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June 1, 2022

WHAT IS THE PROCEDURE FOR VOLUNTARY DISSOLUTION WHERE CREDITORS ARE AFFECTED?

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After reading “What is the procedure for voluntary dissolution where creditors are affected?”, read also “What are the Modes of Corporate Dissolution?”.

  • Voluntary dissolution where creditors are affected covers a case where the corporation petitions for its dissolution which may prejudice the rights of creditors, or are not consented by all of them.

  • The procedure for voluntary dissolution where creditors are affected are provided for under the Revised Corporation Code of the Philippines.

  • Voluntary dissolution shall take effect only upon issuance by the Securities and Exchange Commission of the certificate of dissolution

Voluntary dissolution where creditors are affected covers a case where the corporation petitions for its dissolution which may prejudice the rights of creditors, or are not consented by all of them.

 

The procedure for voluntary dissolution where creditors are affected are provided for under the Revised Corporation Code of the Philippines (RCCP).

 

The law says:

  1. Where the dissolution of a corporation may prejudice the rights of any creditor, a verified petition for dissolution shall be filed with the Securities and Exchange Commission (SEC). The petition shall be signed by a majority of the corporation’s board of directors or trustees, verified by its president or secretary or one of its directors or trustees, and shall set forth all claims and demands against it, and that its dissolution was resolved upon by the affirmative vote of the stockholders representing at least two-thirds (2/3) of the outstanding capital stock or at least two-thirds (2/3) of the members at a meeting of its stockholders or members called for that purpose.

 

  1. The petition shall likewise state: (a) the reason for the dissolution; (b) the form, manner, and time when the notices were given; and (c) the date, place, and time of the meeting in which the vote was made. The corporation shall submit to the SEC the following: (1) a copy of the resolution authorizing the dissolution, certified by a majority of the board of directors or trustees and countersigned by the secretary of the corporation; and (2) a list of all its creditors.

 

  1. If the petition is sufficient in form and substance, the SEC shall, by an order reciting the purpose of the petition, fix a deadline for filing objections to the petition which date shall not be less than thirty (30) days nor more than sixty (60) days after the entry of the order.

 

  1. Before such date, a copy of the order shall be published at least once a week for three (3) consecutive weeks in a newspaper of general circulation published in the municipality or city where the principal office of the corporation is situated, or if there be no such newspaper, then in a newspaper of general circulation in the Philippines, and a similar copy shall be posted for three (3) consecutive weeks in three (3) public places in such municipality or city.

 

  1. Upon five (5) days’ notice, given after the date on which the right to file objections as fixed in the order has expired, the SEC shall proceed to hear the petition and try any issue raised in the objections filed.

 

  1. If no such objection is sufficient, and the material allegations of the petition are true, it shall render judgment dissolving the corporation and directing such disposition of its assets as justice requires, and may appoint a receiver to collect such assets and pay the debts of the corporation. (Section 135, RCCP)

 

In both cases of voluntary dissolution, where creditors are affected or not, voluntary dissolution shall take effect only upon issuance by the SEC of the certificate of dissolution. (Sections 134-135, RCCP)


Alburo Alburo and Associates Law Offices specializes in business law and labor law consulting. For inquiries, you may reach us at info@alburolaw.com, or dial us at (02)7745-4391/0917-5772207.

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