1-72

Question 1

What is the title of the Code discussed in the document?

Answer 1

Revised Corporation Code of the Philippines

Question 2

Define a corporation.

Answer 2

An artificial being created by operation of law, having the right of succession and the powers, attributes, and properties expressly authorized by law or incidental to its existence.

Question 3

What are the two classes of corporations under this Code?

Answer 3

• Stock corporations
• Nonstock corporations

Question 4

What is a stock corporation?

Answer 4

A corporation with capital stock divided into shares, authorized to distribute dividends or surplus profits to shareholders.

Question 5

What governs corporations created by special laws or charters?

Answer 5

They are governed primarily by the provisions of the special law or charter creating them, supplemented by this Code.

Question 6

Who are corporators?

Answer 6

Those who compose a corporation, whether as stockholders or members.

Question 7

Who are incorporators?

Answer 7

Stockholders or members mentioned in the articles of incorporation as originally forming and composing the corporation.

Question 8

What must be indicated in the articles of incorporation regarding shares?

Answer 8

The classification of shares, their corresponding rights, privileges, restrictions, and stated par value.

Question 9

What rights do holders of nonvoting shares have?

Answer 9

• Amendment of the articles of incorporation
• Adoption and amendment of bylaws
• Sale, lease, exchange, mortgage, pledge, or other disposition of corporate property
• Incurring, creating, or increasing bonded indebtedness
• Increase or decrease of authorized capital stock
• Merger or consolidation of the corporation
• Investment of corporate funds in another corporation
• Dissolution of the corporation

Question 10

True or False: No share may be deprived of voting rights except preferred or redeemable shares.

Answer 10

True

Question 11

What are preferred shares of stock?

Answer 11

Shares that may have preference in the distribution of dividends and corporate assets in case of liquidation.

Question 12

What are treasury shares?

Answer 12

Shares that have been issued and fully paid for, but subsequently reacquired by the issuing corporation.

Question 13

What is the maximum number of incorporators allowed to organize a corporation?

Answer 13

Fifteen (15)

Question 14

What is a One Person Corporation?

Answer 14

A corporation with a single stockholder.

Question 15

What is the default term of a corporation?

Answer 15

Perpetual existence.

Question 16

What is required for a corporation to apply for revival of its corporate existence?

Answer 16

Approval by the Commission, and it must include all rights and privileges under its certificate of incorporation.

Question 17

What must all corporations file with the Commission?

Answer 17

Articles of incorporation.

Question 18

List the contents required in the articles of incorporation.

Answer 18

• Name of the corporation
• Specific purpose(s) for formation
• Principal office location
• Term of existence (if not perpetual)
• Names, nationalities, and addresses of incorporators
• Number of directors or trustees
• Names and addresses of first directors or trustees
• Authorized capital stock and share details
• Additional necessary matters

Question 19

Fill in the blank: A corporation’s articles of incorporation must be filed in any of the __________ languages.

Answer 19

official

Question 20

What must be provided in articles of incorporation regarding stock ownership for corporations engaging in business reserved for Filipino citizens?

Answer 20

No transfer of stock or interest reducing Filipino ownership below required percentage is allowed.

Question 21

What happens if the name of the corporation conflicts with existing rights?

Answer 21

The incorporators must change the name immediately upon notice from the Commission.

Question 22

What is a reason for disapproving articles of incorporation?

Answer 22

The articles are not substantially in accordance with the prescribed form

Other reasons include unconstitutional purposes, false capital certification, and non-compliance with Filipino ownership requirements.

Question 23

What must corporations engaging in activities reserved for Filipino citizens provide?

Answer 23

No transfer of stock shall reduce Filipino ownership below the required percentage

This restriction must be indicated on all stock certificates issued by the corporation.

Question 24

What is the required vote for amending articles of incorporation?

Answer 24

Majority vote of the board and two-thirds (2/3) of stockholders

Nonstock corporations require a majority vote of trustees and two-thirds (2/3) of members.

Question 25

What happens if a corporation does not commence business within five years of incorporation?

Answer 25

Its certificate of incorporation shall be deemed revoked ## Footnote If inoperative for five consecutive years, it may be placed under delinquent status.

Question 26

What is the term length for directors elected in a corporation?

Answer 26

One (1) year ## Footnote Trustees are elected for a term not exceeding three (3) years.

Question 27

True or False: A corporate name is distinguishable even if it includes the word 'corporation'.

Answer 27

False ## Footnote Distinguishability does not depend on the inclusion of certain terms or variations in punctuation.

Question 28

What must be included in the articles of incorporation after an amendment?

Answer 28

All provisions required by law ## Footnote Amendments should be indicated by underscoring changes.

Question 29

What is the consequence of using a corporate name that is not distinguishable from another?

Answer 29

The corporation may be ordered to cease using the name and register a new one ## Footnote The Commission may also remove all visible signs bearing the name.

Question 30

What is the definition of a de facto corporation?

Answer 30

A corporation claiming good faith incorporation without inquiry into its powers in private suits ## Footnote Such inquiry may occur in a quo warranto proceeding by the Solicitor General.

Question 31

Fill in the blank: A corporation's certificate of incorporation may be revoked if it does not commence business within _______ years.

Answer 31

five (5) years ## Footnote This applies if there is no formal organization and business commencement.

Question 32

What must incorporators submit to the Commission for verification?

Answer 32

The intended corporate name ## Footnote If approved, they must then submit articles of incorporation and bylaws.

