Summary
Highlights
The video discusses what happens to corporations that have received a certificate of incorporation but fail to formally organize or commence business, thus not utilizing their corporate charter. Section 21 of the Revised Corporation Code addresses these situations.
Section 21, paragraph one, states that if a corporation does not formally organize and commence business within five years from incorporation, its certificate of incorporation is deemed revoked. 'Formally organize' includes filing bylaws, electing directors, and establishing a principal office.
When a certificate of incorporation is revoked, the corporation is stripped of its legal personality and corporate powers. This occurs on the day following the end of the five-year period from the date of incorporation. Such a corporation is not even considered a de facto corporation.
Section 21, paragraph two, deals with corporations that commenced business but later become inoperative for at least five consecutive years. In this scenario, the Securities and Exchange Commission (SEC) may place the corporation under 'delinquent status' after due notice and hearing.
Section 21, paragraph three, allows delinquent corporations a two-year period to resume operations and comply with SEC requirements. If they comply, the delinquent status is lifted. Failure to comply within this period will lead to the revocation of their certificate of incorporation.
Creating a corporation is a state-granted privilege, emphasizing the need for substantial compliance with all SEC requirements to maintain corporate status. Non-compliance can result in the revocation of the certificate of incorporation.