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Also, the matters contained in the following were written in accordance with the law, rules, and jurisprudence prevailing at the time of writing and posting, and do not include any future developments on the subject matter under discussion.
AT A GLANCE:
Assets of a nonstock corporation undergoing dissolution shall be applied and distributed to its members in accordance with specific rules laid down under Section 93 of the Revised Corporation Code.
Distribution of assets of a nonstock corporation
Upon the dissolution of a nonstock corporation, corporate assets can be applied and distributed in accordance with certain specific rules laid down in Section 93 of the Revised Corporation Code.
The law says:
“The assets of a nonstock corporation undergoing the process of dissolution for reasons other than those set forth in Section 139 of this Code shall be applied and distributed as follows:
(a) All liabilities and obligations of the corporation shall be paid, satisfied and discharged, or adequate provision shall be made therefor:
(b) Assets held by the corporation upon a condition requiring return, transfer or conveyed in accordance with such requirements;
(c) Assets received and held by the corporation subject to limitations permitting their use only for charitable religious, benevolent, educational or similar purpose, 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 pursuant to this Chapter;
(d) Assets other than those mentioned in the preceding paragraphs, 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 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
(e) In any other case, assets may be distributed to such person, societies, organizations or corporations, whether or not organized for profit, as may be specified in a plan of distribution. (Section 93, Revised Corporation Code)
Distribution Plan
Section 94 of the Revised Corporation Code provides that a nonstock corporation may adopt a plan providing for the distribution of assets, consistent with the provision of Revised Corporation Code regarding nonstock corporations. It must be noted that in adopting such distribution plan, the board of trustees, by virtue of a resolution of the majority, shall recommend a plan of distribution and direct its submission to the members for voting thereon during a regular or special meeting of members with voting rights.
Every member with voting rights shall be given a written notice of the proposed plan of distribution, and the schedule of the meeting for such purpose. Upon approval of the distribution plan by at least two-thirds (2/3) of members with voting rights present or duly represented in the meeting, the distribution plan shall be adopted.
Read also: Distribution of Assets in Nonstock Corporation Undergoing the Process of Dissolution
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