EIC) applied for registration with the Securities and Exchange Commission (SEC). The EIC submitted its proposed Articles of Incorporation which reads: First: That the name of the corporation shall be, “Express Innovation Corporation” …. Third: That the principal office of the corporation is located in Sakurajima, Konohana Ward, Osaka, Japan. …. Ninth: That Haru Nikko, a resident of Japan, has been elected by the subscribers as the Treasurer of the Corporation to act as such until after the successor is duly elected and qualified in accordance with the by- laws, that as Treasurer, authority has been given to receive in the name and for the benefit of the corporation, all subscriptions, contributions or donations paid or given by the subscribers or members, who certifies the information set forth in the seventh and eighth clauses above, and that the paid-up portion of the subscription in cash and/or property for the benefit and credit of the corporation has been duly received. If you are the SEC Examiner, will you recommend the approval of the Articles of Incorporation? Explain.
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No, as the SEC Examiner, I will not recommend the approval of the Articles of Incorporation. Under Sections 13(c) and 24 of the Revised Corporation Code (R.A. No. 11232), the articles of incorporation of a domestic
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Quick check
Where must the principal office of a domestic corporation be located under Section 13(c) of the Revised Corporation Code?
Section 13(c) of the Revised Corporation Code requires the principal office of a domestic corporation to be located within the Philippines.
What is the citizenship and residency requirement for a corporate treasurer under Section 24 of R.A. No. 11232?
Under Section 24 of the Revised Corporation Code, the corporate treasurer need not be a Filipino citizen but must reside in the Philippines.
What action should the Securities and Exchange Commission take when submitted articles of incorporation violate statutory officer residency rules?
Under Section 16 of the Revised Corporation Code, the SEC must disapprove articles of incorporation that fail to comply with statutory requirements.
Why does Philippine law require the principal office of a domestic corporation to be located within the country?
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Which corporate officer is required by Section 24 of the Revised Corporation Code to be a Filipino citizen?
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Learn more about these topics
1. Principal Office Requirement
Under Section 13(c) of the Revised Corporation Code (Republic Act Number 11232), the articles of incorporation of a domestic corporation must specifically state the city or municipality in the Philippines where its principal office is to be located. Locating the principal office within Philippine jurisdiction is essential for establishing corporate residence, determining proper venue for legal actions, and subjecting the corporation to regulatory oversight by the Securities and Exchange Commission. A proposed article designating a principal office in a foreign country violates mandatory statutory requirements and warrants disapproval of corporate registration.
2. Corporate Officer Residency
Under Section 24 of the Revised Corporation Code, the board of directors must elect key corporate officers, including a president, a treasurer, and a corporate secretary. While the treasurer is not required to be a Filipino citizen, the statute mandatorily requires that the corporate treasurer must be a resident of the Philippines. This residency mandate ensures that the officer custodian of corporate funds remains accessible to local regulatory authorities, creditors, and judicial processes. Electing a non-resident individual as corporate treasurer in the articles of incorporation invalidates the submission.
3. Articles Disapproval Grounds
Under Section 16 of the Revised Corporation Code, the Securities and Exchange Commission may disapprove articles of incorporation or amendments thereto if they fail to comply with the requirements of the Code or other applicable laws. When an examination of submitted articles reveals substantial non-compliance, such as an extraterritorial principal office or a non-resident corporate treasurer, the Commission examiner must issue a formal disapproval. The incorporators must be given a reasonable opportunity to amend the defective provisions prior to final administrative rejection.