Villaraza & Cruz Law Offices

September 3, 1996 Villaraza & Cruz Law Offices 5th Flr.,LTA Bldg.,118 Perea St. Legaspi Village, 1229 City of Makati Attention : Attys . Elma Christine R . Leogardo and Priscilla N . Fernando Madam: This refers to your letter dated August 2, 1996 requesting confirmation of your opinion that "new by-laws" adopted by a corporation need not be signed by the stockholders who voted for and approved said new by-laws. The Corporation Code provides for a separate provision for the adoption of original-by-laws and new by-laws . Section 46 of the Corporation Code explicitly requires that "original" by-laws shall be signed by the stockholders while Section 48 which governs the adoption of the "new" by-laws is silent on the requirement. The Code provides: "SECTION 46. Adoption of by-laws . Every corporation formed under this Code, must, within one (1) month after receipt of official notice of the issuance of its certificate of incorporation by the Securities and Exchange Commission, adopt a code of by-laws for its government not inconsistent with this Code. For the adoption of by-laws by the corporation, the affirmative vote of the stockholders representing at least a majority of the outstanding capital stock, or at least a majority of the members, in the case of non-stock corporations, shall be necessary. The by-laws shall be signed by the stockholders or members voting for them and shall be kept in the principal office of the corporation, subject to the inspection of the stockholders or members during office hours; and a copy thereof, duly certified to by a majority of the directors or trustees and counter-signed by the secretary of the corporation, shall be filed with the Securities and Exchange Commission which shall be attached to the original articles of incorporation. Notwithstanding the provisions of the preceding paragraph, by-laws may be adopted and filed prior to incorporation; in such case, such by-laws shall be approved and signed by all the incorporators and submitted to the Securities and Exchange Commission, together with the articles of incorporation. ..." (Emphasis supplied) "SECTION 48. Amendment to by-laws . The board of directors or trustees, by a majority vote thereof, and the owners of at least a majority of the outstanding capital stock, or at least a majority of the members of a non-stock corporation, at a regular or special meeting duly called for the purpose, may amend or repeal any by-laws or adopt new by-laws .The owners of two-thirds (2/3) of the outstanding capital stock or two-thirds (2/3) of the members in a non-stock corporation may delegate to the board of directors of trustees the power to amend or repeal any by-laws or adopt new by-laws: Provided, That any power delegated to the board of directors or trustees to amend or repeal any by-laws or adopt new by-laws shall be considered as revoked whenever stockholders owning or representing a majority of the outstanding capital stock or a majority of the members in non-stock corporations, shall so vote at a regular or special meeting. cdlex Whenever any amendment or new by-laws are adopted, such amendment or new by-laws shall be attached to the original by-laws in the office of the corporation, and a copy thereof, duly certified under oath by the corporate secretary and a majority of the directors or trustees, shall be filed with the Securities and Exchange Commission, the same to be attached in the original articles of incorporation and original by-laws. ..." (Emphasis supplied) Thus, while the "original by-laws" are required to be signed by the stockholders who voted for the approval thereof, in the case of "new by-laws",it is not necessary to have them signed by the stockholders, provided that the copy of the new by-laws submitted to the Commission for approval shall be accompanied by a Directors Certificates certified under oath by the corporate secretary and majority of the directors certifying to the effect that the new by-laws were duly approved by the board of directors by a majority vote thereof and the stockholders representing at least majority of the outstanding capital stock at a regular or special meeting duly called for the purpose. The reason behind the difference in procedure is that in the case of new by-laws, the signing by the stockholders would be impractical since after incorporation there is always the possibility that the corporation would have several stockholders, e.g. publicly listed corporations. At any rate, misrepresentation is prevented in a sense that the Board of Directors certifies under oath that the new by-laws submitted were duly approved pursuant to Section 48 of the Corporation Code. Consequently, the Directors can be held criminally liable in case of misrepresentation. Accordingly, your view on the matter is hereby confirmed. Very truly yours, (SGD.) FE ELOISA C. GLORIA Associate Commissioner