First, knowledge of the Philippine law governing corporations is necessary in order to comprehend the reasons why revisions to articles of incorporation may be rejected. On February 23, 2019, Republic Act No. 11232, also known as the Revised Corporation Code of the Philippines, went into effect. It contains guidelines for the establishment, administration, and dissolution of corporations in the nation.
According to this law, corporations must notify the SEC of any changes to their articles of organization. The amendments will then be examined by the SEC to see if they adhere to the rules of the Revised Corporation Code. Reasons to Disapprove
If the provisions of the Revised Corporation Code are violated, the SEC may not approve modifications to the articles of incorporation. The SEC might not approve the revisions, for instance, if they have clauses that are against the law, morality, or public policy.
Additionally, if revisions do not follow the guidelines set forth in the Revised Corporation Code, those that aim to alter the corporation’s business or purpose may also be rejected. The SEC might not approve revisions if, for instance, a corporation’s principal purpose is to engage in manufacturing but the amendments attempt to shift that purpose to real estate development.
People also query whether bylaws contain articles. Yes, it is the answer. Articles of incorporation are the charter documents that describe the purpose, authority, and organizational structure of a corporation, whereas bylaws are the rules and regulations that regulate a corporation’s internal activities. The corporation’s shares, directors, executives, and other topics pertaining to its establishment and functioning are covered by the articles.
Finally, it’s critical to comprehend the distinction between operational agreements and articles of organization. The paperwork needed to create a limited liability company (LLC) is known as the articles of organization. The operating agreement, on the other hand, is a contract that specifies the guidelines for the LLC’s internal operations.
Finally, if the provisions of the Revised Corporation Code are violated, the SEC may not approve modifications to the articles of incorporation. To prevent the rejection of their revisions, corporations must adhere to the legal criteria. Articles contain bylaws, and the operating agreement and articles of organization are separate legal documents with distinct functions in the creation and management of an LLC.
No, an LLC agreement and an operating agreement are not the same thing. An operating agreement is a document that specifies the policies, guidelines, and processes for how an LLC will be run. An LLC agreement is the legal document that creates an LLC. Although it is not necessary for an LLC to have an operating agreement, doing so is strongly advised to prevent miscommunications and conflicts between LLC members.
Although the article “Grounds for Disapproval of Amendments to Articles of Incorporation” does not specifically address the benefits of the LLC form of organization, some possible benefits of forming an LLC include limited liability protection for its owners, flexible management structure, and pass-through taxation. In addition, compared to other business structure types, such as a corporation, LLCs may be simpler and less expensive to create and maintain. But before choosing a particular organizational structure, it’s crucial to take the business’s unique requirements and objectives into account.