How to Amend the Articles of Incorporation in the Philippines

To amend the articles of incorporation in the Philippines, the board of directors must approve the amendment by majority vote, and stockholders representing at least two-thirds (2/3) of the outstanding capital stock must vote in favor or give written assent. The amended articles must be filed with the Securities and Exchange Commission (SEC), and the amendment takes effect upon SEC approval or, if not acted upon within six months, from the date of filing. This guide walks through the legal requirements, the voting thresholds, and the practical steps to complete the process.

Legal Basis for Amending the Articles of Incorporation

Under Section 15 of the Revised Corporation Code (Republic Act No. 11232), any provision or matter stated in the articles of incorporation may be amended for legitimate purposes. This includes changes to the corporate name, primary purpose, principal office, authorized capital stock, and other provisions originally set out in the document.

The law requires that the original and amended articles together contain all provisions required by law. This means the amended document must be read alongside the original, and no required provision may be omitted.

Voting Requirements for Stock Corporations

For stock corporations, amending the articles of incorporation requires:

• A majority vote of the board of directors approving the proposed amendment
• The vote or written assent of stockholders representing at least two-thirds (2/3) of the outstanding capital stock

Importantly, the two-thirds requirement is based on the outstanding capital stock, not merely on the shares present or represented at the meeting. This is a higher threshold than ordinary corporate acts, which typically require only a majority of the outstanding capital stock.

Note that even holders of nonvoting shares are entitled to vote on amendments to the articles of incorporation, as provided under Section 6 of the Code. This is one of the limited matters where nonvoting shareholders retain voting rights.

Voting Requirements for Nonstock Corporations

For nonstock corporations, the amendment requires:

• A majority vote of the trustees
• The vote or written assent of at least two-thirds (2/3) of the members

The same two-thirds threshold applies, but the voting body is the membership rather than the stockholders.

Appraisal Right of Dissenting Stockholders

Stockholders who dissent from an amendment to the articles of incorporation have an appraisal right under the Code. This means a dissenting stockholder may demand payment of the fair value of their shares. The appraisal right is expressly preserved in Section 15, so corporations should be prepared to address dissenting stockholders who exercise this right.

Preparing the Amended Articles of Incorporation

When preparing the amended articles, the following requirements apply:

1. Underscore the changes — The amendments must be indicated by underscoring the change or changes made in the document. This allows the SEC to quickly identify what has been modified.

2. Certification under oath — A copy of the amended articles must be certified under oath by the corporate secretary and a majority of the directors or trustees.

3. Statement of approval — The certification must include a statement that the amendments have been duly approved by the required vote of the stockholders or members.

4. Electronic filing — The articles of incorporation and applications for amendments may be filed with the SEC in the form of an electronic document, in accordance with the Commission's rules on electronic filing.

Filing and Effectivity of the Amendment

The amended articles must be submitted to the SEC. The amendment takes effect:

• Upon approval by the SEC, or
• From the date of filing, if the SEC does not act upon the application within six (6) months from the date of filing for a cause not attributable to the corporation

This six-month rule protects corporations from delays that are not their fault. If the SEC simply fails to act within the period, the amendment becomes effective by operation of law.

Grounds for Disapproval of the Amendment

The SEC may disapprove an amendment if it is not compliant with the requirements of the Code. The grounds for disapproval under Section 16 include:

1. The amendment is not substantially in accordance with the prescribed form
2. The purpose or purposes are patently unconstitutional, illegal, immoral, or contrary to government rules and regulations
3. The certification concerning the amount of capital stock subscribed and/or paid is false
4. The required percentage of Filipino ownership of the capital stock under existing laws or the Constitution has not been complied with

If the SEC disapproves the amendment, it must give the corporation a reasonable time to modify the objectionable portions.

Special Rules for Certain Industries

Amendments to the articles of incorporation of banks, banking and quasi-banking institutions, preneed, insurance and trust companies, non-stock savings and loan associations (NSSLAs), pawnshops, and other financial intermediaries require a favorable recommendation from the appropriate government agency before the SEC can approve them.

Frequently Asked Questions

How many votes are needed to amend the articles of incorporation? A majority vote of the board of directors and the vote or written assent of stockholders representing at least two-thirds (2/3) of the outstanding capital stock are required. For nonstock corporations, the requirement is a majority of trustees and two-thirds of the members.

How long does SEC approval take? The amendment takes effect upon SEC approval, or from the date of filing if the SEC does not act within six (6) months from the date of filing for a cause not attributable to the corporation.

Can nonvoting shareholders vote on amendments? Yes. Under Section 6 of the Revised Corporation Code, holders of nonvoting shares are entitled to vote on amendments to the articles of incorporation.

Practical Takeaways

• Secure board approval first, then obtain the two-thirds stockholder vote or written assent before filing
• Underscore all changes in the amended articles and have the corporate secretary and majority of directors certify the document under oath
• File electronically with the SEC and monitor the six-month period for deemed approval
• For regulated industries like banks and insurance companies, obtain the favorable recommendation of the appropriate government agency before filing
• Anticipate appraisal rights of dissenting stockholders and prepare for potential valuation disputes

This article is general information and not legal advice. For your specific situation, consult a lawyer or ask ASG Legal AI.