Question 33

What is a corporation by estoppel?

Answer 33

Persons acting as a corporation without authority are liable as general partners ## Footnote They cannot use lack of corporate personality as a defense in legal matters.

Question 34

What is required for a corporation to resume operations after being placed under delinquent status?

Answer 34

Compliance with all requirements prescribed by the Commission ## Footnote Failure to comply within two years results in certificate revocation.

Question 35

What constitutes an independent director?

Answer 35

A director independent of management and free from business relationships ## Footnote They should not have significant shareholdings or receive fees from the corporation.

Question 36

What is the minimum percentage of independent directors required for certain corporations?

Answer 36

At least twenty percent (20%) ## Footnote This applies to corporations with public interest as specified in the law.

Question 37

What is the period for a delinquent corporation to resume operations?

Answer 37

A delinquent corporation shall have a period of two (2) years to resume operations and comply with all requirements prescribed by the Commission.

Question 38

What happens if a delinquent corporation fails to comply within the given period?

Answer 38

Failure to comply shall cause the revocation of the corporation’s certificate of incorporation.

Question 39

What must the Commission do before suspending or revoking a corporation's certificate?

Answer 39

The Commission shall give reasonable notice to and coordinate with the appropriate regulatory agency.

Question 40

What is the term for directors elected from stockholders?

Answer 40

Directors shall be elected for a term of one (1) year.

Question 41

What is the term for trustees elected from members of the corporation?

Answer 41

Trustees shall be elected for a term not exceeding three (3) years.

Question 42

What is the minimum percentage of independent directors required for certain corporations?

Answer 42

Independent directors must constitute at least twenty percent (20%) of the board.

Question 43

What is an independent director?

Answer 43

An independent director is a person who is independent of management and free from any business or other relationship that could interfere with independent judgment.

Question 44

How are independent directors elected?

Answer 44

Independent directors must be elected by the shareholders present or entitled to vote.

Question 45

What rights do stockholders or members have during elections?

Answer 45

Each stockholder or member has the right to nominate any director or trustee who possesses all qualifications and none of the disqualifications.

Question 46

What is required for a quorum during elections?

Answer 46

Owners of a majority of the outstanding capital stock or a majority of the members entitled to vote must be present.

Question 47

What voting methods are allowed for stockholders or members?

Answer 47

Stockholders or members may vote in person, by proxy, or through remote communication.

Question 48

What must be reported within thirty (30) days after the election of directors?

Answer 48

The names, nationalities, shareholdings, and residence addresses of the elected directors, trustees, and officers must be submitted to the Commission.

Question 49

What disqualifies a person from being a director or trustee?

Answer 49

A person is disqualified if convicted of certain offenses, found administratively liable for fraudulent acts, or disqualified by a foreign court.

Question 50

How can a director or trustee be removed from office?

Answer 50

A director or trustee may be removed by a vote of stockholders holding at least two-thirds (2/3) of the outstanding capital stock.

Question 51

What happens if a vacancy occurs in the board of directors?

Answer 51

Any vacancy may be filled by the vote of at least a majority of the remaining directors or trustees.

Question 52

What is the compensation limit for directors or trustees?

Answer 52

The total yearly compensation of directors shall not exceed ten (10%) percent of the net income before income tax of the corporation.

Question 53

What are directors or trustees liable for?

Answer 53

Directors or trustees are liable for willfully voting for unlawful acts or for gross negligence in directing the affairs of the corporation.

Question 54

What must corporations vested with public interest submit annually?

Answer 54

An annual report of the total compensation of each of their directors or trustees.

Question 55

What are the liabilities of directors or trustees who vote for unlawful acts?

Answer 55

They shall be liable jointly and severally for all damages resulting therefrom suffered by the corporation, its stockholders or members and other persons.

Question 56

What must a director, trustee, or officer not acquire?

Answer 56

Any interest adverse to the corporation in respect of any matter which has been reposed in them in confidence.

Question 57

Under what conditions is a contract with a director or trustee voidable?

Answer 57

If the presence of such director or trustee was necessary for quorum, their vote was necessary for approval, or the contract is not fair and reasonable.

Question 58

What is required for material contracts in corporations vested with public interest?

Answer 58

Approval by at least two-thirds (2/3) of the entire membership of the board, with a majority of independent directors voting to approve.

Question 59

What happens if conditions for a contract with a director are absent?

Answer 59

The contract may be ratified by the vote of stockholders representing at least two-thirds (2/3) of the outstanding capital stock.

Question 60

What is the status of contracts between corporations with interlocking directors?

Answer 60

Such contracts shall not be invalidated on the ground of interlocking directors unless there is fraud or the contract is not fair and reasonable.

Question 61

What stockholdings are considered substantial for interlocking directors?

Answer 61

Stockholdings exceeding twenty percent (20%) of the outstanding capital stock.

Question 62

What must a director do if they acquire a business opportunity belonging to the corporation?

Answer 62

The director must account for and refund all profits to the corporation unless ratified by a vote of stockholders owning at least two-thirds (2/3) of the outstanding capital stock.

Question 63

What can the board create if the bylaws provide for it?

Answer 63

An executive committee composed of at least three (3) directors.

Question 64

What powers does every corporation have under this Code?

Answer 64

To sue and be sued, have perpetual existence, adopt a corporate seal, amend articles of incorporation, adopt bylaws, issue or sell stocks, and deal with property.