The Corporation Code of the Philippines under section 37 allows a corporation to “extend” as well as to “shorten” its term of existence. Dissolving a corporation prior to its expiration, say 50 years, or whatever the term fixed in the Articles of Incorporation, can be done by amending the Articles of Incorporation to shorten the term or vice-versa. When the shorter term expires, then the corporation is automatically dissolved, and its corporate assets liquidated.
Section 37 of the corporation code is all about the Power to extend or shorten a corporate term. A private corporation may extend or shorten its term as stated in the Articles of Incorporation when approved by a majority vote of the Board and ratified at a meeting by the stockholders representing at least 2/3 of the outstanding capital stock/members. A written notice of the proposed action and of the time and place of the meeting shall be addressed to each stockholder or member at his place of residence as shown on the books of the corporation and deposited to the addressee in the post office with postage prepaid, or served personally: Provided, that in case of extension of the corporate term, any dissenting stockholder may exercise his appraisal right under the conditions provided in this Code.
HOWEVER, in the case of increase or reduction of capital stock, any change in a corporate term has to be approved at a members’ or stockholders’ meeting. Unlike in increase or reduction of capital stock, any stockholder who dissents to the extension or shortening of the term may exercise his appraisal right.
This is the procedure to be followed after the stockholders had approved it.
(2) Amendment takes effect upon SEC approval, except if SEC fails to act within 6 months from filing for causes not attributable to the corporation, then the amendment will take effect even without SEC approval.