Rules on Suspension/Revocation of the Certificate of Registration of Corporations

December 29, 1992 RULES ON SUSPENSION/REVOCATION OF THE CERTIFICATE OF REGISTRATION OF CORPORATIONS (SMD Series of 1992) To carry out and implement the provisions of the Corporation Code and P.D. 902-A, as amended, the following rules are hereby adopted to govern the suspension or revocation of the certificate of registration of corporations. RULE I Scope And Definition Of Terms SECTION 1. Scope . These rules shall apply to the following: a) Corporations which have failed to formally organize and commence the transaction of their business or the construction of their works within two (2) years from the date of incorporation; cdlex b) Corporations which have been inoperative for a continuous period of at least five (5) years; c) Corporations which have failed to file by-laws within the prescribed period; d) Corporations which have failed to file/register for a period of at least five (5) years any of the following: d. 1) Financial Statements d. 2) General Information Sheet d. 3) Stock and transfer book/membership book SECTION 2. Definition . For purposes of these Rules the following definition of terms shall apply: A) Formally Organized A corporation shall be considered as formally organized if it has accomplished the following: a. 1) Adoption of the by-laws and the filing and approval of the same with and by the Securities and Exchange Commission in the event the same is not adopted and filed simultaneously with the articles of incorporation; a. 2) Election of the Board of Directors/Trustees and of the Officers; a. 3) Establishment of the principal office; a. 4) Providing for the subscription and payment of the capital stock and the taking of such other steps as are necessary to endow the legal entity with capacity to transact the legitimate business for which it was created, B) Commenced the transaction of business A corporation shall be considered to have commenced the transaction of its business when it has performed preparatory acts geared toward the fulfillment of the purposes for which it was established such as but not limited to the following: b. 1 Entering into contracts or negotiation for lease or sale of properties to be used as business or factory site; b. 2 Making plans for and the construction of the factory; b.3 Taking steps to expedite the construction of the company's working equipment. LibLe x RULE II Notice And Hearing SECTION 3. A Show Cause Order shall be sent by mail to the corporation and to the controlling stockholders or to any of the directors/trustees at their last known address directing them to show cause within thirty (30) days from receipt thereof why the certificate of registration of the corporation shall not be suspended or revoked. SECTION 4. A second Show Cause Order shall be published in a newspaper of general circulation, directing corporations which failed to respond with the Order issued under Section 3 above, to appear before the Commission at a hearing on the date, time and at the place stated in the Order. SECTION 5. The hearing officer designated by the Commission to conduct hearing shall administer oaths and receive evidence(s) (oral or documentary) which are deemed relevant and material. SECTION 6. Respondent corporation thru officers/directors or duly authorized representative shall be given a period of thirty (30) days within which to comply with the submission of the required reports if the corporation opposes the issuance of a suspension/revocation order. SECTION 7. A respondent corporation which fails to appear without any written notice or any justifiable reason shall be declared in default, and the matter of the issuance of the suspension/revocation order shall be submitted to the Commission for resolution. SECTION 8. If the evidence warrants the revocation of the certificate of registration of the corporation, the Commission shall issue the lesser sanction of Suspension which is immediately executory. The corporation shall have ninety (90) days from receipt thereof within which to file a petition for reconsideration of the said Order. SECTION 9. After the lapse of the ninety (90)-day period from receipt of the Order suspending the primary franchise of corporations and no petition for reconsideration having been filed said order shall also serve as Order of Revocation which shall become final and executory. Miscellaneous SECTION 10. The Commission shall furnish the Commissioner of the Bureau of Internal Revenue a copy of such Order pursuant to Section 46 (c) of the National Internal Revenue Code, as amended by Executive Order No. 1026, series of 1985. Effectivity These Rules shall take effect fifteen (15) days after their publication in a newspaper of general circulation in the Philippines. (SGD.) ROSARIO N. LOPEZ Chairman