ON DISTRIBUTION OF ASSETS IN NONSTOCK CORPORATIONS

After reading, On Distribution of Assets in Nonstock Corporations read also Distribution of Assets in Nonstock Corporations Undergoing the Process of Dissolution 

• A plan providing for the distribution of assets, may be adopted by a nonstock corporation

• Such plan shall be adopted upon approval of at least two-thirds (2/3) of members having voting rights

• Assets of a nonstock corporation may be distributed to societies, organizations or corporations

T he Revised Corporation Code provides that the assets of a nonstock corporation undergoing the process of dissolution other than those set forth in Section 139 of the same Code which talks about corporate liquidation, shall be applied and distributed as follows:

 

1. All liabilities and obligations of the corporation shall be paid, satisfied and discharged, or adequate provision shall be made accordingly;

2. Assets held by the corporation upon a condition requiring return, transfer or conveyance, and which condition occurs by reason of the dissolution, shall be returned, transferred or conveyed in accordance with such requirements;

3. Assets received and held by the corporation subject to limitations permitting their use only for charitable, religious, benevolent, educational or similar purposes, but not held upon a condition requiring return, transfer or conveyance by reason of the dissolution, shall be transferred or conveyed to one (1) or more corporations, societies or organizations engaged in activities in the Philippines substantially similar to those of the dissolving corporation according to a plan of distribution adopted by the nonstock corporation;

4. Assets other than those mentioned in paragraphs (a), (b) and (c), if any, shall be distributed in accordance with the provisions of the articles of incorporation or the bylaws, to the extent that the articles of incorporation or the bylaws determine the distributive rights of members, or any class or classes of members, or provide for distribution; and

5. In any other case, assets may be distributed to such persons, societies, organizations or corporations, whether or not organized for profit, as may be specified in a plan of distribution adopted by the nonstock corporation.

How may a nonstock corporation adopt a plan of distribution of assets?

The law says:

A plan providing for the distribution of assets may be adopted by a nonstock corporation in the process of dissolution in the following manner:

1. The board of trustees shall, by majority vote, adopt a resolution recommending a plan of distribution and directing the submission of the same to a vote at a regular or special meeting of members having voting rights;

2. Each member entitled to vote shall be given a written notice setting forth the proposed plan of distribution or a summary of the same and the date, time and place of such meeting within the time and in the manner provided in the Revised Corporation Code for the giving of notice of meetings; and

3. Such plan of distribution shall be adopted upon approval of at least two-thirds (2/3) of the members having voting rights present or represented by proxy at such meeting.

---

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.

All rights reserved.

---

[email-subscribers-form id=”4″]