When is stockholder approval not necessary for a corporation to invest its funds in another business?
Generally, a private corporation must obtain approval from a majority of the board and ratification by two-thirds (2/3) of the outstanding capital stock before investing funds in another business or for any purpose other than its primary purpose (SEC. 41, Revised Corporation Code of the Philippines). However, stockholder approval shall not be necessary where the investment by the corporation is reasonably necessary to accomplish its primary purpose as stated in the articles of incorporation. This exception recognizes the inherent managerial function of the board when the investment aligns directly with the company’s core business mandate. In cases where ratification is required, any dissenting stockholder is granted the right of appraisal.
02 November 2025
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Nicolas and De Vega Law Offices is a full-service law firm in the Philippines. You may visit us at the 16th Flr., Suite 1607 AIC Burgundy Empire Tower, ADB Ave., Ortigas Center, 1605 Pasig City, Metro Manila, Philippines. You may also call us at +632 84706126, +632 84706130, +632 84016392 or e-mail us at [email protected]. Visit our website https://ndvlaw.com/.
