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How to Set-up and Register a Non-Stock, Non-Profit Organization with the Securities and Exchange Commission

Under the Batas Pambansa Bilang 68, also called The Corporation Code of the Philippines, a non-stock corporation is one where no part of its income is distributable as dividends to its members, trustees, or officers, subject to the provisions of [the] Code on dissolution: provided, that any profit which a non-stock corporation may obtain as an incident to its operations shall, whenever necessary or proper, be used for the furtherance of the purpose or purposes for which the corporation was organized. The provisions governing stock corporation, when pertinent, shall be applicable to non-stock corporations, except as may be covered by specific provisions [deleted]. (Section 87)

Non-stock corporations may be formed or organized for charitable, religious, educational, professional, cultural, fraternal, literary, scientific, social, civic service, or similar purposes, like trade, industry, agricultural and like chambers, or any combination thereof, subject to the special provisions [deleted] governing particular classes of non-stock corporations. (Section 88)

Since the provisions governing a stock corporation is also applicable to a non-stock corporation,  the corporate powers of a non-stock corporation shall be exercised, all business conducted and all property of such corporations controlled and held, by the board of trustees to be elected from among the members of the corporation, who shall hold office for one (1) year until their successors are elected and qualified. Trustees of non-stock corporations must be members thereof. A majority of the trustees of a non-stock corporation must be residents of the Philippines.

Incorporators (or those who originally formed the corporation) shall be not less five (5) in number but not more than fifteen (15)  and majority of whom are residents of the Philippines. Resident or non-resident aliens (foreigners) can be incorporators of a non-stock corporation, provided that majority of the incorporators are residents of the Philippines.

An ordinary non-stock, non-profit corporation does not need a required capitalization. However, other special form of non-stock, non-profit corporation like Foundation and schools are required minimum capital contribution.

As stated in SEC Memorandum Circular 8, series 2006, a "Foundation" is a non-stock, non-profit corporation established for the purpose of extending grants or endowments to support its goals or raising funds to accomplish charitable, religious, educational, athletic, cultural, literary, scientific, social welfare, or other similar objectives.

A Foundation applying for registration shall submit or comply the following documents/ requirements, in addition to requirements for non-stock, non-profit corporation:

  • Notarized certificate of bank deposit of the contribution of not less than PHP1,000,000
  • Statement of willingness to allow SEC to conduct an audit
  • Plan of operations, executed under oath, by the president of the foundation, that specifices the mode of operations and how it will source funds
  • The company name is also required to have the word “Foundation” in it.

It is important to note that “non-profit” does not mean tax exempt; there are some tax exemptions, but exemption is not absolute.

In Davao City,  the procedures on filing the registration of a non-stock, non-profit corporation currently are in eight (8) steps:

Step 1. Verification of  Corporate Name
The first thing to do is to submit the proposed alternative names for the corporation at the Verification Section or verify your own in the web through www.sec.gov.ph

Step 2. Application on Registration
The next step is to draft your own Articles of Incorporation and By-Laws. You need to use the SEC form, you have to buy one at Forms Desk Section. You need also to buy Registration Data Sheet (RDS) and pay for other expenses upon filing of the documents like documentary stamps and folders.

Step 3. Pre-processing and Review
Submit the Application on Registration to the Corporate and Legal Section for the processing and review. You need to submit 6 sets copies, at least 2 of which are originally signed by the incorporators. You should use an A4 sized bond paper and entries should be typewritten/computerized and in black print. The documents should be arranged accordingly and notarized as follows:
   * Cover Sheet
   * Name Reservation Confirmation
   * Affidavit of Correction
   * Articles of Incorporation
   * List of members and their contributions, certified correct by the Secretary and Treasurer marked as Annex "A"
   * By-Laws
   * Registration Data Sheet
   * If with foreigner : Photocopy of Passport
   * If Foundation, additional requirements (see SEC Memorandum Circular 8, series 2006)

Step 4. Payment of Filing Fees
You have to pay for the filing fees for the Articles of Incorporation/By-Laws registration amounting to P1,255.00

Step 5. Submission of Registration Documents
You have to submit the documents to the Receiving Section

Step 6. Final Review
The documents shall be forwarded again to the Corporate and Legal Section for final review. The 6 sets of documents shall be found in order and paid.

Step 7. Approval and Signature of the Regional Director
After final review, the documents are forwarded to the regional director for his approval and signature.

Step 8. Issuance of SEC Registration Certificate
The certification may be claimed at the Releasing Section. You only need to present the original receipts of your payments and secure and pay for the membership book as mandatory requirement upon release.

The estimated total expenses for the registration of a non-stock, non-profit corporation at the Securities and Exchange Commission in Davao City would amount to P2,244.00 as follows:
Forms (Article of Incorporation/By-Laws)P500.00
Registration Data SheetP24.00
Documentary Stamps (4 sets)P100.00
Long Size, Expanded FolderP15.00
Filing Fees (Article/By-Laws)P1,255.00
Membership BookP350.00

Disclaimer : Opinions expressed in this article are that of the author and information provided are for general conceptual guidance for public information only and are not substitute for advice from qualified professional or an expert opinion. Contact support@cpadavao.com for more information and/or if you want to avail professional services from a qualified professional. This site accepts and publishes contributions from accountants and business professionals, especially articles that are of interest to the accountancy profession, in particular, and to the business community, in general. Please email your articles to publisher@cpadavao.com together with your bio and affiliations for publication in this website.

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About Vincent Perdiguez

CPADavao.com is a "business blog" maintained by Mr. Vincent C. Perdiguez. Vincent is an accountant by profession. He is writing about accounting, business and the profession. He is an alumnus of the Mindanao State University - Iligan Institute of Technology (MSU-IIT). He's been working as bookkeeper and internal auditor for small and medium businesses here in Davao City. You can reach him through mobile at 0916-2764-585 (Globe) or by email to vincent.perdiguez@cpadavao.com. Thank you for subscribing to us.
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